<PAGE> 1
John Hancock Funds
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CAPITAL
GROWTH
FUND
SEMI-ANNUAL REPORT
June 30, 1995
<PAGE> 2
Chairman's Message
TRUSTEES
Edward J. Boudreau, Jr.
James F. Carlin*
William H. Cunningham*
Charles L. Ladner*
Leo E. Linbeck, Jr.*
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
B.J. Willingham
Senior Vice President
Edgar Larsen
Senior Vice President
Benjamin A. Hock, Jr.
Vice President
John A. Morin
Vice President
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
DEAR FELLOW SHAREHOLDERS:
Educating shareholders has always been one of the most important
responsibilities of a mutual fund company. But that challenge has taken on new
significance in the past several years. Looking at the most recent statistics,
you can see why. According to the Investment Company Institute, the mutual fund
industry now manages more than $2.3 trillion for investors. More than half of
that money has come into mutual funds in just the last four years. Today, there
are more than 95 million mutual fund shareholder accounts. That's up from 12
million in 1980. These are people, like you, who are investing in mutual funds
to save for a home, to send their children to college or to build a nest egg
for a comfortable retirement. This explosive growth, coupled with the growing
complexity of the financial landscape, has made all of us in the mutual fund
industry work harder to inform our shareholders.
At John Hancock Funds, we strive to educate you about all aspects of
your fund: the performance, the strategies and the holdings. We want you to
fully understand what you own. We want you to have realistic expectations of
the potential rewards as well as the potential risks of your investment. These
shareholder reports - which we send you twice a year - are the best way to
give you the most in-depth and up-to-date information.
In the message that follows, the portfolio manager gives a candid
commentary on the market environment; the factors that affected performance;
the fund's current investment strategies; and the outlook for the months ahead.
The ensuing financial statements provide a comprehensive look at the fund's
statistics and holdings. We've included explanations of what each financial
statement shows and how it is used.
We hope you find these shareholder reports a useful tool in evaluating
your investments. Of course, if you have any questions or need more
information, feel free to call one of our customer service representatives on
our toll-free line at 1-800-225-5291, from 8:00 a.m. to 8:00 p.m. eastern time,
Monday through Friday.
Sincerely,
/s/ Edward J. Boudreau
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and
Chief Executive Officer, flush right, next to second
paragraph.
2
<PAGE> 3
BY BENJAMIN A. HOCK, JR., PORTFOLIO MANAGER
JOHN HANCOCK
CAPITAL GROWTH FUND
Falling interest rates, rising earnings fuel stock market; smaller
------------------------------------------------------------------
stocks poised to take lead in second half
-----------------------------------------
Buoyed by falling interest rates, moderate economic growth and strong corporate
earnings, stocks enjoyed an impressive rally during the first six months of
1995. The Dow Jones Industrial Average - the stock market's most widely-watched
barometer - hit several record highs and ended the first half of the year up
nearly 20%.
But not all stocks enjoyed the same level of success during the rally.
Large capitalization stocks were the market's leaders during most of the first
half of the year, outpacing small- and mid-cap stocks. Consider this: The
Standard & Poor's 500-Stock Index, a broad measure of large stock performance,
was up about 18% in the first six months of the year. Meanwhile, the Russell
2000 Index, a common measure of small-stock performance, was up only 12%.
At the onset of 1995, investors feared that higher interest rates would
slow the economy and cut into corporate profits. As a result, many emphasized
high-quality, large-capitalization stocks as a way to mitigate any possible
market volatility. Additionally, investors were attracted to larger,
multinational corporations that would benefit from the declining U.S. dollar.
While John Hancock Capital Growth Fund posted strong gains, its mid-cap
orientation caused it to lag other growth funds. For the six-month period ended
June 30, 1995,
--------------------------------------------------------------------------------
"...stocks enjoyed an impressive rally during the first six months of 1995."
--------------------------------------------------------------------------------
A 3" x 2 1/2" photo of Benjamin A. Hock, Jr. at bottom
center. Caption reads: "Benjamin A. Hock, Jr., Portfolio
Manager."
3
<PAGE> 4
John Hancock Funds - Capital Growth Fund
Chart with heading "Top Five Common Stock Holdings" at top
of left hand column. The chart lists five holdings: 1)
Millipore 5.1%; 2) Silicon Graphics 5.1%; 3) Merck & Co.
4.6%; 4) Paychex, Inc. 4.5%; 5) Marriott International 4.2%.
Footnote below reads: "As a percentage of net assets on June
30, 1995."
the Fund's Class A and Class B shares posted returns of 12.90% and 12.41.%,
respectively, at net asset value. By comparison, the average growth fund had
a total return of 17.47%, according to Lipper Analytical Services.1
--------------------------------------------------------------------------------
"...Technology was the market's leading sector..."
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FOCUS ON SECTORS
Technology was the market's leading sector during the past six months. Because
we built up the Fund's stake in technology stocks to 42% from 25% six months
ago, we benefited from the sector's strong run. During the period, we added
personal computer makers Gateway and Compaq. In our view, personal computer
sales should remain strong throughout 1995. The main reason is the
soon-to-be-released Microsoft Windows 95 software program, which should spur
consumer and business demand for faster computers with more memory. Because of
that new product introduction and the enthusiastic reception it's expected to
receive, we maintained our holding in Microsoft. Other sizable technology
holdings include Silicon Graphics, a leader in computer hardware and software
and Oracle, a networking equipment and software company.
We also increased our holdings in the financial services sector - to
approximately 13% of the Fund's assets by the end of June. After being beaten
down by higher interest rates last year, a number of factors have combined to
provide a better backdrop for this group in 1995. As interest rates fell,
earnings for banks improved and profits generally rose. What's more, loan
demand - which is the bread and butter for most banks # increased. That's why
we added Chase Manhattan Bank. Meanwhile, lower interest rates and the dual
rallies in the stock and bond markets helped companies like regional brokerage
firm A.G. Edwards and credit card/brokerage conglomerate Dean Witter/Discover.
Declining interest rates lowered their costs and spurred increased trading
transactions and revenues.
Health-care stocks, meanwhile, were mostly a disappointment during the
period. As a group, HMO stocks fell on fears that proposed changes in Medicare
and Medicaid reimbursements would eat into the bottom line. Manor Care got
caught up in this negative sentiment, even though most of its revenues don't
come from those federally-funded programs. The health-care sector did, however,
have a few bright spots. Drug stocks like Merck and Schering-Plough were strong
performers, mainly because of reduced cost structures and better earnings
Table entitled "Scorecard" at bottom of left hand column.
The header of the left column is "Investment"; the header of
right hand column is "Recent performance... and what's
behind the numbers." The first listing is "Chase Manhattan
Bank" followed by an up arrow and the phrase "Lower interest
rates boost revenues, earnings." The second listing is
"Silicon Graphics" followed by an up arrow and the phrase
"Increased demand for its graphics software." The third
listing is "Manor Care" followed by a down arrow and the
phrase "Concern about possible health-care legislation."
Footnote below reads: "See "Schedule of Investments".
Investment holdings are subject to change.
4
<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 June 30, 1995." The chart is scaled in
increments of 5% from bottom to top, with 20% at the top and
0% at the bottom. Within the chart there are three solid
bars. The first represents the 12.90% total return for John
Hancock Capital Growth Fund: Class A. The second represents
the 12.41% total return for John Hancock Capital Growth
Fund: Class B. The third represents the 17.47% total return
for the average growth fund. Footnote below reads: "Total
returns for John Hancock Capital Growth Fund are at net
asset value with all distributions reinvested. The average
growth fund is tracked by Lipper Analytical Services. See
following page for historical performance information."
growth. A wave of takeover activity also gave drug stocks an extra boost.
OUTLOOK
We're optimistic that the market's strength can be sustained through the
balance of the year. The competitive position of U.S. corporations versus their
foreign counterparts continues to improve. What's more, the weak U.S. dollar
has made American export items very cheap and attractive to our major trading
partners. With a positive domestic economic outlook and expanding markets
overseas, the environment for corporate America is quite strong.
While U.S. economic growth has shown some signs of slowing, we believe
it's unlikely that we're headed for a recession. In our view, the economy is
more likely to grow at a 3% rate annually, which is in line with historical
norms. In addition, we believe that interest rates will remain stable or may
even go lower. The combination of slow, but steady, growth and stable interest
rates should bode well for growth stocks.
The market typically moves in cycles, and it appears that we've just
completed one in which large stocks dominated. Toward the end of the period, we
witnessed a broadening of the market's rally beyond larger stocks. Presently,
small- and medium-cap stocks appear to be decidedly undervalued relative to
their larger counterparts. If investors recognize these bargains, these stocks
could become the market's leaders.
--------------------------------------------------------------------------------
"We're optimistic that the market's strength can be sustained..."
--------------------------------------------------------------------------------
---------------------------------------------------------------------
1Figures from Lipper Analytical Services include reinvested dividends
and do not take into account sales charges. Actual load-adjusted
performance is lower.
5
<PAGE> 6
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A LOOK AT PERFORMANCE
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The tables on the right show the cumulative total returns and the average
annual total returns for John Hancock Capital Growth 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 share.
Performance figures include the maximum applicable sales charge of 5% for Class
A shares. The effect of the maximum contingent deferred sales charge for Class
B shares (maximum 5% and declining to 0% over six years) is included in Class B
performance. Remember that all figures represent past performance and are no
guarantee of how the Fund will perform in the future. Also, keep in mind that
the total return and share price of the Fund's investments will fluctuate. As a
result, your Fund's shares may be worth more or less than their original cost
depending on when you sell them.
Note: Participant-directed defined-contribution plans with at least 100
eligible employees at inception of the Fund account may purchase Class
A shares without an initial sales charge as of March 15, 1995. If those
shares are redeemed, however, during the year following the calendar
year end during which they were purchased, a contingent deferred sales
charge will be assessed.
<TABLE>
------------------------------------------------------------------
CUMULATIVE TOTAL RETURNS
------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 1995
<CAPTION>
ONE FIVE LIFE OF
YEAR (1)YEARS(1) (1)FUND(1)
---- ----------- ----------
<S> <C> <C> <C>
Capital Growth Fund: Class A(2) 8.87% 15.98% 275.85%
Capital Growth Fund: Class B(2) 8.68% N/A% 6.56%
</TABLE>
<TABLE>
------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------
FOR THE PERIOD ENDED JUNE 30, 1995
<CAPTION>
ONE FIVE LIFE OF
YEAR (1)YEARS(1) (1)FUND(1)
---- ----------- ----------
<S> <C> <C> <C>
Capital Growth Fund: Class A(2) 8.87% 3.01% 14.53%
Capital Growth Fund: Class B(2) 8.68% N/A% 3.23%
</TABLE>
NOTES TO PERFORMANCE
(1) Class A shares started on September 26, 1985. Class B shares started on
June 30, 1993.
(2) Performance is affected by a 12b-1 plan.
6
<PAGE> 7
The charts on the right show how much a $10,000 investment in John Hancock
Capital Growth Fund would be worth on June 30, 1995, assuming you invested on
the day each class of shares started and reinvested all distributions. For
comparision, 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 an often used measure of stock market performance.
John Hancock Capital Growth Fund
Class A shares
Line chart with the heading John Hancock Capital Growth
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 $39,686 as of June 30, 1995.
The second line represents the value of the hypothetical
$10,000 investment made in the John Hancock Capital Growth
Fund on September 26, 1995, before sales charge, and is
equal to $39,554 as of June 30, 1995. The third line
represents the John Hancock Capital Growth Fund after sales
charge and is equal to $37,585 as of June 30, 1995.
John Hancock Capital Growth Fund
Class B shares
Line chart with the heading John Hancock Capital Growth
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 $12,817 as of June 30, 1995.
The second line represents the value of the hypothetical
$10,000 investment made in the John Hancock Capital Growth
Fund on June 30, 1993, before contingent deferred sales
charge, and is equal to $11,056 as of June 30, 1995. The
third line represents the John Hancock Capital Growth Fund
after contingent deferred sales charge and is equal to
$10,656 as of June 30, 1995.
7
<PAGE> 8
Financial Statements
John Hancock Funds - Capital Growth Fund
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $69,345,403)...................... $83,082,299
Preferred stocks (cost - $10,500)....................... 10,238
-----------
83,092,537
Receivable for shares sold................................ 3,220,815
Receivable for investments sold........................... 2,792,520
Dividends receivable...................................... 87,575
Other assets.............................................. 33,862
-----------
Total Assets..................... 89,227,309
---------------------------------------------------
LIABILITIES:
Payable for shares repurchased............................ 12,337
Temporary overdraft of cash............................... 3,617,060
Payable to John Hancock Advisers, Inc.
and affiliates - Note B.................................. 68,545
Accounts payable and accrued expenses..................... 110,484
-----------
Total Liabilities................ 3,808,426
---------------------------------------------------
NET ASSETS:
Capital paid-in........................................... 72,190,944
Accumulated net realized loss on investments.............. (218,999)
Net unrealized appreciation of investments................ 13,736,634
Accumulated net investment loss........................... (289,696)
-----------
Net Assets....................... $85,418,883
===================================================
NET ASSET VALUE PER SHARE:
(Based on net assets and shares of beneficial interest
outstanding # unlimited number of shares authorized
with $0.01 per share par value, respectively)
Class A - $73,547,255/5,959,486........................... $ 12.34
============================================================================
Class B - $11,871,628/978,094............................. $ 12.14
============================================================================
MAXIMUM OFFERING PRICE PER SHARE*
Class A - ($12.34 x 105.26%).............................. $ 12.99
============================================================================
<FN>
* On single retail sales of less than $50,000. On sales of $50,000 or
more and on group sales the offering price is reduced.
</TABLE>
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 JUNE 30,
1995. YOU'LL ALSO FIND THE NET ASSET VALUE 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 CHANGES IN NET ASSETS
<TABLE>
STATEMENT OF OPERATIONS
Six months ended June 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<S> <C>
INVESTMENT INCOME:
Dividends................................................ $ 383,355
Interest................................................. 38,738
-----------
422,093
-----------
Expenses:
Investment management fee - Note B..................... 255,466
Transfer agent fee..................................... 191,392
Distribution/service fee - Note B
Class A.............................................. 86,477
Class B.............................................. 65,337
Custodian fee.......................................... 25,101
Printing............................................... 21,074
Miscellaneous.......................................... 20,707
Auditing fee........................................... 14,771
Registration and filing fees........................... 13,962
Legal fees............................................. 7,120
Trustees' fees......................................... 5,724
Advisory board fee..................................... 4,658
-----------
Total Expenses.................. 711,789
---------------------------------------------------
Net Investment Loss............. (289,696)
---------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments sold.................... (269,546)
Change in net unrealized appreciation/depreciation
of investments.......................................... 10,473,667
-----------
Net Realized and Unrealized
Gain on Investments............. 10,204,121
---------------------------------------------------
Net Increase in Net Assets
Resulting from Operations....... $ 9,914,425
===================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
Financial Statements
John Hancock Funds - Capital Growth Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
---------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss ......................................................... $ (289,696) $ (190,333)
Net realized gain (loss) on investments sold................................. (269,546) 2,453,497
Change in net unrealized appreciation/depreciation of investments............ 10,473,667 (12,203,891)
------------ ------------
Net Increase (Decrease) in Net Assets Resulting from Operations............ 9,914,425 (9,940,727)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gain on investments sold
Class A - (none and $0.2930 per share, respectively)....................... .... (1,798,987)
Class B - (none and $0.2930 per share, respectively)....................... .... (429,429)
------------ ------------
Total Distributions to Shareholders..................................... .... (2,228,416)
------------ ------------
FROM FUND SHARE TRANSACTIONS - NET*............................................ (11,237,153) 12,917,743
------------ ------------
NET ASSETS:
Beginning of period.......................................................... 86,741,611 85,993,011
------------ ------------
End of period (including accumulated net investment loss of $289,696
and none, respectively).................................................... $ 85,418,883 $ 86,741,611
============ ============
<FN>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1994
------------------------------ ------------------------------
Shares Amount Shares Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................................. 1,949,807 $ 22,316,804 3,163,337 $ 37,415,876
Shares issued to shareholders in reinvestment
of distributions........................... .... .... 150,788 1,640,574
------------ ------------ ------------ ------------
1,949,807 22,316,804 3,314,125 39,056,450
Less shares repurchased...................... (2,401,550) (27,311,833) (3,660,949) (43,573,191)
------------ ------------ ------------ ------------
Net decrease................................. (451,743) $ (4,995,029) (346,824) $ (4,516,741)
============ ============ ============ ============
CLASS B
Shares sold.................................. 170,332 $ 1,957,949 2,312,014 $ 27,133,045
Shares issued to shareholders in reinvestment
of distributions........................... .... .... 33,057 355,028
------------ ------------ ------------ ------------
170,332 1,957,949 2,345,071 27,488,073
Less shares repurchased...................... (734,630) (8,200,073) (837,605) (10,053,589)
------------ ------------ ------------ ------------
Net increase (decrease)...................... (564,298) $ (6,242,124) 1,507,466 $ 17,434,484
============ ============ ============ ============
<FN>
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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE> 10
Financial Statements
John Hancock Funds - Capital Growth Fund
<TABLE>
FINANCIAL HIGHLIGHTS
Selected data for each 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 December 31,
JUNE 30, 1995 -------------------------------------------
(UNAUDITED) 1994(c) 1993 1992 1991 1990
----------- ------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CLASS A
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period......................... $ 10.93 $ 12.66 $ 11.90 $ 11.47 $ 9.82 $ 10.65
------- ------- ------- ------- ------- -------
Net Investment Loss (a)...................................... (0.03) (0.02) (0.11) (0.14) (0.13) (0.09)
Net Realized and Unrealized Gain(Loss) on Investments........ 1.44 (1.42) 0.87 0.76 3.73 (0.60)
------- ------- ------- ------- ------- -------
Total from Investment Operations........................... 1.41 (1.44) 0.76 0.62 3.60 (0.69)
------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from Net Investment Income......................... .... .... .... .... .... (0.01)
Distributions from Net Realized Gain on Investments Sold..... .... (0.29) .... (0.19) (1.95) (0.13)
------- ------- ------- ------- ------- -------
Total Distributions........................................ .... (0.29) .... (0.19) (1.95) (0.14)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period............................... $ 12.34 $ 10.93 $ 12.66 $ 11.90 $ 11.47 $ 9.82
======= ======= ======= ======= ======= =======
Total Investment Return at Net Asset Value................... 12.90%(b) (11.34%) 6.39% 5.48% 38.00% (6.37%)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's Omitted).................... $73,547 $70,090 $85,553 $94,861 $89,008 $56,794
Ratio of Expenses to Average Net Assets...................... 1.62%* 1.59% 1.46% 1.41% 1.68% 1.54%
Ratio of Net Investment Loss to Average Net Assets........... (0.59%)* (0.14%) (0.92%) (1.20%) (1.04%) (0.82%)
Portfolio Turnover Rate...................................... 118% 290% 159% 70% 139% 152%
======= ======= ======= ======= ======= =======
<FN>
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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
Financial Statements
John Hancock Funds - Capital Growth Fund
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
FOR THE PERIOD
JUNE 30, 1993
(COMMENCEMENT
SIX MONTHS ENDED Year ended OF OPERATIONS)
JUNE 30, 1995 DECEMBER 31, TO DECEMBER 31,
(UNAUDITED) (c)1994(c) 1993
----------- ---------- ---------------
<S> <C> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period......................... $ 10.80 $ 12.59 $ 11.28
------- ------- -------
Net Investment Loss (a)...................................... (0.07) (0.09) (0.07)
Net Realized and Unrealized Gain (Loss) on Investments....... 1.41 (1.41) 1.38
------- ------- -------
Total from Investment Operations........................... 1.34 (1.50) 1.31
------- ------- -------
Less Distributions
Distributions from Net Realized Gain on Investments Sold..... .... (0.29) ....
------- ------- -------
Net Asset Value, End of Period............................... $ 12.14 $ 10.80 $ 12.59
======= ======= =======
Total Investment Return at Net Asset Value................... 12.41%(b) (11.88%) 11.61%(b)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's Omitted).................... $11,872 $16,652 $ 440
Ratio of Expenses to Average Net Assets...................... 2.37%* 2.34% 2.09%*
Ratio of Net Investment Loss to Average Net Assets........... (1.34%)* (0.89%) (1.07%)*
Portfolio Turnover Rate...................................... 118% 290% 159%
<FN>
* On an annualized basis.
(a) On average month end shares outstanding.
(b) Not annualized.
(c) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
Financial Statements
John Hancock Funds - Capital Growth Fund
<TABLE>
SCHEDULE OF INVESTMENTS
June 30, 1995 (Unaudited)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<CAPTION>
Market
Issuer, Description Number of Shares Value
------------------- ---------------- ------
<S> <C> <C>
COMMON STOCKS
BANKS (2.75%)
Chase Manhattan Corp. ............ 50,000* $ 2,350,000
-----------
BROADCASTING (2.16%)
Lin Television Corp. ** .......... 55,000* 1,849,375
-----------
CHEMICALS (9.34%)
Eastman Chemical Co. ............. 60,000 3,570,000
Lithium Technology Corp. ** ...... 361,890 23,487
Millipore Corp. .................. 65,000 4,387,500
-----------
7,980,987
-----------
COMPUTERS (24.98%)
Bay Networks, Inc.**.............. 75,000* 3,103,125
Cognex Corp. ** .................. 60,000 2,415,000
Compaq Computer Corp.** .......... 50,000* 2,268,750
Digital Equipment Corp. ** ....... 70,000* 2,852,500
Gateway 2000, Inc. ** ............ 50,000* 1,137,500
Seagate Technology, Inc.** ....... 70,000* 2,747,500
Silicon Graphics, Inc.** ......... 110,000 4,386,250
Sun Microsystems, Inc.** ......... 50,000 2,425,000
-----------
21,335,625
-----------
DIVERSIFIED OPERATIONS (2.75%)
ITT Corp. ........................ 20,000* 2,350,000
-----------
DRUGS (8.72%)
Merck & Co., Inc. ................ 80,000 3,920,000
Schering-Plough Corp. ............ 80,000 3,530,000
-----------
7,450,000
-----------
ELECTRONICS (10.60%)
Applied Materials, Inc.** ........ 40,000* 3,465,000
Intel Corp. ...................... 25,000* 1,582,812
Teledyne, Inc. ................... 70,000* 1,715,000
Teradyne, Inc. ** ................ 35,000* 2,288,125
-----------
9,050,937
-----------
FINANCE (10.53%)
Dean Witter Discover & Co. ....... 40,000* 1,880,000
Edwards (A.G.), Inc. ............. 45,000* 1,012,500
First Data Corp. ................. 25,000* 1,421,875
Lehman Brothers Holdings, Inc. ... 40,000* 875,000
Paychex, Inc. .................... 105,000 3,806,250
-----------
8,995,625
-----------
</TABLE>
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED
BY THE CAPITAL GROWTH FUND ON JUNE 30, 1995. IT'S DIVIDED INTO TWO MAIN
CATEGORIES: COMMON STOCKS AND PREFERRED STOCKS. THE INVESTMENTS ARE
FURTHER BROKEN DOWN BY INDUSTRY GROUPS.
<TABLE>
<CAPTION>
Market
Issuer, Description Number of Shares Value
------------------- ---------------- ------
<S> <C> <C>
HEALTHCARE (1.70%)
Manor Care, Inc. ................. 50,000 $ 1,456,250
-----------
HOTELS & MOTELS (4.20%)
Marriott International, Inc. ..... 100,000 3,587,500
-----------
LEISURE & RECREATION (0.74%)
Brassie Golf Corp. ** ............ 315,000 630,000
-----------
METALS (4.13%)
Kennametal, Inc. ................. 100,000* 3,525,000
-----------
OIL & GAS (2.42%)
Western Atlas, Inc. ** ........... 46,600* 2,067,875
-----------
POLLUTION CONTROL (1.29%)
Allwaste, Inc. ** ................ 200,000 1,100,000
-----------
RETAIL (5.01%)
Landry's Seafood
Restaurants, Inc. ** ........... 110,000 2,200,000
Men's Wearhouse, Inc. (The) ** ... 30,000 825,000
Wendy's International, Inc. ...... 70,000* 1,251,250
-----------
4,276,250
-----------
SOFTWARE (5.36%)
Microsoft Corp.** ................ 25,000* 2,259,375
Oracle Corp.** ................... 60,000* 2,317,500
-----------
4,576,875
-----------
TELECOMMUNICATIONS (0.59%)
Ericsson (L.M.) Telephone Co.,
(Class B), American Depository
Receipt, (ADR)................ 25,000 500,000
-----------
TOTAL COMMON STOCKS
(Cost $69,345,403) (97.27%) 83,082,299
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
Financial Statements
John Hancock Funds - Capital Growth Fund
<TABLE>
<CAPTION>
Market
Issuer, Description Number of Shares Value
------------------- ---------------- ------
<S> <C> <C>
PREFERRED STOCKS
Electronics (0.01%)
Teledyne, Inc., $1.20, Series E..... 700 $ 10,238
-----------
TOTAL PREFERRED STOCKS
(Cost $10,500) (0.01%) 10,238
-----------
TOTAL INVESTMENTS (97.28%) $83,092,537
===========
<FN>
** Securities other than short-term investments, newly added to the
portfolio during the six months ended June 30, 1995
** Non-income producing security.
The percentage shown for each investment category is the total value of
that category as a percentage of the net assets of the fund.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE> 14
Notes to Financial Statements
John Hancock Funds - Capital Growth Fund
(UNAUDITED)
NOTE A -
ACCOUNTING POLICIES
John Hancock Capital Growth Fund (the "Fund"), is an open-end management
investment company, registered under the Investment Company Act of 1940. The
Trustees have authorized the issuance of two classes of the Fund, designated as
Class A and Class B shares. The shares of each class represent an interest in
the same portfolio of investments of the Fund and have equal rights to
voting, redemptions, dividends and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission and the Internal Revenue Service. Shareholders of a class
which bears distribution/service expenses under terms of a distribution plan,
have exclusive voting rights regarding such distribution plan. Class A shares
are subject to an initial sales charge of up to 5.00% and a 12b-1 distribution
plan. Prior to May 15, 1995, the maximum sales charge was 5.75%. Class B shares
are subject to a contingent deferred sales charge and a separate 12b-1
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. 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 its taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
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. 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, and at
the same time and will be in the same amount, except for the effect of expenses
that may be applied differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are 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.
14
<PAGE> 15
Notes to Financial Statements
John Hancock Funds - Capital Growth Fund
NOTE B -
MANAGEMENT FEE AND TRANSACTIONS WITH
AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser for a continuous investment program equivalent,
to 0.625% of the Fund's average daily net assets.
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
June 30, 1995, JH Funds received net sales charges of $28,470. Out of this
amount, $2,559 was retained and used for printing prospectuses, advertising,
sales literature, and other purposes, $25,899 was paid as sales commissions to
unrelated broker-dealers, and $12 was paid as sales commissions to 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, all of 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 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 June 30, 1995
contingent deferred sales charges received by JH Funds amounted to $4,563.
In addition, to compensate JH Funds for the services it provides as
distributor of shares of the Fund, the Fund has adopted Distribution Plans with
respect to Class A 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 and service costs. Up to a maximum
of 0.25% of these payments may be service fees as defined by the amended Rules
of Fair Practice of the National Association of Securities Dealers. Under the
amended Rules of Fair Practice, curtailment of a portion of the Fund's 12b-1
payments could occur under certain circumstances.
The Board of Trustees approved a shareholder servicing agreement
between the Fund and John Hancock Investor Services Corporation ("Investor
Services"), a wholly owned subsidiary of The Berkeley Financial Group, for the
period between December 22, 1994 and May 12, 1995, inclusive under which
Investor Services processed telephone transactions on behalf of the Fund. As of
May 15, 1995, the Fund entered into a full service transfer agent agreement
with Investor Services. Prior to this date The Shareholder Services Group was
the transfer agent. The Fund will pay Investor Services a fee based on the
number of shareholder accounts and certain out-of-pocket expenses.
Mr. Edward J. Boudreau is a director and officer of the Adviser and its
affiliates as well as a 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 with regard to the deferred compensation. Investments to
cover the Fund's deferred compensation liability will be recorded on the
15
<PAGE> 16
Notes to Financial Statements
John Hancock Funds - Capital Growth Fund
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 obligations of the
U.S. government and its agencies and short-term securities, during the period
ended June 30, 1995, aggregated $95,107,038 and $103,029,271, respectively.
There were no purchases or sales of long-term obligations of the U.S.
government and its agencies during the period ended June 30, 1995.
The cost of investments owned at June 30, 1995 for federal income tax
purposes was $69,355,903. Gross unrealized appreciation and depreciation of
investments aggregated $14,839,180 and $1,102,546, respectively, resulting in
net unrealized appreciation of $13,736,634.
16
<PAGE> 17
Notes
John Hancock Funds - Capital Growth Fund
17
<PAGE> 18
Notes
John Hancock Funds - Capital Growth Fund
18
<PAGE> 19
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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
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A recycled logo in lower left hand corner with caption
"Printed on Recycled Paper."
--------------
JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGEMENT FIRM U.S. Postage
101 HUNTINGTON AVENUE BOSTON, MA 02199-7603 PAID
Brockton, MA
Permit No. 582
--------------
--------------------------------------------------------------------------------
This report is for the information of shareholders of the John Hancock
Capital Growth Fund. It may be used as sales literature when preceded or
accompanied by the current prospectus, which details charges, investment
objectives and operating policies.
[RECYCLE Printed on Recycled Paper JHD 480SA 6/95
LOGO]
