The latest report from your
Fund's management team
SEMIANNUAL REPORT
Health Sciences
Fund
(formerly Global Health Sciences Fund)
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive 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
CEO CORNER
DEAR FELLOW SHAREHOLDERS:
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and
Chief Executive Officer, flush right next to second paragraph.]
Over the last six months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech
stocks pushed the NASDAQ Composite Index to the stratosphere, as
investors single-mindedly pursued anything technology related. But after
setting a new high on March 10 amid significantly heightened volatility,
the tables started to turn rapidly. Concerns about Microsoft's antitrust
ruling and out-of-sight valuation levels finally triggered waves of
selling that sent the index down nearly 25% from its high by the end of
April.
In this same period, fixed-income securities of all types, including
bonds and preferred stocks, struggled as interest rates rose on fears
that the roaring U.S. economy and the rebound of many others around the
world would spark an inflation outbreak.
While the battle between old and new rages on, several things are clear:
More than ever, diversification and a long-term investment perspective
are two of an investor's best allies. Since not all parts of your
portfolio will perform equally well all the time, we believe it is
important to allocate your assets among different types of investments
and funds that target a variety of stock- and bond-market segments. This
strategy, executed under the guidance of a seasoned investment
professional, could provide you with a better chance of both realizing
longer-term results and weathering the market's changing conditions.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY LINDA I. MILLER, CFA, AND ROBERT D. HALLISEY, JR.,
PORTFOLIO MANAGERS
[A 2" x 2" photo at bottom right side of page of John Hancock
Health Sciences Fund. Caption below reads "Fund portfolio
management team members (l-r): Linda Miller and Robert
Hallisey."]
John Hancock
Health Sciences Fund
Health-care stocks outperform the broader market
John Hancock Global Health Sciences Fund changed its name to John
Hancock Health Sciences Fund effective March 1, 2000.
Thanks mainly to a shot in the arm from the biotechnology sector,
health-care stocks turned in a strong performance compared to the
overall market during the past six months. Biotech stocks were on fire
at the start of 2000, fueled in part by excitement over the sector's
latest success in mapping the human gene and by investors' appetite for
high-growth stocks. As evidence of just how strong their rally was, the
NASDAQ Biotech Index rose about 80% from January 1 through March 6,
2000. Of course, such dramatic run-ups are never sustainable. From the
peak through the end of the period, biotech stocks came tumbling back to
earth when investors began to worry about their valuations. Furthermore,
aggressive share financings caused the supply of biotech stocks to swell
and overwhelm investor demand.
"Biotech
stocks were
on fire at
the start
of 2000..."
Biotech wasn't the only health-care sub- sector that showed signs of
life. Medical-device companies posted decent results because of strong
earnings gains. Many pharmaceutical stocks turned in lackluster to
disappointing returns, however, despite the fact that many of them
reported better-than-expected financial results. What dragged drug
companies lower were a number of political crosscurrents, including
uncertainty over this year's presidential campaign and growing talk in
Washington of a Medicare drug benefit that could lead to drug pricing
pressures. Although the outlook for the health-care service sector
improved in response to a better pricing environment, HMO and hospital
stocks showed little progress until the end of the period.
[Table at top left hand column entitled "Top Five Stock Holdings."
The first listing is Merck 4.2%, the second is Schering-Plough 3.3%,
the third Warner-Lambert 3.1%, the fourth Medtronic 3.1% and the
fifth Johnson & Johnson 3.0%. A note below the table reads "As a
percentage of net assets on April 30, 2000."]
Fund performance
For the six months ended April 30, 2000, John Hancock Health Sciences
Fund had a strong absolute performance, with its Class A, Class B and
Class C shares posting total returns of 17.65%, 17.27% and 17.27%,
respectively, at net asset value. The average health-care/biotechnology
fund returned 37.64% during the six-month period, 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.
"A wave of
industry
consolidation
...helped
buoy medical
device
companies..."
Our smaller-than-average stake in biotech companies, at 16% of the
Fund's net assets, caused our relative performance to lag our peer
group, which includes several funds that are exclusively or more heavily
invested in biotech companies than we are. Rather than chase the
performance of the "hottest" sector at any given time, our approach is
to remain more diversified across the spectrum of groups that make up
the health-care industry. In our view, this diversification helps
moderate risks.
[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 Alkermes followed by an up arrow
with the phrase "Success of new children's growth hormone." The
second listing is Stryker followed by an up arrow with the phrase
"Purchase of Howmedica yields cost-savings." The third listing is
Bristol-Myers Squibb followed by a down arrow with the phrase
"Upcoming expiration of cancer-drug patent." A note below the
table reads "See 'Schedule of Investments.' Investment holdings
are subject to change."]
Biotech winners
One of our best performers in the biotech sector was Alkermes, which
makes biotech drug delivery systems. Investors looked favorably on the
company's new formulation of a growth hormone on behalf of Genentech,
another of our better-performing biotech holdings. Immunex also
performed well, benefiting from enthusiastic response to its arthritis
relief drug. Finally, investors pushed up the price of Amgen
significantly in anticipation of good news on products that are in the
company's development pipeline. The biotech boom also helped
instrumentation company Waters Corp., which has a strong franchise as
one of the leading providers of very sophisticated lab equipment and
other tools for use in development of biotech drugs and treatments.
Device companies rally
A wave of industry consolidation, among other things, helped buoy
medical device companies during the period. One of our biggest winners
in this area was Stryker Corp. The company is the leading player in the
orthopedic implant sector, the demand for which appears to have
increased over the past year as baby boomers enter their 50s. Stryker
also was helped by the efficiencies and cost-savings that emerged as a
result of its 1999 acquisition of Howmedica. Medtronic, considered by
many to be the premier medical-device company in the world, was another
winner. It rode the crest of a new product introduction cycle with
leading-edge cardiovascular devices. As a leader in its category,
Medtronic continued to steal market share away from its competitors.
[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, 2000." The chart is scaled in increments of
10% with 0% at the bottom and 40% at the top. The first bar
represents the 17.65% total return for John Hancock Health
Sciences Fund Class A. The second bar represents the 17.27% total
return for John Hancock Health Sciences Fund Class B. The third
bar represents the 17.27% total return for John Hancock Health
Sciences Fund Class C. The fourth bar represents the 37.64% total
return for Average health-care/biotechnology fund. A note below
the chart reads "Total returns for John Hancock Health Sciences
Fund are at net asset value with all distributions reinvested. The
average health-care/biotechnology fund is tracked by Lipper, Inc.1
See the following two pages for historical performance
information."]
Mixed results for drug companies
While pharmaceutical companies were generally disappointing during the
period, Warner- Lambert bucked the trend. The company's recent success
was in large part due to its acquisition by Pfizer. It appears that the
combination of the two companies will emerge as one of the largest and
fastest-growing drug companies in the world. On the other hand, the
stocks of Merck, Johnson & Johnson, Bristol-Myers Squibb and
Schering-Plough all ended the period with sizable declines. Despite
Merck's successful launch of a new arthritis drug, its stock price fell
as the market avoided drug stocks altogether. J&J, which continued to
post decent earnings, suffered from a number of product disappointments,
including the FDA's mandate that the usage of its ulcer treatment
Propulsid be curtailed. Bristol-Myers was troubled by the impending
expiration of a patent on one of its leading cancer drugs and the
slower-than-expected FDA approval on some new products. Schering-Plough
faced worries that its allergy treatment Claritin was losing market
share to a competitor.
Outlook
There are a number of factors that will shape the performance of
health-care stocks over the short term. Because the health-care industry
is highly regulated, the upcoming presidential election and the
health-care debate that surrounds it could cause continued uncertainty
and volatility. The other important factor is the economy. Should the
economy continue to grow at a fast pace, investors may favor technology,
cyclical and other fast-growing sectors over health care. Should recent
interest-rate hikes slow the economy, on the other hand, the health-care
sector's reputation for providing dependable growth characteristics
could attract more investors.
"...upcoming
presidential
election...
could cause
continued
uncertainty..."
Those potential short-term disturbances don't alter our optimistic
long-term outlook. We believe that the ongoing introduction of new
products and services, coupled with an aging population, will present us
with many exciting long-term growth opportunities in the health-care and
life sciences fields.
-------------------------------------------------------------------------
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.
Sector investing is subject to greater risks than the market as a whole.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock 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 an up-front 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 an up-front sales charge of 1%
and 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 industry segment investing, before you invest or send
money.
CLASS A
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (10/1/91)
------ ------- ---------
Cumulative Total Returns 9.37% 111.14% 314.66%
Average Annual Total Returns 9.37% 16.12% 18.22%
CLASS B
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (3/7/94)
------ ------- ---------
Cumulative Total Returns 9.36% 112.35% 141.63%
Average Annual Total Returns 9.36% 16.26% 15.66%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (3/1/99)
------ ---------
Cumulative Total Returns 12.23% 13.16%
Average Annual Total Returns 12.23% 12.10%
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John
Hancock 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 Index -- an
unmanaged index that includes 500 widely traded common stocks and is a
commonly used measure of stock market performance. It is not possible to
invest in an index. Past performance is not indicative of future
results.
Line chart with the heading John Hancock 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 Index
and is equal to $45,278 as of April 30, 2000. The second line
represents the value of the hypothetical $10,000 investment made
in the John Hancock Health Sciences Fund on October 1, 1991,
before sales charge, and is equal to $43,363 as of April 30, 2000.
The third line represents the same hypothetical investment made in
the John Hancock Health Sciences Fund, after sales charge, and is
equal to $41,194 as of April 30, 2000.
Line chart with the heading John Hancock Health Sciences Fund
Class B*, representing the growth of a hypothetical $10,000
investment over the life of the fund. Within the chart are two
lines. The first line represents the Standard & Poor's 500 Index
and is equal to $35,070 as of April 30, 2000. The second line
represents the value of the hypothetical $10,000 investment made
in the John Hancock Health Sciences Fund on March 7, 1994, before
sales charge, and is equal to $23,982 as of April 30, 2000.
Line chart with the heading John Hancock 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 Index
and is equal to $11,896 as of April 30, 2000. The second line
represents the value of the hypothetical $10,000 investment made
in the John Hancock Health Sciences Fund on March 1, 1999, before
sales charge, and is equal to $11,343 as of April 30, 2000. The
third line represents the same hypothetical investment made in the
John Hancock Health Sciences Fund, after sales charge, and is
equal to $11,230 as of April 30, 2000.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- Health Sciences Fund
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on April 30,
2000. 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, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value -- Note C:
Common stocks (cost -- $252,090,925) $319,491,591
Short-term investments (cost --
$70,768,152) -- Note A 73,283,455
-----------------
392,775,046
Cash 740
Receivable for investments sold 5,198,642
Receivable for shares sold 482,162
Dividends receivable 128,324
Interest receivable 13,611
Other assets 4,088
-----------------
Total Assets 398,602,613
--------------------------------------------------------------
Liabilities:
Payable for investments purchased 13,651,132
Payable for forward foreign currency
exchange contracts purchased -- Note A 6,115
Payable for shares repurchased 154,388
Payable upon return of securities on
loan -- Note A 44,778,455
Foreign taxes payable 2,762
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 758,849
Accounts payable and accrued expenses 26,695
-----------------
Total Liabilities 59,378,396
--------------------------------------------------------------
Net Assets:
Capital paid-in 251,545,775
Accumulated net realized gain on
investments and foreign currency
transactions 21,984,822
Net unrealized appreciation of
investments and foreign currency
transactions 67,400,162
Accumulated net investment loss (1,706,542)
-----------------
Net Assets $339,224,217
==============================================================
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 -- $124,971,103/3,098,589 $40.33
==============================================================
Class B -- $206,465,745/5,362,925 $38.50
==============================================================
Class C -- $7,787,369/202,269 -- Note A $38.50
==============================================================
Maximum Offering Price Per Share*
Class A -- ($40.33/0.95) $42.45
==============================================================
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net
gains (losses) for the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------
Investment Income:
<S> <C>
Dividends (net of foreign withholding
taxes of $16,433) $794,532
Interest 386,640
Securities lending income -- Note A 90,864
-----------------
1,272,036
-----------------
Expenses:
Investment management fee -- Note B 1,141,741
Distribution and service fee -- Note B
Class A 165,741
Class B 912,382
Class C 24,136
Transfer agent fee -- Note B 547,032
Custodian fee 60,670
Registration and filing fees 41,264
Accounting and legal services fee --
Note B 28,005
Auditing fee 15,167
Advisory board -- Note B 14,918
Printing 11,238
Trustees' fees 6,903
Miscellaneous 5,189
Legal fees 1,419
-----------------
Total Expenses 2,975,805
--------------------------------------------------------------
Net Investment Loss (1,703,769)
--------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 29,399,713
Net realized loss on foreign currency
transactions (9,025)
Change in net unrealized
appreciation/depreciation of
investments 12,284,103
Change in net unrealized
appreciation/depreciation of foreign
currency transactions (472)
-----------------
Net Realized and Unrealized Gain on
Investments and Foreign Currency
Transactions 41,674,319
--------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $39,970,550
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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.
Statement of Changes in Net Assets
---------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
From Operations:
Net investment loss ($2,291,611) ($1,703,769)
Net realized gain (loss) on
investments sold and foreign
currency transactions (6,023,839) 29,390,688
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 8,367,386 12,283,631
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 51,936 39,970,550
----------------- -----------------
From Fund Share Transactions -- Net: * 39,104,970 52,287,770
----------------- -----------------
Net Assets:
Beginning of period 207,808,991 246,965,897
----------------- -----------------
End of period (including
accumulated net investment loss
of $2,773 and $1,706,542,
respectively) $246,965,897 $339,224,217
================= =================
<CAPTION>
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
--------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 3,253,210 $111,435,835 3,050,441 $122,336,314
Less shares repurchased (3,023,257) (103,321,157) (2,658,253) (105,904,787)
----------------- ----------------- ----------------- -----------------
Net increase 229,953 $8,114,678 392,188 $16,431,527
================= ================= ================= =================
CLASS B
Shares sold 2,247,732 $75,438,648 1,613,820 $63,199,535
Less shares repurchased (1,398,156) (46,313,310) (890,227) (32,932,180)
----------------- ----------------- ----------------- -----------------
Net increase 849,576 $29,125,338 723,593 $30,267,355
================= ================= ================= =================
CLASS C**
Shares sold 58,751 $1,916,419 159,477 $6,120,258
Less shares repurchased (1,591) (51,465) (14,368) (531,370)
----------------- ----------------- ----------------- -----------------
Net increase 57,160 $1,864,954 145,109 $5,588,888
================= ================= ================= =================
** Class C shares commenced operations on March 1, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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.
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:
-------------------------------------------------------------------------------------------------------------------------------
PERIOD FROM SIX MONTHS
SEPTEMBER 1, ENDED
YEAR ENDED AUGUST 31, 1996 TO YEAR ENDED OCTOBER 31, APRIL 30,
------------------------ OCTOBER 31, -------------------------------------- 2000
1995 1996 1996(1) 1997 1998 1999 (UNAUDITED)
---------- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $16.51 $21.61 $25.43 $25.11 $30.25 $33.89 $34.28
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss(2) (0.36) (0.19) (0.05) (0.19) (0.23) (0.18) (0.14)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions 5.46 4.15 (0.27) 6.56 4.38 0.57 6.19
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 5.10 3.96 (0.32) 6.37 4.15 0.39 6.05
---------- ---------- ---------- ---------- ---------- ---------- ----------
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 $21.61 $25.43 $25.11 $30.25 $33.89 $34.28 $40.33
========== ========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value(3) 30.89% 18.39% (1.26%)(4) 26.63% 13.91% 1.15% 17.65%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $24,394 $42,405 $42,618 $53,122 $83,928 $92,766 $124,971
Ratio of Expenses to Average
Net Assets 2.56% 1.80% 1.92%(5) 1.68% 1.61% 1.60% 1.56%(5)
Ratio of Net Investment Loss
to Average Net Assets (1.99%) (0.75%) (1.04%)(5) (0.71%) (0.71%) (0.52%) (0.70%)(5)
Portfolio Turnover Rate 38% 68% 24% 57% 39% 61% 81%
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $16.46 $21.35 $24.94 $24.60 $29.40 $32.69 $32.83
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Investment Loss(2) (0.55) (0.34) (0.08) (0.37) (0.45) (0.41) (0.26)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions 5.44 4.07 (0.26) 6.40 4.25 0.55 5.93
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations 4.89 3.73 (0.34) 6.03 3.80 0.14 5.67
---------- ---------- ---------- ---------- ---------- ---------- ----------
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 $21.35 $24.94 $24.60 $29.40 $32.69 $32.83 $38.50
========== ========== ========== ========== ========== ========== ==========
Total Investment Return at
Net Asset Value(3) 29.71% 17.53% (1.36%)(4) 25.76% 13.11% 0.43% 17.27%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $6,333 $36,591 $37,521 $53,436 $123,880 $152,323 $206,466
Ratio of Expenses to Average
Net Assets 3.45% 2.42% 2.62%(5) 2.38% 2.31% 2.30% 2.26%(5)
Ratio of Net Investment Loss
to Average Net Assets (2.91%) (1.33%) (1.74%)(5) (1.41%) (1.41%) (1.22%) (1.40%)(5)
Portfolio Turnover Rate 38% 68% 24% 57% 39% 61% 81%
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------------------------
PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------- ----------------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $33.94 $32.83
------------- -------------
Net Investment Loss(2) (0.28) (0.27)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (0.83) 5.94
------------- -------------
Total from Investment
Operations (1.11) 5.67
------------- -------------
Net Asset Value, End of
Period $32.83 $38.50
============= =============
Total Investment Return at
Net Asset Value(3) (3.27%)(4) 17.27%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $1,877 $7,787
Ratio of Expenses to Average
Net Assets 2.40%(5) 2.26%(5)
Ratio of Net Investment Loss
to Average Net Assets (1.30%)(5) (1.43%)(5)
Portfolio Turnover Rate 61% 81%
(1) Effective October 31, 1996, the fiscal year end changed from August
31 to October 31.
(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.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
April 30, 2000 (Unaudited)
------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Health Sciences Fund on April 30, 2000. It's divided into two
main categories: common stocks and short-term investments. Common stocks
are further broken down by industry group. Short-term investments, which
represent the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ---------- ------------
<S> <C> <C> <C>
COMMON STOCKS
Chemicals -- Specialty (3.41%)
Agilent Technologies, Inc.* 13,000 $1,152,125
PE Corp.-PE Biosystems Group 55,000 3,300,000
Waters Corp.* 75,000 7,106,250
------------
11,558,375
------------
Drugs -- Biotechnology (16.48%)
Affymetrix, Inc.* 4,000 540,250
Alexion Pharmaceuticals, Inc.* 20,000 892,500
Alkermes, Inc.* 40,000 2,130,000
Allergan Specialty Therapeutics, Inc. (Class A)* 75,000 1,068,750
Amgen, Inc.* 110,000 6,160,000
Amylin Pharmaceuticals, Inc.* 45,000 469,688
Biogen, Inc.* 80,000 4,705,000
COR Therapeutics, Inc.* 30,000 2,285,625
Diversa Corp.* 30,000 810,000
Exelixis, Inc.* 32,900 627,156
Gene Logic, Inc.* 30,000 806,250
Genentech, Inc.* 17,500 2,047,500
Genzyme Corp.* 40,000 1,952,500
Gilead Sciences, Inc.* 37,500 2,032,031
Human Genome Sciences, Inc.* 15,000 1,148,437
ICOS Corp.* 55,000 2,213,750
IDEC Pharmaceuticals Corp.* 15,000 960,000
Immunex Corp.* 50,000 1,968,750
Integra LifeSciences Holdings* 30,000 339,375
Invitrogen Corp.* 35,000 2,183,125
Ligand Pharmaceuticals, Inc. (Class B)* 75,000 989,062
Maxygen, Inc.* 15,000 627,188
Medimmune, Inc.* 17,500 2,798,906
Millenium Pharmaceuticals, Inc.* 30,000 2,381,250
NPS Pharmaceuticals, Inc.* 150,000 1,950,000
PRAECIS Pharmaceuticals, Inc.* 150,000 2,231,250
Protein Design Labs, Inc.* 12,500 1,268,750
QLT PhotoTherepeutics, Inc. (Canada)* 85,000 4,722,813
Titan Pharmaceuticals, Inc.* 90,000 2,880,000
Visible Genetics, Inc. (Canada)* 20,000 733,750
------------
55,923,656
------------
Drugs -- Diversified (16.14%)
Abbott Laboratories 45,000 1,729,687
ALZA Corp.* 77,500 3,414,844
American Home Products Corp. 170,000 9,551,875
Bristol-Myers Squibb Co. 183,500 9,622,281
Dura Pharmaceuticals, Inc.* 60,000 780,000
Inhale Therapeutic Systems, Inc.* 35,000 2,165,625
Johnson & Johnson 125,000 10,312,500
King Pharmaceuticals, Inc.* 50,000 2,468,750
Pharmacia Corp. 85,000 4,244,687
Warner-Lambert Co. 92,000 10,470,750
------------
54,760,999
------------
Drugs -- Major -- Domestic (10.77%)
Lilly (Eli) & Co. 55,000 4,252,188
Merck & Co., Inc. 205,000 14,247,500
Pfizer, Inc. 160,000 6,740,000
Schering-Plough Corp. 280,000 11,287,500
------------
36,527,188
------------
Drugs -- Major -- International (9.37%)
AstraZeneca Group Plc, American Depositary
Receipts (ADR) (United Kingdom) 60,000 2,527,500
Elan Corp. Plc (ADR) (Ireland)* 70,000 3,001,250
Glaxo Wellcome Plc (ADR) (United Kingdom) 60,000 3,768,750
OXiGENE, Inc.* 40,000 557,500
Roche Holding AG (Switzerland) 350 3,655,156
Sanofi -- Synthelabo SA (France)* 32,500 1,212,853
Shire Pharmaceuticals Group Plc (United
Kingdom)* 180,000 2,550,286
SmithKline Beecham Plc (ADR) (United Kingdom) 115,000 7,906,250
Teva Pharmaceutical Industries Ltd. (ADR)
(Israel) 150,000 6,600,000
------------
31,779,545
------------
Drugs -- Specialty (7.42%)
Allergan, Inc. 175,000 10,303,125
Alpharma, Inc. (Class A) 90,000 3,476,250
Forest Laboratories, Inc.* 110,000 9,246,875
SICOR, Inc.* 50,000 565,625
Watson Pharmaceutical, Inc.* 35,000 1,572,813
------------
25,164,688
------------
Drugs & Sundries -- Wholesale (3.30%)
Cardinal Health, Inc. 115,000 6,332,187
Express Scripts, Inc. (Class A)* 50,000 1,787,500
Syncor International Corp.* 75,000 3,093,750
------------
11,213,437
------------
Healthcare -- Management (3.29%)
Accredo Health, Inc.* 55,000 1,546,875
Columbia/HCA Healthcare Corp. 110,000 3,128,125
Health Management Associates, Inc. (Class A)* 70,000 1,115,625
Province Healthcare Co.* 75,000 2,165,625
Tenet Healthcare Corp.* 50,000 1,275,000
Universal Health Services, Inc. (Class B)* 35,000 1,916,250
------------
11,147,500
------------
Healthcare -- Software/Services (0.64%)
Allscripts, Inc.* 24,500 759,500
eBenX, Inc.* 65,000 1,067,422
XCare.net, Inc.* 60,000 352,500
------------
2,179,422
------------
Insurance (5.53%)
CIGNA Corp. 77,500 6,180,625
Trigon Healthcare, Inc.* 45,000 1,617,188
United HealthCare Corp. 92,300 6,155,256
Wellpoint Health Networks, Inc.* 65,000 4,793,750
------------
18,746,819
------------
Medical Devices and Products (16.13%)
ArthroCare Corp.* 10,000 1,018,750
Bausch & Lomb, Inc. 60,000 3,622,500
Baxter International, Inc. 125,000 8,140,625
Biomet, Inc. 65,000 2,319,687
Cyberonics, Inc.* 30,000 611,250
Cytyc Corp.* 37,500 1,678,125
Edwards Lifesciences Corp.* 50,000 750,000
Guidant Corp.* 115,000 6,598,125
Luminex Corp.* 20,000 372,500
Medtronic, Inc. 200,000 10,387,500
Mettler-Toledo International, Inc.* 27,500 948,750
Nycomed Amersham Plc (United Kingdom) 160,000 1,220,650
Packard BioScience Co.* 200,000 2,387,500
PerkinElmer, Inc. 32,500 1,779,375
Physiometrix, Inc.* 50,000 787,500
Quidel Corp.* 50,000 400,000
Stryker Corp. 125,000 8,984,375
Techne Corp.* 13,000 924,625
Varian Medical Systems, Inc.* 45,000 1,800,000
------------
54,731,837
------------
Pollution Control (0.31%)
Stericycle, Inc.* 50,000 1,050,000
------------
Retail -- Drug Stores (1.39%)
CVS Corp. 67,500 2,936,250
Walgreen Co. 63,000 1,771,875
------------
4,708,125
------------
TOTAL COMMON STOCKS
(Cost $252,090,925) (94.18%) 319,491,591
--------- ------------
<CAPTION>
INTEREST PAR VALUE
RATE (000s OMITTED)
---- ------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (8.40%)
Investment in a joint repurchase
agreement transaction with SBC
Warburg, Inc. -- Dated 04-28-00, due
05-01-00 (Secured by U.S. Treasury
Bonds, 7.875% and 8.875%, due
08-15-17 and 02-15-21) -- Note A 5.73% $28,505 28,505,000
--------- ------------
Cash Equivalents (13.20%)
Navigator Securities Lending Prime
Portfolio** 44,778 44,778,455
------------
TOTAL SHORT-TERM INVESTMENTS (21.60%) 73,283,455
--------- ------------
TOTAL INVESTMENTS (115.78%) 392,775,046
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (15.78%) (53,550,829)
--------- ------------
TOTAL NET ASSETS (100.00%) $339,224,217
========= ============
* 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.
</TABLE>
Portfolio Concentration (Unaudited)
-------------------------------------------------------------------------
The 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, 2000 assigned to the various country categories.
MARKET VALUE
AS A PERCENTAGE OF
COUNTRY DIVERSIFICATION NET ASSETS
----------------------- ----------
Canada 1.61%
France 0.36
Ireland 0.88
Israel 1.94
Switzerland 1.08
United Kingdom 5.30
United States 83.01
Short-Term Investments 21.60
-------
TOTAL INVESTMENTS 115.78%
=======
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds -- 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 Health Sciences Fund
(the "Fund"), John Hancock European Equity Fund and John Hancock Pacific
Basin Equities Fund. Prior to March 1, 2000, the Fund was known as John
Hancock Global Health Sciences 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 a
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
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. Beginning May 1, 2000, all retail purchases of Class C shares will
be assessed a 1.00% up-front sales charge.
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 which 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, at
October 31, 1999, the Fund had $6,190,367 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 gain distribution will be made. The Fund's carryforwards expire
as follow: October 31, 2006 -- $1,300,348 and October 31, 2007 --
$4,890,019.
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.
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. The Fund has entered into a syndicated line of credit
agreement with various banks. 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, 2000.
SECURITIES LENDING The Fund may lend its securities to certain qualified
brokers who pay the Fund negotiated lender fees. 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,
2000, the Fund loaned securities having a market value of $43,215,391
collateralized by cash in the amount of $44,778,455, 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.
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.
At April 30, 2000, open forward foreign currency exchange contracts were
as follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY COVERED BY CONTRACT DATE DEPRECIATION
-------- ------------------- ---------- ------------
BUYS
Pound Sterling 256,964 May 00 $6,115
============
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 to and from the broker,
known as "variation margin," 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, 2000, there were no open positions in financial futures
contracts.
OPTIONS The Fund may purchase or write options contracts. 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.
At April 30, 2000, there were no written option transactions.
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, 2000, net sales charges received with regard to Class A shares
amounted to $202,383. Out of this amount, $41,423 was retained and used
for printing prospectuses, advertising, sales literature and other
purposes, $82,231 was paid as sales commissions to sales personnel of
unrelated broker-dealers and $78,729 was paid as sales commissions to
personnel of Signator Investors, Inc. ("Signator Investors"), a related
broker-dealer. The Adviser's indirect parent, John Hancock Life
Insurance Company ("JHLICo"), 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, 2000, contingent deferred sales
charges paid to JH Funds amounted to $382,710.
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 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, 2000, contingent deferred
sales charges amounted to $2,219.
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 Conduct Rules of the National Association of Securities
Dealers. Under the Conduct Rules, 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 JHLICo.
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,
accounting and legal 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. Stephen L. Brown, Ms. Maureen R. Ford 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 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.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 2000, aggregated
$267,874,078 and $231,230,740, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended April 30, 2000.
The cost of investments (including short-term investments) owned at
April 30, 2000 for federal income tax purposes was $325,766,708. Gross
unrealized appreciation and depreciation of investments aggregated
$85,172,621 and $18,164,283, respectively, resulting in net unrealized
appreciation of $67,008,338.
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101 Huntington Avenue, Boston, MA 02199-7603
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Permit No. 75
This report is for the information of shareholders of the John Hancock
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.
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280SA 4/00
6/00
The latest report from your
Fund's management team
SEMIANNUAL REPORT
Pacific Basin
Equities Fund
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive 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
CEO CORNER
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and
Chief Executive Officer, flush right next to second paragraph.]
DEAR FELLOW SHAREHOLDERS:
Over the last six months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech
stocks pushed the NASDAQ Composite Index to the stratosphere, as
investors single-mindedly pursued anything technology related. But after
setting a new high on March 10 amid significantly heightened volatility,
the tables started to turn rapidly. Concerns about Microsoft's antitrust
ruling and out-of-sight valuation levels finally triggered waves of
selling that sent the index down nearly 25% from its high by the end of
April.
In this same period, fixed-income securities of all types, including
bonds and preferred stocks, struggled as interest rates rose on fears
that the roaring U.S. economy and the rebound of many others around the
world would spark an inflation outbreak.
While the battle between old and new rages on, several things are clear:
More than ever, diversification and a long-term investment perspective
are two of an investor's best allies. Since not all parts of your
portfolio will perform equally well all the time, we believe it is
important to allocate your assets among different types of investments
and funds that target a variety of stock- and bond-market segments. This
strategy, executed under the guidance of a seasoned investment
professional, could provide you with a better chance of both realizing
longer-term results and weathering the market's changing conditions.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY AYAZ EBRAHIM FOR THE PORTFOLIO MANAGEMENT TEAM
John Hancock
Pacific Basin Equities Fund
Asia's future looks bright as fund
posts solid returns for the period
Asian markets continued on their road to recovery over the past six
months. With economic growth picking up throughout the region and
financial restructuring taking hold, it became clear to investors that
Asia's financial crisis was finally over. In the past six months, we've
seen economic growth rates reach 4% to 7% in many countries throughout
Asia. Even with the upswing in economic activity, however, inflationary
pressures have remained under control. Solid economic growth combined
with tame inflation fueled the strong performance of Pacific Basin
stocks over the past six months.
Fund performance
John Hancock Pacific Basin Equities Fund posted outstanding returns
during the period, outpacing its peers. For the six months ended April
30, 2000, the Fund's Class A, Class B and Class C shares returned
21.48%, 21.05% and 21.05%, respectively, at net asset value. By
comparison, the average Pacific region fund returned 11.92%, 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 historical performance information.
"...we've seen
economic
growth rates
reach 4% to
7% in many
countries
throughout
Asia."
Performance review
Essentially what drove the Fund's strong performance was our more
positive view on Asian recovery. Since late 1998, we've firmly held the
view that an Asian recovery was on the horizon, while many of our
competitors were more defensive, given their skepticism about the
region's ability to cope with the daunting financial and structural
reforms. As a result, we focused our portfolio on more aggressive growth
stocks, which have rebounded sharply in the latest market rally.
In particular, we directed our investments toward high-tech/electronics
companies. With the trend toward information technology expanding
throughout Asia, these stocks have turned in a strong performance during
the past six months, despite a sharp pullback in March and April. As you
take a closer look at our investments country by country, you'll notice
that high-tech/electronics stocks have been a common theme across the
portfolio during the period.
[Pie chart at top left hand column with heading "Portfolio
Diversification." The chart is divided into ten sections (from top
to left): Australia 1%, Short-Term Investments & Other 1%, South Korea 9%,
Taiwan 11%, Singapore 9%, Philippines 1%, Malaysia 5%, Japan 42%,
India 1% and Hong Kong 20%. A note below the chart reads "As a
percentage of net assets on April 30, 2000."]
With the exception of Malaysia, our primary emphasis has been on the
more developed countries in northern Asia, such as Japan, Taiwan and
Hong Kong. Many of the smaller, southern countries have been suffering
from what we call "reform fatigue." What's more, since the
high-tech/electronics leaders tend to be in the north, we felt that the
growth prospects were better there.
"...our primary
emphasis has
been on
the more
developed
countries in
northern
Asia..."
Japan
While Japan's economic recovery has not fully taken hold, many of the
recent economic indicators suggest that growth is starting to trend
upward. Given that, we are confident that Japan will eventually make a
full economic recovery. As a result, we've increased our Japanese
holdings to 42% of the Fund's net assets, up from 35% six months ago.
Our focus in Japan remains on high-tech/electronics stocks that will
benefit not only from the trend toward the expansion of information
technology, but also the convergence of multi-media. Our top holdings
include Fanuc and Kyocera.
[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 Pacific Century Regional
Developments followed by an up arrow with the phrase "Successful
Asian cable and Internet projects." The second listing is Malaysia
Pacific Industries followed by an up arrow with the phrase
"Booming semiconductor exports." The third listing is Pohang Iron
& Steel Co. followed by a down arrow with the phrase "Hurt by
investor focus on tech stocks." A note below the table reads
"See 'Schedule of Investments.' Investment holdings are subject
to change."]
Hong Kong
After paring back our holdings here just six months ago, we recently
upped our Hong Kong weighting to 20% of the Fund's net assets. After the
Asian crisis, it took longer for economic growth to return to Hong Kong
than some other countries in the region, which is why we had trimmed our
investments here last year.
With the solid signs of economic improvement, however, we've recently
begun to increase our Hong Kong holdings. Similar to Japan, we've
focused on high-tech and electronics stocks such as Li & Fung and QPL
International Holdings. We also like Hutchison Whampoa, which controls a
significant portion of the telecommunications and retail distribution in
Hong Kong.
Taiwan
We also increased our holdings in Taiwan to as high as 13% of the Fund's
net assets in March, up from 9% six months ago. Economic growth in
Taiwan has been robust and so have electronics exports. In recent
months, political volatility has heated up as Taiwan is battling with
China over its sovereignty, so we cut our position back to 11%.
Nonetheless, we're optimistic about Taiwan's future. Recent additions to
the portfolio include Asustek Computer and Vanguard International
Semiconductor.
[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, 2000." The chart is scaled in increments of
5% with 0% at the bottom and 25% at the top. The first bar
represents the 21.48% total return for John Hancock Pacific Basin
Equities Fund Class A. The second bar represents the 21.05% total
return for John Hancock Pacific Basin Equities Fund Class B. The
third bar represents the 21.05% total return for John Hancock
Pacific Basin Equities Fund Class C. The fourth bar represents
the 11.92% total return for Average Pacific region fund. A note
below the chart reads "Total returns for John Hancock Pacific
Basin Equities Fund are at net asset value with all distributions
reinvested. The average Pacific region fund is tracked by Lipper,
Inc. See the following two pages for historical performance information."]
Malaysia
During the period, we benefited from our strong stake in Malaysia -- at
5% of the portfolio. Malaysia is one of the few countries in the Pacific
Region that have been able to fully recapitalize their banking system.
What's more, its economy has been growing rapidly at 6% to 7%. Our focus
here has been electronics companies such as Malaysian Pacific
Industries. We also have sizeable holdings in banks such as Malayan
Banking.
Australia
Over the past year, we've been gradually reducing our Australian
holdings. In the heat of Asia's financial crisis, Australia was the
perfect defensive play. Because its economy is well insulated from
Asia's, Australia continued its steady growth and low inflation in the
midst of the Asian turmoil. Once the region's recovery began to take
hold, however, other countries started to offer better relative value.
As a result, we reduced our Australian stake to 1% in favor of stocks
with better upside potential.
Outlook
Looking ahead, we remain optimistic about the growth prospects for the
region. After such strong stock performance this year, however, we
believe that investors should temper their expectations going forward.
While Pacific markets still offer strong upside potential, they are
likely to post more modest returns for the remainder of 2000 and into
next year, especially given the recent tech-stock declines.
"Long term...
the outlook
for growth
in the
Pacific
region is
very
positive."
Having said that, though, the region's economic picture is still bright.
In the short term, interest-rate concerns in the U.S. could cast a
shadow over global markets. Long term, however, the outlook for growth
in the Pacific region is very positive. With the technology revolution
underway, we expect demand for electronics to increase throughout Asia
and in the U.S. In addition, consumption will likely continue its upward
trend, thanks to pent-up demand and improved consumer confidence. For
the time being, we will remain focused on northern Asia, where we
believe the growth prospects are the most promising.
-------------------------------------------------------------------------
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.
1 Figures from Lipper,Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Pacific Basin
Equities Fund. Total return 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 an up-front 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 an up-front sales charge of 1%
and 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, 2000
ONE FIVE TEN
YEAR YEARS YEARS
------ ------ ------
Cumulative Total Returns 80.24%(1) 43.48% 111.48%
Average Annual Total Returns 80.24%(1) 7.49% 7.78%
CLASS B
For the period ended March 31, 2000
SINCE
ONE FIVE INCEPTION
YEAR YEARS (3/7/94)
------ ------ ------
Cumulative Total Returns 83.38%(1) 43.73% 34.25%
Average Annual Total Returns 83.38%(1) 7.52% 4.98%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (3/1/99)
------ -------
Cumulative Total Returns 85.58%(1) 110.95%
Average Annual Total Returns 85.58%(1) 99.33%
Note to Performance
(1) The Fund's recent returns occurred during an unusual period of
performance in certain areas of the market in which the Fund invests.
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. In
addition, the Fund is compared to the MSCI All Country Pacific Free
Index, a regional index comprised of nine developed and emerging-market
countries. For future reports, the Adviser has chosen to remove the MSCI
Pacific Index, but will continue to compare the Fund's performance to
the MSCI All Country Pacific Free Index, which more closely represents
the investment strategy of the Fund. It is not possible to invest in an
index. 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 four
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, 1989, before sales charge, and is equal to
$19,103 as of April 30, 2000. 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
$18,147 as of April 30, 2000. The third line represents the MSCI
Pacific Index and is equal to $10,234 as of April 30, 2000. The
fourth line represents the MSCI All Country Pacific Free Index and
is equal to $10,105 as of April 30, 2000.
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 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
$11,656 as of April 30, 2000. The second line represents the MSCI
Pacific Index and is equal to $10,453 as of April 30, 2000. The
third line represents the MSCI All Country Pacific Free Index and
is equal to $10,153 as of April 30, 2000.
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 four
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
$18,495 as of April 30, 2000. 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
$18,311 as of April 30, 2000. The third line represents the MSCI
Pacific Index and is equal to $14,818 as of April 30, 2000. The
fourth line represents the MSCI All Country Pacific Free Index and
is equal to $14,795 as of April 30, 2000.
*No contingent deferred sales charge applicable.
FINANCIAL STATEMENTS
John Hancock Funds -- Pacific Basin Equities Fund
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on April 30,
2000. 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, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value -- Note C:
Common stocks and warrants
(cost -- $70,322,924) $83,016,739
Preferred stocks (cost -- $342,863) 309,656
Short-term investments
(cost -- $8,105,403) -- Note A 8,105,403
-----------------
91,431,798
Cash 712
Foreign currency, at value
(cost -- $2,468,366) 2,468,081
Receivable for investments sold 3,167,086
Receivable for forward foreign currency
exchange contracts sold -- Note A 144,598
Receivable for shares sold 434,031
Dividends receivable 213,176
Other assets 4,211
-----------------
Total Assets 97,863,693
--------------------------------------------------------------
Liabilities:
Payable for bank borrowings -- Note A 4,540,000
Payable for shares repurchased 163,028
Payable for securities on loan --
Note A 8,105,403
Foreign tax payable 304,572
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 237,844
Accounts payable and accrued expenses 22,132
-----------------
Total Liabilities 13,372,979
--------------------------------------------------------------
Net Assets:
Capital paid-in 63,848,467
Accumulated net realized gain on
investments and foreign currency
transactions 10,456,277
Net unrealized appreciation of
investments and foreign currency
transactions 12,518,257
Accumulated net investment loss (2,332,287)
-----------------
Net Assets $84,490,714
==============================================================
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 -- $34,637,964/2,022,258 $17.13
==============================================================
Class B -- $48,294,858/2,932,643 $16.47
==============================================================
Class C -- $1,557,892/94,597 -- Note A $16.47
==============================================================
Maximum Offering Price Per Share*
Class A -- ($17.13/0.95) $18.03
==============================================================
* 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.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net
gains (losses) for the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $44,764) $362,852
Interest (including income on
securities loaned of $20,974) 99,030
-----------------
461,882
-----------------
Expenses:
Investment management fee -- Note B 362,606
Distribution and service fee -- Note B
Class A 57,877
Class B 253,772
Class C 6,562
Transfer agent fee -- Note B 153,701
Custodian fee 112,023
Registration and filing fees 71,409
Auditing fee 15,167
Interest expense -- Note A 10,333
Accounting and legal services fee --
Note B 8,517
Printing 7,261
Trustees' fees 2,164
Miscellaneous 1,098
Legal fees 178
-----------------
Total Expenses 1,062,668
--------------------------------------------------------------
Net Investment Loss (600,786)
--------------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
and Foreign Currency Transactions:
Net realized gain on investments sold 14,631,476
Net realized gain on foreign currency
transactions 976,380
Change in net unrealized
appreciation/depreciation of
investments 593,415
Change in net unrealized
appreciation/depreciation of foreign
currency transactions (115,103)
-----------------
Net Realized and Unrealized Gain on
Investments and Foreign Currency
Transactions 16,086,168
--------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $15,485,382
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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.
Statement of Changes in Net Assets
----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------- --------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($452,820) ($600,786)
Net realized gain on investments
sold and foreign currency
transactions 8,685,360 15,607,856
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 10,410,178 478,312
------------ ------------
Net Increase in Net Assets
Resulting from Operations 18,642,718 15,485,382
------------ ------------
Distributions to Shareholders:
Distributions in excess of net investment income
Class A -- (none and $0.3805 per share, respectively) -- (746,702)
Class B -- (none and $0.3004 per share, respectively) -- (804,368)
Class C** -- (none and $0.3004 per share, respectively) -- (17,273)
------------ ------------
Total Distributions to Shareholders -- (1,568,343)
------------ ------------
From Fund Share Transactions -- Net:* 23,810,812 237,079
------------ ------------
Net Assets:
Beginning of period 27,883,066 70,336,596
------------ ------------
End of period (including accumulated net investment loss of $163,158
and $2,332,287, respectively) $70,336,596 $84,490,714
------------ ------------
<CAPTION>
Statement of Changes in Net Assets (continued)
--------------------------------------------------------------------------------------------------------
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 7,531,188 $89,355,732 5,785,343 $102,241,697
Shares issued to shareholders in
reinvestment of distributions -- -- 45,563 680,253
---------- ----------- ---------- ------------
7,531,188 89,355,732 5,830,906 102,921,950
Less shares repurchased (6,960,105) (81,316,658) (6,059,505) (107,541,936)
---------- ----------- ---------- ------------
Net increase (decrease) 571,083 $8,039,074 (228,599) ($4,619,986)
========== =========== ========== ============
CLASS B
Shares sold 3,427,833 $41,992,258 1,645,648 $27,998,735
Shares issued to shareholders in
reinvestment of distributions -- -- 42,572 613,538
---------- ----------- ---------- ------------
3,427,833 41,992,258 1,688,220 28,612,273
Less shares repurchased (2,330,940) (27,119,544) (1,406,586) (24,160,987)
---------- ----------- ---------- ------------
Net increase 1,096,893 $14,872,714 281,634 $4,451,286
========== =========== ========== ============
CLASS C**
Shares sold 103,934 $1,376,290 278,974 $4,700,353
Shares issued to shareholders in
reinvestment of distributions -- -- 1,072 15,443
---------- ----------- ---------- ------------
103,934 1,376,290 280,046 4,715,796
Less shares repurchased (35,204) (477,266) (254,179) (4,310,017)
---------- ----------- ---------- ------------
Net increase 68,730 $899,024 25,867 $405,779
========== =========== ========== ============
** Class C shares commenced operations on March 1, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of beneficial interest outstanding throughout
each period indicated, investment returns, key ratios and supplemental
data are listed as follows:
----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD FROM YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
---------------------- SEPTEMBER 1, 1996 TO ------------------------------- APRIL 30, 2000
1995 1996 OCTOBER 31, 1996(6) 1997 1998 1999 (UNAUDITED)
-------- -------- ------------------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $15.88 $14.11 $14.74 $14.47 $11.63 $8.76 $14.46
-------- -------- -------- -------- -------- -------- --------
Net Investment Income
(Loss)(1) 0.02(2) (0.02) (0.02) (0.07) 0.02 (0.09) (0.08)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (1.24) 0.65 (0.25) (2.66) (2.89) 5.79 3.13
-------- -------- -------- -------- -------- -------- --------
Total from Investment Operations (1.22) 0.63 (0.27) (2.73) (2.87) 5.70 3.05
-------- -------- -------- -------- -------- -------- --------
Less Distributions:
Distributions in Excess of
Net Investment Income -- -- -- -- -- -- (0.38)
Dividends from Net Realized
Gain on Investments Sold
and Foreign Currency
Transactions (0.55) -- -- (0.11) -- -- --
-------- -------- -------- -------- -------- -------- --------
Total Distributions (0.55) -- -- (0.11) -- -- (0.38)
-------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of
Period $14.11 $14.74 $14.47 $11.63 $8.76 $14.46 $17.13
======== ======== ======== ======== ======== ======== ========
Total Investment Return at
Net Asset Value(3) (7.65%) 4.47% (1.83%)(4) (19.03%) (24.68%) 65.07% 21.48%
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $37,417 $41,951 $38,694 21,109 $14,717 $32,554 $34,638
Ratio of Expenses to Average
Net Assets 2.05% 1.97% 2.21%(5) 2.06% 2.46% 2.37% 1.92%(5,7)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.13%(3) (0.15%) (0.83%)(5) (0.49%) 0.22% (0.77%) (0.93%)(5)
Portfolio Turnover Rate 48% 73% 15% 118% 230% 174% 112%
The Financial Highlights summarizes the impact of the following factors
on a single share for each period indicated: net investment income,
gains (losses), dividends and total investment return of the Fund. It
shows how the Fund's net asset value for a share has changed since the
end of the previous period. Additionally, important relationships
between some items presented in the financial statements are expressed
in ratio form.
<CAPTION>
Financial Highlights (continued)
----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, PERIOD FROM YEAR ENDED OCTOBER 31, SIX MONTHS ENDED
---------------------- SEPTEMBER 1, 1996 TO ------------------------------- APRIL 30, 2000
1995 1996 OCTOBER 31, 1996(6) 1997 1998 1999 (UNAUDITED)
-------- -------- ------------------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $15.84 $13.96 $14.49 $14.20 $11.32 $8.47 $13.89
------- -------- -------- ------- ------- -------- --------
Net Investment Loss(1) (0.09) (0.13) (0.04) (0.18) (0.04) (0.17) (0.14)
Net Realized and Unrealized
Gain (Loss) on Investments
and Foreign Currency
Transactions (1.24) 0.66 (0.25) (2.59) (2.81) 5.59 3.02
------- -------- -------- ------- ------- -------- --------
Total from Investment Operations (1.33) 0.53 (0.29) (2.77) (2.85) 5.42 2.88
------- -------- -------- ------- ------- -------- --------
Less Distributions:
Distributions in Excess of
Net Investment Income -- -- -- -- -- -- (0.30)
Dividends from Net Realized
Gain on Investments Sold
and Foreign Currency
Transactions (0.55) -- -- (0.11) -- -- --
------- -------- -------- ------- ------- -------- --------
Total Distributions (0.55) -- -- (0.11) -- -- (0.30)
------- -------- -------- ------- ------- -------- --------
Net Asset Value, End of
Period $13.96 $14.49 $14.20 $11.32 $8.47 $13.89 $16.47
======= ======== ======== ======= ======= ======== ========
Total Investment Return at
Net Asset Value(3) (8.38%) 3.80% (2.00%)(4) (19.67%) (25.18%) 63.99% 21.05%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $14,368 $32,342 $30,147 $17,320 $13,166 $36,828 $48,295
Ratio of Expenses to Average
Net Assets 2.77% 2.64% 2.90%(5) 2.76% 3.16% 3.07% 2.62%(5,7)
Ratio of Net Investment Loss
to Average Net Assets (0.66%) (0.86%) (1.52%)(5) (1.19%) (0.48%) (1.47%) (1.62%)(5)
Portfolio Turnover Rate 48% 73% 15% 118% 230% 174% 112%
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------------------------------------------------
PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------- ----------------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $9.09 $13.89
---------------- ----------------
Net Investment Loss(1) (0.13) (0.14)
Net Realized and Unrealized
Gain on Investments and
Foreign Currency
Transactions 4.93 3.02
---------------- ----------------
Total from Investment Operations 4.80 2.88
---------------- ----------------
Less Distributions:
Distributions in Excess of
Net Investment Income -- (0.30)
---------------- ----------------
Net Asset Value, End of Period $13.89 $16.47
================ ================
Total Investment Return at
Net Asset Value(3) 52.81%(4) 21.05%(4)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $955 $1,558
Ratio of Expenses to Average
Net Assets 3.14%(5) 2.62%(5,7)
Ratio of Net Investment Loss
to Average Net Assets (1.76%)(5) (1.61%)(5)
Portfolio Turnover Rate 174%(4) 112%
(1) Based on the average of the shares outstanding at the end of each month.
(2) 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.
(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.
(7) Expense ratios do not include interest expense due to bank loans,
which amounted to less than 0.01%.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
Schedule of Investments
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------------------------
The Schedule of Investments is a complete list of all securities owned
by the Pacific Basin Equities Fund on April 30, 2000. It's divided into
four main categories: common stocks, warrants, preferred stocks and
short-term investments. Common stocks, warrants and preferred stocks are
further broken down by country. Short-term investments, which represent
the Fund's "cash" position, are listed last.
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ---------- ------------
<S> <C> <C> <C>
COMMON STOCKS
Australia (0.74%)
Computershare Ltd. (Computers) 21,480 $87,647
Energy Developments Ltd. (Utilities) 16,550 78,868
Gradipore Ltd.* (Medical) 11,451 39,456
Lend Lease Corp. Ltd. (Finance) 7,800 84,526
Westpac Banking Corp. Ltd. (Banks -- Foreign) 53,000 338,305
------------
628,802
------------
China (0.48%)
Shandong International Power Development Co.
Ltd.* (Utilities) 3,960,000 401,633
------------
Hong Kong (19.53%)
Asia Satellite Telecommunications Holdings Ltd.
(Telecommunications) 115,000 359,504
Brilliance China Automotive Holdings Ltd.*
(Automobile/Trucks) 1,414,000 228,732
Cheung Kong Holdings Ltd. (Real Estate
Operations) 104,000 1,241,719
China Telecom Ltd.* (Telecommunications) 140,000 1,002,028
Citic Pacific Ltd. (Diversified Operations) 130,000 597,494
Dah Sing Financial Group (Finance) 46,400 181,687
Giordana International Ltd. (Retail) 700,000 1,145,817
Guoco Group Ltd. (Finance) 308,000 717,686
Hongkong Electric Holdings Ltd. (Utilities) 130,000 406,396
Hongkong Land Holdings Ltd. (Real Estate
Operations) 340,000 516,800
HSBC Holdings Plc (Banks -- Foreign) 150,000 1,680,211
Hutchison Whampoa Ltd. (Diversified Operations) 183,000 2,654,830
JCG Holdings Ltd. (Finance) 862,000 448,197
Legend Holdings Ltd. (Computers) 378,000 436,759
Li & Fung Ltd. (Business Services -- Misc.) 320,000 1,248,909
Next Media Ltd.* (Printing -- Commercial) 4,888,000 972,680
QPL International Holdings Ltd.* (Electronic
Components -- Misc.) 567,000 800,724
Swire Pacific Ltd. (Diversified Operations) 123,000 694,808
Television Broadcasts Ltd. (Media) 79,000 540,075
Yuxing Infotech Holdings Ltd.* (Computers) 754,000 629,205
------------
16,504,261
------------
India (0.77%)
Indocam Himalayan Fund NV (Finance) 30,000 654,000
------------
Japan (41.56%)
Enix Corp. (Computers) 10,600 577,031
Enix Corp. (New Shares)* (Computers) 5,300 288,515
Fanuc Ltd. (Electronic Components -- Misc.) 26,600 2,787,687
Fast Retailing Co. Ltd. (Retail) 4,000 1,762,718
Fujitsu Ltd. (Computers) 50,000 1,416,470
Fujitsu Systems Construction Ltd.
(Telecommunications) 51,000 528,815
Japan Business Computer Co., Ltd. (Computers) 19,000 886,544
Kao Corp. (Cosmetics & Personal Care) 21,000 639,633
Kyocera Corp. (Electronic Components -- Misc.) 15,700 2,626,478
Murata Manufacturing Co., Ltd. (Electronics
Components -- Misc.) 11,000 2,138,592
NEC Corp. (Electronic Products -- Misc.) 87,000 2,368,004
Nihon Unisys, Ltd. (Computers) 13,000 302,088
Nikko Securities Co., Ltd. (The) (Broker
Services) 292,000 3,446,744
Nintendo Co., Ltd. (Leisure) 5,600 933,204
Nippon Telegraph & Telephone Corp.
(Telecommunications) 59 731,935
NTT Mobile Communication Network, Inc.
(Telecommunications) 68 2,272,647
Orix Corp. (Leasing Companies) 9,860 1,407,593
Ryohin Keikaku Co., Ltd. (Retail) 6,100 1,132,296
Sanyo Electric Co., Ltd. (Electronic Products --
Misc.) 146,000 974,550
Seven-Eleven Japan Co., Ltd. (Retail) 18,000 2,216,359
Softbank Corp. (Computers) 1,500 369,393
Softbank Corp. (New Shares)* (Computers) 3,000 741,564
Sony Corp. (Electronic Products -- Misc.) 18,500 2,125,492
Sony Corp. (New Shares)* (Electronic Products --
Misc.) 18,500 2,140,906
Toyota Motor Corp. (Automobile/Trucks) 6,000 298,292
------------
35,113,550
------------
Malaysia (4.91%)
AMMB Holdings Berhad (Banks -- Foreign) 230,000 871,579
Computer Systems Advisers Berhad (Computers) 176,000 727,158
K & N Kenanga Berhad (Broker Services) 818,000 615,653
Malayan Banking Berhad (Banks -- Foreign) 85,000 353,421
Malaysian Pacific Industries Berhad (Electronic
Components -- Misc.) 70,000 782,895
Mesiniaga Berhad* (Computers) 285,000 795,000
------------
4,145,706
------------
Philippines (0.84%)
Bank of the Philippine Islands* (Banks --
Foreign) 70,000 156,837
La Tondena Distillers, Inc. (Beverages) 105,000 69,941
Manila Electric Co. (Utilities) 270,000 483,953
------------
710,731
------------
Singapore (8.81%)
DBS Group Holdings Ltd. (Banks -- Foreign) 104,000 1,432,171
Flextech Holdings Ltd. (Electronic Components --
Misc.) 1,338,000 1,136,888
MediaRing.com Ltd.* (Telecommunications) 155,000 67,214
NatSteel Electronics Ltd. (Electronic Components
-- Misc.) 50,000 287,137
NatSteel Ltd. (Steel) 200,000 489,892
Overseas-Chinese Banking Corp. Ltd. (Banks --
Foreign) 65,000 445,649
Overseas Union Bank Ltd. (Banks -- Foreign) 100,000 457,076
Pacific Century Regional Developments Ltd.*
(Real Estate Operations) 213,000 1,772,400
Singapore Press Holdings Ltd. (Printing --
Commercial) 10,000 195,722
Singapore Technologies Engineering Ltd.
(Engineering/R&D Services) 821,000 1,154,644
------------
7,438,793
------------
South Korea (8.98%)
Hanaro Telecom, Inc., American Depositary
Receipts (ADR)* (Telecommunications) 24,300 191,363
Housing & Commercial Bank* (Banks -- Foreign) 28,766 492,502
Korea Telecom Corp. (ADR)* (Telecommunications) 40,370 1,392,765
Pohang Iron & Steel Co. Ltd. (Steel) 8,000 625,727
Samsung Electronics Co. (Electronic Products --
Misc.) 12,965 3,504,843
Shinhan Bank (Banks -- Foreign) 46,930 450,376
Shinsegae Department Store Co. (Retail) 9,990 375,385
SK Corp. (Oil & Gas) 29,350 554,073
------------
7,587,034
------------
Taiwan (10.53%)
Asustek Computer, Inc. (Computers) 97,000 1,074,783
Hon Hai Precision Industry Co., Ltd.*
(Electronic Products -- Misc.) 196,000 1,889,851
Quanta Computer, Inc. (Computers) 55,000 427,848
Synnex Technology International Corp.
(Computers) 90,000 608,923
Taishin International Bank* (Banks -- Foreign) 68,040 35,360
Taiwan Semiconductor Manufacturing Co., Ltd.*
(Electronic Components -- Misc.) 365,000 2,350,221
Vanguard International Semiconductor Corp.*
(Electronic Components -- Misc.) 170,000 263,932
Winbond Electronics Corp., Global Depositary
Receipts* (Computers) (R) 40,780 1,270,297
Yageo Corp. (Electronic Components -- Misc.) 600,000 976,630
------------
8,897,845
------------
Thailand (0.44%)
BEC World Pcl (Media) 28,000 183,896
Golden Land Property Development Pcl* (Real
Estate Operations) 861,000 185,477
------------
369,373
------------
TOTAL COMMON STOCKS
(Cost $69,730,312) (97.59%) 82,451,728
------- ------------
WARRANTS
Malaysia (0.67%)
AMMB Holdings Berhad* (Banks -- Foreign) 639,000 565,011
------------
TOTAL WARRANTS
(Cost $592,612) (0.67%) 565,011
------- ------------
TOTAL COMMON STOCKS
AND WARRANTS
(Cost $70,322,924) (98.26%) 83,016,739
------- ------------
PREFERRED STOCKS
Australia (0.33%)
News Corp. Ltd. (The) (Media) 26,000 279,689
------------
Taiwan (0.04%)
Taishin International Bank (Banks -- Foreign) 93,555 29,967
------------
TOTAL PREFERRED STOCKS
(Cost $342,863) (0.37%) 309,656
------- ------------
PAR VALUE MARKET
ISSUER, DESCRIPTION (000s OMITTED) VALUE
------------------- ------------ ------------
SHORT-TERM INVESTMENTS
Non-Cash Security Lending Collateral (3.50%)
U.S. Treasury Bonds 3.875% thru
10.375%, due 11-15-12 thru 04-15-29,
and U.S. Treasury Notes 3.375% thru
6.625%, due 06-30-01 thru 01-15-09** $2,962 2,962,003
------------
Cash Equivalents (6.09%)
Navigator Securities Lending Prime
Portfolio** 5,143 5,143,400
------------
TOTAL SHORT-TERM INVESTMENTS (9.59%) 8,105,403
--------- ------------
TOTAL INVESTMENTS (108.22%) 91,431,798
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (8.22%) (6,941,084)
--------- ------------
TOTAL NET ASSETS (100.00%) $84,490,714
========= ============
* Non income-producing security.
** Represents investment of security lending collateral -- Note A.
(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 $1,270,297 as of April
30, 2000.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the Fund.
See notes to financial statements.
</TABLE>
Portfolio Concentration
April 30, 2000 (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, 2000,
assigned to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
--------------------- ---------------
Automobile/Trucks 0.62%
Banks -- Foreign 8.65
Beverages 0.08
Broker Services 4.81
Business Services -- Misc. 1.48
Computers 12.59
Cosmetics & Personal Care 0.76
Diversified Operations 4.67
Electronic Components -- Misc. 16.75
Electronic Products -- Misc. 15.39
Engineering/R&D Services 1.37
Finance 2.47
Leasing Companies 1.67
Leisure 1.10
Media 1.19
Medical 0.05
Oil & Gas 0.66
Printing -- Commercial 1.38
Real Estate Operations 4.40
Retail 7.85
Steel 1.32
Telecommunications 7.75
Utilities 1.62
Short-Term Investments 9.59
-------
TOTAL INVESTMENTS 108.22%
=======
See notes to financial statements.
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
Health Sciences Fund. Prior to March 1, 2000, John Hancock Health
Sciences Fund was known as John Hancock Global Health Sciences Fund. The
other two 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
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. Beginning May 1, 2000, all retail purchases of Class C shares will
be assessed a 1.00% up-front sales charge.
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, which 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, at
October 31, 1999, the Fund had $5,120,554 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 gain distribution will be made. The Fund's entire carryforward
expires on October 31, 2006 -- $5,120,554.
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.
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 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. The Fund has entered into a syndicated line of credit
agreement with various banks. 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 outstanding during the
period amounted to $4,540,000. The annualized interest rate charged
during the period ranged from 6.19% thru 6.81%. At April 30, 2000, the
Fund had an outstanding loan balance of $4,540,000.
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 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, 2000 the Fund loaned securities having a
market value of $6,500,634 collateralized by cash and securities in the
amount of $8,105,403 .
FOREIGN CURRENCY TRANSLATION All assets and liabilities initially
expressed in terms of foreign currencies are translated into U.S.
dollars based on London currency exchange quotations as of 5:00 p.m.,
London time, on the date of any determination of the net asset value of
the Fund. Transactions affecting statement of operations accounts and
net realized gain/(loss) on investments are translated at the rates
prevailing at the dates of the transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain
or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales
of foreign currency, currency gains or losses realized between the trade
and settlement dates on securities transactions and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains
and losses arise from changes in the value of assets and liabilities,
other than investments in securities at fiscal year end, resulting from
changes in the exchange rate.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The Fund may enter into
forward foreign currency exchange contracts as a hedge against the
effect of fluctuations in currency exchange rates. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date at a set price. The aggregate
principal amounts of the contracts are marked to market daily at the
applicable foreign currency exchange rates. Any resulting unrealized
gains and losses are included in the determination of the Fund's daily
net assets. The Fund records realized gains and losses at the time the
forward foreign currency contract is closed out or offset by a matching
contract. Risks may arise upon entering these contracts from potential
inability of counterparties to meet the terms of the contract and from
unanticipated movements in the value of a foreign currency relative to
the U.S. dollar.
These contracts involve market or credit risk in excess of the
unrealized gain or loss reflected in the Fund's Statement of Assets and
Liabilities. The Fund may also purchase and sell forward contracts to
facilitate the settlement of foreign currency denominated portfolio
transactions, under which it intends to take delivery of the foreign
currency. Such contracts normally involve no market risk if they are
offset by the currency amount of the underlying transaction.
At April 30, 2000, open forward foreign currency exchange contracts for
the Fund were as follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY COVERED BY CONTRACT DATE APPRECIATION
-------- ------------------- ---------- ------------
SELLS
Japanese Yen 2,021,230,000 May 00 $144,272
Singapore Dollar 950,000 May 00 326
-----------
$144,598
===========
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
had a sub-advisory contract with John Hancock Advisers International
Limited ("JHAI") and one with Indosuez Asia Advisers Limited ("IAAL"),
under which both sub-advisers, subject to the review of the Trustees and
overall supervision of the Adviser, provided the Fund with investment
management services and advice with respect to the portion of the Fund's
assets invested in countries other than the United States and Canada. As
of March 1, 2000, the Adviser terminated its contract with JHAI so that
currently IAAL is the Fund's sole sub-adviser.
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 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 Adviser paid JHAI a subadvisory
fee at an annual rate of 0.50% of the Fund's average net assets through
February 29, 2000. As of September 1, 1994, JHAI had limited its fee to
0.05% of average daily net assets. The Fund is not responsible for
payment of the sub-advisers' fees.
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, 2000, net sales charges received with regard to sales of Class
A shares amounted to $38,315. Of this amount, $2,754 was retained and
used for printing prospectuses, advertising, sales literature and other
purposes, $15,395 was paid as sales commissions to unrelated
broker-dealers and $20,166 was paid as sales commissions to sales
personnel of Signator Investors, Inc. ("Signator Investors"), a related
broker-dealer. The Adviser's indirect parent, John Hancock Life
Insurance Company ("JHLICo"), 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, 2000, contingent deferred sales
charges paid to JH Funds amounted to $70,221.
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 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, 2000, contingent deferred
sales charges paid to JH Funds amounted to $879.
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 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 Conduct
Rules of the National Association of Securities Dealers. Under the
Conduct Rules, 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 JHLICo.
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,
accounting and legal 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. Stephen L. Brown, Ms. Maureen R. Ford 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.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 2000, aggregated
$100,133,877 and $98,197,331, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended April 30, 2000.
The cost of investments owned at April 30, 2000 (including short-term
investments) for federal income tax purposes was $79,762,718. Gross
unrealized appreciation and depreciation of investments aggregated
$18,365,016 and $6,695,936, respectively, resulting in net unrealized
appreciation of $11,669,080.
[THIS PAGE INTENTIONALLY LEFT BLANK]
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This report is for the information of shareholders of the John Hancock
Pacific Basin Equities Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
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Recycled Paper."
580SA 4/00
6/00
The latest report from your
Fund's management team
SEMIANNUAL REPORT
European
Equity Fund
APRIL 30, 2000
TRUSTEES
Dennis S. Aronowitz*
Stephen L. Brown
Richard P. Chapman, Jr.
William J. Cosgrove*
Leland O. Erdahl
Richard A. Farrell
Maureen R. Ford
Gail D. Fosler
William F. Glavin
Dr. John A. Moore
Patti McGill Peterson
John W. Pratt*
Richard S. Scipione
*Members of the Audit Committee
OFFICERS
Stephen L. Brown
Chairman
Maureen R. Ford
Vice Chairman, President and
Chief Executive Officer
Osbert M. Hood
Executive 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
CEO CORNER
DEAR FELLOW SHAREHOLDERS:
[A 1" x 1" photo of Maureen R. Ford, Vice Chairman, President and
Chief Executive Officer, flush right next to second paragraph.]
Over the last six months, New Economy technology stocks dominated the
business-news headlines and the stock market's performance. Red-hot tech
stocks pushed the NASDAQ Composite Index to the stratosphere, as
investors single-mindedly pursued anything technology related. But after
setting a new high on March 10 amid significantly heightened volatility,
the tables started to turn rapidly. Concerns about Microsoft's antitrust
ruling and out-of-sight valuation levels finally triggered waves of
selling that sent the index down nearly 25% from its high by the end of
April.
In this same period, fixed-income securities of all types, including
bonds and preferred stocks, struggled as interest rates rose on fears
that the roaring U.S. economy and the rebound of many others around the
world would spark an inflation outbreak.
While the battle between old and new rages on, several things are clear:
More than ever, diversification and a long-term investment perspective
are two of an investor's best allies. Since not all parts of your
portfolio will perform equally well all the time, we believe it is
important to allocate your assets among different types of investments
and funds that target a variety of stock- and bond-market segments. This
strategy, executed under the guidance of a seasoned investment
professional, could provide you with a better chance of both realizing
longer-term results and weathering the market's changing conditions.
Sincerely,
/S/ MAUREEN R. FORD
MAUREEN R. FORD, VICE CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BY DIDIER LE CONTE FOR THE PORTFOLIO MANAGEMENT TEAM
[A 3" x 2" photo at bottom right side of page of John Hancock
European Equity Fund. Caption below reads "Fund management team
members (l-r): Didier Le Conte, Miren Etcheverry, Alessandra
Gaudio and Jean-Claude Kaltenbach."]
John Hancock European Equity Fund
A fruitful six months for the European equity markets
European equity markets prospered under favorable economic conditions
during the six months ended April 30, 2000. Vibrant economic activity,
declining unemployment, consolidations, restructuring, relatively low
inflation and corporate profit growth all contributed to a positive
backdrop for investors. While the euro -- Europe's new common currency
-- suffered a steady decline, its fall helped make many European exports
more attractive during a period of global economic prosperity. Most of
the top performers in the European market came from the "TMT" sectors --
technology, media and telecommunications -- all of which benefited from
the world's embrace of the New Economy and the Internet.
Interest rates rose during the period, but didn't knock the markets off
stride except briefly in January. The European Central Bank and The Bank
of England both raised rates several times during the period to control
inflation, although there appeared to be little danger of broad-based
price increases.
"...a period
of global
economic
prosperity."
Performance
In this environment, the Fund's benchmark Morgan Stanley Capital
International (MSCI) Europe Index returned 8.83% during the six months
ended April 30, 2000. For the same six-month period, the Fund's Class A,
Class B and Class C shares returned 10.93%, 10.49% and 10.49%,
respectively, at net asset value. For another comparison, the average
European region fund returned 21.51%, according to Lipper, Inc.1
Remember 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. Historical performance
information can be found on pages six and seven.
[Table at top left hand column entitled "Top Five Stock Holdings."
The first listing is First Vodafone Group 5.7%, the second is
Nokia 5.0%, the third Ericsson 4.7%, the fourth BP Amoco 3.5% and
the fifth Royal Dutch Petroleum 3.0%. A note below the table reads
"As a percentage of net assets on April 30, 2000."]
We suspect that the Fund's relative shortfall compared to its
competitors came from having less of an overweighting in TMT stocks and
from having more of a stake in the underperforming market of the United
Kingdom. In addition, some of the funds in this Lipper group have a
regional concentration.
"European
TMT stocks
thrived for
the same
reasons they
did in the
U.S."
The allure of TMT
European TMT stocks thrived for the same reasons they did in the U.S.
The explosion of cellular telephony, advances in distribution of
entertainment and the unparalleled growth of the Internet helped firms
in these sectors achieve astounding share prices. However, the path was
not altogether smooth. In mid-March, investors became unwilling to pay
extremely high valuations for Internet companies that had yet to post
earnings. There was a sorting out, as investors looked more closely to
find those companies that might survive and grow over the long term.
Telecommunications stocks also stumbled toward the end of the period,
including Vodafone, the Fund's biggest holding. Cellular license
auctions in the United Kingdom brought much higher prices than expected,
leading to fears that companies will have to invest huge amounts to
maintain or adapt their present networks.
The Fund's growth strategy
Our main strategy remained the pursuit of investments in higher-growth
industries such as TMT. Individual winners for the Fund included Nokia,
the Finnish telecommunications equipment giant, and its Swedish
counterpart, Ericsson. The Fund also benefited from its investment in
British media company Pearson, which produces educational materials for
the Internet, as well as in French semiconductor firm
STMicroelectronics, which was propelled by strong worldwide demand for
microchips.
[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 Ericsson followed by an up arrow
with the phrase "Ongoing subscriber growth in mobile
communications." The second listing is STMicroelectronics followed
by an up arrow with the phrase "Strong worldwide demand for
microchips." The third listing is Lloyds followed by a down arrow
with the phrase "Banking competition heats up as country barriers
fall." A note below the table reads "See 'Schedule of
Investments.' Investment holdings are subject to change."]
On the downside, British retailers proved disappointing. Dixons (New
Dixons Group), the largest computer seller in the U.K., and electric
equipment retailer Kingfisher suffered from Wal-Mart's acquisition of
Asda, one of the largest retailers in the United Kingdom. Investors were
concerned that Wal-Mart's entry into the market would ignite a price
war. Banks such as Barclays and Lloyds also struggled. The Internet
helped to break down barriers between countries, making the competitive
landscape that much more difficult.
Looking at sectors, the Fund maintained light positions in basic
industries, construction and food and beverage. We also cut our finance
investments significantly, helping the Fund's performance, and brought
the Fund's pharmaceutical positions to an even more underweighted
position. We also maintained a slight overweight in energy stocks --
including BP Amoco, Total Fina and Royal Dutch Petroleum -- because the
outlook for stable oil prices and strong global economic growth looked
promising.
[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, 2000." The chart is scaled in increments of
5% with 0% at the bottom and 25% at the top. The first bar
represents the 10.93% total return for John Hancock European
Equity Fund Class A. The second bar represents the 10.49% total
return for John Hancock European Equity Fund Class B. The third
bar represents the 10.49% total return for John Hancock European
Equity Fund Class C. The fourth bar represents the 21.51% 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.1 See the following
two pages for historical performance information."]
A look across the map
Before looking at how particular countries fared, please remember that
we are bottom-up stock pickers. Considerations about country and sector
weightings are a by-product of our decision to invest in stocks based on
individual company prospects. That said, the best-performing markets
during the period were Finland and Sweden, largely due to the stellar
performance of Nokia and Ericsson. Germany and France also fared quite
well, posting better-than-market returns due to their continued economic
recoveries. The Fund was hurt by an underweighted German position, but
reaped the rewards of increasing its overweighting in France.
Europe's largest market, the U.K., struggled due to rising interest
rates, and we decreased our stake there. The Bank of England confronted
a similar quandary to that of the Federal Reserve, facing very low
unemployment, strong economic growth and a strong pound sterling, which
increased export prices. The Swiss market stagnated due to its heavy
concentration of bank and pharmaceutical stocks. The latter group
suffered from governments' attempts to reduce health-care costs, and the
increasing cost of launching new products.
"...estimates
call for the
continued
acceleration
of economic
growth in
the euro
zone..."
Outlook
Our outlook for European equities remains positive. Yet, in the short
term, we're aware that rising interest rates and the run-up in equity
prices could make bonds an attractive alternative to stocks. At the same
time, estimates call for the continued acceleration of economic growth
in the euro zone in 2000 to 3.4%, up from 2.2% in 1999. In the U.K.,
forecasts call for growth at 3.1%, up from 2.1%. We expect unemployment
to fall, household consumption to rise and industrial capital spending
to increase. Export trends continue to be positive. At the corporate
level, restructuring and the development of the New Economy should also
proceed apace and it's expected that corporate profits will increase by
about 20%, a level that should continue to attract investors to the
European markets.
-------------------------------------------------------------------------
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.
1 Figures from Lipper, Inc. include reinvested dividends and do not take
into account sales charges. Actual load-adjusted performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock 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 an up-front 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 an up-front sales charge of 1%
and 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, 2000
SINCE
ONE INCEPTION
YEAR (3/2/98)
---------- ----------
Cumulative Total Returns 13.58% 23.93%
Average Annual Total Returns(1) 13.58% 10.87%
CLASS B
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (6/1/98)
---------- ----------
Cumulative Total Returns 13.69% 12.44%
Average Annual Total Returns(1) 13.69% 6.62%
CLASS C
For the period ended March 31, 2000
SINCE
ONE INCEPTION
YEAR (3/1/99)
---------- ----------
Cumulative Total Returns 16.51% 19.91%
Average Annual Total Returns(1) 16.51% 18.27%
Note to Performance
(1) The Adviser has agreed to limit the Fund's expenses on Class A to
1.90% and on Class B and Class C to 2.60% 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
13.27% and 10.21%, respectively, for Class A shares, 13.38% and 6.06%,
respectively, for Class B shares and 16.20% and 17.96%, respectively,
for Class C shares.
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. It is not possible to
invest in an index. 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 $12,767 as of April 30, 2000. 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 $12,380 as of April 30, 2000. The third
line represents the same hypothetical investment made in the John
Hancock European Equity Fund, after sales charge, and is equal to
$11,761 as of April 30, 2000.
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 $11,452 as of April 30, 2000. 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 $11,039 as of April 30, 2000. The third line
represents the same hypothetical investment made in the John
Hancock European Equity Fund, after sales charge, and is equal to
$10,639 as of April 30, 2000.
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 $11,487 as of April 30, 2000. 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 $11,484 as of April 30, 2000. The third
line represents the same hypothetical investment made in the John
Hancock European Equity Fund, after sales charge, and is equal to
$11,369 as of April 30, 2000.
FINANCIAL STATEMENTS
John Hancock Funds -- European Equity Fund
<TABLE>
<CAPTION>
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on April 30,
2000. 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, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Assets:
Investments at value -- Note C:
Common and preferred stocks and
warrants (cost -- $28,104,109) $33,919,696
Short-term investments
(cost -- $8,091,240) -- Note A 8,091,240
-----------------
42,010,936
Cash 48,283
Foreign currency, at value
(cost -- $14,629) 14,569
Receivable for investments sold 407,657
Receivable for shares sold 2,967
Dividends receivable 74,150
Foreign tax receivable 18,869
Interest receivable 583
Other assets 72
-----------------
Total Assets 42,578,086
--------------------------------------------------------------
Liabilities:
Payable for investments purchased 1,042,623
Payable for forward foreign currency
exchange contracts purchased -- Note A 11,668
Payable for forward foreign currency
exchange contracts sold -- Note A 15
Payable for shares repurchased 18,031
Payable upon return of securities on
loan -- Note A 6,871,240
Payable to John Hancock Advisers, Inc.
and affiliates -- Note B 19,366
Accounts payable and accrued expenses 26,566
-----------------
Total Liabilities 7,989,509
--------------------------------------------------------------
Net Assets:
Capital paid-in 30,881,164
Accumulated net realized loss on
investments, financial future
contracts and foreign currency
transactions (1,815,010)
Net unrealized appreciation of
investments and foreign currency
transactions 5,809,173
Accumulated net investment loss (286,750)
-----------------
Net Assets $34,588,577
==============================================================
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 -- $15,957,755/1,289,569 $12.37
==============================================================
Class B -- $18,194,005/1,489,517 $12.21
==============================================================
Class C -- $436,817/35,761 -- Note A $12.21
==============================================================
Maximum Offering Price Per Share*
Class A -- ($12.37/0.95) $13.02
==============================================================
* 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.
</TABLE>
<TABLE>
<CAPTION>
The Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net
gains (losses) for the period stated.
Statement of Operations
Six months ended April 30, 2000 (Unaudited)
--------------------------------------------------------------
<S> <C>
Investment Income:
Dividends (net of foreign withholding
taxes of $25,158) $158,877
Interest (including income on
securities loaned of $3,682) 23,609
-----------------
182,486
-----------------
Expenses:
Investment management fee -- Note B 155,596
Distribution and service fee -- Note B
Class A 24,190
Class B 90,784
Class C 1,466
Transfer agent fee -- Note B 67,834
Custodian fee 64,749
Registration and filing fees 28,784
Auditing fee 9,945
Printing 5,636
Accounting and legal services fee --
Note B 3,267
Miscellaneous 1,323
Trustees' fees 931
Legal fees 161
-----------------
Total Expenses 454,666
--------------------------------------------------------------
Less Expense Reductions -- Note B (61,611)
--------------------------------------------------------------
Net Expenses 393,055
--------------------------------------------------------------
Net Investment Loss (210,569)
--------------------------------------------------------------
Realized and Unrealized Gain (Loss) on
Investments, Financial Futures Contracts
and Foreign Currency Transactions:
Net realized gain on investments sold 1,662,197
Net realized gain on financial futures
contracts 50,447
Net realized loss on foreign currency
transactions (711,499)
Change in net unrealized
appreciation/depreciation of
investments 2,647,347
Change in net unrealized
appreciation/depreciation of foreign
currency transactions (5,726)
-----------------
Net Realized and Unrealized Gain on
Investments, Financial Futures
Contracts and Foreign Currency
Transactions 3,642,766
--------------------------------------------------------------
Net Increase in Net Assets Resulting
from Operations $3,432,197
==============================================================
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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, if any, 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.
Statement of Changes in Net Assets
---------------------------------------------------------------------------------
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
----------------- -----------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment loss ($228,019) ($210,569)
Net realized gain (loss) on
investments sold, financial
futures contracts and foreign
currency transactions (1,420,471) 1,001,145
Change in net unrealized
appreciation/depreciation of
investments and foreign currency
transactions 4,249,574 2,641,621
----------------- -----------------
Net Increase in Net Assets
Resulting from Operations 2,601,084 3,432,197
----------------- -----------------
From Fund Share Transactions --
Net: * 1,040,151 1,601,153
----------------- -----------------
Net Assets:
Beginning of period 27,994,294 29,555,227
----------------- -----------------
End of period (including
accumulated net investment loss
of $76,181 and $286,750,
respectively) $29,555,227 $34,588,577
================= =================
<CAPTION>
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
--------------------------------------- ---------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 1,184,807 $12,972,731 1,247,224 $15,953,805
Less shares repurchased (1,104,630) (12,013,213) (1,244,492) (16,128,005)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) 80,177 $959,518 2,732 ($174,200)
================= ================= ================= =================
CLASS B
Shares sold 955,152 $10,400,345 807,218 $10,097,176
Less shares repurchased (1,177,076) (12,586,150) (674,188) (8,555,097)
----------------- ----------------- ----------------- -----------------
Net increase (decrease) (221,924) ($2,185,805) 133,030 $1,542,079
================= ================= ================= =================
CLASS C **
Shares sold 18,445 $195,641 18,616 $237,908
Less shares repurchased (897) (9,505) (403) (4,634)
----------------- ----------------- ----------------- -----------------
Net increase 17,548 $186,136 18,213 $233,274
================= ================= ================= =================
** Class C shares commenced operations on March 1, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Financial Highlights summarizes the impact of the following factors
on a single share for the period indi cated: 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.
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:
-----------------------------------------------------------------------------------
FOR THE PERIOD FROM
MARCH 2, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1998 OCTOBER 31, 1999 (UNAUDITED)
---------------- ---------------- -------------
<S> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.00 $10.07 $11.16
------------- ------------- -------------
Net Investment Income
(Loss)(1) 0.01 (0.04) (0.05)
Net Realized and Unrealized
Gain on Investments,
Financial Futures Contracts
and Foreign Currency
Transactions 0.06 1.13 1.26
------------- ------------- -------------
Total From Investment
Operations 0.07 1.09 1.21
------------- ------------- -------------
Net Asset Value, End of
Period $10.07 $11.16 $12.37
============= ============= =============
Total Investment Return at
Net Asset Value(2) 0.70%(3) 10.82% 10.93%(3)
Total Adjusted Investment
Return at Net Asset
Value(2,4) (0.24%)(3) 10.49% 10.75%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $12,147 $14,365 $15,958
Ratio of Expenses to Average
Net Assets 1.90%(5) 1.90%(7) 1.90%(5)
Ratio of Adjusted Expenses
to Average Net Assets(6) 3.31%(5) 2.23%(7) 2.26%(5)
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.16%(5) (0.38%) (0.85%)(5)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(6) (1.25%)(5) (0.71%) (1.21%)(5)
Portfolio Turnover Rate 31% 64% 38%
Fee Reduction Per Share(1) $0.10 $0.04 $0.02
<CAPTION>
Financial Highlights (continued)
-----------------------------------------------------------------------------------
FOR THE PERIOD FROM
JUNE 1, 1998
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO YEAR ENDED APRIL 30, 2000
OCTOBER 31, 1998 OCTOBER 31, 1999 (UNAUDITED)
---------------- ---------------- -------------
<S> <C> <C> <C>
CLASS B
Per Share Operating Performance
Net Asset Value, Beginning
of Period $11.07 $10.04 $11.06
------------- ------------- -------------
Net Investment Loss(1) (0.04) (0.12) (0.10)
Net Realized and Unrealized
Gain (Loss) on Investments,
Financial Futures Contracts
and Foreign Currency
Transactions (0.99) 1.14 1.25
------------- ------------- -------------
Total From Investment
Operations (1.03) 1.02 1.15
------------- ------------- -------------
Net Asset Value, End of
Period $10.04 $11.06 $12.21
============= ============= =============
Total Investment Return at
Net Asset Value(2) (9.30%)(3) 10.16% 10.49%(3)
Total Adjusted Investment
Return at Net Asset
Value(2,4) (9.89%)(3) 9.83% 10.31%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $15,847 $14,997 $18,194
Ratio of Expenses to Average
Net Assets 2.60%(5) 2.60%(7) 2.60%(5)
Ratio of Adjusted Expenses
to Average Net Assets(6) 4.01%(5) 2.93%(7) 2.96%(5)
Ratio of Net Investment Loss
to Average Net Assets (1.12%)(5) (1.08%) (1.55%)(5)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(6) (2.53%)(5) (1.41%) (1.91%)(5)
Portfolio Turnover Rate 31% 64% 38%
Fee Reduction Per Share(1) $0.06 $0.04 $0.02
<CAPTION>
Financial Highlights (continued)
------------------------------------------------------------------
FOR THE PERIOD FROM
MARCH 1, 1999
(COMMENCEMENT OF SIX MONTHS ENDED
OPERATIONS) TO APRIL 30, 2000
OCTOBER 31, 1999 (UNAUDITED)
---------------- -------------
<S> <C> <C>
CLASS C
Per Share Operating Performance
Net Asset Value, Beginning
of Period $10.64 $11.06
------------- -------------
Net Investment Loss(1) (0.07) (0.09)
Net Realized and Unrealized
Gain on Investments,
Financial Futures Contracts
and Foreign Currency
Transactions 0.49 1.24
------------- -------------
Total From Investment
Operations 0.42 1.15
------------- -------------
Net Asset Value, End of
Period $11.06 $12.21
============= =============
Total Investment Return at
Net Asset Value(2) 3.95%(3) 10.49%(3)
Total Adjusted Investment
Return at Net Asset
Value(2,4) 3.73%(3) 10.31%(3)
Ratios and Supplemental Data
Net Assets, End of Period
(000s omitted) $194 $437
Ratio of Expenses to Average
Net Assets 2.60%(5,7) 2.60%(5)
Ratio of Adjusted Expenses
to Average Net Assets(6) 2.93%(5,7) 2.96%(5)
Ratio of Net Investment Loss
to Average Net Assets (1.17%)(5) (1.40%)(5)
Ratio of Adjusted Net
Investment Loss to Average
Net Assets(6) (1.50%)(5) (1.76%)(5)
Portfolio Turnover Rate 64% 38%
Fee Reduction Per Share(1) $0.03 $0.02
(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) Expense ratios do not include interest expense due to bank loans,
which amounted to less than 0.01% during the period ended
October 31, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned
by the European Equity Fund on April 30, 2000. It's divided into four
main categories: common stocks, preferred stocks, warrants and
short-term investments. The common and preferred stocks and warrants are
further broken down by country. Short-term investments, which represent
the Fund's "cash" position, are listed last.
Schedule of Investments
April 30, 2000 (Unaudited)
------------------------------------------------------------------------------------
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
------------------- ---------- ------------
<S> <C> <C> <C>
COMMON STOCKS
Denmark (0.77%)
Tele Danmark A/S (Telecommunications) 3,650 $267,288
------------
Finland (7.11%)
Nokia Oyj (Telecommunications) 30,200 1,732,399
Nordic Baltic Holding AB (Banks -- Foreign) 54,800 346,738
Sonera Oyj (Telecommunications) 4,090 224,952
Tietoenator Oyj (Computers) 3,200 154,183
------------
2,458,272
------------
France (19.62%)
Alcatel SA (Telecommunications) 2,395 555,210
Axa SA (Insurance) 2,250 333,617
Banque Nationale de Paris (Banks -- Foreign) 2,340 189,116
Bouygues SA (Building) 400 255,275
Bouygues SA (New Shares)* (Building) 13 8,308
Cap Gemini SA (Computers) 714 140,205
Carrefour SA (Retail) 5,890 383,389
Compagnie de Saint Gobain SA (Building) 1,615 220,376
Credit Lyonnais SA (Banks -- Foreign) 6,288 244,949
France Telecom SA (Telecommunications) 4,350 673,070
Lagardere SCA (Diversified Operations) 2,000 135,456
L'Oreal SA (Cosmetics & Personal Care) 94 63,750
Pinault-Printemps-Redoute SA (Retail) 2,305 464,986
PSA Peugeot Citroen SA (Automobile/Trucks) 780 161,391
Rexel SA (Electronics) 2,800 193,202
Schneider Electric SA (Machinery) 2,950 193,093
STMicroelectronics NV (Electronics) 2,430 463,693
Suez Lyonnaise des Eaux SA (Diversified
Operations) 1,670 261,889
Total Fina SA (Oil & Gas) 6,675 1,012,790
Valeo SA (Automobile/Trucks) 4,321 239,621
Vivendi SA (Diversified Operations) 5,990 592,471
------------
6,785,857
------------
Germany (9.19%)
Allianz AG (Insurance) 1,243 478,334
BASF AG (Chemicals) 4,300 187,990
Bayerische Hypo- und Vereinsbank AG
(Banks -- Foreign) 2,915 177,552
Bayerische Motoren Werke AG (Automobile/Trucks) 7,650 205,857
DaimlerChrysler AG (Automobile/Trucks) 2,790 162,709
Deutsche Telekom AG (Telecommunications) 12,580 816,450
Dresdner Bank AG (Banks -- Foreign) 4,165 171,562
Fresenius AG (Medical) 700 118,365
Muenchener Rueckversicherungs- Gesellschaft AG
(Insurance) 372 109,065
Siemens AG (Diversified Operations) 3,745 554,946
Veba AG (Diversified Operations) 3,900 195,711
------------
3,178,541
------------
Ireland (0.73%)
CRH Plc (Building) 15,834 253,778
------------
Italy (4.26%)
Assicurazioni Generali SpA (Insurance) 6,850 194,916
Eni SpA (Oil & Gas) 23,475 116,736
San Paolo-IMI SpA (Banks -- Foreign) 7,830 109,621
Telecom Italia Mobile SpA (Telecommunications) 71,100 678,689
Telecom Italia SpA (Telecommunications) 26,700 373,318
------------
1,473,280
------------
Netherlands (10.63%)
Aegon NV (Insurance) 3,640 261,586
Akzo Nobel NV (Chemicals) 7,065 289,218
Fortis (NL) NV (Insurance) 9,252 232,648
Getronics NV (Computers) 3,442 205,270
ING Groep NV (Banks -- Foreign) 4,917 268,292
Koninklijke Numico NV (Food) 6,570 244,287
Royal Dutch Petroleum Co. (Oil & Gas) 18,112 1,043,920
Royal Philips Electronics NV (Electronics) 11,880 529,961
Unilever NV (Food) 3,571 162,190
VNU NV (Media) 4,655 249,045
Wolters Kluwer NV (Media) 8,000 188,802
------------
3,675,219
------------
Norway (0.68%)
Tomra Systems ASA (Machinery) 11,360 234,593
------------
Portugal (0.43%)
PT Multimedia Servicos SGPS SA*
(Telecommunications) 2,125 148,269
------------
Spain (4.98%)
Amadeus Global Travel Distribution SA*
(Transport) 24,109 298,078
Banco Bilbao Vizcaya Argentaria SA
(Banks -- Foreign) 29,690 404,868
Banco Santander Central Hispano SA
(Banks -- Foreign) 14,440 150,571
Endesa SA (Utilities) 5,860 127,856
Telefonica SA* (Telecommunications) 33,404 743,398
------------
1,724,771
------------
Sweden (6.65%)
Ericsson (LM) Telefonaktiebolaget
(Telecommunications) 18,400 1,635,601
Hennes & Mauritz AB (Retail) 11,200 297,301
Skandia Forsakrings AB (Insurance) 7,695 368,186
------------
2,301,088
------------
Switzerland (5.33%)
Adecco SA (Business Services -- Misc.) 287 235,485
Credit Suisse Group (Banks -- Foreign) 1,190 214,946
Nestle SA (Food) 115 202,720
Novartis AG (Medical) 500 698,443
Roche Holding AG (Medical) 47 490,835
------------
1,842,429
------------
United Kingdom (25.10%)
Barclays Plc (Banks -- Foreign) 17,823 455,925
BP Amoco Plc (Oil & Gas) 139,985 1,208,532
British Telecommunications Plc
(Telecommunications) 34,800 623,092
Cable & Wireless Plc (Telecommunications) 10,830 179,746
Centrica Plc (Utilities) 113,640 406,943
CMG Plc (Computers) 3,550 227,525
Compass Group Plc (Food) 26,330 379,199
Energis Plc* (Telecommunications) 4,040 199,521
Glaxo Wellcome Plc (Medical) 21,350 659,832
HSBC Holdings Plc (Banks -- Foreign) 18,720 206,937
Invensys Plc (Diversified Operations) 64,231 310,014
Kingfisher Plc (Retail) 16,535 135,157
Lloyds TSB Group Plc (Banks -- Foreign) 26,370 257,426
New Dixons Group Plc (Electronics) 21,476 86,936
Pearson Plc (Media) 13,540 458,093
SEMA Group Plc (Computers) 11,330 182,929
SmithKline Beecham Plc (Medical) 34,525 473,033
Vodafone AirTouch Plc (Telecommunications) 428,265 1,960,356
WPP Group Plc (Advertising) 16,700 269,113
------------
8,680,309
------------
TOTAL COMMON STOCKS
(Cost $27,271,650) (95.48%) 33,023,694
--------- ------------
PREFERRED STOCKS
Germany (1.81%)
Fresenius AG (Medical) 915 202,550
SAP AG (Computers) 720 424,477
------------
627,027
------------
Italy (0.78%)
Telecom Italia SpA (Telecommunications) 42,500 267,753
------------
TOTAL PREFERRED STOCKS
(Cost $831,625) (2.59%) 894,780
--------- ------------
WARRANTS
Germany (0.00%)
Muenchener Rueckversicherungs- Gesellschaft AG*
(Insurance) 16 1,222
------------
TOTAL WARRANTS
(Cost $834) (0.00%) 1,222
--------- ------------
TOTAL COMMON AND PREFERRED STOCKS
AND WARRANTS
(Cost $28,104,109) (98.07%) 33,919,696
--------- ------------
<CAPTION>
INTEREST PAR VALUE
RATE (000s OMITTED)
-------- ------------
SHORT-TERM INVESTMENTS
Joint Repurchase Agreement (3.53%)
Investment in a joint repurchase
agreement transaction with SBC
Warburg, Inc. -- Dated 04-28-00, due
05-01-00 (Secured by U.S. Treasury
Bonds, 7.875% thru 8.875%, due
08-15-17 thru 02-15-21) -- Note A 5.73% $1,220 1,220,000
------------
Cash Equivalents (19.86%)
Navigator Securities Lending
Prime Portfolio** 6,871 6,871,240
------------
TOTAL SHORT-TERM INVESTMENTS (23.39%) 8,091,240
--------- ------------
TOTAL INVESTMENTS (121.46%) 42,010,936
--------- ------------
OTHER ASSETS AND LIABILITIES, NET (21.46%) (7,422,359)
--------- ------------
TOTAL NET ASSETS (100.00%) $34,588,577
========= ============
* 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.
</TABLE>
Portfolio Concentration
April 30, 2000 (Unaudited)
------------------------------------------------------------------------
The Fund 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, 2000,
assigned to the various investment categories.
MARKET VALUE
OF SECURITIES
AS A PERCENTAGE
INVESTMENT CATEGORIES OF NET ASSETS
--------------------- ---------------
Advertising 0.78%
Automobile/Trucks 2.22
Banks -- Foreign 9.25
Building 2.13
Business Services -- Misc. 0.68
Chemicals 1.38
Computers 3.86
Cosmetics & Personal Care 0.18
Diversified Operations 5.93
Electronics 3.68
Food 2.86
Insurance 5.72
Machinery 1.24
Media 2.59
Medical 7.64
Oil & Gas 9.78
Retail 3.70
Telecommunications 32.03
Transportation 0.86
Utilities 1.55
Short-term investments 23.39
-------
TOTAL INVESTMENTS 121.46%
=======
See notes to financial statements.
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 Health Sciences Fund and John Hancock Pacific
Basin Equities Fund. Prior to March 1, 2000, John Hancock Health
Sciences Fund was known as John Hancock Global Health Sciences Fund. The
other two series of the Trust are reported in separate financial
statements. The Fund's investment objective is to achieve long-term
capital appreciation through investment in a diversified portfolio of
European equity securities.
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
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. Beginning May 1, 2000, all retail purchases of Class C shares will
be assessed a 1.00% up-front sales charge.
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, at
October 31, 1999, the Fund had $2,685,265 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 carryfowards expire as follows: October 31, 2006 --
$1,450,896 and October 31, 2007 -- $1,234,369.
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
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. The Fund has entered into a syndicated line of credit
agreement with various banks. 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. At April 30, 2000, there were no outstanding loan
balances.
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 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, 2000, the Fund loaned securities having a
market value of $6,575,920 collateralized by cash in the amount of
$6,871,240, which 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 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.
At April 30, 2000, open forward foreign currency exchange
contracts were as follows:
PRINCIPAL AMOUNT EXPIRATION UNREALIZED
CURRENCY COVERED BY CONTRACT DATE DEPRECIATION
-------- ------------------- ---------- ------------
BUYS
Euro Currency 304,025 May 00 ($10,762)
Pound Sterling 36,159 May 00 (906)
-----------
($11,668)
===========
SELLS
Euro Currency 3,128 May 00 ($10)
Swedish Krona 12,852 May 00 (5)
-----------
($15)
===========
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 will be 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 on 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," will be 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, 2000, 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. 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 Fund is not responsible for paying the IIIS fee.
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 $61,611 for the period ended April 30, 2000.
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, 2000, net sales charges received with regard to sales of Class
A shares amounted to $17,233. Out of this amount, $2,929 was retained
and used for printing prospectuses, advertising, sales literature and
other purposes, $6,610 was paid as sales commissions to unrelated
broker-dealers and $7,694 was paid as sales commissions to sales
personnel of Signator Investors, Inc. ("Signator Investors"), a related
broker-dealer. The Adviser's indirect parent, John Hancock Life
Insurance Company ("JHLICo"), 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, 2000, contingent deferred sales
charges paid to JH Funds amounted to $50,946.
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, 2000, 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 Conduct
Rules of the National Association of Securities Dealers. Under the
Conduct Rules, 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
JHLICo. 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,
accounting and legal 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. Stephen L. Brown, Ms. Maureen R. Ford 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.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
securities, during the period ended April 30, 2000, aggregated
$13,676,031 and $12,554,092, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended April 30, 2000.
The cost of investments owned at April 30, 2000 (including short-term
investments) for federal income tax purposes was $36,277,157. Gross
unrealized appreciation and depreciation of investments aggregated
$7,297,553 and $1,563,774, respectively, resulting in unrealized
appreciation of $5,733,779.
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