January 2, 2004
EDGAR
United States Securities and
Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Form N-CSR
John Hancock Bank and Thrift Opportunity Fund (the "Registrant")
File No. 811-8568
Ladies and Gentlemen:
Enclosed herewith for filing pursuant to the Investment Company Act of 1940 and
the Securities Exchange Act of 1934 is the Registrant's Form N-CSR filing for
the period ending October 31, 2003.
If you have any questions or comments regarding this filing, please contact the
undersigned at (617) 375-1513.
Sincerely,
/s/Alfred P. Ouellette
Alfred P. Ouellette
Senior Attorney and Assistant Secretary
ITEM 1. REPORT TO STOCKHOLDERS.
John Hancock Bank and Thrift Opportunity Fund
Annual Report
10.31.03
Dear Fellow Shareholders,
The stock market has made a strong recovery in 2003. Historically low interest
rates, improving corporate earnings and government stimulus in the form of tax
cuts gave investors hope that the economy would begin to strengthen, which it
did. The market's move up began in April and the breadth of the rally was
enormous. As a result, the major indexes were able to wipe out their
first-quarter losses and post solid gains year-to-date through October 31. With
technology leading the way, the tech-heavy Nasdaq Composite Index rose 45.22%
through October, while the Dow Jones Industrial Average was up 19.82% and the
Standard & Poor's 500 Index returned 21.19%. With falling interest rates, bonds
also did well, although they began to reverse course in July. High yield bonds
led the pack, returning 24.23% through October, as measured by the Lehman
Brothers High Yield Index. In other news, we are pleased to inform you that on
September 28, 2003, the Boards of Directors of Canada-based Manulife Financial
Corporation and Boston-based John Hancock Financial Services, Inc., the parent
company of John Hancock Funds, unanimously voted to merge the two companies.
Please be assured that the completion of the merger - anticipated to occur in
the first half of 2004 - will have no effect on your investment in our John
Hancock mutual funds. Your fund's adviser and board of trustees will remain the
same, as will your relationship with your financial adviser. The merger is
subject to customary closing conditions, including receipt of required
regulatory approvals and approval by John Hancock stockholders. If you only own
shares in a John Hancock mutual fund you are not affected and will not receive a
proxy. Additional information on this transaction is available on our Web site:
www.jhfunds.com. If you have questions about the merger, you may also call
800-732-5543. Separately, for information about your investments in John Hancock
funds, please contact your financial adviser or our Customer Service
representatives at 800-225-5291.
Sincerely,
Maureen Ford Goldfarb,
Chairman and Chief Executive Officer
This commentary reflects the chairman's
views as of October 31, 2003. They are subject to change at any time. your fund
at a glance Over the last twelve months [ ] The stock market staged a strong
recovery as the economy and corporate earnings began to improve.
[ ] Financial stocks as a group did slightly better than the broad market, led
by market-sensitive and small-cap names.
[ ] The Fund's best performers were large banks with improving credit quality
and business lines tied to the rising stock market. The Fund seeks long-term
capital appreciation, with moderate income as a secondary objective, by
investing primarily in stocks of regional banks and lending companies. John
Hancock Bank and Thrift Opportunity Fund Fund performance for the year ended
October 31, 2003. The total return for the Fund is at net asset value with all
distributions reinvested. Top 10 holdings 3.6% FleetBoston Financial Corp.
3.1% Zions Bancorp.
3.1% Wachovia Corp.
2.9% SouthTrust Corp.
2.9% Wells Fargo & Co.
2.8% U.S. Bancorp.
2.7% Compass Bancshares, Inc.
2.7% Fifth Third Bancorp.
2.6% Bank of America Corp.
2.6% National Commerce Financial Corp.
As a percentage of net assets on October 31, 2003.
By James K. Schmidt, CFA,
Lisa A. Welch and James J. McKelvey, Portfolio Managers John Hancock Bank and
Thrift Opportunity Fund Recently, Jay McKelvey, a member of the Fund's
management team since 1998, was added as a portfolio manager, replacing Thomas
Goggins.
The stock market staged a remarkable recovery over the 12 months ending October
31, 2003. A variety of factors contributed to the market's reversal from three
years of negative results. They included increasing signs of a rebounding
economy, further interest-rate cuts, a significant tax cut, a quick end to the
major military phase of war in Iraq and improved corporate earnings. As a
result, the broad market, as measured by the Standard & Poor's 500 Index,
returned 20.79% for the year ending October 31, 2003.
Financial stocks as a group slightly outperformed the S&P 500, returning 23.40%
for the period, as measured by the Standard & Poor's 500 Financial Index. The
best results came from market-sensitive companies, such as asset managers and
securities brokers - who benefited from the rebounding market - and mortgage
originators and specialty finance companies. Among banks, the best performers
were a few of the largest names that have experienced credit quality
improvements and enjoyed a dramatic rebound after being beaten down in the
market's long slide. Small banks also did well, as they continued to benefit
from strong deposit and loan growth, a healthy mortgage climate and growing
speculation about takeover possibilities. Mid-size regional banks turned in
good, but more modest, results. Fund performance For the year ended October 31,
2003, John Hancock Bank and Thrift Opportunity Fund posted a total return of
27.57% at net asset value, compared with the 25.48% return of the average
open-end financial services fund, according to Lipper, Inc. Keep in mind that
your net asset value return will be different from the Fund's performance if you
were not invested in the Fund for the entire period and did not reinvest all
distributions.
Market- and mortgage-related surge
Following the market's trend, many of the Fund's best performers were large
banks recovering from worries about credit problems that proved less severe than
expected, and which also had market-sensitive lines of business. They included
FleetBoston Financial, Wachovia and U.S. Bancorp. In addition to improving
fundamentals, Fleet's stock was lifted at the end of the period by the
announcement of its proposed acquisition by Bank of America at an attractive
premium. With interest rates declining until the last several months of the
period, companies with hefty mortgage banking and fixed-income businesses served
us well, including Countrywide Financial, First Tennessee National, National
City Corp. and Washington Mutual. Our standouts among the small banks were
East-West Bancorp., Independent Bank Corp. and UCBH Holdings. Company-specific
detractors
On the downside, some of our biggest detractors struggled with company specific
problems. Fifth Third Bancorp., long-time Fund stalwart, entered into an
agreement with regulators to improve its operational infrastructure following
the disclosure of a material bookkeeping error in its Treasury department. We
are keeping our stake because we continue to believe in the bank's strong
balance sheet and in its ability to produce double-digit growth. Insurance giant
American International Group was hit hard this year after it took a large charge
for reserves related to Director's and Officer's liability surrounding some
high-profile Internet names that failed between 1998 and 2001. Another
disappointment was government-sponsored mortgage giant Freddie Mac, which came
under fire for accounting re-audits and subsequent dismissals of top management.
Mergers ahead Although the level of bank merger activity in 2003 is only
slightly ahead of last year's at this point, we believe the announced
mega-merger between FleetBoston and Bank of America will place more attention on
mergers and perhaps prompt additional activity. In our view, the climate is ripe
for more, since revenue growth is becoming harder to come by and the market's
uptick has made the stock of acquiring banks more valuable. We continue to
believe the bulk of the mergers going forward will be between large banks buying
smaller ones for specific tactical reasons, such as increasing market share or
the number of bank branches in areas where they are weak. Bank earnings over the
last year have been mixed, but generally positive. Credit costs have been better
than expected, deposits continue to flow into the banking system, even with the
stock market's rebound, and mortgage banking continued to be strong, although we
expect a slowdown in that trend as interest rates have begun to go up. We have
yet to see a pickup in commercial loan growth, although many bank managements
tell us they expect a pickup, and we find this credible because we believe the
economy will accelerate.
Outlook
Our outlook remains positive for the financial sector, including bank stocks. We
believe that in the current environment, banks can produce earnings growth in
the 8% to 10% range. If economic growth continues at the blistering pace of the
third quarter of 2003, however, bank earnings growth could be more modest than
that of other sectors more leveraged to economic recovery. But we believe the
case for bank stock investing remains compelling, with banks' consistency of
earnings and the potential for accelerating merger activity. What's more, with
the new favorable tax treatment of stock dividends, we believe more financial
companies, which tend to have above-average dividend yields, will increase their
dividend payout ratios, following the lead of Bank of America, which increased
its dividend payout by 25% in the period. Going forward, we are turning more
attention toward those banks that will benefit most when commercial lending
activity picks up. We'll also continue to add a number of high-quality small ban
ks and thrifts with strong fundamentals in what appear to be consolidating
markets. This commentary reflects the views of the portfolio managers through
the end of the Fund's period discussed in this report. The managers' statements
reflect their own opinions. As such, they are in no way guarantees of future
events, and are not intended to be used as investment advice or a recommendation
regarding any specific security. They are also subject to change at any time as
market and other conditions warrant.
Sector investing is subject to greater risks than the market as a whole.
"Financial stocks as a group slightly outperformed the S&P 500..." Jim Schmidt
Lisa Welch Jay McKelvey "...many of the Fund's best performers were large banks
recovering from worries about credit problems..." Portfolio diversification As a
percentage of net assets on 10-31-03
98% Common stocks 2% Short-term investments & other INVESTMENT PERIOD'S
PERFORMANCE ... AND WHAT'S BEHIND THE NUMBERS Zions Bancorp. Improving
fundamentals FleetBoston Financial Sells for significant premium Fifth Third
Bancorp. Heightened regulatory scrutiny scorecard "Our outlook remains positive
for the financial sector, including bank stocks." Financial STatements This
schedule is divided into four main categories: common stocks, preferred stocks,
bonds and short-term investments. Common and preferred stocks and bonds are
further broken down by industry group. Short-term investments, which represent
the Fund's cash position, are listed last. Securities owned by the Fund on
October 31, 2003 shares ISSUER value COMMON STOCKS 98.10% $905,879,377 (Cost
$431,220,847) Banks - Regional 50.97% 470,673,507 65,400 ABC Bancorp. (GA)
1,100,028 142,500 Alabama National Bancorp. (AL)+ 7,502,625 108,000 Allegiant
Bancorp., Inc. (MO) 2,376,000 325,383 AmericanWest Bancorp. (WA)* 6,494,645
95,879 AmSouth Bancorp. (AL) 2,264,662 482,474 Banknorth Group, Inc. (ME)
15,111,086 344,846 BB&T Corp. (NC) 13,335,195 47,500 Beverly National Corp. (MA)
1,223,125 113,795 BOK Financial Corp. (OK)* 4,301,451 140,000 Camden National
Corp. (ME) 4,228,000 59,635 Capital City Bank Group, Inc. (FL)+ 2,304,893
155,418 Cascade Bancorp. (OR) 2,937,400 184,700 CCBT Financial Cos., Inc. (MA)
4,911,173 370,000 Charter One Financial, Inc. (OH) 11,825,200 140,196 Chittenden
Corp. (VT) 4,511,507 224,427 City National Corp. (CA) 13,512,750 615,200
Colonial BancGroup, Inc. (AL) 9,646,336 90,000 Columbia Bancorp. (MD) 2,503,800
50,962 Commercial Bankshares, Inc. (FL) 1,608,361 83,378 Community Banks, Inc.
(PA) 2,905,723 213,100 Community First Bankshares, Inc. (ND) 5,785,665 650,857
Compass Bancshares, Inc. (AL) 24,589,377 20,000 Cullen/Frost Bankers, Inc. (TX)
775,200 137,500 Desert Community Bank (CA) 2,868,250 62,696 DNB Financial Corp.
(PA) 1,691,538 340,000 East-West Bancorp., Inc. (CA) 16,690,600 73,000 Financial
Institutions, Inc. (NY) 1,825,730 52,200 First Charter Corp. (NC)+ 1,070,100
65,000 First State Bancorp. (NM) 2,041,650 170,900 First Tennessee National
Corp. (TN) 7,752,024 20,780 FNB Bankshares (ME) 1,090,950 Banks - Regional
(continued) 90,049 F.N.B. Corp. (FL)+ $2,976,119 101,718 Fulton Financial Corp.
(PA) 2,100,477 235,385 Glacier Bancorp., Inc. (MT) 7,240,443 131,216
Harleysville National Corp. (PA) 3,962,723 230,000 Hibernia Corp. (Class A) (LA)
5,195,700 308,105 Independent Bank Corp. (MI) 8,913,478 310,000 Local Financial
Corp. (OK) (R) 6,017,100 238,657 M&T Bank Corp. (NY) 22,409,892 334,545 Marshall
& Ilsley Corp. (WI) 11,983,402 209,500 Mercantile Bankshares Corp. (MD)
8,876,515 71,541 Merrill Merchants Bankshares, Inc. (ME) 1,374,303 50,000
Mid-State Bancshares (CA) 1,216,500 873,392 National Commerce Financial Corp.
(TN) 23,992,078 290,800 North Fork Bancorp., Inc. (NY) 11,335,384 70,053
Northrim Bancorp., Inc. (AK) 1,467,610 273,266 Pacific Capital Bancorp. (CA)
9,307,440 120,000 Prosperity Bancshares, Inc. (TX)+ 2,772,000 165,058 Provident
Bankshares Corp. (MD) 5,121,750 154,700 S&T Bancorp., Inc. (PA) 4,678,128 9,500
Sandy Spring Bancorp., Inc. (MD)+ 342,665 234,850 Sky Financial Group, Inc. (OH)
5,718,598 849,350 SouthTrust Corp. (AL) 27,051,798 260,330 Southwest Bancorp. of
Texas, Inc. (TX)* 9,348,450 139,500 Summit Bancshares, Inc. (TX) 3,949,245
450,000 Synovus Financial Corp. (GA)+ 12,420,000 213,200 Taylor Capital Group,
Inc. (IL)* 5,419,544 214,008 TCF Financial Corp. (MN) 11,166,937 26,500 TriCo
Bancshares (CA) 848,000 200,000 UCBH Holdings, Inc. (CA) 7,142,000 177,901
Umpqua Holdings Corp. (OR) 3,638,075 127,390 Union Planters Corp. (TN) 4,238,265
136,812 Univest Corp. (PA) 4,986,797 142,755 Valley National Bancorp. (NJ)
4,175,584 67,583 West Coast Bancorp. (OR) 1,409,106 106,500 Whitney Holding
Corp. (LA) 4,043,805 350,000 Wilmington Trust Corp. (DE) 11,788,000 97,400
Yardville National Bancorp. (NJ)+ 2,281,108 472,825 Zions Bancorp. (UT)
28,979,444 Banks - Superregional 29.07% 268,403,756 318,010 Bank of America
Corp. (NC)+ 24,082,897 359,880 Bank One Corp. (OH)+ 15,276,906 447,400 Comerica,
Inc. (MI) 23,032,152 422,563 Fifth Third Bancorp. (OH) 24,491,751 827,483
FleetBoston Financial Corp. (MA) 33,422,037 Banks - Superregional (continued)
320,000 KeyCorp (OH)+ $9,040,000 330,000 Mellon Financial Corp. (PA) 9,857,100
500,224 National City Corp. (OH) 16,337,316 390,500 PNC Financial Services Group
(PA)+ 20,919,085 161,152 SunTrust Banks, Inc. (GA)+ 10,808,465 961,041 U.S.
Bancorp (MN) 26,159,536 621,625 Wachovia Corp. (NC)+ 28,513,939 469,861 Wells
Fargo & Co. (CA) 26,462,572 Broker Services 0.82% 7,573,500 27,000 Edwards
(A.G.) Inc. (MO) 1,093,500 90,000 Lehman Brothers Holdings, Inc. (NY) 6,480,000
Finance 3.44% 31,766,023 236,900 CIT Group, Inc. (NY) 7,964,578 449,925
Citigroup, Inc. (NY) 21,326,445 100,000 MBNA Corp. (DE) 2,475,000 Insurance
2.29% 21,138,653 110,088 American International Group, Inc. (NY) 6,696,653
134,000 MetLife, Inc. (NY) 4,207,600 85,000 Prudential Financial, Inc. (NJ)
3,284,400 100,000 XL Capital Ltd. (Class A) (Bermuda) 6,950,000 Investment
Management 3.75% 34,680,815 200,500 Affiliated Managers Group, Inc. (MA)*+
14,536,250 53,000 Eaton Vance Corp. (MA) 1,848,640 52,000 Federated Investors,
Inc. (Class B) (PA) 1,437,800 202,500 Legg Mason, Inc. (MD) 16,858,125 Mortgage
Banking 3.27% 30,171,905 112,500 Countrywide Financial Corp. (CA)+ 11,826,000
122,500 Fannie Mae (DC) 8,782,025 140,000 Freddie Mac (VA) 7,858,200 46,000 New
Century Financial Corp. (CA)+ 1,705,680 Thrifts 4.49% 41,471,218 71,910 Astoria
Financial Corp. (NY) 2,490,962 337,500 Commercial Capital Bancorp., Inc. (CA)*+
6,334,875 255,750 GreenPoint Financial Corp. (NY) 7,966,613 80,000 Hingham
Institute for Savings (MA) 3,380,000 65,000 LSB Corp. (MA) 1,143,350 156,800
PennFed Financial Services, Inc. (NJ) 4,910,976 276,812 Washington Mutual, Inc.
(WA) 12,110,525 70,110 Webster Financial Corp. (CT) 3,133,917 PREFERRED STOCKS
0.11% $1,034,000 (Cost $1,000,000) Banks & Thrifts 0.11% 40,000 IFC Capital
Trust I, 9.25% (IN) 1,034,000 INTEREST PAR VALUE ISSUER, DESCRIPTION, MATURITY
DATE RATE (000s OMITTED) VALUE BONDS 0.10% $929,390 (Cost $770,000) Banks 0.10%
CSBI Capital Trust I, Sub Cap Income, Ser A 06-06-27 (A) 11.750% $770 929,390
SHORT-TERM INVESTMENTS 10.03% $92,597,356 (Cost $92,597,356) Certificates of
Deposit 0.01% Deposits in mutual banks 76 75,884 Joint Repurchase Agreement
1.65% Investment in a joint repurchase agreement transaction with Barclays
Capital, Inc. - Dated 10-31-03, due 11-03-03 (Secured by U.S. Treasury Inflation
Indexed Bond 3.625% due 04-15-28, U.S. Treasury Inflation Indexed Note 1.875%
due 07-15-13) 1.020 15,188 15,188,000 SHARES Cash Equivalents 8.37% AIM Cash
Investment Trust** 77,333,472 77,333,472 TOTAL INVESTMENTS 108.34%
$1,000,440,123 OTHER ASSETS AND LIABILITIES, NET (8.34%) ($77,013,206) TOTAL NET
ASSETS 100.00% $923,426,917 See notes to financial statements. Financial
STatements shares ISSUER value See notes to financial statements. Financial
STatements shares ISSUER value See notes to financial statements. Financial
STatements shares ISSUER value + All or a portion of this security is on loan as
of October 31, 2003. * Non-income producing security. ** Represents investment
of security lending collateral. (A) This security is valued in good faith under
procedures established by the Board of Trustees. (R) This security is exempt
from registration under Rule 144A of the Securities Act of 1933. Such security
may be resold, normally to qualified institutional buyers, in transactions
exempt from registration. Rule 144A securities amounted to $6,017,100 or 0.65%
of net assets as of October 31, 2003. Parenthetical disclosure of a foreign
country in the security description represents country of a foreign issuer. 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. Financial STatements ASSETS Investments at value (including
$76,152,148 of securities loaned) Unaffiliated issuers (cost $525,021,053)
$999,349,173 Affiliated issuers (cost $567,150) 1,090,950 Cash 1,660 Dividends
and interest receivable 1,353,034 Other assets 155,253 Total assets
1,001,950,070 LIABILITIES Payable for securities on loan 77,333,472 Payable to
affiliates Management fee 775,273 Other 141,835 Other payables and accrued
expenses 272,573 Total liabilities 78,523,153 NET ASSETS Capital paid-in
396,939,741 Accumulated net realized gain on investments 43,448,697 Net
unrealized appreciation of investments 474,851,920 Accumulated net investment
income 8,186,559 Net assets $923,426,917 NET ASSET VALUE PER SHARE Based on
84,400,000 shares outstanding $10.94 October 31, 2003 This Statement of Assets
and Liabilities is the Fund's balance sheet. It shows the value of what the Fund
owns, is due and owes. You'll also find the net asset value for each common
share. See notes to financial statements. Financial STatements INVESTMENT INCOME
Dividends (including $54,369 received from affiliated issuers) $20,900,657
Interest (including securities lending income of $126,091) 596,456 Total
investment income 21,497,113 EXPENSES Investment management fee 9,124,264
Administration fee 1,983,536 Printing 169,575 Custodian fee 126,890 Registration
and filing fee 68,107 Legal fee 67,920 Trustees' fee 54,596 Transfer agent fee
45,985 Miscellaneous 41,517 Auditing fee 36,807 Interest 773 Total expenses
11,719,970 Less expense reductions (396,707) Net expenses 11,323,263 Net
investment income 10,173,850 REALIZED AND UNREALIZED GAIN Net realized gain on
investments 43,579,476 Change in net unrealized appreciation (depreciation) of
investments 136,897,644 Net realized and unrealized gain 180,477,120 Increase in
net assets from operations $190,650,970 operations For the year ended October
31, 2003 This Statement of Operations summarizes the Fund's investment income
earned and expenses incurred in operating the Fund. It also shows net gains
(losses) for the period stated. See notes to financial statements. Financial
STatements YEAR YEAR ended ended 10-31-02 10-31-03 INCREASE (DECREASE) IN NET
ASSETS From operations Net investment income $9,239,742 $10,173,850 Net realized
gain 62,746,904 43,579,476 Change in net unrealized appreciation (depreciation)
12,647,511 136,897,644 Increase in net assets resulting from operations
84,634,157 190,650,970 Distributions to shareholders From net investment income
(11,181,690) (9,831,756) From net realized gain (91,547,836) (62,701,604)
(102,729,526) (72,533,360) NET ASSETS Beginning of period 823,404,676
805,309,307 End of period 1 $805,309,307 $923,426,917 These Statements of
Changes in Net Assets show how the value of the Fund's net assets has changed
during the last two periods. The difference reflects earnings less expenses, any
investment gains and losses, distributions paid to shareholders, if any, and any
increase or decrease due to the sale of common shares. 1 Including accumulated
net investment income of $7,842,188 and $8,186,559, respectively. See notes to
financial statements. Financial highlights COMMON SHARES The Financial
Highlights show how the Fund's net asset value for a share has changed since the
end of the previous period. FINANCIAL HIGHLIGHTS PERIOD ENDED 10-31-99 10-31-00
10-31-01 10-31-02 10-31-03 PER SHARE OPERATING PERFORMANCE Net asset value,
beginning of period $11.08 $11.31 $9.53 $9.76 $9.54 Net investment income 1 0.14
0.19 0.15 0.11 0.12 Net realized and unrealized gain (loss) on investments 0.40
(1.27) 0.86 0.88 2.14 Total from investment operations 0.54 (1.08) 1.01 0.99
2.26 Less distributions From net investment income (0.14) (0.15) (0.21) (0.13)
(0.12) From net realized gain (0.17) (0.55) (0.57) (1.08) (0.74) (0.31) (0.70)
(0.78) (1.21) (0.86) Net asset value, end of period $11.31 $9.53 $9.76 $9.54
$10.94 Per share market value, end of period $9.50 $7.81 $7.88 $7.92 $9.65 Total
return at market value 2 (%) (16.44) (10.58) 9.56 3 15.39 3 35.54 3 RATIOS AND
SUPPLEMENTAL DATA Net assets, end of period (in millions) $955 $804 $823 $805
$923 Ratio of expenses to average net assets (%) 1.48 1.47 1.43 1.43 1.43 Ratio
of adjusted expenses to average net assets 4 (%) - - 1.45 1.46 1.48 Ratio of net
investment income to average net assets (%) 1.29 2.18 1.51 1.11 1.28 Portfolio
turnover (%) 5 13 27 20 4 1 Based on the average of the shares outstanding. 2
Assumes dividend reinvestment. 3 Total returns would have been lower had certain
expenses not been reduced during the periods shown. 4 Does not take into
consideration expense reductions during the periods shown. See notes to
financial statements. NOTE A Accounting policies John Hancock Bank and Thrift
Opportunity Fund (the "Fund") is a diversified closed-end 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. 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. Investments in AIM Cash Investment Trust
are valued at their net asset value each business day. 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, LLC (the "Adviser"), a wholly
owned subsidiary of The Berkeley Financial Group, LLC, may participate in a
joint repurchase agreement transaction. Aggregate cash balances are invested in
one or more large 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. Discount and premium on securities The Fund accretes
discount and amortizes premium from par value on securities from either the date
of issue or the date of purchase over the life of the security. Expenses The
majority of the expenses are directly identifiable to an individual fund.
Expenses that 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.
Securities lending The Fund may lend securities to certain qualified brokers who
pay the Fund negotiated lender fees. These fees are included in interest income.
The loans are collateralized at all times with cash or securities with a market
value at least equal to the market value of the securities on loan. As with
other extensions of credit, the Fund may bear the risk of delay of the loaned
securities in recovery or even loss of rights in the collateral, should the
borrower of the securities fail financially. On October 31, 2003, the Fund
loaned securities having a market value of $76,152,148 collateralized by cash in
the amount of $77,333,472. The cash collateral was invested in a short-term
instrument. Federal income taxes The Fund qualifies as a "regulated investment
company" by complying with the applicable provisions of the Internal Revenue
Code and will not be subject to federal income tax on taxable income that is
distributed to shareholders. Therefore, no federal income tax provision is
required. Dividends, interest and distributions Dividend income on investment
securities is recorded on the ex-dividend date or, in the case of some foreign
securities, on the date thereafter when the Fund identifies the dividend.
Interest income on investment securities is recorded on the accrual basis.
Foreign income may be subject to foreign withholding taxes, which are accrued as
applicable. The Fund records distributions to shareholders from net investment
income and net realized gains on the ex-dividend date. During the year ended
October 31, 2003, the tax character of distributions paid was as follows:
ordinary income $9,831,756 and long-term capital gains $62,701,604. As of
October 31, 2003, the components of distributable earnings on a tax basis
included $10,465,132 of undistributed ordinary income and $41,425,071 of
undistributed long- term gain. Such distributions and distributable earnings, on
a tax basis, are determined in conformity with income tax regulations, which may
differ from accounting principles generally accepted in the United States of
America. Distributions in excess of tax basis earnings and profits, if any, are
reported in the Fund's financial statements as a return of capital. Use of
estimates The preparation of these financial statements, in accordance with
accounting principles generally accepted in the United States of America,
incorporates estimates made by management in determining the reported amount of
assets, liabilities, revenues and expenses of the Fund. Actual results could
differ from these estimates. NOTE B Management fee and transactions with
affiliates and others The Fund has an investment management contract with the
Adviser. Under the investment management contract, the Fund pays a monthly
management fee to the Adviser at an annual rate of 1.15% of the Fund's average
weekly net asset value. The Fund has an agreement with the Adviser to provide
certain administrative services for the Fund. The compensation for the year was
at an annual rate of 0.25% of the average weekly net assets of the Fund. The
Adviser agreed to limit the administration fee to 0.20% of the Fund's average
weekly net assets. Accordingly, the expense reductions related to administration
fee amounted to $396,707 for the year ended October 31, 2003. The Adviser
reserves the right to terminate this limitation in the future with Trustees'
approval. Ms. Maureen Ford Goldfarb and Mr. John M. DeCiccio 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
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 makes investments into other John Hancock funds, as applicable, to
cover its liability for the deferred compensation. Investments to cover the
Fund's deferred compensation liability are recorded on the Fund's books as an
other asset. The deferred compensation liability and the related other asset are
always equal and are marked to market on a periodic basis to reflect any income
earned by the investments as well as any unrealized gains or losses. The
Deferred Compensation Plan investments had no impact on the operations of the
Fund. NOTE C Fund common share transactions The Fund had no common share
transactions during the year ended October 31, 2003. NOTE D Investment
transactions Purchases and proceeds from sales or maturities of securities,
other than short-term securities and obligations of the U.S. government, during
the year ended October 31, 2003, aggregated $27,611,120 and $91,146,776,
respectively. The cost of investments owned on October 31, 2003, including
short-term investments, for federal income tax purposes was $525,715,082. Gross
unrealized appreciation and depreciation of investments aggregated $478,351,489
and $3,626,448, respectively, resulting in net unrealized appreciation of
$474,725,041. The difference between book basis and tax basis net unrealized
appreciation of investments is attributable primarily to the tax deferral of
losses on certain sales of securities. NOTE F Reclassification of accounts
During the year ended October 31, 2003, the Fund reclassified amounts to reflect
an increase in accumulated net realized gain on investments of $1,020, an
increase in accumulated net investment income of $2,277 and a decrease in
capital paid-in of $3,297. This represents the amounts necessary to report these
balances on a tax basis, excluding certain temporary differences, as of October
31, 2003. Additional adjustments may be needed in subsequent reporting periods.
These reclassifications, which have no impact on the net asset value of the
Fund, are primarily attributable to certain differences in the computation of
distributable income and capital gains under federal tax rules versus accounting
principles generally accepted in the United States of America and book and tax
differences in accounting for deferred compensation. The calculation of net
investment income per share in the Fund's Financial Highlights excludes these
adjustments. NOTE E Transactions in securities of affiliated issuers Affiliated
issuers, as defined by the Investment Company Act of 1940, are those in which
the Fund's holdings of an issuer represent 5% or more of the outstanding voting
securities of the issuer. A summary of the Fund's transactions in the securities
of these issuers during the year ended October 31, 2003, is set forth below.
BEGINNING ENDING SHARE SHARE REALIZED DIVIDEND ENDING AFFILIATE AMOUNT AMOUNT
GAIN INCOME VALUE FNB Bankshares (ME) Common stock bought: none 20,780 20,780 -
$24,936 $1,090,950 sold: none MVBI Capital Trust (MO) Preferred stock bought:
none 40,000 -1 - 29,433 - sold: none Totals $54,369 $1,090,950 1 Security was
fully called on 7-31-03. No gain or loss was recognized on the call. The Board
of Directors and Shareholders, We have audited the accompanying statement of
assets and liabilities, including the schedule of investments, of John Hancock
Bank and Thrift Opportunity Fund (the "Fund") as of October 31, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. We conducted
our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at October 31, 2003 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion. In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of the Fund at
October 31, 2003, the results of its operations, the changes in its net assets,
and its financial highlights for the respective stated periods in conformity
with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP Boston, Massachusetts December 5, 2003 Report of Deloitte
& Touche LLP, Independent Auditors For federal income tax purposes, the
following information is furnished with respect to the dividends of the Fund, if
any, paid during its taxable year ended October 31, 2003. The Fund designated
distributions to shareholders of $62,701,604 as capital gain dividends. With
respect to distributions paid by the Fund for the fiscal year ended October 31,
2003, 100% of the distributions qualify for the dividends-received deduction
available for corporations. The Fund hereby designates the maximum amount
allowable of its net taxable income as qualified dividend income as provided in
the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be
reflected on Form 1099-DIV for the calendar year 2003. Shareholders will be
mailed a 2003 U.S. Treasury Department Form 1099-DIV in January 2004. This will
reflect the total of all distributions that are taxable for the calendar year
2003. tax information Unaudited INVESTMENT OBJECTIVE AND POLICY The 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. On November 20, 2001, the Fund's Trustees approved the following
investment policy changes, which became effective December 15, 2001. Under
normal circumstances, the Fund will invest at least 80% of its net assets in
equity securities of U.S. regional banks and thrifts and holding companies that
primarily own or receive a substantial portion of their income from regional
banks or thrifts. "Net assets" is defined as net assets plus borrowings for
investment purposes. "Primarily owned" means that the bank or financial holding
company derives a substantial portion of its business from U.S. regional banks
or thrifts as determined by the Adviser, based upon generally accepted measures
such as revenues, asset size and number of employees. U.S. regional banks or
thrifts are ones that provide full-service banking (i.e., savings accounts,
checking accounts, commercial lending and real estate lending) and whose assets
are primarily of domestic origin. The Fund will notify shareholders at least 60
days prior to any cha nge in this 80% investment policy. The Fund may invest in
investment-grade debt securities as well as debt securities rated BB or below by
Standard & Poor's Ratings group ("Standard & Poor's") or Ba or below by Moody's
Investors Service, Inc. ("Moody's"), or, if unrated by such rating
organizations, determined by the Adviser to be of comparable quality. DIVIDEND
REINVESTMENT PLAN The Fund offers its shareholders a Dividend Reinvestment Plan
(the "Plan"), which offers the opportunity to earn compounded yields. Each
holder of common shares will automatically have all distributions of dividends
and capital gains reinvested by Mellon Investor Services as Plan agent for the
common shareholders (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.
Shareholders may also make their election by notifying the Plan Agent by
telephone or by visiting the Plan Agent's Web site at www.melloninvestor.com.
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 dividend 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 Fund will
not issue any new shares in connection with the Plan. 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.
Participants in the Plan may withdraw from the Plan at any time by contacting
the Plan Agent by telephone, in writing or by visiting the Plan Agent's Web site
at www.melloninvestor.com. Such withdrawal will be effective immediately if
received 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.
The Plan Agent will hold common shares in the account of each Plan participant
in non-certificated 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. 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. federal income tax that
may be payable or required to be withheld on such dividends or distributions.
The amount of dividends to be reported on 1099-DIV should be the amount of cash
used by the Plan Agent to purchase shares in the open market, including the
amount of cash allocated to brokerage commissions paid on such purchases.
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 may be amended or terminated by the Plan
Agent after at least 90 days' written notice to all shareholders of the Fund.
All correspondence or additional information concerning the Plan should be
directed to the Plan Agent, Mellon Bank, N.A., c/o Mellon Investor Services,
P.O. Box 3338, South Hackensack, NJ 07606-1938 (telephone 1-800-852-0218).
SHAREHOLDER COMMUNICATION AND ASSISTANCE If you have any questions concerning
the Fund, we will be pleased to assist you. If you hold shares in your own name
and not with a brokerage firm, please address all notices, correspondence,
questions or other communications regarding the Fund to the transfer agent at:
Mellon Investor Services 85 Challenger Road Overpeck Centre Ridgefield Park, NJ
07660 Telephone: 1-800-852-0218 If your shares are held with a brokerage firm,
you should contact that firm, bank or other nominee for assistance. SHAREHOLDER
MEETINGS On November 19, 2002, the Board of Trustees adopted several amendments
to the Fund's by-laws, including provisions relating to the calling of a special
meeting and requiring advance notice of shareholder proposals or nominees for
Trustee. The advance notice provisions in the by-laws require shareholders to
notify the Fund in writing of any proposal which they intend to present at an
annual meeting of shareholders, including any nominations for Trustee, between
90 and 120 days prior to the first anniversary of the mailing date of the notice
from the prior year's annual meeting of shareholders. The notification must be
in the form prescribed by the by-laws. The advance notice provisions provide the
Fund and its Trustees with the opportunity to thoughtfully consider and address
the matters proposed before the Fund prepares and mails its proxy statement to
shareholders. Other amendments set forth the procedures that must be followed in
order for a shareholder to call a special meeting of shareholders. Please con
tact the Secretary of the Fund for additional information about the advance
notice requirements or the other amendments to the by-laws. On April 3, 2003,
the Annual Meeting of the Fund was held to elect four Trustees and to ratify the
action of the Trustees in selecting independent auditors for the Fund. Proxies
covering 81,709,995 shares of beneficial interest were voted at the meeting. The
shareholders elected the following Trustees to serve until their respective
successors are duly elected and qualified, with the votes tabulated as follows:
WITHHELD FOR AUTHORITY Ronald R. Dion 69,221,199 12,488,796 Charles L. Ladner
69,221,850 12,438,145 John A. Moore 69,155,197 12,554,798 Maureen Ford Goldfarb
68,870,675 12,839,320 The shareholders also ratified the Trustees' selection of
Deloitte & Touche LLP as the Fund's independent auditors for the fiscal year
ending October 31, 2003, with the votes tabulated as follows: 71,978,944 FOR,
706,418 AGAINST and 9,024,632 ABSTAINING. A shareholder proposal recommending
that the Board consider merging the Fund into the John Hancock Regional Bank
Fund was rejected, with the votes tabulated as follows: 18,516,875 FOR,
24,555,030 AGAINST and 1,703,101 ABSTAINING. This chart provides information
about the Trustees and Officers who oversee your John Hancock fund. Officers
elected by the Trustees manage the day-to-day operations of the Fund and execute
policies formulated by the Trustees. independent Trustees number of name, age
trustee john hancock Principal occupation(s) and other of fund funds overseen
directorships during past 5 years since1 by trustee James F. Carlin, Born: 1940
1994 30 Director and Treasurer, Alpha Analytical Inc. (analytical laboratory)
(since 1985); Part Owner and Treasurer, Lawrence Carlin Insurance Agency, Inc.
(since 1995); Part Owner and Vice President, Mone Lawrence Carlin Insurance
Agency, Inc. (since 1996); Director and Treasurer, Rizzo Associates (until
2000); Chairman and CEO, Carlin Consolidated, Inc. (management/investments)
(since 1987); Director and Partner, Proctor Carlin & Co., Inc. (until 1999);
Trustee, Massachusetts Health and Education Tax Exempt Trust (since 1993);
Director of the following: Uno Restaurant Corp. (until 2001), Arbella Mutual
(insurance) (until 2000), HealthPlan Services, Inc. (until 1999), Flagship
Healthcare, Inc. (until 1999), Carlin Insurance Agency, Inc. (until 1999);
Chairman, Massachusetts Board of Higher Education (until 1999). William H.
Cunningham, Born: 1944 1995 30 Former Chancellor, University of Texas System and
former President of the University of Texas, Austin, Texas; Chairman and CEO,
IBT Technologies (until 2001); Director of the following: The University of
Texas Investment Management Company (until 2000), Hire.com (since 2000), STC
Broadcasting, Inc. and Sunrise Television Corp. (until 2001), Symtx, Inc. (since
2001), Adorno/ Rogers Technology, Inc. (since 2001), Pinnacle Foods Corporation
(since 2001), rateGenius (since 2001), LaQuinta Motor Inns, Inc. (hotel
management company) (until 1998), Jefferson-Pilot Corporation (diversified life
insurance company) (since 1985), New Century Equity Holdings (formerly Billing
Concepts) (until 2001), eCertain (until 2001), ClassMap.com (until 2001), Agile
Ventures (until 2001), LBJ Foundation (until 2000), Golfsmith International,
Inc. (until 2000), Metamor Worldwide (until 2000), AskRed.com (until 2001),
Southwest Airlines (since 2000) and Introgen (since 2000); Advisory Director, Q
Investments (since 2000); Advisory Director, Chase Bank (formerly Texas Commerce
Bank-D Austin) (since 1988), LIN Television (since 2002) and WilTel
Communications (since 2002). Ronald R. Dion, Born: 1946 1998 30 Chairman and
Chief Executive Officer, R.M. Bradley & Co., Inc.; Director, The New England
Council and Massachusetts Roundtable; Trustee, North Shore Medical Center;
Director, BJ's Wholesale Club, Inc. and a corporator of the Eastern Bank;
Trustee, Emmanuel College. number of name, age trustee john hancock Principal
occupation(s) and other of fund funds overseen directorships during past 5 years
since1 by trustee Charles L. Ladner,2 Born: 1938 1994 30 Chairman and Trustee,
Dunwoody Village, Inc. (retirement services); Senior Vice President and Chief
Financial Officer, UGI Corporation (Public Utility Holding Company) (retired
1998); Vice President and Director for AmeriGas, Inc. (retired 1998); Director
of AmeriGas Partners, L.P. (until 1997) (gas distribution); Director,
EnergyNorth, Inc. (until 1995); Director, Parks and History Association (since
2001). John A. Moore,2 Born: 1939 2002 29 President and Chief Executive Officer,
Institute for Evaluating Health Risks (nonprofit institution) (until 2001);
Chief Scientist, Sciences International (health research) (since 1998);
Principal, Hollyhouse (consulting) (since 2000); Director, CIIT (nonprofit
research) (since 2002). Patti McGill Peterson,2 Born: 1943 2002 29 Executive
Director, Council for International Exchange of Scholars (since 1998); Vice
President, Institute of International Education (since 1998); Senior Fellow,
Cornell Institute of Public Affairs, Cornell University (until 1997); President
Emerita of Wells College and St. Lawrence University; Director, Niagara Mohawk
Power Corporation (electric utility). Steven Pruchansky, Born: 1944 1994 30
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc.
(since 2000); Director and President, Greenscapes of Southwest Florida, Inc.
(until 2000); Managing Director, JonJames, LLC (real estate) (since 2001);
Director, First Signature Bank & Trust Company (until 1991); Director, Mast
Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991).
Norman H. Smith, Born: 1933 1994 30 Lieutenant General, United States Marine
Corps; Deputy Chief of Staff for Manpower and Reserve Affairs, Headquarters
Marine Corps; Commanding General III Marine Expeditionary Force/3rd Marine
Division (retired 1991). John P. Toolan,2 Born: 1930 1994 30 Director, The Smith
Barney Muni Bond Funds, The Smith Barney Tax-Free Money Funds, Inc., Vantage
Money Market Funds (mutual funds), The Inefficient-Market Fund, Inc. (closed-end
investment company); Chairman, Smith Barney Trust Company of Florida (retired
1991); Director, Smith Barney, Inc., Mutual Management Company and Smith Barney
Advisers, Inc. (investment advisers) (retired 1991); Senior Executive Vice
President, Director and member of the Executive Committee, Smith Barney, Harris
Upham & Co., Incorporated (investment bankers) (until 1991). Interested
Trustees3 name, age number of position(s) held with fund trustee john hancock
Principal occupation(s) and other of fund funds overseen directorships during
past 5 years since1 by trustee John M. DeCiccio, Born: 1948 2001 51 Trustee
Executive Vice President and Chief Investment Officer, John Hancock Financial
Services, Inc.; Director, Executive Vice President and Chief Investment Officer,
John Hancock Life Insurance Company; Chairman of the Committee of Finance of
John Hancock Life Insurance Company; Director, John Hancock Subsidiaries, LLC
(Subsidiaries, LLC), Hancock Natural Resource Group, Independence Investment
LLC, Declaration Management Research LLC, John Hancock Advisers, LLC (the
"Adviser"), The Berkeley Financial Group, LLC ("The Berkeley Group"), John
Hancock Funds, LLC ("John Hancock Funds") and Massachusetts Business Development
Corporation; Director, John Hancock Insurance Agency, Inc. ("Insurance Agency,
Inc.") (until 1999).
name, age number of
position(s) held with fund trustee john hancock Principal occupation(s) and
other of fund funds overseen directorships during past 5 years since1 by trustee
Maureen Ford Goldfarb, Born: 1955 2000 51 Trustee, Chairman, President and Chief
Executive Officer Executive Vice President, John Hancock Financial Services,
Inc., John Hancock Life Insurance Company; Chairman, Director, President and
Chief Executive Officer, the Adviser and The Berkeley Group; Chairman, Director,
President and Chief Executive Officer, John Hancock Funds; Chairman, Director,
President and Chief Executive Officer, Sovereign Asset Management Corporation
("SAMCorp."); Director, Independence Investment LLC, Subsidiaries, LLC and
Signature Services; Investment Company Institute Board of Governors (since
2002); Senior Vice President, MassMutual Insurance Co. (until 1999).
Principal Officers who are not Trustees
name, age position(s) held with fund officer Principal occupation(s) and of fund
directorships during past 5 years since Richard A. Brown, Born: 1949 2000 Senior
Vice President and Chief Financial Officer Senior Vice President, Chief
Financial Officer and Treasurer, the Adviser, John Hancock Funds and The
Berkeley Group; Second Vice President and Senior Associate Controller, Corporate
Tax Department, John Hancock Financial Services, Inc. (until 2001). Thomas H.
Connors, Born: 1959 1994 Vice President and Compliance Officer Vice President
and Compliance Officer, the Adviser and each of the John Hancock funds; Vice
President, John Hancock Funds.
name, age position(s) held with fund officer Principal occupation(s) and of fund
directorships during past 5 years since William H. King, Born: 1952 1994 Vice
President and Treasurer Vice President and Assistant Treasurer, the Adviser;
Vice President and Treasurer of each of the John Hancock funds; Assistant
Treasurer of each of the John Hancock funds (until 2001). Susan S. Newton, Born:
1950 1994 Senior Vice President, Secretary and Chief Legal Officer Senior Vice
President, Secretary and Chief Legal Officer, SAMCorp., the Adviser and each of
the John Hancock funds, John Hancock Funds and The Berkeley Group; Vice
President, Signature Services (until 2000); Director, Senior Vice President and
Secretary, NM Capital. The business address for all Trustees and Officers is 101
Huntington Avenue, Boston, Massachusetts 02199. The Statement of Additional
Information of the Fund includes additional information about members of the
Board of Trustees of the Fund and is available, without charge, upon request, by
calling 1-800-225-5291. 1 Each Trustee serves until resignation, retirement age
or until his or her successor is elected. 2 Member of Audit Committee. 3
Interested Trustees hold positions with the Fund's investment adviser,
underwriter and certain other affiliates. INVESTMENT ADVISER John Hancock
Advisers, LLC 101 Huntington Avenue Boston, Massachusetts 02199-7603
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT AND
DIVIDEND DISBURSER
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660
LEGAL COUNSEL
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109-1803
INDEPENDENT AUDITORS
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116-5022
STOCK SYMBOL
Listed New York Stock Exchange: BTO
For shareholder assistance refer to page 22 for your information How to contact
us On the Internet www.jhfunds.com By regular mail Mellon Investor Services 85
Challenger Road Overpeck Centre Ridgefield Park, NJ 07660 Customer service
representatives 1-800-852-0218 Portfolio commentary 1-800-344-7054 24-hour
automated information 1-800-843-0090 TDD Line 1-800-231-5469 The Fund's voting
policies and procedures are available without charge, upon request: By phone
1-800-225-5291 On the Fund's Web site www.jhfunds.com/proxy On the SEC's Web
site www.sec.gov P900A 10/03 12/03 PRESORTED STANDARD U. S. Postage PAID MIS
1-800-852-0218 1-800-843-0090 EASI-Line 1-800-231-5469 (TDD)
www.jhfunds.com
ITEM 2. CODE OF ETHICS.
As of the end of the period, October 31, 2003, the registrant has adopted a code
of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief
Executive Officer, Chief Financial Officer and Treasurer (respectively, the
principal executive officer, the principal financial officer and the principal
accounting officer, the "Senior Financial Officers"). A copy of the code of
ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Charles L. Ladner is the audit committee financial expert and is "independent",
pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
See attached Exhibit "Proxy Voting Policies and Procedures".
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and
procedures as conducted within 90 days of the filing date of this Form N-CSR,
the registrant's principal executive officer and principal financial officer
have concluded that those disclosure controls and procedures provide reasonable
assurance that the material information required to be disclosed by the
registrant on this report is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
have materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of
1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer
and principal financial officer, as required by 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule
30a-2(b) under the Investment Company Act of 1940, are attached. The
certifications furnished pursuant to this paragraph are not deemed to be "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to the liability of that section. Such certifications are not deemed to
be incorporated by reference into any filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934, except to the extent that the Registrant
specifically incorporates them by reference.
(c)(1) Proxy Voting Policies and Procedures are attached.
(d)(1) Contact person at the registrant
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By:
------------------------------
Maureen Ford Goldfarb
Chairman, President and Chief Executive Officer
Date: December 18, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By:
-------------------------------
Maureen Ford Goldfarb
Chairman, President and Chief Executive Officer
Date: December 18, 2003
By:
-------------------------------
Richard A. Brown
Senior Vice President and Chief Financial Officer
Date: December 18, 2003