N-Q 1 a_capseries.htm JOHN HANCOCK CAPITAL SERIES
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
 
FORM N-Q 
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED 
MANAGEMENT INVESTMENT COMPANIES 
 
Investment Company Act file number 811- 1677 
John Hancock Capital Series 
(Exact name of registrant as specified in charter) 
601 Congress Street, Boston, Massachusetts 02210 
(Address of principal executive offices) (Zip code) 
Salvatore Schiavone 
Treasurer 
601 Congress Street 
Boston, Massachusetts 02210 
(Name and address of agent for service) 
Registrant's telephone number, including area code: 617-663-4497 
Date of fiscal year end:  October 31 
 
 
Date of reporting period:  July 31, 2010 

 

ITEM 1. SCHEDULE OF INVESTMENTS






John Hancock U.S. Global Leaders Growth Fund
As of 7-31-10 (Unaudited)

  Shares  Value 
 
Common Stocks 99.66%    $442,159,717 
(Cost $350,319,266)     
 
Consumer Discretionary 16.16%    71,676,054 
 
Hotels, Restaurants & Leisure 3.95%     
Starbucks Corp. (L)  705,740  17,537,635 
 
Internet & Catalog Retail 3.00%     
Amazon.com, Inc. (I)  112,850  13,303,887 
 
Specialty Retail 9.21%     
Lowe's Companies, Inc.  872,600  18,097,724 
Staples, Inc. (L)  1,118,387  22,736,808 
 
Consumer Staples 7.11%    31,560,827 
 
Beverages 7.11%     
PepsiCo, Inc.  208,000  13,501,280 
The Coca-Cola Company  327,700  18,059,547 
 
Energy 6.23%    27,627,330 
 
Energy Equipment & Services 6.23%     
National Oilwell Varco, Inc.  352,810  13,816,040 
Schlumberger, Ltd. (L)  231,500  13,811,290 
 
Financials 6.97%    30,924,086 
 
Capital Markets 3.95%     
State Street Corp.  450,350  17,527,622 
 
Consumer Finance 3.02%     
American Express Company  300,100  13,396,464 
 
Health Care 17.11%    75,894,929 
 
Health Care Equipment & Supplies 6.34%     
Intuitive Surgical, Inc. (I) (L)  11,060  3,631,772 
Stryker Corp. (L)  237,080  11,040,816 
Zimmer Holdings, Inc. (I)  253,860  13,452,041 
 
Health Care Technology 3.58%     
Cerner Corp. (I) (L)  205,110  15,885,770 
 
Pharmaceuticals 7.19%     
Johnson & Johnson  228,880  13,295,639 
Teva Pharmaceutical Industries, Ltd., SADR  380,530  18,588,891 
 
Industrials 7.30%    32,376,990 
 
Air Freight & Logistics 3.28%     
FedEx Corp. (L)  176,330  14,556,042 
 
Trading Companies & Distributors 4.02%     
Fastenal Company (L)  363,100  17,820,948 
 
Information Technology 35.78%    158,766,635 
 
Communications Equipment 4.97%     
Juniper Networks, Inc. (I)  478,360  13,288,841 
QUALCOMM, Inc.  229,600  8,743,168 
 
Computers & Peripherals 3.96%     
Apple, Inc. (I)  68,290  17,567,603 

 

1 

 



John Hancock U.S. Global Leaders Growth Fund
As of 7-31-10 (Unaudited)

      Shares  Value 
Information Technology (continued)         
 
Internet Software & Services 6.97%         
eBay, Inc. (I)      654,020  $13,675,558 
Google, Inc., Class A (I)      27,660  13,410,951 
VistaPrint NV (I) (L)      116,810  3,860,571 
 
IT Services 8.88%         
Automatic Data Processing, Inc.      427,990  17,663,147 
Visa, Inc., Class A (L)      296,480  21,746,808 
 
Software 11.00%         
Microsoft Corp.      693,790  17,906,720 
Oracle Corp.      731,020  17,281,313 
Red Hat, Inc. (I)      423,700  13,621,955 
 
Materials 3.00%        13,332,866 
 
Chemicals 3.00%         
Ecolab, Inc.      272,600  13,332,866 
 
Short-Term Investments18.40%        $81,627,513 
(Cost $81,605,726)         
    Maturity  Par value   
  Yield*  date    Value 
 
Short-Term Securities 0.32%        1,399,998 
Federal Home Loan Bank Discount Notes  0.060%  8-2-10  $1,400,000  1,399,998 
 
      Shares  Value 
 
Securities Lending Collateral 18.08%        80,227,515 
John Hancock Collateral Investment Trust(W)  0.3385% (Y)    8,014,416  80,227,515 
 
Total investments (Cost $431,924,992)† 118.06%        $523,787,230 
 
Other assets and liabilities, net (18.06%)        ($80,115,726) 
 
Total net assets 100.00%        $443,671,504 

 

The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the Fund.

SADR Sponsored American Depositary Receipts

(I) Non-income producing security.

(L) All or a portion of this security is on loan as of 7-31-10.

(W) Investment is an affiliate of the Fund, the adviser and/or subadviser. Also, it represents the investment of securities lending collateral received.

(Y) The rate shown is the annualized seven-day yield as of 7-31-10.

* Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end.

† At 7-31-10, the aggregate cost of investment securities for federal income tax purposes was $447,615,333. Net unrealized appreciation aggregated $76,171,897, of which $102,582,793 related to appreciated investment securities and $26,410,896 related to depreciated investment securities.

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Notes to the Schedule of Investments (Unaudited)

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. The Fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these techniques are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes significant unobservable inputs when market prices are not readily available or reliable, including the Fund’s own assumptions in determining the fair value of investments. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the values by input classification of the Fund’s investments as of July 31, 2010, by major security category or type:

      Level 2  Level 3 
  Total Market    Significant  Significant 
  Value at  Level 1 Quoted  Observable  Unobservable 
    07/31/10  Price  Inputs  Inputs 
Common Stocks         
Consumer Discretionary  $ 71,676,054  $ 71,676,054  —  — 
Consumer Staples  31,560,827  31,560,827  —  — 
Energy  27,627,330  27,627,330  —  — 
Financials  30,924,086  30,924,086  —  — 
Health Care  75,894,929  75,894,929  —  — 
Industrials  32,376,990  32,376,990  —  — 
Information Technology  158,766,635  158,766,635  —  — 
Materials  13,332,866  13,332,866  —  — 
Short-Term Investments  81,627,513  80,227,515  $1,399,998  — 
Total investments in Securities  $ 523,787,230  $ 522,387,232  $1,399,998  — 

 

During the nine month period ended July 31, 2010, there were no significant transfers in or out of Level 1 or Level 2 assets.

In order to value the securities, the Fund uses the following valuation techniques. Equity securities held by the Fund are valued at the last sale price or official closing price on the principal securities exchange on which they trade. In the event there were no sales during the day or closing prices are not available, then securities are valued using the last quoted bid or evaluated price. Certain securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading. Certain short-term securities are valued at amortized cost. John Hancock Collateral Investment Trust (JHCIT), an affiliate of the Fund, is valued at its closing net asset value (NAV). JHCIT has a floating NAV and invests in short-term investments as part of a securities lending program.

Other portfolio securities and assets, where market quotations are not readily available, are valued at fair value, as determined in good faith by the Fund’s Pricing Committee,

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following procedures established by the Board of Trustees. Generally, trading in non-U.S. securities is substantially completed each day at various times prior to the close of trading on the NYSE. Significant market events that affect the values of non-U.S. securities may occur after the time when the valuation of the securities is generally determined and the close of the NYSE. During significant market events, these securities will be valued at fair value, as determined in good faith, following procedures established by the Board of Trustees. The Fund may use a fair valuation model to value non-U.S. securities in order to adjust for events which may occur between the close of foreign exchanges and the close of the NYSE.

Securities lending. The Fund may lend its securities to earn additional income. It receives and maintains cash collateral received from the borrower in an amount not less than the market value of the loaned securities. The Fund will invest its collateral in JHCIT, as a result, the Fund will receive the benefit of any gains and bear any losses generated by JHCIT. Although risk of the loss of the securities lent is mitigated by holding the collateral, the Fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities or if collateral investments decline in value. The Fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities.

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John Hancock Classic Value Fund
As of 7-31-10 (Unaudited)

  Shares  Value 
 
Common Stocks 99.59%  $2,324,395,086 
(Cost $2,393,436,090)     
 
Consumer Discretionary 8.47%    197,757,127 
 
Household Durables 1.94%     
Fortune Brands, Inc. (L)  1,029,450  45,172,266 
 
Media 3.53%     
Omnicom Group, Inc. (L)  2,213,700  82,482,462 
 
Multiline Retail 3.00%     
J.C. Penney Company, Inc.  2,846,220  70,102,399 
 
Consumer Staples 4.11%    95,967,787 
 
Food Products 1.99%     
Kraft Foods, Inc., Class A (L)  1,593,675  46,551,247 
 
Personal Products 2.12%     
Avon Products, Inc. (L)  1,587,425  49,416,540 
 
Energy 9.97%    232,782,359 
 
Oil, Gas & Consumable Fuels 9.97%     
Apache Corp. (L)  465,000  44,444,700 
BP PLC, SADR (L)  1,595,275  61,370,229 
Exxon Mobil Corp.  1,536,273  91,684,773 
Valero Energy Corp.  2,076,672  35,282,657 
 
Financials 35.54%    829,422,974 
 
Capital Markets 9.92%     
Morgan Stanley  1,751,950  47,285,131 
State Street Corp.  1,624,050  63,208,026 
The Goldman Sachs Group, Inc.  254,275  38,349,756 
UBS AG (I) (L)  4,871,429  82,668,150 
 
Commercial Banks 2.94%     
Comerica, Inc. (L)  907,993  34,830,612 
PNC Financial Services Group, Inc.  570,578  33,886,627 
 
Consumer Finance 1.57%     
Capital One Financial Corp. (L)  863,301  36,543,531 
 
Diversified Financial Services 6.54%     
Bank of America Corp. (L)  3,058,675  42,943,797 
Citigroup, Inc. (I)  14,894,602  61,067,868 
JPMorgan Chase & Company  1,207,825  48,651,191 
 
Insurance 14.57%     
Axis Capital Holdings, Ltd.  1,882,421  58,675,063 
Fidelity National Financial, Inc., Class A  2,711,699  40,051,794 
Hartford Financial Services Group, Inc.  1,042,325  24,400,828 
The Allstate Corp.  2,782,850  78,587,684 
Torchmark Corp. (L)  1,483,175  78,712,097 
Willis Group Holdings PLC  1,946,432  59,560,819 
 
Health Care 7.74%    180,652,513 
 
Health Care Equipment & Supplies 2.17%     
Zimmer Holdings, Inc. (I)  955,282  50,620,393 
 
Health Care Providers & Services 3.57%     
Aetna, Inc. (L)  2,111,877  58,815,774 

 

1 

 



John Hancock Classic Value Fund
As of 7-31-10 (Unaudited)

  Shares  Value 
 
Health Care (continued)     
Laboratory Corp. of America Holdings (I) (L)  335,100  $24,455,598 
 
Pharmaceuticals 2.00%     
Forest Laboratories, Inc. (I)  429,700  11,924,175 
Johnson & Johnson  599,700  34,836,573 
 
Industrials 13.62%    317,822,755 
 
Aerospace & Defense 9.27%     
L-3 Communications Holdings, Inc.  840,123  61,362,584 
Northrop Grumman Corp. (L)  1,579,350  92,613,084 
The Boeing Company  915,625  62,390,688 
 
Building Products 2.25%     
Masco Corp. (L)  5,095,280  52,379,478 
 
Electrical Equipment 2.10%     
Cooper Industries PLC (L)  1,086,975  49,076,921 
 
Information Technology 13.69%    319,536,692 
 
Communications Equipment 2.58%     
Alcatel-Lucent, SADR (I) (L)  16,736,946  49,876,099 
Motorola, Inc. (I)  1,394,871  10,447,584 
 
Computers & Peripherals 2.99%     
Dell, Inc. (I) (L)  3,510,210  46,475,180 
Hewlett-Packard Company  506,425  23,315,807 
 
Electronic Equipment, Instruments & Components 3.38%     
Tyco Electronics, Ltd.  2,920,297  78,848,019 
 
Software 4.74%     
CA, Inc.  3,312,255  64,787,708 
Microsoft Corp.  1,773,975  45,786,295 
 
Materials 3.37%    78,669,622 
 
Chemicals 3.37%     
PPG Industries, Inc.  376,275  26,139,824 
The Sherwin-Williams Company (L)  759,650  52,529,798 
 
Utilities 3.08%    71,783,257 
 
Electric Utilities 2.03%     
Edison International  1,425,225  47,246,209 
 
Multi-Utilities 1.05%     
Sempra Energy (L)  493,207  24,537,048 
 
Short-Term Investments 12.44%    $290,262,046 
(Cost $290,202,634)     
  
  Par value  Value 
 
Repurchase Agreement 0.64%    14,889,000 
Repurchase Agreement with State Street Corp. dated 7-30-10 at 0.01% to be     
repurchased at $14,889,012 on 8-2-10, collateralized by $15,170,000 Federal Home     
Loan Mortgage Corp., 1.30% due 7-26-13 (valued at $15,188,963, including interest)  $14,889,000  14,889,000 

 

2 

 



John Hancock Classic Value Fund
As of 7-31-10 (Unaudited)

  Shares  Value 
 
Securities Lending Collateral 11.80%    $275,373,046 
John Hancock Collateral Investment Trust, 0.3385% (W) (Y)  27,508,696  275,373,046 
 
Total investments (Cost $2,683,638,724)† 112.03%    $2,614,657,132 
 
Other assets and liabilities, net (12.03%)    ($280,694,297) 
 
Total net assets 100.00%  $2,333,962,835 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the Fund.

SADR Sponsored American Depositary Receipts

(I) Non-income producing security.

(L) All or a portion of this security is on loan as of 7-31-10.

(W) Investment is an affiliate of the Fund, the adviser and/or subadviser. Also, it represents the investment of securities lending collateral received.

(Y) The rate shown is the annualized seven-day yield as of 7-31-10.

† At 7-31-10, the aggregate cost of investment securities for federal income tax purposes was $2,806,784,311. Net unrealized depreciation aggregated $192,127,179, of which $252,470,343 related to appreciated investment securities and $444,597,522 related to depreciated investment securities.

The portfolio had the following country concentration as a percentage of total net assets on 7-31-10:

United States  83% 
Switzerland  7% 
United Kingdom  5% 
Bermuda  2% 
France  2% 
Short-Term Investments & Other  1% 

 

3 

 



Notes to the Schedule of Investments (Unaudited)

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. The Fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these techniques are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes significant unobservable inputs when market prices are not readily available or reliable, including the Fund’s own assumptions in determining the fair value of investments. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the values by input classification of the Fund’s investments as of July 31, 2010, by major security category or type:

      LEVEL 2  LEVEL 3 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  SIGNIFICANT 
  VALUE AT  QUOTED  OBSERVABLE  UNOBSERVABLE 
  7-31-10  PRICE  INPUTS  INPUTS 
Common Stocks         
Consumer Discretionary  $197,757,127  $197,757,127  —  — 
Consumer Staples  95,967,787  95,967,787  —  — 
Energy  232,782,359  232,782,359  —  — 
Financials  829,422,974  829,422,974  —  — 
Health Care  180,652,513  180,652,513  —  — 
Industrials  317,822,755  317,822,755  —  — 
Information Technology  319,536,692  319,536,692  —  — 
Materials  78,669,622  78,669,622  —  — 
Utilities  71,783,257  71,783,257  —  — 
Short-Term Investments  290,262,046  275,373,046  $14,889,000   
Total Investments in Securities  $2,614,657,132  $2,599,768,132  $14,889,000  — 

 

During the nine month period ended July 31, 2010, there were no significant transfers in or out of Level 1 or Level 2 assets.

In order to value the securities, the Fund uses the following valuation techniques. Equity securities held by the Fund are valued at the last sale price or official closing price on the principal securities exchange on which they trade. In the event there were no sales during the day or closing prices are not available, then securities are valued using the last quoted bid or evaluated price. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing service. Certain securities traded only in the over-the-counter market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading. Certain short-term securities are valued at amortized cost. John Hancock Collateral Investment Trust (JHCIT), an affiliate of the Fund, is valued at its closing net asset value (NAV). JHCIT has a floating NAV and invests in short-term investments as part of a securities lending program.

Other portfolio securities and assets, where market quotations are not readily available, are valued at fair value, as determined in good faith by the Fund’s Pricing Committee, following procedures established by the Board of Trustees. Generally, trading in non-U.S. securities is substantially completed each day at various times prior to the close of trading on the NYSE. Significant market events that affect the values of non-U.S. securities may occur after the time when the valuation of the securities is generally determined and the close of the NYSE. During significant market events, these securities will be valued at fair value, as determined in good faith, following procedures established by the Board of Trustees. The Fund may use a fair valuation model to value non-U.S. securities in order to adjust for events which may occur between the close of foreign exchanges and the close of the NYSE.

4 

 



Repurchase agreements. The Fund may enter into repurchase agreements. When a Fund enters into a repurchase agreement, it receives collateral which is held in a segregated account by the Fund’s custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline.

Securities lending. The Fund may lend its securities to earn additional income. It receives and maintains cash collateral received from the borrower in an amount not less than the market value of the loaned securities. The Fund will invest its collateral in JHCIT, as a result, the Fund will receive the benefit of any gains and bear any losses generated by JHCIT. Although risk of the loss of the securities lent is mitigated by holding the collateral, the Fund could experience a delay in recovering its securities and a possible loss of income or value if the borrower fails to return the securities or if collateral investments decline in value. The Fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities.

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ITEM 2. CONTROLS AND PROCEDURES.

(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-Q, the registrant's principal executive officer and principal accounting officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

(b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 3. EXHIBITS.

Separate certifications for the registrant's principal executive officer and principal accounting officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.



SIGNATURES 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

John Hancock Capital Series

By:  /s/ Keith F. Hartstein 
  ------------------------------ 
  Keith F. Hartstein 
  President and Chief Executive Officer 
 
 
Date:  September 22, 2010 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:  /s/ Keith F. Hartstein 
  ------------------------------- 
  Keith F. Hartstein 
  President and Chief Executive Officer 
 
 
Date:  September 22, 2010 
 
 
By:  /s/ Charles A. Rizzo 
  ------------------------------- 
  Charles A. Rizzo 
  Chief Financial Officer 
 
 
Date:  September 22, 2010