-----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, SR+FjCO+wFBd8rAAIr5tVSDmyE3fMQkwdQ9vqQDB9CI2pTYB7CsfhgMyy2zoFXeo fuhrKcGwepSTIvjUlK48CQ== 0000950135-96-000055.txt : 19960104 0000950135-96-000055.hdr.sgml : 19960104 ACCESSION NUMBER: 0000950135-96-000055 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19960103 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANCOCK JOHN SERIES INC CENTRAL INDEX KEY: 0000819300 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-05254 FILM NUMBER: 96500695 BUSINESS ADDRESS: STREET 1: 101 HUNTINGTON AVENUE STREET 2: STE 6000 CITY: BOSTON STATE: MA ZIP: 02199 BUSINESS PHONE: 7137512400 MAIL ADDRESS: STREET 1: 101 HUNTINGTON AVENUE STREET 2: 10TH FLOOR CITY: BOSTON STATE: MA ZIP: 02199 FORMER COMPANY: FORMER CONFORMED NAME: TRANSAMERICA SERIES INC DATE OF NAME CHANGE: 19940729 FORMER COMPANY: FORMER CONFORMED NAME: TRANSAMERICA SPECIAL SERIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CRITERION SPECIAL SERIES INC DATE OF NAME CHANGE: 19890718 N-30B-2 1 JH EMERGING GROWTH FUND ANNUAL REPORT 1 John Hancock Funds - -------------------------------------------------------------------------------- Emerging Growth Fund ANNUAL REPORT October 31, 1995 2 TRUSTEES Edward J. Boudreau, Jr. James F. Carlin* William H. Cunningham* Charles L. Ladner* Leo E. Linbeck* Patricia P. McCarter* Steven R. Pruchansky* Lt. Gen. Norman H. Smith, USMC (Ret.)* John P. Toolan* *Members of the Audit Committee OFFICERS Edward J. Boudreau, Jr. Chairman and Chief Executive Officer Robert G. Freedman Vice Chairman and Chief Investment Officer Anne C. Hodsdon President Thomas H. Drohan Senior Vice President and Secretary James B. Little Senior Vice President and Chief Financial Officer 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 INDEPENDENT AUDITORS Ernst & Young llp 200 Clarendon Street Boston, Massachusetts 02116 Chairman's Message DEAR FELLOW SHAREHOLDERS: Investors around the world have been watching Wall Street in awe for the better part of 1995. Through October, the Standard & Poor's 500-Stock Index, a widely-used barometer of stock performance, had grown by more than 25%. Investors who stayed in the market after a disappointing 1994 have been rewarded. On another street, Pennsylvania Avenue, one of the hot topics many people are watching is Medicare reform. While there's no clear-cut solution on the horizon, today's Medicare debate should serve as another wake-up call to all Americans about the need to have a financial plan and to save for retirement. Whether or not the government changes the way health-care benefits are allotted to senior citizens, the message is clear: your future security and well-being lies in your own hands -- not Uncle Sam's. [A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive Officer, flush right, next to second paragraph.] We know you've heard it a hundred times. Pick up almost any financial periodical today, and you'll see cover stories on retirement. Many of them will perhaps scare you or make you think that the task of saving for retirement is just too daunting. But take heart. We don't believe that and neither do many financial experts. Yet retirement planning is not to be taken lightly. To live the way you want to -- the way you deserve to after all those years of hard work -- you need to plan and save now, on a regular basis, no matter what your other costs, no matter how small the amount, no matter what your current age. It may be easier if you start earlier, but it's never too late. Building a secure nest egg is indeed doable. Talk to your financial adviser about establishing your retirement planning roadmap, if you haven't already. And educate yourself by reading some of the many articles about how to save for retirement. Take control of your future by saving today. That way, when it comes time for retirement, you shouldn't have to think about any street but Easy Street. Sincerely, /s/Edward J. Boudreau, Jr. - -------------------------- EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER 2 3 BY EDGAR M. LARSEN, PORTFOLIO MANAGER John Hancock Emerging Growth Fund Small stocks shine in 1995; outlook calls for their good fortune to continue Although it began somewhat inauspiciously, the past year was a sensational period for small stocks. While small cap stocks enjoyed a moderate surge along with their larger counterparts from October 1994 through April 1995, they did so to a much lesser extent. Investors, hoping to take advantage of the U.S. dollar's weakness, migrated toward larger companies which tend to derive more of their revenues overseas. Larger stocks also benefited from a bout of investor nervousness in the spring; many feared that the market could eventually weaken and so turned to larger, more liquid names as a defense against a possible correction. [A 3 1/4" x 2 1/2" photo of Edgar M. Larsen at bottom center. Caption reads: "Edgar M. Larsen, Portfolio Manager"] But from May through October, the tide turned and small-cap stocks handily outpaced larger stocks. Fueling their outperformance was the rapid rate at which small companies were able to grow their earnings, especially compared to larger companies. And once the dollar strengthened and economic growth moderated, investors' taste for larger stocks started to wane. They moved instead toward the less dollar-sensitive and economically-sensitive small-company stocks. Finally, a wave of merger activity sent these stocks soaring even higher. TECHNOLOGY LEADS THE PACK Against that backdrop, John Hancock Emerging Growth Fund posted a strong performance both in absolute terms and [CAPTION] "...the past year was a sensational period for small stocks." 3 4 John Hancock Funds - Emerging Growth Fund [Chart with heading "Top Five Common Stock Holdings" at top of left hand column. The chart lists five holdings: 1) U.S. Robotics 2.2% 2) Madge NV 2.0% 3) 3COM Corp. 1.9% 4) Ascend Communications 1.7% 5) Tencor Instruments 1.5%. A footnote below reads "As a percentage of net assets on October 31, 1995."] against the competition. For the year ended October 31, 1995, the Fund's Class A and Class B shares had total returns of 34.56% and 33.60%, respectively, at net asset value. Those returns beat the average small-company growth fund's return of 22.72%, according to Lipper Analytical Services.1 As a group, technology stocks were the market's -- and the Fund's -- biggest winners for nearly the entire year. Strong earnings gains and exciting new product enhancements and developments led to an explosion in technology stock prices. America Online (AOL), the fast-growing on-line service and one of the Fund's largest holdings, has risen nearly eight-fold since we first bought it in 1992. With more consumers turning to AOL for access to the Internet, personal financial management, education and entertainment, we remain optimistic about its prospects. Some of our other large technology holdings -- including U.S. Robotics, a leading maker of modems, and 3Com, a maker of adapter kits needed to support the use of integrated services digital network (ISDN) -could be the future leaders if they continue to grow their earnings as they have recently. During the past year we attempted to keep our stake in technology stocks to under 40% of investments. But that wasn't always easy because as the prices of many stocks in the group appreciated dramatically, they comprised an increasing percentage of the Fund's market value. Recently, we've cut back some of our largest technology holdings to rebalance the portfolio and make it less dependent on the performance of one particular sector. In our view, the best way to control the risk associated with small-cap stock investing is to broadly diversify our investments. That's why we have our investments spread out in more than 500 stocks in 17 different industries. We're often asked if technology stocks are due for a correction. Of course, the answer is that no one knows for sure. But it wouldn't surprise us if after spiking up so far, so quickly, tech stocks could pause to catch their breath sometime. But a sector's or the market's short-term fluctuations aren't our focus. Rather, we concentrate on finding companies that can increase their earnings at roughly 25% or more annually. Since stock prices tend to follow earnings, companies that can achieve this should be the winners over the long term. However, since we're growth investors with a value bent, we want to buy companies at a reasonable price. If we can find a well-managed, quickly growing company with little or no debt and improving profits, we'll hold [Table entitled "Scorecard" at bottom of left hand column. The header for the column is "Investments"; the header for the right column is "Recent performance...and what's behind the numbers. The first listing is America Online followed by an up arrow and the phrase "Rapid increase in subscriptions, earnings explosion." The second listing is Cordis followed by an up arrow and the phrase "Possible takeover boosts stock." The third listing is Nuevo Energy followed by a down arrow and the phrase "Weak oil prices curtailed earnings." Footnote below reads: "See "Schedule of Investments." Investment holdings are subject to change."] [CAPTION] ["...technology stocks were the market's -- and the Fund's -- biggest winners..."] 4 5 John Hancock Funds - Emerging Growth Fund [Bar chart with heading "Fund Performance" at top of left hand column. Under the heading is the footnote: "For the year ended October 31, 1995." The chart is scaled in increments of 10% from bottom to top, with 40% at the top and 0% at the bottom. Within the chart there are three solid bars. The first represents the 34.56% total return for the John Hancock Emerging Growth Fund, Class A. The second represents the 33.60% total return for the John Hancock Emerging Growth Fund, Class B. The third represents the 22.72% total return for the average small-company growth fund. A footnote below reads: "The total returns for John Hancock Emerging Growth Fund are at net asset value with all distributions reinvested. The average small-company growth fund is tracked by Lipper Analytical Services. (1) See page seven for historical performance information."] onto it for the long term, despite the market's ups and downs. The extra plus to that strategy is that low-turnover minimizes trading costs and limits our shareholders' tax liability. We actively manage the Fund to avoid distributing capital gains and fortunately we've been successful so far. Over the last five years, the Fund's B shares have provided an average annual return, at net asset value, of 25.85% through October 31, 1995. (Class A shares came into existence in 1991.) During that five-year period, the Fund only paid a total of six cents per share in capital gains distributions, and that was back in 1991. While there's no guarantee about future capital gains distributions, our tax strategies prompted SmartMoney magazine to place the Fund at the top of its "Five Most Tax-Efficient Funds" list in April 1995. WINNERS AND LOSERS Despite all the attention paid to technology stocks, there were other big winners in the market, including health-care stocks. As investors worried that technology stocks may have peaked, they began to look elsewhere, including the health-care sector. And a heightened level of merger and acquisition activity further buoyed the sector. A good example of that trend was Cordis, a maker of the materials used to perform angioplasty surgery. A proposed buyout of the company by Johnson & Johnson sent Cordis' stock soaring. The financial services sector was also boosted by a wave of merger and acquisition activity as well as by the strong stock and bond markets. We focused our financial services holdings in money management firms, including brokerage firms, mutual-fund houses and insurance companies, including National RE Corporation and the Municipal Bond Insurance Agency. Even under ideal market conditions there are always disappointments. This year was no exception. Energy stocks lagged the overall market, thanks to a sluggish worldwide economy and low oil prices. Though we remain underweighted in this sector relative to the market as a whole, we do consider energy stocks like Nuevo Energy to be excellent long-term values. Finally, many retail stocks were among the market's laggards during the period due to a high level of consumer debt that kept a lid on personal spending. OUTLOOK There is a probability that the capital-gains tax rate will be reduced in 1996. Small-company [CAPTION] ["...many of the factors that contributed to small stocks' success... are still in place."] 1Figures from Lipper Analytical Services include reinvested dividends and do not take into account sales charges. Actual load-adjusted performance is lower. 5 6 John Hancock Funds - Emerging Growth Fund stocks would benefit most from a change in the tax treatment of capital gains, since these companies reward investors through capital appreciation, not dividends. But capital gains cut or not, many of the factors that contributed to small stocks' success over the past 12 months are still in place as we begin 1996. The earnings growth rate for small companies is attractive compared to larger companies. And despite their recent rise, small stock prices don't yet appear to be too expensive relative to their earnings. Looking out to next year, there are additional reasons to be optimistic. We expect the wave of mergers and acquisitions to continue in 1996. From January through October of 1995, 25 of our holdings have merged or been acquired by other companies. We believe that trend will continue and could even accelerate if foreigners start acquiring U.S. companies as a way to grow or enhance their businesses. 6 7 A LOOK AT PERFORMANCE The tables on the right show the cumulative total returns and the average annual total returns for the John Hancock Emerging Growth Fund. Total return is a performance measure that equals the sum of all dividends and capital gains, assuming reinvestment of these distributions and the change in the price of the Fund's shares, expressed as a percentage of the Fund's average net assets. Performance figures include the maximum applicable sales charge of 5% for Class A shares. (Prior to May 15, 1995, the maximum applicable sales charge for Class A shares was 5.75%.) 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. CUMULATIVE TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 1995
LIFE ONE FIVE OF YEAR YEARS FUND John Hancock Emerging Growth Fund: Class A 34.45% 94.26%(1) N/A John Hancock Emerging Growth Fund: Class B 35.51% 212.63% 384.97%(2)
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 1995
LIFE ONE FIVE OF YEAR YEARS FUND John Hancock Emerging Growth Fund: Class A 34.45% 17.54%(1) N/A John Hancock Emerging Growth Fund: Class B 35.51% 25.60% 22.03%(2)
NOTES TO PERFORMANCE (1) Class A shares started on August 22, 1991. (2) Class B shares started on October 26, 1987. 7 8 WHAT HAPPENED TO A $10,000 INVESTMENT... The charts on the right show how much a $10,000 investment in the John Hancock Emerging Growth Fund would be worth on October 31, 1995, assuming you had invested on the day each class of shares started and 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 a commonly used measure of stock market performance. EMERGING GROWTH FUND CLASS A SHARES Line chart with the heading Emerging 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 hypothetical $10,000 investment made in the Emerging Growth Fund on August 22, 1991, before sales charge, and is equal to $19,986 as of October 31, 1995. The second line represents the Emerging Growth Fund after sales charge and is equal to $18,989 as of October 31, 1995. The third line represents the value of the Standard & Poor's 500 Stock Index and is equal to $16,918 as of October 31, 1995. EMERGING GROWTH FUND CLASS B SHARES* Line chart with the heading Emerging Growth Fund: Class B, representing the growth of a hypothetical $10,000 investment over the life of the fund. Within the chart are two lines. The first line represents the value of the hypothetical $10,000 investment made in the Emerging Growth Fund on October 26, 1987, before contingent deferred sales charge, and is equal to $47,367 as of October 31, 1995. The second line represents the value of the Standard & Poor's 500 Stock Index and is equal to $23,295 as of October 31, 1995. *No contingent deferred sales charge applicable. 8 9 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth 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 OCTOBER 31, 1995. YOU'LL ALSO FIND THE NET ASSET VALUE AND THE MAXIMUM OFFERING PRICE PER SHARE AS OF THAT DATE.
STATEMENT OF ASSETS AND LIABILITIES October 31, 1995 - -------------------------------------------------------------------------------- ASSETS: Investments at value - Note C: Common stocks and warrants (cost - $315,147,300) .......... $ 560,712,711 Joint repurchase agreement (cost - $13,738,000) ........... 13,738,000 Corporate savings account ................................. 477,189 ------------- 574,927,900 Receivable for shares sold ................................. 1,051,401 Receivable for investments sold ............................ 1,112,500 Dividends receivable ....................................... 153,011 Interest receivable ........................................ 2,372 Other assets ............................................... 40,603 ------------- Total Assets ............................. 577,287,787 ----------------------------------------------------------- LIABILITIES: Payable for shares repurchased ............................. 111,403 Payable for investments purchased .......................... 3,706,000 Payable to John Hancock Advisers, Inc. and affiliates - Note B ...................................... 386,877 Accounts payable and accrued expenses ...................... 124,750 ------------- Total Liabilities ........................ 4,329,030 ----------------------------------------------------------- NET ASSETS: Capital paid-in ............................................ 333,863,246 Accumulated net realized loss on investments ............... (6,469,900) Net unrealized appreciation of investments ................. 245,565,411 ------------- Net Assets ............................... $ 572,958,757 =========================================================== NET ASSET VALUE PER SHARE: (Based on net assets and shares of beneficial interest outstanding - 125,000,000 shares authorized with $.01 per share par value, respectively) Class A - $179,481,007/4,973,680 ........................... $ 36.09 ============================================================================= Class B - $393,477,750/11,309,413 .......................... $ 34.79 ============================================================================= MAXIMUM OFFERING PRICE PER SHARE* Class A - ($36.09 x 105.26%) ............................... $ 37.99 =============================================================================
* On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. THE STATEMENT OF 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 YEAR ENDED October 31, 1995 - -------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends .............................................. $ 2,174,731 Interest ............................................... 403,533 ------------- 2,578,264 ------------- Expenses: Investment management fee - Note B .................... 3,474,999 Distribution/service fee - Note B Class A ............................................. 357,908 Class B ............................................. 3,140,608 Transfer agent fee .................................... 1,140,068 Registration and filing fees .......................... 155,596 Custodian fee ......................................... 153,848 Printing .............................................. 98,467 Auditing fee .......................................... 63,340 Trustees' fees ........................................ 49,191 Legal fees ............................................ 38,145 Advisory board fee .................................... 34,540 Miscellaneous ......................................... 28,284 ------------- Total Expenses ....................... 8,734,994 ----------------------------------------------------------- Net Investment Loss .................. (6,156,730) ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments sold .................. 10,693,222 Change in net unrealized appreciation/depreciation of investments ....................................... 134,216,496 ------------- Net Realized and Unrealized Gain on Investments .................. 144,909,718 ----------------------------------------------------------- Net Increase in Net Assets Resulting from Operations ............ $ 138,752,988 ===========================================================
SEE NOTES TO FINANCIAL STATEMENTS. 9 10 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund STATEMENT OF CHANGES IN NET ASSETS - -----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, -------------------------------------- 1995 1994 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment loss ............................................................ $ (6,156,730) $ (4,439,725) Net realized gain (loss) on investments sold ................................... 10,693,222 (8,817,307) Change in net unrealized appreciation/depreciation of investments .............. 134,216,496 27,047,214 ------------- ------------- Net Increase in Net Assets Resulting from Operations .......................... 138,752,988 13,790,182 ------------- ------------- FROM FUND SHARE TRANSACTIONS -- NET* ............................................. 19,718,122 99,950,356 ------------- ------------- NET ASSETS: Beginning of period ............................................................ 414,487,647 300,747,109 ------------- ------------- End of period .................................................................. $ 572,958,757 $ 414,487,647 ============= =============
* Analysis of Fund Share Transactions:
YEAR ENDED OCTOBER 31, ------------------------------------------------------------------------------- 1995 1994 ----------------------------------- ----------------------------------- CLASS A SHARES AMOUNT SHARES AMOUNT ------------- ------------- ------------- ------------- Shares sold .............................. 5,389,301 $ 177,314,439 4,169,752 $ 107,936,683 Less shares repurchased .................. (5,302,592) (171,990,271) (2,421,719) (62,106,008) ------------- ------------- ------------- ------------- Net increase ............................. 86,709 $ 5,324,168 1,748,033 $ 45,830,675 ============= ============= ============= ============= CLASS B Shares sold .............................. 7,378,294 $ 212,291,363 10,731,824 $ 265,135,236 Less shares repurchased .................. (6,952,481) (197,897,409) (8,513,937) (211,015,555) ------------- ------------- ------------- ------------- Net increase ............................. 425,813 $ 14,393,954 2,217,887 $ 54,119,681 ============= ============= ============= =============
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 YEAR. THE DIFFERENCE REFLECTS EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, AND ANY INCREASE OR DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES THE NUMBER OF FUND SHARES SOLD AND REDEEMED DURING THE LAST TWO PERIODS, ALONG WITH THE CORRESPONDING DOLLAR VALUE. SEE NOTES TO FINANCIAL STATEMENTS. 10 11 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the period indicated, investment returns, key ratios and supplemental data are listed as follows: - --------------------------------------------------------------------------------
FOR THE PERIOD AUGUST 22, 1991 (COMMENCEMENT YEAR ENDED OCTOBER 31, OF OPERATIONS) ------------------------------------------------------- OCTOBER 31, 1995(b) 1994 1993 1992 1991 ----------- ----------- ----------- ----------- ----------- CLASS A PER SHARE OPERATING PERFORMANCE Net Asset Value, Beginning of Period .................. $ 26.82 $ 25.89 $ 20.60 $ 19.26 $ 18.12 ----------- ----------- ----------- ----------- ----------- Net Investment Loss (a) ............................... (0.25) (0.18) (0.16) (0.20) (0.03) Net Realized and Unrealized Gain on Investments ....... 9.52 1.11 5.45 1.60 1.17 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations ..................... 9.27 0.93 5.29 1.40 1.14 ----------- ----------- ----------- ----------- ----------- Less Distributions Distributions from Net Realized Gain on Investments Sold .................................... -- -- -- (0.06) -- ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period ........................ $ 36.09 $ 26.82 $ 25.89 $ 20.60 $ 19.26 =========== =========== =========== =========== =========== Total Investment Return at Net Asset Value (c) ........ 34.56% 3.59% 25.68% 7.32% 6.29%(d) RATIOS AND SUPPLEMENTAL DATA Net Assets, End of Period (000's Omitted) ............. $ 179,481 $ 131,053 $ 81,263 $ 46,137 $ 38,859 Ratio of Expenses to Average Net Assets ............... 1.38% 1.44% 1.40% 1.67% 0.33%* Ratio of Net Investment Loss to Average Net Assets .... (0.83)% (0.71)% (0.70)% (1.03)% (0.15)%* Portfolio Turnover Rate ............................... 23% 25% 29% 48% 66%
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A SINGLE SHARE FOR THE PERIOD INDICATED: INCOME, EXPENSES, DISTRIBUTIONS AND GAINS (LOSSES) 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. 11 12 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund FINANCIAL HIGHLIGHTS (continued) - ----------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31, ---------------------------------------------------------------------- 1995(b) 1994 1993 1992 1991 ----------- ----------- ----------- ----------- ----------- CLASS B PER SHARE OPERATING PERFORMANCE Net Asset Value, Beginning of Period ................... $ 26.04 $ 25.33 $ 20.34 $ 19.22 $ 11.06 ----------- ----------- ----------- ----------- ----------- Net Investment Loss (a) ................................ (0.45) (0.36) (0.36) (0.38) (0.30) Net Realized and Unrealized Gain on Investments ........ 9.20 1.07 5.35 1.56 8.46 ----------- ----------- ----------- ----------- ----------- Total from Investment Operations ...................... 8.75 0.71 4.99 1.18 8.16 ----------- ----------- ----------- ----------- ----------- Less Distributions Distributions from Net Realized Gain on Investments Sold -- -- -- (0.06) -- ----------- ----------- ----------- ----------- ----------- Net Asset Value, End of Period ......................... $ 34.79 $ 26.04 $ 25.33 $ 20.34 $ 19.22 =========== =========== =========== =========== =========== Total Investment Return at Net Asset Value (c) ......... 33.60% 2.80% 24.53% 6.19% 73.78% RATIOS AND SUPPLEMENTAL DATA Net Assets, End of Period (000's Omitted) .............. $ 393,478 $ 283,435 $ 219,484 $ 86,923 $ 52,743 Ratio of Expenses to Average Net Assets ................ 2.11% 2.19% 2.28% 2.64% 2.85% Ratio of Net Investment Loss to Average Net Assets ..... (1.55)% (1.46)% (1.58)% (1.99)% (1.83)% Portfolio Turnover Rate ................................ 23% 25% 29% 48% 66%
* On an annualized basis. (a) On average month end shares outstanding. (b) On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser of the Fund. (c) Total investment return assumes dividend reinvestment and does not reflect the effect of sales charge. (d) Not annualized. SEE NOTES TO FINANCIAL STATEMENTS. 12 13 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE EMERGING GROWTH FUND ON OCTOBER 31, 1995. IT'S DIVIDED INTO TWO MAIN CATEGORIES:COMMON STOCKS AND WARRANTS AND SHORT-TERM INVESTMENTS. COMMON STOCKS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUP. SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED LAST. SCHEDULE OF INVESTMENTS October 31, 1995 - --------------------------------------------------------------------------------
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- COMMON STOCKS ADVERTISING (0.32%) Catalina Marketing Corp.** ................ 27,000 $1,363,500 Katz Media Group ** ....................... 25,000* 450,000 ---------- 1,813,500 ---------- AUTOMOBILE/TRUCK (0.73%) APS Holding Corp. (Class A) ** ............ 10,000 205,000 Copart, Inc. ** ........................... 50,000 1,137,500 Detroit Diesel Corp. ** ................... 20,000 355,000 Discount Auto Parts, Inc. ** .............. 30,000 802,500 Edelbrock Corp. ** ........................ 10,000 152,500 Pep Boys - Manny, Moe & Jack .............. 20,000 437,500 Rollins Truck Leasing Corp. ............... 22,500 216,562 Stewart & Stevenson Services, Inc. ........ 15,000 341,250 Thompson PBE, Inc. ** ..................... 30,000* 547,500 ---------- 4,195,312 ---------- BANKS (0.03%) Hibernia Corp. (Class A) ** ............... 15,000 148,125 ---------- BEVERAGES (0.06%) Pepsi-Cola Puerto Rico Bottling Co. (Class B) .................. 25,000* 340,625 ---------- BROADCASTING (1.28%) American Radio Systems Corp. ** ........... 1,300* 29,250 Clear Channel Communications, Inc. ** ..... 30,075 2,466,150 E-Z Communications, Inc. (Class A) ** ..... 10,000 162,500 Gaylord Entertainment Co. (Class A) ....... 27,300 702,975 Heftel Broadcasting Corp. (Class A) ** .... 125,000 2,281,250 Lodgenet Entertainment Corp. ** ........... 5,000 57,500 SFX Broadcasting, Inc. (Class A) ** ....... 40,000 1,080,000 United International Holdings, Inc. (Class A)** .............. 6,400 100,800 Westcott Communications, Inc. ** .......... 20,000* 275,000 Young Broadcasting Corp. (Class A) ** ..... 5,100* 155,550 ---------- 7,310,975 ---------- BUILDING PRODUCTS (0.06%) NCI Building Systems, Inc. ** ............ 15,000 348,750 ---------- CHEMICAL (0.22%) Arcadian Corp. ** ......................... 50,000* 1,031,250 Mallinckrodt Group, Inc. .................. 6,000 208,500 ---------- 1,239,750 ---------- COMPUTERS (24.71%) Adaptec, Inc. ** .......................... 110,000 $4,895,000 Adobe Systems, Inc. ....................... 70,000 3,990,000 Alantec Corp. ** .......................... 7,500 268,125 American Business Information, Inc. ** .... 7,500 131,250 Applied Voice Technology, Inc. ** ......... 35,000* 406,875 Applix, Inc. ** ........................... 8,000* 222,000 ArcSys, Inc. ** ........................... 2,500* 105,000 Aspen Technology, Inc. ** ................. 5,000 137,500 Astea International, Inc. ** .............. 10,000* 180,000 Auspex Systems, Inc.** .................... 5,000 70,625 Autodesk, Inc. ............................ 29,000 986,000 Bann Co., N.V. ** ......................... 10,000* 425,000 Banyan Systems, Inc.** .................... 25,000 195,312 Bay Networks, Inc. ** ..................... 50,000 3,312,500 BDM International, Inc. ** ................ 10,000* 250,000 Bell & Howell Holdings Co. ** ............ 25,000* 625,000 BISYS Group, Inc. (The)** ................. 41,835* 1,171,380 BMC Software, Inc.** ...................... 34,000 1,211,250 Broderbund Software, Inc. ** .............. 19,000 1,318,125 Cabletron Systems, Inc.** ................. 22,500 1,769,062 Cadence Design Systems, Inc.** ............ 112,544 3,629,528 C*ATS Software, Inc. ** ................... 4,000* 29,500 Cerner Corp. ** ........................... 40,000 1,060,000 CFI ProServices, Inc. ** .................. 35,000 476,875 Cheyenne Software, Inc.** ................. 22,000 459,250 Computer Management Sciences, Inc. ** ..... 10,000* 205,000 Computron Software, Inc. ** ............... 7,500* 127,500 Compuware Corp. ** ........................ 26,600 605,150 Computervision Corp. ** ................... 100,000* 1,175,000 Concentra Corp. ** ........................ 10,000* 95,000
SEE NOTES TO FINANCIAL STATEMENTS. 13 14 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- COMPUTERS (continued) Conner Peripherals, Inc. ** ................... 25,000* $ 450,000 Continuum, Inc. ** ............................ 75,000 2,953,125 Cornerstone Imaging, Inc. ** .................. 7,000 157,500 Cybex Computer Products Corp. ** .............. 11,500* 235,750 Datalogix International, Inc. ** .............. 10,000* 100,000 Datastream Systems, Inc. ** ................... 20,000* 445,000 Dataware Technologies, Inc. ** ................ 3,000 30,750 Dell Computer Corp. ** ........................ 140,000 6,527,500 Dendrite International, Inc. ** ............... 10,000* 173,750 Diamond Multimedia Systems, Inc. ** ........... 20,000* 590,000 Digital Biometrics, Inc. ** ................... 11,000 68,750 Discreet Logic, Inc. ** ....................... 10,000* 570,000 DST Systems, Inc. ** .......................... 130,000* 2,730,000 Electroglas, Inc. ** .......................... 106,000 7,446,500 Electronic Arts, Inc. ** ...................... 5,000 183,125 EPIC Design Technology, Inc. ** ............... 500 23,000 Expert Software, Inc. ** ...................... 8,000* 166,000 FileNet Corp. ** .............................. 7,000 317,625 Firefox Communications, Inc. ** ............... 3,500* 60,375 Frame Technology Corp. ** ..................... 2,500 69,687 Gateway 2000, Inc. ** ......................... 50,000 1,668,750 General Magic, Inc. ** ........................ 5,000* 63,125 Global Village Communication ** ............... 2,000 34,000 HCIA, Inc. ** ................................. 200* 5,450 HNC Software, Inc. ** ......................... 4,500* 114,750 HPR, Inc. ** .................................. 12,500* 325,000 Hyperion Software Corp. ** .................... 40,000* 1,970,000 Information Resources, Inc. ** ................ 35,000* 380,625 Informix Corp.** .............................. 250,000 7,281,250 Inso Corp. ** (formerly Infosoft International, Inc.) ........................ 10,000 357,500 Integrated Measurement Systems, Inc. ** ....... 10,000* 135,000 Intuit, Inc. ** ............................... 8,000* 576,000 Kronos, Inc. ** ............................... 21,500 989,000 Lannet Data Communications, Ltd. ** ........... 55,000* 1,581,250 Legato System, Inc. ** ........................ 5,000* 182,500 Logic Works, Inc. ** .......................... 5,000* 76,250 Loronix Information Systems, Inc. ** .......... 265,000 811,563 Madge, N.V. ** ................................ 270,000 11,306,250 MapInfo Corp. ** .............................. 6,000 120,750 Maxis, Inc. ** ................................ 4,000* 177,000 Measurex Corp. ................................ 20,500 630,375 Mercury Interactive Corp. ** .................. 95,000 1,947,500 Micropolis Corp. ** ........................... 96,500 398,063 Minnesota Educational Computing Corp. ** ...... 7,500 232,500 Mustang Software, Inc. ** ..................... 8,000* $ 58,000 National Instruments Corp. ** ................. 6,000* 112,500 NetManage, Inc. ** ............................ 12,000 244,500 Network General Corp.** ....................... 95,000 3,942,500 Norand Corp. ** ............................... 2,500 42,500 Novadigm, Inc. ** ............................. 12,000* 246,000 Oak Technology, Inc. ** ....................... 24,000* 1,314,000 ON Technology Corp. ** ........................ 15,000* 180,000 Open Environment Corp. ** ..................... 20,000* 195,000 OPTi, Inc. ** ................................. 120,000 1,200,000 Parametric Technology Corp.** ................. 70,000 4,681,250 PeopleSoft, Inc. ** ........................... 50,400 4,334,400 Performance Systems International, Inc. ** .... 20,000* 355,000 Phamis, Inc. ** ............................... 5,500* 138,875 Physician Computer Network, Inc. ** ........... 25,000* 171,875 Pinnacle Systems, Inc. ** ..................... 35,000* 1,098,125 PixTech, Inc. ** .............................. 16,500* 162,937 Platinum Technology, Inc. ** .................. 195,000 3,558,750 Policy Management Systems Corp. ** ............ 2,300 108,387 Premenos Technology Corp. ** .................. 12,000* 471,000 PRI Automation, Inc. ** ....................... 27,500 1,017,500 Printronix, Inc. ** ........................... 25,000 475,000 Progress Software Corp.** ..................... 28,500 1,866,750 Project Software & Development, Inc. ** ....... 37,500 993,750 Pure Software, Inc. ** ........................ 5,000* 183,750 Pyxis Corp. ** ................................ 95,000 1,199,375 Quantum Corp. ** .............................. 20,000 347,500 QuickResponse Services, Inc.** ................ 6,000 150,000 Read-Rite Corp. ** ............................ 51,000 1,778,625 Renaissance Solutions, Inc. ** ................ 9,000* 184,500 Seagate Technology, Inc.** .................... 50,000 2,237,500 Security Dynamics Technologies, Inc. ** ....... 10,000* 315,000 Seer Technologies, Inc. ** .................... 27,500* 412,500 Sierra On-Line, Inc. ** ....................... 40,000 1,490,000 Smith Micro Software, Inc. ** ................ 20,000* 245,000 Softdesk, Inc. ** ............................. 40,000 930,000 Software Artistry, Inc. ** .................... 2,500* 41,250 Software Spectrum, Inc. ** .................... 5,000 107,500 SPSS, Inc. ** ................................. 70,000 1,181,250 StorMedia, Inc. ** ............................ 10,000* 460,000 Sybase, Inc.** ................................ 56,000 2,198,000 Symantec Corp. ** ............................. 14,000 340,375 TGV Software, Inc. ** ......................... 3,000* 27,000 3COM Corp.** .................................. 234,770 11,034,190 3D Systems Corp. ** ........................... 2,000* 34,250 Tivoli Systems, Inc. ** ....................... 5,000* 160,625
SEE NOTES TO FINANCIAL STATEMENTS. 14 15 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- COMPUTERS (continued) Transaction Systems Architects, Inc. ...... (Class A) ** ............................ 10,000* $ 260,000 Unison Software, Inc. ** .................. 17,500* 218,750 Vantive Corp. ** .......................... 15,000* 240,000 Verity, Inc. ** ........................... 22,500* 826,875 Videoserver, Inc. ** ...................... 4,000* 122,000 Western Digital Corp. ** ................. 35,000 542,500 Wind River Systems ** ..................... 10,000* 270,000 Wonderware Corp. ** ....................... 20,000 635,000 Zebra Technologies Corp. (Class A)** ...... 2,200 130,900 Zilog, Inc. ** ............................ 60,000 2,130,000 ------------ 141,598,509 ------------ COMPUTER SERVICES (1.55%) America Online, Inc. ** ................... 12,000 960,000 Hogan Systems, Inc. ** .................... 90,000 798,750 Learning Co. (The) ** ..................... 15,000 885,000 NETCOM On-Line Communication Services, Inc. ** ....................... 10,000* 582,500 7th Level, Inc. ** ........................ 40,000 590,000 Sterling Software, Inc. ** ................ 105,000 4,843,125 Sylvan Learning Systems, Inc. ** .......... 5,600 134,400 VMARK Software, Inc. ** ................... 10,000* 68,750 ------------ 8,862,525 ------------ CONTAINERS (0.03%) Mobile Mini, Inc. ** ...................... 40,000* 175,000 ------------ COSMETICS & TOILETRIES (0.42%) Maybelline Inc. ........................... 65,006 1,535,767 Playtex Products, Inc. ** ................. 125,000 875,000 ------------ 2,410,767 ------------ DRUGS (1.99%) ALZA Corp. ** ............................. 24,600 541,200 Big B, Inc. ............................... 10,000 147,500 Centocor, Inc. ** ......................... 35,500 399,375 Chronimed, Inc. ** ........................ 20,000 305,000 Eckerd (Jack) Corp. ** .................... 85,000 3,368,125 Elan Corp., PLC, American Depositary Receipt, (ADR) ** ............ 5,250 210,656 Martek Biosciences Corp. ** ............... 25,000* 478,125 Mylan Laboratories, Inc. .................. 127,500 2,422,500 North American Vaccine, Inc. ** ........... 40,000 420,000 OraVax, Inc. ** ........................... 25,000* 321,875 Syncor International Corp. ** ............ 16,500 132,000 Teva Pharmaceutical Industries Ltd., ADR .. 10,000* 392,500 Watson Pharmaceuticals, Inc. ** ........... 50,000 2,237,500 ------------ 11,376,356 ------------ ELECTRONICS (9.22%) American Sensors, Inc. ** ................. 25,000* $ 178,125 ANADIGICS, Inc. ** ........................ 6,350* 141,288 Analog Devices, Inc. ** ................... 20,000* 722,500 Atmel Corp. ** ............................ 100,000 3,125,000 Burr-Brown Corp. ** ....................... 12,500* 406,250 C-Cube Microsystems, Inc. ** .............. 15,000 1,036,875 CIDCO, Inc. ** ............................ 15,200 450,300 Cirrus Logic, Inc. ** ..................... 80,000 3,370,000 Clare (C.P.) Corp. ** ..................... 13,500* 349,312 Exar Corp. ** ............................. 96,000 2,280,000 GaSonics International Corp.** ............ 18,000 594,000 General Instrument Corp. ** ............... 26,000 494,000 Integrated Circuit Systems, Inc. ** ....... 42,500* 576,406 Integrated Silicon Solution, Inc. ** ...... 5,000* 156,563 Itron, Inc. ** ............................ 15,000* 435,000 LAM Research Corp.** ...................... 100,000 6,087,500 Level One Communications, Inc.** .......... 4,500 101,250 Mackie Designs, Inc. ** ................... 5,000* 63,750 Macromedia, Inc. ** ....................... 10,000* 370,000 Mattson Technology, Inc. ** ............... 4,000 88,000 Maxim Integrated Products, Inc. ** ........ 54,000 4,036,500 Megatest Corp. ** ......................... 160,000 4,720,000 Micrel, Inc. ** ........................... 17,500* 398,125 PSC, Inc. ** .............................. 70,000* 717,500 Quickturn Design System, Inc. ** .......... 25,000 259,375 SDL, Inc. ** .............................. 25,000* 637,500 S3, Inc.** ................................ 30,000 513,750 Sonic Solutions, Inc. ** .................. 10,000 81,250 Tektronix, Inc. ........................... 2,000 118,500 TelCom Semiconductor, Inc. ** ............ 5,000* 39,375 Tencor Instruments ** ..................... 195,000 8,311,875 Teradyne, Inc. ** ......................... 220,000 7,342,500 Ultratech Stepper, Inc. ** ................ 30,000 1,200,000 VeriFone, Inc.** .......................... 25,000 675,000 Xilinx, Inc.** ............................ 60,000 2,760,000 ------------ 52,837,369 ---------- ENGINEERING (0.13%) J. Ray Mcdermott, S. A. ** ................ 50,000* 756,250 ---------- FINANCE (3.22%) ADVANTA Corp. (Class A) ** ................ 7,500 290,625 ADVANTA Corp. (Class B) ................... 6,750 241,313 Alex Brown, Inc. ** ....................... 3,000 146,625 Alliance Capital Management, L.P. ......... 110,000 2,310,000 Bear Stearns Cos., Inc. ................... 4,896 97,311 Capital One Financial Corp. ............... 30,000* 735,000 Capital RE Corp. .......................... 30,000 847,500
SEE NOTES TO FINANCIAL STATEMENTS. 15 16 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- FINANCE (CONTINUED) Concord EFS, Inc. ** ........................ 6,750 $ 232,875 CUC International, Inc. ** .................. 30,000 1,038,750 Donaldson Lufkin & Jenrette, Inc. ........... 20,000* 595,000 Eaton Vance Corp. ........................... 25,000 912,500 Franklin Resources, Inc. .................... 32,000 1,624,000 KBK Capital Corp. ** ........................ 100,000 600,000 Lehman Brothers Holdings, Inc. .............. 25,000* 543,750 Oppenheimer Capital, L.P. ................... 60,000 1,612,500 Price (T. Rowe) & Associates, Inc. .......... 66,000 3,283,500 Raymond James Financial, Inc. ............... 84,750 1,822,125 SEI Corp. ................................... 18,000 382,500 SunAmerica, Inc. ............................ 7,000 435,750 US Order, Inc. ** ........................... 2,500* 37,500 WFS Financial, Inc. ** ...................... 40,000* 665,000 ----------- 18,454,124 ----------- FUNERAL SERVICES (0.54%) Service Corp. International ................. 50,000 2,006,250 Stewart Enterprises, Inc. (Class A) ......... 32,250 1,088,437 ----------- 3,094,687 ----------- HEALTHCARE (4.81%) AHI Healthcare Systems, Inc. ** ............. 25,000* 350,000 American Oncology Resources, Inc. ** ........ 5,500* 192,500 Apogee, Inc. ** ............................. 5,000 43,750 Applied Bioscience International, Inc. ** ... 40,000 255,000 Apria Healthcare Group, Inc. ** ............. 88,200* 1,907,325 Arbor Health Care Co. ** .................... 3,000 51,000 Beverly Enterprises, Inc. ** ................ 25,000 293,750 Cardinal Health, Inc. ....................... 3,750 192,656 Caremark International, Inc. ................ 140,000 2,887,500 Community Care of America, Inc. ** .......... 65,000* 877,500 CorVel Corp. ** ............................. 20,000 640,000 Enterprise Systems, Inc. .................... 4,000* 93,500 Express Scripts, Inc. (Class A) ** .......... 25,000 950,000 Health Care & Retirement Corp. ** ........... 57,100 1,677,312 Health Management Associates, Inc. .......... (Class A) ** .............................. 25,312 544,219 Health Management Systems, Inc. ** .......... 30,000 960,000 Horizon Healthcare Corp. ** ................. 85,000 1,721,250 Horizon Mental Health Management, Inc. ** ... 5,000* 78,125 Integrated Health Services, Inc. ............ 2,000 45,750 Interim Services, Inc. ** ................... 15,000 446,250 Living Centers Of America, Inc. ** .......... 41,500 1,073,812 Manor Care, Inc. ............................ 37,500 1,228,125 Mariner Health Group, Inc.** ................ 50,000 487,500 MedPartners, Inc. ** ........................ 15,000* 420,000 Mid Atlantic Medical Services ** ............ 20,000* $ 397,500 Multicare Cos., Inc. ** ..................... 50,000 937,500 NovaCare, Inc. ** ........................... 40,000 250,000 OccuSystems, Inc. ** ........................ 15,000* 310,313 OrNda Healthcorp ** ......................... 20,000* 352,500 PhyCor, Inc. ** ............................. 7,875 289,406 Physician Reliance Network ** .............. 10,000* 332,500 Renal Treatment Centers, Inc. ** ............ 15,000 540,000 Summit Care Corp. ** ........................ 40,000 830,000 Sun Healthcare Group, Inc. ** .............. 20,000* 237,500 Surgical Care Affiliates, Inc. .............. 41,000 1,214,625 TheraTx, Inc. ** ............................ 50,000 562,500 Total Renal Care Holdings, Inc. ** .......... 20,000 407,500 Value Health, Inc. ** ....................... 49,750* 1,138,031 Vencor, Inc. ** ............................. 8,437 234,127 Vivra, Inc. ** .............................. 65,000 2,145,000 ----------- 27,595,826 ----------- HOTELS & MOTELS (0.44%) Equity Inns, Inc. ....................... 30,000 352,500 Marcus Corp. ............................ 25,000 865,625 Marriott International, Inc. ............ 10,000 368,750 Primadonna Resorts, Inc. ** ............. 41,000 640,625 Red Lion Hotels, Inc. ** ................ 15,000* 296,250 --------- 2,523,750 --------- INSURANCE (5.05%) ACE, Ltd. ............................... 50,000 1,700,000 Acordia, Inc. ........................... 7,500 206,250 American RE Corp. ....................... 57,000 2,180,250 Berkley (W. R.), Corp. .................. 20,000 865,000 Capital Guaranty Corp. .................. 10,000 221,250 CMAC Investment Corp. ................... 15,000 712,500 Enhance Financial Services Group, Inc. ........................... 5,000 101,875 Exel Ltd. ............................... 10,500 561,750 Gallagher (Arthur J.) & Co. ............. 15,000 530,625 Guaranty National Corp. ................. 35,000 498,750 HCC Insurance Holdings, Inc.** .......... 27,000 938,250 Hilb, Rogal & Hamilton Co. .............. 10,000 137,500 Horace Mann Educators Corp. ............. 75,000 1,996,875 Insurance Auto Auctions, Inc.** ......... 29,500 199,125 Life Partners Group, Inc. ............... 65,000 1,178,125 Life RE Co. ............................. 5,000 103,750 Maxicare Health Plans, Inc. ** .......... 125,000 2,171,875 MBIA, Inc. .............................. 28,000 1,949,500 Mid Ocean Ltd. .......................... 4,000 141,500 NAC Re Corp. ............................ 30,050 1,055,506 National RE Corp. ....................... 78,000 2,622,750
SEE NOTES TO FINANCIAL STATEMENTS. 16 17 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- INSURANCE (continued) Oxford Health Plans, Inc. ** .............. 10,000 $ 782,500 PacifiCare Health Systems, Inc. ** ........ 5,000 352,500 PartnerRe Holdings, Ltd. .................. 10,000 265,625 Philadelphia Consolidated Holding Corp. ** ................................ 75,000 1,406,250 Physicians Health Services, Inc. .......... (Class A) ** ............................ 7,500 249,375 Prudential Reinsurance Holdings, Inc.** ... 12,500* 254,688 PXRE Corp. ................................ 5,000 127,500 RenaissanceRe Holdings, Ltd. .............. 6,500* 176,313 Sierra Health Services, Inc. ** ........... 35,000 1,001,875 TIG Holdings, Inc. ........................ 10,000* 253,750 Transatlantic Holdings, Inc. .............. 17,000 1,145,375 UNUM Corp. ................................ 27,500 1,447,187 Vesta Insurance Group, Inc. ............... 10,000* 403,750 Western National Corp. .................... 75,000* 1,031,250 ----------- 28,970,944 ----------- LEISURE & RECREATION (0.66%) Aztar Corp. ** ............................ 20,000* 162,500 Circus Circus Enterprises, Inc.** ......... 5,050 134,456 Coleman Co., Inc. ** ...................... 5,000 171,250 KingWorld Productions, Inc. ** ............ 25,000* 871,875 Rawlings Sporting Goods Co. ** ............ 10,000* 80,000 Royal Caribbean Cruises Ltd. .............. 40,000 920,000 Trump Hotels & Casino Resorts, Inc. ** .... 85,000* 1,445,000 ----------- 3,785,081 ----------- MACHINERY (2.53%) Asyst Technologies, Inc. ** ............... 20,000 840,000 Bridgeport Machines, Inc. ** .............. 25,000* 437,500 Credence Systems Corp.** .................. 175,000 6,540,625 Duracraft Corp. ** ........................ 9,000 195,750 KLA Instruments Corp. ** .................. 30,000 1,282,500 Novellus Systems, Inc. ** ................. 65,000 4,476,875 Opal, Inc. ** ............................. 15,000* 226,875 Veeco Instruments, Inc. ** ................ 20,000* 480,000 ----------- 14,480,125 ----------- MEDICAL/DENTAL (3.66%) Benson Eyecare Corp. ** ................... 20,000 187,500 BioWhittaker, Inc. ** ..................... 120,000 900,000 Cognex Corp. ** ........................... 42,000* 2,509,500 Cordis Corp. ** ........................... 20,000 2,210,000 EP Technologies, Inc. ** .................. 10,000* 123,750 Forest Laboratories, Inc. ** .............. 10,000 413,750 Gulf South Medical Supply, Inc. ** ........ 20,000 415,000 Haemonetics Corp. ** ...................... 30,000 566,250 HemaSure, Inc. ** ......................... 30,000* 382,500 ICU Medical, Inc. ** ...................... 40,000* $ 510,000 IDEXX Laboratories, Inc. ** ............... 5,000* 203,750 InStent, Inc. ** .......................... 29,500* 497,813 Isolyser Co., Inc. ** ..................... 10,000 178,750 i-STAT Corp. ** ........................... 10,000* 310,000 IVAX Corp. ................................ 32,000 728,000 Liposome Co., Inc. ** ..................... 45,000* 691,875 MAXXIM Medical, Inc. ** ................... 40,000 555,000 MedCath, Inc. ** .......................... 20,000* 470,000 MiniMed, Inc. ** .......................... 60,000* 555,000 Pall Corp. ................................ 6,666 162,484 Patterson Dental, Inc. ** ................. 28,500 712,500 Perrigo Co.** ............................. 60,000 735,000 Rotech Medical Corp. ** ................... 36,000 819,000 Scherer (R.P.) Corp.** .................... 22,000 979,000 Steris Corp. ** ........................... 28,000 945,000 Stryker Corp. ............................. 6,100 275,262 Target Therapeutics, Inc. ** .............. 8,500 658,750 Tecnol Medical Products, Inc. ** .......... 90,000 1,710,000 United Dental Care, Inc. ** ............... 10,000* 305,000 Uromed Corp. ** ........................... 50,000* 531,250 Ventritex, Inc. ** ........................ 15,000 294,375 Vital Signs, Inc. ......................... 25,000* 456,250 ----------- 20,992,309 ----------- OFFICE EQUIPMENT & SUPPLIES (0.32%) Indigo N. V. ** ............................. 45,000* 410,625 Staples, Inc. ** ............................ 54,000 1,437,750 --------- 1,848,375 --------- OIL & GAS (4.03%) Alexander Energy Corp. ** ................... 25,000* 96,875 Anadarko Petroleum Corp. .................... 12,500 542,188 Apache Corp. ................................ 50,000 1,275,000 Baker Hughes, Inc. .......................... 10,000 196,250 Barrett Resources Corp. ** .................. 12,500 290,625 B.J. Services Co. ** ........................ 6,000 141,000 Brown (Tom), Inc. ** ........................ 115,000 1,279,375 Cabot Oil & Gas Corp. (Class A) ** .......... 60,000 802,500 Cairn Energy USA, Inc. ** ................... 52,000 624,000 Camco International, Inc. ................... 20,000* 457,500 Cross Timbers Oil Co. ** .................... 40,000 580,000 Energy Ventures, Inc. ** .................... 40,000* 760,000 Enron Oil & Gas Co. ......................... 65,000 1,300,000 ENSCO International, Inc. ** (formerly Energy Service Co., Inc.) ................. 20,000 337,500 Falcon Drilling Co., Inc. ** ................ 100,000* 1,037,500 Halliburton Co. ............................. 5,000* 207,500
SEE NOTES TO FINANCIAL STATEMENTS. 17 18 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- OIL & GAS (CONTINUED) Hornbeck Offshore Services, Inc. ** ......... 10,000 $ 146,250 HS Resources, Inc. ** ....................... 10,000* 138,750 Landmark Graphics Corp. ** .................. 10,000 217,500 Mitchell Energy & Development Corp. (Class B) ........................... 10,000 162,500 Natural Gas Clearinghouse ................... 65,000* 585,000 Newfield Exploration Co. ** ................. 73,000 2,153,500 Noble Affiliates, Inc. ...................... 70,000 1,732,500 Noble Drilling Corp. ** ..................... 15,000* 105,000 Nuevo Energy Co. ** ......................... 80,000 1,770,000 Oceaneering International, Inc.** ........... 23,000 218,500 Parker & Parsley Petroleum Co. .............. 30,000 555,000 PetroCorp, Inc. ** .......................... 20,000 155,000 Pogo Producing Co. .......................... 75,000 1,509,375 Smith International, Inc. ** ................ 50,000 800,000 Snyder Oil Corp. ............................ 19,000 194,750 Stone Energy Corp. ** ....................... 20,000 227,500 Tidewater, Inc. ............................. 10,000 263,750 Tuboscope Vetco International Corp. ** ...... 90,000 528,750 Weatherford International, Inc. ** .......... 70,000 1,688,750 ----------- 23,080,188 ----------- PAPER PRODUCTS (0.20%) Mercer International, Inc. ** .............. 50,000 1,150,000 ----------- POLLUTION CONTROL (0.52%) GNI Group, Inc. ** .......................... 125,000 875,000 IMCO Recycling, Inc. ........................ 48,500 1,042,750 Safety-Kleen Corp. .......................... 10,000* 153,750 Tetra Tech, Inc. ** ......................... 15,625 339,844 TRC Companies ** ............................ 30,000 176,250 U.S. Filter Corp. ** ........................ 17,500* 406,875 ----------- 2,994,469 ----------- PRINTING (0.56%) Harte-Hanks Communications, Inc. ............ 50,000 1,512,500 International Imaging Materials, Inc. ** .... 35,000 883,750 Mecklermedia Corp. ** ....................... 70,000 822,500 ----------- 3,218,750 ----------- PROTECTION (0.46%) Checkpoint Systems, Inc. ** ................. 5,000* 144,375 First Alert, Inc. ** ........................ 85,000 1,317,500 Koala Corp. ** .............................. 35,000 319,375 Protection One, Inc. ** ..................... 100,000 787,500 Sensormatic Electronics Corp. ............... 2,250 48,094 ----------- 2,616,844 ----------- PUBLISHING (0.73%) Desktop Data, Inc. ** ....................... 10,500* 375,375 Franklin Electronic Publishers, Inc. ** ..... 19,500 806,812 PUBLISHING (CONTINUED) Readers Digest Association, Inc. (Class A) .. 20,000 $ 1,005,000 Scholastic Corp.** .......................... 32,500 2,006,875 ----------- 4,194,062 ----------- REAL ESTATE (3.68%) Beacon Properties Corp. ................... 10,000 217,500 Camden Property Trust ..................... 30,000 622,500 Cavaliar Homes, Inc. ...................... 25,000* 425,000 Champion Enterprises, Inc. ** ............ 30,000* 776,250 Clayton Homes, Inc. ....................... 112,546 2,954,332 Crescent Real Estate Equities, Inc. ....... 20,300 649,600 Equity Residential Properties Trust ....... 20,000 560,000 Evans Withycombe Residential, Inc. ........ 5,000* 94,375 Factory Stores Of America, Inc. ........... 30,000 577,500 HGI Realty, Inc. .......................... 17,500* 387,188 Highwoods Properties, Inc. ................ 5,000 133,125 Insignia Financial Group, Inc. ............ (Class A) ** ............................ 25,000 675,000 Liberty Property Trust .................... 10,000 202,500 Manufactured Home Communities, Inc. ....... 40,000 660,000 Mid-America Apartment Communities, Inc ..................................... 25,400 584,200 NHP, Inc. ** .............................. 25,000* 356,250 Oakwood Homes Corp. ....................... 80,000 3,000,000 Oasis Residential, Inc. ................... 20,000 435,000 Post Properties, Inc. ..................... 11,100 333,000 Redman Industries, Inc. ** ................ 170,000 4,420,000 Regency Realty Corp. ...................... 25,000 425,000 RFS Hotel Investors, Inc. ................. 10,000 151,250 ROC Communities, Inc. ..................... 25,000 562,500 Security Capital Industrial Trust ......... 15,000 245,625 Security Capital Pacific Trust ............ 20,000* 357,500 Storage USA, Inc. ......................... 10,400 304,200 Tanger Factory Outlet Centers, Inc. ....... 18,000 423,000 Vornado Realty Trust ...................... 15,000 538,125 ---------- 21,070,520 ---------- RETAIL (12.60%) ADFlex Solutions, Inc. ** ................. 54,000 1,431,000 AmeriSource Health Corp. ** ............... 75,000* 2,043,750 Apple South, Inc. ......................... 77,062 1,579,771 Applebee's International, Inc.** .......... 25,000 703,125 Arbor Drugs, Inc. ......................... 9,000 166,500 Au Bon Pain Co., Inc. (Class A) ** ........ 5,000 38,125 Barnes & Noble, Inc. ** ................... 11,000 401,500 Bed Bath & Beyond, Inc. ** ................ 60,000 1,875,000 Best Buy Co., Inc.** ...................... 75,000 1,556,250 Blyth Industries, Inc. ** ................. 10,000 505,000
SEE NOTES TO FINANCIAL STATEMENTS. 18 19 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- RETAIL (CONTINUED) Borders Group, Inc. ** .................... 65,000* $ 1,113,125 Brookstone, Inc. ** ....................... 50,000 331,250 Campo Electronics, Appliances and Computers, Inc. ** ...................... 150,000 693,750 Catherine's Stores Corp. ** ............... 10,000 92,500 Chart House Enterprises, Inc. ** .......... 76,000 522,500 Claire's Stores, Inc. ..................... 9,000 176,625 Consolidated Stores Corp. ** .............. 24,000 555,000 Corporate Express, Inc. ** ................ 25,000 653,125 Creative Computers, Inc. ** ............... 25,000* 725,000 Daisytek International Corp. ** ........... 25,000* 706,250 De Rigo S.p.A., ADR ....................... 13,000* 268,125 Department 56, Inc.** ..................... 20,000 907,500 DF & R Restaurants, Inc. ** ............... 10,000 305,000 Dollar Tree Stores, Inc. ** ............... 1,000* 27,000 Dreyer's Grand Ice Cream, Inc. ............ 15,000 517,500 El Chico Restaurants, Inc. ** ............ 110,000 1,086,250 Ellett Brothers, Inc. ..................... 81,000 617,625 Ethan Allen Interiors, Inc.** ............ 41,000 809,750 Federated Department Stores, Inc. ** ...... 90,000 2,283,750 Fingerhut Cos., Inc. ...................... 16,000 218,000 Franklin Quest Co. ** ..................... 41,000 978,875 Friedman's, Inc. (Class A) ** ............ 10,000 202,500 Gadzooks, Inc. ** ......................... 25,000* 462,500 Garden Ridge Corp. ** ..................... 10,000* 357,500 General Nutrition Cos., Inc. ** ........... 4,000 99,500 Global DirectMail Corp. ** ................ 65,000* 1,771,250 Good Times Restaurants, Inc. ** ........... 120,000 116,244 Gymboree Corp. ** ......................... 22,000 497,750 Hollywood Entertainment Corp.** ........... 10,000 267,500 HomeTown Buffet, Inc. ** .................. 40,000 525,000 IHOP Corp. ** ............................. 130,000 2,795,000 Intimate Brands, Inc. ..................... 40,000* 670,000 Just For Feet, Inc. ** .................... 5,625 132,891 Landry's Seafood Restaurants, Inc. ** ..... 90,000 1,215,000 Little Switzerland, Inc. ** ............... 100,000 375,000 Lone Star Steakhouse & Saloon, Inc. ** .... 13,500 521,437 Media Arts Group, Inc. ** ................. 15,000* 49,688 Men's Wearhouse, Inc. (The) ** ............ 12,750 497,250 Michael's Stores, Inc. ** ................. 50,000 681,250 Moovies, Inc. ** .......................... 15,000 245,625 Movie Gallery, Inc. ** .................... 15,000* 577,500 Neiman Marcus Group, Inc. ................. 30,000* 513,750 Neostar Retail Group, Inc. ** ............ 20,000* 305,000 Nine West Group, Inc. ** .................. 75,000 3,337,500 Oakley, Inc. ** ........................... 10,200* 351,900 Office Depot, Inc.** ...................... 35,009 1,002,133 RETAIL (CONTINUED) OfficeMax, Inc. ** ........................ 39,300* $ 972,675 Oshman's Sporting Goods, Inc. ** .......... 10,000* 135,000 Outback Steakhouse, Inc. ** ............... 105,000 3,294,375 Papa John's International, Inc. ** ........ 2,500 96,250 PetSmart, Inc.** .......................... 12,000 402,000 Pier 1 Imports, Inc. ...................... 145,750 1,402,844 Quality Dining, Inc. ** ................... 31,000 604,500 Revco D.S., Inc. ** ....................... 205,454 4,879,532 Rite-Aid Corp. ............................ 65,000 1,755,000 Sonic Corp. ** ............................ 64,500 1,419,000 Sports Authority, Inc. (The) ** ........... 21,900* 476,325 Sports & Recreation, Inc. ** .............. 50,000 368,750 Starbucks Corp. ** ........................ 10,000 392,500 Sunglass Hut International, Inc.** ........ 190,000 5,177,500 Talbots, Inc. ............................. 50,000 1,212,500 Tiffany & Co. ............................. 31,000 1,352,375 USA Detergents, Inc. ** ................... 30,000* 765,000 U.S. Delivery Systems, Inc. ** ............ 14,000 290,500 Urban Outfitters, Inc. ** ................. 18,000 391,500 Wall Street Deli, Inc. ** ................. 7,500 50,625 Wendy's International, Inc. ............... 145,000 2,881,875 West Marine, Inc. ** ...................... 45,000 1,372,500 Whole Foods Market, Inc. ** ............... 20,000 245,000 Williams-Sonoma, Inc. ** .................. 12,000 208,500 Zale Corp. ** ............................. 40,000 590,000 ----------- 72,195,815 ----------- TELECOMMUNICATIONS (9.18%) ACC Corp. ................................. 12,000 225,000 ACT Networks, Inc. ** ..................... 12,500* 90,625 ANTEC Corp. ** ............................ 40,000 495,000 Applied Digital Access, Inc. ** ........... 5,000 60,000 Ascend Communications, Inc. ** ............ 148,000 9,620,000 Black Box Corp. ** ........................ 25,000* 406,250 BroadBand Technologies, Inc. ** ........... 25,000 437,500 Checkfree Corp. ** ........................ 15,000* 316,875 Communications Center, Inc. ** ............ 15,000 82,500 DSC Communications Corp.** ................ 17,500 647,500 Equifax, Inc. ............................. 71,500 2,788,500 Geoworks ** ............................... 60,000 1,282,500 Gilat Satellite Networks Ltd.** ........... 2,500* 55,625 HighwayMaster Communications, Inc. ** ..... 75,000* 600,000 International Cabletel, Inc. ** ........... 26,666 706,649 Metrocall, Inc. ** ........................ 41,000 1,025,000 MFS Communications Co., Inc. ** ........... 11,200 452,200 MIDCOM Communications, Inc. ** ............ 50,000* 750,000 MobileMedia Corp. ** ...................... 47,500* 1,246,875
SEE NOTES TO FINANCIAL STATEMENTS. 19 20 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
MARKET ISSUER, DESCRIPTION NUMBER OF SHARES VALUE - ------------------- ---------------- ----- TELECOMMUNICATIONS (continued) Mobile Telecommunications Technologies Corp. ** ................... 30,000 $ 851,250 NFO Research, Inc. ** ..................... 25,000 568,750 Octel Communication Corp. ** .............. 20,000 682,500 Paging Network, Inc. ** ................... 7,500 172,500 Pairgain Technologies, Inc. ** ............ 45,000* 1,923,750 PriCellular Corp. (Class A) ** ............ 31,250* 406,250 ProNet, Inc. ** ........................... 40,000 1,020,000 QUALCOMM, Inc. ** ......................... 5,000 192,500 Scientific-Atlanta, Inc. .................. 50,000 618,750 Sitel Corp. ** ............................ 10,500* 238,875 Stanford Telecommunications, Inc. ** ...... 11,000 225,500 Tellabs, Inc. ** .......................... 180,000 6,120,000 Telular Corp. ** .......................... 5,000 69,375 Transaction Network Services, Inc. ** ..... 15,000 352,500 US Long Distance Corp. ** ................. 40,000 515,000 U. S. Robotics, Inc. ** ................... 135,000 12,487,500 UUNET Technologies, Inc. ** ............... 3,000* 182,250 WorldCom, Inc. (formerly LDDS Communications, Inc.)** ............ 127,996 4,175,869 Zoom Telephonics, Inc.** .................. 30,000 487,500 ----------- 52,579,218 ----------- TEXTILES (0.52%) Ashworth, Inc. ** ......................... 25,000 168,750 Cutter & Buck, Inc. ** .................... 30,000* 195,000 Gucci Group, NV ** (Registered Shares) .... 5,000* 150,000 Haggar Corp. .............................. 8,000 132,000 Nautica Enterprises, Inc. ** .............. 60,000 2,055,000 St. John Knits, Inc. ...................... 5,000 239,375 Tandy Brands Accessories, Inc. ** ......... 6,750 48,938 ----------- 2,989,063 ----------- TOYS/GAMES/HOBBY PRODUCTS (1.20%) Acclaim Entertainment, Inc. ** ............ 30,000 708,750 Callaway Golf Co. ......................... 52,000 851,500 Cannondale Corp. ** ....................... 20,200* 323,200 Cobra Golf, Inc. ** ....................... 37,000 962,000 GTECH Holdings Corp.** .................... 10,000 245,000 Happiness Express, Inc. ** ................ 55,000* 288,750 Intergold Ltd. ** ......................... 100,000 126,390 Players International, Inc. ** ............ 169,000 1,816,750 Station Casinos, Inc. ** .................. 110,000 1,430,000 Toy Biz, Inc. ** .......................... 5,000* 111,875 ----------- 6,864,215 ----------- TRANSPORTATION (2.17%) Alaska Air Group, Inc. ** ................. 25,000 371,875 American Medical Response, Inc. ** ........ 10,000* 288,750 TRANSPORTATION (CONTINUED) Atlantic Southeast Airlines, Inc. ......... 65,000 $ 1,608,750 Comair Holdings, Inc. ..................... 85,950 2,411,972 Continental Airlines, Inc. (Class B) ** ... 10,000 356,250 Fritz Cos., Inc. ** ....................... 11,300* 395,500 Frontier Airlines, Inc. ** ................ 250,000 1,281,250 Greenbrier Cos., Inc. ..................... 20,000 217,500 Mesa Airlines, Inc.** ..................... 100,000 950,000 Northwest Airlines Corp. ** ............... 70,000 2,808,750 Offshore Logistics, Inc. ** ............... 11,500 142,314 Rural/Metro Corp.** ....................... 15,000 360,000 Skywest, Inc. ............................. 20,000 342,500 Southwest Airlines Co. .................... 45,000 900,000 ----------- 12,435,411 ----------- UTILITIES (0.03%) York Research Corp. ** .................... 22,000* 159,500 ----------- COMMON STOCKS (Cost $315,097,152) .......... 97.86% 560,707,089 ----------- ----------- WARRANTS -------- WARRANTS Retail (0.00%) Good Times Restaurants, Inc. ** ......... 60,000 5,622 ----------- TOTAL WARRANTS (Cost $50,148) .......... 0.00% 5,622 ----------- ----------- TOTAL COMMON STOCKS AND WARRANTS (Cost $315,147,300) .......... 97.86% 560,712,711 ----------- -----------
SEE NOTES TO FINANCIAL STATEMENTS. 20 21 FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund
INTEREST PAR VALUE MARKET ISSUER, DESCRIPTION RATE (000'S OMITTED) VALUE - ------------------- ---- --------------- ----- SHORT-TERM INVESTMENTS joint repurchase agreement (2.40%) Investment in a joint repurchase agreement transaction with SBC Capital Market, Inc. - Dated 10-31-95, due 11-01-95 (secured by U.S. Treasury Bond, 8.75%, due 05-15-17 and U.S. Treasury Note 5.75% due 09-30-97) - Note A ....... 5.89% $ 13,738 $ 13,738,000 ------------ corporate savings account (0.08%) Investors Bank & Trust Company Daily Interest Savings Account Current Rate 3.00% ........... 477,189 ------------ TOTAL SHORT-TERM INVESTMENTS . 2.48% 14,215,189 ------------ ------------ TOTAL INVESTMENTS . 100.34% $574,927,900 ============ ============
** Securities, other than short-term investments, newly added to the portfolio during the year ended October 31, 1995 ** Non-income producing security. + Denotes an affiliated company in which the Fund has ownership of at least 5% of the voting securities. Investments in affiliates at October 31, 1995 were as follows:
AFFILIATE COST DIVIDEND INCOME - --------------------------------- ---------- --------------- Frontier Airlines, Inc. $1,133,125 -- Loronix Information Systems, Inc. $1,595,000 --
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the Fund. SEE NOTES TO FINANCIAL STATEMENTS. 21 22 NOTES TO FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund NOTE A -- ACCOUNTING POLICIES John Hancock Series, Inc. (the "Corporation") is a diversified, open-end management investment company, registered under the Investment Company Act of 1940, as amended. The Corporation consists of six series portfolios: John Hancock Emerging Growth Fund (the "Fund"), John Hancock Global Resources Fund, John Hancock High Yield Tax Free Fund, John Hancock High Yield Bond Fund, John Hancock Money Market Fund and John Hancock Government Income Fund (collectively, the "Funds"). The Board of Directors may authorize the creation of additional Funds from time to time to satisfy various investment objectives. Effective December 22, 1994 (see Note B), the Corporation and Funds changed names by replacing the word Transamerica with John Hancock. The Board of Directors have authorized the issuance of two classes of shares 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, redemption, dividends, and liquidation, except that certain expenses, subject to the approval of the Board of Directors, may be applied differently to each class of shares in accordance with current regulations of the Securities and Exchange Commission and the Internal Revenue Service. Shareholders of a class which bears distribution/service expenses under the terms of a distribution plan have exclusive voting rights regarding such distribution plan. 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 Board of Directors. 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. FOREIGN CURRENCY TRANSLATION All assets and liabilities initially expressed in terms of foreign currencies are translated into U.S.dollars based on London currency exchange quotations as of 5:00 p.m., London time, on the date of any determination of the net asset value of the Fund. Transactions affecting statement of operations accounts and net realized gain/loss on investments are translated at the rates prevailing at the dates of the transactions. The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Reported net realized foreign exchange gains or losses arise from sales of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities, resulting from changes in the exchange rate. INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of purchase, sale or maturity. Net realized gains and 22 23 NOTES TO FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund losses on sales of investments are determined on the identified cost basis for both financial reporting and federal income tax purposes. 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, at October 31, 1995, the Fund has $6,354,280 of capital loss carryforward available, to the extent provided by regulations, to offset future net realized capital gains. If such carryforwards are used by the Fund, no capital gain distributions will be made. The carryforward expires October 31, 2003. DIVIDENDS, DISTRIBUTIONS AND INTEREST Interest income on investment securities is recorded on the accrual basis. Dividend income on investment securities is recorded on the ex-dividend date, or, in the case of some foreign securities, on the date thereafter when the Fund is made aware of the dividend. 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, if any, 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 effect of expenses that may be applied differently to each class as explained previously. EXPENSES The majority of the expenses of the Corporation are directly identifiable to an individual Fund. Expenses which are not readily identifiable to a specific Fund are allocated in such a manner as deemed equitable, taking into consideration, among other things, the nature and type of expense and the relative sizes of the Fund. 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. NOTE B -- MANAGEMENT FEE, ADMINISTRATIVE SERVICES AND TRANSACTIONS WITH AFFILIATES AND OTHERS On December 22, 1994, John Hancock Advisers, Inc. became the investment adviser for the Fund with approval of the Board of Directors and shareholders of the Fund. The Fund's former investment manager was Transamerica Fund Management Company ("TFMC"). Under the present investment management contract, the Fund pays a monthly management fee to the Adviser for a continuous investment program equivalent, to 0.75% of the Fund's average daily net assets. This fee structure is consistent with the former agreement with TFMC. For the period ended October 31, 1995, the advisory fee earned by the Adviser and TFMC amounted to $2,978,791 and $496,208, respectively, resulting in a total fee of $3,474,999. The Adviser and TFMC, for their respective periods, provided administrative services to the Fund pursuant to an administrative service agreement through January 16, 1995 on which day the agreement was terminated. In the event normal operating expenses of the Fund, exclusive of certain expenses prescribed by state law, are in excess of the most restrictive state limit where the Fund is registered to sell shares of beneficial interest, the fee payable to the Adviser will be reduced to the extent of such excess and the Adviser will make additional arrangements necessary to eliminate any remaining excess expenses. The current limits are 2.5% of the first $30,000,000 of the Fund's average daily net asset value, 2.0% of the next $70,000,000 and 1.5% of the remaining average daily net asset value. On December 22, 1994 John Hancock Funds, Inc. ("JH Funds"), a wholly-owned subsidiary of the Adviser, became the principal underwriter of the Fund. Prior to this date, Transamerica Fund Distributors, Inc. ("TFD") served as the principal underwriter and distributor of 23 24 NOTES TO FINANCIAL STATEMENTS John Hancock Funds - Emerging Growth Fund the Fund. For the period ended October 31, 1995, JH Funds and TFD received net sales charges of $604,527 with regard to sales of Class A shares. Out of this amount, $67,705 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $489,876 was paid as sales commissions to unrelated broker-dealers and $46,946 was paid as sales commissions to sales personnel of John Hancock Distributors, Inc. ("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro & Co., Inc. ("Sutro"). The Adviser's indirect parent, John Hancock Mutual Life Insurance Company, is the indirect sole shareholder of Distributors and John Hancock Freedom Securities Corporation and its subsidiaries, which include Tucker Anthony and Sutro, 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, formerly TFD, and are used in whole or in part to defray its expenses related to providing distribution related services to the Fund in connection with the sale of Class B shares. For the period ended October 31, 1995, contingent deferred sales charges amounted to $934,403. 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 shares pursuant to Rule 12b-1 under the Investment Company Act of 1940. Accordingly, the Fund will make payments for distribution and service expenses which in total will not exceed on an annual basis 0.25% of the Fund's average daily net assets attributable to Class A shares and 1.00% (0.90% effective December 1, 1995) of the Fund's average daily net assets attributable to Class B shares, 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, the 12b-1 fee on Class B shares was decreased to 0.95% at various times during the fiscal year. This fee structure and plan is similar to the former arrangement with TFD. The Board of Directors 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 paid Investor Services a fee based on the number of shareholder accounts and certain out-of-pocket expenses. A partner with Baker & Botts was an officer of the Corporation until December 22, 1994. During the period ended October 31, 1995, legal fees paid to Baker & Botts amounted to $4,849. Mr. Edward J. Boudreau, Jr. is a director and officer of the Adviser and its affiliates as well as Director of the Corporation. The compensation of unaffiliated Directors is borne by the Fund. Effective with the fees paid for 1995, the unaffiliated Directors may elect to defer 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 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 retired Directors who provide advice to the current Board of Directors in order to facilitate a smooth management transition. The Fund pays the advisory board and its counsel a fee. 24 25 NOTES TO FINANCIAL STATEMENTS John Hancock Funds -- Emerging Growth Fund 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 obligations, during the period ended October 31, 1995 aggregated $110,148,117 and $103,491,275, respectively. There were no purchases or sales of long-term obligations of the U.S. government and its agencies during the period ended October 31, 1995. The cost of investments owned at October 31, 1995 for Federal income tax purposes was $329,000,920. Gross unrealized appreciation and depreciation of investments aggregated $262,700,162 and $17,250,371, respectively, resulting in net unrealized appreciation of $245,449,791. NOTE D -- RECLASSIFICATION OF CAPITAL ACCOUNTS During the year ended October 31, 1995, the Fund has reclassified the accumulated net investment loss in the amount of $6,156,730 to capital paid-in. This represents the cumulative amount necessary to report these balances on a tax basis, excluding certain temporary differences, as of October 31, 1995. Additional adjustments may be needed in subsequent reporting periods. These reclassifications, which have no impact on the net asset value of the Fund, are primarily attributable to certain differences in the computation of distributable income and capital gains under federal tax rules versus generally accepted accounting principles. 25 26 John Hancock Funds - Emerging Growth Fund REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS To the Board of Trustees and Shareholders of John Hancock Series, Inc. -- John Hancock Emerging Growth Fund We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the John Hancock Emerging Growth Fund (the "Fund"), (formerly the Transamerica Emerging Growth Fund), one of the portfolios constituting John Hancock Series, Inc. (the "Corporation") (formerly Transamerica Series, Inc.), as of October 31, 1995, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995, by correspondence with the custodian and brokers, or other appropriate auditing procedures when replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the John Hancock Emerging Growth Fund portfolio of John Hancock Series, Inc. at October 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Boston, Massachusetts December 15, 1995 TAX INFORMATION NOTICE (UNAUDITED) For Federal income tax purposes, the following information is furnished with respect to the distributions of the Fund during the fiscal year ended October 31, 1995. The Fund has not paid any distributions of dividends or net realized gains during the fiscal year. 26 27 ADDITIONAL INFORMATION John Hancock Funds - Emerging Growth Fund On December 16, 1994 , a special meeting of John Hancock (formerly Transamerica) Series, Inc. (the "Corporation") in respect of John Hancock (formerly Transamerica) Emerging Growth Fund (the "Fund") was held involving the election of trustees and certain other matters concerning the Fund. Specifically, shareholder's first approved a new investment management agreement between the Trust on behalf of the Fund and John Hancock Advisers, Inc. on substantially similar terms of the prior investment management agreement, to take effect on December 22, 1994, the date of the consummation of Transamerica Fund Management Company by The Berkeley Financial Group. The shareholder votes tallied were 9,431,012 FOR, 166,278 AGAINST and 429,415 ABSTAINING. The shareholders next approved new Plans of Distribution for each Class A and Class B shares of the Fund, also effective on December 22, 1994, and also on substantially the same terms as the prior Plans of Distribution. The Class A shareholder votes tallied were 2,599,984 FOR, 53,194 AGAINST and 72,895 ABSTAINING. The Class B shareholder votes tallied were 6,658,409 FOR, 163,863 AGAINST and 478,360 ABSTAINING. The shareholders also voted to ratify the selection of Ernst & Young, LLP as independent auditors for the Fund for the fiscal year ending October 31, 1995, and the votes tallied were 9,663,738 FOR, 104,051 AGAINST and 104,051 ABSTAINING. Lastly, the following directors were elected to serve until their respective successors shall become duly elected and qualified, with the votes tabulated as indicated:
NAME OF DIRECTOR FOR WITHHOLD - ---------------- --- -------- Edward J. Boudreau, Jr.......... 9,435,905 665,140 James F. Carlin................. 9,437,876 663,169 William H. Cunningham........... 9,435,106 665,939 Charles L. Ladner............... 9,434,675 666,370 Leo E. Linbeck, Jr.............. 9,437,770 663,275 Patricia P. McCarter............ 9,436,432 664,615 Steven R. Pruchansky............ 9,433,692 667,354 Norman H. Smith................. 9,435,218 665,827 John P. Toolan.................. 9,437,615 663,430
27 28 [LOGO] 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 [A 1/2" x 1/2" John Hancock Funds logo in upper left hand corner of the page. A box sectioned in quadrants with a triangle in upper left, a circle in upper right, a cube in lower left and a diamond in lower right. A tag line below reads "A Global Investment Management Firm." This report is for the information of the John Hancock Emerging 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. [A recycled logo in lower left hand corner with caption "Printed on Recycled Paper."] -----END PRIVACY-ENHANCED MESSAGE-----