SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
European
Equity Fund
APRIL 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
-------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Stephen L. Brown
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
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02199-7603
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-INVESTMENT ADVISER
Indocam International Investment Services
90 Boulevard Pasteur
Paris, France 75015
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
----------------------------------------
================================CHAIRMAN'S MESSAGE==============================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements are nearly done, and the tests of all our
systems are on schedule for completion by the end of July. The rest of 1999 will
be spent testing with our business partners and continuing to participate in
industry testing. We have also established additional contingency plans beyond
our regular ones to prepare for any challenges that the Year 2000 might present.
In the end, John Hancock will spend approximately $90-$95 million to ensure we
make a successful transition to the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000's.
Sincerely,
/s/Edward J. Boudreau, Jr.
- -------------------------------------------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Didier Le Conte for the Portfolio Management Team
John Hancock
European Equity Fund
Mixed six-month period for European equity markets
--------------------------------------------------
European equity markets recovered strongly during the last quarter of 1998, but
struggled at the beginning of 1999 due to sluggish growth and a decline in the
value of Europe's new common currency, the euro. Nevertheless, evidence of a
turnaround in the economies of the Far East - a fertile market for many European
products - helped re-kindle optimism for European markets in April. In addition,
a dramatic 0.50% slash in short-term interest rates by the European Central Bank
in early April raised hopes that we would see stronger performance by European
economies going forward.
The rally at the end of 1998 was followed by the introduction of the
euro January 1, 1999. While the new currency was welcomed with a great deal of
fanfare and enthusiasm, its value steadily declined through the end of the
period. That drop has provided a mixed blessing. On the one hand, a declining
euro has hurt the performance of European equities for dollar-based investors so
far in 1999. On the other hand, a cheaper euro should make European products
more attractively priced going forward. In addition, European equities were hurt
by economic growth that proved to be slower than expected. Many attributed this
lethargy to stagnant consumer spending in Germany and the effects of the ongoing
economic and financial problems in Southeast Asia and other emerging markets.
Toward the end of the period, however, evidence of an emerging-market
recovery caused investors to become more optimistic about prospects for European
equities. That optimism was enhanced when the European Central Bank chose to
reduce its base lending
- --------------------------------------------------------------------------------
[A 3 1/2" x 2 1/2" photo at bottom right side of page of John Hancock European
Equity Fund. Caption below reads "European Equity Fund management team (l-r):
"Brigitte Carriere, Gerard Bailly, Claire Chaves d' Oliveira, Patrice de Larrard
and Didier Le Conte."]
- --------------------------------------------------------------------------------
"...evidence of a turnaround in the economies of the Far East... helped
re-kindle optimism for European markets in April."
3
<PAGE>
================================================================================
John Hancock Funds - European Equity Fund
"...the Fund tended to be concentrated more than the MSCI Europe Index in
high-growth industries..."
- --------------------------------------------------------------------------------
[Table at top left hand column entitled "Top Five Stock Holdings." The first
listing is BP Amoco 4.4%, the second is British Telecommunications 3.3%, the
third Dordtsche Petroleum-Industrie 3.2%, the fourth Nokia 3.0% and the fifth
Roche Holding 2.7%. A note below the table reads "As a percentage of net assets
on April 30, 1999."]
- --------------------------------------------------------------------------------
rate from 3.00% to 2.50% on April 8. The magnitude of the cut surprised the
market, as most investors anticipated a decrease of only 0.25%. It appears the
Bank was concerned about lethargic economic growth in Europe and chose the
deeper cut to signal it was done lowering rates. In addition, the Bank of
England was very aggressive in its attempt to stimulate that country's
relatively stagnant economy, lowering its short-term rate from 7.50% to 5.25%
over the period.
Performance and strategy review
Solid stock picking and staying fully invested during the European equity
markets' recovery at the end of 1998 helped the Fund post good absolute and
relative performance. For the six months ended April 30, 1999, John Hancock
European Equity Fund's Class A and Class B shares posted total returns of 9.53%
and 9.26%, respectively, at net asset value. Those results
- --------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Nokia
followed by an up arrow with the phrase "Continued success for Finnish company
with new lines of cell phones." The second listing is Vodafone followed by an up
arrow with the phrase "Boosted by merger with U.S. company AirTouch
Communications." The third listing is Unilever followed by a down arrow with the
phrase "Market prefers companies with more dynamic earnings growth." A note
below the table reads "See `Schedule of Investments.' Investment holdings are
subject to change."]
- --------------------------------------------------------------------------------
outperformed the 8.95% return of the average European region fund, according to
Lipper, Inc.1 In the same six-month period, the Morgan Stanley Capital
International (MSCI) Europe Index returned 11.49%. The Fund's Class C shares,
which were introduced March 1, 1999, returned 3.10% at net asset value for the
two months from inception through April 30, 1999. Keep in mind that your net
asset value return will vary from the Fund's stated performance if you were not
invested in the Fund for the entire period and did not reinvest all dividends.
Two factors late in the period - signs of an overall acceleration of
growth and lower interest rates - helped shares of cyclical companies post sharp
gains in April. Cyclical companies are those whose prospects rise and fall in
concert with economic growth, which tends to improve with lower interest rates.
Many investors chose to shift at least some of their assets to cyclicals from
the growth stocks that have dominated the market over the past few years, but
the Fund did not follow suit. That's because we believe that cyclical stocks
remain vulnerable to any signs of slower growth. For example, too much
industrial capacity continues to plague the steel and chemical industries.
Instead, the Fund's investments were a result of a consistent stock-picking
approach. More specifically, the portfolio is made up of liquid,
large-capitalization stocks that we feel promise high future profit growth, with
strong management and a solid balance sheet structure. Considerations about
country weightings are subordinate. That being said, during the period the Fund
maintained an underweighted position in the U.K. relative to the MSCI Europe
Index because of that country's stagnant growth.
As a result of this growth-oriented approach, the Fund tended to be
concentrated more than
4
<PAGE>
================================================================================
John Hancock Funds - European Equity Fund
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended April 30, 1999." The
chart is scaled in increments of 2% with 0% at the bottom and 10% at the top.
The first bar represents the 9.53% total return for John Hancock European Equity
Fund Class A. The second bar represents the 9.26% total return for John Hancock
European Equity Fund Class B. The third bar represents the 3.10%* total return
for John Hancock European Equity Fund Class C, and the fourth bar represents the
8.95% total return for Average European region fund. A note below the chart
reads "Total returns for John Hancock European Equity Fund are at net asset
value with all distributions reinvested. The average European region fund is
tracked by Lipper, Inc. See the following two pages for historical performance
information. * From inception March 1, 1999 through April 30, 1999."]
- --------------------------------------------------------------------------------
the MSCI Europe Index in high-growth industries such as telecommunications,
technology, media and pharmaceuticals. The pharmaceutical position was reduced
slightly as we sought more promising growth opportunities in telecommunications.
Top performers for the Fund included Finnish telecommunications giant Nokia;
Vodafone Group, a British telephone service company that acquired U.S. firm
AirTouch Communications, and Vivendi, a diversified waste management and mobile
communications company. On the down side, the Fund's performance was hurt by
investments in Nestle and Unilever, two food companies with steady growth, but
not enough to attract investors during a time when the market was on the rise.
Outlook
Expectations for growth in Europe this year were revised downward, mainly
because of the sluggish German economy. Normally, this prediction would indicate
a less than enthusiastic outlook for European equity markets. However, there are
several positive developments that indicate a strong backdrop for European
stocks. First, the European Central Bank's recent rate cut should help increase
cash flow from other asset classes into equity markets. And because inflation
remains quite low, it seems likely that interest rates will also remain low.
Second, consumer spending should improve due to a growing number of new jobs and
declining mortgage rates. Third, the decline in the value of the euro helps
European exports become more attractive. In addition, neither gold nor real
estate offers an attractive alternative to stocks.
Further, the European market is currently undervalued relative to Wall
Street. Finally, we should see benefits from the restructuring of the industrial
and financial framework that is occurring, including consolidation and increased
focus on shareholder-friendly management. At the center of this movement is the
euro. This unified currency has captured the enthusiasm of corporate management.
No longer are currency exchanges a concern, and it is now possible to compare
prices across the Continent. The euro makes it much easier for companies to
manage their cash. It is creating optimism and accelerating trade within the
euro zone. The Fund will continue to look for investment opportunities in this
exciting environment.
"...the European market is currently undervalued relative to Wall Street."
- --------------------------------------------------------------------------------
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 such as political, economic and
currency risks and differences in accounting standards and financial reporting.
1Figures from Lipper, Inc. include reinvested dividends and do not take into
account sales charges. Actual load-adjusted performance is lower.
5
<PAGE>
================================================================================
John Hancock Funds - European Equity Fund
- --------------------------------------------------------------------------------
A LOOK AT PERFORMANCE
- --------------------------------------------------------------------------------
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock European Equity Fund. Total return measures
the change in value of an investment from the beginning to the end of a period,
assuming all distributions were reinvested.
For Class A shares, total return figures include a maximum applicable sales
charge of 5%. Class B performance reflects a maximum contingent deferred sales
charge (maximum 5% and declining to 0% over six years). Class C performance
includes a contingent deferred sales charge (1% declining to 0% after one year).
All figures represent past performance and are no guarantee of future results.
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. Please read your
prospectus for a discussion of the risks associated with international
investing, including currency and political risks and differences in accounting
standards and financial reporting before you invest or send money.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
ONE INCEPTION
YEAR (3/2/98)
------- ---------
Cumulative Total Returns (1.00%) 3.70%
Average Annual Total Returns(1) (1.00%) 3.43%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
INCEPTION
(6/1/98)
---------
Cumulative Total Return (6.80%)
Average Annual Total Return(1) (6.80%)(2)
- --------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
INCEPTION
(3/1/99)
---------
Cumulative Total Return 1.07%
Average Annual Total Return(1) 1.07%(2)
Notes to Performance
(1) The Adviser has agreed to limit the Fund's expenses to 1.90% on
Class A and 2.60% on Class B and Class C of the Fund's average daily
net assets. Without the limitation of expenses, the average annual
total return for the one-year period and since inception would have
been (1.94%) and 2.46% for Class A shares. The cumulative total return
since inception would have been (7.50%) and 1.05% for Class B shares
and Class C shares, respectively.
(2) Not annualized.
6
<PAGE>
================================================================================
John Hancock Funds - European Equity Fund
- --------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
- --------------------------------------------------------------------------------
The charts on the right show how much a $10,000 investment in the John Hancock
European Equity Fund would be worth, assuming all distributions were reinvested
for the period indicated. For comparison, we've shown the same $10,000
investment in the Morgan Stanley Capital International (MSCI) Europe Index - an
unmanaged index used to measure the performance of securities listed on European
stock exchanges. Past performance is not indicative of future results.
- --------------------------------------------------------------------------------
Line chart with the heading John Hancock European Equity 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 MSCI
Europe Index and is equal to $11,577. The second line represents the value of
the hypothetical $10,000 investment made in the John Hancock European Equity
Fund on March 2, 1998, before sales charge, and is equal to $11,030 as of April
30, 1999. The third line represents the value of the same hypothetical
investment made in the John Hancock European Equity Fund, after sales charge,
and is equal to $10,475 as of April 30, 1999.
Line chart with the heading John Hancock European Equity 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 MSCI
Europe Index and is equal to $10,384. The second line represents the value of
the hypothetical $10,000 investment made in the John Hancock European Equity
Fund on June 1, 1998, before sales charge, and is equal to $9,910 as of April
30, 1999. The third line represents the value of the same hypothetical
investment made in the John Hancock European Equity Fund, after sales charge,
and is equal to $9,414 as of April 30, 1999.
Line chart with the heading John Hancock European Equity Fund Class C,
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 MSCI
Europe Index and is equal to $10,415. The second line represents the value of
the hypothetical $10,000 investment made in the John Hancock European Equity
Fund on March 1, 1999, before sales charge, and is equal to $10,310 as of April
30, 1999. The third line represents the value of the same hypothetical
investment made in the John Hancock European Equity Fund, after sales charge,
and is equal to $10,210 as of April 30, 1999.
- --------------------------------------------------------------------------------
7
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
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 April 30, 1999. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common and preferred stocks, rights and warrants
(cost - $29,060,005)................................. $31,528,114
Cash .................................................. 862
Foreign currency, at value (cost - $3,791) ............ 3,791
Receivable for investments sold ....................... 805,391
Receivable for shares sold ............................ 1,617
Dividends receivable .................................. 56,262
Foreign tax receivable ................................ 10,321
-------------
Total Assets ................. 32,406,358
--------------------------------------------------
Liabilities:
Payable for forward foreign currency exchange
contracts sold - Note A .............................. 10
Payable for bank borrowings - Note A .................. 327,000
Payable for shares repurchased ........................ 16,776
Payable to John Hancock Advisers, Inc.
and affiliates - Note B .............................. 43,023
Accounts payable and accrued expenses ................. 53,192
------------
Total Liabilities ............ 440,001
-------------------------------------------------
Net Assets:
Capital paid-in ....................................... 32,174,547
Accumulated net realized loss on investments and
foreign currency transactions ........................ (2,440,906)
Net unrealized appreciation of investments and foreign
currency transactions ................................ 2,466,396
Accumulated net investment loss ....................... (233,680)
------------
Net Assets ................... $31,966,357
=================================================
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)
Class A - $15,144,075/1,372,582 ....................... $11.03
==========================================================================
Class B - $16,778,731/1,530,106 ....................... $10.97
==========================================================================
Class C * - $43,551/3,971 ............................. $10.97
==========================================================================
Maximum Offering Price Per Share**
Class A - ($11.03 x 105.26%) .......................... $11.61
===========================================================================
* Class C shares commenced operations on March 1, 1999.
** 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.
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
Six months ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Interest .............................................. $9,835
Dividends (net of foreign withholding taxes of $14,320) 154,149
-----------
163,984
-----------
Expenses:
Investment management fee - Note B .................... 142,217
Distribution and service fee - Note B
Class A .............................................. 22,523
Class B .............................................. 82,909
Class C .............................................. 32
Transfer agent fee .................................... 51,222
Custodian fee ......................................... 44,373
Registration and filing fees .......................... 24,559
Auditing fee .......................................... 9,918
Printing .............................................. 4,653
Financial services fee ................................ 2,277
Miscellaneous ......................................... 1,430
Trustees' fees ........................................ 759
Legal fees ............................................ 177
Interest expense - Note A ............................. 150
-----------
Total Expenses .................. 387,199
----------------------------------------------------
Less Expense Reductions -
Note B .......................... (28,754)
----------------------------------------------------
Net Expenses .................... 358,445
----------------------------------------------------
Net Investment Loss ............. (194,461)
----------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized loss on investments sold ................. (1,032,124)
Net realized gain on foreign currency transactions .... 59,504
Change in net unrealized appreciation/depreciation
of investments and foreign currency transactions ..... 3,548,418
------------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions ... 2,575,798
----------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ....... $2,381,337
====================================================
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
MARCH 2, 1998 SIX MONTHS ENDED
(COMMENCEMENT OF OPERATIONS) APRIL 30, 1999
TO OCTOBER 31, 1998 (UNAUDITED)
------------------- -----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss......................................................... ($46,072) ($194,461)
Net realized loss on investments sold and foreign currency transactions .... (1,556,583) (972,620)
Change in net unrealized appreciation/depreciation of investments and
foreign currency transactions ............................................. (1,082,022) 3,548,418
----------- ------------
Net Increase (Decrease) in Net Assets Resulting from Operations ........... (2,684,677) 2,381,337
----------- ------------
From Fund Share Transactions - Net:* ........................................ 30,678,971 1,590,726
----------- ------------
Net Assets:
Beginning of period ........................................................ -- 27,994,294
----------- ------------
End of period (including accumulated net investment loss of $46,072 and
$233,680, respectively).................................................... $27,994,294 $31,966,357
=========== ============
* Analysis of Fund Share Transactions:
FOR THE PERIOD FROM MARCH 2, 1998 SIX MONTHS ENDED
(COMMENCEMENT OF OPERATIONS) APRIL 30, 1999
TO OCTOBER 31, 1998 (UNAUDITED)
--------------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ----------
CLASS A **
Shares sold............................... 1,635,681 $17,462,387 876,984 $9,708,477
Less shares repurchased .................. (429,021) (4,383,005) (711,062) (7,818,231)
------------ -------------- -------------- -------------
Net increase ............................. 1,206,660 $13,079,382 165,922 $1,890,246
============ ============== ============== =============
CLASS B ***
Shares sold .............................. 1,817,977 $20,041,352 670,915 $7,404,590
Less shares repurchased .................. (239,566) (2,441,763) (719,220) (7,747,609)
------------ -------------- -------------- -------------
Net increase (decrease) .................. 1,578,411 $17,599,589 (48,305) ($343,019)
============ ============== ============== =============
CLASS C ****
Shares sold .............................. -- -- 3,971 $43,499
------------ -------------- -------------- -------------
Net increase ............................. -- -- 3,971 $43,499
============ =============== ============== =============
</TABLE>
** Class A shares commenced operations on March 2, 1998.
*** Class B shares commenced operations on June 1, 1998.
**** Class C shares commenced operations on March 1, 1999.
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 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 and repurchased
during the last two periods, along with the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout the
period indicated, investment returns, key ratios and supplemental data are
listed as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM MARCH 2, 1998 SIX MONTHS ENDED
(COMMENCEMENT OF OPERATIONS) APRIL 30, 1999
TO OCTOBER 31, 1998 (UNAUDITED)
------------------- -----------
<S> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ................................ $10.00 $10.07
------- -------
Net Investment Income (Loss)(1) ..................................... 0.01 (0.05)
Net Realized and Unrealized Gain on Investments and
Foreign Currency Transactions...................................... 0.06 1.01
------- -------
Total From Investment Operations.................................... 0.07 0.96
------- -------
Net Asset Value, End of Period ...................................... $10.07 $11.03
======= =======
Total Investment Return at Net Asset Value(2) ....................... 0.70%(3) 9.53%(3)
Total Adjusted Investment Return at Net Asset Value(2,4)............. (0.24%)(3) 9.44%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted)............................. $12,147 $15,144
Ratio of Expenses to Average Net Assets.............................. 1.90%(5) 1.90%(5)
Ratio of Adjusted Expenses to Average Net Assets(6).................. 3.31%(5) 2.08%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets.......... 0.16%(5) (0.86%)(5)
Ratio of Adjusted Net Investment Loss to Average Net Assets(6)....... (1.25%)(5) (1.04%)(5)
Portfolio Turnover Rate ............................................ 31% 36%
Fee Reduction Per Share(1)........................................... $0.10 $0.01
</TABLE>
The Financial Highlights summarizes the impact of the following factors on a
single share for the 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.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM MARCH 2, 1998 SIX MONTHS ENDED
(COMMENCEMENT OF OPERATIONS) APRIL 30, 1999
TO OCTOBER 31, 1998 (UNAUDITED)
------------------- -----------
<S> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period................................. $11.07 $10.04
------- -------
Net Investment Loss(1)............................................... (0.04) (0.08)
Net Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions....................................... (0.99) 1.01
------- -------
Total From Investment Operations ................................... (1.03) 0.93
------- -------
Net Asset Value, End of Period ...................................... $10.04 $10.97
======= =======
Total Investment Return at Net Asset Value(2)........................ (9.30%)(3) 9.26%(3)
Total Adjusted Investment Return at Net Asset Value(2,4)............. (9.89%)(3) 9.17%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted)............................. $15,847 $16,779
Ratio of Expenses to Average Net Assets ............................. 2.60%(5) 2.60%(5)
Ratio of Adjusted Expenses to Average Net Assets(6).................. 4.01%(5) 2.78%(5)
Ratio of Net Investment Loss to Average Net Assets................... (1.12%)(5) (1.56%)(5)
Ratio of Adjusted Net Investment Loss to Average Net Assets(6)....... (2.53%)(5) (1.74%)(5)
Portfolio Turnover Rate ............................................. 31% 36%
Fee Reduction Per Share(1) .......................................... $0.06 $0.01
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM MARCH 1, 1999
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 1999
(UNAUDITED)
---------
<S> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period.......................................................... $10.64
-------
Net Investment Loss(1) ....................................................................... (0.01)
Net Realized and Unrealized Gain on Investments and Foreign Currency Transactions ............ 0.34
-------
Total From Investment Operations ............................................................ 0.33
-------
Net Asset Value, End of Period ............................................................... $10.97
=======
Total Investment Return at Net Asset Value(2) ................................................ 3.10%(3)
Total Adjusted Investment Return at Net Asset Value(2,4) ..................................... 3.07%(3)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ..................................................... $44
Ratio of Expenses to Average Net Assets ...................................................... 2.60%(5)
Ratio of Adjusted Expenses to Average Net Assets(6) .......................................... 2.78%(5)
Ratio of Net Investment Loss to Average Net Assets ........................................... (0.94%)(5)
Ratio of Adjusted Net Investment Loss to Average Net Assets(6) ............................... (1.12%)(5)
Portfolio Turnover Rate ...................................................................... 36%
Fee Reduction Per Share(1) ................................................................... $0.00(7)
</TABLE>
(1) Based on the average of the shares outstanding at the end of each month.
(2) Assumes dividend reinvestment and does not reflect the effect of sales
charges.
(3) Not annualized.
(4) An estimated total return calculation which does not take into consideration
fee reductions by the Adviser during the periods shown.
(5) Annualized.
(6) Unreimbursed, without fee reduction.
(7) Less than $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
The Schedule of Investments is a complete list of all securities owned by the
European Equity Fund on April 30, 1999. It's divided into three main categories:
common stocks, preferred stocks, and rights and warrants. The stocks and rights
and warrants are further broken down by country.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
COMMON STOCKS
Finland (4.18%)
Nokia AB (Telecommunications)................ 12,500 $963,305
Sonera Group Oyj (Telecommunications) ....... 10,000 198,603
Tieto Corp. (Computers) ..................... 4,400 175,236
----------
1,337,144
----------
France (14.45%)
Axa (Insurance) ............................. 4,100 529,278
Banque Nationale de Paris
(Banks - Foreign) .......................... 4,500 372,936
Carrefour SA (Retail) ....................... 500 396,150
France Telecom SA
(Telecommunications) ....................... 3,382 273,136
L'Oreal SA (Cosmetics & Personal Care) ...... 800 512,143
Legrand SA (Electronics) .................... 1,500 358,120
Pinault-Printemps-Redoute SA (Retail) ....... 2,750 456,101
Rexel SA (Electronics) ...................... 2,800 232,197
Synthelabo SA (Medical) ..................... 1,500 306,620
Total SA (Oil & Gas) ........................ 3,750 513,410
Vivendi SA (Diversified Operations) ......... 2,860 668,010
----------
4,618,101
----------
Germany (8.21%)
Allianz AG (Insurance) ...................... 1,900 605,159
DaimlerChrysler AG
(Automobile/Trucks)* ....................... 8,136 803,191
Deutsche Telekom AG
(Telecommunications) ....................... 5,000 197,019
Douglas Holding AG (New) (Retail) ........... 280 13,015
Douglas Holding AG (Retail) ................. 3,500 160,837
Dresdner Bank AG (Banks - Foreign) .......... 9,450 407,306
Fresenius AG (Medical) ...................... 700 106,485
Metro AG (Retail) ........................... 4,500 325,160
Muenchener Rueckversicherungs-
Gesellschaft AG (New Shares)
(Insurance) ................................ 16 3,211
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Germany (continued)
Muenchener Rueckversicherungs-
Gesellschaft (New) (Insurance) .............. 16 $3,178
----------
2,624,561
----------
Ireland (2.48%)
Allied Irish Banks Plc (Banks - Foreign) .... 22,000 354,268
CRH Plc (Building) .......................... 13,500 264,953
Irish Life Plc (Insurance) .................. 19,000 174,222
----------
793,443
----------
Italy (8.73%)
Assicurazioni Generali SpA (Insurance) ...... 17,700 689,032
Bank Commerciale Italiana
(Banks - Foreign) .......................... 33,700 277,329
Ente Nazionale Idrocarburi SpA
(Oil & Gas) ................................ 40,000 263,255
San Paolo-Imi SpA (Banks - Foreign) ......... 19,500 292,517
Telecom Italia Mobile (TIM) SpA
(Telecommunications) ....................... 63,000 375,360
Telecom Italia SpA - RNC
(Telecommunications) ....................... 24,300 258,502
Telecom Italia SpA (Telecommunications) ..... 42,500 228,526
UniCredito Italiano SpA (Banks - Foreign) ... 80,000 405,658
----------
2,790,179
----------
Netherlands (9.90%)
AEGON NV (Insurance) ........................ 5,200 498,515
Dordtsche Petroleum-Industrie MIJ NV
(Diversified Operations) ................... 19,700 1,015,581
Equant NV (Computers) ....................... 2,055 186,481
ING Groep NV (Banks - Foreign) .............. 5,900 363,370
STMicroelectronics NV (Electronics)* ........ 1,500 156,242
TNT Post Group NV (Transport) ............... 12,000 323,258
Unilever NV (Food) .......................... 4,000 273,819
Wolters Kluwer NV (Media) ................... 8,000 348,189
----------
3,165,455
----------
Norway (0.75%)
Tomra Systems ASA (Machinery) ............... 6,000 238,141
----------
Spain (5.12%)
Banco Bilbao Vizcaya SA
(Banks - Foreign) .......................... 13,000 194,462
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Spain (continued)
Banco Santander SA (Banks - Foreign)......... 16,000 $347,513
Endesa SA (Utilities) ....................... 17,000 377,853
Telefonica SA (Telecommunications) .......... 15,300 716,826
----------
1,636,654
----------
Sweden (1.59%)
Ericsson (LM) Telefonaktiebolaget
(Telecommunications) ....................... 9,000 236,281
Skandia Forsakrings AB (Insurance) .......... 14,000 270,475
----------
506,756
----------
Switzerland (11.16%)
Adecco SA (Business Services - Misc.) ....... 740 372,983
Clariant AG (Chemicals) ..................... 340 173,822
Credit Suisse Group (Banks - Foreign) ....... 2,400 475,847
Nestle SA (Food) ............................ 100 185,030
Novartis AG (Medical) ....................... 300 439,077
Roche Holding AG (Medical) .................. 74 870,132
UBS AG (Banks - Foreign) .................... 1,200 407,420
Zurich Allied AG (Insurance) ................ 1,000 644,294
----------
3,568,605
----------
United Kingdom (31.12%)
Bank of Scotland (Banks - Foreign)* ......... 16,000 238,860
BP Amoco Plc (Oil & Gas) .................... 73,561 1,396,383
British Aerospace Plc (Aerospace) ........... 56,380 421,748
British Telecommunications Plc
(Telecommunications) ....................... 64,000 1,068,691
Carlton Communications (Media) .............. 17,000 164,224
CMG Plc (Computers) ......................... 12,000 330,231
Compass Group Plc (Food) .................... 32,000 329,462
Dixons Group Plc (Retail) ................... 7,300 155,748
Energis (Telecommunications) ................ 8,400 220,263
Glaxo Wellcome Plc (Medical) ................ 28,000 829,703
HSBC Holdings Plc
(Banks - Foreign) .......................... 16,287 622,271
JARVIS (Building) ........................... 30,000 250,475
Kingfisher Plc (Retail) ..................... 30,000 447,862
Lloyds TSB Group Plc (Banks - Foreign) ...... 54,600 880,107
Misys Plc (Computers) ....................... 21,543 200,312
Pearson Plc (Media) ......................... 20,000 424,696
SEMA Group Plc (Computers) .................. 25,000 241,707
SmithKline Beecham Plc (Medical) ............ 54,000 714,070
Smiths Industries Plc (Manufacturing) ....... 17,730 273,814
Vodafone Group Plc (Telecommunications) ..... 40,000 736,784
----------
9,947,411
----------
TOTAL COMMON STOCKS
(Cost $28,659,871) (97.69%) 31,226,450
-------- ----------
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
PREFERRED STOCKS
Germany (0.90%)
Fresenius AG (Medical)....................... 355 $61,879
SAP AG (Computers) .......................... 600 225,013
----------
TOTAL PREFERRED STOCKS
(Cost $399,300) (0.90%) 286,892
------- ----------
RIGHTS AND WARRANTS
Spain (0.04%)
Telefonica SA (Rights Issue)
(Telecommunications)* ...................... 15,300 14,223
----------
Germany (0.00%)
Muenchener Rueckversicherungs-
Gesellschaft AG (Warrants Issue)
(Insurance)* .............................. 16 549
----------
TOTAL RIGHTS AND WARRANTS
(Cost $834) (0.04%) 14,772
------ ----------
TOTAL COMMON AND PREFERRED STOCKS,
RIGHTS AND WARRANTS
(Cost $29,060,005) (98.63%) 31,528,114
------- ----------
OTHER ASSETS AND LIABILITIES, NET (1.37%) 438,243
------- ----------
TOTAL NET ASSETS (100.00%) $31,966,357
======= ===========
* 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
14
<PAGE>
=============================FINANCIAL STATEMENTS===============================
John Hancock Funds - European Equity Fund
Portfolio Concentration
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Fund primarily invests in securities issued by companies of other countries.
The performance of the Fund is closely tied to the economic conditions within
the countries in which 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 April 30, 1999 assigned to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
- --------------------- ---------------
Aerospace................................................ 1.32%
Automobile/Trucks ....................................... 2.51
Banks - Foreign ......................................... 17.65
Building ................................................ 1.61
Business Services - Misc. ............................... 1.17
Chemicals ............................................... 0.54
Computers ............................................... 4.25
Cosmetics & Personal Care ............................... 1.60
Diversified Operations .................................. 5.27
Electronics ............................................. 2.34
Food .................................................... 2.47
Insurance ............................................... 10.68
Machinery ............................................... 0.74
Manufacturing ........................................... 0.86
Media ................................................... 2.93
Medical ................................................. 10.41
Oil & Gas ............................................... 6.80
Retail .................................................. 6.12
Telecommunications ...................................... 17.17
Transportation .......................................... 1.01
Utilities ............................................... 1.18
----------
TOTAL INVESTMENTS 98.63%
==========
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - European Equity Fund
(UNAUDITED)
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: John Hancock European Equity Fund (the "Fund"), John Hancock
Global Health Sciences Fund and John Hancock Pacific Basin Equities Fund. The
other series of the Trust are reported in separate financial statements. The
Fund's investment objective is to achieve long-term capital appreciation.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The Trustees
authorized the issuance of Class C shares effective March 1, 1999. 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,
Inc., 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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required. For
federal income tax purposes, the Fund has $1,450,896 of capital loss
carryforwards available, to the extent provided by regulations, to offset future
net realized capital gains. To the extent such carryforwards are used by the
Fund, no capital gains distributions will be made. The carryforwards expire as
follows: October 31, 2006 - $1,450,896.
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.
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 relative net assets of the respective
16
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - European Equity Fund
classes. Distribution and 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.
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.
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.
BANK BORROWINGS The Fund is permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. Effective March 12, 1999,
the Fund entered into a syndicated line of credit agreement with various banks,
and the agreements previously in effect were terminated. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund based on its borrowings. In
addition, a commitment fee is charged based on the average daily unused portion
of the line of credit and is allocated among the participating funds. The
maximum loan balance for the Fund during the period for which loans were
outstanding amounted to $327,000. At April 30, 1999, the loan outstanding was
$327,000 at an annual rate of interest of 5.50%.
SECURITIES LENDING The Fund may lend its securities to certain qualified brokers
who pay the Fund negotiated lender fees. These fees are included in interest
income. The loans are collateralized at all times with cash or securites with a
market value at least equal to the market value of the securities on loan. As
with other extensions of credit, the Fund may bear risk of delay of the loaned
securities in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. The Fund had no securities lending
activity for the period ended April 30, 1999.
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
17
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - European Equity Fund
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 if they are offset by the currency amount of the
underlying transaction.
At April 30, 1999, open forward foreign currency exchange contracts
were as follows:
UNREALIZED
PRINCIPAL AMOUNT EXPIRATION APPRECIATION/
CURRENCY COVERED BY CONTRACT DATE (DEPRECIATION)
- -------- ------------------- ---- --------------
SELLS
European Currency 44,163 MAY 99 $40
Pound Sterling 126,062 MAY 99 (214)
Swedish Krona 485,021 MAY 99 164
-----
($10)
=====
FINANCIAL FUTURES CONTRACTS The Fund may buy and sell financial futures
contracts to hedge against the effects of fluctuations in interest rates and
other market conditions. Buying futures tends to increase the Fund's exposure to
the underlying instrument. Selling futures tends to decrease the Fund's exposure
to the underlying instrument or hedge other Fund instruments. 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 on
which it trades. 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. In addition,
the Fund could be prevented from opening or realizing the benefits of closing
out futures positions because of position limits or limits on daily price
fluctuation imposed by an exchange.
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 April 30, 1999, there were no open positions in financial futures
contracts.
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS
WITH AFFILIATES AND OTHERS
The Adviser is responsible for managing the Fund's investment business affairs
and overseeing the investment activities of the sub-adviser, Indocam
International Investment Services ("IIIS") (the "Sub-Adviser"). 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) 0.90% of the first $500,000,000 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 $500,000,000.
The Adviser has a sub-investment management contract with the
Sub-Adviser under which the Sub-Adviser, subject to the review of the Trustees
and the overall supervision of the Adviser, provides the Fund with investment
services and advice with respect to that portion of the Fund's assets invested
in countries other than the United States. The Adviser pays the Sub-Adviser a
fee at the annual rate of 0.35% of the average daily net assets of the Fund.
The Adviser has agreed to limit the Fund's expenses on Class A, Class B
and Class C shares to 1.90%, 2.60% and 2.60%, respectively, of the Fund's
average daily net assets. Accordingly, the reduction in the Adviser's fee
amounted to $28,754 for the period ended April 30, 1999. The Adviser reserves
the right to terminate this limitation 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
April 30, 1999, net sales charges received with regard to sales of Class A
shares amounted to $99,080. Out of this amount, $9,428
18
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - European Equity Fund
was retained and used for printing prospectuses, advertising, sales literature
and other purposes, $71,355 was paid as sales commissions to unrelated
broker-dealers and $18,297 was paid as sales commissions to sales personnel of
Signator Investors, Inc. ("Signator Investors"), a related broker-dealer,
formerly known as John Hancock Distributors, Inc. The Adviser's indirect parent,
John Hancock Mutual Life Insurance Company ("JHMLICo"), is the indirect sole
shareholder of Signator Investors.
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 5.00% 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 for providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended April 30, 1999,
contingent deferred sales charges paid to JH Funds amounted to $70,309.
Class C shares which are redeemed within one year of purchase will be
subject to a CDSC at a rate of 1.00% 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
part to defray its expenses for providing distribution related services to the
Fund in connection with the sale of Class C shares. For the period ended April
30, 1999, there were no contingent deferred sales charges paid to JH Funds.
In addition, to reimburse JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A, Class B and Class C 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 to exceed
0.30% of Class A average daily net assets and 1.00% of Class B and Class C
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 Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo. The
Fund pays transfer agent fees based on the number of shareholder accounts and
certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Fund. The compensation for the period was
at an annual rate of less than 0.02% of the average net assets of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione 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. 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 April 30, 1999, the
Fund's investments to cover the deferred compensation liability had no
unrealized appreciation/depreciation.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 1999, aggregated $12,292,379 and
$11,210,248, respectively. There were no purchases or sales of obligations of
the U.S. government and its agencies during the period ended April 30, 1999.
The cost of investments owned at April 30, 1999 for federal income tax
purposes was $29,112,559. Gross unrealized appreciation and depreciation of
investments aggregated $3,489,777 and $1,074,222, respectively, resulting in
unrealized appreciation of $2,415,555.
19
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS ---------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
---------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
European Equity Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[LOGO] Printed on Recycled Paper 920SA 4/99
6/99
<PAGE>
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Global Health
Sciences Fund
APRIL 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
----------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Stephen L. Brown
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
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
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 LLP
60 State Street
Boston, Massachusetts 02109-1803
-----------------------------------------------
================================================================================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements are nearly done, and the tests of all our
systems are on schedule for completion by the end of July. The rest of 1999 will
be spent testing with our business partners and continuing to participate in
industry testing. We have also established additional contingency plans beyond
our regular ones to prepare for any challenges that the Year 2000 might present.
In the end, John Hancock will spend approximately $90-$95 million to ensure we
make a successful transition to the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000's.
Sincerely,
/s/Edward J. Boudreau, Jr.
- -------------------------------------------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Linda I. Miller, CFA, Portfolio Management Team Leader, and
Robert D. Hallisey, Jr., Assistant Portfolio Manager
John Hancock Global
Health Sciences Fund
Biotech, drug stocks lead health-care stocks
--------------------------------------------
Health-care stocks posted modest returns compared to the broader stock market
over the last six months, as conditions for the group became increasingly less
favorable. Much of the health-care sector's early gains were due to the strong
performance of large pharmaceutical stocks in the final months of 1998. They, in
turn, were boosted by a combination of factors including investors' renewed
infatuation with large-company growth stocks, drug companies' reputations for
delivering predictable earnings and exciting results from the introduction of
new drugs.
In early 1999, however, the climate began to shift. Although the forces
that make health care an attractive sector for the long term remain in place,
investors sensed that the U.S. economy was growing at a fairly quick pace and
that troubled foreign economies could be approaching a bottom. As a result, they
began to rotate out of the more defensive drug stocks, turning to the
high-flying technology and Internet stocks. The more attractively priced
industry groups such as cyclicals, financial services and energy those that
stood to benefit the most from a stronger global economy - also came back in
vogue. The exodus from drug stocks - hurried by some slightly orse-than-expected
earnings warnings - erased some, but not all, of their earlier gains, and put
pressure on much of the health-care group.
Beyond drug stocks, performance was mixed. Biotech stocks, for example,
generally posted good returns throughout the period, spurred by exciting new
products. In contrast, certain service sectors, such as hospitals, nursing
homes, long-term care facilities and home health care, were hurt by reductions
in Medicare reimbursements.
- --------------------------------------------------------------------------------
[A 2 1/2" x 2 1/2" photo at bottom right side of page of John Hancock Global
Health Sciences Fund. Caption below reads "Fund portfolio management team
members (l-r): "Linda Miller and Robert Hallisey."]
- --------------------------------------------------------------------------------
"Health-care stocks posted modest returns compared to the broader stock
market..."
3
<PAGE>
================================================================================
John Hancock Funds - Global Health Sciences Fund
"...we had a somewhat larger exposure than average to health-care service
stocks."
- --------------------------------------------------------------------------------
[Table at top left hand column entitled "Top Five Stock Holdings." The first
listing is Bristol-Myers Squibb 5.3%, the second is Pfizer 5.1%, the third
Johnson & Johnson 5.0%, the fourth Merck 4.8% and the fifth Warner-Lambert 4.8%.
A note below the table reads "As a percentage of net assets on April 30, 1999."]
- --------------------------------------------------------------------------------
Performance overview
For the six-month period ended April 30, 1999, John Hancock Global Health
Sciences Fund's Class A and Class B shares posted total returns of -1.15% and
- -1.47%, respectively, at net asset value. Class C shares, which were launched on
March 1, 1999, returned -5.10% at net asset value for the first two months of
operations. Those returns lagged the average healthcare/ biotechnology fund's
return of 7.63%, according to Lipper, Inc.1 Keep in mind that your net asset
value return will be different from the Fund's performance if you were not
invested in the Fund for the entire period and did not reinvest all
distributions. Please see pages six and seven for longer-term performance
information.
There were several factors behind the Fund's underperformance. First,
even though we had a sizeable weighting in the largest drug stocks, such as
Pfizer, Merck and Eli Lilly that performed so well late last year, our exposure
was still less than our peers'. We prefer to take a balanced
- --------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Amgen
followed by an up arrow with the phrase "Success with Epogen." The second
listing is Allergan followed by an up arrow with the phrase "Well-executed
restructuring." The third listing is Omnicare followed by a down arrow with the
phrase "Caught up in service sector decline." A note below the table reads "See
`Schedule of Investments.' Investment holdings are subject to change."]
- --------------------------------------------------------------------------------
approach, spreading our investments across a variety of health-care sub-sectors.
We do that so that the Fund's performance isn't overly dependent on the fortunes
of a handful of companies or one health-care sub-sector. But as it occasionally
does, a diversified approach worked against us during this period.
Second, we had a somewhat larger exposure than average to health-care
service stocks. Weakness in that sector started late last fall, when service
providers began to feel the force of government cutbacks. As part of efforts to
balance the federal budget in 1997, Congress effectively capped Medicare
reimbursements for treating elderly and disabled patients. Although many of the
Fund's holdings in the health-care service group never missed a beat in terms of
meeting earnings expectations, they were nonetheless dragged down by negative
sentiment. One example was Omnicare, which provides pharmacy services for
nursing homes. The stock suffered losses, even though the company continued to
post annual earnings growth of about 35%. Finally, our holdings in retail
drugstore chains such as CVS and Walgreen suffered when investor sentiment
turned negative on the retailing segment and focused on the potential
vulnerability of those companies to e-commerce via the Internet.
New products help drive winners
Among our largest drug-company holdings, the better performers tended to be
those that met success with new product launches. Pfizer and the Searle division
of Monsanto were helped by the successful introduction of the first of a new
class of arthritis drugs, Celebrex, while Forest Laboratories and Warner-Lambert
grabbed a better-than-expected share of the antidepressant
4
<PAGE>
================================================================================
John Hancock Funds - Global Health Sciences Fund
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended April 30, 1999." The
chart is scaled in increments of 2% with -6% at the bottom and 8% at the top.
The first bar represents the -1.15% total return for John Hancock Global Health
Sciences Fund Class A. The second bar represents the -1.47% total return for
John Hancock Global Health Sciences Fund Class B. The third bar represents the
- -5.10%* total return for John Hancock Global Health Sciences Fund Class C. The
fourth bar represents the 7.63% total return for Average
healthcare/biotechnology fund. A note below the chart reads "Total returns for
John Hancock Global Health Sciences Fund are at net asset value with all
distributions reinvested. The average healthcare/biotechnology fund is tracked
by Lipper, Inc. See the following two pages for historical performance
information. *From inception March 1, 1999 through April 30, 1999."]
- --------------------------------------------------------------------------------
market with Celexa, a drug similar to the well known Prozac.
Some of our biotech holdings performed particularly well throughout
most of the period. Amgen posted strong gains, thanks in large part to the
higher sales of the anti-anemia drug Epogen used extensively by U.S. dialysis
patients. Biogen also was a winner, following its success with a drug used to
treat relapsing forms of multiple sclerosis. MedImmune, and its marketing
partner Abbott Laboratories, saw strong sales of a drug used to prevent
respiratory viruses in premature infants. In addition to strong sales of
pharmaceuticals related to eye conditions and care, Allergan benefited from the
efforts of a revitalized management team.
Long-term prospects intact
Despite its recent setback, we believe the health-care sector continues to offer
many exciting long-term growth opportunities. The aging of America marches on.
One of the country's fastest-growing age segments is the over-85 group which
consumes a tremendous amount of health-care products and services. Studies show
that once they reach age 65, people are using three times the health-care goods
and services they did earlier in life. With the largest American age group - the
Baby Boomers - set to hit 65 in the next two decades or so, there clearly will
be increased demand for health-care products and services. The development of
new products, services and technologies should generate even more demand.
Over the short term, however, rhetoric out of Washington could
periodically stymie the drug group if there are calls for universal drug
coverage for Medicare beneficiaries which could hurt prices. It might also haunt
the service companies that could be subject to further investigations of fraud
and abuse. Furthermore, strong worldwide economic conditions could put
non-cyclical U.S.-oriented health-care stocks out of the investment limelight
for the near term. However, with the recent underperformance of the group, we
are seeing attractive valuations that mirror conditions in the 1996 market, when
health-care stocks went on to substantially outperform the general market.
- --------------------------------------------------------------------------------
This commentary reflects the views of the portfolio managers through the end of
the Fund's period discussed in this report. Of course, the managers' views are
subject to change as market and other conditions warrant.
International investing involves special risks such as political, economic 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, Inc. include reinvested dividends and do not take into
account sales charges. Actual load-adjusted performance is lower.
"...the health-care sector continues to offer many exciting long-term growth
opportunities."
5
<PAGE>
================================================================================
John Hancock Funds - Global Health Sciences Fund
- --------------------------------------------------------------------------------
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 Health Sciences Fund. Total return
measures the change in value of an investment from the beginning to the end of a
period, assuming all distributions were reinvested.
For Class A shares, total return figures include a maximum applicable sales
charge of 5%. Class B performance reflects a maximum contingent deferred sales
charge (maximum 5% and declining to 0% over six years). Class C performance
includes a contingent deferred sales charge (1% declining to 0% after one year).
All figures represent past performance and are no guarantee of future results.
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. Please read your
prospectus for a discussion of the risks associated with international
investing, including currency and political risks and differences in accounting
standards and financial reporting, before you invest or send money.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (10/1/91)
------- ------- --------
Cumulative Total Returns (3.58%) 128.31% 260.13%
Average Annual Total Returns (3.58%) 17.95% 18.63%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (3/7/94)
------- ------- --------
Cumulative Total Returns (4.20%) 129.51% 110.29%
Average Annual Total Returns (4.20%) 18.08% 15.80%
- --------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
INCEPTION
(3/1/99)
--------
Cumulative Total Return (1.06%)
Average Annual Total Return (1.06%)(1)
Notes to Performance
(1) Not annualized.
6
<PAGE>
================================================================================
John Hancock Funds - Global Health Sciences Fund
- --------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
- --------------------------------------------------------------------------------
The charts on the right show how much a $10,000 investment in the John Hancock
Global Health Sciences Fund would be worth, assuming all distributions were
reinvested for the period indicated. 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 a commonly used measure of
stock market performance. Past performance is not indicative of future results.
- --------------------------------------------------------------------------------
Line chart with the heading John Hancock Global Health Sciences 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
Standard & Poor's 500 Stock Index and is equal to $41,117. The second line
represents the value of the hypothetical $10,000 investment made in the John
Hancock Global Health Sciences Fund on October 1, 1991, before sales charge, and
is equal to $36,019 as of April 30, 1999. The third line represents the value of
the same hypothetical investment made in the John Hancock Global Health Sciences
Fund, after sales charge, and is equal to $34,206 as of April 30, 1999.
Line chart with the heading John Hancock Global Health Sciences 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
Standard & Poor's 500 Stock Index and is equal to $31,847. The second line
represents the value of the hypothetical $10,000 investment made in the John
Hancock Global Health Sciences Fund on March 7, 1994, before sales charge, and
is equal to $20,064 as of April 30, 1999. The third line represents the value of
the same hypothetical investment made in the John Hancock Global Health Sciences
Fund, after sales charge, and is equal to $19,964 as of April 30, 1999.
Line chart with the heading John Hancock Global Health Sciences Fund Class C,
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
Standard & Poor's 500 Stock Index and is equal to $10,803. The second line
represents the value of the hypothetical $10,000 investment made in the John
Hancock Global Health Sciences Fund on March 1, 1999, before sales charge, and
is equal to $9,490 as of April 30, 1999. The third line represents the value of
the same hypothetical investment made in the John Hancock Global Health Sciences
Fund, after sales charge, and is equal to $9,395 as of April 30, 1999.
- --------------------------------------------------------------------------------
7
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
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 April 30, 1999. You'll also
find the net asset value and the maximum offering price per share as of that
date.
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value - Note C:
Common stocks (cost - $183,976,272) ....................... $232,311,482
Short-term investments (cost - $31,935,795)................ 31,935,795
--------------
264,247,277
Cash ....................................................... 224
Foreign currency, at value (cost - $1,748) ................. 1,734
Receivable for investments sold ............................ 3,029,487
Receivable for shares sold ................................. 289,088
Dividends receivable ....................................... 267,749
Interest receivable ........................................ 972
Other assets ............................................... 3,024
--------------
Total Assets ......................... 267,839,555
-------------------------------------------------------
Liabilities:
Payable for shares repurchased ............................. 143,079
Payable upon return of securities on loan - Note A ......... 24,777,795
Foreign taxes payable ...................................... 10,984
Payable to John Hancock Advisers, Inc.
and affiliates - Note B ................................... 576,720
Accounts payable and accrued expenses ...................... 41,408
-------------
Total Liabilities .................... 25,549,986
-------------------------------------------------------
Net Assets:
Capital paid-in ............................................ 202,058,997
Accumulated net realized loss on investments and
foreign currency transactions ............................. (6,917,118)
Net unrealized appreciation of investments and
foreign currency transactions ............................. 48,335,414
Accumulated net investment loss ............................ (1,187,724)
-------------
Net Assets ........................... $242,289,569
=======================================================
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)
Class A - $92,360,312/2,756,757 ............................ $33.50
=============================================================================
Class B - $149,600,541/4,645,204 ........................... $32.21
=============================================================================
Class C* - $328,716/10,207 ................................. $32.21
=============================================================================
Maximum Offering Price Per Share**
Class A - ($33.50 x 105.26%) ............................... $35.26
=============================================================================
* Class C shares commenced operations on March 1, 1999.
** 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.
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
Six months ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Investment Income:
Dividends (net of foreign withholding taxes of $35,579) .... $885,214
Interest (including income on securities loaned
of $34,971) ............................................... 291,127
-------------
1,176,341
-------------
Expenses:
Investment management fee - Note B ........................ 930,992
Distribution and service fee - Note B
Class A .................................................. 140,337
Class B .................................................. 720,268
Class C .................................................. 246
Transfer agent fee - Note B ................................ 432,610
Custodian fee .............................................. 42,584
Registration and filing fees ............................... 25,986
Advisory board fee - Note B ................................ 19,836
Financial services fee - Note B ............................ 17,124
Auditing fee ............................................... 15,050
Printing ................................................... 10,464
Trustees' fees ............................................. 5,524
Legal fees ................................................. 1,147
-------------
Total Expenses ....................... 2,362,168
-------------------------------------------------------
Net Investment Loss .................. (1,185,827)
-------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized loss on investments sold ...................... (5,529,028)
Net realized gain on foreign currency transactions ......... 1,641
Change in net unrealized appreciation/depreciation
of investments ............................................ 1,586,269
-------------
Net Realized and Unrealized
Loss on Investments .................. (3,941,118)
--------------------------------------------------------
Net Decrease in Net Assets
Resulting from Operations ............ ($5,126,945)
=======================================================
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------- -------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss .......................................................... ($1,698,807) ($1,185,827)
Net realized loss on investments sold and foreign currency transactions ...... (1,389,101) (5,527,387)
Change in net unrealized appreciation/depreciation of investments and
foreign currency transactions ............................................... 16,823,770 1,586,269
-------------- ---------------
Net Increase (Decrease) in Net Assets Resulting from Operations ............. 13,735,862 (5,126,945)
-------------- ---------------
Distributions to Shareholders:
Distributions from net realized gain on investments sold and
foreign currency transactions
Class A - ($0.5126 and none per share, respectively) ........................ (891,908) --
Class B - ($0.5126 and none per share, respectively) ........................ (951,137) --
-------------- ---------------
Total Distributions to Shareholders ......................................... (1,843,045) --
-------------- ---------------
From Fund Share Transactions - Net:* .......................................... 89,358,253 39,607,523
-------------- ---------------
Net Assets:
Beginning of period .......................................................... 106,557,921 207,808,991
-------------- ---------------
End of period
(including accumulated net investment loss of $1,897 and
$1,187,724, respectively) ................................................... $207,808,991 $242,289,569
============== ===============
</TABLE>
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 repurchased during the last two periods, along with
the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
Statement of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
* Analysis of Fund Share Transactions:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ................................................................ 1,619,964 $53,582,895 1,267,097 $44,952,282
Shares issued to shareholders in reinvestment of distributions.............. 27,245 834,213 -- --
--------- ----------- --------- -----------
1,647,209 54,417,108 1,267,097 44,952,282
Less shares repurchased .................................................... (926,858) (29,707,988) (986,788) (35,074,681)
--------- ----------- --------- -----------
Net increase ............................................................... 720,351 $24,709,120 280,309 $9,877,601
========= =========== ========= ===========
CLASS B
Shares sold ................................................................ 2,488,498 $81,014,505 1,438,184 $49,265,822
Shares issued to shareholders in reinvestment of distributions ............. 26,809 797,000 -- --
--------- ----------- --------- -----------
2,515,307 81,811,505 1,438,184 49,265,822
Less shares repurchased .................................................... (543,276) (17,162,372) (582,736) (19,883,882)
--------- ----------- --------- -----------
Net increase ............................................................... 1,972,031 $64,649,133 855,448 $29,381,940
========= =========== ========= ===========
CLASS C**
Shares sold ................................................................ -- -- 10,207 $347,982
--------- ----------- --------- -----------
Net increase ............................................................... -- -- 10,207 $347,982
========= =========== ========= ===========
</TABLE>
** Class C shares commenced operations on March 1, 1999.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
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:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED AUGUST 31, PERIOD FROM OCTOBER 31, SIX MONTHS ENDED
------------------------- SEPTEMBER 1, 1996 TO ---------------- APRIL 30, 1999
1994 1995 1996 OCTOBER 31, 1996(6) 1997 1998 (UNAUDITED)
------ ------- ------ ------------------- ------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period ...... $13.38 $16.51 $21.61 $25.43 $25.11 $30.25 $33.89
------- ------- ------- ------- ------- ------- --------
Net Investment Loss ....................... (0.32) (0.36)(2) (0.19)(2) (0.05)(2) (0.19)(2) (0.23)(2) (0.10)(2)
Net Realized and Unrealized Gain (Loss) on
Investments
and Foreign Currency Transactions ........ 3.45 5.46 4.15 (0.27) 6.56 4.38 (0.29)
------- ------- ------- ------- ------- ------- --------
Total from Investment Operations ......... 3.13 5.10 3.96 (0.32) 6.37 4.15 (0.39)
------- ------- ------- ------- ------- ------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold
and Foreign Currency Transactions ........ -- -- (0.14) -- (1.23) (0.51) --
------- ------- ------- ------- ------- ------- --------
Net Asset Value, End of Period ............ $16.51 $21.61 $25.43 $25.11 $30.25 $33.89 $33.50
======= ======= ======= ======= ======= ======= ========
Total Investment Return at
Net Asset Value(3) ...................... 23.39% 30.89% 18.39% (1.26%)(4) 26.63% 13.91% (1.15%)(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .. $18,643 $24,394 $42,405 $42,618 $53,122 $83,928 $92,360
Ratio of Expenses to Average Net Assets ... 2.55% 2.56% 1.80% 1.92%(5) 1.68% 1.61% 1.56%(5)
Ratio of Net Investment Loss to
Average Net Assets ....................... (2.01%) (1.99%) (0.75%) (1.04%)(5) (0.71%) (0.71%) (0.57%)(5)
Portfolio Turnover Rate ................... 52% 38% 68% 24% 57% 39% 31%
CLASS B(1)
Per Share Operating Performance
Net Asset Value, Beginning of Period ...... $17.29 $16.46 $21.35 $24.94 $24.60 $29.40 $32.69
------- ------- ------- ------- ------- ------- --------
Net Investment Loss(2) .................... (0.17) (0.55) (0.34) (0.08) (0.37) (0.45) (0.22)
Net Realized and Unrealized Gain (Loss) on
Investments
and Foreign Currency Transactions ........ (0.66) 5.44 4.07 (0.26) 6.40 4.25 (0.26)
------- ------- ------- ------- ------- ------- --------
Total from Investment Operations ......... (0.83) 4.89 3.73 (0.34) 6.03 3.80 (0.48)
------- ------- ------- ------- ------- ------- --------
Less Distributions:
Distributions from Net Realized Gain on
Investments Sold
and Foreign Currency Transactions ........ -- -- (0.14) -- (1.23) (0.51) --
------- ------- ------- ------- ------- ------- --------
Net Asset Value, End of Period ............ $16.46 $21.35 $24.94 $24.60 $29.40 $32.69 $32.21
======= ======= ======= ======= ======= ======= ========
Total Investment Return at
Net Asset Value(3) ...................... (4.80%)(4) 29.71% 17.53% (1.36%)(4) 25.76% 13.11% (1.47%)(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .. $1,071 $6,333 $36,591 $37,521 $53,436 $123,880 $149,601
Ratio of Expenses to Average Net Assets ... 3.34%(5) 3.45% 2.42% 2.62%(5) 2.38% 2.31% 2.26%(5)
Ratio of Net Investment Loss to
Average Net Assets ....................... (2.65%)(5) (2.91%) (1.33%) (1.74%)(5) (1.41%) (1.41%) (1.27%)(5)
Portfolio Turnover Rate ................... 52% 38% 68% 24% 57% 39% 31%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
PERIOD FROM MARCH 1, 1999
(COMMENCEMENT OF
OPERATIONS) TO
APRIL 30, 1999
(UNAUDITED)
-------------
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period..................... $33.94
--------
Net Investment Loss(2) .................................. (0.08)
Net Realized and Unrealized Loss on Investments
and Foreign Currency Transactions ...................... (1.65)
--------
Total from Investment Operations ....................... (1.73)
--------
Net Asset Value, End of Period .......................... $32.21
========
Total Investment Return at Net Asset Value(3) ........... (5.10%)(4)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ................ $329
Ratio of Expenses to Average Net Assets ................. 2.38%(5)
Ratio of Net Investment Loss to Average Net Assets ...... (1.19%)(5)
Portfolio Turnover Rate ................................. 31%
(1) Class B shares commenced operations on March 7, 1994.
(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) Annualized.
(6) Effective October 31, 1996, the fiscal year end changed from August 31 to
October 31.
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.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
Schedule of Investments
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Global Health Sciences Fund on April 30, 1999. 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.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
COMMON STOCKS
Chemicals - Specialty (3.24%)
Monsanto Co. ................................. 34,000 $1,538,500
Waters Corp.* ................................. 60,000 6,307,500
----------
7,846,000
----------
Drugs - Biotechnology (6.23%)
Affymetrix, Inc.* ............................. 17,500 715,313
Alkermes, Inc.* ............................... 90,000 2,407,500
Amgen, Inc.* .................................. 30,000 1,843,125
Biogen, Inc.* ................................. 16,000 1,521,000
Cantab Pharmaceuticals Plc* .................. 15,000 47,537
Genzyme Corp.* ................................ 14,000 528,500
Gilead Sciences, Inc.* ........................ 25,000 1,151,563
IDEC Pharmaceuticals Corp.* ................... 35,000 1,776,250
Immunex Corp.* ................................ 10,000 955,000
Incyte Pharmaceuticals, Inc.* ................. 25,000 451,563
MedImmune, Inc.* .............................. 40,000 2,205,000
OSI Pharmaceuticals, Inc.* .................... 40,000 255,000
Progenics Pharmaceuticals, Inc.* .............. 35,000 498,750
SangStat Medical Corp.* ....................... 25,000 362,500
Vertex Pharmaceuticals, Inc.* ................. 17,500 369,688
----------
15,088,289
----------
Drugs - Diversified (24.63%)
Abbott Laboratories ........................... 212,000 10,268,750
American Home Products Corp. .................. 164,000 10,004,000
Bristol-Myers Squibb Co. ...................... 201,000 12,776,062
Johnson & Johnson ............................. 123,000 11,992,500
Pharmacia & Upjohn, Inc. ...................... 55,000 3,080,000
Warner-Lambert Co. ............................ 170,000 11,549,375
----------
59,670,687
----------
Drugs - Major - Domestic (18.75%)
Lilly (Eli) & Co. ............................. 135,000 9,939,375
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Drugs - Major - Domestic (continued)
Merck & Co., Inc. ............................. 167,000 $11,731,750
Pfizer, Inc. .................................. 107,000 12,311,687
Schering-Plough Corp. ......................... 237,000 11,450,062
----------
45,432,874
----------
Drugs - Major - International (10.55%)
AstraZeneca Group Plc, American
Depositary Receipts (ADR)
(United Kingdom) ............................. 85,000 3,336,250
Glaxo Wellcome Plc (ADR)
(United Kingdom) ............................. 110,000 6,407,500
Novartis AG (ADR) (Switzerland) ............... 77,000 5,646,849
Roche Holding AG (Switzerland) ................ 160 1,881,366
SmithKline Beecham Plc (ADR)
(United Kingdom) ............................. 109,000 7,159,937
Synthelabo SA (France) ........................ 5,500 1,124,274
----------
25,556,176
----------
Drugs - Specialty (3.56%)
Forest Laboratories, Inc.* .................... 80,000 3,560,000
Mylan Laboratories, Inc. ...................... 90,000 2,041,875
Watson Pharmaceutical, Inc.* .................. 75,000 3,037,500
----------
8,639,375
----------
Drugs & Sundries - Wholesale (5.01%)
AmeriSource Health Corp. (Class A)* ........... 40,000 1,107,500
Cardinal Health, Inc. ......................... 120,000 7,177,500
McKesson Corp. ................................ 70,300 2,460,500
Schein (Henry), Inc.* ......................... 47,500 1,243,906
Syncor International Corp.* ................... 5,000 142,500
----------
12,131,906
----------
Healthcare - Management (5.00%)
Accredo Health, Inc.* ......................... 44,500 984,563
Hanger Orthopedic Group, Inc.* ................ 57,200 836,550
HEALTHSOUTH Corp.* ............................ 215,000 2,889,062
IMPATH, Inc.* ................................. 65,000 1,625,000
Lincare Holdings, Inc.* ....................... 40,000 1,185,000
PAREXEL International Corp.* .................. 30,000 721,875
Renal Care Group, Inc.* ....................... 65,000 1,356,875
Trigon Healthcare, Inc.* ...................... 15,000 476,250
Wellpoint Health Networks, Inc.* .............. 29,000 2,037,250
----------
12,112,425
----------
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Healthcare - Software/Services (3.37%)
IMS Health, Inc. .............................. 110,000 $3,300,000
MedQuist, Inc.* ............................... 30,000 1,027,500
Omnicare, Inc. ................................ 160,000 3,850,000
----------
8,177,500
----------
Healthcare - Supplies (1.37%)
Becton, Dickinson & Co. ....................... 65,000 2,417,188
Ocular Sciences, Inc.* ........................ 30,000 915,000
----------
3,332,188
----------
Hospitals Management (1.48%)
Health Management Associates, Inc.
(Class A)* ................................... 230,000 3,593,750
----------
Medical Devices and Products (9.70%)
Allergan, Inc. ................................ 50,000 4,493,750
Baxter International, Inc. .................... 32,000 2,016,000
Guidant Corp.* ................................ 40,000 2,147,500
Medtronic, Inc. ............................... 100,000 7,193,750
Stryker Corp. ................................. 125,000 7,648,437
----------
23,499,437
----------
Nursing Homes (0.92%)
HCR Manor Care, Inc.* ......................... 80,000 2,220,000
----------
Retail - Drug Stores (2.07%)
CVS Corp. ..................................... 77,000 3,667,125
Walgreen Co. .................................. 50,000 1,343,750
----------
5,010,875
----------
TOTAL COMMON STOCKS
(Cost $183,976,272) (95.88%) 232,311,482
------ -----------
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
- ------------------- ---- -------------- -----
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (2.95%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
04-30-99, due 05-03-99
(Secured by U.S. Treasury Bonds,
6.875% thru 13.875%, due
05-15-11 thru 08-15-25)
- Note A ........................... 4.89% $7,158 $7,158,000
-----------
Cash Equivalents (10.23%)
Navigator Securities Lending
Prime Portfolio** .................. 24,778 24,777,795
-----------
TOTAL SHORT-TERM INVESTMENTS (13.18%) 31,935,795
-------- ------------
TOTAL INVESTMENTS (109.06%) 264,247,277
-------- ------------
OTHER ASSETS AND LIABILITIES, NET (9.06%) (21,957,708)
-------- ------------
TOTAL NET ASSETS (100.00%) $242,289,569
========= ============
*Non-income producing security.
**Represents investment of security lending collateral - Note A.
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
14
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Global Health Sciences Fund
Portfolio Concentration (Unaudited)
- --------------------------------------------------------------------------------
The Global Health Sciences 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 investments at
April 30, 1999 assigned to the various country categories.
MARKET VALUE
AS A PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
- ----------------------- ------------------
France ...................................................... 0.46%
Switzerland ................................................. 3.11
United Kingdom .............................................. 6.98
United States ............................................... 98.51
--------
TOTAL INVESTMENTS 109.06%
========
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
=======================NOTES TO FINANCIAL STATEMENTS============================
John Hancock Funds - Global Health Sciences Fund
(UNAUDITED)
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: John Hancock Global Health Sciences Fund (the "Fund"), John
Hancock European Equity Fund and John Hancock Pacific Basin Equities Fund. The
other series of the Trust are reported in separate financial statements. The
investment objective of the Fund is long-term capital appreciation through
investments in an international portfolio consisting primarily of equity
securities of issuers in the health-care industry.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The Trustees
authorized the issuance of Class C shares, effective March 1, 1999. 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."
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,
Inc., 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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required. For
federal income tax purposes, the Fund has $1,300,348 of capital loss
carryforwards 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 distribution will be made. The Fund's carryforwards expire as
follows: October 31, 2006 - $1,300,348.
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 identifies 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.
16
<PAGE>
=======================NOTES TO FINANCIAL STATEMENTS============================
John Hancock Funds - Global Health Sciences Fund
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 relative net assets of the respective classes. Distribution
and 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.
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 size of the funds.
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.
BANK BORROWINGS The Fund is permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. Effective March 12, 1999,
the Fund entered into a syndicated line of credit agreement with various banks
and the agreements previously in effect were terminated. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings. In
addition, a commitment fee is charged based on the average daily unused portion
of the line of credit and is allocated among the participating funds. The Fund
had no borrowing activity for the period ended April 30, 1999.
SECURITIES LENDING The Fund may lend its securities to certain qualified brokers
who pay the Fund negotiated lender fees. These fees are included in interest
income. The loans are collateralized at all times with cash or securities with a
market value at least equal to the market value of the securities on loan. As
with other extensions of credit, the Fund may bear the risk of delay of the
loaned securities in recovery or even loss of rights in the collateral should
the borrower of the securities fail financially. At April 30, 1999, the Fund
loaned securities having a market value of $23,696,597 collateralized by cash in
the amount of $24,777,795, which was invested in a short-term instrument.
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.
17
<PAGE>
=======================NOTES TO FINANCIAL STATEMENTS============================
John Hancock Funds - Global Health Sciences Fund
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 if they are offset by the currency amount of the
underlying transaction.
There were no open forward foreign currency exchange contracts at April
30, 1999.
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. Buying futures tends to increase the Fund's exposure to the
underlying instrument. Selling futures tends to decrease the Fund's exposure to
the underlying instrument or hedge other Fund instruments. 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 on
which it trades. 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 April 30, 1999, there were no open positions in financial futures
contracts.
OPTIONS Listed options will be 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 changing
security prices. 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 ("credit risk"), 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 April
30, 1999.
18
<PAGE>
=======================NOTES TO FINANCIAL STATEMENTS============================
John Hancock Funds - Global Health Sciences Fund
NOTE B -
MANAGEMENT FEE, ADMINISTRATIVE SERVICES
AND TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a quarterly
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 Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly owned subsidiary of the Adviser. For the period ended
April 30, 1999, net sales charges received with regard to Class A shares
amounted to $538,151. Out of this amount, $74,341 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$376,992 was paid as sales commissions to sales personnel of unrelated
broker-dealers and $86,818 was paid as sales commissions to personnel of
Signator Investors, Inc. ("Signator Investors"), a related broker-dealer,
formerly known as John Hancock Distributors, Inc. The Adviser's indirect parent,
John Hancock Mutual Life Insurance Company ("JHMLICo"), is the indirect sole
shareholder of Signator Investors.
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 for providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended April 30, 1999,
contingent deferred sales charges paid to JH Funds amounted to $318,040.
Class C shares which are redeemed within one year of purchase will be
subject to a contingent deferred sales charge ("CDSC") at a rate of 1.00% 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 C shares. For the period ended April 30, 1999, there were no contingent
deferred sales charges.
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, Class B and Class C 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 and Class C 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 Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo. The
Fund pays transfer agent fees based on the number of shareholder accounts and
certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Fund. The compensation for the period was
at an annual rate of less than 0.02% of the average net assets of the 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. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione 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. The unaffiliated Trustees may elect
to defer, for tax purposes, their receipt of this compensation under the John
Hancock Group of Funds Deferred Compensation
19
<PAGE>
=======================NOTES TO FINANCIAL STATEMENTS============================
John Hancock Funds - Global Health Sciences Fund
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 April 30,
1999, the Fund's investments to cover the deferred compensation liability had
unrealized appreciation of $220.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 1999, aggregated $78,333,409 and
$38,833,369, respectively. There were no purchases or sales of obligations of
the U.S. government and its agencies during the period ended April 30, 1999.
The cost of investments owned at April 30, 1999 (including short-term
investments) for federal income tax purposes was $216,001,450. Gross unrealized
appreciation and depreciation of investments aggregated $59,135,396 and
$10,889,569, respectively, resulting in net unrealized appreciation of
$48,245,827.
20
<PAGE>
=======================================NOTES====================================
John Hancock Funds - Global Health Sciences Fund
21
<PAGE>
=======================================NOTES====================================
John Hancock Funds - Global Health Sciences Fund
22
<PAGE>
=======================================NOTES====================================
John Hancock Funds - Global Health Sciences Fund
23
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS ----------------
A Global Investment Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
----------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Global Health Sciences Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[LOGO] Printed on Recycled Paoer 280SA 4/99
6/99
<PAGE>
The latest report from your
Fund's management team
SEMIANNUAL REPORT
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
Pacific Basin
Equities Fund
APRIL 30, 1999
[LOGO] JOHN HANCOCK FUNDS
A Global Investment Management Firm
<PAGE>
---------------------------------
TRUSTEES
Edward J. Boudreau, Jr.
Dennis S. Aronowitz*
Stephen L. Brown
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
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Anne C. Hodsdon
President, and Chief Operating Officer
and Chief Investment Officer
Osbert M. Hood
Senior Vice President and
Chief Financial Officer
Susan S. Newton
Vice President and Secretary
James J. Stokowski
Vice President and Treasurer
Thomas H. Connors
Vice President and Compliance Officer
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
John Hancock Signature Services, Inc.
1 John Hancock Way, Suite 1000
Boston, Massachusetts 02217-1000
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
SUB-INVESTMENT ADVISER
Indocam Asia Advisers Limited
One Exchange Square
Hong Kong
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
-----------------------------------------
================================================================================
DEAR FELLOW SHAREHOLDERS:
The Year 2000 is fast approaching and people around the world are getting ready
to celebrate this historic transition to a new millennium. At John Hancock
Funds, we share the excitement, but we aren't popping the champagne corks just
yet. Rather, we are staying on the course that we set more than two years ago to
ensure that the transition to a new millennium is a smooth one for our
shareholders.
As many already know, the Year 2000 has created more than the prospect of New
Year's festivities of epic proportions. It has also presented the world with a
challenge: making sure that older computers, and any equipment powered by
computer chips, can properly read and process the date "00" as 2000, not 1900.
Much has been written about how the world will weather the change. Some view it
as a non-event, while others see the potential for disruptions. How much
disruption, and for how long, depends on whom you talk to.
- --------------------------------------------------------------------------------
[A 1" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right next to second paragraph.]
- --------------------------------------------------------------------------------
As a company, we recognize that the Year 2000 ("Y2K") phenomenon is an important
issue to be dealt with and we have made it a top priority. Two years ago, John
Hancock Funds put a full-time team of experts on the case and established a
company-wide program to evaluate all computer applications and to modify or
replace those that needed changing.
These modifications and replacements are nearly done, and the tests of all our
systems are on schedule for completion by the end of July. The rest of 1999 will
be spent testing with our business partners and continuing to participate in
industry testing. We have also established additional contingency plans beyond
our regular ones to prepare for any challenges that the Year 2000 might present.
In the end, John Hancock will spend approximately $90-$95 million to ensure we
make a successful transition to the Year 2000.
Throughout 1999, each of our quarterly "Fundamentals" newsletters is featuring
articles with more detailed information on Y2K matters of importance to our
shareholders. I encourage you to read them, or contact one of our Customer
Service Representatives at 1-800-225-5291 for another copy. For your own peace
of mind, we also recommend that you save your 1999 statements, especially those
you receive between October and December, so that you are able to check them
against the first one you receive in 2000. It's a measure of prudence, not
panic. Good record keeping is part of good planning.
No one knows how the dawning of the new millennium will unfold. Although we
cannot make any ironclad assurances, we are confident that the steps we have
taken will provide shareholders with as smooth a transition as possible. Once
that occurs, we will happily raise our glasses to toast the New Year, future
prosperity and our hopes to serve you well into the 2000's.
Sincerely,
/s/Edward J. Boudreau, Jr.
- -------------------------------------------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE>
================================================================================
By Ayaz Ebrahim for the Portfolio Management Team
John Hancock
Pacific Basin
Equities Fund
Pacific Basin markets on the road to recovery
---------------------------------------------
The clouds have finally begun to lift from the Pacific Basin stock markets. The
bright spot in the region has been Japan, where stocks rose sharply in the past
six months. The Japanese rally has been fueled largely by foreign investors, who
have flooded back into the market on signs of economic recovery and much-needed
corporate restructuring. Although Japan's recession is far from over, indicators
- - such as increased consumer spending suggest that the economy has finally
turned the corner. What's more, the government has started to implement
significant reforms to address critical problems in the country's banking
system.
Elsewhere, the performance of other Asian markets was mixed. South
Korea's Kospi stock market index gained strongly with evidence of the
government's firm commitment to substantial financial reform. Hong Kong also
turned in a strong performance, thanks to low U.S. interest rates and a strong
property sector. In the Philippines, on the other hand, investors took a
wait-and-see attitude, looking for more substantial signs of economic recovery.
As for the Indonesian market, a combination of upcoming elections and riots kept
investors on the sidelines.
Performance scorecard
The region's recent turnaround has resulted in positive returns for Pacific
Basin equity funds. For the six months ended April 30, 1999, John Hancock
Pacific Basin Equities Fund's Class A and Class B shares posted total returns of
38.01% and 37.66%, respectively, at net asset value. Those results outpaced the
average Pacific region fund's return of 31.39%, according
- --------------------------------------------------------------------------------
[A 2 1/2" x 2 1/2" photo at bottom right side of page of John Hancock Pacific
Basin Equities Fund. Caption below reads "Ayaz Ebrahim."]
- --------------------------------------------------------------------------------
"The bright spot in the region has been Japan..."
3
<PAGE>
================================================================================
John Hancock Funds - Pacific Basin Equities Fund
"Increasing our stake in Japan contributed significantly to the Fund's strong
performance..."
- --------------------------------------------------------------------------------
[Pie chart at top left hand column with heading "Portfolio Diversification." The
chart is divided into eight sections (from top to left): Japan 39%, China 3%,
Taiwan 4%, Singapore 4%, Australia 8%, South Korea 8%, Short-Term Investments &
Other 10% and Hong Kong 24%. A note below the chart reads "As a percentage of
net assets on April 30, 1999."]
- --------------------------------------------------------------------------------
to Lipper, Inc.1 The Fund's Class C shares, which were introduced on March 1,
1999, returned 28.27% from inception through April 30, 1999. Keep in mind that
your net asset value return will be different from the Fund's performance if you
were not invested in the Fund for the entire period and did not reinvest all
distributions. Please see pages six and seven for longer-term performance
information.
Japan
Increasing our stake in Japan contributed significantly to the Fund's strong
performance during the period. For two key reasons, we've beefed up our Japanese
holdings to 39% of net assets, up from 25% six months ago. First, given their
sharp decline over the past few years, Japanese stocks offered some of the best
values in the region. Second, and more importantly, we saw compelling evidence
that Japan's economy had
- --------------------------------------------------------------------------------
[Table at bottom of left hand column entitled "Scorecard". The header for the
left column is "Investment" and the header for the right column is "Recent
Performance...and What's Behind the Numbers". The first listing is Sony Corp.
followed by an up arrow with the phrase "Cost-cutting announcement." The second
listing is Housing & Commercial Bank followed by an up arrow with the phrase
"Bank restructuring and declining rates." The third listing is Fuji Photo Film
followed by a down arrow with the phrase "Strong yen and disappointing results."
A note below the table reads "See `Schedule of Investments.' Investment holdings
are subject to change."]
- --------------------------------------------------------------------------------
bottomed out and that the government was finally tackling the serious problems
facing the banking sector.
Our focus has been on financial stocks and corporate restructuring
plays. One recent purchase was Nomura Securities, which is benefiting from
increased trading volume in Japanese stocks. We've also added a position in Sony
Corp. The stock jumped sharply on the heels of its restructuring announcement,
which entails reducing 10% of its staff.
Australia
To fund the increase in Japan, we've taken significant profits in Australia.
During the region's financial crisis and currency turmoil, Australia offered an
attractive defensive play. Because of its strong correlation to the U.S. stock
market, Australia was more immune to the region's crisis. Although the prospects
for Australia are still solid, Japan, in our view, now offers better relative
value. As result, we've reduced our Australian weighting from 18% to 8% of net
assets.
Hong Kong
Our strong position in Hong Kong also buoyed the Fund's performance. By the end
of April, our Hong Kong position had reached 24% of net assets - the Fund's
second largest weighting behind Japan. As mentioned earlier, Hong Kong has
reaped the benefits of low U.S. interest rates. Because the Hong Kong dollar is
closely tied to the U.S. dollar, Hong Kong interest rates tend to move in
lockstep with U.S. interest rates. Thankfully, stable U.S. inflation has kept
interest rates low both in the U.S. and Hong Kong. Other positive factors have
been increased liquidity in the market, positive budget news and glimmers of
life in the economy. Our emphasis has remained
4
<PAGE>
================================================================================
John Hancock Funds - Pacific Basin Equities Fund
- --------------------------------------------------------------------------------
[Bar chart at top of left hand column with heading "Fund Performance". Under the
heading is a note that reads "For the six months ended April 30, 1999." The
chart is scaled in increments of 5% with 0% at the bottom and 40% at the top.
The first bar represents the 38.01% total return for John Hancock Pacific Basin
Equities Fund Class A. The second bar represents the 37.66% total return for
John Hancock Pacific Basin Equities Fund Class B. The third bar represents the
28.27%* total return for John Hancock Pacific Basin Equities Fund Class C. The
fourth bar represents the 31.39% total return for Average Pacific region fund. A
note below the chart reads "Total returns for John Hancock Pacific region fund
are at net asset value with all distributions reinvested. The average Pacific
region fund is tracked by Lipper, Inc. See the following two pages for
historical performance information. *From inception March 1, 1999 through April
30, 1999."]
- --------------------------------------------------------------------------------
on interest-rate-sensitive stocks, particularly in the property sector. After
their significant decline, property stocks - such as Cheung Kong Holdings -are
poised to benefit most from lower interest rates.
South Korea
South Korea has been one of the most successful restructuring stories in Asia.
Although financial reform there is far from complete, the government's
initiatives have been quite encouraging. Bad loans are being sorted out and
lending has been put on a much more solid footing. What's more, the economic
picture is positive. The South Korean consumer has started spending again and
there's a strong chance that economic growth in South Korea could reach 4% this
year. Given all of the positive signs, we've increased our South Korean holdings
from 5% to 8% of net assets. Our recent purchases have focused on banks - such
as Housing & Commercial Bank and Shinhan Bank - that are likely to be the
biggest eneficiaries of South Korea's aggressive financial reform.
Continuing rebound
We remain optimistic about the region's prospects for the remainder of the year.
With foreign investment in the region likely to gain momentum over the next
several months, we expect Asian markets to continue their upward trend. In
addition, the Japanese economy appears to have finally reached its cyclical
trough, and monetization - or the injection of money into the economy - is
likely to bring the next stage of the recovery. With Japan as the engine of
growth in Asia, prospects for a recovery across the region are bright. In fact,
South Korea is likely to return to growth this year and Thailand is following
closely in its footsteps. Even the Malaysian economy is starting to showing
signs of life.
Given the positive economic situation, we expect earnings growth to
materialize in the second half of the year. For the short term, we will continue
to focus on interest-rate-sensitive stocks and restructuring plays. But as
earnings growth becomes more of a reality in the next few months, we will begin
to search out growth stories.
- --------------------------------------------------------------------------------
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 such as political, economic and
currency risks and differences in accounting standards and financial reporting.
1Figures from Lipper, Inc. include reinvested dividends and do not take into
account sales charges. Actual load-adjusted performance is lower.
"...prospects for a recovery across the region are bright."
5
<PAGE>
================================================================================
John Hancock Funds - Pacific Basin Equities Fund
- --------------------------------------------------------------------------------
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
measures the change in value of an investment from the beginning to the end of a
period, assuming all distributions were reinvested.
For Class A shares, total return figures include a maximum applicable sales
charge of 5%. Class B performance reflects a maximum contingent deferred sales
charge (maximum 5% and declining to 0% over six years). Class C performance
includes a contingent deferred sales charge (1% declining to 0% after one year).
All figures represent past performance and are no guarantee of future results.
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. Please read your
prospectus for a discussion of the risks associated with international
investing, including currency and political risks and differences in accounting
standards and financial reporting, before you invest or send money.
- --------------------------------------------------------------------------------
CLASS A
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
ONE FIVE TEN
YEAR YEARS YEARS
------- ------- --------
Cumulative Total Returns (4.31%) (26.80%) 18.33%
Average Annual Total Returns (4.31%) (6.05%) 1.70%
- --------------------------------------------------------------------------------
CLASS B
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
ONE FIVE INCEPTION
YEAR YEARS (3/7/94)
------- ------- --------
Cumulative Total Returns (4.90%) (27.05%) (29.41%)
Average Annual Total Returns (4.90%) (6.11%) (6.65%)
- --------------------------------------------------------------------------------
CLASS C
- --------------------------------------------------------------------------------
For the period ended March 31, 1999
SINCE
INCEPTION
(3/1/99)
--------
Cumulative Total Return 12.09%
Average Annual Total Return 12.09%(1)
Notes to Performance
(1) Not annualized.
6
<PAGE>
================================================================================
John Hancock Funds - Pacific Basin Equities Fund
- --------------------------------------------------------------------------------
WHAT HAPPENED TO A $10,000 INVESTMENT...
- --------------------------------------------------------------------------------
The charts on the right show how much a $10,000 investment in the John Hancock
Pacific Basin Equities Fund would be worth, assuming all distributions were
reinvested for the period indicated. For comparison, we've shown the same
$10,000 investment in the Morgan Stanley Capital International (MSCI) 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. Past performance is not indicative of future results.
- --------------------------------------------------------------------------------
Line chart with the heading John Hancock 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 John Hancock Pacific Basin
Equities Fund on October 31, 1988, before sales charge, and is equal to $14,860.
The second line represents the value of the same hypothetical investment made in
the John Hancock Pacific Basin Equities Fund, after sales charge, and is equal
to $14,119. The third line represents the MSCI Pacific Index and is equal to
$8,846.
Line chart with the heading John Hancock 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 MSCI
and is equal to $8,477. The second line represents the value of the hypothetical
$10,000 investment made in the John Hancock Pacific Basin Equities Fund on March
7, 1994, before sales charge, and is equal to $8,083 as of April 30, 1999. The
third line represents the value of same hypothetical investment made in the John
Hancock Pacific Basin Equities Fund, after sales charge, and is equal to $8,006
as of April 30, 1999.
Line chart with the heading John Hancock Pacific Basin Equities Fund Class C,
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 John Hancock Pacific Basin
Equities Fund on March 1, 1999, before sales charge, and is equal to $12,827.
The second line represents the value of the same hypothetical investment made in
the John Hancock Pacific Basin Equities Fund, after sales charge, and is equal
to $12,727. The third line represents the MSCI Pacific Index and is equal to
$12,017.
- --------------------------------------------------------------------------------
7
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Statement of Assets and Liabilities
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $26,016,054)....................................................................... $34,044,610
Bonds (cost - $ 948,187) ................................................................................ 976,500
Short-term investments (cost - $6,318,394) - Note A ..................................................... 6,318,394
---------------
41,339,504
Cash ..................................................................................................... 893
Foreign currency, at value (cost - $151,178) ............................................................. 143,828
Receivable for investments sold .......................................................................... 3,212,523
Receivable for shares sold ............................................................................... 131,967
Interest receivable ...................................................................................... 8,525
Dividends receivable ..................................................................................... 88,093
Other assets ............................................................................................. 3,663
---------------
Total Assets ............................................................................. 44,928,996
--------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investments purchased ........................................................................ 2,926,467
Payable for shares repurchased ........................................................................... 3,304
Payable for forward foreign currency exchange contracts purchased - Note A ............................... 2,483
Payable for securities on loan - Note A .................................................................. 4,198,783
Foreign tax payable ...................................................................................... 2,433
Payable to John Hancock Advisers, Inc. and affiliates - Note B ........................................... 3,663
Accounts payable and accrued expenses .................................................................... 120,538
---------------
Total Liabilities ........................................................................ 17,257,671
--------------------------------------------------------------------------------------------------------------
Net Assets:
Capital paid-in .......................................................................................... 39,527,642
Accumulated net realized loss on investments and foreign currency transactions ........................... (9,537,584)
Net unrealized appreciation of investments and foreign currency transactions ............................. 8,027,769
Accumulated net investment loss .......................................................................... (346,502)
---------------
Net Assets ............................................................................... $37,671,325
==============================================================================================================
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 )
Class A - $18,187,469/1,503,943 .......................................................................... $12.09
==============================================================================================================================
Class B - $19,416,536/1,665,780 .......................................................................... $11.66
==============================================================================================================================
Class C* - $67,320/5,776 ................................................................................. $11.66
==============================================================================================================================
Maximum Offering Price Per Share**
Class A - ($12.09 x 105.26%) ............................................................................. $12.73
==============================================================================================================================
</TABLE>
* Class C shares commenced operations on March 1, 1999.
** 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.
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 April 30, 1999. You'll also
find the net asset value and the maximum offering price per share as of that
date.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Statement of Operations
Six months ended April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Investment Income:
Dividends (net of foreign withholding taxes of $18,771) ......................................................... $255,496
Interest (including income on securities loaned of $11,972) ..................................................... 46,529
------------
302,025
------------
Expenses:
Investment management fee - Note B ............................................................................. 114,779
Distribution and service fee - Note B
Class A ....................................................................................................... 22,242
Class B ....................................................................................................... 69,303
Class C ....................................................................................................... 29
Transfer agent fee - Note B .................................................................................... 98,962
Custodian fee .................................................................................................. 59,855
Registration and filing fees ................................................................................... 17,177
Auditing fee ................................................................................................... 15,108
Printing ....................................................................................................... 6,819
Financial services fee - Note B ................................................................................ 2,067
Trustees' fees ................................................................................................. 708
Legal fees ..................................................................................................... 160
Miscellaneous .................................................................................................. 151
------------
Total Expenses ................................................................................ 407,360
--------------------------------------------------------------------------------------------------------------
Net Investment Loss ........................................................................... (105,335)
--------------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold ........................................................................... 3,516,075
Net realized gain on foreign currency transactions .............................................................. 252,498
Change in net unrealized appreciation/depreciation
of investments ................................................................................................. 6,407,411
Change in net unrealized appreciation/depreciation
of foreign currency transactions ............................................................................... (9,409)
------------
Net Realized and Unrealized
Gain on Investments and
Foreign Currency Transactions ................................................................. 10,166,575
--------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations ..................................................................... $10,061,240
==============================================================================================================
</TABLE>
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.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
---------------- ----------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss......................................................... ($28,009) ($105,335)
Net realized gain (loss) on investments sold and
foreign currency transactions ............................................. (14,494,802) 3,768,573
Change in net unrealized appreciation/depreciation of investments and
foreign currency transactions ............................................. 6,619,151 6,398,002
------------- ------------
Net Increase (Decrease) in Net Assets Resulting from Operations .......... (7,903,660) 10,061,240
------------- ------------
From Fund Share Transactions - Net:* ........................................ (2,642,510) (272,981)
------------- ------------
Net Assets:
Beginning of period ........................................................ 38,429,236 27,883,066
------------- ------------
End of period (including accumulated net investment loss of $241,167 and
$346,502, respectively) ................................................... $27,883,066 $37,671,325
============= ============
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 1999
OCTOBER 31, 1998 (UNAUDITED)
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ----------- ----------
CLASS A
Shares sold................................ 6,871,046 $63,598,308 3,417,801 $34,582,868
Less shares repurchased ................... (7,006,277) (65,982,694) (3,593,632) (36,486,042)
------------ ------------- ------------ -------------
Net decrease .............................. (135,231) ($2,384,386) (175,831) ($1,903,174)
============ ============= ============ =============
CLASS B
Shares sold ............................... 2,024,172 $18,385,168 932,949 $9,510,437
Less shares repurchased ................... (1,999,604) (18,643,292) (821,285) (7,944,223)
------------ ------------- ------------ -------------
Net increase (decrease) ................... 24,568 ($258,124) 111,664 $1,566,214
============ ============= ============ =============
CLASS C**
Shares sold ............................... -- -- 5,776 $63,979
------------ ------------- ------------ -------------
Net increase .............................. -- -- 5,776 $63,979
============ ============= ============ =============
</TABLE>
** Class C shares commmenced operations on March 1, 1999.
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, if any, and any increase or decrease in
money shareholders invested in the Fund. The footnote illustrates the number of
Fund shares sold, reinvested and repurchased during the last two periods, along
with the corresponding dollar value.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
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:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, PERIOD FROM YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
-------------------------- SEPTEMBER 1, 1996 TO ---------------------- APRIL 30, 1999
1994 1995 1996 October 31, 1996(7) 1997 1998 (UNAUDITED)
------ ------- ------- -------------------- ------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period....... $13.27 $15.88 $14.11 $14.74 $14.47 $11.63 $8.76
-------- -------- -------- --------- --------- -------- --------
Net Investment Income (Loss)(2) ........... (0.10) 0.02(3) (0.02) (0.02) (0.07) 0.02 (0.02)
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currency
Transactions ............................ 3.12 (1.24) 0.65 (0.25) (2.66) (2.89) 3.35
-------- -------- -------- --------- --------- -------- --------
Total from Investment Operations ........ 3.02 (1.22) 0.63 (0.27) (2.73) (2.87) 3.33
-------- -------- -------- --------- --------- -------- --------
Less Distributions:
Dividends from Net Realized Gain on
Investments Sold and Foreign Currency
Transactions ............................. (0.41) (0.55) -- -- (0.11) -- --
-------- -------- -------- --------- --------- -------- --------
Net Asset Value, End of Period ............ $15.88 $14.11 $14.74 $14.47 $11.63 $8.76 $12.09
======== ======== ======== ========= ========= ======== ========
Total Investment Return at
Net Asset Value(4) ....................... 22.82% (7.65%) 4.47% (1.83%)(5) (19.03%) (24.68%) 38.01%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) .. $50,261 $37,417 $41,951 $38,694 $21,109 $14,717 $18,187
Ratio of Expenses to Average Net Assets ... 2.43% 2.05% 1.97% 2.21%(6) 2.06% 2.46% 2.50%(6)
Ratio of Net Investment Income (Loss)
to Average Net Assets .................... (0.66%) 0.13%(3) (0.15%) (0.83%)(6) (0.49%) 0.22% (0.39%)(6)
Portfolio Turnover Rate ................... 68% 48% 73% 15% 118% 230% 108%
</TABLE>
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.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED YEAR ENDED AUGUST 31, PERIOD FROM OCTOBER 31, SIX MONTHS ENDED
AUGUST 31, --------------------- SEPTEMBER 1, 1996 TO -------------- APRIL 30, 1999
1994(1) 1995 1996 OCTOBER 31, 1996(7) 1997 1998 (UNAUDITED)
------------ -------- -------- -------------------- ----- ----- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning of Period..... $15.11 $15.84 $13.96 $14.49 $14.20 $11.32 $8.47
--------- ---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss(2) .................. (0.09) (0.09) (0.13) (0.04) (0.18) (0.04) (0.05)
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions .......................... 0.82 (1.24) 0.66 (0.25) (2.59) (2.81) 3.24
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations ...... 0.73 (1.33) 0.53 (0.29) (2.77) (2.85) 3.19
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less Distributions:
Dividends from Net Realized Gain on
Investments Sold and Foreign Currency
Transactions .......................... -- (0.55) -- -- (0.11) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period .......... $15.84 $13.96 $14.49 $14.20 $11.32 $8.47 $11.66
========== ========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value(4) ..................... 4.83%(5) (8.38%) 3.80% (2.00%)(5) (19.67%) (25.18%) 37.66%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) $9,480 $14,368 $32,342 $30,147 $17,320 $13,166 $19,417
Ratio of Expenses to Average Net Assets . 3.00%(6) 2.77% 2.64% 2.90%(6) 2.76% 3.16% 3.20%(6)
Ratio of Net Investment Loss to
Average Net Assets ..................... (1.40%)(6) (0.66%) (0.86%) (1.52%)(6) (1.19%) (0.48%) (1.10%)(6)
Portfolio Turnover Rate ................. 68% 48% 73% 15% 118% 230% 108%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Financial Highlights (continued)
- --------------------------------------------------------------------------------
PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT
OF OPERATIONS) TO
APRIL 30, 1999
(UNAUDITED)
---------
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning of Period ......................... $9.09
----------
Net Investment Loss(2) ....................................... 0.01
Net Realized and Unrealized Gain on Investments
and Foreign Currency Transactions ........................... 2.56
----------
Total from Investment Operations ........................... 2.57
----------
Net Asset Value, End of Period ............................... $11.66
==========
Total Investment Return at Net Asset Value(4) ................ 28.27%(5)
Ratios and Supplemental Data
Net Assets, End of Period (000s omitted) ..................... $67
Ratio of Expenses to Average Net Assets ...................... 3.20%(6)
Ratio of Net Investment Income to Average Net Assets ......... 1.06%(6)
Portfolio Turnover Rate ...................................... 108%
(1) Class B shares commenced operations on March 7, 1994.
(2) Based on the average of the 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) Annualized.
(7) Effective October 31, 1996, the fiscal year end changed from August 31 to
October 31.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Schedule of Investments
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned by the
Pacific Basin Equities Fund on April 30, 1999. It's divided into three main
categories: common stocks, bonds and short-term investments. Common stocks and
bonds are further broken down by country. Short-term investments, which
represent the Fund's "cash" position, are listed last.
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
COMMON STOCKS
Australia (8.44%)
Brambles Industries Ltd.
(Diversified Operations)...................... 11,883 $349,182
Foster's Brewing Group Ltd. (Beverages) ....... 109,300 318,827
National Australia Bank Ltd.
(Banks - Foreign) ............................ 19,200 373,799
National Foods Ltd. (Food) .................... 157,500 326,226
Pasminco Ltd. (Metal) ......................... 599,100 670,008
Qantas Airways Ltd. (Transport) ............... 195,597 537,161
WMC Ltd. (Metal) .............................. 61,000 263,595
Woodside Petroleum Ltd. (Oil & Gas) ........... 50,000 340,801
----------
3,179,599
----------
Hong Kong (23.74%)
Amoy Properties Ltd.
(Real Estate Operations) ..................... 295,000 268,320
Cafe De Coral Holdings Ltd. (Retail) .......... 1,078,000 354,651
Cheung Kong Holdings Ltd.
(Real Estate Operations) ..................... 78,000 709,457
Guoco Group Ltd. (Finance) .................... 661,000 1,743,962
Hang Lung Development Co., Ltd.
(Real Estate Operations) ..................... 521,000 672,171
Hongkong Electric Holdings Ltd. (Utilities) ... 206,500 658,051
Hong Kong Telecommunications Ltd.
(Telecommunications) ......................... 336,000 903,832
HSBC Holdings Ltd. (Banks - Foreign) .......... 33,200 1,233,596
Hutchison Whampoa Ltd.
(Diversified Operations) ..................... 81,000 726,293
New World Infrastructure Ltd. (Building)* ..... 70,400 128,520
Road King Infrastructure Ltd. (Building) ...... 500,000 338,666
Sun Hung Kai Properties Ltd.
(Real Estate Operations) ..................... 50,000 438,653
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
Hong Kong (continued)
Swire Pacific Ltd. (Diversified Operations) ... 136,500 $766,062
----------
8,942,234
----------
Japan (39.07%)
Bank of Tokyo-Mitsubishi, Ltd.
(Banks - Foreign) ............................ 39,000 575,431
Credit Saison Co., Ltd. (Finance) ............. 11,800 241,099
Daiwa House Industry Co., Ltd. (Building) ..... 50,000 596,634
Fuji Photo Film Co., Ltd. (Leisure) ........... 6,000 226,595
Honda Motor Co., Ltd.
(Automobile/Trucks) .......................... 14,000 616,647
Matsushita Communication Industrial Co.,
Ltd. (Telecommunications) ..................... 9,000 645,872
NIDEC Corp. (Machinery) ....................... 2,000 259,588
Nippon Telegraph & Telephone Corp.
(Telecommunications) ......................... 89 968,849
Nomura Securities Co., Ltd.
(Broker Services) ............................ 149,000 1,607,034
NTT Data Corp. (Telecommunications) ........... 150 1,186,987
NTT Mobile Communication Network, Inc.
(Telecommunications) ......................... 18 1,055,100
Orix Corp. (Leasing Companies) ................ 12,100 973,715
Sakura Bank, Ltd. (The) (Banks - Foreign) ..... 452,000 1,744,867
Secom Co., Ltd.
(Protection - Safety Equip. & Svc.) .......... 4,000 390,554
Sekisui House, Ltd. (Building) ................ 17,000 190,328
Sony Corp. (Electronics) ...................... 9,300 868,322
Sumitomo Bank, Ltd. (The)
(Banks - Foreign) ............................ 81,000 1,096,098
Takeda Chemical Industries, Ltd. (Medical) .... 22,000 956,121
Takefuji Corp. (Finance) ...................... 4,200 348,183
Toyota Motor Corp. (Automobile/Trucks) ........ 6,000 170,323
----------
14,718,347
----------
Malaysia (1.67%)
Malaysia International Shipping Berhad
(Transport)*** ............................... 120,000 151,579
Petronas Gas Berhad (Oil & Gas)*** ............ 104,000 193,768
Public Bank Berhad (Banks - Foreign)*** ....... 144,000 107,318
Sime Darby Berhad
(Diversified Operations)*** .................. 191,000 174,514
----------
627,179
----------
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
MARKET
ISSUER, DESCRIPTION NUMBER OF SHARES VALUE
- ------------------- ---------------- -----
New Zealand (0.73%)
Warehouse Group Ltd. (The) (Retail) ........... 68,500 $273,556
----------
Philippine Islands (1.40%)
Equitable Banking Corp.
(Banks - Foreign) ............................ 227,200 528,789
----------
Singapore (3.73%)
Advanced Systems Automation Ltd.
(Machinery) .................................. 650,000 433,001
Allgreen Properties Ltd.
(Real Estate Operations)* .................... 90,000 54,648
City Developments Ltd.
(Real Estate Operations) ..................... 57,000 379,709
First Capital Corp. Ltd.
(Real Estate Operations) ..................... 271,000 359,459
Wing Tai Holdings Ltd.
(Real Estate Operations) ..................... 142,000 176,631
----------
1,403,448
----------
South Korea (8.09%)
Housing & Commercial Bank
(Banks - Foreign)* ........................... 62,000 1,460,665
Kookmin Bank (Banks - Foreign)* ............... 62,960 858,184
Korea Line Co. (Transport)* ................... 16,827 202,462
Samsung Display Devices Co.
(Electronics) ................................ 4,062 208,483
Samsung Electronics Ltd., Global
Depositary Receipts (Electronics)* (R) ........ 294 13,054
Shinhan Bank (Banks - Foreign)* ............... 27,720 305,538
----------
3,048,386
----------
Taiwan (3.51%)
Asustek Computer, Inc. (Computers)* ........... 38,000 397,431
Compal Electronics, Inc. (Computers)* ......... 28,056 96,952
D-Link Corp. (Computers)* ..................... 52,000 107,339
Taiwan Semiconductor Manufacturing Co.,
Ltd. (Electronics)* .......................... 181,250 612,481
Winbond Electronics Corp. (Electronics)* ...... 100,000 108,869
----------
1,323,072
----------
TOTAL COMMON STOCKS
(Cost $26,016,054) (90.38%) 34,044,610
------ ----------
INTEREST PAR VALUE MARKET
ISSUER, DESCRIPTION RATE (000s OMITTED) VALUE
- ------------------- ---- -------------- -----
BONDS
China (2.59%)
Huaneng Power International,
Inc. (Energy)
Conv Bond 05-21-04............. 1.75% $1,050 $976,500
----------
TOTAL BONDS
(Cost $948,187) (2.59%) 976,500
------ ----------
SHORT-TERM INVESTMENTS
Hong Kong (0.67%)
Hong Kong Time Deposit,
Due 05-03-99**** .............. 4.63 1,950 251,611
----------
Joint Repurchase Agreement (4.96%)
Investment in a joint repurchase
agreement transaction with
SBC Warburg, Inc. - Dated
04-30-99, due 05-03-99
(Secured by U.S. Treasury
Bonds, 6.875% thru 13.875%,
due 05-15-11 thru 08-15-25)
- Note A ...................... 4.89 1,868 1,868,000
----------
Cash Equivalents (11.14%)
Navigator Securities Lending
Prime Portfolio ** ...................... 4,199 4,198,783
----------
TOTAL SHORT-TERM INVESTMENTS (16.77%) 6,318,394
-------- -----------
TOTAL INVESTMENTS (109.74%) 41,339,504
-------- -----------
OTHER ASSETS AND LIABILITIES, NET (9.74%) (3,668,179)
-------- -----------
TOTAL NET ASSETS (100.00%) $37,671,325
======== ===========
* Non-income producing security.
** Represents investment of security lending collateral - Note A.
*** Security is restricted as to resale by the Malaysian Central Bank.
**** Par value of this security is denominated in foreign currency.
(R) Security is exempt from registration under rule 144A of the
Securities and Exchange Act of 1933. Such securities may be resold,
normally to qualified institutional buyers, in transactions exempt from
registration. Rule 144A securities amounted to $13,054 as of April 30,
1999.
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
15
<PAGE>
==============================FINANCIAL STATEMENTS==============================
John Hancock Funds - Pacific Basin Equities Fund
Industry Diversification
April 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
The Fund primarily invests in securities issued by companies of other countries.
The performance of the Fund is closely tied to the economic conditions within
the countries in which 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 April 30, 1999 assigned to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
- --------------------- ----------------
Automobile/Trucks ........................................... 2.09%
Banks - Foreign ............................................. 21.99
Beverages ................................................... 0.85
Broker Services ............................................. 4.27
Buildings ................................................... 3.33
Computers ................................................... 1.60
Diversified Operations ...................................... 5.35
Electronics ................................................. 4.81
Energy ...................................................... 2.59
Finance ..................................................... 6.19
Food ........................................................ 0.87
Leasing Companies ........................................... 2.58
Leisure ..................................................... 0.60
Machinery ................................................... 1.84
Medical ..................................................... 2.54
Metal ....................................................... 2.48
Oil & Gas ................................................... 1.42
Protection - Safety Equip. & Svc. ........................... 1.04
Real Estate Operations ...................................... 8.12
Retail ...................................................... 1.67
Telecommunications .......................................... 12.64
Transport ................................................... 2.36
Utilities ................................................... 1.74
Short-Term Investments ...................................... 16.77
----------
TOTAL INVESTMENTS 109.74%
==========
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Pacific Basin Equities Fund
(UNAUDITED)
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: John Hancock Pacific Basin Equities Fund (the "Fund"), John
Hancock European Equity Fund and John Hancock Global Health Sciences Fund. The
other series of the Trust are reported in separate financial statements. The
Fund's investment objective is to seek long-term capital appreciation through
investment in a diversified portfolio of equity securities of issuers located in
countries of the Pacific Basin.
The Trustees have authorized the issuance of multiple classes of shares
of the Fund, designated as Class A, Class B and Class C shares. The Trustees
authorized the issuance of Class C shares, effective March 1, 1999. 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."
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,
Inc., 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 qualifies as a "regulated investment company" by
complying with the applicable provisions of the Internal Revenue Code and will
not be subject to federal income tax on taxable income which is distributed to
shareholders. Therefore, no federal income tax provision is required. For
federal income tax purposes, the Fund has $13,211,734 of capital loss
carryforwards 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 distribution will be made. The Fund's carryforwards expire as
follows: October 31, 2005 - $369,905 and October 31, 2006 - $12,841,829.
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
17
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Pacific Basin Equities Fund
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.
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.
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 relative net assets of the respective classes. Distribution
and 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.
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 size of the funds.
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.
BANK BORROWINGS The Fund is permitted to have bank borrowings for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. Effective March 12, 1999,
the Fund entered into a syndicated line of credit agreement with various banks
and the agreements previously in effect were terminated. This agreement enables
the Fund to participate with other funds managed by the Adviser in an unsecured
line of credit with banks which permit borrowings up to $500 million,
collectively. Interest is charged to each fund, based on its borrowings. In
addition, a commitment fee is charged based on the average daily unused portion
of the line of credit and is allocated among the participating funds. The Fund
had no borrowing activity for the period ended April 30, 1999.
SECURITIES LENDING The Fund may lend its securities to certain qualified brokers
who pay the Fund negotiated lender fees. These fees are included in interest
income. The loans are collateralized at all times with cash or securites with a
market value at least equal to the market value of the securities on loan. As
with other extensions of credit, the Fund may bear risk of delay of the loaned
securities in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. At April 30, 1999, the Fund loaned
securities having a market value of $3,991,489 collateralized by cash and
securities in the amount of $4,198,783. The cash portion of the collateral was
invested in a short-term instrument.
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
18
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Pacific Basin Equities Fund
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 if they are offset by the currency amount of the
underlying transaction.
Open forward foreign currency exchange contracts for the Fund at April
30, 1999 were as follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY COVERED BY CONTRACT DATE DEPRECIATION
- -------- ------------------- ---- ------------
BUYS
Japanese Yen 84,100,000 MAY 99 $2,483
========
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
quarterly 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 its 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).
The Fund has a distribution agreement with John Hancock Funds, Inc.
("JH Funds"), a wholly owned subsidiary of the Adviser. For the period ended
April 30, 1999, net sales charges received with regard to sales of Class A
shares amounted to $32,073. Of this amount, $5,782 was retained and used for
printing prospectuses, advertising, sales literature and other purposes, $22,305
was paid as sales commissions to unrelated broker-dealers and $3,986 was paid as
sales commissions to sales personnel of Signator Investors, Inc. ("Signator
Investors"), a related broker-dealer, formerly known as John Hancock
Distributors, Inc. The Adviser's indirect parent, John Hancock Mutual Life
Insurance Company ("JHMLICo"), is the indirect sole shareholder of Signator
Investors.
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 5.00% of the lesser of the current market value at the
19
<PAGE>
==========================NOTES TO FINANCIAL STATEMENTS=========================
John Hancock Funds - Pacific Basin Equities Fund
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 for providing distribution related services to the Fund in
connection with the sale of Class B shares. For the period ended April 30, 1999,
contingent deferred sales charges paid to JH Funds amounted to $38,957.
Class C shares which are redeemed within one year of purchase will be
subject to a contingent deferred sales charge ("CDSC") at a rate of 1.00% 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 C shares. For the period ended April 30, 1999, there were no contingent
deferred sales charges.
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, Class B and Class C 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 to exceed
0.30% of Class A average daily net assets and 1.00% of Class B and Class C
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 Signature
Services, Inc. ("Signature Services"), an indirect subsidiary of JHMLICo. The
Fund pays transfer agent fees based on the number of shareholder accounts and
certain out-of-pocket expenses.
The Fund has an agreement with the Adviser to perform necessary tax and
financial management services for the Fund. The compensation for the period was
at an annual rate of less than 0.02% of the average net assets of the Fund.
Mr. Edward J. Boudreau, Jr., Mr. Stephen L. Brown, Ms. Anne C. Hodsdon
and Mr. Richard S. Scipione are Trustees and/or officers of the Adviser and/or
its affiliates, as well as Trustees 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. 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 April 30, 1999, the
Fund's investments to cover the deferred compensation liability had unrealized
appreciation of $428.
NOTE C -
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 1999, aggregated $31,776,721 and
$30,558,006, respectively. There were no purchases or sales of obligations of
the U.S. government and its agencies during the period ended April 30, 1999.
The cost of investments owned at April 30, 1999 (including short-term
investments) for federal income tax purposes was $33,357,439. Gross unrealized
appreciation and depreciation of investments aggregated $8,302,996 and $320,931,
respectively, resulting in unrealized appreciation of $7,982,065.
20
<PAGE>
====================================NOTES=======================================
John Hancock Funds - Pacific Basin Equities
21
<PAGE>
====================================NOTES=======================================
John Hancock Funds - Pacific Basin Equities
22
<PAGE>
====================================NOTES=======================================
John Hancock Funds - Pacific Basin Equities
23
<PAGE>
================================================================================
[LOGO] JOHN HANCOCK FUNDS ---------------
A Global Investment Management Firm Bulk Rate
U.S. Postage
101 HUNTINGTON AVENUE, BOSTON, MA 02199-7603 PAID
1-800-225-5291 1-800-554-6713 (TDD) Randolph, MA
INTERNET: www.jhancock.com/funds Permit No. 75
---------------
- --------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Pacific Basin Equities Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[LOGO] Printed on Recycled Paper 580SA 4/99
6/99
