<PAGE> 1
John Hancock Funds
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Growth &
Income
Fund
SEMI-ANNUAL REPORT
February 28, 1995
<PAGE> 2
TRUSTEES
EDWARD J. BOUDREAU, JR.
JAMES F. CARLIN*
WILLIAM H. CUNNINGHAM*
CHARLES L. LADNER*
LEO E. LINBECK*
PATRICIA P. MCCARTER*
STEVEN R. PRUCHANSKY*
LT. GEN. NORMAN H. SMITH, USMC (RET.)*
JOHN P. TOOLAN*
*Members of the Audit Committee
OFFICERS
EDWARD J. BOUDREAU, JR.
Chairman and Chief Executive Officer
ROBERT G. FREEDMAN
Vice Chairman and
Chief Investment Officer
ANNE C. HODSDON
President
THOMAS H. DROHAN
Senior Vice President and Secretary
JAMES B. LITTLE
Senior Vice President and
Chief Financial Officer
MICHAEL P. DICARLO
Senior Vice President
EDGAR LARSON
Senior Vice President
B. J. WILLINGHAM
Senior Vice President
JOHN A. MORIN
Vice President
SUSAN S. NEWTON
Vice President and Compliance Officer
THOMAS J. PRESS
Vice President and Assistant Secretary
JAMES J. STOKOWSKI
Vice President and Treasurer
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
89 SOUTH STREET
BOSTON, MASSACHUSETTS 02111
TRANSFER AGENT
THE SHAREHOLDER SERVICES GROUP
ONE AMERICAN EXPRESS PLACE
PROVIDENCE, RI 02903-1135
INVESTMENT ADVISER
JOHN HANCOCK ADVISERS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
PRINCIPAL DISTRIBUTOR
JOHN HANCOCK FUNDS, INC.
101 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02199-7603
LEGAL COUNSEL
HALE AND DORR
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
On behalf of our nearly 700 associates, I'm delighted to welcome you to John
Hancock Funds. As you all know, Transamerica Fund Management Company was
acquired by John Hancock Funds on December 22, 1994, following a favorable
shareholder vote. At that time, all of the Transamerica mutual funds became part
of the John Hancock family of funds.
[PHOTO - SEE APPENDIX]
We're excited about the opportunities this acquisition will bring to
shareholders. The combined firms form a larger, more competitive organization
with more than $13 billion in assets under management and more than 1 million
shareholders. Now with 50 open-end funds, 8 closed-end funds and a full array of
retirement and private account services, John Hancock Funds offers you a broader
selection of investment choices to meet your long-term financial needs. What's
more, the union of the Hancock and Transamerica investment teams gives you
access to some of the top talent in the industry.
The Transamerica name is changing, but the commitment to serving you as a
valued shareholder isn't. Here at John Hancock Funds, our motto is: "We invest
in quality first." It has to do with the way we invest your money and the way we
work with you. Not only do we strive to ensure that your investments are
well-managed, we also take pride in providing the highest quality customer
service. We can't guarantee investment performance; nobody can. The quality of
our service, however, depends totally on us. That is something that we can
guarantee.
In mid-May, we anticipate that all of the Transamerica funds will be fully
integrated into John Hancock's internal shareholder service organization, John
Hancock Investor Services. At that time, not only will you gain exchange
privileges into all John Hancock funds, but your account will be handled by one
of the top-rated service organizations in the industry. To show you how
seriously we take our commitment to quality, you will have access to our service
guarantee. If we make an error in processing a transaction in your account, we
will deposit $25 into it. Or if you have a retirement account, we will waive the
annual fee.
We value your business and look forward to serving your investment needs in
the years to come.
Sincerely,
/s/ Edward J. Boudreau
- ------------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
2
<PAGE> 3
BY BRIAN GROVE FOR THE PORTFOLIO MANAGEMENT TEAM
JOHN HANCOCK
GROWTH & INCOME FUND
Hope for soft landing boosts markets
For most of the past six months, we've been operating in a volatile investment
climate marked by rising interest rates, a declining U.S. dollar and a series of
international crises, both natural and man-made. Despite the challenging
conditions, domestic stocks as a whole survived the period relatively unscathed,
thanks to a surge that began in December and propelled the Dow Jones Industrial
Average past 4000 by the end of February. There were two main factors behind the
advance: one, a perception in the market that interest rates may finally be
leveling off; and two, a series of positive fourth-quarter earnings surprises.
Together, those developments raised hopes among investors that we may indeed be
headed for a so-called "soft landing" -- a gradual economic slowdown leading to
stable inflation and continued strong earnings growth in the months ahead.
John Hancock Growth & Income Fund, like the market as a whole, finished the
period about where it started. During the six months ended February 28, 1995,
the Fund's Class A and Class B total return rose 0.86% and 0.48%, respectively,
at net asset value. Those returns were slightly behind the average growth and
income fund, which rose 1.27% during the same period, according to Lipper
Analytical Services.(1)
THE IMPORTANCE OF FREE CASH FLOW
Before we get into a more detailed discussion of the Fund's results, let's
review our investment strategy. Since
[PHOTO - SEE APPENDIX]
BRIAN GROVE, PORTFOLIO MANAGER
[CAPTION]
"...WE'VE BEEN OPERATING IN A VOLATILE INVESTMENT CLIMATE..."
3
<PAGE> 4
John Hancock Funds - Growth & Income Fund
[CHART - SEE APPENDIX]
- --------------------------------------------------
TOP FIVE COMMON STOCK HOLDINGS
1. NORTHROP GRUMMAN 4.8%
2. EASTMAN KODAK 4.1%
3. McDONNELL DOUGLAS 4.1%
4. J.P. MORGAN & CO. 3.8%
5. TIME WARNER 3.6%
As a percentage of net assets on February 28, 1995
- --------------------------------------------------
taking over management of the Fund in June 1994, we've been gradually adjusting
the Fund's holdings to reflect our belief in the primary importance of a
variable called free cash flow. In simple terms, free cash flow is the money
generated by a company's ongoing operations. It represents the amount of cash
that management has on hand to enhance shareholder value. There are many ways to
use free cash flow advantageously, including buying back shares, paying down
debt, increasing the dividend and investing in the business. What works best
depends on the company and its circumstances, but having free cash flow
available is key. We look for companies with a price-to-free-cash-flow ratio of
10 or less.
In addition, we aim to distribute the Fund's assets broadly among sectors in
roughly the same proportion as the market averages. We're not sector rotators.
We don't make big bets on
SCORECARD
[CHART - SEE APPENDIX]
<TABLE>
<CAPTION>
INVESTMENT RECENT PERFORMANCE...AND WHAT'S BEHIND THE NUMBERS
- -------------------------------------------------------------------------------
<S> <C>
NORTHROP GRUMMAN Strong free cash flow
CBS Renewed focus on profits/takeover speculation
RJR NABISCO Litigation concerns/exit by large shareholder
- -------------------------------------------------------------------------------
</TABLE>
See "Schedule of Investments." Investment holdings are subject to change.
hot industries. We use free cash flow to identify the most attractive investment
opportunities within each industry. That said, the Fund's holdings occasionally
will tilt toward industries where we happen to find a cluster of companies with
abundant free cash flow. The best example of that right now is the defense and
aerospace industry.
STRONG EARNINGS GIVE LIFT TO AEROSPACE
Among the Fund's largest holdings are defense companies: Northrop Grumman and
McDonnell Douglas. Northrop Grumman was trading recently at five times free cash
flow, which puts it well within our guidelines. When Northrop acquired Grumman,
the combined company was left with lots of debt. By using some of its free cash
flow to pay down that debt -- instead of aggressively bidding on new business --
it has been able to reduce interest expenses and increase earnings. Also, like
many defense companies these days, Northrop Grumman finds that many of its
contracts have entered the mature phase when profits are highest. McDonnell
Douglas is a similar story with plenty of mature contracts. Its stock is trading
at five times free cash flow. But instead of paying down debt, it has been using
its free cash flow to buy back shares and increase its dividend. As a group,
companies in the defense and aerospace industry totaled 15% of the Fund's
investments at the end of the period.
Another investment was RJR Nabisco. It's an extreme case, trading recently at
four times free cash flow. On the down side, RJR Nabisco is facing a host of
tough legal challenges from anti-smoking groups, along with what we believe
[CAPTION]
"...WE USE FREE CASH FLOW TO IDENTIFY THE MOST ATTRACTIVE INVESTMENT
OPPORTUNITIES..."
4
<PAGE> 5
John Hancock Funds - Growth & Income Fund
FUND PERFORMANCE
[CHART- SEE APPENDIX]
For the six months ended February 28, 1995
<TABLE>
<CAPTION>
John John
Hancock Hancock
Growth & Growth & Average
Income Income growth &
Fund: Fund: income
Class A Class B fund
- ----------------------------------------------------
<S> <C> <C>
0.86% 0.48% 1.27%
</TABLE>
Total returns for John Hancock Growth & Income Fund are at net asset value with
all distributions reinvested. The average growth and income fund is tracked by
Lipper Analytical Services.(1) See following page for historical performance
information.
- -------------------------------------------------------------------------------
is a misperception that it will have a hard time increasing its earnings over
the long term. But with all that cash flow, they've been able to reduce debt,
add a substantial dividend and expand its tobacco business overseas -- where the
growth potential is explosive.
Among our most disappointing performers during the past six months was
Hibernia, a Louisiana bank. Financial stocks made up the second largest sector
grouping in the Fund at 14% of assets and nearly all of them suffered because of
rising interest rates. Hibernia was no exception, despite impressive earnings
growth over the past four years, abundant free cash flow, and the possibility
that it may one day be an attractive acquisition target. Hibernia has been a
frustrating story for the Fund so far, but we remain hopeful about its
prospects.
OUTLOOK: BRIGHT, ESPECIALLY FOR EXPORTERS
We're positive about the outlook for the rest of 1995 and beyond. With inflation
moderate and interest rates apparently leveling off, that would suggest that
conditions may be in place to support strong corporate earnings growth in the
months ahead. Moreover, as the investment climate stabilizes, more companies
that have been able to reduce costs in recent years -- by slashing payrolls,
investing in technology and otherwise finding ways to do more with less -- could
begin to see those savings translate into positive earnings surprises. Finally,
volatile conditions in foreign markets could translate into higher demand -- and
higher prices -- for U.S. stocks.
One last point: We'll be paying special attention to exporters in the months
ahead. The slumping U.S. dollar has made U.S. goods that much more attractive to
foreign buyers. And with many foreign economies expanding at a far faster rate
than ours, exporters are likely to profit from strong growth in consumer demand,
especially big companies with significant overseas exposure such as Coca-Cola
and United Technologies.
(1) Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance
would be lower.
[CAPTION]
"WE'RE POSITIVE ABOUT THE OUTLOOK FOR THE REST OF 1995..."
5
<PAGE> 6
Notes to Performance Information
John Hancock Funds - Growth & Income Fund
In accordance with the reporting requirements of the Securities and Exchange
Commission, the following data are supplied for the periods ended December 31,
1994 with all distributions reinvested in shares. The average annualized total
returns for Class A shares for the 1-year, 5-year and 10-year periods were
(13.77%), 5.73% and 9.83%, respectively, and reflect payment of the maximum
sales charge of 4.50%. The average annualized total returns for Class B shares
for the 1-year period and since the Fund's inception in August 22, 1991 were
(14.16%) and 3.41%, respectively, and reflect applicable contingent deferred
sales charge (maximum contingent deferred sales charge of 5% and declines to 0%
over six years). The standard SEC yield for the 30-day period ended February 28,
1995 for Class A and Class B shares was 1.89% and 1.27%, respectively. All
performance data shown represent past performance and should not be considered
indicative of future performance. Returns and principal values of Fund
investments will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Performance is affected by a 12b-1
plan. International investing involves special risks, such as currency
fluctuations, political risks and differences in accounting and financial
reporting. See the prospectus for details.
HYPOTHETICAL $10,000 INVESTMENT OVER LIFE OF THE FUND (OR MOST RECENT TEN YEARS)
6
<PAGE> 7
Financial Statements
John Hancock Funds - Growth & Income Fund
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $198,261,831) ..................... $ 218,071,425
Convertible debt (cost - $3,226,875) .................... 3,062,500
Convertible preferred stocks (cost - $9,811,106) ........ 8,826,250
--------------
229,960,175
Dividends receivable .................................... 910,625
Receivable for investments sold ......................... 3,497,283
Receivable for shares sold .............................. 58,219
Miscellaneous assets .................................... 63,419
--------------
Total Assets ........................... 234,489,721
-----------------------------------------------------------
LIABILITIES:
Payable for investments purchased ......................... 3,367,385
Payable for shares repurchased ............................ 196,306
Overdraft of cash ......................................... 755,801
Dividend payable .......................................... 322
Payable to John Hancock Advisers, Inc. and
affiliates - Note B ..................................... 388,297
Accounts payable and accrued expenses ..................... 51,221
--------------
Total Liabilities ...................... 4,759,332
-----------------------------------------------------------
NET ASSETS:
Capital paid-in ........................................... 219,073,427
Accumulated net realized loss on investments .............. (8,892,965)
Net unrealized appreciation of investments ................ 18,660,363
Undistributed net investment income ....................... 889,564
--------------
Net Assets ............................. $ 229,730,389
===========================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with $0.01 per share par value, respectively)
Class A - $120,515,470/10,542,878 ......................... $ 11.43
===============================================================================
Class B - $109,214,919/9,534,999 .......................... $ 11.45
===============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($11.43 x 106.10%) .............................. $ 12.13
===============================================================================
</TABLE>
*On single retail sales of less than $50,000. On sales of $50,000 or more and on
group sales the offering price is reduced.
THE STATEMENT OF ASSETS AND LIABILITIES IS THE FUND'S BALANCE SHEET AND SHOWS
THE VALUE OF WHAT THE FUND OWNS, IS DUE AND OWES ON FEBRUARY 28, 1995. YOU'LL
ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF
THAT DATE.
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 February 28, 1995 (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends ................................................. $ 3,668,878
Interest .................................................. 113,436
------------
3,782,314
------------
Expenses:
Investment management fee - Note B ...................... 693,010
Distribution/service fee - Note B
Class A ................................................ 141,426
Class B ................................................ 505,225
Transfer agent fee ...................................... 293,672
Custodian fee ........................................... 63,078
Registration and filing fees ............................ 53,183
Administration fee ...................................... 49,105
Auditing fee ............................................ 45,145
Trustees' fees .......................................... 16,652
Legal fees .............................................. 10,568
Miscellaneous ........................................... 8,090
Printing ................................................ 5,182
Advisory board fee ...................................... 3,210
------------
Total Expenses ......................... 1,887,546
-----------------------------------------------------------
Net Investment Income .................. 1,894,768
-----------------------------------------------------------
Realized and Unrealized Gain (Loss) on Investments
Net realized loss on investments sold ..................... (3,305,690)
Change in net unrealized appreciation/depreciation
of investments .......................................... 2,582,992
------------
Net Realized and Unrealized
Loss on Investments .................... (722,698)
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations .............. $ 1,172,070
============================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
Financial Statements
John Hancock Funds - Growth & Income Fund
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31,
(UNAUDITED) 1994
---------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
Net investment income ........................................... $ 1,894,768 $ 5,248,852
Net realized loss on investments sold ........................... (3,305,690) (4,108,702)
Change in net unrealized appreciation/depreciation of investments 2,582,992 (6,227,126)
------------- -------------
Net Increase (Decrease) in Net Assets Resulting from Operations 1,172,070 (5,086,976)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class A - ($0.0842 and $0.3723 per share, respectively) ....... (889,784) (3,841,209)
Class B - ($0.0432 and $0.2857 per share, respectively) ....... (425,636) (2,125,768)
------------- -------------
Total Distributions to Shareholders .......................... (1,315,420) (5,966,977)
------------- -------------
FROM FUND SHARE TRANSACTIONS-- NET* .............................. (5,311,614) 65,449,506
------------- -------------
NET ASSETS:
Beginning of period ............................................. 235,185,353 180,789,800
------------- -------------
End of period (including undistributed net investment income of
$889,564 and $310,216, respectively) .......................... $ 229,730,389 $ 235,185,353
============= =============
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED AUGUST 31,
(UNAUDITED) 1994
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold .................................................. 987,172 $ 10,927,632 2,589,934 $ 30,320,622
Shares issued to shareholders in reinvestment of distributions 67,621 736,393 268,525 3,107,249
----------- ------------- ----------- -------------
1,054,793 11,664,025 2,858,459 33,427,871
Less shares repurchased ...................................... (1,120,013) (12,282,484) (1,838,450) (21,316,096)
----------- ------------- ----------- -------------
Net increase (decrease) ...................................... (65,220) ($ 618,459) 1,020,009 $ 12,111,775
=========== ============= =========== =============
CLASS B
Shares sold .................................................. 989,824 $ 10,896,941 4,698,506 $ 55,098,942
Shares issued to shareholders in reinvestment of distributions 32,793 358,651 152,463 1,763,746
Fund shares issued for the net assets of Transamerica
Special Blue Chip Fund - Note D .............................. -- -- 2,382,863 26,592,756
----------- ------------- ----------- -------------
1,022,617 11,255,592 7,233,832 83,455,444
Less shares repurchased ...................................... (1,453,488) (15,948,747) (2,642,211) (30,117,713)
----------- ------------- ----------- -------------
Net increase (decrease) ...................................... (430,871) ($ 4,693,155) 4,591,621 $ 53,337,731
=========== ============= =========== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
Financial Statements
John Hancock Funds - Growth & Income Fund
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated: investment returns, key ratios and supplemental data are as
follows:
- --------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1995 -----------------------
(UNAUDITED) 1994 1993
-------------- -------- --------
<S> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ..................... $ 11.42 $ 12.08 $ 12.43
------- ------- -------
Net Investment Income .................................... 0.11 0.32(a) 0.40(a)
Net Realized and Unrealized Gain (Loss) on Investments ... (0.02) (0.61) 1.12
------- ------- -------
Total from Investment Operations ....................... 0.09 (0.29) 1.52
------- ------- -------
Less Distributions:
Dividends from Net Investment Income ................... (0.08) (0.37) (0.42)
Distributions from Net Realized Gain on Investments Sold -- -- (1.45)
------- ------- -------
Total Distributions ................................... (0.08) (0.37) (1.87)
------- ------- -------
Net Asset Value, End of Period ........................... $ 11.43 $ 11.42 $ 12.08
======= ======= =======
Total Investment Return at Net Asset Value ............... 0.86%(b) (2.39%) 13.64%
======= ======= =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ................ $120,515 $121,160 $115,780
Ratio of Expenses to Average Net Assets .................. 1.34%* 1.31% 1.29%
Ratio of Net Investment Income to Average Net Assets ..... 2.06%* 2.82% 3.43%
Portfolio Turnover Rate .................................. 53% 195% 107%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------
1992 1991 1990
------- ------- ----------
<S> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ..................... $ 11.77 $ 9.87 $ 10.19
------- ------- --------
Net Investment Income .................................... 0.32(a) 0.20 0.20
Net Realized and Unrealized Gain (Loss) on Investments ... 0.89 2.07 (0.18)
------- ------- --------
Total from Investment Operations ....................... 1.21 2.27 0.02
------- ------- --------
Less Distributions:
Dividends from Net Investment Income ................... (0.25) (0.19) (0.27)
Distributions from Net Realized Gain on Investments Sold (0.30) (0.18) (0.07)
------- ------- --------
Total Distributions ................................... (0.55) (0.37) (0.34)
------- ------- --------
Net Asset Value, End of Period ........................... $ 12.43 $ 11.77 $ 9.87
======= ======= ========
Total Investment Return at Net Asset Value ............... 10.47% 23.80% O.18%
======= ======= ========
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ................ $89,682 $77,461 $ 63,150
Ratio of Expenses to Average Net Assets .................. 1.34% 1.38% 1.29%
Ratio of Net Investment Income to Average Net Assets ..... 2.75% 1.90% 1.96%
Portfolio Turnover Rate .................................. 119% 70% 69%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
Financial Statements
John Hancock Funds - Growth & Income Fund
FINANCIAL HIGHLIGHTS (continued)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS ENDED AUGUST 22, 1991
FEBRUARY 28, 1995 YEAR ENDED AUGUST 31, TO AUGUST 31,
---------------------------
(UNAUDITED) 1994 1993 1992 1991
----------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period.................... $ 11.44 $ 12.10 $ 12.44 $ 11.77 $ 11.52
------- ------- ------- ------- -------
Net Investment Income................................... 0.07 0.24(a) 0.30(a) 0.23(a) ...
Net Realized and Unrealized Gain (Loss) on Investments.. ( 0.02) ( 0.61) 1.12 0.89 0.25
------- ------- ------- ------- -------
Total from Investment Operations...................... 0.05 ( 0.37) 1.42 1.12 0.25
------- ------- ------- ------- -------
Less Distributions
Dividends from Net Investment Income.................. ( 0.04) ( 0.29) (0.31) ( 0.15) ...
Distributions from Net Realized Gain
on Investments Sold................................. ... ... (1.45) ( 0.30) ...
------- ------- ------- ------- -------
Total Distributions.................................. ( 0.04) ( 0.29) (1.76) ( 0.45) ...
------- ------- ------- ------- -------
Net Asset Value, End of Period.......................... $ 11.45 $ 11.44 $ 12.10 $ 12.44 $ 11.77
======= ======= ======= ======= =======
Total Investment Return at Net Asset Value.............. 0.48%(b) (3.11%) 12.64% 9.67% 2.17%(b)
======= ======= ======= ======= =======
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)............... $109,215 $114,025 $65,010 $29,826 $ 7,690
Ratio of Expenses to Average Net Assets................. 2.09%* 2.06% 2.19% 2.07% 2.19%*
Ratio of Net Investment Income to Average Net Assets ... 1.31%* 2.07% 2.53% 2.02% 1.46%*
Portfolio Turnover Rate................................. 53% 195% 107% 119% 70%
</TABLE>
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Not annualized.
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: THE NET INVESTMENT INCOME, GAINS
(LOSSES), DISTRIBUTIONS AND TOTAL INVESTMENT RETURN OF THE FUND. IT SHOWS HOW
THE FUND'S NET ASSET VALUE FOR A SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS
PERIOD. ADDITIONALLY, IMPORTANT RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN
THE FINANCIAL STATEMENTS ARE EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
Financial Statements
John Hancock Funds - Growth & Income Fund
SCHEDULE OF INVESTMENTS
February 28, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
COMMON STOCKS
AEROSPACE (14.75%)
Gencorp, Inc.................. 200,000* $ 2,700,000
General Dynamics Corp......... 100,000* 4,712,500
McDonnell Douglas Corp........ 168,000* 9,408,000
Northrop Grumman Corp......... 250,000 11,093,750
United Technologies Corp...... 90,000 5,973,750
-----------
33,888,000
-----------
AUTOMOBILE/TRUCK (1.86%)
General Motors Corp........... 100,000* 4,262,500
-----------
BANKS (10.08%)
Banc One Corp................. 150,000 4,406,250
Hibernia Corp. (Class A)...... 700,000 5,425,000
J.P. Morgan & Co., Inc........ 135,000 8,707,500
Midlantic Corp., Inc.......... 150,000 4,612,500
-----------
23,151,250
-----------
BEVERAGES (2.15%)
Coca-Cola Co.................. 90,000 4,950,000
-----------
BROADCASTING (1.68%)
CBS, Inc...................... 60,000 3,870,000
-----------
CHEMICALS (3.39%)
Eastman Chemical Co........... 80,000 4,380,000
Monsanto Co................... 43,000* 3,407,750
-----------
7,787,750
-----------
COMPUTERS (4.67%)
Hewlett-Packard Co............ 50,000 5,750,000
Unisys Corp.**................ 560,000 4,970,000
-----------
10,720,000
-----------
DIVERSIFIED OPERATIONS (5.72%)
AlliedSignal, Inc............. 118,000 4,484,000
TRW, Inc...................... 79,400 5,220,550
Warner-Lambert Co............. 45,000* 3,436,875
-----------
13,141,425
-----------
DRUGS (4.78%)
Pfizer, Inc................... 76,000 6,289,000
Schering-Plough Corp.......... 60,000 4,702,500
-----------
10,991,500
-----------
FINANCE (3.92%)
Edwards (A.G.), Inc........... 110,000* 2,475,000
Household International, Inc. 65,000* 2,843,750
Student Loan Marketing Association 100,000 3,687,500
-----------
9,006,250
----------
</TABLE>
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
GROWTH AND INCOME FUND ON FEBRUARY 28, 1995. IT'S DIVIDED INTO THREE MAIN
CATEGORIES: COMMON STOCKS, CONVERTIBLE DEBT AND CONVERTIBLE PREFERRED STOCKS.
THE INVESTMENTS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS.
<TABLE>
<S> <C> <C>
FOODS (3.34%)
CPC International, Inc........ 70,000 $ 3,745,000
Heinz (H.J.) Co............... 100,000 3,937,500
-----------
7,682,500
-----------
HOTELS & MOTELS (1.99%)
Hilton Hotels Corp............ 65,000* 4,566,250
-----------
INSURANCE (2.85%)
Aetna Life & Casualty Co...... 65,000* 3,493,750
Alexander & Alexander Services, Inc. 140,000 3,045,000
-----------
6,538,750
-----------
LEISURE & RECREATION (2.32%)
Walt Disney Co................ 100,000 5,337,500
-----------
MEDICAL/DENTAL (2.57%)
Bausch & Lomb, Inc............ 65,000* 2,161,250
Baxter International, Inc..... 120,000* 3,735,000
-----------
5,896,250
-----------
OFFICE EQUIP & SUPPLIES (1.63%)
Avery Dennison Corp........... 100,000 3,750,000
-----------
OIL & GAS (3.03%)
Atlantic Richfield Co......... 30,000 3,288,750
Occidental Petroleum Corp..... 185,000* 3,676,875
-----------
6,965,625
-----------
PAPER (2.73%)
Federal Paper Board Co........ 150,000 4,462,500
Kimberly-Clark Corp........... 35,000* 1,820,000
-----------
6,282,500
-----------
PHOTO EQUIPMENT (4.11%)
Eastman Kodak Co.............. 185,000 9,435,000
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
Financial Statements
John Hancock Funds - Growth & Income Fund
<TABLE>
<CAPTION>
ISSUER, DESCRIPTION NUMBER OF SHARES MARKET VALUE
- ------------------- ---------------- ------------
<S> <C> <C>
PUBLISHING (3.61%)
Time Warner, Inc..................... 215,000 $ 8,304,375
-----------
RETAIL (5.05%)
Federated Department Stores, Inc.**.. 170,000 3,740,000
J.C. Penney Co., Inc................. 85,000 3,644,375
Kmart Corp........................... 330,000* 4,207,500
-----------
11,591,875
------------
SOAP & CLEANING PREPARATIONS (1.45%)
Clorox Co............................ 55,000 3,320,625
-----------
TELECOMMUNICATIONS (1.76%)
AT & T Corp.......................... 78,000 4,036,500
-----------
TOBACCO (3.34%)
Philip Morris Cos., Inc.............. 80,000 4,860,000
RJR Nabisco Holdings Corp............ 500,000* 2,812,500
-----------
7,672,500
-----------
UTILITIES (2.14%)
Entergy Corp......................... 220,000 4,922,500
-----------
TOTAL COMMON STOCKS
(Cost $198,261,831) (94.92%) 218,071,425
------- -----------
</TABLE>
<TABLE>
<CAPTION>
ISSUER, DESCRIPTION UNITS MARKET VALUE
- ------------------- ----- ------------
<S> <C> <C>
CONVERTIBLE DEBT
OIL & GAS (1.33%)
Atlantic Richfield Co., 9.00%... 125,000* $3,062,500
----------
TOTAL CONVERTIBLE DEBT
(Cost $3,226,875) (1.33%) 3,062,500
------- ----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS
STEEL (1.21%)
AK Steel Holding Corp., 7.00%, SAILS... 100,000* 2,775,000
------------
TOBACCO (2.64%)
RJR Nabisco Holdings, $0.6012,
Depositary Shares, Ser C............... 1,030,000 6,051,250
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $9,811,106) (3.85%) 8,826,250
--------- ------------
TOTAL INVESTMENTS (100.10%) $229,960,175
========= ============
</TABLE>
* Securities, other than short-term investments, newly added to the portfolio
during the period ended February 28, 1995.
** Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
Notes to Financial Statements
John Hancock Funds - Growth & Income Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
John Hancock Investment Trust, (the "Trust") is a diversified, open-end
management investment company, registered under the Investment Company Act of
1940. John Hancock Growth and Income Fund (the "Fund") is the only series of the
Trust presently issuing shares. The Trustees may authorize the creation of
additional Funds from time to time to satisfy various investment objectives.
Effective December 22, 1994, the Trust and the Fund changed names from
Transamerica Investment Trust and Transamerica Growth and Income Fund,
respectively.
The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemptions, dividends, and liquidation, except that certain
expenses, subject to the approval of the Trustees, may be applied differently to
each class of shares in accordance with current regulations of the Securities
and Exchange Commission and the Internal Revenue Service. Shareholders of a
class, which bears distribution/service expenses under the terms of a
distribution plan, have exclusive voting rights regarding such distribution
plan.
Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAX The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal income tax provision is
required. For federal income tax purposes, the Fund has $1,383,000 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 distributions will be made. The carryforwards expire as follows:
August 31, 1995 - $569,000, August 31, 1996 - $763,000, and August 31, 1998 -
$51,000. Additionally, net capital losses of $4,204,218 attributable to security
transactions occurring after October 31, 1993 are treated as arising on the
first day (September 1, 1994) of the Fund's next taxable year.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date or, in the case of some foreign securities,
on the date thereafter when the Fund is made aware of the dividend. Interest
income on investment securities is recorded on the accrual basis. Foreign income
may be subject to foreign withholding taxes which are accrued as applicable.
The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined in
conformity with income tax regulations, which may differ from generally accepted
accounting principles. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and will be in
the
13
<PAGE> 14
Notes to Financial Statements
John Hancock Funds - Growth & Income Fund
same amount, except for the effect of expenses that may be applied differently
to each class as explained previously.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees if any, are calculated daily at the class level based
on the appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
NOTE B --
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND TRANSACTIONS WITH AFFILIATES AND
OTHERS
On December 22, 1994, John Hancock Advisers, Inc. (the "Adviser"), a wholly
owned subsidiary of The Berkeley Financial Group, became the investment manager
for the Fund with approval of the Trustees and shareholders of the
Fund. The Fund's former investment manager was Transamerica Fund Management
Company ("TFMC").
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent, to
0.625% of the Fund's average daily net asset value. This fee structure is
consistent with the former agreement with TFMC. For the period ended February
28, 1995, the advisory fee earned by the Adviser and TFMC amounted to $231,003
and $462,007, respectively, resulting in a total fee of $693,010.
The Adviser and TFMC, for their respective periods, provided administrative
services to the Fund pursuant to an administrative service agreement through
January 16, 1995 on which day the agreement was terminated.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive state
limit where the Fund is registered to sell shares of beneficial interest, the
fee payable to the Adviser will be reduced to the extent of such excess and the
Adviser will make additional arrangements necessary to eliminate any remaining
excess expenses. The current limits are 2.5% of the first $30,000,000 of the
Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of
the remaining average daily net asset value.
On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a wholly-owned
subsidiary of the Adviser, became the principal underwriter of the Fund. Prior
to this date, Transamerica Fund Distributors, Inc. ("TFD") served as the
principal underwriter and distributor of the Fund. For the period ended February
28, 1995, JH Funds and TFD received net sales charges of $793,191 with regard to
sales of Class A shares. Out of this amount, $59,556 was retained and used for
printing prospectuses, advertising, sales literature and other purposes,
$733,635 was paid as sales commissions to unrelated broker-dealers and nothing
was paid as sales commissions to sales personnel of John Hancock Distributors,
Inc. ("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro
& Co., Inc. ("Sutro"). The Adviser's indirect parent, John Hancock Mutual Life
Insurance Company, is the indirect sole shareholder of Distributors and John
Hancock Freedom Securities Corporation and its subsidiaries, which include
Tucker Anthony and Sutro, which are broker-dealers.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining rates
beginning at 5.0% of the lesser of the current market value at the time of
redemption or the original purchase cost of the shares being redeemed. Proceeds
from the CDSC are paid to JH Funds, formerly TFD, and are used in whole or in
part to defray its expenses related to providing distribution related services
to the Fund in connection with the sale of Class B shares. For the period ended
February 28, 1995, contingent deferred sales charges amounted to $242,975.
In addition, to compensate JH Funds, for the services it provides as
distributor of shares of the Fund, the Fund has adopted a Distribution Plan with
respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund will make payments for distribution
and service expenses which in total will not exceed on an annual basis 0.25% of
the Fund's average daily net assets attributable to Class A shares and 1.00%
14
<PAGE> 15
Notes to Financial Statements
John Hancock Funds - Growth & Income Fund
of the Fund's average daily net assets attributable to Class B shares, to
reimburse for its distribution/service costs. Up to a maximum of 0.25% of such
payments may be service fees as defined by the amended Rules of Fair Practice of
the National Association of Securities Dealers which became effective July 7,
1993. Under the amended Rules of Fair Practice, curtailment of a portion of the
Fund's 12b-1 payments could occur under certain circumstances. This fee
structure and plan is similar to the former arrangement with TFD.
The Board of Trustees approved a shareholder servicing agreement between the
Fund and John Hancock Investors Corporation ("Investor Services") for the period
between December 22, 1994 and May 12, 1995, inclusive. Investor Services
provides transfer agency services (processing telephone transactions) on behalf
of the Fund.
A partner of Baker & Botts was an officer of the Trust, until December 22,
1994. During the period ended February 28, 1995, legal fees paid to Baker &
Botts amounted to $5,000.
Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser, and its
affiliates as well as Trustee of the Fund. The compensation of unaffiliated
Trustees is borne by the Fund. Effective with the fees paid for 1995, the
unaffiliated Trustees may elect to defer for tax purposes their receipt of this
compensation under the John Hancock Group of Funds Deferred Compensation Plan.
The Fund will make investments into other John Hancock Funds, as applicable, to
cover its liability as regards to 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 will be marked to
market on a periodic basis and income earned by the investment will be recorded
on the Fund's books.
The Fund has an independent advisory board composed of certain members of the
former Transamerica Board of Trustees who provide advice to the current Trustees
in order to facilitate a smooth management transition for which the Fund pays
the advisory board and its counsel a fee.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term
obligations, during the period ended February 28, 1995 aggregated $120,525,764
and $125,134,828, respectively.
The cost of investments owned at February 28, 1995 for Federal income tax
purposes was $211,299,812. Gross unrealized appreciation and depreciation of
investments aggregated $22,711,884, and $4,051,521, respectively, resulting in
net unrealized appreciation of $18,660,363.
NOTE D --
ACQUISITION OF TRANSAMERICA SPECIAL BLUE CHIP FUND
On May 27, 1994, John Hancock Growth and Income Fund acquired all the net assets
of Transamerica Special Blue Chip Fund pursuant to a plan of reorganization
approved by Transamerica Special Blue Chip Fund shareholders on May 20, 1994.
This tax-free reorganization was accomplished by the issuance of 2,382,863 Class
B Shares of John Hancock Growth and Income Fund (valued at $26,592,756) for the
2,645,385 shares of Transamerica Special Blue Chip Fund outstanding at May 27,
1994. Transamerica Special Blue Chip Fund's net assets at that date of
$26,592,756, including $2,005,978 of unrealized appreciation, were combined with
those of John Hancock Growth and Income Fund. The aggregate net assets of John
Hancock Growth and Income Fund and Transamerica Special Blue Chip Fund
immediately after the acquisition were $229,033,314.
15
<PAGE> 16
Additional Information
John Hancock Funds - Growth & Income Fund
On December 16, 1994, a special meeting of John Hancock (formerly
Transamerica) Investment Trust (the "Trust") in respect of John Hancock
(formerly Transamerica) Growth and Income Fund (the "Fund") was held involving
the election of trustees and certain other matters concerning the Fund.
Specifically, shareholders first approved a new investment management
agreement between the Trust on behalf of the Fund and John Hancock Advisers,
Inc. on substantially similar terms to the prior investment management
agreement, to take effect on December 22, 1994, the date of the consummation of
the acquisition of Transamerica Fund Management Company by The Berkeley
Financial Group. The shareholder votes tallied were 9,768,389 FOR, 206,169
AGAINST and 414,288 ABSTAINING.
The shareholders next approved new Plans of Distribution for each Class A and
Class B Shares of the Fund, also effective on December 22, 1994 and also upon
substantially the same terms as the prior Plans of Distribution. The Class A
Shareholder votes tallied were 5,669,928 FOR, 185,398 AGAINST, 302,148
ABSTAINING and the Class B Shareholder votes tallied were 3,950,260 FOR, 66,048
AGAINST and 215,065 ABSTAINING.
The shareholders also voted to ratify the selection of Ernst & Young LLP as
independent auditors for the Fund for the fiscal year ending August 31, 1995,
and the votes were tallied as follows: 10,148,779 FOR, 65,216 AGAINST and 65,216
ABSTAINING.
Lastly, the following trustees of the Fund were elected to serve until their
respective successors shall become duly elected and qualified, with the votes
tabulated as indicated:
<TABLE>
<CAPTION>
NAME OF TRUSTEE FOR WITHHOLD
--------------- --- --------
<S> <C> <C>
Edward J. Boudreau, Jr. ......... 8,806,833 1,734,030
James F. Carlin ................. 8,811,848 1,729,014
William H. Cunningham ........... 8,815,857 1,725,005
Charles L. Ladner ............... 8,815,544 1,725,319
Leo E. Linbeck, Jr............... 8,818,554 1,722,309
Patricia P. McCarter ............ 8,813,806 1,727,057
Steven R. Pruchansky............. 8,806,874 1,733,989
Norman H. Smith.................. 8,802,016 1,738,846
John P. Toolan................... 8,811,073 1,729,790
</TABLE>
16
<PAGE> 17
Notes
John Hancock Funds - Growth & Income Fund
17
<PAGE> 18
Notes
John Hancock Funds - Growth & Income Fund
18
<PAGE> 19
Notes
John Hancock Funds - Growth & Income Fund
19
<PAGE> 20
--------------
Bulk Rate
[LOGO - SEE APPENDIX] U.S. Postage
JOHN HANCOCK FUNDS PAID
A GLOBAL INVESTMENT MANAGEMENT FIRM Brockton, MA
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 Permit No. 582
-------------
This report is for the information of shareholders of the John Hancock Growth
& Income Fund. It may be used as sales literature when preceded or accompanied
by the current prospectus, which details charges, investment objectives and
operating policies.
[LOGO - SEE APPENDIX] Printed on Recycled Paper JH T16SA 2/95
<PAGE> 21
APPENDIX
JOHN HANCOCK GROWTH & INCOME FUND
Page 2
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.
Page 3
A 2 3/4" x 2 1/2" photo of Brian Grove centered at bottom. Caption reads: "Brian
Grove, Portfolio Manager."
Page 4
Chart with heading "Top Five Common Stock Holdings" at top of left hand column.
The chart lists five holdings: 1) Northrop Grumman 4.8% 2) Eastman Kodak 4.1% 3)
McDonnell Douglas 4.1% 4) J.P. Morgan & Co. 3.8% 5) Time Warner 3.6%. A footnote
below reads: "As a percentage of net assets on February 28, 1995."
Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investment"; the header for the right column is "Recent
performance ... and what's behind the numbers." The first listing is Northrop
Grumman followed by an up arrow and the phrase "Strong free cash flow." The
second listing is CBS followed by an up arrow and the phrase "Renewed focus on
profits/takeover speculation." The third listing is RJR Nabisco followed by a
down arrow and the phrase "Litigation concerns/exit by large shareholder."
Footnote below reads: "See "Schedule of Investments." Investment holdings are
subject to change."
Page 5
Bar chart with heading "Fund Performance" at top of left hand column. Under the
heading is the footnote: "For the six months ended February 28, 1995." The chart
is scaled in increments of 1% from bottom to top, with 2% at the top and 0% at
the bottom. Within the chart, there are three solid bars. The first represents
the 0.86% total return for John Hancock Growth & Income Fund: Class A. The
second represents the 0.48% total return for John Hancock Growth & Income Fund:
Class B. The third represents the 1.27% total return for the average growth and
income fund. The footnote below states: "Total returns for John Hancock Growth &
Income Fund are at net asset value with all distributions reinvested. The
average growth and income fund is tracked by Lipper Analytical Services. (1) See
following page for historical performance information."
Back Cover
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quadrants with a triangle in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management Firm."
A recycled logo in lower left hand corner with the caption "Printed on Recycled
Paper."
<PAGE> 22
Growth & Income Fund
Class A shares
Line chart with the heading Growth & Income Fund: Class A, representing the
growth of a hypothetical $10,000 investment over the life of the fund (or most
recent 10 years). Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500 Stock Index and
is equal to $37,381* as of February 28, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the Growth & Income Fund on
February 28, 1985, before sales charge, and is equal to $26,921 as of February
28, 1995. The third line represents the Growth & Income Fund after sales charge
and is equal to $25,364 as of February 28, 1995.
Growth & Income Fund
Class B shares
Line chart with the heading Growth & Income Fund: Class B, representing the
growth of a hypothetical $10,000 investment over the life of the fund (or most
recent 10 years). Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500 Stock Index and
is equal to $13,950* as of February 28, 1995. The second line represents the
value of the hypothetical $10,000 investment made in the Growth & Income Fund on
August 22, 1991, before contingent deferred sales charge, and is equal to
$12,288 as of February 28, 1995. The third line represents the Growth & Income
Fund after contingent deferred sales charge and is equal to $11,988 as of
February 28, 1995.
*The Standard & Poor's 500 Stock Index is an unmanaged index that includes 500
widely traded common stocks and is a commonly used measure of stock market
performance.
