<PAGE> 1
JOHN HANCOCK FUNDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
REGIONAL
BANK
FUND
ANNUAL REPORT
October 31, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Chairman
William A. Barron, III*
Douglas M. Costle*
Leland O. Erdahl*
Richard A. Farrell*
William F. Glavin*
Patrick Grant*
Ralph Lowell, Jr.*
John A. Moore*
Patti McGill Peterson*
John W. Pratt*
*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, Assistant Secretary 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 ACCOUNTANTS
Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts 02110
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
[A 1 1/4" x 1" photo of Edward J. Boudreau Jr., Chairman and Chief Executive
Officer, flush right, next to second paragraph.]
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.
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
<PAGE> 3
BY JAMES K. SCHMIDT, CFA, SENIOR VICE PRESIDENT AND
PORTFOLIO MANAGER
JOHN HANCOCK
REGIONAL BANK FUND
Bank stocks outperform in a strong market; merger mania abounds and
earnings fundamentals remain healthy
After suffering through a difficult 1994, stock and bond investors have been
treated royally in 1995. With inflation low and the economy growing at a more
moderate, but controlled pace, interest rates have fallen. The stock market has
taken off and hasn't looked back, reaching record highs this year. From the
start of the year through October, the Standard & Poor's 500-Stock Index was up
29% and the 30-year Treasury bond had returned 27%.
[A 2 1/4" x 3 1/4" photo of James K. Schmidt at bottom right. Caption reads:
"James K. Schmidt, Portfolio Manager."]
As a group, bank and thrift stocks have been among the leaders of the
rally. After a deeper sell-off in late 1994, financial stocks rebounded with a
vengeance and have outperformed the overall market so far in 1995. John Hancock
Regional Bank Fund participated in the rally to an even greater degree than its
peers during the period. For the year ended October 31, 1995, the Fund's Class A
and B shares had respective total returns at net asset value of 31.00% and
30.11%. In comparison, the average financial services fund returned 26.12%,
according to Lipper Analytical Services.(1)
The unprecedented level of bank merger activity has been the driving
force behind the bank and thrift rally this year. Banks also produced record
earnings in 1995 and their fundamentals remain positive. The banking industry is
as healthy today as it has been in the last 30 years, as reflected in banks'
loan quality, capital levels and earnings capacity. As interest rates eased
earlier in 1995 and the pace of mergers accelerated, investors came to realize
that these
[CAPTION]
"...BANK AND THRIFT STOCKS HAVE BEEN AMONG THE LEADERS OF THE RALLY."
3
<PAGE> 4
John Hancock Funds - Regional Bank Fund
solid earnings and takeover prospects could be purchased cheaply, driving
up the stocks from their late-1994 lows.
MERGER MANIA
In the first ten months of 1995, a record 24 of the Fund's holdings announced
their intent to merge with another institution. Included in this group are some
blockbuster deals, such as Fleet-Shawmut; Chase Manhattan-Chemical; First
Union-First Fidelity and First Chicago-NBD, where the acquired bank had over $30
billion in assets. This is noteworthy because there have been few deals of this
size in the past and none at all last year. In addition, the Fund's largest
holding, First Interstate Bancorp, saw its stock price leap as it became the
target of a bidding war between a hostile suitor, Wells Fargo, and a "white
knight," First Bank Systems. The fight for First Interstate, which is still
raging as we go to press, could be precedent setting because hostile takeovers
have been very unusual in the banking industry. A victory by Wells Fargo (we are
pulling for them) could intensify the consolidation activity that is already
prevalent.
The astounding size of this year's crop of mergers is due to the introduction
of national interstate banking, which went in to effect in September as the
result of an act of Congress last year. These mergers have tremendous
significance to what the banking industry will look like in the future. Each
deal that creates a new, larger bank increases the pressure on competitors to
make acquisitions to achieve similar size. When Fleet and Shawmut announced
their merger in February creating an $82 billion banking institution, analysts
thought it would make them a major player among the nation's top banks for years
to come. But only eight months later, the "new" Fleet was dwarfed by banks
created in other mega-mergers, such as the "new" Chase that will have over $400
billion in assets. It now seems that $100 billion in assets or more is needed to
assure survival as an independent entity. Bank managements often consider size
an important indicator of competitiveness, because it determines the ability of
a bank to realize economies of scale in technological investments and
sophistication of products. We also believe there's a human element connected to
the move to increase assets, and it usually has to do with chief executives'
drive to attain greater prestige, power and wealth. Right or wrong, all of these
factors are highly correlated with asset size.
The merger activity we foresee over the next decade is important to us for
two reasons. First, it will allow us to earn takeover premiums as stocks we own
are acquired. Second, and more subtly, mergers are removing overcapacity from
the industry and allowing everyone left to make more money. As banks merge,
bankers are laid off, branches are closed and the number of banks shrinks. There
were about 14,000 commercial banks in the United States when we started the Fund
in 1985. There are roughly 10,000 now and
[Table entitled "Scorecard" at bottom of left hand column. The header for the
left column is "Investments"; the header for the right column is "Recent
performance ... and what's behind the numbers. The first listing is Coast
Savings Financial followed by an up arrow and the phrase "Tremendous potential
windfall from goodwill lawsuit is possible." The second listing is US Bancorp
followed by an up arrow and the phrase "Dominant Northwest franchise sees
rebound after market initially questioned West One purchase." The third listing
is Fidelity Federal followed by a down arrow and the phrase "Weak California
real estate market continues to frustrate turnaround efforts." Footnote below
reads: See "Schedule of Investments." Investment holdings are subject to
change."]
[CAPTION]
"THE BANKING INDUSTRY IS AS HEALTHY TODAY AS IT HAS BEEN IN THE LAST 30 YEARS."
4
<PAGE> 5
John Hancock Funds - Regional Bank Fund
we think there will be about 4,000 by the year 2010. Removing banks from the
scene through mergers helps solve the problem of too many banks chasing too
little business.
Our basic investment concept in the Fund is to own banks that represent good
value on a stand-alone basis and to regard potential acquisition as "icing on
the cake." We pay little attention to takeover rumors and approach every stock
as if we may own it for many years. Nevertheless, we expect many of the nearly
300 banks we own today to disappear through merger as the consolidation process
plays out.
INDUSTRY REPORT CARD
Even after a record-breaking 1995, banks appear poised for another good year
because the industry's fundamentals remain so healthy. The economic outlook
through 1996 calls for slow growth, low inflation and a flat-to-declining
interest-rate environment -- nirvana for bank stocks. Banks don't make enough on
loans when the economy "booms" to make up for what they lose when it "busts." As
bank investors, we would like to see consistent, slow, plodding growth forever.
That is what we have been getting lately. Even though a recent uptick in
consumer credit delinquencies and losses has caused some nervousness, these
trends are manageable and are to be expected. In 1996, we expect banks to
generate more interest revenues from higher loan volumes and stable rates, while
expenses will go down with tighter controls and lower FDIC insurance premiums.
That should more than offset a moderate increase in loan loss provisions from
the unsustainably low level we have witnessed this year.
Next year, we expect the average regional bank to report a 10% increase
in earnings-per-share over 1995. Despite 1995's bank stock rally, the stocks
still remain inexpensive. The stocks in the Fund trade at a median of 10.5 times
estimated 1996 earnings versus 16 times for the broad market, as measured by the
S&P 500 index. This discount to market is slightly greater than the 30-year
average and we think unwarranted based on our earnings outlook.
On the regulatory front, the FDIC deposit premiums were recently reduced for
most banks (mainly commercial banks) insured by the Bank Insurance Fund (BIF),
from 23 cents per $100 in deposits to 4 cents. The cut was the second stage of a
plan that succeeded in
- --------------------------------------------------------------------------------
(1) Figures from Lipper Analytical Services include reinvested dividends and do
not take into account sales charges. Actual load-adjusted performance is
lower.
[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 31.00% total return for the John Hancock Regional Bank Fund, Class A. The
second represents the 30.11% total return for John Hancock Regional Bank Fund,
Class B. The third represents the 26.12% total return for the average financial
services fund. A footnote below reads: "Total returns for John Hancock Regional
Bank Fund are at net asset value with all distributions reinvested. The average
financial services fund is tracked by Lipper Analytical Services. (1) See page 8
for historical performance information.]
[CAPTION]
"...24 OF THE FUND'S HOLDINGS HAVE ANNOUNCED THEIR INTENT TO MERGE WITH
ANOTHER INSTITUTION."
5
<PAGE> 6
John Hancock Funds - Regional Bank Fund
[Chart with heading "Top Five Common Stock Holdings" at top of left hand column.
The chart lists five holdings: 1) First Interstate Bancorp. 3.0% 2) Midlantic
Corp. 1.9% 3) Shawmut National Corp. 1.7% 4) Greenpoint Financial Corp. 1.6% 5)
First Tennessee National Corp. 1.5%. A footnote below reads "As a percentage of
net assets on October 31, 1995."]
recapitalizing the BIF. The savings would boost banks' earnings by 5% if it all
flowed to the bottom line. In fairness, the entire 5% may not be realized
because some of the savings could be passed on to customers.
On the thrift side of the coin, the effort to recapitalize the ailing Savings
Association Insurance Fund has advanced. There is now legislation pending that
would levy a surcharge on thrifts' deposit base in early 1996. After the
one-time hit, thrifts would then see their insurance premiums drop to the same
level as the banks, thus leveling the playing field. What's more, with the issue
resolved, banks that have been sitting on the sidelines for much of this year
should resume aggressively bidding for thrifts.
PORTFOLIO TACTICS AND OUTLOOK
In its overall strategy, the Fund continues to favor undervalued regional banks
and thrifts that have solid earnings' prospects and the potential to benefit
from a consolidation. A majority of the Fund's assets were invested in banks, at
57%, with 20% in thrifts and 23% in cash.
Our stock purchases this year have fallen into several categories. First, we
have increased our holdings in many mid-sized regionals -- those with $10-$30
billion in assets such as First of America, Union Planters, and AmSouth. In past
years, there was little likelihood of banks in this size category being
acquired. The arrival of national interstate banking and the trend toward larger
mergers has made many of these banks potential acquisition targets. We doubt
that many banks currently in this asset range will remain independent over the
long run.
Second, we have acquired positions in many mutual savings and loans that have
recently converted to public ownership. Measured on a price-to-book value basis,
this is the least expensive group in the industry. While the median
publicly-traded commercial bank sells at 153% of book value, and the median
thrift trades at 106% of book value, we are able to buy many of the recent
conversions in the 80%-90% range. There have been so many conversions in the
last two years that we think many of these stocks individually suffer from a
lack of attention.
Third, some of our recent purchases have been arbitrage positions. These are
banks that are in the process of being acquired for stock. The bank being bought
often trades at a significant discount to the value that will be received in the
acquiring bank's stock after the merger is completed. This is a good method of
buying stock in the surviving bank. In many cases we own a bank at the time of
an acquisition and add to our position subsequently.
Our biggest position as of October 31 was not a stock, but rather cash
equivalents. Cash
[CAPTION]
"...RISING EARNINGS AND CONTINUED MERGER ACTIVITY BOTH BODE WELL FOR
STOCK PRICES ..."
6
<PAGE> 7
John Hancock Funds - Regional Bank Fund
flows into the Fund have been strong all year. Recently, we have been investing
about two-thirds of what we have been getting in and letting the rest
accumulate. That stemmed from our experience over each of the Fund's nine
previous years of operation, in which the results were better in the first half
of the year than the second. Because of the nearly straight-line advance in bank
stocks through mid-September, we felt it was likely that we would have a chance
to buy on weakness during the last two months of the year. We generally expect
to run the Fund holding no more than 10% in cash assets.
Because of the flows of new cash into the Fund, we have not sold many of our
holdings. We have sold positions in several thrifts where we felt a company
buyback program was artificially holding up the stock price. We often trim or
eliminate positions in companies whose prices are running up to unrealistic
levels based on merger speculation. Although we believe many of our holdings
will be taken over eventually, it is very difficult to pick which stock will be
bought at which moment. Most media reports that try to do this are wrong, and it
usually makes sense to bet against them.
Looking ahead, we continue to see tremendous long-term value for bank and
thrift stocks. The economic environment is right. The stocks remain inexpensive,
trading at just 65% of the market multiple. And the fundamentals are positive
for the industry's continued health.
The investment risks traditionally associated with bank-stock investing, such
as fluctuating interest rates and changing regulations, appear to be limited for
now.
Even with the inevitable short-term swings, the long-term prognosis is
positive: rising earnings and continued merger activity both bode well for stock
prices and attractive returns over the next several years.
7
<PAGE> 8
A LOOK AT PERFORMANCE
The tables on the right show the cumulative total returns and the average annual
total returns for the John Hancock Regional Bank 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 August 1992, different sales charges were in effect for Class
A shares and are not reflected in the performance data. 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. Please see your prospectus for risks associated with industry segment
investing.
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
<TABLE>
<CAPTION>
ONE FIVE TEN
YEAR YEARS YEARS
---- ----- -----
<S> <C> <C> <C>
John Hancock Regional Bank
Fund: Class A 20.85% 139.06%(1) N/A
John Hancock Regional Bank
Fund: Class B 21.36% 319.65% 557.93%(2)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
For the period ended September 30, 1995
<TABLE>
<CAPTION>
ONE FIVE TEN
YEAR YEARS YEARS
---- ----- -----
<S> <C> <C> <C>
John Hancock Regional Bank
Fund: Class A 20.85% 26.23%(1) N/A
John Hancock Regional Bank
Fund: Class B 21.36% 33.22% 20.75%(2)
</TABLE>
NOTES TO PERFORMANCE
(1) Class A shares started on January 3, 1992.
(2) Class B shares started on October 4, 1985.
8
<PAGE> 9
WHAT HAPPENED TO A $10,000 INVESTMENT...
The charts on the right show how much a $10,000 investment in the John Hancock
Regional Bank Fund would be worth on October 31, 1995, assuming you either had
invested on the day each class of shares started or have been invested for the
most recent ten years and have reinvested all distributions. For comparison,
we've shown the same $10,000 investment in the Standard & Poor's 500 Stock Index
- -- an unmanaged index that includes 500 widely traded common stocks and is a
commonly used measure of stock market performance.
Regional Bank Fund
Class A shares
Line chart with the heading Regional Bank 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 Regional Bank Fund on January 3, 1992, before sales charge, and is equal
to $25,156 as of October 31, 1995. The second line represents the Regional Bank
Fund after sales charge and is equal to $23,897 as of October 31, 1995. The
third line represents the value of the Standard & Poor's 500 Stock Index and is
equal to $15,510 as of October 31, 1995.
Regional Bank Fund
Class B shares*
Line chart with the heading Regional Bank 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 second line represents the value of the Standard & Poor's 500 Stock Index
and is equal to $65,720 as of October 31, 1995. The first line represents the
value of the hypothetical $10,000 investment made in the Regional Bank Fund on
October 4, 1985, before contingent deferred sales charge, and is equal to
$42,070 as of October 31, 1995.
* No contingent deferred sales charge applicable.
JOHN HANCOCK REGIONAL BANK FUND: CLASS A
[CHART 1]
JOHN HANCOCK REGIONAL BANK FUND: CLASS B*
[CHART 2]
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank 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.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
- -------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks, warrants and other
(cost - $1,029,904,626)................................... $1,304,825,527
Preferred stocks (cost - $21,532,181)....................... 24,301,819
Bonds (cost - $2,689,560)................................... 3,228,780
Joint repurchase agreement
(cost - $262,117,000)..................................... 262,117,000
Short-term investments (cost - $138,725,952) 138,725,952
Corporate savings account................................... 1,058,728
--------------
1,734,257,806
Receivable for investments sold.............................. 4,405,000
Receivable for shares sold................................... 16,984,325
Dividends receivable......................................... 2,178,774
Interest receivable.......................................... 288,424
Other assets................................................. 3,662
--------------
Total Assets........ ...................... 1,758,117,991
-----------------------------------------------------------
LIABILITIES:
Payable for investments purchased............................ 30,954,539
Payable for shares repurchased............................... 2,434,013
Payable to John Hancock Advisers, Inc. and
affiliates - Note B......................................... 1,424,050
Accounts payable and accrued expenses........................ 227,013
--------------
Total Liabilities.......................... 35,039,615
-----------------------------------------------------------
NET ASSETS:
Capital paid-in.............................................. 1,428,161,434
Accumulated net realized gain on investments................. 14,650,722
Net unrealized appreciation of investments................... 278,229,759
Undistributed net investment income.......................... 2,036,461
--------------
Net Assets................................. $1,723,078,376
===========================================================
NET ASSET VALUE PER SHARE:
(Based on net asset values and shares of beneficial
interest outstanding - unlimited number of shares
authorized with no par value, respectively)
Class A - $486,630,887 / 17,931,218.......................... $ 27.14
===============================================================================
Class B - $1,236,447,489 / 45,761,124........................ $ 27.02
===============================================================================
Maximum Offering Price Per Share*
Class A - ($27.14 x 105.26%)................................. $ 28.57
===============================================================================
</TABLE>
* 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
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (including $168,400 received from
affiliated issuers)........................................... $ 27,706,275
Interest....................................................... 7,993,341
------------
35,699,616
------------
Expenses:
Investment management fee - Note B............................ 7,644,892
Distribution/service fee - Note B
Class A..................................................... 849,533
Class B..................................................... 7,028,080
Transfer agent fee - Note B................................... 2,298,130
Registration and filing fees.................................. 339,298
Custodian fee................................................. 180,577
Trustees' fees................................................ 150,112
Printing...................................................... 64,001
Miscellaneous................................................. 39,878
Auditing fee.................................................. 34,589
Legal fees.................................................... 26,856
------------
Total Expenses............................... 18,655,946
-----------------------------------------------------------
Net Investment Income........................ 17,043,670
-----------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold.......................... 14,650,736
Change in net unrealized appreciation/depreciation
of investments................................................ 235,518,324
Net Realized and Unrealized ------------
Gain on Investments......................... 250,169,060
-----------------------------------------------------------
Net Increase in Net Assets
Resulting from Operations................... $267,212,730
===========================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------
1995 1994
------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................................... $ 17,043,670 $ 6,043,134
Net realized gain on investments sold............................................... 14,650,736 11,428,717
Change in net unrealized appreciation/depreciation of investments................... 235,518,324 ( 7,116,756)
-------------- ------------
Net Increase in Net Assets Resulting from Operations............................... 267,212,730 10,355,095
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
Class A - ($0.4773 and $0.3356 per share, respectively)............................ ( 5,715,567) ( 2,449,060)
Class B - ($0.3215 and $0.2112 per share, respectively)............................ ( 9,516,354) ( 3,373,113)
Distributions from net realized gain on investments sold
Class A - ($0.3413 and $1.0644 per share, respectively)............................ ( 3,288,461) ( 4,773,906)
Class B - ($0.3413 and $1.0644 per share, respectively)............................ ( 8,137,395) ( 8,743,106)
--------------- ------------
Total Distributions to Shareholders.............................................. ( 26,657,777) ( 19,339,185)
-------------- ------------
FROM FUND SHARE TRANSACTIONS -- NET*................................................... 743,338,429 482,203,467
-------------- ------------
NET ASSETS:
Beginning of period................................................................. 739,184,994 265,965,617
-------------- ------------
End of period (including undistributed net investment income of
$2,036,461 and $224,712, respectively)......................................... $1,723,078,376 $739,184,994
============== ============
</TABLE>
* ANALYSIS OF FUND SHARE TRANSACTIONS:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------
1995 1994
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................... 14,505,492 $363,725,341 7,852,429 $170,793,204
Shares issued to shareholders in reinvestment of distributions 359,736 7,817,904 323,274 6,649,805
---------- ------------ ---------- ------------
14,865,228 371,543,245 8,175,703 177,443,009
Less shares repurchased................................... (7,018,102) (171,254,724) (2,446,139) (52,952,434)
---------- ------------ ---------- ------------
Net increase.............................................. 7,847,126 $200,288,521 5,729,564 $124,490,575
========== ============ ========== ============
CLASS B
Shares sold............................................... 26,194,033 $658,793,433 17,745,423 $386,853,695
Shares issued to shareholders in reinvestment of distributions 593,436 12,598,000 519,637 10,621,844
---------- ------------ ---------- ------------
26,787,469 671,391,433 18,265,060 397,475,539
Less shares repurchased................................... (5,396,234) (128,341,525) (1,862,961) (39,762,647)
---------- ------------ ---------- ------------
Net increase.............................................. 21,391,235 $543,049,908 16,402,099 $357,712,892
========== ============ ========== ============
</TABLE>
THE STATEMENT OF CHANGES IN NET ASSETS SHOWS HOW THE VALUE OF THE FUND'S NET
ASSETS HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. THE DIFFERENCE REFLECTS
EARNINGS LESS EXPENSES, ANY INVESTMENT GAINS AND LOSSES, AND ANY INCREASE OR
DECREASE IN MONEY SHAREHOLDERS INVESTED IN THE FUND. THE FOOTNOTE ILLUSTRATES
THE NUMBER OF FUND SHARES SOLD, REINVESTED AND REDEEMED DURING THE PERIOD, ALONG
WITH THE CORRESPONDING DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank 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:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CLASS A**
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period........................ $ 21.52 $ 21.62 $ 17.47 $ 13.47
------- ------- ------ ------
Net Investment Income....................................... 0.52*** 0.39*** 0.26*** 0.21
Net Realized and Unrealized Gain on Investments............. 5.92 0.91 5.84 3.98
------- ------- ------ ------
Total from Investment Operations........................... 6.44 1.30 6.10 4.19
------- ------- ------ ------
Less Distributions:
Dividends from Net Investment Income........................ (0.48) (0.34) (0.26) (0.19)
Distributions from Net Realized Gain on Investments Sold.... (0.34) (1.06) (1.69) --
------- ------- ------- -------
Total Distributions........................................ (0.82) (1.40) (1.95) (0.19)
------- ------- ------ -------
Net Asset Value, End of Period.............................. $ 27.14 $ 21.52 $ 21.62 $ 17.47
======= ======= ====== ======
Total Investment Return at Net Asset Value (a).............. 31.00% 6.44% 37.45% 31.26%(b)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................... $486,631 $216,978 $94,158 $31,306
Ratio of Expenses to Average Net Assets..................... 1.39% 1.34% 1.35% 1.41%*
Ratio of Net Investment Income to Average Net Assets........ 2.23% 1.78% 1.29% 1.64%*
Portfolio Turnover Rate..................................... 14% 13% 35% 53%
</TABLE>
THE FINANCIAL HIGHLIGHTS SUMMARIZES THE IMPACT OF THE FOLLOWING FACTORS ON A
SINGLE SHARE FOR THE PERIOD INDICATED: THE NET INVESTMENT INCOME, AND TOTAL
INVESTMENT RETURN OF THE FUND. IT SHOWS HOW THE FUND'S NET ASSET VALUE FOR A
SHARE HAS CHANGED SINCE THE END OF THE PREVIOUS PERIOD. ADDITIONALLY, IMPORTANT
RELATIONSHIPS BETWEEN SOME ITEMS PRESENTED IN THE FINANCIAL STATEMENTS ARE
EXPRESSED IN RATIO FORM.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
<TABLE>
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------
1995 1994 1993 1992 1991
----- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
CLASS B
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period........................ $ 21.43 $ 21.56 $ 17.44 $ 13.76 $ 8.13
------ ------ ------ ------ -----
Net Investment Income....................................... 0.36*** 0.23*** 0.15*** 0.18 0.29
Net Realized and Unrealized Gain on Investments............. 5.89 0.91 5.83 4.56 5.68
------ ------ ------ ------ -----
Total from Investment Operations........................... 6.25 1.14 5.98 4.74 5.97
------ ------ ------ ------ -----
Less Distributions:
Dividends from Net Investment Income........................ (0.32) (0.21) (0.17) (0.28) (0.34)
Distributions from Net Realized Gain on Investments Sold.... (0.34) (1.06) (1.69) (0.78) --
------ ------ ------ ------ -----
Total Distributions........................................ (0.66) (1.27) (1.86) (1.06) (0.34)
------ ------ ------ ------ -----
Net Asset Value, End of Period.............................. $ 27.02 $ 21.43 $ 21.56 $ 17.44 $ 13.76
====== ====== ====== ====== =====
Total Investment Return at Net Asset Value (a).............. 30.11% 5.69% 36.71% 37.20% 75.35%
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted)................... $1,236,447 $522,207 $171,808 $56,016 $52,098
Ratio of Expenses to Average Net Assets..................... 2.09% 2.06% 1.88% 1.96% 2.04%
Ratio of Net Investment Income to Average Net Assets........ 1.53% 1.07% 0.76% 1.21% 2.65%
Portfolio Turnover Rate..................................... 14% 13% 35% 53% 75%
* On an annualized basis.
** Class A shares commenced operations on January 3, 1992.
*** On average month end shares outstanding.
(a) Total investment return assumes dividend reinvestment and does not reflect
the effect of sales charges.
(b) Not annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
13
<PAGE> 14
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
SCHEDULE OF INVESTMENTS
October 31, 1995
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<TABLE>
<CAPTION>
MARKET
ISSUER, STATE, DESCRIPTION NUMBER OF SHARES VALUE
- -------------------------- ---------------- ------
<S> <C> <C>
COMMON STOCKS, WARRANTS AND OTHER
MONEY CENTER BANKS (2.29%)
Bankers Trust New York Corp. (NY)....... 50,000* $ 3,187,500
Chase Manhattan Corp. (NY).............. 430,700 24,549,900
First Chicago Corp. (IL)................ 23,700* 1,608,637
Morgan (J.P.) & Co., Inc. (NY).......... 131,000 10,103,375
------------
39,449,412
------------
SUPER REGIONAL BANKS (11.14%)
Banc One Corp. (OH)..................... 345,250 11,652,187
BankAmerica Corp. (CA).................. 420,987 24,206,752
Bank of Boston Corp. (MA)............... 386,250 17,188,125
Bank of New York, Inc. (NY)............. 547,000 22,974,000
Barnett Banks, Inc. (FL)................ 320,000 17,680,000
First Bank Systems, Inc. (MN)........... 160,730 7,996,317
First Fidelity Bancorp. (NJ)............ 158,000 10,329,250
First Interstate Bancorp. (CA).......... 400,500 51,664,500
First Union Corp. (NC).................. 26,500 1,315,062
KeyCorp. (OH)........................... 174,905 5,903,044
Mellon Bank Corp. (PA).................. 68,201 3,418,575
NationsBank Corp. (NC).................. 72,000 4,734,000
NBD Bancorp., Inc. (MI)................. 43,916 1,668,808
Norwest Corp. (MN)...................... 275,500 8,127,250
Wachovia Corp. (NC)..................... 70,000 3,088,750
------------
191,946,620
------------
REGIONAL BANKS (43.62%)
ABC Bancorp. (GA)....................... 130,000 1,755,000
ANB Corp. (IN).......................... 41,500 1,203,500
American Bancorp. (WV).................. 74,000 1,591,000
AmSouth Bancorp. (AL)................... 237,293 9,462,058
Bancfirst Corp. (OK).................... 143,000 3,181,750
Bancorp. Hawaii, Inc. (HI).............. 618,200 20,709,700
Bank of New Hampshire Corp. (NH)........ 191,800 6,904,800
Bank South Corp. (GA)................... 225,000 6,285,937
Banknorth Group, Inc. (VT).............. 291,500 9,255,125
Banponce Corp. (PR)..................... 276,000* 10,660,500
B M J Financial Corp. (NJ).............. 132,632 2,006,059
BNH Bancshares, Inc. **(CT)............. 545,000 1,021,875
Boatmens' Bancshares, Inc. (MO)......... 344,734 13,099,892
Brenton Banks, Inc. (IA)................ 176,600 3,421,625
Bryn Mawr Bank Corp. (PA)............... 27,600 1,297,200
BT Financial Corp. (PA)................. 19,950 718,200
</TABLE>
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY THE
REGIONAL BANK FUND ON OCTOBER 31, 1995. IT'S DIVIDED INTO FOUR MAIN CATEGORIES:
COMMON STOCKS, WARRANTS AND OTHER, PREFERRED STOCKS, BONDS, AND SHORT-TERM
INVESTMENTS. COMMON STOCKS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS.
SHORT-TERM INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LAST.
<TABLE>
<CAPTION>
MARKET
ISSUER, STATE, DESCRIPTION NUMBER OF SHARES VALUE
- -------------------------- ---------------- ------
<S> <C> <C>
REGIONAL BANKS (CONTINUED)
California Commercial
Bankshares **(CA)...................... 52,747 $ 395,602
California State Bank (CA).............. 64,600* 904,400
Capital Bancorp., Inc. (MO)............. 97,000 3,419,250
Carnegie Bancorp. (NJ).................. 47,250 797,344
CB Bancshares, Inc. (HI)................ 60,000 1,762,500
CCB Financial Corp. (NC)................ 56,000 2,772,000
Central Fidelity Banks, Inc. (VA)....... 25,000* 775,000
Centura Banks, Inc. (NC)................ 288,325 9,730,969
Citizens Banking Corp. ( MI)............ 38,400* 1,161,600
CM Bank Holding Co. (LA)................ 8,000 560,000
CNB Bancshares, Inc. (IN)............... 61,245* 1,638,293
Colonial BancGroup, Inc. (AL)........... 196,500 5,673,937
Comerica, Inc. (MI)..................... 267,798 9,004,708
Commerce Bancshares, Inc. (MO).......... 117,763 4,416,094
Commercial Bancshares, Inc. ** (FL)..... 159,000 2,206,125
Compass Bancshares, Inc. (AL)........... 446,500 13,841,500
Continental Pacific Bank **(CA)......... 35,020 536,244
CoreStates Financial Corp. (PA)......... 221,708 8,064,628
Crestar Financial Corp. (VA)............ 161,800 9,222,600
CU Bancorp. (CA)........................ 46,211 439,004
Cupertino National Bancorp. (CA)........ 27,277 320,504
Dauphin Deposit Corp. (PA).............. 38,000 1,102,000
Deposit Guaranty Corp. (MS)............. 128,100 5,700,450
Evergreen Bancorp., Inc. (NY)........... 95,350 2,002,350
F & M National Corp. (VA)............... 83,250 1,488,094
First American Corp. (TN)............... 512,500 22,485,937
First of America Bank Corp. (MI)........ 530,105 22,595,726
First Citizens Bancshares, Inc.
(Class A) (NC)......................... 5,000 263,750
First Colonial Group, Inc. (PA)......... 23,000 422,625
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, STATE, DESCRIPTION NUMBER OF SHARES VALUE
- -------------------------- ---------------- ----------
<S> <C> <C>
REGIONAL BANKS (CONTINUED)
First Commerce Corp. (LA)..................... 544,887 $16,891,497
First Commercial Corp.(AR).................... 106,653 3,199,590
First Merchants Corp. (IN).................... 22,500 579,375
First National Bancorp. (GA).................. 199,000 5,547,125
First Patriot Bankshares (VA)................. 81,100 790,725
First Security Corp. (UT)..................... 170,000 5,567,500
First Source Corp. (IN)....................... 57,144 1,314,322
First State Bancorp. (NM)..................... 62,000 992,000
First Tennesse National Corp.(TN)............. 467,250 24,997,875
Firstar Corp. (WI)............................ 325,376 11,510,176
FirstBanc Corp. (MI).......................... 45,203 1,141,363
FirstMerit Corp. (OH)......................... 50,000* 1,350,000
Firstbank of Illinois Co. (IL)................ 52,275 1,542,112
FirsTier Financial, Inc. (NE)................. 33,000 1,404,562
FNB Corp. (PA)................................ 50,308 1,056,459
FNB Rochester Corp. **(NY).................... 153,737 1,210,679
Fourth Financial Corp. (Dep Shares) (KS)...... 65,000 2,080,000
Fourth Financial Corp. (KS)................... 192,500 7,098,437
Franklin Bank, NA (MI)........................ 75,125 892,109
Fulton Financial Corp. (PA)................... 179,114 3,895,732
Gateway Bancorp., Inc. (KY)................... 42,500* 653,437
Hancock Holdings Co. (MS)..................... 233,000 8,329,750
Hawkeye Bancorp. (IA)......................... 151,400 3,652,525
Hibernia Corp. (Class A) (LA)................. 584,000* 5,767,000
Hubco, Inc. (NJ).............................. 112,500 2,250,000
Huntington Bancshares, Inc. (OH).............. 47,250 1,128,094
Independent Bank Corp. (MA)................... 210,000 1,417,500
Integra Financial Corp. (PA).................. 343,280 20,167,700
Interchange Financial Services Corp.(NJ)...... 90,000 1,867,500
Intercontinental Bank (FL).................... 60,000 1,762,500
Lafayette American Bancorp., Inc. (CT)........ 306,513 2,758,617
Liberty Bancorp., Inc. (OK)................... 15,000 543,750
LSB Bancshares, Inc. (NC)..................... 10,727 209,177
Magna Group, Inc. (MO)........................ 67,000 1,649,875
Mark Twain Bancshares, Inc. (MO).............. 15,000* 528,750
Marshall and Ilsley Corp. (WI)................ 311,480 7,553,390
Mercantile Bancorp., Inc. (MO)................ 553,393 24,349,292
Mercantile Bankshares Corp. (MD).............. 340,000 9,350,000
Merchants Bancorp., Inc. (IL)................. 30,800 823,900
Meridian Bancorp., Inc. (PA).................. 355,493 15,197,326
MetroBanCorp (IN)............................. 75,000 487,500
Michigan Financial Corp. (MI)................. 61,552 1,584,964
Michigan National Corp. (MI).................. 54,051 5,932,097
Midlantic Corp., Inc. (NJ).................... 618,000 32,754,000
Mississippi Valley Bancshares (MO)............ 75,500 1,887,500
Mountain Parks Financial Corp. **(Co)......... 65,000 1,511,250
National City Bancshares, Inc. (IN)........... 21,270* 983,738
North Fork Bancorp., Inc. (NY)................ 166,209 3,635,822
North Valley Bancorp (CA)..................... 51,067 1,353,276
Old Kent Financial Corp. (MI)................. 232,451 8,891,255
One Valley Bancorp. of
West Virginia, Inc. (WV).................... 29,000 964,250
Pacific Bank N.A. **(CA)..................... 66,923 1,154,422
Peoples Bank Corp. of Indianapolis (IN)...... 22,500 551,250
Piedmont BankGroup, Inc. (VA)................ 51,850 1,348,100
Premier Bancorp., Inc. (LA).................. 540,800 11,289,200
Premier Bankshares Corp. (VA)................ 85,000 1,540,625
Premier Financial Services, Inc. (IL)........ 160,500 1,324,125
Princeton National Bancorp., Inc. (IL)....... 64,500 1,072,313
Provident Bancorp., Inc. (OH)................ 97,500 4,119,375
Regions Financial Corp. (AL)................. 15,000 598,125
Republic Bancorp., Inc. (MI)................. 79,910 1,018,863
Republic New York Corp. (NY)................. 358,800 21,034,650
Riggs National Corp. **(DC).................. 335,000 4,396,875
SC Bancorp. **(CA)........................... 219,051 1,273,234
Seacoast Banking Corp. of Florida
(Class A) (FL).............................. 98,500 2,413,250
Shawmut National Corp. (MA).................. 889,541 30,133,201
Signet Banking Corp. (VA).................... 351,000 8,336,250
Simmons First National Corp. (AR) +.......... 192,000 5,568,000
Southern National Corp. (NC)................. 636,228 16,382,871
SouthTrust Corp. (AL)........................ 640,500 16,092,563
Southwest Bancorp., Inc. (OK)................ 140,500 2,397,281
State Financial Services Corp................
(Class A) (WI)............................. 48,000 798,000
State Street Boston Corp. (MA).............. 25,000* 971,875
Sterling Bancshares (TX).................... 107,150 1,848,338
Summit Bancorp., Inc. (NJ).................. 265,500 7,533,563
Susquehanna Bancshares, Inc. (PA)........... 152,175 4,375,031
Texas Regional Bancshares, Inc.
(Class A) (TX)............................ 152,500 2,611,563
Today's Bancorp., Inc. (IL)................ 102,200 2,197,300
Trico Bancshares (CA)...................... 73,750 1,124,688
Trustmark Corp. (MS)....................... 72,000 1,404,000
UJB Financial Corp. (NJ)................... 422,800 13,476,750
Union Bank (CA)............................ 132,300 6,631,538
Union Planters Corp. (TN).................. 791,119 24,228,019
US Bancorp. (OR)........................... 275,305 8,155,911
USBANCORP, Inc. (PA)....................... 48,000 1,548,000
Vectra Banking Corp. **(CO)................ 35,000 385,000
Vermont Financial Services (VT)............ 204,500 6,492,875
Westamerica Bancorp. (CA).................. 67,800 2,712,000
West Coast Bancorp., Inc. (FL)............. 30,000 472,500
West Coast Bancorp. (OR)................... 12,750* 213,563
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE> 16
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, STATE, DESCRIPTION NUMBER OF SHARES VALUE
- -------------------------- ---------------- ------
<S> <C> <C>
REGIONAL BANKS (CONTINUED)
West One Bancorp., Inc. (ID)............ 522,600* $ 22,210,500
Whitney Holding Corp. (LA).............. 307,500 9,532,500
Wilmington Trust Corp. (DE)............. 59,000* 1,740,500
Zions Bancorp. (UT)..................... 137,500 9,521,875
------------
751,515,290
------------
THRIFTS (17.36%)
ALBANK Financial Corp. (NY)............. 20,000 577,500
Allied Bank Capital, Inc. (NC).......... 91,000 2,138,500
Ahmanson [H.F] & Co. (CA)............... 785,000* 19,625,000
American Federal Bank FSB (SC).......... 185,000 2,728,750
American National Savings Bank (MD)..... 115,000 1,106,875
AMFED Financial, Inc. (NV) +............ 312,500 9,140,625
Astoria Financial Corp. (NY)............ 315,000 13,505,625
Avondale Financial Corp. **(IL)......... 210,000* 3,045,000
BankUnited Financial Corp.
(Class A) ** (FL)...................... 20,000 160,000
Bedford Bancshares, Inc. (VA)........... 30,000 540,000
BostonFed Bancorp, Inc. ** (MA)......... 34,600* 415,200
Brooklyn Bancorp., Inc. **(NY).......... 466,200 18,356,625
California Federal Bank **(CA).......... 58,334 860,427
California Financial Holding Co. (CA)... 191,000 3,915,500
Calumet Bancorp., Inc. **(IL) +......... 155,000 4,281,875
Cameron Financial Corp. (MO)............ 95,000* 1,306,250
CB Bancorp., Inc. **(IN)................ 57,870 1,012,725
CCF Holding Co. ** (GA) +............... 75,000* 871,875
Cenfed Financial Corp. (CA)............. 30,000 697,500
Center Banks, Inc. (NY)................. 23,000 322,000
CFX Corp. (NH).......................... 40,329 685,601
Coast Savings Financial, Inc. **(CA).... 115,000 3,033,125
Coastal Bancorp., Inc. (TX)............. 45,000* 742,500
Collective Bancorp., Inc. (NJ).......... 290,000* 6,851,250
Commercial Federal Corp. (NE)........... 181,000* 5,950,375
Community Financial Corp. ** (IL)....... 15,000* 195,000
CSB Financial Group, Inc. ** (IL)....... 40,000* 370,000
Damen Financial Corp. ** (IL)........... 25,000* 293,750
Dime Bancorp Inc.**(NY)................. 887,700 9,431,813
Eagle Bancshares (GA)................... 52,000 1,807,000
East Texas Financial
Services, Inc. ** (TX)................. 44,000* 704,000
Elmira Savings Bank (NY)................ 34,950 598,519
Farmers & Mechanics Bank **(CT)......... 41,300 836,325
FFW Corp. (IN).......................... 20,000 350,000
Fidelity Federal Bank **(CA)............ 740,500* 1,481,000
First Ashland Financial Corp. ** (KY)... 30,000* 420,000
First Bankshares, Inc. (MO)............. 40,000 670,000
First Bell Bancorp, Inc. ** (PA)........ 392,500* 5,151,563
First Defiance Financial Corp. (OH) +... 575,500* 5,750,000
Firstfed Michigan Corp. (MI)............ 42,500 1,434,375
First Federal Bancorp. **(MN)........... 42,000* 582,750
First Federal Capital Corp. (WI)........ 39,945 709,024
First Financial Corp. (WI).............. 115,151 2,461,344
First Financial Corp. of
Western Maryland (MD).................. 65,500 1,416,438
First Independence Corp. (KS)........... 35,500 665,625
First Indiana Corp. (IN)................ 41,166 1,029,150
First Keystone Financial Inc. **(PA).... 43,000* 827,750
First Mutual Bancorp, Inc. (IL)......... 235,000* 2,878,750
First Republic Bancorp., Inc. **(CA).... 229,162 2,835,880
First Southern Bancshares, (AL)......... 35,000* 516,250
FMS Financial Corp. (NJ)................ 12,000 399,000
Fort Bend Holdings Corp. (TX) +......... 44,000 814,000
Frankfort First Bancorp. (KY)........... 115,000* 1,437,500
Glendale Federal Bank **(CA)............ 691,900 11,070,400
Golden West Financial Corp.(CA)......... 30,000 1,503,750
Great American Bancorp., Inc. ** (IL)... 35,000* 472,500
Great Southern Bancorp., Inc. (MO)...... 14,900 346,425
Greenpoint Financial Corp. (NY)
(formerly GP Financial Corp)........... 1,027,000* 27,729,000
Harbor Federal Bancorp., Inc. (MD)...... 80,000 1,180,000
Haven Bancorp. (NY)..................... 137,500 2,947,656
HF Financial Corp. (SD)................. 75,000 2,287,500
HMN Financial, Inc. **(MN).............. 125,000 1,906,250
Home Federal Bancorp. (IN).............. 7,500 181,875
Home Financial Corp. (FL)............... 10,000* 152,500
ISB Financial Corp. (NJ)................ 110,000* 1,842,500
Imperial Thrift & Loan Assn. ** (CA).... 285,000* 3,277,500
Industrial Bancorp., Inc. (OH).......... 60,000* 798,750
Kentucky First Bancorp., Inc. ** (KY)... 50,000* 612,500
Klamath First Bancorp., Inc. ** (OR).... 100,000* 1,275,000
Lakeview Financial Corp. (NJ)........... 33,000 589,875
Landmark Bancshares, Inc. (KS).......... 110,000 1,512,500
Leader Financial Corp. (TN)............. 55,000* 1,959,375
Logansport Financial Corp. (IN)......... 50,000* 643,750
Long Island Bancorp., Inc. (NY)......... 330,000 7,548,750
MAF Bancorp., Inc. (IL)................. 168,850 4,179,038
Marble Financial Corp. (VT)............. 15,000 262,500
Marion Capital Holdings, Inc. (IN)...... 72,500 1,413,750
Marshalltown Financial Corp. **(IA)..... 20,000 295,000
MassBank Corp. (MA)..................... 35,000 1,098,125
MFB Corp. **(IN)........................ 100,000 1,525,000
MLF Bancorp., Inc. (PA)................. 55,000 1,237,500
Mississippi View Holding Co. ** (MN).... 50,000* 575,000
Morgan Financial Corp. (CO) +........... 21,000 456,750
Monterey Bay Bancorp., Inc. **(CA)...... 100,000* 1,200,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE> 17
FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
<TABLE>
<CAPTION>
MARKET
ISSUER, STATE, DESCRIPTION NUMBER OF SHARES VALUE
- -------------------------- ---------------- ------
<S> <C> <C>
THRIFTS (CONTINUED)
MSB Bancorp., Inc. (NY)................... 20,000 $ 370,000
Northeast Indiana Bancorp., Inc. (IN)..... 37,000* 462,500
Palfed, Inc. **(SC)....................... 208,000 2,704,000
Pennfirst Bancorp., Inc. (PA)............. 81,290 1,056,775
Permanent Bancorp., Inc. (IN)............. 108,500 1,763,125
Potters Savings & Loan Co. (OH)........... 25,000* 428,125
PVF Capital Corp. ** (OH)................. 18,150* 279,056
QCF Bancorp., Inc. ** (MN)................ 50,000* 731,250
River Bank America, Inc. **(NY)........... 150,000 1,087,500
Roosevelt Financial Group, Inc. (MO)...... 1,044,623 16,844,546
SFS Bancorp., Inc. ** (NY)................ 45,000* 556,875
Sobieski Bancorp., Inc. ** (IN)........... 40,000* 490,000
Southern Banc Co, Inc. ** (AL)............ 30,000* 375,000
Southern Financial Federal
Savings Bank (VA) +...................... 68,272 1,041,140
Southern Missouri Bancorp., Inc.(MO)...... 70,000 1,172,500
Sovereign Bancorp. (PA)................... 26,772 264,373
Springfield Institution For
Savings **(MA)........................... 102,500* 1,575,937
Standard Financial., Inc. ** (IL)......... 170,000* 2,337,500
Sterling Financial Corp. **(WA)........... 150,378 2,030,096
Tappan Zee Financial., Inc. ** (NY)....... 12,500* 150,000
TCF Financial Corp. (MN).................. 63,413 3,725,514
Teche Holding Co. (LA).................... 35,000* 472,500
TeleBanc Financial Corp. **(VA)........... 100,000 650,000
Texarkana First Financial Corp. ** (AR)... 96,800* 1,331,000
Virginia First Financial Corp.(VA)........ 130,000 2,957,500
Washington Federal., Inc, (WA)............ 153,500* 3,511,312
Washington Mutual Savings Bank (WA)....... 615,000 15,836,250
WesterFed Financial Corp. (MT)............ 230,000 3,766,250
WSFS Financial Corp. **(DE)............... 129,400 1,132,250
-------------
299,121,402
-------------
OTHER - FINANCIAL (1.15%)
Allmerica Financial Corp. **.............. 20,000* 502,500
Capital One Financial Corp................ 332,000* 8,134,000
Donaldson Lufkin & Jenrette., Inc. **..... 20,000* 595,000
Financial Security Assurance
Holdings Ltd............................. 10,000 260,000
First Merchants Acceptance Corp. **....... 159,000* 3,279,375
First Washington Realty Trust............. 79,470 1,390,725
KBK Capital Corp. **...................... 19,000 114,000
Lomas Financial Corp. **.................. 180,000 2,808
PMC Capital, Inc.......................... 25,000 309,375
Prime Residential, Inc.................... 70,000 1,225,000
Prime Retail, Inc......................... 15,000 186,562
Union Acceptance Corp. **................. 165,000* 2,598,750
WFS Financial, Inc. **.................... 74,500* 1,238,562
-------------
19,836,657
-------------
WARRANTS (0.17%)
Carnegie Bancorp. **(NJ).................. 29,000 108,750
Glendale Federal Bank **(CA).............. 400,000 2,800,000
-------------
2,908,750
-------------
OTHER (0.00%)
California Federal Bank **(CA)
Goodwill Litigation Security............. 10,833* 47,396
-------------
TOTAL COMMON STOCKS,
WARRANTS AND OTHER
(Cost $1,029,904,626) (75.73%) 1,304,825,527
--------- -------------
PREFERRED STOCKS
California Federal Bank, Ser B,
10.625% (CA)............................. 13,333 1,439,964
Chevy Chase Savings, 13.00% (MD).......... 50,000 1,562,500
Community Bank, Ser B, 13.00% (CA)........ 40,000 1,000,000
FirstFederal Financial Corp., Ser A,
7.00% (OH)............................... 10,000 513,750
First Nationwide Bank, 11.50% (CA)........ 30,000 3,405,000
First Washington Realty Trust, Ser A,
9.75% (MD)............................... 113,498 2,553,705
Glendale Federal Bank, Ser E,
8.75% (CA)............................... 100,000 4,212,500
National City Corp., 8.00% (OH)........... 7,000 516,250
Prime Retail Inc., Ser B, 8.50% (MD)...... 150,000 2,868,750
Riggs National Corp., Ser B,
10.75% (DC).............................. 64,300 1,800,400
River Bank America Inc., Ser A,
15.00% (NY).............................. 10,000 225,000
Roosevelt Financial Group, Inc.,
Ser F, 6.50% (MO)........................ 16,000 952,000
Southern National Corp., Ser A,
6.75% (NC)............................... 50,000 1,912,500
Southwest Bancorp., Inc. Ser A,
9.20% (OK)............................... 20,000* 540,000
Suncoast Savings and Loan Assn.,
Ser A, 8.00% (FL)........................ 28,000 374,500
Washington Mutual Savings Bank,
Ser D, 6.00% (WA)........................ 4,000 425,000
-------------
TOTAL PREFERRED STOCKS
(Cost $21,532,181) (1.41%) 24,301,819
--------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
<TABLE>
INTEREST PAR VALUE MARKET
ISSUER, STATE, DESCRIPTION RATE (000'S OMITTED) VALUE
- -------------------------- -------- --------------- ------
<S> <C> <C> <C>
BONDS
Bank of New York, Inc.
Conv Note 08-15-01................ 7.50% 200 $ 438,000
Susquehanna Bancshares, Inc.
Conv Sub Deb 02-01-05............. 9.00 2000* 2,230,780
Sierra Tahoe Bancorp.
Conv Sub Deb 02-01-04............. 8.50 500 560,000
--------------
TOTAL BONDS
(Cost $2,689,560) (0.19%) 3,228,780
---- --------------
SHORT-TERM INVESTMENTS
JOINT REPURCHASE AGREEMENT (15.21%)
Investment in a joint repurchase
transaction agreement with
SBC Capital Markets 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 9-30-97)...................... 5.89 262,117 262,117,000
--------------
SHORT-TERM NOTES (8.05%)
American Telephone & Telegraph Co.
due 11-21-95...................... 5.73 10,000 9,968,167
Federal Farm Credit Bank
due 11-1-95....................... 5.73 13,000 13,000,000
GTE North Inc.
due 11-8-95....................... 5.79 795 794,105
GTE North Inc.
due 11-9-95....................... 5.79 495 494,363
GTE Northwest Inc.
due 11-14-95...................... 5.73 141 140,708
International Business Machines
due 11-6-95....................... 5.70 10,000 9,992,083
Melville Corp.
due 11-7-95....................... 5.75 2,200 2,197,892
Melville Corp.
due 11-13-95...................... 5.75 10,000 9,980,833
Melville Corp.
due 11-27-95...................... 5.73 5,000 4,979,308
Merrill Lynch & Co., Inc.
due 11-3-95....................... 5.73 5,000 4,998,408
Merrill Lynch & Co., Inc.
due 11-20-95...................... 5.73 20,000 19,939,517
Merrill Lynch & Co., Inc.
due 11-22-95...................... 5.73 10,000 9,966,575
Merrill Lynch & Co., Inc.
due 11-29-95...................... 5.75 15,000 14,932,917
Merrill Lynch & Co., Inc.
due 11-30-95...................... 5.73 15,000 14,930,763
Merrill Lynch & Co., Inc.
due 12-1-95....................... 5.74 5,000 4,976,083
Merrill Lynch & Co., Inc.
due 12-8-95....................... 5.70 10,000 9,941,417
Pacific Gas & Electric Co.
due 11-7-95....................... 5.75 7,500 7,492,813
--------------
138,725,952
--------------
CORPORATE SAVINGS ACCOUNT (0.06%)
Investors Bank & Trust Company
Daily Interest Savings Account
Current Rate 3.00%................ 1,058,728
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $401,901,680) (23.32%) 401,901,680
------- -------------
TOTAL INVESTMENTS (100.65%) $1,734,257,806
======= ==============
</TABLE>
* Securities, other than short-term investments, newly added to the
portfolio during the year ended October 31, 1995.
** Non-income producing security.
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
+ 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:
<TABLE>
<CAPTION>
AFFILIATE COST DIVIDEND INCOME
--------- ---- ---------------
<S> <C> <C>
AMFED Financial, Inc. (NV).............. $7,145,000 $57,050
CCF Holding Co. (GA).................... 858,750 --
Calumet Bancorp., Inc. (IL)............. 3,544,063 --
First Defiance Financial Corp. (OH)..... 5,995,000 --
Fort Bend Holdings Corp. (TX)........... 493,225 12,320
Morgan Financial Corp. (CO)............. 333,500 46,200
Simmons First National Corp. (AR)....... 4,989,500 35,700
Southern Financial Federal Savings
Bank (VA)............................. 686,598 17,130
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
NOTE A --
ACCOUNTING POLICIES
Freedom Investment Trust (the "Trust") is an open-end management investment
company, registered under the Investment Company Act of 1940. The Trust consists
of five series portfolios: John Hancock Regional Bank Fund (the "Fund"), John
Hancock Gold & Government Fund, John Hancock Sovereign U.S. Government Income
Fund, John Hancock Sovereign Achievers Fund, and John Hancock Managed Tax-Exempt
Fund. Prior to January 1, 1995, John Hancock Regional Bank Fund was known as
John Hancock Freedom Regional Bank Fund and John Hancock Gold & Government Fund
was known as John Hancock Freedom Gold & Government Fund.
The Trustees have authorized the issuance of two classes of the Fund,
designated as Class A and Class B. The shares of each class represent an
interest in the same portfolio of investments of the Fund and have equal rights
to voting, redemption, dividends, and liquidation, except that certain expenses,
subject to the approval of the Trustees, may be applied differently to each
class of shares in accordance with current regulations of the Securities and
Exchange Commission. Shareholders of a class which bears distribution/service
expenses under the terms of a distribution plan, have exclusive voting rights
regarding such distribution plan. After the close of business on July 22, 1994,
the Fund was closed to new shareholders. The Fund was re-opened to new
shareholders on December 27, 1994. Significant policies of the Fund are as
follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt instruments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
may participate in a joint repurchase agreement transaction. Aggregate cash
balances are invested in one or more repurchase agreements, whose underlying
securities are obligations of the U.S. government and/or its agencies. The
Fund's custodian bank receives delivery of the underlying securities for the
joint account on the Fund's behalf. The Adviser is responsible for ensuring that
the agreement is fully collateralized at all times.
INVESTMENT TRANSACTIONS Investment transactions are recorded as of the date of
purchase, sale or maturity. Net realized gains and losses on sales of
investments are determined on the identified cost basis.
FEDERAL INCOME TAXES The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income, including any net realized gain on
investment, to its shareholders. Therefore, no federal tax provision is
required.
DIVIDENDS, DISTRIBUTIONS AND INTEREST Dividend income on investment securities
is recorded on the ex-dividend date. Interest income on investment securities
is recorded on the accrual basis.
The Fund records all distributions to shareholders from net investment income
and realized gains on the ex-dividend date. Such distributions are determined in
conformity with income tax regulations, which may differ from generally accepted
accounting principles. Dividends paid by the Fund with respect to each class of
shares will be calculated in the same manner, at the same time and will be in
the same amount, except for the effect of expenses that may be applied
differently to each class as explained previously.
EXPENSES The majority of the expenses of the Trust are directly identifiable to
an individual Fund. Expenses which are not readily identifiable to a specific
Fund are allocated in such a manner as deemed equitable, taking into
consideration, among other things, the nature and type of expense and the
relative sizes of the Funds.
CLASS ALLOCATIONS Income, common expenses and realized and unrealized gains
(losses) are determined at the Fund level and allocated daily to each class of
shares based on the appropriate net assets of the respective classes.
Distribution/service fees, if any, are calculated daily at the class level based
on the appropriate net assets of each class and the specific expense rate(s)
applicable to each class.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Regional Bank Fund
DISCOUNT ON SECURITIES The Fund accretes discount from par value on securities
purchased from either the date of issue or the date of purchase over the life
of the security, as required by the Internal Revenue Code.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH
AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser, for a continuous investment program equivalent,
on an annual basis, to the sum of (a) 0.80% of the first $500,000,000 of the
Fund's average daily net asset value and (b) 0.75% of the Fund's average daily
net asset value in excess of $500,000,000.
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.
John Hancock Funds, Inc. ("JH Funds"), a wholly-owned subsidiary of the
Adviser, and Freedom Distributors Corporation ("FDC") act as Co-Distributors for
shares of the Fund. Prior to January 1, 1995, JH Funds was known as John Hancock
Broker Distribution Services, Inc. For the period ended October 31, 1995, JH
Funds received net sales of $8,366,103 with regard to sales of Class A shares.
Out of this amount, $1,308,517 was retained and used for printing prospectuses,
advertising, sales literature and other purposes, $6,381,071 was paid as sales
commissions to unrelated broker-dealers, and $676,425 was paid as sales
commissions to sales personnel of John Hancock Distributors, Inc.
("Distributors"), Tucker Anthony, Incorporated ("Tucker Anthony") and Sutro &
Co., Inc. ("Sutro"), all of which are broker-dealers. The Adviser's indirect
parent, John Hancock Mutual Life Insurance Company, is the indirect sole
shareholder of Distributors and John Hancock Freedom Securities Corporation and
its subsidiaries, which include FDC, Tucker Anthony and Sutro.
Class B shares which are redeemed within six years of purchase are subject to
a contingent deferred sales charge ("CDSC") at declining rates beginning at 5.0%
of the lesser of the current market value at the time of redemption or the
original purchase cost of the shares being redeemed. Proceeds from the CDSC are
paid to JH Funds and are used in whole or in part to defray its expenses related
to providing distribution related services to the Fund in connection with the
sale of Class B shares. For the period ended October 31, 1995 the contingent
deferred sales charges received by JH Funds amounted to $1,931,207.
In addition, to reimburse the Co-Distributors for the services they provide
as distributors of shares of the Fund, the Fund has adopted Distribution Plans
with respect to Class A and Class B pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Accordingly, the Fund makes payments to the Co-Distributors
for distribution and service expenses, at an annual rate not to exceed 0.30% of
Class A average daily net assets and 1.00% of Class B average daily net assets
to reimburse the Co-Distributors for their 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.
The Fund has a transfer agent agreement with John Hancock Investor Services
Corporation ("Investor Services"), a wholly-owned subsidiary of The Berkeley
Financial Group. Prior to January 1, 1995, Investor Services was known as John
Hancock Fund Services, Inc. Prior to January 1, 1995, the Fund paid Investor
Services a monthly transfer agent fee equivalent, on an annual basis, to 0.15%
and 0.18% of the average daily net asset value of Class A and Class B shares of
the Fund, respectively, plus out of pocket expenses incurred by Fund Services
on behalf of the Fund. For the period January 1, 1995 and through September 30,
1995 Class A and Class B shares paid
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds-- Regional Bank Fund
transfer agent fees based on the number of shareholder accounts and certain
out-of-pocket expenses. For the eleven months ended September 30, 1995 the
transfer agent expense, calculated as a class specific expense was $508,692 for
Class A and $1,348,550 for Class B, respectively. Effective October 1, 1995
transfer agent expense is being treated as a fund expense based on the number
of shareholder accounts in the Fund and certain out-of-pocket expenses.
Edward J. Boudreau, Jr. is a director and officer of the Adviser and its
affiliates, as well as a Trustee of the Fund. The compensation of unaffiliated
Trustees is borne by the Fund.
Effective with the fees paid for 1995, the unaffiliated Trustees may elect to
defer for tax purposes their receipt of this compensation under the John Hancock
Group of Funds Deferred Compensation Plan. The Fund will make investments into
other John Hancock funds, as applicable, to cover its liability with regard to
the deferred compensation. Investments to cover the Fund's deferred compensation
liability will be recorded on the 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.
NOTE C --
INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than obligations of the
U.S. government and its agencies and short-term securities, during the period
ended October 31, 1995, aggregated $523,319,885 and $117,639,958, respectively.
There were no purchases or sales of 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 (including the joint
repurchase agreement) for Federal income tax purposes was $1,455,217,203. Gross
unrealized appreciation and depreciation of investments aggregated $285,811,043
and $7,829,168, respectively, resulting in net unrealized appreciation of
$277,981,875.
21
<PAGE> 22
John Hancock Funds - Regional Bank Fund
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of John Hancock Regional Bank Fund and the
Trustees of Freedom Investment Trust
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of John Hancock Regional Bank Fund
(the "Fund") (formerly known as John Hancock Freedom Regional Bank Fund) (a
portfolio of Freedom Investment Trust) at October 31, 1995, and the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Boston, Massachusetts
December 14, 1995
TAX INFORMATION NOTICE (UNAUDITED)
For Federal Income Tax purposes, the following information is furnished with
respect to the taxable distributions of the Fund during its fiscal year ended
October 31, 1995.
The Fund designated distributions to shareholders of $7,449,114 as a long
term capital gain dividend. These amounts were reported on the 1994 U.S.
Treasury Department Form 1099-DIV. It is anticipated that there will be a
distribution from net realized gains from sales of securities to shareholders of
record on December 22, 1995 and payable December 28, 1995. Shareholders will
receive a 1995 U.S. Treasury Department Form 1099-DIV in January 1996
representing their proportionate share.
For the fiscal year ended October 31, 1995, 100% of the ordinary income
distributions qualify for the corporate dividends received deduction.
22
<PAGE> 23
NOTES
John Hancock Funds - Regional Bank Fund
23
<PAGE> 24
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JHD 0100A 10/95
12/95
