-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
LEbMlwKGYhXV3IVncFyFccYayfx0cfhMYwukS4ksUeY9g2vv8v1jzpnc972sR3xO
zU3B2VKg2EKS5x6XFsHVQg==
JOHN HANCOCK CAPITAL SERIES
601 Congress Street
Boston, Massachusetts 02210
September 2, 2008
Chad Eskildsen
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
VIA EDGAR
Re: | Form N-CSR Report - December 31, 2007 Response to SEC comments | |
John Hancock Capital Series (the Trust) (File No. 811-01677) | ||
John Hancock Classic Value Fund, John Hancock Classic Value II and John Hancock | ||
Core Equity Fund (each a Fund and together the Funds) |
Dear Mr. Eskildsen:
This letter responds to comments of the staff of the Securities and Exchange Commission (the Commission) transmitted orally regarding the Trusts Form N-CSR report for the annual period ended December 31, 2007 as filed with the Commission on March 7, 2008 (accession no. 0000928816-08-000335). For the staffs convenience, its comments are restated below, followed by the Trusts responses. Please note that we have also included a Tandy letter as requested.
SEC Comment 1: Portfolio Turnover
Core Equity Fund - The staff provided the following comments:
The Funds Shareholder Report states in the Financial Highlights section that the Funds portfolio turnover increased from 78% in 2006 to 147% in 2007. Registrant should consider adding appropriate disclosure in the Management Discussion of Fund Performance section regarding the increased portfolio turnover.
The Funds Statement of Additional Information (SAI) shows historical turnover of around 80% and the increase in 2007. Registrant should consider adding disclosure regarding the increased portfolio turnover.
Managements Response: Comment Accepted.
The reason for the increase in portfolio turnover is due to a benchmark change that occurred at the end of the Funds 2006 fiscal year. This was disclosed in the 2006 annual report. As a result, management shifted to a more aggressive use of a quantitative rating
1
system in fiscal 2007 and introduced more market-responsive models into the quantitative ranking system. Additionally, overall market volatility and net redemptions increased the Funds turnover.
The following disclosure was included in the Funds June 30, 2008 Shareholder Report -Managers Report to shareholders: Most of the Funds underperformance versus the benchmark occurred in the first quarter. The problem during that stretch was that investors flocked to companies perceived as being capable of delivering stable earnings growth regardless of how expensive they were. Our stock-picking model, which emphasizes undervalued stocks of companies with improving fundamentals, was out of step with this environment, although our model regained some of its effectiveness in the second quarter. We introduced more market-responsive models into our quantitative ranking system and made more aggressive use of our quantitative rating system, which increased our portfolio turnover rate, but made us more nimble.
The SAI provides the Funds annual turnover rates for the last two years and states that a turnover rate of 100% or above is considered high. Since the Funds 2007 portfolio rate is above 100% we have added the following footnote disclosure to the Funds SAI: The Funds increase in portfolio turnover was the result of a benchmark change that occurred at the end of the Funds 2006 fiscal year end.
SEC Comment 2: Sector Concentration
Classic Value Fund & Classic Value Fund II The staff provided the following comments:
These Funds Shareholder Report states in the Management Discussion of Fund Performance (portfolio summary) section that the Funds held 44%/46% of their portfolios in the financial sector. Registrant should consider adding disclosure regarding sector concentration.
The Funds Prospectus and SAI state that the Funds are diversified by industry but do not appear to address sector concentrations. Registrant should consider adding disclosure regarding sector focus and performance risk.
Managements Response: Comment Accepted.
Commencing with the Funds June 30, 2008 shareholder report, we have commenced adding general sector risk disclosure in the Portfolio Summary section, as follows: Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors.
The following disclosure has been added to the Funds Prospectus: As a result of the subadviser's research and analysis, the Fund may focus on particular sectors of the economy. (added to the Goal and strategy section). Because the Fund may focus on
2
particular sectors of the economy, its performance may depend on the performance of those sectors. (added to the Main risk section).
***** |
Per the staffs request and pursuant to the Commissions press release (SEC Staff to Publicly Release Comment Letters and Responses, 2004-89), the Trust acknowledges the following:
If you have any questions or comments, please contact me at (617) 663-4324.
Best regards,
/s/ Alfred P. Ouellette Alfred P. Ouellette Assistant Vice President and Senior Counsel |
3