<PAGE> 1
John Hancock Funds
---------------------------------
BANK AND
THRIFT
OPPORTUNITY
FUND
SEMI-ANNUAL REPORT
APRIL 30, 1995
<PAGE> 2
TRUSTEES
Edward J. Boudreau, Jr.
Thomas W. L. Cameron
James F. Carlin*
William H. Cunningham
Charles F. Fretz*
Harold R. Hiser, Jr.*
Charles L. Ladner*
Leo E. Linbeck, Jr.
Patricia P. McCarter*
Steven R. Pruchansky*
Richard S. Scipione
Lt. Gen. Norman J. Smith, USMC (Ret.)*
John P. Toolan*
*Members of the Audit Committee
OFFICERS
Edward J. Boudreau, Jr.
Chairman and Chief Executive Officer
Robert G. Freedman
Vice Chairman and
Chief Investment Officer
Andrew F. St. Pierre
President
Anne C. Hodsdon
Executive Vice President
James B. Little
Senior Vice President and
Chief Financial Officer
Thomas H. Drohan
Senior Vice President and Secretary
Michael P. DiCarlo
Senior Vice President
James K. Ho
Senior Vice President
James K. Schmidt
Senior Vice President
John A. Morin
Vice President
Susan S. Newton
Vice President, Assistant Secretary
and Compliance Officer
James J. Stokowski
Vice President and Treasurer
INVESTMENT ADVISER
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199-7603
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSER
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
Listed:New York Stock Exchange Symbol:BTO
CHAIRMAN'S MESSAGE
DEAR FELLOW SHAREHOLDERS:
Educating shareholders has always been of one of the most important
responsibilities of a mutual fund company. But that challenge has taken on new
significance in the past several years. Looking at the most recent statistics,
you can see why. According to the Investment Company Institute, the mutual fund
industry now manages more than $2.3 trillion for investors. More than half of
that money has come into mutual funds in just the last four years. Today, there
are more than 95 million mutual fund shareholder accounts. That's up from 12
million in 1980. These are people, like you, who are investing in mutual funds
to save for a home, to send their children to college or to build a nest egg for
a comfortable retirement. This explosive growth, coupled with the growing
complexity of the financial landscape, has made all of us in the mutual fund
industry work harder to inform our shareholders.
At John Hancock Funds, we strive to educate you about all aspects of your
fund: the performance, the strategies and the holdings. We want you to fully
understand what you own. We want you to have realistic expectations of the
potential rewards as well as the potential risks of your investment. These
shareholder reports -- which we send you twice a year -- are the best way to
give you the most in-depth and up-to-date information.
In the message that follows, the portfolio manager gives a candid commentary
on the market environment; the factors that affected performance; the fund's
current investment strategies; and the outlook for the months ahead. The ensuing
financial statements provide a comprehensive look at the fund's statistics and
holdings. We've included explanations of what each financial statement shows and
how it is used.
We hope you find these shareholder reports a useful tool in evaluating your
investments. Of course, if you have any questions or need more information, feel
free to call one of our customer service representatives on our toll-free line
at 1-800-225-5291, from 8:00 a.m. to 8:00 p.m. eastern standard time, Monday
through Friday.
Sincerely,
Edward J. Boudreau, Jr.
- ---------------------------
EDWARD J. BOUDREAU, JR., CHAIRMAN AND CHIEF EXECUTIVE OFFICER
(Photo)
A 1 1/4" x 1" photo of Edward J. Boudreau, Jr., Chairman and Chief Executive
Officer, flush right, next to paragraph.
2
<PAGE> 3
BY JAMES K. SCHMIDT, CFA, SENIOR VICE PRESIDENT
AND PORTFOLIO MANAGER
JOHN HANCOCK
BANK AND THRIFT
OPPORTUNITY FUND
Bank stocks soar, fueled by healthy earnings,
continuing consolidation and shareholder activism
After painfully adjusting to rising interest rates in 1994, the stock market
has broken through to new highs so far in 1995. Investors seem to believe that
rates have stabilized and the Federal Reserve may indeed have engineered a "soft
landing" -- that is, a moderately growing economy with low inflation. This
belief propelled the S&P 500 Index more than 11.5% over the last six months.
Bank and thrift stocks mirrored the stock market's trend but with greater
variation. After a steeper sell-off in the fourth quarter of 1994, the financial
group rebounded sharply, outperforming the overall market so far in 1995. John
Hancock Bank and Thrift Opportunity Fund benefited from the resurgence,
returning 12.14% at net asset value for the six months ended April 30, 1995.
That compares favorably to the 8.50% return for the average closed-end financial
services fund, according to Lipper Analytical Services.
Why have banks and thrifts rallied so strongly? As we discussed in the annual
report six months ago, we believed that the fourth quarter sell-off in banks and
thrifts was a
[Caption]
"...THE FINANCIAL GROUP REBOUNDED SHARPLY..."
[Photo]
A 2 1/4" x 3 1/4" photo of James K. Schmidt at bottom right. Caption reads:
"James K. Schmidt, Portfolio Manager."
3
<PAGE> 4
John Hancock Funds - Bank and Thrift Opportunity Fund
temporary pullback, not the start of a prolonged downturn. In fact, we saw it as
a great opportunity to put money to work at bargain basement prices. And sure
enough, as investors' interest-rate fears eased, the group bounced back nicely.
What sparked the upward move was a combination of stronger-than-expected fourth
quarter earnings and several headline mergers.
FUNDAMENTALS STILL HEALTHY
After record-breaking earnings in 1993, banks faced a more difficult, rising
interest-rate environment in 1994. Yet, according to FDIC data, commercial bank
operating earnings actually increased 16.2% over 1993. That's mainly because net
interest margins -- the spread banks earn between what they charge borrowers
(prime rate) and pay depositors (deposit rates) -- remained relatively wide,
despite rising rates. For the year, average net interest margins narrowed only
four basis points, from 4.40% to 3.36%. This is notable given the steep, three
percentage point increase in short-term rates.
Several factors have kept bank margins at healthy levels. As the Fed raised
rates last year, banks hiked their prime rates but kept deposit rates relatively
steady. What's more, because the recent rates hikes have been accompanied by
healthy commercial and consumer loan growth, most banks have been able to book
higher-yielding assets to offset any increase in deposit costs. And finally, a
sharp drop in problem loans has reduced credit costs.
For 1995, we're only expecting a minor compression of about 10 to 20 basis
points in bank interest margins as money shifts from money market accounts to
certificates of deposit. In addition, with takeovers forcing banks to cut costs,
the industry's overhead ratio is the lowest since the 1950s. Given that, our
forecast calls for bank earnings to increase 8% to 10% in 1995.
Thrifts, on the other hand, are likely to report more moderate gains. Because
they're more interest-rate sensitive, thrifts saw their margins squeezed more
than banks last year. As a result, their 1994 earnings contracted slightly from
1993 levels. But with rates starting to stabilize, so, too, should thrift
margins. For 1995, we expect to see thrifts post earnings increases in the range
of 2% to 5%.
VALUE IN BANKS
Despite the recent rally, bank stocks are still surprisingly inexpensive. The
average regional bank stock in the Fund is trading at approximately 9.5 times
1995 estimated earnings versus 15.5 times for the broad market, as measured by
the S&P 500 Index. That means bank stocks are selling at a 40% discount to the
market, which is still near the inexpensive end of their historical range. We
expect this discount to narrow as bank stocks continue their upward move.
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 Long
Island Savings Bank followed by an up arrow and the phrase "Takeover
speculation pushes price higher." The second listing is Standard Federal
Bancorp followed by an up arrow and the phrase "Stabilizing interest rates
boost earnings." The third listing is West One Bancorp followed by an up arrow
and the phrase "Sale to U.S. Bancorp fuels stock price." The fourth listing is
United States Bancorp and the phrase "Acquisition of West One may dilute
earnings." Footnote below reads: "See "Schedule of Investments." Investment
holdings are subject to change."
[CAPTION]
"...BANK STOCKS ARE STILL SURPRISINGLY INEXPENSIVE."
4
<PAGE> 5
John Hancock Funds -- Bank and Thrift Opportunity Fund
Bar chart with heading "Fund Performance" at top of left hand column, Under the
heading is the footnote: "For the six months ended April 30, 1995." The chart
is scaled in increments of 7% from bottom to top, with 14% at the top and 0% at
the bottom. Within the chart, there are two solid bars. The first represents
the 12.14% total return for John Hancock Bank and Thrift Opportunity Fund. The
second represents the 8.50% total return for the average closed-end financial
services fund. Footnote below reads: "The total return for John Hancock Bank
and Thrift Opportunity Fund is at net asset value with all distributions
reinvested. The average closed-end financial services fund is tracked by Lipper
Analytical Services."
ON THE MERGER FRONT
In the last six months, two of the Fund's largest holdings have announced that
they're going to be acquired. First, Shawmut National agreed to be bought by
Fleet Financial Group. This is the first "large bank" takeover in more than a
year. With the Riegle-Neal Interstate Banking and Branching Efficiency Act
taking effect on October 1, 1995, we expect to see more mergers between major
banks.
The other takeover of note is Michigan National's sale to National Australia
Bank. What's interesting about this deal is how it came about. A major
shareholder, Michael Price of Mutual Shares, took a large position in Michigan
National and initiated a proxy battle to replace the board. His efforts
culminated in the sale of the bank to National Australia at a significant
premium. More recently, Mr. Price has purchased a 6% stake in Chase Manhattan
and pledged to enhance shareholder value, which has sent the stock higher.
Although it's unlikely that Chase will be taken over, its management will likely
be forced to operate more efficiently and improve performance.
SHAREHOLDER ACTIVISM
Compass Bancshares has grabbed the spotlight recently as a dissident director,
Harry Brock, attempted to get the Birmingham, Alabama bank to consider a premium
buyout offer from First Union. Although we feel that management has done an
excellent job running Compass, we sided with the dissident group. That's because
we didn't believe that management was looking out for the shareholders' best
interests when it dismissed First Union's bid and subsequently showed interest
in a no-premium "merger of equals" with another Birmingham bank. Though Mr.
Brock lost by a narrow margin, this case of shareholder activism drives home the
point that all managements must consider what's best for shareholders -- and not
themselves -- in the merger process.
NEWS FROM WASHINGTON
National interstate banking becomes law in less than six months. This
long-awaited legislation is important because it removes the last barrier to
nationwide banking and should lead to even more consolidation over the next
several years. In addition, other regulatory changes are adding to the appeal of
bank stocks:
- -REPEAL OF THE GLASS-STEAGALL ACT, which has separated commercial banking from
securities underwriting for sixty years, could afford banks broader brokerage
and insurance distribution
[Caption]
"NATIONAL INTERSTATE BANKING BECOMES LAW IN LESS THAN SIX MONTHS."
5
<PAGE> 6
John Hancock Funds - Bank and Thrift Opportunity Fund
Chart with heading "Top Five Common Stock Holdings" at top of left hand column.
The chart lists five holdings: 1) Southtrust Corporation 2.5% 2) Midlantic
Corporation 2.5% 3) U.S. Bancorp 2.4% 4) Crestar Financial 2.4% 5) Firstar
Corporation 2.2%. A footnote below reads: "As a percentage of net assets on
April 30, 1995."
powers. Due to the complexity and highly-politicized nature of this legislation,
any near-term resolution is unlikely. Longer term, however, we're likely to see
less regulation and, therefore, more revenue potential.
- -FDIC deposit premiums are slated to be reduced for most institutions insured by
the Bank Insurance Fund, mainly commercial banks. By late 1995, the rate for
most banks could go from 23 cents to 4 cents per $100 in deposits. That could
boost earnings by 6%. The rub here is that entities insured by the Savings
Association Insurance Fund, mostly thrifts, get no reduction. Some compromise
needs to be reached and, therefore, banks will likely see a smaller windfall.
- -THE OFFICE OF THRIFT SUPERVISION (OTS), the primary thrift regulator, recently
approved several stock repurchases. At issue here is the excess capital many
thrifts generated in conversions from mutual ownership to public ownership over
the last two years. Unable to deploy the capital prudently in loans, thrifts
want to buy back their shares, but need special regulatory clearance.
OTS-approved repurchases add to earnings and generally support the price of the
stock. We have made investments in many of these recently-converted thrifts.
PORTFOLIO STRATEGY AND OUTLOOK
Throughout the period, we continued to invest the money raised in the Fund's
initial public offering last August. Our focus is on undervalued regional banks
and thrifts with healthy earnings prospects and the potential to benefit from
industry consolidation. While the Fund is geographically diverse, we've targeted
banks in states -- such as Virginia and Missouri -- that will benefit most from
the new banking legislation. We've also placed more emphasis on banks due to
their lower interest-rate sensitivity. By the end of April, the Fund had 57% of
its total assets in bank stocks; 33% in thrift stocks; and the remaining 10% in
cash.
Looking ahead, we're optimistic about the long-term story for banks. We
continue to see solid, long-term investment value in bank and thrift stocks. The
economic environment is ideal: Banks do best in a low inflation, slow growth
economy. The stocks are inexpensive: Despite increasing profitability, the
thrift and bank group still carries a low valuation, trading at just 40% of the
market multiple. The fundamentals are positive: Favorable earnings and continued
merger activity both augur well for stock prices. Given that, we're confident
that bank and thrift stocks will be able to generate attractive returns over the
next several years.
[Caption]
"WE CONTINUE TO SEE SOLID, LONG-TERM INVESTMENT VALUE IN BANK AND THRIFT
STOCKS."
6
<PAGE> 7
FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity 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 APRIL 30, 1995. YOU'LL ALSO
FIND THE NET ASSET VALUE FOR EACH COMMON SHARE AS OF THAT DATE.
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments at value - Note C:
Common stocks (cost - $387,946,866) .............. $430,098,401
Preferred stocks (cost - $11,962,375) ............ 12,046,250
Bonds (cost - $12,356,868) ....................... 12,578,125
Short-term investments (cost - $53,948,740) ...... 53,948,740
------------
508,671,516
Cash ............................................... 916
Receivable for investments sold .................... 684,375
Interest receivable ................................ 313,098
Dividends receivable ............................... 1,015,932
Deferred organization expenses - Note A ............ 69,047
------------
Total Assets .................... 510,754,884
----------------------------------------------------
LIABILITIES:
Payable for investments purchased .................. 4,131,784
Payable to John Hancock Advisers, Inc. and
affiliates - Note B .............................. 577,061
Accounts payable and accrued expenses .............. 139,876
------------
Total Liabilities ............... 4,848,721
----------------------------------------------------
NET ASSETS:
Capital paid-in .................................... 458,870,000
Accumulated net realized gain on investments ....... 848,122
Net unrealized appreciation of investments ......... 42,456,667
Undistributed net investment income ................ 3,731,374
------------
Net Assets ...................... $505,906,163
====================================================
NET ASSET VALUE PER SHARE:
(based on 23,005,000 shares of beneficial interest
outstanding - unlimited number of shares authorized
with no par value) ................................ $ 21.99
========================================================================
</TABLE>
THE STATEMENT OF OPERATIONS SUMMARIZES THE FUND'S INVESTMENT INCOME EARNED AND
EXPENSES INCURRED IN OPERATING THE FUND. IT ALSO SHOWS NET GAINSFOR THE PERIOD
STATED.
STATEMENT OF OPERATIONS
Six months ended April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (Including $77,988 received
from affiliated issuers) ....................... $ 5,961,928
Interest ......................................... 3,647,034
-----------
9,608,962
-----------
Expenses:
Investment management fee - Note B ............. 2,653,657
Administration fee - Note B .................... 576,882
Custodian fee .................................. 59,941
Trustees' fees ................................. 29,251
Auditing fee ................................... 24,178
New York Stock Exchange fee .................... 23,661
Printing ....................................... 22,771
Transfer agent fee ............................. 21,137
Organization expense - Note A .................. 7,930
Legal fees ..................................... 6,369
Miscellaneous .................................. 4,187
-----------
Total Expenses ................ 3,429,964
------------------------------- -----------
Net Investment Income ......... 6,178,998
-------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments sold ............ 848,122
Change in net unrealized appreciation/depreciation
of investments ................................. 48,399,282
-----------
Net Increase in Net Assets
Resulting from Operations ..... $55,426,402
=================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE> 8
FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
AUGUST 23, 1994
SIXMONTHS ENDED (COMMENCEMENT OF
APRIL 30, 1995 OPERATIONS)TO
(UNAUDITED) OCTOBER 31, 1994
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income ....................................................................... $ 6,178,998 $ 2,728,501
Net realized gain on investments sold ....................................................... 848,122 --
Change in net unrealized appreciation/depreciation of investments ........................... 48,399,282 (5,942,615)
-------------- --------------
Net Increase (Decrease) in Net Assets Resulting from Operations ........................... 55,426,402 (3,214,114)
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.2250 and none per share, respectively) ............. (5,176,125) --
--------------
FROM FUND SHARE TRANSACTIONS -- NET:*
Common Shares sold (proceeds from sale of common shares, net of $1,230,000
of offering costs)........................................................................... -- 458,770,000
NET ASSETS:
Initial investment in Common Shares by John Hancock Advisers, Inc - Note A .................. -- 100,000
Beginning of period ......................................................................... 455,655,886 --
-------------- --------------
End of period (including undistributed net investment income of $3,731,374 and
$2,728,501, respectively) ................................................................... $ 505,906,163 $ 455,655,886
============== ==============
</TABLE>
*ANALYSIS OF COMMON SHARE TRANSACTIONS:
<TABLE>
SIX MONTHS ENDED FOR THE PERIOD AUGUST 23, 1994
APRIL 30, 1995 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) TO OCTOBER 31, 1994
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Common Shares outstanding beginning of period ......................... 23,005,000 $458,870,000 -- --
Common Shares sold .................................................... -- -- 23,000,000 $458,770,000
Initial investment in Common Shares by John Hancock Advisers, Inc.
- Note A............................................................. -- -- 5,000 100,000
---------- ------------ ---------- ------------
Common Shares outstanding end of period ............................... 23,005,000 $458,870,000 23,005,000 $458,870,000
========== ============ ========== ============
</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 DURING THE PERIOD, ALONG WITH THE CORRESPONDING
DOLLAR VALUE.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE> 9
FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity 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>
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED FOR THE PERIOD AUGUST 23, 1994
APRIL 30, 1995 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) TO OCTOBER 31, 1994
--------------- ------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net Asset Value, Beginning of Period ................. $ 19.81 $ 20.00
------ -------
Net Investment Income ................................ 0.27 0.12
Net Realized and Unrealized Gain (Loss) on Investments 2.14 (0.26)
------ -------
Total from Investment Operations ................... 2.41 (0.14)
------ -------
Less Distributions:
Dividends from Net Investment Income ............... (0.23) --
------ -------
Common Shares Offering Costs ......................... -- (0.05)
------ -------
Net Asset Value, End of Period ....................... $ 21.99 $ 19.81
====== =======
Per share market value, end of period ................ $ 19.00 $ 18.00
====== =======
Total Investment Return at Market Value .............. 6.86% (10.00%)
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (000's omitted) ............ $505,906 $455,656
Ratio of Expenses to Average Net Assets .............. 1.49%* 1.51%*
Ratio of Net Investment Income to Average Net
Assets................................................ 2.68%* 3.22%*
Portfolio Turnover Rate .............................. 3% 0%
</TABLE>
* On an annualized basis.
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.
9
<PAGE> 10
FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity Fund
SCHEDULE OF INVESTMENTS
April 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
THE SCHEDULE OF INVESTMENTS IS A COMPLETE LIST OF ALL SECURITIES OWNED BY BANK
AND THRIFT OPPORTUNITY FUND ON APRIL 30, 1995. IT'S DIVIDED INTO FOUR MAIN
CATEGORIES: COMMON STOCKS, PREFERRED STOCKS, BONDS AND SHORT-TERM INVESTMENTS.
THE COMMON STOCKS ARE FURTHER BROKEN DOWN BY INDUSTRY GROUPS. SHORT-TERM
INVESTMENTS, WHICH REPRESENT THE FUND'S "CASH" POSITION, ARE LISTED LAST.
<TABLE>
<CAPTION>
MARKET
DESCRIPTION, ISSUER, STATE NUMBER OF SHARES VALUE
- -------------------------- ---------------- -----
<S> <C> <C>
COMMON STOCKS
SUPER REGIONALS (3.33%)
Barnett Banks, Inc. (FL) ............... 230,000 $10,752,500
Shawmut National Corp. (MA) ............ 230,000* 6,095,000
-----------
16,847,500
-----------
REGIONALS (51.77%)
ABC Bancorp (GA) ....................... 30,000 397,500
Alabama National Bancorporation (AL) ... 130,000* 1,722,500
American Bancorporation (WV) ........... 10,000* 152,500
Bancorp Hawaii, Inc. (HI) .............. 300,000 8,437,500
Bancorpsouth, Inc. (MS) ................ 20,000* 735,000
Banknorth Group, Inc. (VT) ............. 26,500* 642,625
BanPonce Corp. (PR) .................... 150,000* 4,846,875
Benson Financial Corp. (TX) + .......... 258,300 3,228,750
Beverly National Corp. (MA) ............ 25,000* 375,000
Boatmen's Bancshares, Inc. (MO) ........ 62,000* 2,061,500
Broad National Bancorp (NJ) ............ 38,325 268,275
CB Bancorp, Inc. (IN) .................. 35,000 446,250
California State Bank (CA) ............. 24,200* 296,450
Central Mortgage Bancshares, Inc. (MO) . 35,000 752,500
Centura Banks, Inc. (NC) ............... 80,000 2,070,000
Century Financial Corp. (PA) ........... 10,000* 121,250
Chittenden Corp. (VT) .................. 25,000* 593,750
Citizens Investments, Inc. (NJ) (r) .... 50,000 669,000
Colonial Bancgroup, Inc. (AL) .......... 385,000 9,336,250
Comerica, Inc. (MI) .................... 155,000* 4,456,250
Compass Bancshares (AL) ................ 292,000 7,628,500
Corestates Financial Corp. (PA) ........ 100,000* 3,262,500
Crestar Financial Corp. (VA) ........... 267,000 12,015,000
Dauphin Deposit Corp. (PA) ............. 80,000 1,925,000
Empire Banc Corp. (MI) ................. 10,900* 318,825
Evergreen Bancorp, Inc. (NY) ........... 25,000* 425,000
FNB Corp. (PA) ......................... 35,000* 586,250
FNB Bankshares (ME) .................... 20,780* 566,255
First American Corp. (TN) .............. 317,100 10,939,950
First of America Bancorp. (MI) ......... 308,300 10,674,888
First Commerce Corp. (LA) .............. 370,000 10,175,000
First Security Corp. (UT) .............. 100,000 2,387,500
First State Bancorporation (NM) ........ 66,100 974,975
First Tennessee National Corp. (TN) .... 45,000 1,912,500
Firstar Corp. (WI) ..................... 393,000 11,347,875
Harleysville National Corp. (PA) ....... 25,200 680,400
Hawkeye Bancorp (IA) ................... 50,175 1,138,345
Hometown Bancorporation, Inc. (CT) ..... 42,000* 456,750
Imperial Bancorp (CA) .................. 52,500* 840,000
Integra Financial Co. (PA) ............. 245,700 10,749,375
Lawrence Savings Bank (MA) ............. 75,000* 262,500
Magna Group, Inc. (MO) ................. 80,000* 1,680,000
Mahaska Investment Co. (IA) + .......... 149,500 2,093,000
Mercantile Bancorporation, Inc. (MO) ... 205,000 7,482,500
Meridian Bancorp, Inc. (PA) ............ 145,000 4,603,750
Metrobancorp (IN) ...................... 39,000 204,750
Michigan National Corp. (MI) ........... 95,297 9,994,272
Midlantic Corp. (NJ) ................... 340,000 12,410,000
Mississippi Valley Bankshares, Inc.
(MO).................................. 57,500 1,063,750
New England Community Bancorp (CT) + ... 165,000* 1,278,750
North Fork Bancorporation, Inc. (NY) ... 10,800* 189,000
Old Kent Financial Corp. (MI) .......... 177,500 5,502,500
Oriental Bank & Trust (PR) ............. 55,000* 831,875
Provident Bankshares Corp. (MD) ........ 31,500* 791,437
Regions Financial Corp. (AL) ........... 80,000* 2,780,000
Riggs National Corp. (DC) .............. 190,000 1,900,000
Salem Bank and Trust (VA) .............. 40,000* 450,000
Santa Barbara Bancorp (CA) ............. 3,000* 79,500
Security Capital Bancorp. (NC) ......... 69,600* 1,418,100
Security Shares, Inc. (TX) (r) ......... 200,000 1,084,000
Signet Banking Corp. (VA) .............. 355,000 7,543,750
Southern National Corp. (NC) ........... 337,375* 6,916,188
Southtrust Corp. (AL) .................. 580,000 12,470,000
Southwest Bancorp, Inc. (OK) ........... 68,500 941,875
Summit Bancorp (NJ) .................... 63,800 1,228,150
Surety Capital Corp. (TX) (r) + ........ 303,700* 1,181,393
UJB Financial Corp. (NJ) ............... 395,000 10,813,125
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE> 11
FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity Fund
<TABLE>
<CAPTION>
MARKET
DESCRIPTION, ISSUER, STATE NUMBER OF SHARES VALUE
- -------------------------- ---------------- -----
<S> <C> <C>
REGIONALS (CONTINUED)
UST Corp. (MA) ............................. 60,000 $ 652,500
Union Planters Corp. (TN) .................. 433,200 10,396,800
US Bancorp (OR) ............................ 435,000 12,016,875
U S Trust Corp. (NY) ....................... 26,000* 1,781,000
Vectra Banking Corp. (CO) .................. 34,100 341,000
West One Bancorp. (ID) ..................... 198,000* 5,469,750
Whitney Holding Corp. (LA) ................. 128,500* 3,324,938
Yardville National Bank (NJ) ............... 6,500* 81,250
------------
261,872,891
------------
THRIFTS (28.57%)
American Federal Bank (SC) ................. 140,000* 1,942,500
American National Savings Bank (MD) ........ 75,500* 868,250
Amfed Financial, Inc. (NV) ................. 162,806 3,663,135
Avondale Financial Corp. (IL) .............. 100,000* 1,200,000
Bank West Financial Corp. (MI) + .......... 210,000* 1,876,875
Bell Bancorp, Inc. (IL) .................... 100,000* 2,800,000
Brooklyn Bancorp, Inc. (NY) ................ 335,000 10,636,250
Cameron Financial Corp. (MO) + ............. 190,000* 2,232,500
Collective Bancorp, Inc. (NJ) .............. 510,000 9,243,750
Community Investments Bancorp, Inc. (OH) ... 10,000* 115,000
Conestoga Bancorp, Inc. (NY) ............... 175,000 2,646,875
East Texas Financial Services, Inc. (TX) ... 25,000* 300,000
Equitable Federal Savings (MD) + .......... 40,000 930,000
FFVA Financial Corp. (VA) .................. 115,000 3,033,125
FSF Financial Corp. (MN) ................... 120,000* 1,350,000
Fidelity Federal Bank (CA) ................. 562,500* 1,968,750
Financial Bancorp, Inc. (NY) ............... 85,000* 924,375
First Federal Bancshares Eau Claire (WI) +.. 370,000 4,255,000
First Financial Corp. (WI) ................. 30,418* 475,281
First Keystone Financial, Inc. (PA) ........ 40,000* 505,000
First State Financial Services, Inc. (NJ)... 22,500* 247,500
Fort Bend Holding Corp. (TX) ............... 40,000 640,000
GP Financial Corp. (NY) .................... 445,000 10,652,187
Glendale Federal Savings Bank
Warrants (CA) ............................ 250,000 988,281
Great Financial Corp. (KY) ................. 95,000 1,686,250
HMN Financial, Inc. (MN) ................... 171,500 2,250,938
Harbor Federal Bancorp, Inc. (MD) .......... 100,000 1,262,500
Harvest Home Financial Corp. (OH) .......... 25,000* 250,000
Hingham Institute of Savings (MA) .......... 48,000 516,000
Horizon Bancorp, Inc. (TX) ................. 30,000* 225,000
IBS Financial Corp. (NJ) ................... 420,000 5,381,250
Kirksville Bancshares, Inc. (MO) .......... 12,000* 312,000
Leader Financial Corp. (TN) ................ 303,000* 8,181,000
Life Bancorp, Inc. (VA) .................... 415,000 5,706,250
Long Island Bancorp, Inc. (NY) ............. 340,000 6,290,000
MLF Bancorp, Inc. (PA) ..................... 20,000* 347,500
MassBank Corp. (MA) ........................ 14,500* 351,625
Meritrust Federal Savings Bank (LA) ........ 28,000 525,000
Mid Continent Bancshares, Inc. (KS) ........ 50,000 700,000
Mississippi View Holding Co. (MN) .......... 75,000* 660,938
Monterey Bay Bancorp, Inc. (CA) + .......... 230,000* 2,213,750
New Hampshire Thrift
Bancshares, Inc. (NH) .................... 25,000* 237,500
Northwest Equity Corp. (WI) + .............. 96,000 888,000
Ottawa Financial Corp. (MI) ................ 75,000 993,750
Pamrapo Bancorp, Inc. (NJ) ................. 131,000 2,783,750
Pennfed Financial Services, Inc. (NJ) + .... 465,000 5,521,875
Permanent Bancorp, Inc. (IN) ............... 90,000 1,462,500
Redfed Bancorp (CA) ........................ 55,000 481,250
River Bank of America (NY) ................. 115,000 833,750
Roosevelt Financial Group (MO) ............. 461,000 7,376,000
St. Landry Financial Corp. (LA) + .......... 25,000* 262,500
Security Bancorp. (MT) ..................... 39,500* 770,250
Southern Missouri Bancorp, Inc. (MO) ....... 32,000* 480,000
Springfield Institution for Savings (MA) ... 75,000* 890,625
Standard Federal Bank of Troy (MI) ......... 195,000 5,484,375
Standard Financial, Inc. (IL) .............. 270,000 3,341,250
Sterling Financial Corp. (WA) .............. 15,000* 202,500
Sturgis Federal Savings Bank (MI) .......... 27,000 378,000
Sulphur Springs Building & Loan (TX) + ..... 97,000 1,067,000
Washington Mutual Savings Bank (WA) ........ 350,000 7,175,000
Wells Financial Corp. (MN) + ............... 187,000* 1,729,750
Westerfed Financial Corp. (MT) ............. 140,000 1,820,000
------------
144,534,260
------------
OTHER - FINANCIAL (1.35%)
Capital One Financial Corp. (VA) .......... 325,000* 6,540,625
Olympic Financial Ltd. (MN) ................ 25,000* 303,125
------------
6,843,750
------------
TOTAL COMMON STOCKS
(Cost $387,946,866) (85.02%) 430,098,401
----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE> 12
FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity Fund
<TABLE>
<CAPTION>
MARKET
DESCRIPTION, ISSUER, STATE NUMBER OF SHARES VALUE
- -------------------------- ---------------- -----
<S> <C> <C>
PREFERRED STOCKS
BANKS (2.38%)
Carolina First Corp. 7.32% (South Carolina)... 15,000* $ 386,250
Chevy Chase Federal Savings Bank
13.00% (Maryland) .......................... 55,000 1,553,750
Community Bank of Huntington
13.00% (California) ........................ 21,000 441,000
Greater New York Savings Bank
12.00% Ser B (New York) .................... 100,000 2,700,000
Riggs National Corp. 10.75%
(Washington DC) ............................ 93,000 2,371,500
Southern National Bank 6.75% Ser A
(North Carolina) ........................... 150,000 4,593,750
------------
TOTAL PREFERRED STOCKS
(Cost $11,962,375) (2.38%) 12,046,250
------- ------------
</TABLE>
<TABLE>
<CAPTION>
INTEREST PAR VALUE
RATE (000'S OMITTED)
-------- ---------------
<S> <C> <C> <C>
BONDS
CENFED Financial Corp. (R)
Sr Note 12-15-01 ................... 11.17% $3,500* 3,626,875
First Federal Financial Corp. ........
Note 10-01-04 ...................... 11.75% 3,500 3,556,875
SFFed Corp.(R) Sr Note 09-01-04 ...... 11.20% 2,500 2,484,375
WSFS Financial Corp. (R)
Sr Note 12-31-05 ................... 11.00% 3,000 2,910,000
-----------
TOTAL BONDS
(Cost $12,356,868) (2.49%) 12,578,125
----- -----------
SHORT-TERM INVESTMENTS
CERTIFICATES OF DEPOSIT (0.00%)
Deposits in Mutual Banks ................ 17,500
------------
COMMERCIAL PAPER (0.40%)
Security Pacific Corp. 10.05% 05-01-95... 2,000 2,025,240
------------
JOINT REPURCHASE AGREEMENT (10.26%)
Investment in a joint repurchase
agreement with BT Securities
Corp. - Dated 04-28-95,
Due 05-01-95 (secured by
U.S. Treasury Bond 13.875%
Due 05-15-11 and U.S. Treasury
Note 6.375% Due 10-31-98)
Note A ................................ 5.93% 51,906 51,906,000
------------
TOTAL SHORT-TERM INVESTMENTS (10.66%) 53,948,740
------------- ------------
TOTAL INVESTMENTS (100.55%) $508,671,516
============= ============
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS
* Securities, other than short-term investments, newly added to the portfolio
during the period ended April 30, 1995.
(R)The securities indicated by (R) are exempt from registration under rule 144A
of the Securities Act of 1933. Such securities may be resold, normally to
qualified institutional buyers, in transactions exempt from registration. See
Note A of the Notes to Financial Statements for valuation policy. Rule 144A
securities amounted to $9,021,250 as of April 30, 1995.
(r) Direct placement securities are restricted as to resale. They have been
valued at fair value by the Trustees after consideration of restrictions as
to resale, financial condition and prospects of the issuer, general market
conditions and pertinent information in accordance with the Fund's By-Laws
and the Investment Company Act of 1940, as amended. The Fund has limited
rights to registration under the Securities Act of 1933 with respect to the
restricted securities.
Additional information on each restricted security is as follows:
<TABLE>
<CAPTION>
VALUE AS A
PERCENTAGE
AQUISITION AQUISITION OF FUND'S VALUE AT
DATE COST NET ASSETS APRIL 30, 1995
---- ---- ---------- --------------
<S> <C> <C> <C> <C>
Citizens
Investments, Inc. ....... 09-29-94 $ 650,000 0.13% $ 669,000
Security Shares, Inc. ..... 09-29-94 1,150,000 0.21% 1,084,000
Surety Capital Corp. ...... 12-09-94 987,025 0.23% 1,181,393
</TABLE>
+Denotes an affiliated company in which the Fund has ownership of at least 5%
of the voting securities. Investments in affiliates at April 30, 1995 were as
follows:
<TABLE>
<CAPTION>
AFFILIATE COST DIVIDEND INCOME
- --------- ---- ---------------
<S> <C> <C>
Bank West Financial Corp. (MI) $1,821,875 --
Benson Financial Corp. (TX) 2,932,313 --
Cameron Financial Corp. (MO) 2,061,563 --
Equitable Federal Savings (MD) 660,000 --
First Federal Bancshares Eau Claire (WI) 3,466,875 --
Mahaska Investment Co. (IA) 2,184,313 $ 40,868
Monterey Bay Bancorp, Inc. (CA) 2,082,500 --
New England Community Bancorp (CT) 1,320,000 16,500
Northwest Equity Corp. (WI) 746,813 6,720
Pennfed Financial Services, Inc. (NJ) 5,349,375 --
St. Landry Financial Corp. (LA) 250,000 --
Sulphur Springs Building & Loan (TX) 953,375 13,900
Surety Capital Corp. (TX) 987,025 --
Wells Financial Corp. (MN) 1,702,000 --
</TABLE>
The percentage shown for each investment category is the total value of that
category as a percentage of the net assets of the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity Fund
(UNAUDITED)
NOTE A --
ACCOUNTING POLICIES
The John Hancock Bank and Thrift Opportunity Fund (the "Fund") is a diversified
closed-end management investment company registered under the Investment Company
Act of 1940. To provide the initial capital of the Fund, John Hancock Advisers,
Inc. (the "Adviser"), a wholly-owned subsidiary of The Berkeley Financial Group,
purchased a total of 5,000 common shares for an aggregate purchase price of
$100,000 on August 8, 1994. The Adviser was the sole holder of common shares
until the public offering was completed and the operations of the Fund commenced
on August 23, 1994. The Fund's primary investment objective is long-term capital
appreciation. Significant accounting policies of the Fund are as follows:
VALUATION OF INVESTMENTS Securities in the Fund's portfolio are valued on the
basis of market quotations, valuations provided by independent pricing services
or, at fair value as determined in good faith in accordance with procedures
approved by the Trustees. Short-term debt investments maturing within 60 days
are valued at amortized cost which approximates market value.
JOINT REPURCHASE AGREEMENT Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having a management contract with the Adviser, 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. It
will not be subject to Federal income tax on taxable earnings which are
distributed to shareholders.
DISTRIBUTIONS AND INCOME 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.
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.
OPTIONS Listed options will be valued at the last quoted sales price on the
exchange on which they are primarily traded. Purchased put or call
over-the-counter options will be valued at the average of the "bid" prices
obtained from two independent brokers. Written put or call over-the-counter
options will be valued at the average of the "asked' prices obtained from two
independent brokers. Upon the writing of a call or put option, an amount equal
to the premium received by the Fund will be included in the Statement of Assets
and Liabilities as an asset and corresponding liability. The amount of the
liability will be subsequently marked to market to reflect the current market
value of the written option.
The Fund may use option contracts to manage its exposure to the stock market.
Writing puts and buying calls will tend to increase the Fund's exposure to the
underlying instrument and buying puts and writing calls will tend to decrease
the Fund's exposure to the underlying instrument, or hedge other Fund
investments.
The maximum exposure to loss for any purchased options will be limited to the
premium initially paid for the option. In all other cases, the face (or
"notional") amount of each contract at value will reflect the maximum exposure
of the Fund in these contracts, but the actual exposure will be limited to the
change in value of the contract over the period the contract remains open.
13
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
John Hancock Funds - Bank and Thrift Opportunity Fund
Risks may also arise if counterparties do not perform under the contracts'
terms, or if the Fund is unable to offset a contract with a counterparty on a
timely basis ("liquidity risk"). Exchange-traded options have minimal credit
risk as the exchanges act as counterparties to each transaction, and only
present liquidity risk in highly unusual market conditions. To minimize credit
and liquidity risks in over-the-counter option contracts, the Fund will
continuously monitor the creditworthiness of all its counterparties.
At any particular time, except for purchased options, market or credit risk
may involve amounts in excess of those reflected in the Fund's period-end
Statement of Assets and Liabilities.
There were no written option transactions for the period ended April 30,
1995.
ORGANIZATION COSTS Expenses incurred in connection with the organization of the
Fund have been capitalized and are being charged to the Fund's operations
ratably over a five-year period that began with the commencement of investment
operations of the Fund.
NOTE B --
MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES AND OTHERS
Under the present investment management contract, the Fund pays a monthly
management fee to the Adviser, for a continuous investment program, equivalent
on an annual basis to 1.15% of the Fund's average weekly net asset value.
The Fund has also entered into an administrative agreement with the Adviser
pursuant to which the Adviser provides certain administrative services on behalf
of the Fund. In return, the Fund has agreed to pay a monthly administration fee
at an annual rate of 0.25% of the Fund's average weekly net asset value.
Messers. Edward J. Boudreau, Jr., Thomas W.L. Cameron, and Richard S.
Scipione are directors and/or officers of the Adviser, and/or its affiliates, as
well as Trustees of the Fund. The compensation of unaffiliated Trustees is borne
by the Fund. The Adviser owns 5,000 shares of beneficial interest of 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 short-term
obligations, during the period ended April 30, 1995, aggregated $192,688,748 and
$10,191,836, respectively.
The cost of investments owned at April 30, 1995 for Federal income tax
purposes was $466,214,849. Gross unrealized appreciation and depreciation of
investments aggregated $49,245,684 and $6,789,017, respectively, resulting in
net unrealized appreciation of $42,456,667.
NOTE D --
CAPITAL
In connection with a public offering, the Fund received proceeds of
$458,770,000, net of offering costs of $1,230,000 ($0.05 per share), through the
issuance of 23,000,000 common shares at $20.00 per share. John Hancock
Distributors, Inc. ("Distributors"), Tucker Anthony Incorporated ("Tucker
Anthony") and Sutro & Co., Inc. ("Sutro") earned commissions amounting to
$68,000, $2,000,000 and $840,000, respectively for their participation as
underwriters in the public offering. Distributors is a wholly owned subsidiary
of the Berkeley Financial Group. The Adviser's indirect parent, John Hancock
Mutual Life Insurance Company, is the indirect sole share holder of Distributors
and John Hancock Freedom Securities Corporation and its subsidiaries, which
include, Tucker Anthony and Sutro, which are broker-dealers.
14
<PAGE> 15
John Hancock Funds - Bank and Thrift Opportunity Fund
INVESTMENT OBJECTIVE AND POLICY
John Hancock Bank and Thrift Opportunity fund is a closed-end diversified
management investment company, shares of which were initially offered to the
public on August 23, 1994 and are publicly traded on the New York Stock
Exchange. Its investment objective is long-term capital appreciation.
DIVIDEND REINVESTMENT PLAN
The Fund provides shareholders with a Dividend Reinvestment Plan, (the "Plan"),
which offers the opportunity to earn compound yields. Each holder of Common
Shares will automatically have all distributions of dividends and capital gains
reinvested by State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, as agent for holders of Common Shares pursuant to the Plan
(the "Plan Agent") unless an election is made to receive cash. Each registered
shareholder will receive from the Plan Agent an authorization card to be signed
and returned if the shareholder elects to receive distributions from net
investment income in cash or elects not to receive capital gains distributions
in the form of a shares dividend. The Plan Agent will effect purchases of Common
Shares under the Plan in the open market. The Fund will not issue any new shares
in connection with the Plan. Holders of Common Shares who elect not to
participate in the Plan will receive all distributions in cash paid by check
mailed directly to the shareholder of record (or if the Common Shares are held
in street or other nominee name, then to the nominee) by the Plan Agent, as
divided disbursing agent. Shareholders whose shares are held in the name of a
broker or nominee or shareholders transferring such an account to a new broker
or nominee should contact the broker or nominee to determine whether and how
they may participate in the Plan.
The Plan Agent serves as agent for the holders of Common Shares in
administering the Plan. After the Fund declares a dividend or makes a capital
gains distribution, the Plan Agent will, as agent for the participants, receive
the cash payment and use it to buy Common Shares in the open market, on the New
York Stock Exchange or elsewhere, for the participants' accounts. The price of
the shares will be the average market price at which such shares were purchased
by the Plan Agent.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent. Such withdrawal will be effective immediately if received not
less than ten days prior to a dividend record date; otherwise, it will be
effective for all subsequent dividend record dates. When a participant withdraws
from the Plan or upon termination of the Plan as provided below, either a cash
payment will be made to the participant for the full value of the Common Shares
credited to the account upon instruction by the participant or certificates for
whole Common Shares credited to his or her account under the Plan will be issued
and a cash payment will be made for any fraction of a Common Share credited to
such account.
The Plan Agent maintains each shareholder's account in the Plan and furnishes
monthly written confirmations of all transactions in the accounts, including
information needed by the shareholders for personal and tax records. Common
Shares in the account of each Plan participant will be held by the Plan Agent in
non-certified form in the name of the participant. Proxy material relating to
shareholders' meetings of the Fund will include those shares purchased as well
as shares held pursuant to the Plan.
In the case of shareholders, such as banks, brokers, or nominees, which hold
Common Shares for others who are the beneficial owners, the Plan Agent will
administer the Plan on the basis of the number of Common Shares certified from
time to time by the record shareholders as representing the total amount
registered in the record shareholder's name and held for the account of
beneficial owners who are participants in the Plan. Shares may be purchased
through broker dealers.
The Plan Agent's fees for the handling of reinvestment of dividends and other
distributions will be paid by the Fund. Each participant will pay a pro rata
share of brokerage commissions incurred with respect to the Plan Agent's open
market purchases in connection with the reinvestment of distributions. There are
no other charges to participants for reinvesting dividends or capital gain
distributions.
15
<PAGE> 16
John Hancock Funds - Bank and Thrift Opportunity Fund
Dividends and capital gains distributions are taxable whether received in
cash or reinvested in additional Common Shares, and the automatic reinvestment
of dividends and capital gain distributions will not relieve participants of any
U.S. income tax that may be payable or required to be withheld on such dividends
or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any distribution paid subsequent to written notice of the change sent
to all shareholders of the Fund at least 90 days before the record date for the
dividend or distribution. The Plan also may be amended or terminated by the Plan
Agent by at least 90 days' written notice to all shareholders of the Fund. All
correspondence concerning the Plan should be directed to the Plan Agent at P.O.
Box 8209, Boston, Massachusetts 02266-8209 (telephone 1-800-426-5523).
16
<PAGE> 17
NOTES
John Hancock Funds - Bank and Thrift Opportunity Fund
17
<PAGE> 18
NOTES
John Hancock Funds - Bank and Thrift Opportunity Fund
18
<PAGE> 19
NOTES
John Hancock Funds - Bank and Thrift Opportunity Fund
19
<PAGE> 20
[LOGO]JOHN HANCOCK FUNDS Bulk Rate
A GLOBAL INVESTMENT MANAGMENT FIRM U.S. Postage
101 Huntington Avenue Boston, MA 02199-7603 PAID
So. Hackensack
Permit No. 750
A 1/2" by 1/2" John Hancock Funds logo in upper left hand corner of the page. A
box sectioned in quedrants with a triangel in upper left, a circle in upper
right, a cube in lower left and a diamond in lower right. A tag line below
reads: "A Global Investment Management firm."
A recycled logo in lower left hand corner with the caption "Printed on Recycled
Paper."
