John Hancock Funds
Pacific
Basin
Equities
Fund
ANNUAL REPORT
August 31, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Douglas M. Costle*
Leland O. Erdahl*
Richard A. Farrell*
Gail D. Fosler*
William F. Glavin*
Anne C. Hodsdon
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt*
Richard S. Scipione
Edward Spellman*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
Since late 1994, prospectus simplification has been a major topic in
the mutual fund industry. At that time, Securities and Exchange
Commission Chairman Arthur Levitt called on fund companies to
make their prospectuses more user-friendly. He noted that
prospectuses are often overloaded with technical detail and are hard
for most investors to understand. Many industry observers agreed,
and rightly so.
So it is my pleasure to let you know that after being under
development for a year, John Hancock Funds has introduced new
simplified and consolidated prospectuses. The prospectuses feature
shorter, clearer language with a streamlined design, and they
incorporate several funds with similar investment objectives into
one document. They cover our income, growth, growth and income, tax-
free income, international/global and money market funds. We are
gratified at the favorable reviews that our new prospectuses have
received from shareholders, financial advisers, industry analysts
and the press. We believe they are a bold but sensible step forward.
And while they are easier to read, they still comply with all
federal and state guidelines.
We have taken the initiative to create a prospectus that
dramatically departs from the norm. Among its most innovative
features is a two-page spread highlighting each fund's goals and
investment strategy, the types of securities it buys, its portfolio
management and risk factors, all in plainer language. Fund expenses
and financial highlights are now found here, too, as is a new bar
chart that shows year-to-year volatility for each fund. Other
features include a better presentation of fund services, a new
glossary of investment risks and a discussion about how funds are
organized, including a diagram showing the connection of the various
players that provide services to your Hancock fund(s).
We believe we have made a significant advancement in the drive
toward better mutual fund prospectuses. We hope you will agree
because in the end, we did it for you, our shareholders.
Sincerely,
/S/ EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY MARIAN LI, FOR THE PORTFOLIO MANAGEMENT TEAM
John Hancock
Pacific Basin
Equities Fund
Political instability, sagging exports undermine emerging
markets; Japan can't compete with U.S. market rally
The current reporting period divides neatly into two parts. While
the first six months were promising, the last six months have been
disappointing. Factors that detracted from the Fund's performance
after the halfway mark included rising stock prices in the United
States, which diverted the flow of investment funds; upward pressure
on interest rates, which particularly affected Hong Kong; a broad-
based economic slump in the region, caused in part by falling
semiconductor prices; and spasms of political instability throughout
the Pacific. Within the broader pattern of volatility, performance
varied widely from one country to the next. Hong Kong, for example,
was up 0.3% during the reporting period, despite a weak second half,
while Thailand was down 17%.
John Hancock Pacific Basin Equities Fund performed in line with
other funds that have a similar investment objective. During the
year that ended August 31, 1996, the Fund's Class A and Class B
shares had total returns of 4.47% and 3.80%, respectively, at net
asset value compared to 3.93% for the average Pacific region fund,
according to Lipper Analytical Services.1 Please see pages six and
seven for longer-term performance information. In the sections that
follow, we'll take a closer look at various countries where the Fund
had significant holdings.
"...performance
varied widely
from one
country to
the next."
A 2" x 2" photo of Marian Li at bottom center. Caption reads: "Marian
Li".
Japan
Last February, we reported that the Japanese economy was finally
showing signs of emerging from its long recession. If anything,
those signs multiplied during the past six months, even if the
Japanese stock market as a whole failed to generate much excitement.
Exports have risen as the value of the yen has declined and
historically low interest rates have helped companies improve their
balance sheets by restructuring long-term debt. Both developments
bode well for corporate profits. As the period progressed, we
shifted our emphasis away from basic materials such as paper,
chemicals and steel, which are burdened by excess inventories, and
toward manufacturers. Our favorites included Mitsbushi Heavy
Industries, Toyota, Sony and Sharp, all of which are large
exporters. Our most recent focus has been on companies that stand to
benefit from the next stage of the Japanese recovery, which should
bring an improvement in domestic consumer demand. They include NTT
Data, a telecommunications company and Jusco, a retailer. The Fund's
total stake in Japan at the end of August was about 29% of net
assets, off slightly from its high during the period due to
selective profit-taking.
Pie chart with the heading "Portfolio Diversification" at top of left
hand column. The chart is divided into 12 sections. Going from top left
to right: Short-Term Investments and Other 2%; Australia 6%; Hong Kong
18%; Indonesia 2%; Japan 29%; South Korea 5%, Malaysia 11%; New Zealand
2%; Philippines 3%; Singapore 11%; Taiwan 3%; Thailand 8%. Footnote
below reads: "As a percentage of net assets on August 31, 1996."
"...Hong Kong
stocks
accounted
for 18%
of the
Fund's net
assets ..."
Table entitled "Scorecard" at bottom of left hand column. The header for
the left column is "Investment"; the header for the right column is
"Recent performance ... and what's behind the numbers." The first
listing is HSBC Holdings followed by an up arrow and the phrase "Hong
Kong bank delivers strong earnings." The second listing is Sharp
followed by an up arrow and the phrase "Growth in exports benefits
Japanese manufacturer." The third listing is Shinawatra Communications
followed by a down arrow and the phrase "Thai cellular provider faces
new competition." Footnote below reads: "See "Schedule of Investments."
Investment holdings are subject to change."
Hong Kong
As Hong Kong prepares to shed its colonial ties to Great Britain
next summer, it has seen a significant influx of Chinese investment
capital, much of it flowing into real estate. Among the prime
beneficiaries of the strong real estate market was Cheung Kong, a
local developer. Chinese investment capital was also a factor in the
superior performance of HSBC Holdings, Hong Kong's largest bank. Our
main concern in Hong Kong has been its historically strong
correlation with Wall Street, at a time when many U.S. stocks seem
overvalued. That has meant we've put a premium lately on stock-
picking, with a clear preference for large, well-established
companies. A good example would be Hutchison Whampoa, an industrial
conglomerate with good exposure to the Chinese market. All in all,
Hong Kong stocks accounted for 18% of the Fund's net assets at the
end of the period.
Singapore/Malaysia/Thailand
Singapore, Malaysia and Thailand together accounted for about one-
third of the Fund's net assets, divided roughly equally among the
three. Our stake in Singapore is not likely to increase in the
months ahead, and may decline slightly. Local manufacturers have
suffered lately from excess inventories of one of the country's main
exports, computer hard drives. That has had a dampening effect on
the whole economy. One of our largest holdings in Singapore remains
Keppel, a conglomerate with interests in shipping, banking and
property development. Thailand, which lately has paid a price for
growing too fast during the early 1990s, was a drag on the Fund's
performance during the period. But with interest rates apt to come
down again and exports likely to improve, the economy seems a good
bet to bounce back in 1997. Our largest local investment at the end
of the period was Bangkok Bank, a major player in the regional
economy. Shinawatra Communications, a holding company for a Thai
cellular phone service, was a major disappointment. It suffered from
increased competition brought on by changes in the regulatory
climate. Malaysia is another emerging market that faltered after an
extended period of meteoric growth. Like Thailand, however, Malaysia
appears poised for a comeback. Among our largest holdings in
Malaysia was Sime Darby, another conglomerate well-placed to profit
from improvements in the local economy.
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the year ended August 31, 1996."
The chart is scaled in increments of 1% from bottom to top, with 5% at
the top and 0% at the bottom. Within the chart there are three solid
bars. The first represents the 4.47% total return for the John Hancock
Pacific Basin Equities Fund: Class A. The second represents the 3.80%
total return for the John Hancock Pacific Basin Equities Fund: Class B.
The third represents the 3.93% total return for the Average Pacific
region fund. A footnote below reads: "The total returns for John Hancock
Pacific Basin Equities Fund are at net asset value with all
distributions reinvested. The average pacific region fund is tracked by
Lipper Analytical Services. (1) See following two pages for historical
performance information."
Australia/New Zealand
Australia and New Zealand together accounted for 8% of the Fund's
net assets. Large holdings included National Australia Bank, which
profited from falling interest rates and a vibrant local economy;
and several mining and natural resource stocks, notably WMC Ltd.,
whose main products are industrial commodities such as nickel and
copper.
Outlook
We're optimistic about the chances for a strong recovery in the
Pacific region in 1997, affecting both earnings and stock prices.
For three years now, the region has underperformed both Europe and
the United States. That's had the effect of squeezing the excessive
valuations out of the market and setting the stage, we hope, for a
comeback. We remain concerned, however, about upward pressure on
interest rates in the United States and the effect that might have,
particularly on the region's emerging markets. If interest rates
were to rise suddenly, we might choose to emphasize markets where
the correlation with the United States is less pronounced, such as
Japan, Korea and Taiwan.
"We're
optimistic
about the
chances for
a strong
recovery in
the Pacific
region in
1997..."
- --------------------------------------------------------------------
This commentary reflects the views of the portfolio management team
through the end of the Fund's period discussed in this report. Of
course, the team's views are subject to change as market and other
conditions warrant.
International investing involves special risks, including currency
and political risks and differences in accounting standards and
financial reporting.
1Figures from Lipper Analytical Services include reinvested
dividends and do not take into account sales charges. Actual load-
adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Pacific Basin
Equities Fund. Total return is a performance measure that equals the
sum of all income and capital gains dividends, assuming reinvestment
of these distributions, and the change in the price of the Fund's
shares, expressed as a percentage of the Fund's net asset value per
share. Performance figures include the maximum applicable sales
charge of 5% for Class A shares. The effect of the maximum
contingent deferred sales charge for Class B shares (maximum 5% and
declining to 0% over six years) is included in Class B performance.
Remember that all figures represent past performance and are no
guarantee of how the Fund will perform in the future. Also, keep in
mind that the total return and share price of the Fund's investments
will fluctuate. As a result, your Fund's shares may be worth more or
less than their original cost, depending on when you sell them.
CUMULATIVE TOTAL RETURNS
For the period ended June 30, 1996
ONE FIVE LIFE OF
YEAR YEARS FUND
----------- ---------- ----------
John Hancock Pacific
Basin Equities Fund:
Class A 5.36% 66.13% 90.38%(1)
John Hancock Pacific
Basin Equities Fund:
Class B 5.15% N/A (0.18%)(2)
AVERAGE ANNUAL TOTAL RETURNS
For the period ended June 30, 1996
ONE FIVE LIFE OF
YEAR YEARS FUND
----------- ---------- ----------
John Hancock Pacific
Basin Equities Fund:
Class A 5.36% 10.69% 7.58%(1)
John Hancock Pacific
Basin Equities Fund:
Class B 5.15% N/A (0.08)%(2)
Notes to Performance
(1) Class A shares started on September 8, 1987.
(2) Class B shares started on March 7, 1994.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Pacific Basin Equities Fund would be worth on August 31,
1996, assuming you invested on the day each class of shares started
and have reinvested all distributions. For comparison, we've shown
the same $10,000 investment in the Morgan Stanley Capital International
Pacific Index -- an unmanaged index that measures performance for a
diverse range of global stock markets, including Australia, Hong Kong,
Japan, New Zealand, and Singapore/Malaysia.
Pacific Basin Equities Fund
Class A shares
Line chart with the heading Pacific Basin Equities Fund: Class A,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are three lines.
The first line represents the value of the hypothetical $10,000
investment made in the Pacific Basin Equities Fund on September 8, 1987,
before sales charge, and is equal to $19,263 as of August 31, 1996. The
second line represents the Pacific Basin Equities Fund after sales
charge and is equal to $18,293 as of August 31, 1996. The third line
represents the value of the Morgan Stanley Capital International Pacific
Index and is equal to $11,494 as of August 31, 1996.
Pacific Basin Equities Fund
Class B shares
Line chart with the heading Pacific Basin Equities Fund: Class B,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are three lines.
The first line represents the value of the Morgan Stanley Capital
International Pacific Index and is equal to $9,969 as of August 31,
1996. The second line represents the value of the hypothetical $10,000
investment made in the Pacific Basin Equities Fund on March 7, 1994, and
is equal to $9,707 as of August 31, 1996. The third line represents the
value of the Pacific Basin Equities Fund after sales charge and is equal
to $9,670 as of August 31, 1996.
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on August 31, 1996. You'll also
find the net asset value and the maximum offering price per share as of that date.
Statement of Assets and Liabilities
August 31, 1996
- -----------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks and warrants (cost - $68,770,066) $72,395,283
Joint repurchase agreement (cost - $1,202,000) 1,202,000
-----------
73,597,283
-----------
Cash 751
Foreign currency, at value (cost - $1,730,537) 1,727,694
Receivable for shares sold 223,470
Receivable for investments sold 895,255
Interest receivable 350
Dividends receivable 97,440
Other Assets 2,096
-----------
Total Assets 76,544,339
- -----------------------------------------------------------------------
Liabilities:
Payable for shares repurchased 19,182
Payable for foreign currency contracts sold 64,907
Payable for investments purchased 1,789,376
Foreign taxes payable 82,156
Payable to John Hancock Advisers, Inc. and
affiliates - Note B 187,484
Accounts payable and accrued expenses 108,329
-----------
Total Liabilities 2,251,434
- -----------------------------------------------------------------------
Net Assets:
Capital paid-in $70,785,736
Accumulated net realized gain on investments and
foreign currency transactions 210,044
Net unrealized appreciation of investments and
foreign currency transactions 3,485,502
Accumulated net investment loss (188,377)
-----------
Net Assets $74,292,905
- -----------------------------------------------------------------------
Net Asset Value Per Share:
(Based on net asset values and shares of
beneficial interest outstanding - unlimited
number of shares authorized with no par
value, respectively)
Class A - $41,950,793 / 2,845,096 $14.74
=======================================================================
Class B - $32,342,112 / 2,232,382 $14.49
=======================================================================
Maximum Offering Price Per Share *
Class A - ($14.74 x 105.26%) $15.52
=======================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or more
and on group sales the offering price is reduced.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned
and expenses incurred in operating the Fund. It also shows net gains (losses)
for the period stated.
Statement of Operations
Year ended August 31, 1996
- -----------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding taxes of $98,605) $1,099,280
Interest 122,834
-----------
1,222,114
-----------
Expenses:
Investment management fee - Note B 542,565
Distribution/service fee - Note B
Class A 125,170
Class B 260,971
Transfer agent fee - Note B 264,695
Custodian fee 170,793
Registration and filing fees 64,657
Auditing fee 31,500
Printing 30,583
Financial services fees - Note B 9,488
Trustees' fees 5,337
Miscellaneous 3,064
-----------
Total Expenses 1,508,823
- -----------------------------------------------------------------------
Net Investment Loss (286,709)
- -----------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 851,139
Net realized loss on foreign currency transactions (366,268)
Change in net unrealized appreciation/depreciation
of investments 1,932,317
Change in net unrealized appreciation/depreciation
of foreign currency transactions 47,009
-----------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions 2,464,197
- -----------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $2,177,488
=======================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
---------------------------
1995 1996
----------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($26,724) ($286,709)
Net realized gain (loss) on investments sold and
foreign currency transactions (808,993) 484,871
Change in net unrealized appreciation/depreciation
of investments and foreign currency transactions (3,796,418) 1,979,326
----------- -----------
Net Increase (Decrease) in Net Assets Resulting
from Operations (4,632,135) 2,177,488
----------- -----------
Distributions to shareholders:
Distributions from net realized gain on
investments sold and foreign currency transactions
Class A - ($0.5482 and none per
share, respectively) (1,615,390) --
Class B - ($0.5482 and none per
share, respectively) (485,450) --
----------- -----------
Total Distributions to Shareholders (2,100,840) --
----------- -----------
From Fund Share Transactions - Net* (1,223,114) 20,330,528
----------- -----------
Net Assets:
Beginning of period 59,740,978 51,784,889
----------- -----------
End of period (including accumulated net
investment loss of none and $188,377,
respectively) $51,784,889 $74,292,905
=========== ===========
* Analysis of Fund Share Transactions: YEAR ENDED AUGUST 31,
-----------------------------------------------------------
1995 1996
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ---------- -----------
CLASS A
Shares sold 1,831,046 $25,781,273 5,439,721 $80,924,479
Shares issued to shareholders in reinvestment
of distributions 112,000 1,558,965 -- --
----------- ----------- ---------- -----------
1,943,046 27,340,238 5,439,721 80,924,479
Less shares repurchased (2,455,590) (34,756,404) (5,246,580) (78,427,912)
----------- ----------- ---------- -----------
Net increase (decrease) (512,544) ($7,416,166) 193,141 $2,496,567
=========== =========== =========== ===========
CLASS B
Shares sold 1,880,511 $26,138,987 3,821,397 $56,351,704
Shares issued to shareholders in reinvestment
of distributions 31,341 434,079 -- --
----------- ----------- ---------- -----------
1,911,852 26,573,066 3,821,397 56,351,704
Less shares repurchased (1,481,266) (20,380,014) (2,618,144) (38,517,743)
----------- ----------- ---------- -----------
Net increase 430,586 $6,193,052 1,203,253 $17,833,961
=========== =========== =========== ===========
The Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the
previous period. The difference reflects earnings less expenses, any investment and foreign currency gains and losses,
distributions paid to shareholders, and any increase or decrease in money shareholders invested in the Fund. The footnote
illustrates the number of Fund shares sold,reinvested and redeemed during the last two periods, along with the corresponding
dollar values.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each period indicated,
investment returns, key ratios and supplemental data are listed as follows:
YEAR ENDED AUGUST 31,
---------------------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $9.05 $8.87 $13.27 $15.88 $14.11
-------- -------- -------- -------- --------
Net Investment Income (Loss) (0.07)(2) (0.11)(2) (0.10)(2) 0.02(2)(3) (0.02)(2)
Net Realized and Unrealized Gain (Loss)
on Investments and
Foreign Currency Transactions (0.11) 4.51 3.12 (1.24) 0.65
-------- -------- -------- -------- --------
Total from Investment Operations (0.18) 4.40 3.02 (1.22) 0.63
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Realized Gain on
Investments Sold and
Foreign Currency Transactions -- -- (0.41) (0.55) --
-------- -------- -------- -------- --------
Total Distributions -- -- (0.41) (0.55) --
-------- -------- -------- -------- --------
Net Asset Value, End of Period $8.87 $13.27 $15.88 $14.11 $14.74
======== ======== ======== ======== ========
Total Investment Return at Net Asset
Value (4) (1.99%) 49.61% 22.82% (7.65%) 4.47%
Total Adjusted Investment Return at
Net Asset Value (4)(6) (5.57%) 48.31% -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $3,222 $14,568 $50,261 $37,417 $41,951
Ratio of Expenses to Average Net Assets** 2.73% 2.94% 2.43% 2.05% 1.97%
Ratio of Adjusted Expenses to Average
Net Assets (8) 6.31% 4.24% -- -- --
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.82%) (0.98%) (0.66%) 0.13%(3) (0.15%)
Ratio of Adjusted Net Investment Loss
to Average Net Assets (8) (4.40%) (2.28%) -- -- --
Portfolio Turnover Rate 179% 171% 68% 48% 73%
** Expense Reimbursement Per Share $0.31 $0.14 -- -- --
Average Brokerage Commission Rate (9) N/A N/A N/A N/A $.0183
The Financial Highlights summarizes the impact of the following factors on a single share
for each period indicated: net investment income, gains (losses), dividends and total
investment return of the Fund. It shows how the Fund's net asset value for a share has
changed since the end of the previous period. Additionally, important relationships
between some items presented in the financial statements are expressed in ratio form.
<CAPTION>
PERIOD YEAR ENDED
ENDED AUGUST 31,
AUGUST 31, ----------------------------
1994(1) 1995 1996
-------- -------- --------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $15.11 $15.84 $13.96
-------- -------- --------
Net Investment Income (0.09)(2) (0.09)(2) (0.13)(2)
Net Realized and Unrealized Loss on
Investments and Foreign Currency
Transactions 0.82 (1.24) 0.66
-------- -------- --------
Total from Investment Operations 0.73 (1.33) 0.53
-------- -------- --------
Less Distributions:
Dividends from Net Realized Gain on
Investments Sold and Foreign Currency
Transactions -- (0.55) --
-------- -------- --------
Total Distributions -- (0.55) --
-------- -------- --------
Net Asset Value, End of Period $15.84 $13.96 $14.49
======== ======== ========
Total Investment Return at Net Asset Value (4) 4.83%(5) (8.38%) 3.80%
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $9,480 $14,368 $32,342
Ratio of Expenses to Average Net Assets 3.00%(7) 2.77% 2.64%
Ratio of Net Investment Loss to Average
Net Assets (1.40%)(7) (0.66%) (0.86%)
Portfolio Turnover Rate 68% 48% 73%
Average Brokerage Commission Rate (9) N/A N/A $.0183
(1) Class B shares commenced operations on March 7, 1994.
(2) Based on average of shares outstanding at the end of each month.
(3) May not accord to amounts shown elsewhere in the financial statements due to the timing of
sales and repurchases of fund shares in relation to fluctuating market values of the
investments of the fund.
(4) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(5) Not annualized.
(6) An estimated total return calculation that does not take into consideration fee reductions
by the adviser during the periods shown.
(7) Annualized.
(8) Unreimbursed, without fee reduction.
(9) Per portfolio share traded. Required for fiscal years that began September 1, 1995 or later.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned by the Pacific Basin
Equities Fund on August 31, 1996. It's divided into three main categories: common stocks,
warrants and short-term investments. Common stocks are further broken down by country.
Short-term investments, which represent the Fund's "cash" position, are listed last.
Schedule of Investments
August 31, 1996
- ------------------------------------------------------------------------------------------
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- --------------------------------- --------------- --------
<S> <C> <C>
COMMON STOCKS
Australia (6.23%)
Broken Hill Proprietary Co., Ltd.
(Diversified Operations) 80,000 $1,089,787
Hoyts Cinemas Group. (Leisure)* 203,200 400,259
Lihir Gold Ltd.* (Metal) 320,000 632,861
National Australia Bank Ltd.
(Banks - Foreign) 110,000 1,072,937
WMC Ltd. (Metal) 150,000 1,044,221
Woodside Petroleum Ltd. (Oil & Gas) 65,000 386,164
----------
4,626,229
----------
Hong Kong (17.86%)
Asia Satellite Telecommunications
Holdings Ltd. (Telecommunications)* 100,000 261,899
Asia Satellite Telecommunications
Holdings Ltd., American
Depositary Receipts (ADR),
(Telecommunications)* 7,600 199,500
Bank of East Asia, Ltd. (Banks - Foreign) 304,219 1,103,640
Cheung Kong (Holdings) Ltd.
(Real Estate Operations) 235,000 1,648,829
Great Eagle Holdings Ltd.
(Real Estate Operations) 250,000 724,263
HSBC Holdings Ltd. (Banks - Foreign) 154,000 2,658,950
Hutchison Whampoa Ltd.
(Diversified Operations) 299,000 1,809,777
New World Development Co., Ltd.
(Real Estate Operations) 200,000 969,995
Sun Hung Kai Properties Ltd.
(Real Estate Operations) 140,000 1,367,046
Swire Pacific Ltd.
(Diversified Operations) 121,000 1,075,886
Wharf Holdings Ltd.
(Real Estate Operations) 240,000 906,363
Wheelock & Co., Ltd.
(Diversified Operations) 268,000 540,714
----------
13,266,862
----------
Indonesia (1.52%)
PT Bank International Indonesia
(Banks - Foreign) 218,484 508,319
PT Indonesian Satellite ADR
(Telecommunications) 20,000 625,000
----------
1,133,319
Japan (29.39%) ----------
Bank of Tokyo-Mitsubishi, Ltd.
(Banks - Foreign) 33,000 671,176
Canon Inc. (Office) 71,000 1,319,897
Fanuc Ltd. (Machinery) 7,000 255,752
Itochu Corp. (Diversified Operations) 120,000 727,775
Jusco Co., Ltd. (Retail) 27,000 800,110
Marui Co., Ltd. (Retail) 49,000 960,519
Matsushita Electric Industrial Co., Ltd.
(Electronics) 104,000 1,751,518
Minebea Co., Ltd. (Machinery) 155,000 1,295,233
Mitsubishi Estate Co., Ltd.
(Real Estate Operations) 72,000 881,281
Mitsubishi Heavy Industries, Ltd.
(Machinery) 53,000 418,986
Mitsui Home Co., Ltd. (Building) 34,000 488,128
NKK Corp. (Steel)* 180,000 475,428
Nomura Securities Co., Ltd. (Finance) 69,000 1,200,166
NTT Data Corp. (Formerly NTT Data
Communications Systems Co.
(Computers) 63 1,930,701
Rohm Co., Ltd. (Electronics) 8,000 479,293
Sharp Corp. (Electronics) 64,000 1,013,068
Sony Corp. (Electronics) 31,000 1,945,702
Sumitomo Electric Industries, Ltd.
(Electronics) 68,000 901,160
Toho Titanium Co., Ltd. (Metal)* 86,000 1,638,321
Toshiba Corp. (Electronics) 155,000 1,001,380
Toyota Motor Corp.
(Automobile / Trucks) 70,000 1,687,834
----------
21,843,428
----------
Malaysia (10.98%)
DCB Holdings Berhad (Banks - Foreign) 394,000 1,201,123
Hicom Holdings Berhad
(Diversified Operations) 270,000 752,707
Malaysia (continued)
Magnum Corp. Berhad (Leisure) 500,000 810,269
Malakoff Berhad (Energy) 86,000 396,711
Malaysian Resources Corp. Berhad
(Diversified Operations) 280,000 887,284
MBF Capital Berhad (Finance) 316,000 451,247
Resorts World Berhad (Leisure) 250,000 1,363,819
Sime Darby Berhad
(Diversified Operations) 300,000 1,016,847
United Engineers Ltd. (Building) 180,000 1,277,978
----------
8,157,985
----------
New Zealand (1.60%)
Telecom Corporation of New Zealand
(Telecommunications) 248,000 1,186,496
----------
Philippine Islands (3.39%)
Manila Electric Co. (B Shares) (Utilities) 93,340 716,218
Philippine Long Distance Telephone Co.
(ADR) (Utilities) 12,500 748,438
Pilipino Telephone Corp.
(Telecommunications)* 800,000 1,053,636
----------
2,518,292
----------
Singapore (10.83%)
Cycle & Carriage Ltd.
(Automobile / Trucks) 60,000 575,693
DBS Land Ltd. (Real Estate Operations) 250,000 831,557
Fraser & Neave Ltd. (Beverages) 97,000 978,962
Jardine Matheson Holdings Ltd.
(Diversified Operations) 130,000 819,000
Keppel Corp. Ltd.
(Diversified Operations) 160,000 1,216,773
Oversea-Chinese Banking Corp.
(Banks - Foreign) 93,500 1,123,063
Singapore Airlines Ltd. (Transport) 100,000 1,058,991
United Overseas Bank Ltd.
(Banks - Foreign) 150,000 1,439,232
----------
8,043,271
----------
South Korea (4.76%)
Korea Electric Power Corp. (Utilities) 22,000 671,346
Korea Electric Power Corp.
(ADR) (Utilities) 30,000 637,500
Korea Exchange Bank (Banks - Foreign) 39,800 429,942
South Korea (continued)
Korea Mobile Telecommunications
(ADR) (Telecommunications) 49,700 795,200
Pohang Iron & Steel Co., Ltd. (Steel) 9,000 537,199
Samsung Electronics Co. (Electronics) 4,656 362,591
Samsung Electronics Co. (New Shares)
(Electronics)* 1,403 104,294
----------
3,538,072
----------
Taiwan (2.51%)
ROC Taiwan Fund (Finance) 75,000 825,000
Taiwan Fund, Inc. (Finance) 44,200 1,038,700
----------
1,863,700
----------
Thailand (8.34%)
Bangkok Bank (Banks - Foreign) 112,000 1,416,321
Electricity Generating Public Co., Ltd.
(Utilities) 230,000 681,683
Finance One Public Co., Ltd. (Finance) 109,500 540,901
Italian-Thai Development Public Co., Ltd.
(Building) 64,000 526,062
Krung Thai Bank Public Co., Ltd.
(Banks - Foreign) 128,800 554,799
Land & House Public Co., Ltd.
(Real Estate Operations) 53,000 762,379
Shinawatra Computer and Communication
Public Co., Ltd. (Telecommunications) 57,000 882,988
Siam City Bank (Banks - Foreign) 420,000 829,876
----------
6,195,009
----------
TOTAL COMMON STOCKS
(Cost $68,775,324) (97.41%) 72,372,663
----------
WARRANT
Malaysia (0.03%)
Renong Berhad (Diversified Operations) 54,750 22,620
------ ----------
TOTAL WARRANT
(Cost $14,742) (0.03%) 22,620
------ ----------
TOTAL COMMON STOCKS AND WARRANT
(Cost $68,770,066) (97.44%) 72,395,283
------ ----------
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE
- ----------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (1.62%)
Investment in a joint repurchase
agreement transaction with
SBC Capital Markets Inc.,
Dated 08-30-96, Due
09-03-96 (secured by
U.S. Treasury Notes, 7.50%
Due 12-31-96 and by
U.S. Treasury Bond
8.125% due 08-15-21)
Note A 5.26% $1,202 $1,202,000
----------
TOTAL SHORT-TERM INVESTMENTS (1.62%) $1,202,000
------ ----------
TOTAL INVESTMENTS (99.06%) 73,597,283
====== ==========
*Non-income producing security.
The percentage shown for each investment category is the total value of that category as a
percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Industry Diversification
August 31, 1996 (Unaudited)
- -----------------------------------------------------------------------------------
The Fund primarily invests in securities issued by companies of other countries,
primarily in the Pacific Basin region. The performance of the Fund is closely tied
to the economic conditions within the countries it invests. The concentration of
investments by country for individual securities held by the Fund is shown in the
schedule of investments. In addition, the concentration of investments can be
aggregated by various industry groups. The table below shows the percentages of
the Fund's investments at August 31, 1996 assigned to the various investment
categories.
MARKET VALUE
OF SECURITIES
AS A %
INVESTMENT CATEGORIES OF NET ASSETS
- -----------------------------------------------------
<S> <C>
Agriculture Operations 0.90%
Auto/Trucks 3.05
Banks-Foreign 16.61
Beverages 1.32
Building 3.09
Computers 2.60
Diversified Operations 13.40
Electronics 10.17
Energy 0.53
Finance 5.46
Leisure & Recreation 3.46
Machinery 2.65
Metals 4.46
Office 1.78
Oil & Gas 0.52
Real Estate Operations 10.89
Retail 2.37
Steel 1.36
Telecommunications 6.74
Transportation 1.43
Utilities 4.65
Short-Term Investments 1.62
--------
TOTAL INVESTMENTS 99.06%
========
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Pacific Basin Equities Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock World Fund (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of
1940. The Trust consists of three series portfolios: John Hancock
Pacific Basin Fund (the "Fund"), John Hancock Global Rx Fund and
John Hancock Global Marketplace Fund. On May 21, 1996, the Board of
Directors voted to change the fiscal period end from August 31 to
October 31. This change is effective October 31, 1996. The Fund's
investment objective is to seek long-term growth of capital by
investing primarily in a diversified portfolio of stocks of
companies located in countries bordering the Pacific Ocean.
The Trustees have authorized the issuance of multiple classes of
shares of the Fund, designated as Class A and Class B shares. The
shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights to voting,
redemptions, dividends, and liquidation, except that certain
expenses subject to the approval of the Trustees may be applied
differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the
Internal Revenue Service. Shareholders of a class which bears
distribution and service expenses under terms of a distribution
plan, have exclusive voting rights to that distribution plan.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are
valued on the basis of market quotations, valuations provided by
independent pricing services or, at fair value as determined in good
faith in accordance with procedures approved by the Trustees. Short-
term debt investments maturing within 60 days are valued at
amortized cost which approximates market value. All portfolio
transactions initially expressed in terms of foreign currencies have
been translated into U.S. dollars as described in "Foreign Currency
Translation" below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by
the Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with
John Hancock Advisers, Inc. (the "Adviser"), a wholly-owned
subsidiary of The Berkeley Financial Group, may participate in a
joint repurchase agreement transaction. Aggregate cash balances are
invested in one or more large repurchase agreements, whose
underlying securities are obligations of the U.S. government and/or
its agencies. The Fund's custodian bank receives delivery of the
underlying securities for the joint account on the Fund's behalf.
The Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of
the date of purchase, sale or maturity. Net realized gains and
losses on sales of investments are determined on the identified cost
basis. Capital gains realized on some foreign securities are subject
to foreign taxes and are accrued, as applicable.
FEDERAL INCOME TAXES The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all of its taxable
income, including any net realized gain on investments, to its
shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, net currency exchange
gains and losses from sales of foreign debt securities may be
treated as ordinary income even though such items are gains and
losses for accounting purposes. For federal income tax purposes, the
Fund has net capital losses of $258,284 attributable to security
transactions incurred after October 31, 1995, which are treated as
arising on the first day (September 1, 1996) of the Fund's next
taxable year.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date or, in the case of
some foreign securities, on the date thereafter when the Fund is
made aware of the dividend. Interest income on investment securities
is recorded on the accrual basis. Foreign income may be subject to
foreign withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such
distributions are determined in conformity with income tax
regulations, which may differ from generally accepted accounting
principles. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and
will be in the same amount, except for the effect of expenses that
may be applied differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not readily
identifiable to a specific fund are allocated in such a manner as
deemed equitable, taking into consideration, among other things, the
nature and type of expense and the relative sizes of the funds.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
securities purchased from either the date of issue to the date of
purchase over the life of the security, as required by the Internal
Revenue Code.
CLASS ALLOCATIONS Income, common expenses and realized and
unrealized gains (losses) are calculated at the Fund level and
allocated daily to each class of shares based on the appropriate net
assets of the respective classes. Distribution/service fees, if any,
are calculated daily at the class level based on the appropriate net
assets of each class and the specific expense rate(s) applicable to
each class.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles
incorporates estimates made by management in determining the
reported amount of assets, liabilities, revenues, and expenses of
the Fund. Actual results could differ from these estimates.
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00
p.m., London time, on the date of any determination of the net asset
value of the Fund. Transactions affecting statement of operations
accounts and net realized gain/(loss) on investments are translated
at the rates prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from
sales of foreign currency, currency gains or losses realized between
the trade and settlement dates on securities transactions and the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date at a set price. The
aggregate principal amounts of the contracts are marked-to-market
daily at the applicable foreign currency exchange rates. Any
resulting unrealized gains and losses are included in the
determination of the Fund's daily net assets. The Fund records
realized gains and losses at the time the forward foreign currency
contract is closed out or offset by a matching contract. Risks may
arise upon entering these contracts from potential inability of
counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative
to the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets
and Liabilities. The Fund may also purchase and sell forward
contracts to facilitate the settlement of foreign currency
denominated portfolio transactions, under which it intends to take
delivery of the foreign currency. Such contracts normally involve no
market risk other than that offset by the currency amount of the
underlying transaction.
Open forward foreign currency exchange contracts to sell at August
31, 1996 are as follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY: COVERED BY CONTRACT: MONTH DEPRECIATION
- --------- ------------------- ----------- ------------
Australian Dollar 4,780,000 Oct 96 ($64,907)
NOTE B --
MANAGEMENT FEE, AND
TRANSACTIONS WITH AFFILIATES AND OTHERS
The Adviser is solely responsible for advising the Fund with respect
to investments in the United States and Canada.
The Fund and the Adviser also have a sub-investment management
contract with John Hancock Advisers International Limited (the "Sub-
Adviser"), a wholly-owned subsidiary of the Adviser, under which the
Sub-Adviser, subject to the review of the Trustees and overall
supervision of the Adviser, provides the Fund with investment
management services and advice with respect to that portion of the
Fund's assets invested in countries other than the United States and
Canada. The Adviser and Indosuez Asia Advisers Limited ("IAAL") have
a second subadvisory contract. Pursuant to such contract, IAAL will
serve as co-subadviser to the Fund with the Sub-Adviser. IAAL
provides additional expertise in Asian and Pacific Basin countries.
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, on an annual basis, to the sum of (a) 0.80% of
the first $200,000,000 of the Fund's average daily net asset value
and (b) 0.70% of the Fund's average daily net asset value in excess
of $200,000,000. The Adviser pays the Sub-Adviser a quarterly
management fee equivalent, on an annual basis, to the sum of (a)
0.50% of the first $200,000,000 of the Fund's average daily net
asset value and (b) 0.4375% of the Fund's average daily net asset
value in excess of $200,000,000. As of September 1, 1994, the Sub-
Adviser has waived all but 0.05% of their fee. The Adviser pays IAAL
quarterly a subadvisory fee at the annual rate of (a) 0.30% of the
first $100,000,000 of the Fund's average daily net assets managed by
IAAL plus (b) 40% percent of the gross management fee received by
the Adviser pursuant to the investment management contract with
respect to the Fund's average daily net assets in excess of
$100,000,000 which are managed by IAAL (the rate increases to 50% on
net assets in excess of $250,000,000).
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares
of beneficial interest, the fee payable to the Adviser will be
reduced to the extent of such excess and the Adviser will make
additional arrangements necessary to eliminate any remaining excess
expenses. The current limits are 2.5% of the first $30,000,000 of
the Fund's average daily net asset value, 2.0% of the next
$70,000,000, and 1.5% of the remaining average daily net asset
value.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. For the
period ended August 31, 1996, net sales charges received with regard
to sales of Class A shares amounted to $354,754. Out of this amount,
$50,352 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $157,947 was paid
as sales commissions to unrelated broker-dealers and $146,455 was
paid as sales commissions to sales personnel of John Hancock
Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated
("Tucker Anthony") and Sutro & Co., ("Sutro"), all of which are
broker dealers. The Adviser's indirect parent, John Hancock Mutual
Life Insurance Company, is the indirect sole shareholder of
Distributors and John Hancock Freedom Securities Corporation and its
subsidiaries, which include Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will
be subject to a contingent deferred sales charge ("CDSC") at
declining rates beginning at 5.0% of the lesser of the current
market value at the time of redemption or the original purchase cost
of the shares being redeemed. Proceeds from the CDSC are paid to JH
Funds and are used in whole or in part to defray its expenses
related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended
August 31, 1996, contingent deferred sales charges paid to JH Funds
amounted to $77,380.
In addition, to reimburse JH Funds for the services it provides as
distributors of shares of the Fund, the Fund has adopted a
Distribution Plan with respect to Class A and Class B pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Accordingly,
the Fund will make payments to JH Funds for distribution and service
expenses at an annual rate not exceed 0.30% of Class A average daily
net assets and 1.00% of Class B average daily net assets to
reimburse JH Funds for its distribution/service costs. Up to a
maximum of 0.25% of such payments may be service fees as defined by
the amended Rules of Fair Practice of the National Association of
Securities Dealers. Under the amended Rules of Fair Practice,
curtailment of a portion of the Fund's 12b-1 payments could occur
under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned
subsidiary of The Berkeley Financial Group. Prior to October 1,
1995, the Fund paid transfer agent fees as a class specific expense
based on the number of shareholder accounts and certain out-of-
pocket expenses. For the one month ended September 30, 1995 the
transfer agent expense, calculated as a class specific expense, was
$10,272 for Class A and $5,657 for Class B, respectively. Effective
October 1, 1995, transfer agent expense is a fund expense.
On March 5, 1996, the Board of Trustees approved retroactively to
January 1, 1996, an agreement with the Adviser to perform necessary
tax and financial management services for the Funds. The
compensation for 1996 is estimated to be at an annual rate of
0.01875% of the average net assets of each Fund.
Mr. Edward J. Boudreau, Jr., Mr. Richard S. Scipione and Ms. Anne C.
Hodsdon are directors and/or officers of the Adviser and/or its
affiliates, as well as Trustees of the Fund. The Adviser owns 10,000
Class A shares of beneficial interest of the Fund. Trustee Edward J.
Boudreau, Jr. is Managing Director of the Sub-Adviser. The
compensation of unaffiliated Trustees is borne by the Fund.
Effective with the fees paid for 1995, the unaffiliated Trustees may
elect to defer for tax purposes their receipt of this compensation
under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund makes investments into other John Hancock funds, as
applicable, to cover its liability for the deferred compensation.
Investments to cover the Fund's deferred compensation liability will
be recorded on the Fund's books as an other asset. The deferred
compensation liability and the related other asset are always equal
and are marked to market on a periodic basis to reflect any income
earned by the investment as well as any unrealized gains or losses.
At August 31, 1996, the Fund's investments to cover the deferred
compensation liability had unrealized appreciation of $211.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-
term securities, during the period ended August 31, 1996 aggregated
$65,102,104 and $44,539,614, respectively. There were no purchases
or sales of obligations of the U.S. government and its agencies
during the period ended August 31, 1996.
The cost of investments owned at August 31, 1996 (including the
joint repurchase agreement) for federal income tax purposes was
$69,992,072. Gross unrealized appreciation and depreciation of
investments aggregated $6,775,878 and $3,170,582, respectively,
resulting in net unrealized appreciation of $3,605,296.
NOTE D--
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the period ended August 31, 1996, the Fund has reclassified
amounts to reflect an increase in accumulated net realized gain
investments of $410,161, a decrease in accumulated net investment
loss of $98,332 and a decrease in capital paid-in of $508,493. This
represents the amount necessary to report these balances on a tax
basis, excluding certain temporary differences, as of August 31,
1996. Additional adjustments may be needed in subsequent reporting
periods. These reclassifications, which have no impact on the net
asset value of the Fund, are primarily attributable to the treatment
of net operating losses in the computation of distributable income
and capital gains under federal tax rules versus generally accepted
accounting principles. The calculation of net investment income per
share excludes these adjustments.
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of John Hancock Pacific Basin Equities Fund
and the Trustees of John Hancock World Fund
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and the related
statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the
financial position of John Hancock Pacific Basin Equities Fund (the
"Fund") (a portfolio of John Hancock World Fund) at August 31, 1996,
and the results of its operations, the changes in its net assets and
the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe
that our audits, which included confirmation of securities at August
31, 1996 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations
from brokers were not received, provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 9, 1996
TAX INFORMATION NOTICE (UNAUDITED)
For Federal income tax purposes, the following information is
furnished with respect to the distributions of the Fund during the
fiscal year ended August 31, 1996.
The Fund has not paid any distributions of ordinary income dividends
or net long-term capital gains during the fiscal year ended August
31, 1996. It is anticipated that there will be a distribution from
sales of securities to shareholders of record on December 23, 1996
and payable December 30, 1996. Shareholders will receive a 1996 U.S.
Treasury Department Form 1099-DIV in January 1997 representing their
proportionate share.
None of the distributions qualify for the dividends received
deduction available to corporations.
SHAREHOLDER MEETING (UNAUDITED)
On July 18, 1996, a special meeting of John Hancock Pacific Basin
Equities Fund (the "Fund") was held.
The Shareholders approved a new Subadvisory Agreement between the
Fund and Indosuez Asia Advisers Limited. The shareholder votes were
2,309,848 FOR, 78,813 AGAINST and 248,160 ABSTAINING.
The Shareholders elected the following Trustees with the votes as
indicated:
NAME OF TRUSTEE FOR WITHHELD
- --------------- ----------- ----------------
Dennis S. Aronowitz 3,080,593 83,522
Edward J. Boudreau, Jr. 3,079,554 84,561
Richard P. Chapman, Jr. 3,083,006 81,109
William J. Cosgrove 3,082,112 82,003
Douglas M. Costle 3,080,167 83,948
Leland O. Erdahl 3,080,384 83,731
Richard A. Farrell 3,082,364 81,751
Gail D. Fosler 3,083,320 80,795
William F. Glavin 3,081,355 82,760
Anne C. Hodsdon 3,084,015 80,100
Dr. John A. Moore 3,082,112 82,003
Patti McGill Peterson 3,080,832 83,283
John W. Pratt 3,080,603 83,513
Richard S. Scipione 3,081,101 83,014
Edward J. Spellman 3,080,926 83,189
NOTES
John Hancock Funds - Pacific Basin Equities Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
NOTES
John Hancock Funds - Pacific Basin Equities Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
NOTES
John Hancock Funds - Pacific Basin Equities Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
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This report is for the information of shareholders of the John
Hancock Pacific Basin Equities Fund. It may be used as sales
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A recycled logo in lower left hand corner with caption "Printed on
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10/96
John Hancock Funds
Global
Marketplace
Fund
Annual Report
August 31, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Douglas M. Costle*
Leland O. Erdahl*
Richard A. Farrell*
Gail D. Fosler*
William F. Glavin*
Anne C. Hodsdon
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt*
Richard S. Scipione
Edward J. Spellman*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
Since late 1994, prospectus simplification has been a major topic in
the mutual fund industry. At that time, Securities and Exchange
Commission Chairman Arthur Levitt called on fund companies to
make their prospectuses more user-friendly. He noted that prospectuses
are often overloaded with technical detail and are hard for most
investors to understand. Many industry observers agreed, and rightly so.
So it is my pleasure to let you know that after being under development
for a year, John Hancock Funds has introduced new simplified and
consolidated prospectuses. The prospectuses feature shorter, clearer
language with a streamlined design, and they incorporate several funds
with similar investment objectives into one document. They cover our
income, growth, growth and income, tax-free income, international/global
and money market funds. We are gratified at the favorable reviews that
our new prospectuses have received from shareholders, financial
advisers, industry analysts and the press. We believe they are a bold
but sensible step forward. And while they are easier to read, they still
comply with all federal and state guidelines.
We have taken the initiative to create a prospectus that dramatically
departs from the norm. Among its most innovative features is a two-page
spread highlighting each fund's goals and investment strategy, the types
of securities it buys, its portfolio management and risk factors, all in
plainer language. Fund expenses and financial highlights are now found
here, too, as is a new bar chart that shows year-to-year volatility for
each fund. Other features include a better presentation of fund
services, a new glossary of investment risks and a discussion about how
funds are organized, including a diagram showing the connection of the
various players that provide services to your Hancock fund(s).
We believe we have made a significant advancement in the drive toward
better mutual fund prospectuses. We hope you will agree because in the
end, we did it for you, our shareholders.
Sincerely,
/S/EDWARD J. BOUDREAU, JR.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By Bernice S. Behar, CFA, Portfolio Manager
John Hancock
Global Marketplace Fund
Retailers with innovative or unique characteristics
boost performance amid weak environment
Not all retail stocks are created equally. At no time was this
inequality more evident than during the past 12 months. For most of the
year, consumer confidence continued to improve and so did retail sales
numbers. During a brief period in the first quarter of 1996, even those
traditional retailers became the darlings of the stock market. But
eventually, investors came to the conclusion that many apparel makers,
department stores and chains would continue to buckle under the almost
unbearable weight of their own plenitude. Granted, the year was witness
to some consolidation of chains and closing of stores. Even so, the U.S.
continues to harbor a glut of retail space. Generally speaking, only
those "traditional" retailers who catered to an affluent consumer, sold
computer-related products or occupied a unique niche were able to emerge
as winners in an otherwise lackluster year.
"For most of
the year,
consumer
confidence
continued to
improve..."
A 2" x 3 1/2" photo of Fund management team at bottom right. Caption
reads: "Bernice Behar and Fund management team members William Maffie
(l) and Robert Hallisey (r)".
The last year has also seen the continued emergence of a new breed of
retailers who use various but non-traditional methods to distribute
products and services. Many of these companies benefited from the rise
in consumer spending as they swiped market share away from their more
traditional competitors. And despite the woes plaguing the traditional
retailers, some of the companies who provide security and transaction
processing services to the industry performed quite well. The Fund's
focus on this new breed -- companies that have expanded the definition
of "retail" with unique products or services and those using innovative
distribution, sales and marketing methods -- caused it to significantly
outperform its peers and benchmarks in the last 12 months.
Chart with heading "Top Five Common Stock Holdings" at top of left hand
column. The chart lists five holdings: 1) CompUSA 2.3% 2) Family Golf
Centers 2.1% 3) Mossimo 2.1% 4) Cost Plus 2.0% 5) PetSmart 1.9%. A
footnote below reads "As a percentage of net assets on August 31, 1996."
"Some of our
non-apparel
retail chains
also topped
our best
performing
list."
A look at performance
For the year ended August 31, 1996, the Fund's Class A shares posted a
total return of 31.94% at net asset value. The Fund's Class B shares,
which began on January 22, 1996, had a total return of 26.28%, at net
asset value, through August 31, 1996. By comparison, the average global
fund returned 11.93% for the same-year period, according to Lipper
Analytical Services1, and the Standard & Poor's Retail Index returned
18.98%. Please see pages six and seven for longer-term performance
information.
Table entitled "Scorecard" at bottom of left hand column. The header for
the left column is "Investment"; the header for the right column is
"Recent performance ... and what's behind the numbers." The first
listing is CompUSA followed by an up arrow and the phrase "Healthy PC
demand boosts sales." The second listing is Gucci Group followed by an
up arrow and the phrase "Improved marketing of high-profile products."
The third listing is Authentic Fitness followed by a down arrow and the
phrase "Uncertainty over future with Warnaco." Footnote below reads:
"See "Schedule of Investments." Investment holdings are subject to
change."
Niche players dominate
During the 1990s, many affluent Americans have enjoyed the riches
generated by one of the greatest extended bull markets in stock market
history. And high-end retailers catering to their affluent clients have
been one of the prime beneficiaries of that growing wealth. That trend
helps explain why Gucci Group -- which designs, produces and distributes
leather goods, scarves, ties and other apparel -- was one of the Fund's
best performers. But that's not the entire story. The Italian-based
retailer has made impressive gains in marketing and distributing what is
arguably one of the best-known brands throughout the world. In addition
to opening a number of its own new stores this year, the company has
struck agreements with Neiman Marcus and Saks Fifth Avenue to distribute
its goods. Speaking of Saks, its holding company Saks Group was also a
leading performer for the Fund, boosted by its strong sales of high-end
apparel.
Our apparel stocks turned in mixed performance. Tommy Hilfiger was on
the winning side as its brand of casual clothing became an increasingly
popular choice among young and older men alike. The company recently
launched its women's wear division to strong reviews. Similarly, Chaifa,
a Hong Kong-based retailer that sells Playboy and Garfield apparel,
benefited from the growing middle class consumer group in that region.
Authentic Fitness, on the other hand, proved to be a disappointment.
This manufacturer of swimwear and activewear got into a protracted legal
battle with one of its largest shareholders. To avoid the pain of
further legal haggling between the two, we eliminated the stock from our
holdings.
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For Class A shares and the average
global fund, returns are for the year ended August 31, 1996. For Class B
shares, return is from January 22, 1996 through August 31, 1996." The
chart is scaled in increments of 5% from bottom to top, with 35% at the
top and 0% at the bottom. Within the chart there are three solid bars.
The first represents the 31.94% total return for the John Hancock Global
Marketplace Fund: Class A. The second represents the 26.28% total return
for the John Hancock Global Marketplace Fund: Class B. The third
represents the 11.93% total return for the Average global fund. A
footnote below reads: "The total returns for John Hancock Global
Marketplace Fund are at net asset value with all distributions
reinvested. The average global fund is tracked by Lipper Analytical
Services. (1) See following two pages for historical performance
information."
Some of our non-apparel retail chains also topped our best performing
list. PetSmart continued to take a pit bull-sized bite out of the pet
supply market. And the Fund took profits on its Orchard Supply Hardware
stock when that company was taken over by Sears.
Technology-related stocks compute big gains
Our holdings in domestic and foreign computer retailers also enjoyed
strong gains throughout the year. CompUSA, the U.S.'s leading computer
retailer, continued to benefit from strong demand for personal
computers. Overseas, Dixons -- which is a U.K.-based likeness of CompUSA
- -- continued to benefit from rapidly growing demand for personal
computers in that region.
Like most of corporate America, retailers are increasingly looking for
ways to do business more efficiently. That trend has benefited HNC
Software, which develops and produces software that helps detect credit-
and debit-card fraud, manage retail inventory and control merchant risk.
And Ultrack, which has developed a relatively inexpensive way for
retailers to do electronic surveillance in each aisle of a store, has
performed well during the past year.
"...we'll focus
on retailers
that offer
unique
products or
services..."
What's in store
With the amount of retail space so overly abundant given our needs, many
traditional retailers will continue to struggle well into the next
decade, so we'll focus on retailers that offer unique products or
services or dominate specialized areas, and those that can continue to
take market share in their niches.
- -----------------------------------------------------------------------
This commentary reflects the views of the portfolio manager through the
end of the Fund's period discussed in this report. Of course, the
manager's views are subject to change as market and other conditions
warrant.
International investing involves special risks such as political and
currency risks and differences in accounting standards and financial
reporting. Sector investing is subject to greater risks than the market
as a whole.
1 Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adjusted
performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Global Marketplace
Fund. Total return is a performance measure that equals the sum of all
income and capital gains dividends, assuming reinvestment of these
distributions, and the change in the price of the Fund's shares,
expressed as a percentage of the Fund's net asset value per share.
Performance figures include the maximum applicable sales charge of 5%
for Class A shares. The effect of the maximum contingent sales charge
for Class B shares (5% and declining to 0% over six years) is included
in Class B performance. Performance is affected by a 12b-1 plan, which
commenced on September 29, 1994 and January 22, 1996 for Class A and B
shares, respectively. Remember that all figures represent past
performance and are no guarantee of how the Fund will perform in the
future. Also, keep in mind that the total return and share price of the
Fund's investments will fluctuate. As a result, your Fund's shares may
be worth more or less than their original cost, depending on when you
sell them.
CUMULATIVE TOTAL RETURNS
For the period ended June 30, 1996
ONE LIFE OF
YEAR FUND
------- ---------
John Hancock Global Marketplace Fund: Class A 44.87% 75.53%(1)
John Hancock Global Marketplace Fund: Class B N/A 25.71%(2)
AVERAGE ANNUAL TOTAL RETURNS
For the period ended June 30, 1996
ONE LIFE OF
YEAR FUND
------- ---------
John Hancock Global Marketplace Fund: Class A 44.87% 37.92%(1,3)
John Hancock Global Marketplace Fund: Class B(3) N/A 25.71%(2)
Notes to Performance
(1) Class A shares started on September 29, 1994.
(2) Class B shares started on January 22, 1996.
(3) Effective September 29, 1994, the Adviser has voluntarily undertaken
to limit the Fund's expenses, including the management fee (but not
including the transfer agent fee and the 12b-1 fee) to 0.90% of the
Fund's daily net asset value. Without the limitations of expenses,
the average annual total return for the one-year period and since
inception would have been 43.16% and 33.12% for Class A shares,
respectively. For Class B shares, the total return for the period
ended would have been 24.98%.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Global Marketplace Fund would be worth on August 31, 1996,
assuming you invested on the day each class of shares started and have
reinvested all distributions. For comparison, we've shown the same
$10,000 investment in both the Standard & Poor's 500 Stock Index and the
Morgan Stanley World Index. The Standard & Poor's 500 Stock Index is an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance. The Morgan Stanley
World Index is an unmanaged index that measures the performance of a
diverse range of global stock markets.
Global Marketplace Fund
Class A shares
Line chart with the heading Global Marketplace Fund: Class A,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are four lines.
The first line represents the value of the hypothetical $10,000
investment made in the Global Marketplace Fund on September 29, 1994,
before sales charge, and is equal to $17,892 as of August 31, 1996. The
second line represents the Global Marketplace Fund after sales charge
and is equal to $16,993 as of August 31, 1996. The third line represents
the value of the Standard & Poor's 500 Stock Index and is equal to
$14,776 as of August 31, 1996. The fourth line represents the value of
the Morgan Stanley World Index and is equal to $12,632.
Global Marketplace Fund
Class B shares
Line chart with the heading Global Marketplace Fund: Class B,
representing the growth of a hypothetical $10,000 investment over the
life of the fund. Within the chart are four lines.
The first line represents the value of the hypothetical $10,000
investment made in the Global Marketplace Fund on January 22, 1996,
before sales charge, and is equal to $12,628 as of August 31, 1996. The
second line represents the Global Marketplace Fund after sales charge
and is equal to $12,128 as of August 31, 1996. The third line represents
the value of the Standard & Poor's 500 Stock Index and is equal to
$10,745 as of August 31, 1996. The fourth line represents the value of
the Morgan Stanley World Index and is equal to $10,477.
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on August 31, 1996. You'll
also find the net asset value and the maximum offering price per share as of
that date.
Statement of Assets and Liabilities
August 31, 1996
- ------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $37,162,180) $38,369,420
-----------
Cash 483,179
Foreign currency, at value (cost - $2,240) 2,235
Receivable for shares sold 623,145
Receivable from John Hancock Advisers, Inc. -
Note B 123,900
Receivable for investments sold 802,927
Dividends receivable 15,040
Foreign tax receivable 2,073
Deferred organization expenses - Note A 4,468
-----------
Total Assets 40,426,387
- ------------------------------------------------------------------------
Liabilities:
Payable for investments purchased 1,003,978
Payable for shares repurchased 19,291
Accounts payable and accrued expenses 191,173
-----------
Total Liabilities 1,214,442
- ------------------------------------------------------------------------
Net Assets:
Capital paid-in $38,811,759
Accumulated net realized loss on investments and
foreign currency transactions (807,128)
Net unrealized appreciation of investments and
foreign currency transactions 1,207,314
-----------
Net Assets $39,211,945
========================================================================
Net Asset Value Per Share:
(Based on net asset values and shares of
beneficial interest outstanding - unlimited
number of shares authorized with no par
value, respectively)
Class A - $16,966,067 / 1,119,479 $15.16
========================================================================
Class B - $22,245,878 / 1,474,058 $15.09
========================================================================
Maximum Offering Price Per Share *
Class A - ($15.16 x 105.26%) $15.96
========================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned and
expenses incurred in operating the Fund. It also shows net gains (losses) for
the period stated.
Statement of Operations
Year ended August 31, 1996
- ------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest $44,926
Dividends (net of foreign withholding taxes of $4,847) 41,556
-----------
86,482
-----------
Expenses:
Investment management fee - Note B 79,077
Registration and filing fees 66,454
Distribution/service fee - Note B
Class A 14,626
Class B 50,092
Custodian fee 59,574
Auditing fee 30,030
Transfer agent fee - Note B 24,624
Printing 21,071
Legal fees 3,458
Financial services fee - Note B 1,805
Organization expense - Note A 1,457
Miscellaneous 502
Trustees' fees 311
-----------
Total Expenses 353,081
- ------------------------------------------------------------------------
Less Expenses Reimbursable
by John Hancock Advisers,
Inc. - Note B (174,778)
-----------
Net Expenses 178,303
Net Investment Loss (91,821)
- ------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized loss on investments sold (794,705)
Net realized loss on foreign currency transactions (7,413)
Change in net unrealized appreciation/depreciation
of investments 1,009,133
Change in net unrealized appreciation/depreciation
of foreign currency transactions 78
-----------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions 207,093
- ------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $115,272
========================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTMEBER 29, 1994
(COMMENCEMENT
OF OPERATIONS) TO YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1996**
------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) In Net Assets:
From Operations:
Net investment income (loss) $321 ($91,821)
Net realized loss on investments sold and foreign
currency transactions (12,743) (802,118)
Change in net unrealized appreciation/depreciation of
investments and foreign currency transactions 198,103 1,009,211
--------- -----------
Net Increase in Net Assets Resulting from Operations 185,681 115,272
--------- -----------
Distributions to Shareholders:
Dividends from net investment income
Class A - ($0.0133 per share) (803) --
--------- -----------
Dividends in excess of net investment income
Class A - ($0.0140 per share) (844) --
--------- -----------
Total Distributions (1,647) --
--------- -----------
From Fund Share Transactions - Net* 27,566 38,385,073
--------- -----------
Net Assets:
Initial Investment by John Hancock Advisers, Inc. -
Note A / Beginning of period 500,000 711,600
--------- -----------
End of period $711,600 $39,211,945
========= ===========
* Analysis of Fund Share Transactions: FOR THE PERIOD
SEPTEMBER 29, 1994
(COMMENCEMENT
OF OPERATIONS) TO YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1996
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
Class A
Shares sold 4,064 $36,313 1,349,557 $20,373,589
Shares issued to shareholders in reinvestment
of distributions 5 44 -- --
------ -------- --------- -----------
4,069 $36,357 1,349,557 $20,373,589
Less shares repurchased (947) (8,791) (292,024) (4,386,051)
------ -------- --------- -----------
Net increase 3,122 27,566 1,057,533 $15,987,538
========= ===========
Initial Investment by John Hancock
Advisers, Inc. - Note A 58,824 500,000
------ --------
Net increase and shares outstanding end of
period 61,946 $527,566
====== ========
Class B **
Shares sold 1,569,827 $23,824,449
Less shares repurchased (95,769) (1,426,914)
--------- -----------
Net increase 1,474,058 $22,397,535
========= ===========
** Class B commenced operations on January 22, 1996.
The Statement of Changes in Net Assets shows how the value of the Fund's
net assets has changed since the commencement of operations. The difference
reflects earnings less expenses, any investment and foreign currency gains
and losses, distributions paid to shareholders, and any increase or decrease
in money shareholders invested in the Fund. The footnote illustrates the number
of Fund shares sold, reinvested and redeemed during the last two periods, along
with the corresponding dollar value.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each period indicated, investment
returns, key ratios and supplemental data are listed as follows:
- -------------------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 29, 1994
(COMMENCEMENT OF
OPERATIONS) YEAR ENDED
TO AUGUST 31, 1995 AUGUST 31, 1996
------------------- -----------------
<S> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $8.50(1) $11.49
------- -------
Net Investment Income (Loss) 0.01(2) (0.08)(2)
Net Realized and Unrealized Gain on Investments and
Foreign Currency Transactions 3.01 3.75
------- -------
Total from Investment Operations 3.02 3.67
------- -------
Less Distributions:
Dividends from Net Investment Income (0.01) --
Distributions in Excess of Net Investment Income (0.02) --
------- -------
Total Distributions (0.03) --
------- -------
Net Asset Value, End of Period $11.49 $15.16
======= =======
Total Investment Return at Net Asset Value (5) 35.61%(4) 31.94%
Total Adjusted Investment Return at Net Asset Value (5)(6) 28.69%(4) 29.69%
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $712 $16,966
Ratio of Expenses to Average Net Assets 1.50%* 1.45%
Ratio of Adjusted Expenses to Average Net Assets (3) 9.00%* 3.70%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.06%* (0.57%)
Ratio of Adjusted Net Investment Loss to
Average Net Assets (3) (7.44%)* (2.82%)
Portfolio Turnover Rate 63% 52%
Average Broker Commission Rate (7) N/A $0.01
Fee Reduction Per Share (2) $0.65 $0.31
The Financial Highlights summarizes the impact of the following factors on a single share for
each period indicated: net investment income, gains (losses), distributions of the Fund and total
investment return of the Fund. It shows how the Fund's net asset value for a share has changed since
the end of the previous period. Additionally, important relationships between some items presented in
the financial statements are expressed in ratio form.
<CAPTION>
FOR THE PERIOD JANUARY 22, 1996
TO AUGUST 31, 1996
------------------
<S> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $11.95(1)
-------
Net Investment Loss (0.11)(2)
Net Realized and Unrealized Gain on Investments and
Foreign Currency Transactions 3.26
-------
Total from Investment Operations 3.14
-------
Net Asset Value, End of Period $15.09
=======
Total Investment Return at Net Asset Value (5) 26.28%(4)
Total Adjusted Investment Return at Net Asset Value (5)(6) 25.50%(4)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $22,246
Ratio of Expenses to Average Net Assets 2.15%*
Ratio of Adjusted Expenses to Average Net Assets (3) 3.49%*
Ratio of Net Investment Loss to Average Net Assets (1.28%)*
Ratio of Adjusted Net Investment Loss to
Average Net Assets (3) (2.62%)*
Portfolio Turnover Rate 52%
Average Broker Commission Rate (7) $0.0140
Fee Reduction Per Share (2) $0.11
* On an annualized basis.
(1) Initial price to commence operations.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Unreimbursed, without fee reduction.
(4) Not annualized.
(5) Total investment return assumes dividend reinvestments and does not reflect
the effect of sales charges.
(6) An estimated total return calculation that does not take into consideration
reductions by the Adviser during the periods shown.
(7) Per portfolio share traded. Required for fiscal years that began September 1, 1995, or later.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
August 31, 1996
- ---------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the Global
Marketplace Fund on August 31, 1996. It is comprised of common stocks which are further
broken down by industry groups.
- ---------------------------------------------------------------------------------------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- -------------------------- -------------------- ----------------
<S> <C> <C>
COMMON STOCKS
Advertising (6.39%)
Ackerley Communications, Inc. 5,000 $139,375
Catalina Marketing Corp. * 12,000 570,000
Lamar Advertising Co. (Class A) * 27,000 756,000
Outdoor Systems, Inc. * 10,500 443,625
Universal Outdoor Holdings, Inc. * 20,000 595,000
-----------
2,504,000
-----------
Business Services (1.35%)
APAC Teleservices, Inc. * 12,000 531,000
-----------
Computer (3.56%)
HNC Software, Inc. * 18,000 535,500
JDA Software Group, Inc. * 27,200 550,800
Sterling Commerce, Inc. * 10,000 310,000
-----------
1,396,300
-----------
Cosmetics & Personal Care (1.47%)
Avon Products, Inc. 12,000 574,500
-----------
Electronics (1.50%)
Ultrak, Inc. * 25,000 587,500
-----------
Finance (3.79%)
First USA Paymentech, Inc. * 9,100 343,525
Medallion Financial Corp. * 26,000 334,750
PMT Services, Inc. * 30,000 536,250
Security First Network Bank * 10,000 272,500
-----------
1,487,025
-----------
Leisure (11.14%)
Bandai Co., Ltd. (Japan) 16,000 534,511
Family Golf Centers, Inc. * 28,600 836,550
Grand Optical Photoservice SA (France) 4,000 489,106
HFS, Inc. * 9,000 538,875
Oakley, Inc. * 15,000 615,000
Premier Parks Inc. * 9,900 242,550
Regal Cinemas, Inc. * 20,000 730,000
Silicon Gaming, Inc. * 39,000 380,250
-----------
4,366,842
-----------
Medical (0.91%)
CNS, Inc. * 20,000 355,000
-----------
Office Equipment & Automation (0.44%)
Daisytek International Corp. * 4,200 171,150
-----------
Paper & Paper Products (0.42%)
American Pad & Paper Co. * 10,000 $166,250
-----------
Real Estate Operations (1.46%)
Central Parking Corp. 19,800 571,725
-----------
Retail - Apparel / Shoe Group (9.11%)
AnnTaylor Stores Corp. * 30,000 435,000
First Sign International Holdings
Ltd. (Hong Kong) 1,200,000 325,918
Gucci Group, NV (Netherlands) 9,000 598,500
Melville Corp. 13,000 549,250
Men's Wearhouse, Inc. (The) * 34,000 714,000
North Face, Inc. (The) * 27,000 641,250
Vans, Inc. * 21,000 309,750
-----------
3,573,668
-----------
Retail - Consumer Electronics (1.87%)
Dixons Group PLC (United Kingdom) 87,000 733,604
-----------
Retail - Department Stores (6.42%)
Federated Department Stores, Inc. * 6,000 207,750
Joyce Boutique Holdings Ltd.
(Hong Kong) 794,000 210,515
Kohl's Corp. * 20,000 760,000
Neiman Marcus Group, Inc. (The) * 5,400 159,975
Oasis Stores PLC (United Kingdom) 90,000 541,068
Saks Holdings, Inc. * 18,700 638,138
-----------
2,517,446
-----------
Retail - Discount & Variety (0.78%)
Garden Ridge Corp. * 20,000 305,000
-----------
Retail - Drug Stores (1.69%)
Eckerd Corp. * 27,000 661,500
-----------
Retail - Home Furnishings (2.05%)
Cost Plus, Inc. * 30,000 802,500
-----------
Retail - Mail Order / Direct (2.62%)
CUC International, Inc. * 7,750 $266,406
Global DirectMail Corp. * 9,900 447,975
Seattle Filmworks, Inc. * 17,200 313,900
-----------
1,028,281
-----------
Retail - Misc./Diversified (7.70%)
Burton Group PLC (United Kingdom) 268,000 638,195
Next, PLC (United Kingdom) 60,000 543,410
OfficeMax, Inc. * 10,575 148,050
PetSmart, Inc.* 28,000 763,000
Ryohin Keikaku Co., Ltd. (Japan) 6,000 516,289
Urban Outfitters, Inc.* 18,000 409,500
-----------
3,018,444
-----------
Retail - Restaurants (6.11%)
Landry's Seafood Restaurants, Inc. * 18,000 497,250
Papa John's International, Inc. * 13,550 613,138
PizzaExpress PLC (United Kingdom) 50,000 351,343
Rainforest Cafe, Inc.* 16,300 454,363
Wetherspoon (J.D.) PLC
(United Kingdom) 32,500 482,121
-----------
2,398,215
-----------
Retail - Supermarkets (8.67%)
Albertson's, Inc. 15,000 635,625
Blue Square-Israel Ltd., American
Depositary Receipt, ADR (Israel) * 37,000 536,500
Carrefour SA (France) 990 500,446
Disco S.A. ADR (Argentina) * 20,000 385,000
Santa Isabel S.A. ADR (Chile) 15,000 380,625
Vons Cos., Inc. (The) * 14,000 619,500
Weis Markets, Inc. 10,000 341,250
-----------
3,398,946
-----------
Retail / Wholesale - Auto Parts (0.76%)
AutoZone, Inc.* 11,000 299,750
-----------
Retail / Wholesale - Building Products (5.04%)
Castorama Dubois Investissements SA
(France) 2,456 477,465
Central Garden & Pet Co.* 23,000 566,375
Home Centers (DIY) Ltd. (Israel) * 60,000 337,500
Home Depot, Inc. 11,000 584,375
Praktiker Bau - Und Heimwerkemaerkte
AG (Germany) (R) * 500 12,165
-----------
1,977,880
-----------
Retail / Wholesale - Computers (2.25%)
CompUSA, Inc.* 22,000 882,750
-----------
Retail / Wholesale - Jewelry (1.63%)
Marks Bros. Jewelers, Inc.* 27,000 $641,250
-----------
Schools / Education (1.15%)
Apollo Group, Inc. (Class A)* 17,650 450,075
-----------
Textiles (6.48%)
Chaifa Holdings Ltd. (Hong Kong) 1,000,000 323,332
Cutter & Buck, Inc.* 15,000 174,375
Donna Karan International, Inc.* 5,000 122,500
Guess ?, Inc.* 20,000 337,500
Mossimo, Inc. * 18,200 825,825
Tommy Hilfiger Corp.* 15,100 756,887
-----------
2,540,419
-----------
Tobacco (1.09%)
Consolidated Cigar Holdings Inc.* 13,600 428,400
-----------
TOTAL COMMON STOCKS
(Cost $37,162,180) (97.85%) $38,369,420
------ -----------
TOTAL INVESTMENTS (97.85%) $38,369,420
====== ===========
* Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
(R) This security is exempt from registration under Rule 144A of the Securities Act of 1933.
Such security may be resold, normally to qualified institutional buyers, in transactions
exempt from registration. Rule 144A securities amounted to $12,165 as of August 31, 1996.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Country Diversification
August 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------------
The concentration of investments by industry group for individual securities held by
the Fund is shown in the schedule of investments. In addition, the concentration of
investments can be aggregated by the countries in which the Fund invests. The table
below shows the percentage of the Fund's investments at August 31, 1996 assigned to
the various countries.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
OF FUND'S
COUNTRY DIVERSIFICATION NET ASSETS
- ---------------------------- ----------------
<S> <C>
Argentina 0.98%
Chile 0.97
France 3.74
Germany, Federal Republic of 0.03
Hong Kong 2.19
Israel 2.23
Japan 2.68
Netherlands 1.53
United Kingdom 8.39
United States 75.11
---------------
TOTAL INVESTMENTS 97.85%
===============
See notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Marketplace Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock World Fund (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of 1940.
The Trust consists of three series portfolios: John Hancock Global
Marketplace Fund (the "Fund"), John Hancock Pacific Basin Equities Fund
and John Hancock Global Rx Fund. Prior to December 11, 1995, the Fund
was known as John Hancock Global Retail Fund. On May 21 1996, the Board
of Directors voted to change the fiscal period end from August 31 to
October 31. This change is effective October 31, 1996. The investment
objective of the Fund is long-term capital appreciation through investment
primarily in foreign and U.S stocks of companies that merchandise goods
and services to consumers or to consumer companies.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A and Class B shares. The shares of
each class represent an interest in the same portfolio of investments of
the Fund and have equal rights to voting, redemptions, dividends, and
liquidation, except that certain expenses subject to the approval of the
Trustees, may be applied differently to each class of shares in
accordance with current regulations of the Securities and Exchange
Commission and the Internal Revenue Service. Shareholders of a class
which bears distribution/service expenses under terms of a distribution
plan have exclusive voting rights to that distribution plan. On January
22, 1996, Class B shares of beneficial interest were sold to commence
class activity. Significant accounting policies of the Fund are as
follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued
on the basis of market quotations, valuations provided by independent
pricing sources or, at fair value as determined in good faith in
accordance with procedures approved by the Trustees. Securities traded
on NASDAQ are valued at last available bid price. Short-term debt
investments maturing within 60 days or less are valued at amortized
cost, which approximates market value. All portfolio transactions
initially expressed in terms of foreign currencies have been translated
into U.S. dollars as described in "Foreign Currency Translation" below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with John
Hancock Advisers, Inc. (the "Adviser"), a wholly-owned subsidiary of The
Berkeley Financial Group, may participate in a joint repurchase
agreement transaction. Aggregate cash balances are invested in one or
more large repurchase agreements, whose underlying securities are
obligations of the U.S. government and/or its agencies. The Fund's
custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for
ensuring that the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the
date of purchase, sale or maturity. Net realized gains and losses on
sales of investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all its taxable income,
including any net realized gain on investment, to its shareholders.
Therefore, no federal income tax provision is required. For federal
income tax purposes, net currency exchange gains and losses from sales
of foreign debt securities may be treated as ordinary income even though
such items are gains and losses for accounting purposes. For federal
income tax purposes, the Fund has $849 of a capital loss carryforward
available, to the extent provided by regulations, to offset future net
realized capital gains. If such carryforwards are used by the Fund, no
capital gains distributions will be made. The carryforward expires
August 31, 2004. Additionally, net capital losses of $806,279
attributable to security transactions incurred after October 31, 1995
are treated as arising on the first day (September 1, 1996) of the
Fund's next taxable year.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date, or, in the case of some
foreign securities, on the date thereafter when the Fund is made aware
of the dividend. Interest income on investment securities is recorded on
the accrual basis. Foreign income may be subject to foreign withholding
taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations, which may
differ from generally accepted accounting principles. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class as
explained previously.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual Fund. Expenses which are not identifiable
to a specific Fund are allocated in such a manner as deemed equitable,
taking into consideration, among other things, the nature and type of
expense and the relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized
gains (losses) are calculated at the Fund level and allocated daily to
each class of shares based on the appropriate net assets of the
respective classes. Distribution/service fees are calculated daily at
the class level based on the appropriate net assets of each class and
the specific expense rate(s) applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund. Actual results
could differ from these estimates.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00 p.m.,
London time, on the date of any determination of the net asset value of
the Fund. Transactions affecting statement of operations accounts and
net realized gain/(loss) on investments are translated at the rates
prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities
other than investments in securities at fiscal year end, resulting from
changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a set price. The aggregate
principal amounts of the contracts are marked-to-market daily at the
applicable foreign currency exchange rates. Any resulting unrealized
gains and losses are included in the determination of the Fund's daily
net assets. The Fund records realized gains and losses at the time the
forward foreign currency contract is closed out or offset by a matching
contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The Fund may also purchase and sell forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which it intends to take delivery of the foreign
currency. Such contracts normally involve no market risk other than the
offset by the currency amount of the underlying transaction.
There were no open forward foreign currency contracts at
August 31, 1996.
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts for speculative purposes and/or to hedge against the effects
of fluctuations in interest rates, currency exchange rates and other
market conditions. At the time the Fund enters into a financial futures
contract, it is required to deposit with its custodian a specified
amount of cash or U.S. government securities, known as "initial margin",
equal to a certain percentage of the value of the financial futures
contract being traded. Each day, the futures contract is valued at the
official settlement price of the board of trade or U.S. commodities
exchange. Subsequent payments, known as "variation margin", to and from
the broker are made on a daily basis as the market price of the
financial futures contract fluctuates. Daily variation margin
adjustments, arising from this "mark to market", are recorded by the
Fund as unrealized gains or losses.
When the contracts are closed, the Fund recognizes a gain or loss. Risks
of entering into futures contracts include the possibility that there
may be an illiquid market and/or that a change in the value of the
contracts may not correlate with changes in the value of the underlying
securities.
For Federal income tax purposes, the amount, character and timing of the
Fund's gains and/or losses can be affected as a result of futures
contracts.
At August 31, 1996, there were no open positions in financial futures
contracts.
OPTIONS Listed options are valued at the last quoted sales price on the
exchange on which they are primarily traded. Over-the-counter options
are valued at the mean between the last bid and asked prices. Upon the
writing of a call or put option, an amount equal to the premium received
by the Fund is included in the Statement of Assets and Liabilities as an
asset and corresponding liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the
written option.
The Fund may use option contracts to manage its exposure to the stock
market. Writing puts and buying calls tend to increase the Fund's
exposure to the underlying instrument and buying puts and writing calls
tend to decrease the Fund's exposure to the underlying instrument, or
hedge other Fund investments.
The maximum exposure to loss for any purchased options will be limited
to the premium initially paid for the option. In all other cases, the
face (or "notional") amount of each contract at value reflects the
maximum exposure of the Fund in these contracts, but the actual exposure
will be limited to the change in value of the contract over the period
the contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with a
counterparty on a timely basis ("liquidity risk"). Exchange-traded
options have minimal credit risk as the exchanges act as counterparties
to each transaction, and only present liquidity risk in highly unusual
market conditions. To minimize credit risk and liquidity risks in over-
the-counter option contracts, the Fund will continuously monitor the
creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit
risk may involve amounts in excess of those reflected in the Fund's
period-end Statement of Assets and Liabilities.
There were no written option transactions for the period ended August
31, 1996.
ORGANIZATION EXPENSES Expenses incurred in connection with the
organization of the Fund have been capitalized and are being charged to
the Fund's operations ratably over a five year period that commenced
with the investment operations of the Fund.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, on an annual basis, to the sum of (a) 0.80% of the
first $250,000,000 of the Fund's average daily net asset value and (b)
0.70% of the Fund's average daily net asset value in excess of
$250,000,000.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive
state limit where the Fund is registered to sell shares of beneficial
interest, the fee payable to the Adviser will be reduced to the extent
of such excess, and the Adviser will make additional arrangements
necessary to eliminate any remaining excess expenses. The current limits
are 2.5% of the first $30,000,000 of the Fund's average daily net asset
value, 2.0% of the next $70,000,000, and 1.5% of the remaining average
daily net asset value.
The Adviser has agreed to limit Fund expenses, including the management
fee (but not including the transfer agent fee and the 12b-1 fee), to
0.90% of the Fund's daily net assets. Accordingly, the reduction in the
Adviser's fee amounted to $174,778 for the period ended August 31, 1996.
The Adviser reserves the right to terminate this limit in the future.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly-owned subsidiary of the Adviser. For the period ended
August 31, 1996, net sales charges received with regard to Class A
shares amounted to $414,309. Out of this amount, $63,388 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $263,737 was paid as sales commissions to sales
personnel of unrelated broker-dealers and $87,184 was paid as sales
commissions to personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony Incorporated ("Tucker Anthony") and
Sutro & Co., Inc. ("Sutro"), all of which are broker dealers. The
Adviser's indirect parent, John Hancock Mutual Life Insurance Company,
is the indirect sole shareholder of Distributors and John Hancock
Freedom Securities Corporation and its subsidiaries, which include
Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining
rates beginning at 5.0% of the lesser of the current market value at the
time of redemption or the original purchase cost of the shares being
redeemed. Proceeds from the CDSC are paid to JH Funds and are used in
whole or in part to defray its expenses related to providing
distribution related services to the Fund in connection with the sale of
Class B shares. For the period ended August 31, 1996, contingent
deferred sales charges paid to broker services amounted to $275.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution
Plans with respect to Class A and Class B pursuant to Rule 12b-1 under
the Investment Company Act of 1940. Accordingly, the Fund will make
payments to JH Funds at an annual rate not to exceed 0.30% of Class A
average daily net assets and 1.00% of Class B average daily net assets
to reimburse JH Funds for its distribution and service costs. Up to a
maximum of 0.25% of these payments may be service fees as defined by the
amended Rules of Fair Practice of the National Association of Securities
Dealers. Under the amended Rules of Fair Practice, curtailment of a
portion of the Fund's 12b-1 payments could occur under certain
circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services, Corp. ("Investor Services"), a wholly-owned subsidiary of The
Berkeley Financial Group. The Fund pays a fee to Investors Services
based on the number of shareholder accounts and certain-out-pocket
expenses.
On March 5, 1996, the Board of Trustees approved retroactively to
January 1, 1996, an agreement with the Adviser to perform necessary tax
and financial management services for the Funds. The compensation for
1996 is estimated to be at an annual rate of 0.01875% of the average net
assets of each Fund.
Mr. Edward J. Boudreau, Jr., Mr. Richard S. Scipione, and Ms. Anne C.
Hodsdon are directors and/or officers of the Adviser, and/or its
affiliates, as well as Trustees of the Fund. The Adviser owns 58,824
shares of beneficial interest of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. Effective with the fees paid
for 1995, the unaffiliated Trustees may elect to defer for tax purposes
their receipt of this compensation under the John Hancock Group of Funds
Deferred Compensation Plan. The Fund makes investments into other John
Hancock funds, as applicable, to cover its liability with regard to the
deferred compensation. Investments to cover the Fund's deferred
compensation liability are recorded on the Fund's books as an other
asset. The deferred compensation liability and the related other asset
are marked to market on a periodic basis to reflect any income earned by
the investment as well as any unrealized gain or losses. At August 31,
1996, the Fund's investments to cover the deferred compensation
liability had unrealized appreciation of $2.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended August 31, 1996, aggregated
$42,641,365, and $5,188,524, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended August 31, 1996.
The cost of investments owned at August 31, 1996 for federal income tax
purposes was $37,162,180. Gross unrealized appreciation and depreciation
of investments aggregated $2,718,786 and $1,511,546, respectively,
resulting in net unrealized appreciation of $1,207,240.
NOTE D --
RECLASSIFICATION OF ACCOUNTS
During the period ended August 31, 1996, the Fund has reclassified
amounts to reflect a decrease in accumulated net realized loss on
investments of $7,413, a decrease in accumulated net investment loss of
$91,821 and a decrease in capital paid-in of $99,234. This represents
the amount necessary to report these balances on a tax basis, excluding
certain temporary differences, as of August 31, 1996. Additional
adjustments may be needed in subsequent reporting periods. These
reclassifications, which have no impact on the net asset value of the
Fund, are primarily attributable to certain differences in the
computation of distributable income and capital gains under federal tax
rules versus generally accepted accounting principles. The calculation
of net investment income per share excludes these adjustments.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Global Marketplace Fund
(formerly John Hancock Global Retail Fund)
and the Trustees of John Hancock World Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of John
Hancock Global Marketplace Fund (formerly John Hancock Global Retail
Fund) (the "Fund") (a portfolio of John Hancock World Fund) at August
31, 1996, and the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1996 by correspondence with the
custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 9, 1996
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished
with respect to the distributions of the Fund for its fiscal year ended
August 31, 1996.
The Fund has not paid any distributions of dividends or net realized
gains during the fiscal year.
SHAREHOLDER MEETING (UNAUDITED)
On June 28, 1996, a special meeting of John Hancock Global Marketplace
Fund (the "Fund") was held.
The Shareholders elected the following Trustees with the votes as
indicated:
NAME OF TRUSTEE FOR WITHHELD
- ---------------- ------- --------
Dennis S. Aronowitz 368,860 3,584
Edward J. Boudreau, Jr. 368,857 3,588
Richard P. Chapman, Jr. 368,860 3,584
William J. Cosgrove 368,860 3,584
Douglas M. Costle 368,860 3,584
Leland O. Erdahl 368,857 3,588
Richard A. Farrell 368,860 3,584
Gail D. Fosler 368,860 3,584
William F. Glavin 368,860 3,584
Anne C. Hodsdon 368,857 3,588
Dr. John A. Moore 368,860 3,584
Patti McGill Peterson 368,860 3,584
John W. Pratt 368,860 3,584
Richard S. Scipione 368,860 3,584
Edward J. Spellman 368,860 3,584
NOTES
John Hancock Funds - Global Marketplace Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
NOTES
John Hancock Funds - Global Marketplace Fund
[THIS PAGE INTENTIONALLY LEFT BLANK]
A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
Bulk Rate
U.S. Postage
PAID
Randolph, MA
Permit No. 75
This report is for the information of shareholders of the John Hancock
Global Marketplace Fund. It may be used as sales literature when
preceded or accompanied by the current prospectus, which details
charges, investment objectives and operating policies.
A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper." 3000A 8/96
10/96
John Hancock Funds
Global Rx
Fund
ANNUAL REPORT
August 31, 1996
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Richard P. Chapman, Jr.*
William J. Cosgrove*
Douglas M. Costle*
Leland O. Erdahl*
Richard A. Farrell*
Gail D. Fosler*
William F. Glavin*
Anne C. Hodsdon
Dr. John A. Moore*
Patti McGill Peterson*
John W. Pratt*
Richard S. Scipione
Edward J. Spellman*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Anne C. Hodsdon
President
James B. Little
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Second Vice President and Compliance Officer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
Since late 1994, prospectus simplification has been a major topic in
the mutual fund industry. At that time, Securities and Exchange
Commission Chairman Arthur Levitt called on fund companies to
make their prospectuses more user-friendly. He noted that
prospectuses are often overloaded with technical detail and are hard
for most investors to understand. Many industry observers agreed,
and rightly so.
So it is my pleasure to let you know that after being under
development for a year, John Hancock Funds has introduced new
simplified and consolidated prospectuses. The prospectuses feature
shorter, clearer language with a streamlined design, and they
incorporate several funds with similar investment objectives into
one document. They cover our income, growth, growth and income, tax-
free income, international/global and money market funds. We are
gratified at the favorable reviews that our new prospectuses have
received from shareholders, financial advisers, industry analysts
and the press. We believe they are a bold but sensible step forward.
And while they are easier to read, they still comply with all
federal and state guidelines.
We have taken the initiative to create a prospectus that
dramatically departs from the norm. Among its most innovative
features is a two-page spread highlighting each fund's goals and
investment strategy, the types of securities it buys, its portfolio
management and risk factors, all in plainer language. Fund expenses
and financial highlights are now found here, too, as is a new bar
chart that shows year-to-year volatility for each fund. Other
features include a better presentation of fund services, a new
glossary of investment risks and a discussion about how funds are
organized, including a diagram showing the connection of the various
players that provide services to your Hancock fund(s).
We believe we have made a significant advancement in the drive
toward better mutual fund prospectuses. We hope you will agree
because in the end, we did it for you, our shareholders.
Sincerely,
/S/Edward J. Boudreau Jr.
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BY LINDA MILLER, CFA, PORTFOLIO MANAGER
John Hancock
Global Rx Fund
Rising interest rates, foreign government cutbacks create
mixed environment for health-care stocks
Health-care trends have been mixed during the past year. In the
U.S., interest rates were on the rise. Overseas, there were cutbacks
in government funded health-care expenditures especially in
important western European markets like Italy, France and Germany,
as well as in Japan. That was augmented by continued cost concerns
and heightened competition. These were all negatives for health-care
stocks. In addition, many U.S.-based health-care companies were also
impacted adversely by unfavorable currency trends.
But there were also positive developments in the past 12 months.
Fears faded of a government mandated draconian change in the U.S
health-care system, and the federal Food and Drug Administration
kept on its path of accelerating approvals of new and innovative
products. What's more, the basic characteristics of health-care
demand remained steadfast: an aging population and new technologies
offering solutions to unmet medical needs.
With this contradictory environment as background, the Fund's
performance for the 12-month period ended August 31, 1996 was strong
in absolute terms, although relative performance was slightly
disappointing. The Fund's Class A and Class B shares posted total
returns of 18.39% and 17.53%, respectively at net asset value. By
comparison, the average health-care/biotechnology fund returned
23.20% for the same period, according to Lipper Analytical
Services.1 Please see pages six and seven for longer-term
performance information. The Fund's relative underperformance was
likely associated with its being underweighted in certain health-
care sectors during the year as we worked to re-balance the
portfolio across a broader array of sectors.
A 2 1/2 " x 3 1/2" photo of Fund management team at bottom right.
Caption reads: "Linda Miller (seated) and Fund management team members
Anurag Pandit (l) and Ben Hock (r)".
"Health-care
trends have
been mixed
during the
past year."
Chart with heading "Top Five Common Stock Holdings" at top of left hand
column. The chart lists five holdings: 1) HEALTHSOUTH 3.3% 2) Cardinal
Health 2.9% 3) Health Management Assoc. 2.6% 4)Omnicare 2.3% 5) CRA
Managed Care 2.2%. A footnote below reads "As a percentage of net assets
on August 31, 1996."
"...the Fund
pursued and
broadened
three major
investment
themes..."
Three themes: Cost efficiency,
new products and consolidation
During the year the Fund pursued and broadened three major
investment themes. One is long-standing for the Fund and involves
the cost efficient delivery of health care, primarily focused on
health-care service companies in the U.S. Another involves new
product opportunities found both at smaller companies in their
developmental stages as well as large multinational drug companies.
The third is consolidation, an influential trend across many
industry sectors. For example, the Fund benefited from the proposed
merger of Sandoz and Ciba-Geigy and continues to look for other such
opportunities.
Table entitled "Scorecard" at bottom of left hand column. The header for
the left column is "Investment"; the header for the right column is
"Recent performance ... and what's behind the numbers". The first
listing is Cardinal Health followed by an up arrow and the phrase
"Benefits from acquisitions." The second listing is HEALTHSOUTH followed
by a flat arrow and the phrase "Weakness in health-care services." The
third listing is Dura Pharmaceuticals followed by an up arrow and the
phrase "Stock-split boosts performance." Footnote below reads: "See
"Schedule of Investments." Investment holdings are subject to change."
In the health-care delivery area, we expanded the Fund's exposure to
drug distributors, such as AmeriSource, Cardinal Health, Henry
Schein and Omnicare. They are all companies which have benefited not
only from their ability to offer more efficient health care
services, but also from the large number of recent new products. The
more products that are available to be put through their
distribution system, the more potential these companies have to
increase earnings. We also think there's a great deal of opportunity
for consolidation in the distribution end of the health-care
industry.
We also continued to increase the Fund's exposure to drug stocks.
Eli Lilly &Co. performed well based on anticipation of FDA approval
of Zyprexia, its drug to control the symptoms of schizophrenia.
Merck launched Crixivan, one of the new HIV protease inhibitors, but
demand for Fosamax, its drug for osteoporosis, was somewhat below
market expectations. Another holding, American Home Products, did
well because of cost cutting stemming from its acquisition of
American Cyanamid and because of its much-anticipated new weight-
loss drug, Redux.
On the medical device side, we broadened the Fund's exposure to
diversify within this sector. We added Medtronic which has a strong
new product line across the company's cardiovascular franchise and
Stryker, a leader in orthopedics, among others.
HMOs weak
As a group, health maintenance organizations (HMOs), performed
rather poorly during the past six months and the Fund has reduced
its exposure accordingly. The rapid growth of HMOs during the past
couple of years resulted in several negative trends in that
business. First, many HMOs have grown so fast that they've been less
able to control costs, which hurt stock prices. Also, competition
heated up in the sector, as companies vied for large corporations'
health plan business. Finally, the emergence of Medicare-risk HMOs,
which was supposed to fuel further industry growth, did not supply
the enrollment or profitability envisioned by some. Interestingly,
these trends had a positive influence on some other sectors. Drug
and medical device companies, for instance, were two sectors which
benefited from the increase in HMO spending. As we pared down the
Fund's exposure to HMOs, we boosted its holdings in these two
groups.
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the year ended August 31, 1996."
The chart is scaled in increments of 5% from bottom to top, with 25% at
the top and 0% at the bottom. Within the chart there are three solid
bars. The first represents the 18.39% total return for the John Hancock
Global Rx Fund: Class A. The second represents the 17.53% total return
for the John Hancock Global Rx Fund: Class B. The third represents the
23.20% total return for the Average health-care/biotechnology fund. A
footnote below reads: "Total returns for John Hancock Global Rx Fund are
at net asset value with all distributions reinvested. The average
health-care/biotechnology fund is tracked by Lipper Analytical Services.
(1) See following two pages for historical performance information."
New opportunities
We have found opportunities in the move towards outsourcing
services. For example, drug companies have begun to utilize contract
research organizations (CROs) to conduct certain product development
activities they used to do in-house. As a result, the Fund has taken
positions in stocks such as Parexel and Quintiles Transnational, two
market leaders that have also been strong performers for the Fund.
We are also focused on companies providing products and services for
the treatment of kidney disease. With the graying of America, that
patient population is growing at a rapid pace, and there are now
better treatments available for some of the diseases that are
associated with kidney failure. As a result, we have invested in
some service providers, like Renal Treatment Centers, Total Renal
Care and Vivra and in a biotechnology company, Amgen, which has a
unique drug, Epogen, for patients undergoing kidney dialysis.
Looking ahead
There are several reasons why, in our view, the outlook for health-
care remains positive for the long term. The still-bloated U.S.
health-care system needs further cost cutting, the aging population
will continue to demand additional health-care services and new
products and technologies are continuing to come to market at a
faster pace. Worldwide, as younger economies experience rapid
growth, they too will seek greater health-care coverage. In the near
term, the performance outlook will be to some extent shaped by the
political environment and the direction of interest rates and the
economy. If the U.S. economy continues to be strong and interest
rates keep rising, or if the rhetoric surrounding the presidential
election in November results in a perception of sharp health-care
cuts in the federal budget, the health-care sector could lag the
overall market in the short term. However, this would give us a
chance to buy stocks we favor for the long term at better prices.
"The still-
bloated U.S.
health-care
system needs
further cost
cutting."
- --------------------------------------------------------------------
This commentary reflects the views of the portfolio manager through
the end of the Fund's period discussed in this report. Of course,
the manager's views are subject to change as market and other
conditions warrant.
International investing involves special risks such as political and
currency risks and differences in accounting standards and financial
reporting. Sector investing is subject to greater risks than the
market as a whole.
1Figures from Lipper Analytical Services include reinvested
dividends and do not take into account sales charges. Actual load-
adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Global Rx Fund.
Total return is a performance measure that equals the sum of all
income and capital gains distributions, assuming reinvestment of
these distributions, and the change in the price of the Fund's
shares, expressed as a percentage of the Fund's net asset value per
share. Performance figures include the maximum applicable sales
charge of 5% for Class A shares. The effect of the maximum
contingent deferred sales charge for Class B shares (maximum 5% and
declining to 0% over six years) is included in Class B performance.
Remember that all figures represent past performance and are no
guarantee of how the Fund will perform in the future. Also, keep in
mind that the total return and share price of the Fund's investments
will fluctuate. As a result, your Fund's shares may be worth more or
less than their original cost, depending on when you sell them.
CUMULATIVE TOTAL RETURNS
For the period ended June 30, 1996
ONE LIFE OF
YEAR FUND
----------- -----------
John Hancock Global Rx Fund: Class A 35.88% 158.35%(1)
John Hancock Global Rx Fund: Class B 37.00% 51.56%(2)
AVERAGE ANNUAL TOTAL RETURNS
For the period ended June 30, 1996
ONE LIFE OF
YEAR FUND
----------- -----------
John Hancock Global Rx Fund: Class A 35.88% 22.12%(1)
John Hancock Global Rx Fund: Class B 37.00% 19.54%(2)
Notes to Performance
(1) Class A shares started on October 1, 1991.
(2) Class B shares started on March 7, 1994.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Global Rx Fund would be worth on August 31, 1996, assuming
you invested on the day each class of shares started and have
reinvested all distributions. For comparison, we've shown the same
$10,000 investment in the Standard & Poor's 500 Stock Index -- an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance.
Global Rx Fund
Class A shares
Line chart with the heading Global Rx Fund: Class A, representing the
growth of a hypothetical $10,000 investment over the life of the fund.
Within the chart are three lines.
The first line represents the value of the hypothetical $10,000
investment made in the Global Rx Fund on October 1, 1991, before sales
charge, and is equal to $25,584 as of August 31, 1996. The second line
represents the Global Rx Fund after sales charge and is equal to $24,296
as of August 31, 1996. The third line represents the value of the
Standard & Poor's 500 Stock Index and is equal to $19,217 as of August
31, 1996.
Global Rx Fund
Class B shares
Line chart with the heading Global Rx Fund: Class B, representing the
growth of a hypothetical $10,000 investment over the life of the fund.
Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500 Stock
Index and is equal to $14,884 as of August 31, 1996. The second line
represents the value of the hypothetical $10,000 investment made in the
Global Rx Fund on March 7, 1994, before contingent deferred sales
charge, and is equal to $14,513 as of August 31, 1996. The third line
represents the Global Rx Fund after contingent deferred sales charge and
is equal to $14,213 as of August 31, 1996.
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and shows
the value of what the Fund owns, is due and owes on August 31, 1996. You'll
also find the net asset value and the maximum offering price per share as of
that date.
Statement of Assets and Liabilities
August 31, 1996
- --------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $56,608,543) $69,170,036
Joint repurchase agreement (cost - $10,869,000) 10,869,000
-----------
80,039,036
Cash 171,941
Receivable for investments sold 1,283,596
Receivable for shares sold 185,792
Interest receivable 3,176
Dividends receivable 13,305
Foreign tax receivable 1,668
Other assets 1,272
Deferred organization expenses - Note A 675
-----------
Total Assets 81,700,461
- --------------------------------------------------------------------------------
Liabilities:
Payable for investments purchased 2,439,109
Payable for shares repurchased 18,993
Payable to John Hancock Advisers, Inc.
and affiliates - Note B 164,584
Accounts payable and accrued expenses 81,003
-----------
Total Liabilities 2,703,689
- --------------------------------------------------------------------------------
Net Assets:
Capital paid-in 62,843,966
Accumulated net investment loss (1,045)
Accumulated net realized gain on investments
and foreign currency transactions 3,587,808
Net unrealized appreciation of investments
and foreign currency transactions 12,566,043
-----------
Net Assets $78,996,772
- --------------------------------------------------------------------------------
Net Asset Value Per Share:
(Based on net asset values and shares of
beneficial interest outstanding - unlimited number
of shares authorized with no par value, respectively)
Class A - $42,405,391 / 1,667,615 $25.43
================================================================================
Class B - $36,591,381 / 1,466,949 $24.94
================================================================================
Maximum Offering Price Per Share *
Class A - ($25.43 x 105.26%) $26.77
================================================================================
*On single retail sales of less than $50,000. On sales of $50,000 or more and on
group sales the offering price is reduced.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income earned
and expenses incurred in operating the Fund. It also shows net gains (losses)
for the period stated.
Statement of Operations
Year ended August 31, 1996
- --------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest $512,036
Dividends (net of foreign withholding taxes of $5,733) 95,414
-----------
607,450
-----------
Expenses:
Investment management fee - Note B 457,352
Distribution/service fee - Note B
Class A 104,576
Class B 223,104
Transfer agent fee - Note B 167,783
Registration and filing fees 58,794
Custodian fee 49,156
Advisory board fee - Note B 32,500
Auditing fee 31,530
Printing 16,573
Financial services fee - Note B 8,407
Organization expense - Note A 8,228
Trustees' fees 3,401
Miscellaneous 1,987
Legal fees 1,447
-----------
Total Expenses 1,164,838
- --------------------------------------------------------------------------------
Net Investment Loss (557,388)
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 3,587,850
Net realized loss on foreign currency transactions (1,045)
Change in net unrealized appreciation/depreciation
of investments 2,087,678
Change in net unrealized appreciation/depreciation
of foreign currency transactions 4,405
-----------
Net Realized and Unrealized Gain
on Investments and Foreign
Currency Transactions 5,678,888
- --------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $5,121,500
================================================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
YEAR ENDED AUGUST 31,
-----------------------------
1995 1996
------------ ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($506,007) ($557,388)
Net realized gain on investments sold and
foreign currency transactions 1,224,533 3,586,805
Change in net unrealized appreciation/
depreciation of investments and foreign
currency transactions 5,931,154 2,092,083
----------- -----------
Net Increase in Net Assets Resulting
from Operations 6,649,680 5,121,500
----------- -----------
Distributions to Shareholders:
Distributions from net realized gain on
investments sold and foreign currency transactions
Class A - (none and $0.1437 per share,
respectively) -- (175,093)
Class B - (none and $0.1437 per share,
respectively) -- (80,096)
----------- -----------
Total Distributions to Shareholders -- (255,189)
----------- -----------
From Fund Share Transactions - Net* 4,364,193 43,402,980
----------- -----------
Net Assets:
Beginning of period 19,713,608 30,727,481
----------- -----------
End of period (including net accumlated investment loss
of none and $1,045, respectively) $30,727,481 $78,996,772
=========== ===========
* Analysis of Fund Share Transactions:
YEAR ENDED AUGUST 31,
---------------------------------------------------------------
1995 1996
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------ ------------ ------------
CLASS A
Shares sold 517,942 $9,800,086 2,278,174 $57,180,069
Shares issued to shareholders in reinvestment
of distributions -- -- 7,174 170,226
------- ---------- --------- -----------
517,942 9,800,086 2,285,348 57,350,295
Less shares repurchased (517,990) (9,686,022) (1,746,628) (43,511,318)
------- ---------- --------- -----------
Net increase (decrease) (48) $114,064 538,720 13,838,977
======= ========== ========= ===========
CLASS B
Shares sold 451,492 $8,376,819 1,739,644 43,690,955
Shares issued to shareholders in reinvestment
of distributions -- -- 3,211 75,464
------- ---------- --------- -----------
451,492 8,376,819 1,742,855 43,766,419
Less shares repurchased (219,936) (4,126,690) (572,508) (14,202,416)
------- ---------- --------- -----------
Net increase 231,556 $4,250,129 1,170,347 $29,564,003
======= ========== ========= ===========
The Statement of Changes in Net Assets shows how the value of the Fund's net assets has changed since the end of the previous
period. The difference reflects earnings less expenses, any investment and foreign currency gains and losses, distributions
paid to shareholders, and any increase or decrease in money shareholders invested in the Fund. The footnote illustrates the
number of the Fund shares sold, reinvested and redeemed during the last two periods, along with the corresponding dollar
values.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout each period indicated,
investment returns, key ratios and supplemental data are as follows:
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
---------------------------------------------------------------
1992(1) 1993 1994 1995 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $10.00 $13.34 $13.38 $16.51 $21.61
------- ------- ------- ------- -------
Net Investment Loss (0.03) (0.23) (0.32) (0.36)(2) (0.19)(2)
Net Realized and Unrealized Gain on Investments and
Foreign Currency Transactions 3.37 0.27 3.45 5.46 4.15
------- ------- ------- ------- -------
Total from Investment Operations 3.34 0.04 3.13 5.10 3.96
------- ------- ------- ------- -------
Less Distributions:
Distributions from Net Realized Gain on Investments Sold and
Foreign Currency Transactions -- -- -- -- (0.14)
------- ------- ------- ------- -------
Net Asset Value, End of Period $13.34 $13.38 $16.51 $21.61 $25.43
======= ======= ======= ======= =======
Total Investment Return at Net Asset Value (3) 33.40%(4) 0.30% 23.39% 30.89% 18.39%
Total Adjusted Investment Return at Net Asset Value (3)(5) 32.11%(4) 0.04% -- -- --
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $14,702 $15,647 $18,643 $24,394 $42,405
Ratio of Expenses to Average Net Assets 1.98%(6) 2.50% 2.55% 2.56% 1.80%
Ratio of Adjusted Expenses to Average Net Assets (7) 3.39%(6) 2.76% -- -- --
Ratio of Net Investment Loss to Average Net Assets (0.51%)(6) (1.67%) (2.01%) (1.99%) (0.75%)
Ratio of Adjusted Net Investment Loss to Average Net Assets (7) (1.92%)(6) (1.93%) -- -- --
Portfolio Turnover Rate 48% 93% 52% 38% 68%
Average Broker Commission Rate (8) N/A N/A N/A N/A $0.0181
Fee reduction per share $0.085 $0.035 -- -- --
The Financial Highlights summarizes the impact of the following factors on a single share for each period
indicated: net investment loss, gains (losses), distributions and total investment return of the Fund. It
shows how the Fund's net asset value for a share has changed since the end of the previous period.
Additionally, important relationships between some items presented in the financial statements are
expressed in ratio form.
<CAPTION>
YEAR ENDED AUGUST 31,
------------------------------------------
1994(1) 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period $17.29 $16.46 $21.35
------- ------- -------
Net Investment Loss (0.17)(2) (0.55)(2) (0.34)(2)
Net Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions (0.66) 5.44 4.07
------- ------- -------
Total from Investment Operations (0.83) 4.89 3.73
------- ------- -------
Less Distributions:
Distributions from Net Realized Gain on Investments
Sold and Foreign Currency Transactions -- -- (0.14)
------- ------- -------
Net Asset Value, End of Period $16.46 $21.35 $24.94
======= ======= =======
Total Investment Return at Net Asset Value (3) (4.80%)(4) 29.71% 17.53%
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $1,071 $6,333 $36,591
Ratio of Expenses to Average Net Assets 3.34%(6) 3.45% 2.42%
Ratio of Net Investment Loss to Average Net Assets (2.65%)(6) (2.91%) (1.33%)
Portfolio Turnover Rate 52% 38% 68%
Average Broker Commission Rate (8) N/A N/A $0.0181
(1) Class A and Class B shares commenced operations on October 1, 1991 and March 7, 1994, respectively.
(2) Based on the average of the shares outstanding at the end of each month.
(3) Assumes dividend reinvestment and does not reflect the effect of sales charges.
(4) Not annualized.
(5) An estimated total return calculation that does not take into consideration fee reductions by the adviser during
the periods shown.
(6) Annualized.
(7) Unreimbursed, without fee reduction.
(8) Per portfolio share traded. Required for fiscal years that began September 1, 1995 or later.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
August 31, 1996
- -------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the Global Rx
Fund on August 31, 1996. It's divided into two main categories: common stocks and
short-term investments. Common stocks are further broken down by industry group. Short-term
investments, which represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- ---------------------------------- ------------ ------------
<S> <C> <C>
COMMON STOCKS
Drugs - Biotechnology (5.38%)
Affymetrix, Inc.* 20,000 $275,000
Amgen, Inc.* 22,000 1,281,500
Genzyme Corp.* 30,000 716,250
Myriad Genetics, Inc.* 10,000 220,000
PathoGenesis Corp.* 20,000 320,000
Serologicals Corp.* 50,000 1,437,500
-----------
4,250,250
-----------
Drugs - Delivery (2.11%)
Alza Corp.* 15,000 410,625
Elan Corp., PLC American Depositary
Receipts (ADR) (Ireland)* 40,000 1,255,000
-----------
1,665,625
-----------
Drugs - Generic (2.20%)
Dura Pharmaceuticals, Inc.* 50,500 1,742,250
-----------
Drugs - Major (13.03%)
American Home Products Corp. 14,000 829,500
Johnson & Johnson 28,000 1,379,000
Lilly, (Eli) & Co. 20,000 1,145,000
Merck & Co., Inc. 15,000 984,375
Pfizer, Inc. 12,000 852,000
Pharmacia & Upjohn, Inc. 18,000 756,000
Roche Holding AG (Switzerland) 100 761,893
Sandoz AG (ADR) (Switzerland) 18,000 1,073,174
SmithKline Beecham PLC (ADR)
(United Kingdom) 16,000 932,000
Warner-Lambert Co. 12,000 714,000
Zeneca Group PLC (ADR)
(United Kingdom) 12,000 865,500
-----------
10,292,442
-----------
Drugs & Sundries - Wholesale (3.94%)
AmeriSource Health Corp. (Class A)* 22,000 838,750
Cardinal Health, Inc. 31,000 2,274,625
-----------
3,113,375
-----------
Healthcare - Alternate Site (9.66%)
Assisted Living Concepts Inc.* 54,000 1,053,000
HEALTHSOUTH Corp.* 80,000 2,590,000
National Surgery Centers, Inc.* 27,500 728,750
Renal Treatment Centers, Inc.* 37,500 1,223,437
Sterling House Corp.* 10,000 160,000
Sunrise Assisted Living, Inc.* 5,000 128,750
Total Renal Care Holdings, Inc.* 30,000 1,233,750
Vivra, Inc.* 17,000 512,125
-----------
7,629,812
-----------
Healthcare - HMO (1.22%)
Compdent Corp.* 17,000 578,000
United Dental Care, Inc.* 10,000 382,500
-----------
960,500
-----------
Healthcare - Management (13.96%)
CRA Managed Care, Inc.* 40,000 1,760,000
IMPATH, Inc.* 18,500 198,875
NCS HealthCare, Inc. (Class A)* 30,000 1,005,000
OccuSystems, Inc.* 10,000 272,500
Omnicare, Inc. 75,000 1,837,500
Parexel International Corp.* 35,000 1,680,000
PhyCor, Inc.* 45,000 1,462,500
Physician Reliance Network, Inc.* 45,000 630,000
Quintiles Transnational Corp.* 13,000 975,000
RTW, Inc.* 45,000 1,203,750
-----------
11,025,125
-----------
Healthcare - Software/Services (10.12%)
HBO & Co. 30,000 1,627,500
HCIA, Inc.* 30,000 1,687,500
Health Management Systems, Inc.* 30,000 825,000
HPR Inc.* 88,000 1,496,000
MDL Information Systems, Inc.* 55,000 1,526,250
Medaphis Corp.* 11,000 138,875
Medic Computer Systems, Inc.* 20,000 697,500
-----------
7,998,625
-----------
Healthcare - Supplies (1.80%)
Physician Sales & Service, Inc.* 15,000 258,750
Schein (Henry), Inc.* 35,000 1,163,750
-----------
1,422,500
-----------
Hospital Management (4.20%)
Columbia / HCA Healthcare Corp. 17,500 986,563
EmCare Holdings Inc.* 12,000 285,000
Health Management Associates, Inc.
(Class A) * 90,000 2,047,500
-----------
3,319,063
-----------
Medical Devices and Products (16.66%)
Boston Scientific Corp.* 26,250 1,204,219
Cohr, Inc.* 12,000 294,000
Esaote S.p.A.(ADR) (Italy)* (R) 20,000 745,000
ESC Medical Systems Ltd. (Israel)* 35,000 945,000
Guidant Corp. 20,000 1,015,000
IDEXX Laboratories, Inc.* 41,500 1,608,125
Medtronic, Inc. 25,000 1,300,000
Molecular Devices Corp.* 40,000 360,000
NeoPath, Inc.* 20,000 475,000
OrthoLogic Corp.* 48,000 450,000
Physio-Control International Corp.* 37,500 684,375
Respironics, Inc.* 25,000 568,750
Sofamor Danek Group, Inc.* 15,000 431,250
Stryker Corp. 40,000 975,000
Trex Medical Corp.* 20,000 460,000
US Surgical Corp. 15,000 547,500
Waters Corp.* 35,000 1,098,125
-----------
13,161,344
-----------
Nursing Homes (3.28%)
Genesis Health Ventures, Inc.* 22,000 561,000
Health Care and Retirement Corp.* 50,000 1,237,500
Manor Care, Inc. 23,000 790,625
-----------
2,589,125
-----------
TOTAL COMMON STOCKS
(Cost $56,608,543) (87.56%) 69,170,036
------- -----------
<CAPTION>
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (OOO'S OMITTED) VALUE
- ------------------------------------- ----------- -------------- -----------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (13.76%)
Investment in a joint
repurchase agreement
transaction with SBC
Capital Markets Inc. -
Dated 8-30-96,
due 9-03-96 (secured by
U.S. Treasury Bond, 8.125%
due 8-15-21; and U.S.
Treasury Note, 7.50%,
due 12-31-96) - Note A 5.260% $10,869 $10,869,000
-----------
TOTAL SHORT-TERM INVESTMENTS (13.76%) 10,869,000
------- -----------
TOTAL INVESTMENTS (101.32%) $80,039,036
======= ===========
* Non-income producing security.
(R) Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be
resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A
securities amounted to $745,000 as of August 31, 1996.
The percentage shown for each investment category is the total value of that category as a percentage of the
net assets of the Fund.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Portfolio Concentration (Unaudited)
- -------------------------------------------------------------------------------------------
The Global Rx Fund invests primarily in equity securities of issuers in the health
care industry in the United States and abroad. The concentration of investments by
industry category for individual securities held by the Fund is shown in the schedule
of investments. In addition, concentration of investments can be aggregated by various
countries. The table below shows the percentage of the Fund's investment at August 31,
1996 assigned to the various country categories.
MARKET VALUE AS A
COUNTRY DIVERSIFICATION % OF NET ASSETS
- -------------------------------------------------------------------- ------------------
<S> <C>
Ireland 1.59%
Israel 1.20
Italy 0.94
Switzerland 2.32
United Kingdom 2.28
United States 92.99
-------
TOTAL INVESTMENTS 101.32%
=======
See notes to financial statments.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Global Rx Fund
NOTE A --
ACCOUNTING POLICIES
John Hancock World Fund (the "Trust") is an open-end management
investment company, registered under the Investment Company Act of
1940. The Trust consists of three series portfolios: John Hancock
Global Rx Fund (the "Fund"), John Hancock Pacific Basin Fund and
John Hancock Global Marketplace Fund. On May 21, 1996, the Board
of Directors voted to change the fiscal period end from August 31
to October 31. This change is effective October 31, 1996. The
investment objective of the Fund is to achieve long-term growth
of capital by investing primarily in stocks of foreign and U.S.
Health Care companies.
The Trustees have authorized the issuance of multiple classes of
shares of the Fund, designated as Class A and Class B shares. The
shares of each class represent an interest in the same portfolio of
investments of the Fund and have equal rights to voting,
redemptions, dividends, and liquidation, except that certain
expenses subject to the approval of the Trustees, may be applied
differently to each class of shares in accordance with current
regulations of the Securities and Exchange Commission and the
Internal Revenue Service. Shareholders of a class which bears
distribution/service expenses under terms of a distribution plan
have exclusive voting rights to that distribution plan. Significant
accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are
valued on the basis of market quotations, valuations provided by
independent pricing services or, at fair value as determined in good
faith in accordance with procedures approved by the Trustees.
Securities traded on NASDAQ are valued at last available price.
Short-term debt investments maturing within 60 days are valued at
amortized cost which approximates market value. All portfolio
transactions initially expressed in terms of foreign currencies have
been translated into U.S. dollars as described in "Foreign Currency
Translation" below.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by
the Securities and Exchange Commission, the Fund, along with other
registered investment companies having a management contract with
John Hancock Advisers, Inc. (the "Adviser"), a wholly-owned
subsidiary of The Berkeley Financial Group, may participate in a
joint repurchase agreement transaction. Aggregate cash balances are
invested in one or more large repurchase agreements, whose
underlying securities are obligations of the U.S. government and/or
its agencies. The Fund's custodian bank receives delivery of the
underlying securities for the joint account on the Fund's behalf.
The Adviser is responsible for ensuring that the agreement is fully
collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of
the date of purchase, sale or maturity. Net realized gains and
losses on sales of investments are determined on the identified cost
basis. Capital gains realized on some foreign securities are subject
to foreign taxes and are accrued, as applicable.
FEDERAL INCOME TAXES The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all its taxable
income, including any net realized gain on investments, to its
shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, net currency exchange
gains and losses from sales of foreign debt securities must be
treated as ordinary income even though such items are gains and
losses for accounting purposes. For federal income tax purposes, the
Fund has net capital losses of $1,045 attributable to security
transactions incurred after October 31, 1995, which are treated as
arising on the first day (September 1, 1996) of the Fund's next
taxable year.
DIVIDENDS, INTEREST AND DISTRIBUTIONS Dividend income on investment
securities is recorded on the ex-dividend date, or, in the case of
some foreign securities, on the date thereafter when the Fund is
made aware of the dividend. Interest income on investment securities
is recorded on the accrual basis. Foreign income may be subject to
foreign withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net
investment income and realized gains on the ex-dividend date. Such
distributions are determined in conformity with income tax
regulations, which may differ from generally accepted accounting
principles. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and
will be in the same amount, except for the effect of expenses that
may be applied differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not
identifiable to a specific fund are allocated in such a manner as
deemed equitable, taking into consideration, among other things, the
nature and type of expense and the relative sizes of the funds.
CLASS ALLOCATIONS Income, common expenses and realized and
unrealized gains (losses) are calculated at the Fund level and
allocated daily to each class of shares based on the appropriate net
assets of the respective classes. Distribution/service fees are
calculated daily at the class level based on the appropriate net
assets of each class and the specific expense rate(s) applicable to
each class.
DISCOUNT ON SECURITIES The Fund accretes discount from par value on
securities purchased from either the date of issue or the date of
purchase over the life of the security, as required by the Internal
Revenue Code.
ORGANIZATION EXPENSES Expenses incurred in connection with the
organization of the Fund have been capitalized and are being charged
to the Fund's operations ratably over a five-year period that
commenced with the investment operations of the Fund.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles
incorporates estimates made by management in determining the
reported amounts of assets, liabilities, revenues, and expenses of
the Fund. Actual results could differ from these estimates.
FOREIGN CURRENCY TRANSLATION All assets or liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00
p.m., London time, on the date of any determination of the net asset
value of the Fund. Transactions affecting statement of operations
accounts and net realized gain/(loss) on investments are translated
at the rates prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from
sales of foreign currency, currency gains or losses realized between
the trade and settlement dates on securities transactions and the
difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date at a set price. The
aggregate principal amounts of the contracts are marked-to-market
daily at the applicable foreign currency exchange rates. Any
resulting unrealized gains and losses are included in the
determination of the Fund's daily net assets. The Fund records
realized gains and losses at the time the forward foreign currency
contract is closed out or offset by a matching contract. Risks may
arise upon entering these contracts from potential inability of
counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative
to the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets
and Liabilities. The Fund may also purchase and sell forward
contracts to facilitate the settlement of foreign currency
denominated portfolio transactions, under which it intends to take
delivery of the foreign currency. Such contracts normally involve no
market risk other than the offset by the currency amount of the
underlying transaction.
There were no open forward foreign currency contracts at
August 31,1996.
OPTIONS Listed options are valued at the last quoted sales price on
the exchange on which they are primarily traded. Over-the-counter
options are valued at the mean between the last bid and asked
prices. Upon the writing of a call or put option, an amount equal to
the premium received by the Fund is included in the Statement of
Assets and Liabilities as an asset and corresponding liability. The
amount of the liability is subsequently marked-to-market to reflect
the current market value of the written option.
The Fund may use options contracts to manage its exposure to the
stock market. Writing puts and buying calls tend to increase the
Fund's exposure to the underlying instrument and buying puts and
writing calls tend to decrease the Fund's exposure to the underlying
instrument, or hedge other Fund investments.
The maximum exposure to loss for any purchased options will be
limited to the premium initially paid for the option. In all other
cases, the face (or "notional") amount of each contract at value
reflects the maximum exposure of the Fund in these contracts, but
the actual exposure will be limited to the change in value of the
contract over the period the contract remains open.
Risks may also arise if counterparties do not perform under the
contracts' terms, or if the Fund is unable to offset a contract with
a counterparty on a timely basis ("liquidity risk"). Exchange-traded
options have minimal credit risk as the exchanges act as
counterparties to each transaction, and only present liquidity risk
in highly unusual market conditions. To minimize credit risk and
liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or
credit risk may involve amounts in excess of those reflected in the
Fund's period-end Statement of Assets and Liabilities.
There were no written option transactions for the period ended
August 31, 1996.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES
AND TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, on an annual basis, to the sum of (a) 0.80% of
the first $200,000,000 of the Fund's average daily net asset value
and (b) 0.70% of the Fund's average daily net asset value in excess
of $200,000,000.
In the event normal operating expenses of the Fund, exclusive of
certain expenses prescribed by state law, are in excess of the most
restrictive state limit where the Fund is registered to sell shares
of beneficial interest, the fee payable to the Adviser will be
reduced to the extent of such excess, and the Adviser will make
additional arrangements necessary to eliminate any remaining excess
expenses. The current limits are 2.5% of the first $30,000,000 of
the Fund's average daily net asset value, 2.0% of the next
$70,000,000, and 1.5% of the remaining average daily net asset
value.
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly-owned subsidiary of the Adviser. For the
period ended August 31, 1996, net sales charges received with regard
to Class A shares amounted to $471,313. Out of this amount, $71,002
was retained and used for printing prospectuses, advertising, sales
literature and other purposes, $298,216 was paid as sales
commissions to sales personnel of unrelated broker-dealers and
$102,095 was paid as sales commissions to personnel of John Hancock
Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated
("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"), all of which are
broker dealers. The Adviser's indirect parent, John Hancock Mutual
Life Insurance Company, is the indirect sole shareholder of
Distributors and John Hancock Freedom Securities Corporation and its
subsidiaries, which include Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will
be subject to a contingent deferred sales charge ("CDSC") at
declining rates beginning at 5.0% of the lesser of the current
market value at the time of redemption or the original purchase cost
of the shares being redeemed. Proceeds from CDSC are paid to JH
Funds and are used in whole or in part to defray its expenses
related to providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended
August 31, 1996, contingent deferred sales charges paid to JH Funds
amounted to $44,671.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted a
Distribution Plan with respect to Class A and Class B pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Accordingly,
the Fund will make payments to JH Funds at an annual rate not to
exceed 0.30% of Class A average daily net assets and 1.00% of Class
B average daily net assets to reimburse JH Funds for its
distribution and service costs. Up to a maximum of 0.25% of such
payments may be service fees as defined by the amended Rules of Fair
Practice of the National Association of Securities Dealers. Under
the amended Rules of Fair Practice, curtailment of a portion of the
Fund's 12b-1 payments could occur under certain circumstances.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly-owned
subsidiary of The Berkeley Financial Group. Prior to October 1,
1995, the Fund paid transfer agent fees as a class specific expense
based on the number of shareholder accounts and certain out-of-
pocket expenses. For the one month ended September 30, 1995, the
transfer agent expense, calculated as a class specific expense, was
$6,588 for Class A and $2,601 for Class B, respectively. Effective
October 1, 1995, transfer agent fees are a fund expense.
On March 5, 1996, the Board of Trustees approved retroactively to
January 1, 1996, an agreement with the Adviser to perform necessary
tax and financial management services for the Funds. The
compensation for 1996 is estimated to be at an annual rate of
0.01875% of the average net assets of each Fund.
The Fund has an independent advisory board composed of scientific
and medical experts who provide the investment officers of the Fund
with advice and consultation on health care developments, for which
the Fund pays the advisory board a fee.
Mr. Edward J. Boudreau, Jr., Mr. Richard S. Scipione and Ms. Anne C.
Hodsdon are directors and/or officers of the Adviser and/or its
affiliates, as well as Trustees of the Fund. The compensation of
unaffiliated Trustees is borne by the Fund. Effective with the fees
paid for 1995, the unaffiliated Trustees may elect to defer for tax
purposes their receipt of this compensation under the John Hancock
Group of Funds Deferred Compensation Plan. The Fund makes
investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover
the Fund's deferred compensation liability are recorded on the
Fund's books as an other asset. The deferred compensation liability
and the related other asset are always equal and are marked to
market on a periodic basis to reflect any income earned by the
investment as well as any unrealized gains or losses. At August 31,
1996, the Fund's investments to cover the deferred compensation
liability had unrealized appreciation of $86.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than
obligations of the U.S. government and its agencies and short-term
securities, during the period ended August 31, 1996, aggregated
$66,178,986 and $32,438,938, respectively. There were no purchases
or sales of obligations of the U.S. government and its agencies
during the period ended August 31, 1996.
The cost of investments owned at August 31, 1996 for federal income
tax purposes was $67,477,543. Gross unrealized appreciation and
depreciation of investments aggregated $14,617,278 and $2,055,785,
respectively, resulting in net unrealized appreciation of
$12,561,493.
NOTE D --
RECLASSIFICATION OF CAPITAL ACCOUNTS
During the year ended August 31, 1996 the Fund has reclassified
amounts to reflect an increase in accumulated net realized gain on
investments of $1,045, a decrease in accumulated net investment loss
of $556,343 and a decrease in capital paid-in of $557,388. This
represents the cumulative amount necessary to report these balances
on a tax basis, excluding certain temporary differences, as of
August 31, 1996. Additional adjustments may be needed in subsequent
reporting periods. These reclassifications, which have no impact on
the net asset value of the Fund, are primarily attributable to the
treatment of net operating losses in the computation of
distributable income and capital gains under federal income tax
rules versus generally accepted accounting principles. The
calculation of net investment income per share in the financial
highlights excludes these adjustments.
John Hancock Funds - Global Rx Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Global Rx Fund
and the Trustees of John Hancock World Fund
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and the related
statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the
financial position of John Hancock Global Rx Fund (the "Fund") (a
portfolio of John Hancock World Fund) at August 31, 1996, and the
results of its operations, the changes in its net assets and the
financial highlights for the periods indicated, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of securities at August 31, 1996 by
correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion
expressed above.
Price Waterhouse LLP
Boston, Massachusetts
October 9, 1996
TAX INFORMATION NOTICE (UNAUDITED)
For Federal income tax purposes, the following information is
furnished with respect to the distributions of the Fund during the
fiscal year ended August 31, 1996.
The Fund distributed to shareholders of record December 22, 1995 and
paid on December 28, 1995, a long-term capital gain dividend of
$255,189. Shareholders were mailed a 1995 U.S. Treasury Department
Form 1099-DIV in January 1996 representing their proportionate
share. It is anticipated that there will be a distribution from
sales of securities to shareholders of record on December 23, 1996
and payable December 30, 1996. Shareholders will receive a 1996 U.S.
Treasury Department Form 1099-DIV in January 1997 representing their
proportionate share.
None of the distributions qualify for the dividends received
deduction available to corporations.
SHAREHOLDER MEETING (UNAUDITED)
On June 26, 1996, a special meeting of John Hancock Global Rx Fund
(the "Fund") was held.
The Shareholders elected the following Trustees with the votes as indicated:
NAME OF TRUSTEE FOR WITHHELD
- ---------------- ----------- ------------
Dennis S. Aronowitz 1,658,818 45,016
Edward J. Boudreau, Jr. 1,662,536 41,298
Richard P. Chapman, Jr. 1,659,289 44,546
William J. Cosgrove 1,658,243 45,591
Douglas M. Costle 1,661,045 42,789
Leland O. Erdahl 1,661,255 42,579
Richard A. Farrell 1,660,930 42,904
Gail D. Fosler 1,657,768 46,066
William F. Glavin 1,659,673 44,161
Anne C. Hodsdon 1,658,058 45,776
Dr. John A. Moore 1,657,229 46,605
Patti McGill Peterson 1,659,035 44,799
John W. Pratt 1,660,208 43,626
Richard S. Scipione 1,661,448 42,386
Edward J. Spellman 1,657,490 46,344
A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the
page. A box sectioned in quadrants with a triangle in upper left, a
circle in upper right, a cube in lower left and a diamond in lower
right. A tag line below reads: "A Global Investment Management Firm."
101 Huntington Avenue, Boston, MA 02199-7603
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PAID
Randolph, MA
Permit No. 75
This report is for the information of shareholders of the John Hancock
Global Rx Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
A recycled logo in lower left hand corner with caption "Printed on
Recycled Paper." 2800A 8/96
10/96
