Hancock Funds
Growth
and Income
Fund
SEMI-ANNUAL REPORT
February 29, 1996
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles F. Fretz*
Harold R. Hiser, Jr.*
Charles L. Ladner*
Leo E. Linbeck*
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman J. 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
Susan S. Newton
Vice President and Compliance Officer
James J. Stokowski
Vice President and Treasurer
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
TRANSFER AGENT
John Hancock Investor Services Corporation
P.O. Box 9116
Boston, Massachusetts 02205-9116
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
PRINCIPAL DISTRIBUTOR
John Hancock Funds, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief
Executive Officer, flush right, next to second paragraph.
Chairman's Message
DEAR FELLOW SHAREHOLDERS:
The stock market's record-breaking, whirlwind performance in 1995 will
be a tough act to follow in 1996. In fact, we've already seen greater
market volatility this year, particularly among last year's leaders --
technology stocks. That's to be expected after a year that saw market
indexes soar, including the Standard & Poor's 500-Stock Index's 37%
advance. While many of the same economic conditions that fostered the
stellar 1995 market are still in place - slow economic growth, muted
inflation and decent corporate earnings - it would be unrealistic to
expect the market to stage a repeat in 1996. The old saying "trees don't
grow to the sky" comes to mind. Shareholders would do well to temper
expectations of investment returns and perhaps revisit their investment
allocations with their financial advisor to determine if rebalancing
their portfolio makes sense.
No matter how you scale back your market expectations, you should always
be able to count on consistent customer service performance. At John
Hancock Funds, we never stop working to find ways to sustain and improve
the quality of information and assistance we provide you. Our commitment
to this task is no less than John Hancock's loyalty was to his fledgling
country when he is said to have uttered, "if it does the public good,
burn Boston." We won't go that far, of course, but we share our
namesake's dedication to putting the public before all else.
In our case, that public is you, our shareholders. We take very
seriously the role you have entrusted to us, that of helping you achieve
your financial goals. Part of that will always involve good customer
service. So please do not hesitate to call your Customer Service
Representative at 1-800-225-5291 if you have any questions or need
information. We take pride in helping you with the same spirit that John
Hancock displayed at the dawning of America.
Sincerely,
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
By Benjamin Hock, Portfolio Manager
John Hancock
Growth and Income Fund
Upward market trend continues as low rates,
tame inflation and strong earnings prevail
Benjamin Hock, Portfolio Manager
In November 1995, Benjamin Hock began managing John Hancock Growth and
Income Fund. A vice president of John Hancock Funds, Mr. Hock is also
assistant portfolio manager of John Hancock Emerging Growth Fund and
heads the company's Equity Research Division. Prior to joining John
Hancock Funds, Mr. Hock was a portfolio manager at Transamerica Fund
Management Company, which was acquired by John Hancock Funds in December
1994. Mr. Hock has more than 22 years of experience in the investment
business.
The good news continued for stock investors during the last six months.
Falling interest rates, strong corporate earnings and tame inflation
drove stock prices virtually straight up. From August 31, 1995 through
February 29, 1996, the Standard & Poor's 500-Stock Index -- the most
common measure of the broad stock market -- gained nearly 33%.
John Hancock Growth and Income Fund participated fully in the stock
market's rally, posting double-digit returns. For the six months ended
February 29, 1996, the Fund's Class A and Class B shares had total
returns of 12.58% and 12.18%, respectively, at net asset value. Those
returns outpaced the average growth and income fund's return of 12.08%
for the same period, according to Lipper Analytical Services. (1)
A 2 1/2" x 2 1/4" photo of Ben Hock centered at bottom. Caption reads:
"Ben Hock, Portfolio Manager."
"The good
news continued
for stock
investors
during the
last six
months."
Chart with heading "Top Five Common Stock Holdings" at top of left
hand column. The chart lists five holdings: 1) Eastman Kodak 5.2% 2)
J.P. Morgan 4.6% 3) Hibernia Corp. 4.3% 4) McDonnell Douglas 4.1% 5)
Time Warner 3.9%. A footnote below reads: "As a percentage of net
assets on February 29, 1996."
Performance review
Strong exposure to aerospace and financial services stocks fueled
performance during the period. At nearly 20% of net assets, aerospace
companies remained the Fund's largest sector weighting. What we like
about aerospace companies is that they're putting their abundant cash
flow to work in the right way. Despite the sharp slowdown in defense
spending in the last several years, companies such as McDonnell Douglas
and Northrup Grumman have been able to keep their earnings and market
share growing strongly with strategic acquisitions of smaller rivals and
aggressive cost-cutting.
"Strong
exposure to
aerospace
and financial
services
stocks fueled
performance..."
As for financial services stocks, the group has continued its winning
streak for several reasons. First is their attractive valuations and
stronger-than-expected earnings. The second has to do with falling
interest rates, which helped boost profits. And third is the takeover
frenzy that has swept through the bank industry. Regional banks such as
Hibernia Corp., AmSouth Bancorporation and Signet Banking have been the
Fund's biggest winners.
Of course, not all of our investments worked out as well. Quaker Oats,
for example, was a disappointment. We thought its acquisition of Snapple
would boost earnings, but Quaker has failed to effectively integrate
Snapple into its existing product line and distribution channels. As a
result, we recently sold the stock.
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
McDonnell Douglas followed by an up arrow and the phrase "Cost cutting,
strategic acquisitions." The second listing is Signet Banking followed
by an up arrow and the phrase "Strong earnings and falling interest
rates." The third listing is Quaker Oats followed by a down arrow and
the phrase "Poor integration of Snapple acquisition." Footnote below
reads: "See "Schedule of Investments." Investment holdings are subject
to change."
Consistent strategy
We continue to apply the same investment strategy that has worked for us
in the past and that we believe will continue to do so in the future.
For John Hancock Growth and Income Fund, the most important indicator of
a company's potential will continue to be its free cash flow -- that is,
the amount of cash left over after all expenses and capital improvements
have been paid. Companies can use free cash flow to invest in their
business, to buy back their stock or to raise their dividends. We will
continue to target companies with a price-to-free-cash- flow ratio of 10
or less. (A company with a ratio of 10 is generating enough free cash
flow to buy back all of their outstanding stock in 10 years.) We will
also look for companies that are using their cash flow to enhance
shareholder value.
Portfolio additions
Over the last six months, we've added several new holdings to the
portfolio's lineup. Below are three of our favorites.
Dole Foods. Formerly a food and real estate company, Dole recently
separated its two main businesses. We saw this as a great opportunity to
buy a premier food company with expected earnings growth of more than
25%. As most of you know, fresh produce is Dole's strong suit.
Representing nearly 20% of supermarkets' profits, Dole is a dominant
player in the industry. The company boasts an excellent product mix,
good pricing flexibility and strong distribution channels.
Bar chart with heading "Fund Performance" at top of left hand column.
Under the heading is the footnote: "For the six months ended February
29, 1996." The chart is scaled in increments of 5% from bottom to top,
with 30% at the top and 0% at the bottom. Within the chart, there are
three solid bars. The first represents the 12.58% total return for
John Hancock Growth and Income Fund: Class A. The second represents
the 12.18% total return for John Hancock Growth and Income Fund:
Class B. The third represents the 25.75% total return for the average
growth and income fund. The footnote below states: "Total returns for
John Hancock Growth and 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."
"...we're
relatively
positive
about the future..."
Marriott International. This top-notch hotel chain operates more than
1,000 hotels worldwide and is rapidly expanding into other high- margin
businesses such as time shares, franchising and senior-living
communities. Known for its strong service and quality worldwide,
Marriott enjoys superior brand-name recognition throughout the industry.
It has a strong price to free cash flow ratio and we expect earnings to
grow nearly 20% over the next several years.
Landry's Seafood. This small, but growing chain of restaurants has
carved out a nice niche in the seafood restaurant market. With its
higher-quality dining, it targets a different customer base than other
chain restaurants and therefore doesn't appear to have much competition.
Although heavily concentrated in Texas, Landry's is using its strong
cash flow to expand rapidly. We don't believe that the market has
recognized Landry's unique concept and strong market niche. But once it
does, the stock stands to benefit.
A look ahead
With the recent volatility in the market, investors are wondering what's
ahead for stocks. In early March, just after the period ended, signs of
a more robust economy sparked worries about rising interest rates and a
possible resurgence of inflation. That has sent stocks on a roller
coaster ride and has prompted investors to wonder if it was the start of
a larger market correction. While no one knows the answer, one thing on
which most people agree is that stocks aren't likely to repeat their
spectacular 1995 performance. Investors would therefore be wise to
temper their expectations for the remainder of the year.
Having said that, we're relatively positive about the future. Corporate
earnings are likely to continue to be strong. With so much pessimism
about slowing earnings, we may see more earnings surprises on the high
side of expectations. Moreover, we believe that the recent inflation
scare has been blown out of proportion. Inflation has been in the same
range -- 2.5% to 2.7% -- for the last few years and in our view that's
not likely to change in the near future. As investors continue to sift
through the economic data, we may see market volatility continue in the
near term. Longer term, however, we think the environment remains strong
for stocks.
This commentary reflects the views of the portfolio manager through the
end of the Fund's period discussed in this report. Of course, the
manager's views are subject to change as market and other conditions
warrant.
(1) Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adjusted
performance is lower.
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the
average annual total returns for the John Hancock Growth and Income
Fund. Total return is a performance measure that equals the sum of all
income and capital gains dividends, assuming reinvestment of these
distributions, and the change in the price of the Fund's shares,
expressed as a percentage of the Fund's net asset value per share.
Performance figures include the maximum applicable sales charge of 5%
for Class A shares. The effect of the maximum contingent deferred sales
charge for Class B shares (maximum 5% and declining to 0% over six
years) is included in Class B performance. Performance is affected by a
12b-1 plan, which commenced on January 1, 1990 and August 22, 1994 for
Class A and Class B shares, respectively. Remember that all figures
represent past performance and are no guarantee of how the Fund will
perform in the future. Also, keep in mind that the total return and
share price of the Fund's investments will fluctuate. As a result, your
Fund's shares may be worth more or less than their original cost,
depending on when you sell them.
CUMULATIVE TOTAL RETURNS
For the period ended December 31, 1995
One Five Life of
Year Years Fund
------- -------- --------
John Hancock Growth
and Income Fund:
Class A 29.92% 83.01% 183.23%
John Hancock Growth
and Income Fund:
Class B(1) 30.79% N/A 54.08%
AVERAGE ANNUAL TOTAL RETURNS
For the period ended December 31, 1995
One Five Life of
Year Years Fund
------- -------- --------
John Hancock Growth
and Income Fund:
Class A 29.92% 12.85% 10.97%
John Hancock Growth
and Income Fund:
Class B(1) 30.79% N/A 10.42%
YIELDS
As of February 29, 1996
SEC 30-Day
Yield
----------
John Hancock Growth and Income Fund: Class A 1.13%
John Hancock Growth and Income Fund: Class B 0.45%
Notes to Performance
(1)Class B shares started on August 22, 1991.
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in John
Hancock Growth and Income Fund would be worth on February 29, 1996,
assuming either you have invested on the day each class of shares
started or have been invested for the most recent ten years and have
reinvested all distributions. For comparison, we've shown the same
$10,000 investment in the Standard & Poor's 500 Stock Index--an
unmanaged index that includes 500 widely traded common stocks and is
often used as a measure of stock market performance.
Growth and Income Fund
Class A shares
Line chart with the heading Growth and Income Fund: Class A,
representing the growth of a hypothetical $10,000 investment over
the life of the fund. Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500
Stock Index and is equal to $38,582 as of February 29, 1996. The
second line represents the value of the hypothetical $10,000 investment
made in the Growth and Income Fund on September 29, 1994, before
sales charge, and is equal to $28,562 as of February 29, 1996.
The third line represents the Growth and Income Fund after sales
charge and is equal to $27,133 as of February 29, 1996.
Growth and Income Fund
Class B shares
Line chart with the heading Growth and Income Fund: Class B,
representing the growth of a hypothetical $10,000 investment over
the life of the fund. Within the chart are three lines.
The first line represents the value of the Standard & Poor's 500
Stock Index and is equal to $18,352 as of February 29, 1996. The
second line represents the value of the hypothetical $10,000 investment
made in the Growth and Income Fund on August 22, 1991, before contingent
deferred sales charge, and is equal to $16,244 as of February 29, 1996.
The third line represents Growth and Income Fund after contingent
deferred sales charge and is equal to $16,044 as of February 29, 1996.
<TABLE>
<CAPTION>
John Hancock Funds - Growth and Income Fund
The Statement of Assets and Liabilities is the Fund's balance sheet and
shows the value of what the Fund owns, is due and owes on February 29,
1996. You'll also find the net asset value and the maximun offering
price per share as of that date.
Statement of Assets and Liabilities
February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------
<S> <C>
Assets:
Investments at value - Note C:
Common stocks (cost - $193,890,186) $253,656,500
Convertible preferred stocks (cost - $5,548,531) 5,878,125
------------
259,534,625
Dividends and interest receivable 634,196
Receivable for investments sold 896,895
Receivable for shares sold 168,212
Miscellaneous assets 38,374
------------
Total Assets 261,272,302
Liabilities:
Payable for shares repurchased 120,868
Temporary overdraft of cash 65,153
Payable to John Hancock Advisers, Inc. and
affiliates - Note B 145,666
Accounts payable and accrued expenses 49,162
------------
Total Liabilities 380,849
Net Assets:
Capital paid-in 187,609,921
Accumulated net realized gain on investments 12,697,648
Net unrealized appreciation of investments 60,095,908
Undistributed net investment income 487,976
------------
Net Assets $260,891,453
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 - $135,820,543/9,184,133 $14.79
=====================================================================
Class B - $125,070,910/8,442,063 $14.82
=====================================================================
Maximum Offering Price Per Share*
Class A - ($14.79 x 105.26%) $15.57
=====================================================================
** 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 for
the period stated.
Statement of Operations
Six months ended February 29, 1996 (Unaudited)
- ---------------------------------------------------------------------
<S> <C>
Investment Income:
Dividends $3,431,530
Interest 46,749
-----------
3,478,279
-----------
Expenses:
Investment management fee - Note B 784,170
Distribution/service fee - Note B
Class A 164,781
Class B 576,354
Transfer agent fee 234,845
Registration and filing fees 29,459
Custodian fee 25,224
Auditing fee 17,942
Printing 17,480
Trustees' fees 15,021
Advisory board fee 10,695
Legal fees 4,231
Miscellaneous 3,108
-----------
Total Expenses 1,883,310
- ---------------------------------------------------------------------
Net Investment Income 1,594,969
- ---------------------------------------------------------------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments sold 14,677,111
Change in net unrealized appreciation/
depreciation of investments 13,168,038
-----------
Net Realized and Unrealized
Gain on Investments 27,845,149
- ---------------------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations $29,440,118
=====================================================================
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, and any increase or
decrease in money shareholders invested in the Fund. The footnote
illustrates the number of Fund shares sold, reinvested and redeemed
during the last two periods, along with the corresponding dollar
values.
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED
FEBRUARY 29, YEAR ENDED
1996 AUGUST 31,
(UNAUDITED) 1995
---------- ----------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income $1,594,969 $3,388,316
Net realized gain on investments sold 14,677,111 6,147,562
Change in net unrealized appreciation/depreciation of investments 13,168,038 30,850,499
----------- -----------
Net Increase in Net Assets Resulting from Operations 29,440,118 40,386,377
----------- -----------
Distributions to Shareholders:
Dividends from net investment income:
Class A -- ($0.1122 and $0.2026 per share, respectively) (1,048,412) (2,080,993)
Class B -- ($0.0657 and $0.1178 per share, respectively) (562,213) (1,113,907)
Distributions from net realized gain on investments sold:
Class A -- ($0.1450 and none per share, respectively) (1,309,129) --
Class B -- ($0.1450 and none per share, respectively) (1,230,621) --
----------- -----------
Total Distributions to Shareholders (4,150,375) (3,194,900)
----------- -----------
From Fund Share Transactions - Net* (9,303,758) (27,471,362)
----------- -----------
Net Assets:
Beginning of period 244,905,468 235,185,353
----------- -----------
End of period (including undistributed net investment
income of $487,976 and $503,632, respectively) $260,891,453 $244,905,468
============ ============
<CAPTION>
* Analysis of Fund Share Transactions:
SIX MONTHS ENDED
FEBRUARY 29, 1996 YEAR ENDED AUGUST 31,
(UNAUDITED) 1995
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------------------------- ------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold 706,060 $9,884,182 1,688,091 $19,652,565
Shares issued to shareholders in reinvestment of distributions 143,864 2,008,947 149,026 1,724,908
----------- ----------- ---------- ------------
849,924 11,893,129 1,837,117 21,377,473
Less shares repurchased (1,391,963) (19,542,514) (2,719,043) (31,913,858)
----------- ----------- ---------- ------------
Net decrease (542,039) ($7,649,385) (881,926) ($10,536,385)
=========== =========== ========== ============
CLASS B
Shares sold 1,343,805 $18,956,035 1,972,798 $23,053,675
Shares issued to shareholders in reinvestment of distributions 111,673 1,568,204 80,431 936,397
----------- ----------- ---------- ------------
1,455,478 20,524,239 2,053,229 23,990,072
Less shares repurchased (1,567,571) (22,178,612) (3,464,943) (40,925,049)
----------- ----------- ---------- ------------
Net decrease (112,093) ($1,654,373) (1,411,714) ($16,934,977)
=========== =========== ========== ============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
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:
- ------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 29, 1996
(UNAUDITED) 1995 1994 1993 1992 1991
------------ ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Per Share Operating Performance
Net Asset Value, Beginning of Period $13.38 $11.42 $12.08 $12.43 $11.77 $9.87
-------- -------- -------- -------- -------- --------
Net Investment Income 0.11 0.21(a) 0.32(a) 0.40(a) 0.32(a) 0.20
Net Realized and Unrealized Gain
(Loss) on Investments 1.56 1.95 (0.61) 1.12 0.89 2.07
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.67 2.16 (0.29) 1.52 1.21 2.27
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income (0.11) (0.20) (0.37) (0.42) (0.25) (0.19)
Distributions from Net Realized Gain
on Investments Sold (0.15) -- -- (1.45) (0.30) (0.18)
-------- -------- -------- -------- -------- --------
Total Distributions (0.26) (0.20) (0.37) (1.87) (0.55) (0.37)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $14.79 $13.38 $11.42 $12.08 $12.43 $11.77
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (c) 12.58%(b) 19.22% (2.39%) 13.64% 10.47% 23.80%
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $135,820 $130,183 $121,160 $115,780 $89,682 $77,461
Ratio of Expenses to Average Net Assets 1.16%* 1.30% 1.31% 1.29% 1.34% 1.38%
Ratio of Net Investment Income to Average
Net Assets 1.60%* 1.82% 2.82% 3.43% 2.75% 1.90%
Portfolio Turnover Rate 36% 99% 195% 107% 119% 70%
The Financial Highlights summarizes the impact of the following factors on a single share for the period indicated: net
investment income, gains (losses), dividends and total investment return of the Fund. It shows how the Fund's net asset
value for a share has changed since the end of the previous period. Additionally, important relationships between some
items presented in the financial statements are expressed in ratio form.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (continued)
- --------------------------------------------------------------------------------------------------------------------------
PERIOD FROM
SIX MONTHS ENDED YEAR ENDED AUGUST 31, AUGUST 22, 1991
February 29, 1996 ------------------------------------------------- TO AUGUST 31,
(UNAUDITED) 1995 1994 1993 1992 1991
------------ ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
CLASS B (d)
Per Share Operating Performance
Net Asset Value, Beginning of Period $13.41 $11.44 $12.10 $12.44 $11.77 $11.52
-------- -------- -------- -------- -------- --------
Net Investment Income 0.07 0.13(a) 0.24(a) 0.30(a) 0.23(a) --
Net Realized and Unrealized Gain (Loss)
on Investments 1.56 1.96 (0.61) 1.12 0.89 0.25
-------- -------- -------- -------- -------- --------
Total from Investment Operations 1.63 2.09 (0.37) 1.42 1.12 0.25
-------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Investment Income (0.07) (0.12) (0.29) (0.31) (0.15) --
Distributions from Net Realized Gain
on Investments Sold (0.15) -- -- (1.45) (0.30) --
-------- -------- -------- -------- -------- --------
Total Distributions (0.22) (0.12) (0.29) (1.76) (0.45) --
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $14.82 $13.41 $11.44 $12.10 $12.44 $11.77
======== ======== ======== ======== ======== ========
Total Investment Return at Net Asset Value (c) 12.18%(b) 18.41% (3.11%) 12.64% 9.67% 2.17%(b)
Ratios and Supplemental Data
Net Assets, End of Period (000's omitted) $125,071 $144,723 $114,025 $65,010 $29,826 $7,690
Ratio of Expenses to Average Net Assets 1.87%* 2.03% 2.06% 2.19% 2.07% 2.19%
Ratio of Net Investment Income to Average
Net Assets 0.89%* 1.09% 2.07% 2.53% 2.02% 1.46%
Portfolio Turnover Rate 36% 99% 195% 107% 119% 70%
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Not annualized.
(c) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charges.
(d) Class B shares commenced operations on August 22, 1991.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
The Schedule of Investments is a complete list of all securities owned by
the Fund on February 29, 1996. It's divided into two main categories:
common stocks and convertible preferred stocks. The common stocks and
convertible preferred stocks are further broken down by industry groups.
Under each industry group is a list of the stocks owned by the Fund.
Schedule of Investments
February 29, 1996 (Unaudited)
- -----------------------------------------------------------------------
NUMBER OF MARKET
ISSUER, DESCRIPTION SHARES VALUE
- -----------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
Aerospace (18.22%)
Gencorp, Inc. 400,000 $5,200,000
General Dynamics Corp. 100,000 5,962,500
McDonnell Douglas Corp. 120,000 10,590,000
Northrop Grumman Corp. 100,000 6,175,000
Raytheon Co. 70,000 3,508,750
Rohr Industries, Inc.* 175,000 3,150,000
Thiokol Corp. 80,000 3,280,000
United Technologies Corp. 90,000 9,675,000
----------
47,541,250
----------
Banks (13.89%)
AmSouth Bancorporation 100,000 3,937,500
Bankers Trust New York Corp. 75,000 4,846,875
Hibernia Corp. (Class A) 1,050,000 11,287,500
J.P. Morgan & Co., Inc. 145,000 11,871,875
Signet Banking Corp. 165,000 4,290,000
----------
36,233,750
----------
Broadcasting (0.32%)
US West Media Group* 40,000 835,000
----------
Chemicals (2.22%)
Monsanto Co. 43,000 5,788,875
----------
Computers (1.49%)
Digital Equipment Corp.* 25,000 1,800,000
Oracle Corp.* 40,000 2,080,000
----------
3,880,000
----------
Cosmetics & Toiletries (1.24%)
Gillette Co. 60,000 3,247,500
----------
Diversified Operations (5.96%)
AlliedSignal, Inc. 100,000 5,562,500
Dial Corp. 45,000 1,350,000
Teledyne, Inc. 70,000 1,968,750
TRW, Inc. 77,000 6,670,125
----------
15,551,375
----------
Drugs (6.98%)
Eli Lilly & Co. 40,000 2,420,000
Pfizer, Inc. 100,000 6,587,500
Schering-Plough Corp. 120,000 6,735,000
Warner-Lambert Co. 25,000 2,471,875
----------
18,214,375
----------
Electronics (6.63%)
Amphenol Corp (Class A)* 80,000 1,950,000
General Electric Co. 70,000 5,285,000
Honeywell, Inc. 50,000 2,650,000
Westinghouse Electric Corp. 400,000 7,400,000
----------
17,285,000
----------
Finance (5.47%)
Federal National Mortgage Association 135,000 4,269,375
Great Western Financial Corp. 220,000 5,032,500
Student Loan Marketing Association 60,000 4,957,500
----------
14,259,375
----------
Foods (4.94%)
CPC International, Inc. 70,000 4,847,500
Dole Food Co. 200,000 8,050,000
----------
12,897,500
----------
Hotels & Motels (2.91%)
Marriott International, Inc. 75,000 3,684,375
Promus Hotel Corp.* 150,000 3,900,000
----------
7,584,375
----------
Insurance (2.01%)
ITT Hartford Group, Inc.* 50,000 2,575,000
Travelers Group, Inc. 40,000 2,675,000
----------
5,250,000
----------
Leisure & Recreation (2.65%)
Bally Entertainment Corp.* 150,000 2,325,000
Walt Disney Co. 70,000 4,585,000
----------
6,910,000
----------
Medical/Dental (3.59%)
Bausch & Lomb, Inc. 100,000 3,887,500
Baxter International, Inc. 120,000 5,490,000
----------
9,377,500
----------
Oil & Gas (2.97%)
Gulf Canada Resources, Ltd.* 1,000,000 $4,250,000
Phillips Petroleum Co. 100,000 3,500,000
----------
7,750,000
----------
Photo Equipment (5.21%)
Eastman Kodak Co. 190,000 13,585,000
----------
Publishing (4.86%)
Readers Digest
Association, Inc. (Class B) 60,000 2,640,000
Time Warner, Inc. 235,000 10,046,250
----------
12,686,250
----------
Retail (0.47%)
Landry's Seafood Restaurants, Inc.* 70,000 1,225,000
----------
Telecommunications (2.16%)
A T & T Corp. 55,000 3,499,375
DSC Communications Corp.* 70,000 2,135,000
----------
5,634,375
----------
Tobacco (3.04%)
Philip Morris Cos., Inc. 80,000 7,920,000
----------
TOTAL COMMON STOCKS
(COST $ 193,890,186) (97.23%) 253,656,500
------- ----------
CONVERTIBLE PREFERRED STOCKS
Tobacco (2.25%)
RJR Nabisco Holdings, $0.6012,
Depositary Shares, Ser C 855,000 $5,878,125
------- ----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $ 5,548,531) (2.25%) 5,878,125
----------
TOTAL INVESTMENTS (99.48%) $259,534,625
======= ============
*Non-income producing security.
The percentage shown for each investment category is the total value
of that category as a percentage of net assets of the fund.
See notes to financial statements.
</TABLE>
Notes to Financial Statements
John Hancock Funds - Growth and 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. The investment objective of the Fund is
to obtain the highest total return, a combination of capital
appreciation and current income, consistent with reasonable safety of
capital.
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. 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 TAXES The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all of its taxable
income, including any net realized gain on investments, to its
shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has $203,000 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 gain distributions will
be made. The carryforwards expire as follows: August 31, 1996 -
$152,000, August 31, 1998 - $51,000.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment
securities is recorded on the ex-dividend date. Interest income on
investment securities is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment
income and realized gains on the ex-dividend date. Such distributions
are determined in conformity with income tax regulations which may
differ from generally accepted accounting principles. Dividends paid by
the Fund with respect to each class of shares will be calculated in the
same manner, at the same time and will be in the same amount, except for
the effect of expenses that may be applied differently to each class as
explained previously.
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 appropriated net assets of each
class and the specific expense rate(s) applicable to each class.
USE OF ESTIMATES The preparation of these financial statements in
accordance with generally accepted accounting principles incorporates
estimates made by management in determining the reported amounts of
assets, liabilities, revenues, and expenses of the Fund
NOTE B ---
MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND
TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a
monthly management fee to the Adviser for a continuous investment
program equivalent, to 0.625% of the Fund's average daily net asset
value.
In the event normal operating expenses of the Fund, exclusive of certain
expenses prescribed by state law, are in excess of the most restrictive
state limit where the Fund is registered to sell shares of beneficial
interest, the fee payable to the Adviser will be reduced to the extent
of such excess and the Adviser will make additional arrangements
necessary to eliminate any remaining excess expenses. The current limits
are 2.5% of the first $30,000,000 of the Fund's average daily net asset
value, 2.0% of the next $70,000,000 and 1.5% of the remaining average
daily net asset value.
The Fund has a distribution agreement with John Hancock Funds, Inc. ("JH
Funds"), a wholly owned subsidiary of the Adviser. For the period ended
February 29, 1996, net sales charges received with regard to sales of
Class A shares amounted to $182,125. Out of this amount, $18,689 was
retained and used for printing prospectuses, advertising, sales
literature and other purposes, $132,375 was paid as sales commissions
and first year service fees to unrelated broker-dealers and $31,061 was
paid as sales commissions and service fees to sales personnel of John
Hancock Distributors, Inc. ("Distributors"), Tucker Anthony,
Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"), all of
which are broker dealers. The Adviser's indirect parent, John Hancock
Mutual Life Insurance Company, is the indirect sole shareholder of
Distributors and John Hancock Freedom Securities Corporation and its
subsidiaries, which include Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at declining
rates beginning at 5.0% of the lesser of the current market value at the
time of redemption or the original purchase cost of the shares being
redeemed. Proceeds from the CDSC are paid to JH Funds and are used in
whole or in part to defray its expenses related to providing
distribution related services to the Fund in connection with the sale of
Class B shares. For the period ended February 29, 1996, contingent
deferred sales charges amounted to $142,137.
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 to JH Funds for distribution and service expenses at an annual
rate not to exceed 0.25% of Class A average daily net assets and 1.00%
of Class B average daily net assets to reimburse JH Funds for its
distribution/service costs. Up to a maximum of 0.25% of such payments
may be service fees as defined by the amended Rules of Fair Practice of
the National Association of Securities Dealers. Under the amended Rules
of Fair Practice, curtailment of a portion of the Fund's 12b-1 payments
could occur under certain circumstances. In order to comply with this
rule, effective September 1, 1995, the 12b-1 fee was decreased on Class
B shares to 0.90%, increased back to 1.00% on October 1, 1995, decreased
back to 0.90% on November 1, 1995 and increased back to 1.00% on
December 1, 1995.
The Fund has a transfer agent agreement with John Hancock Investor
Services Corporation ("Investor Services"), a wholly owned subsidiary of
The Berkeley Financial Group. The Fund pays transfer agent fees based on
transaction volume and the number of shareholder accounts.
On March 26, 1996, the Board of Trustees approved, retroactively to
January 1, 1996, an agreement with the Adviser to perform necessary tax
and financial management services for the Fund.
Messrs. Edward J. Boudreau, Jr.and Richard S. Scipione are directors and
officers of the Adviser and its affiliates, as well as Trustees of the
Fund. The compensation of unaffiliated Trustees is borne by the Fund.
Effective with the fees paid for 1995, the unaffiliated Trustees may
elect to defer for tax purposes their receipt of this compensation under
the John Hancock Group of Funds Deferred Compensation Plan. The Fund
makes investments into other John Hancock funds, as applicable, to cover
its liability for the deferred compensation. Investments to cover the
Fund's deferred compensation liability are recorded on the Fund's books
as an other asset. The deferred compensation liability and the related
other asset are always equal and are marked to market on a periodic
basis to reflect any income earned by the investment as well as any
unrealized gains or losses.
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.
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 29, 1996 aggregated
$88,749,678 and $98,664,827, respectively. There were no purchases or
sales of obligations of the U.S. government and its agencies during the
period ended February 29, 1996.
The cost of investments owned at February 29, 1996 for Federal income
tax purposes was $199,438,717. Gross unrealized appreciation and
depreciation of investments aggregated $61,214,302, and $1,118,394,
respectively, resulting in net unrealized appreciation of $60,095,908.
Notes
John Hancock Funds - Growth and Income Fund
Notes
John Hancock Funds - Growth and Income Fund
Notes
John Hancock Funds - Growth and Income Fund
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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."
John Hancock Funds
A Global Investment Management Firm
101 Huntington Avenue, Boston, MA 02199-7603
Bulk Rate
U.S. Postage
PAID
Brockton, MA
Permit No. 582
This report is for the information of shareholders of the John Hancock
Growth and 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.
Printed on Recycled Paper JHD 500SA 2/96
4/96
