UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8568
John Hancock Bank & Thrift Opportunity Fund
(Exact name of registrant as specified in charter)
101 Huntington Avenue, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip code)
Susan S. Newton, Secretary
101 Huntington Avenue
Boston, Massachusetts 02199
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-375-1702
Date of fiscal year end: October 31
Date of reporting period: October 31, 2004
ITEM 1. REPORT TO SHAREHOLDERS.
JOHN HANCOCK
Bank and Thrift Opportunity Fund
10.31.2004
Annual Report
[A 2" x 1" John Hancock (Signature)/John Hancock Funds logo in lower,
center middle of page. A tag line below reads "JOHN HANCOCK FUNDS."]
[A photo of James A. Shepherdson, Chief Executive Officer, flush left next
to first paragraph.]
CEO CORNER
Table of contents
Your fund at a glance
page 1
Managers' report
page 2
Fund's investments
page 6
Financial statements
page 13
Trustees & officers
page 26
For more information
page 29
Dear Fellow Shareholders,
The stock market made little, if any, headway year-to-date through October
2004, as it wrestled with a variety of uncertainties. Questions about the
continuing strength of the economy, the effects of rising interest rates
and expectations for corporate earnings growth kept investors jittery. In
addition, record high crude oil prices, geopolitical issues and a closely
contested U.S. presidential race all weighed on the market. The picture
brightened in early November with the election over and oil prices
moderating somewhat.
Year-to-date through October 31, 2004, the Standard & Poor's 500 Index was
up 3.06%, while the Dow Jones Industrial Average and the Nasdaq Composite
Index were slightly negative, returning -2.40% and -1.05%, respectively.
Despite the Federal Reserve's three hikes in short-term interest rates from
historic lows, bonds still managed to outperform stocks, with the Lehman
Brothers Aggregate Bond Index up 4.22%.
In news closer to home, we are pleased to announce that on June 15, 2004,
your fund's Board of Trustees appointed Charles L. Ladner as independent
Chairman of the Board of Trustees, a position previously held by John
Hancock Funds LLC's former Chairman and Chief Executive Officer, Maureen
Ford Goldfarb. This appointment came in advance of new SEC regulations
requiring all mutual funds to have independent chairmen.
Mr. Ladner has served as an independent member of John Hancock Funds' Board
of Trustees since 1992 and formerly held the position of Senior Vice
President and Chief Financial Officer of UGI Corporation, a public utility
holding company in Valley Forge, PA, until his retirement in 1998. He
brings a wealth of knowledge, experience and leadership and we are
delighted to have him serve as Chairman.
Sincerely,
/S/ JAMES A. SHEPHERDSON
James A. Shepherdson,
Chief Executive Officer
This commentary reflects the CEO's views as of October 31, 2004. They are
subject to change at any time.
YOUR FUND
AT A GLANCE
The Fund seeks
long-term capital
appreciation by nor-
mally investing at
least 80% of its
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.
Over the last twelve months
* The broad stock market advanced, but ran into headwinds in 2004 as
geopolitical issues, rising oil prices and economic uncertainties kept
investors wary.
* Financial stocks slightly underperformed the market, with merger banks
among the best performing group.
* The Fund's strong weightings in regional banks and takeover candidates
helped it outperform its index and peers.
[Bar chart with heading "John Hancock Bank and Thrift Opportunity Fund".
Under the heading is a note that reads "Fund performance for the year ended
October 31, 2004." The chart is scaled in increments of 5% with 0% at the
bottom and 25% at the top. The first bar represents the 17.93% Net asset
value for John Hancock Bank and Thrift Opportunity Fund. The second bar
represents the 21.37% market value for the John Hancock Bank and Thrift
Opportunity Fund. A note below the chart reads, "The total returns for the
Fund include the reinvestment of all distributions. The performance data
contained within this material represents past performance, which does not
guarantee future results."]
Top 10 holdings
3.3% SouthTrust Corp.
3.2% Zions Bancorp.
3.0% Compass Bancshares, Inc.
3.0% Bank of America Corp.
2.9% Comerica, Inc.
2.9% Wells Fargo & Co.
2.9% US Bancorp.
2.6% North Fork Bancorp., Inc.
2.6% M&T Bank Corp.
2.6% SunTrust Banks, Inc.
As a percentage of net assets on October 31, 2004.
1
BY JAMES K. SCHMIDT, CFA, LISA A. WELCH AND THOMAS M. FINUCANE, PORTFOLIO
MANAGERS
MANAGERS'
REPORT
JOHN HANCOCK
Bank and Thrift Opportunity Fund
Portfolio manager Thomas Finucane, who was a portfolio manager at John
Hancock from 1990 to 2002, recently rejoined the team as a co-portfolio
manager after two years at another asset management firm.
The stock market began the Fund's fiscal year last November on an upbeat
path, bolstered by low interest rates, a rebounding economy, tax cuts and
strong corporate earnings growth. But the environment became more difficult
as the new calendar year progressed, and stocks moved sideways for much of
2004. Concerns that the Federal Reserve's moves to raise interest rates
would negatively impact corporate earnings, and questions about the
strength of the economy, combined with a host of other fears to keep
investors wary. The list of uncertainties included spiking oil prices,
hurricanes, terrorism, the Iraq war and the tight U.S. presidential
election race. Although the broad market, as measured by the Standard &
Poor's 500 Index, returned 9.42% in the 12 months ended October 31, 2004,
much of the advance came at the beginning of the period last November and
December.
"...stocks moved sideways for
much of 2004."
Financial stocks as a group slightly underperformed the broad market, with
the Standard & Poor's 500 Financial Index returning 8.04% in the period.
Regional banks, diversified banks and real estate investment trusts (REITs)
all performed well, as growing uncertainties led investors to these more
conservative safe-haven sectors, given their high dividends and stable
earnings. Regional banks were also bolstered by an upswing in mergers,
while the more market-sensitive names, such as trust banks and brokers,
struggled. Insurance stocks were hit hard at the end of the period by
charges of bid rigging and price fixing against the most prominent
insurance broker, Marsh & McLennan.
2
Fund performance and strategy
For the year ended October 31, 2004, John Hancock Bank and Thrift
Opportunity Fund posted total returns of 17.93% at net asset value and
21.37% at market value. The difference in the Fund's net asset value (NAV)
performance and its market performance stems from the fact that the market
share price is subject to the dynamics of secondary market trading, which
could cause it to trade at a discount or premium to the Fund's NAV share
price at any time. The Fund's return exceeded the Fund's benchmark Standard
& Poor's 500 Financial Index and the 10.57% return of the average open-end
financial services fund, according to Lipper, Inc.
[Photos of Jim Schmidt, Lisa Welch and Tom Finucane flush right next to
first paragraph.]
Our overweighting in the strong-performing regional bank sector and
primarily good stock selection in the sector were the main drivers of our
outperformance.
The Fund continues to implement the same investment strategy that it has
adhered to since its inception in August 1994. The Fund owns regional banks
that have good fundamentals and are selling at attractive valuations, and,
as an added plus, could also be potential candidates for merger activity.
This investment approach -- and its focus on regional banks -- has served
long-time shareholders well and continues to generate very competitive
returns. Since its inception in 1994, the Fund has produced average annual
returns of 16.53% at net asset value, outperforming the 14.25% annual
return at net asset value of Lipper's average open-end financial services
fund and the 10.82% average annual return of the S&P 500 Index in the same
period through October 31, 2004.
"...banks involved in mergers were
some of our biggest contributors to
performance..."
Mergers: dominant performance driver
Merger activity picked up significantly over the last 12 months -- an
average of one deal a month in our fund alone -- spearheaded by the
announced mega-merger between FleetBoston and Bank of America just before
the fiscal year began. Not surprisingly, banks involved in mergers were
some of our biggest contributors to performance during the year, including
FleetBoston and Bank of America, whose stock rebounded as the market became
more comfortable with the acquisition. Of our top 12 performers, five were
takeout names,
3
and our large stakes in these regional banks at the time of the announced
deals made a significant positive impact on performance. Some of the bigger
names and top performers included Charter One, which was acquired by Royal
Bank of Scotland, SouthTrust, which was bought by Wachovia, National Commerce
Financial, which was acquired by SunTrust, and Banknorth which received an
acquisition bid from Toronto Dominion. Greenpoint Financial, which was
acquired by North Fork Bancorporation, and Bank One, which was bought by
JPMorgan Chase, were also top contributors.
[Table at top left-hand side of page entitled "Top five industry groups." The
first listing is Regional banks 66%, the second is Diversified banks 14%, the
third is Thrifts & mortgage finance 7%, the fourth is Other diversified
financial service 5%, and the fifth is Asset management & custody banks 5%].
We also were well served by our large weightings in mid-cap banks whose
stocks did very well, some because of heightened speculation that they
would become takeover targets, and some because they are perceived to be
asset-sensitive, that is, their income rises as interest rates increase.
These included East West Bancorp., Compass Bancshares, Comerica, Colonial
BancGroup, Zions Bancorp and TCF Financial.
[Pie chart in middle of page with heading "Portfolio diversification As a
percentage of net assets on 10-31-04." The chart is divided into two
sections (from top to left): Common stocks 98% and Short-term investments &
other 2%.]
Market-sensitive stocks lag
The biggest disappointments were market-sensitive stocks that struggled
along with the decline in the stock market, as the bulk of their earnings
come from market-related activities. These detractors included Citigroup,
Mellon Financial Corp. and State Street Corp. Some of the mortgage-related
names also faded as interest rate volatility made conditions difficult for
such companies as Washington Mutual and First Horizon National.
4
Regulatory risk hurt several of our holdings, including Fannie Mae, which had
accounting issues. Our large stake in Fifth Third Bancorp also hurt, as the
bank struggled with regulatory issues and disappointing earnings.
[Table at top of page entitled "Scorecard." The header for the left column
is "Investment" and the header for the right column is "Period's
performance...and what's behind the numbers." The first listing is East
West Bancorp followed by an up arrow with the phrase "Chinese-focused bank
continues to shine." The second listing is SouthTrust followed by an up
arrow with the phrase "Acquired by Wachovia." The third listing is State
Street followed by a down arrow with the phrase "Earnings disappointments
in a tough operating environment."]
Outlook
Bank fundamentals remain in good shape, with solid earnings growth,
improving margins and signs that commercial lending is picking up. We
believe bank stocks can serve as a good safe haven, especially in an
uncertain economic environment, with their stable earnings, healthy
dividends and merger activity, which we believe will continue. Given the
strong outperformance in the last several years of small banks, we think
that large-cap financial names now trade at more attractive valuations.
"Bank fundamentals remain in good
shape, with solid earnings growth,
improving margins and signs that
commercial lending is picking up."
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.
5
FINANCIAL STATEMENTS
FUND'S
INVESTMENTS
Securities owned
by the Fund on
October 31, 2004
This schedule is divided into three main categories: bonds, common stocks
and short-term investments. Bonds and common stocks are further broken down
by industry group. Short-term investments, which represent the Fund's cash
position, are listed last.
Interest Maturity Credit Par value
Issuer, description rate date rating (000) Value
Bonds 0.10% $951,643
(Cost $770,000)
Regional Banks 0.10% 951,643
CSBI Capital Trust I,
Sub Cap Income Ser A (B)(G) 11.750% 06-06-27 B- $770,000 951,643
Issuer Shares Value
Common stocks 97.57% $920,134,086
(Cost $388,448,921)
Asset Management & Custody Banks 4.65% 43,905,842
Affiliated Managers Group, Inc. (MA) (I)(L) 245,750 13,722,680
Federated Investors, Inc. (Class B) (PA) 30,000 869,700
Investors Financial Services Corp. (MA) 15,000 577,350
Legg Mason, Inc. (MD) 198,750 12,662,362
Mellon Financial Corp. (PA) 330,000 9,537,000
Northern Trust Corp. (IL) 70,000 2,977,800
State Street Corp. (MA) 79,000 3,558,950
Consumer Finance 0.27% 2,563,000
MBNA Corp. (DE) 100,000 2,563,000
Diversified Banks 14.14% 133,331,949
Bank of America Corp. (NC) 634,670 28,426,869
Comerica, Inc. (MI) 447,400 27,519,574
Fifth Third Bancorp. (OH) 467,563 22,999,424
U.S. Bancorp. (MN) 941,041 26,923,183
Wells Fargo & Co. (CA) 459,861 27,462,899
Investment Banking & Brokerage 0.04% 420,245
Piper Jaffray Cos., Inc. (MN) (I)(L) 9,610 420,245
See notes to
financial statements.
6
FINANCIAL STATEMENTS
Issuer Shares Value
Life & Health Insurance 0.72% $6,776,600
MetLife, Inc. (NY) 104,000 3,988,400
Prudential Financial, Inc. (NJ) 60,000 2,788,200
Other Diversified Financial Service 4.76% 44,848,715
CIT Group, Inc. (NJ) 100,600 4,064,240
Citigroup, Inc. (NY) 505,925 22,447,892
JPMorgan Chase & Co. (MA) 475,041 18,336,583
Property & Casualty Insurance 0.23% 2,175,000
XL Capital Ltd. (Class A) (Cayman Islands) (L) 30,000 2,175,000
Regional Banks 65.60% 618,602,317
ABC Bancorp. (GA) 65,400 1,330,236
Alabama National Bancorp. (AL) 142,500 9,105,750
AmericanWest Bancorp. (WA) (I) 357,921 7,104,732
AmSouth Bancorp. (AL) 95,879 2,530,247
Bank of New York Co., Inc. (The) (NY) 288,000 9,348,480
Banknorth Group, Inc. (ME) 682,688 24,078,406
BB&T Corp. (NC) (L) 344,846 14,176,619
Beverly National Corp. (MA) 47,500 1,273,000
BOK Financial Corp. (OK) (I) 117,208 5,334,136
Camden National Corp. (ME) 140,000 5,159,000
Capital City Bank Group, Inc. (FL) 59,635 2,332,325
Cardinal Financial Corp. (VA) (I) 86,200 857,690
Cascade Bancorp. (OR) 194,272 3,934,008
Chittenden Corp. (VT) 175,245 4,962,938
City Holding Co. (WV) 41,600 1,441,440
City National Corp. (CA) 224,427 15,463,020
CoBiz, Inc. (CO) 8,650 171,659
Colonial BancGroup (The), Inc. (AL) 585,200 12,669,580
Columbia Bancorp. (MD) 90,000 2,800,800
Columbia Bancorp. (OR) 13,250 236,513
Columbia Banking System, Inc. (WA) 29,645 726,303
Commercial Bankshares, Inc. (FL) 63,702 2,246,770
Community Banks, Inc. (PA) 105,055 3,061,303
Compass Bancshares, Inc. (AL) (L) 600,857 28,702,939
Cullen/Frost Bankers, Inc. (TX) 20,000 980,000
Dearborn Bancorp., Inc. (MI) (I) 37,470 1,011,690
Desert Community Bank (CA) 137,500 3,553,000
DNB Financial Corp. (PA) 65,830 1,678,665
East West Bancorp., Inc. (CA) 540,000 21,621,600
See notes to
financial statements.
7
FINANCIAL STATEMENTS
Issuer Shares Value
Regional Banks (continued)
EuroBancshares, Inc. (Puerto Rico) (I) 87,830 $1,629,247
F.N.B. Corp. (PA) 90,049 1,848,706
Financial Institutions, Inc. (NY) 73,000 1,924,280
First Charter Corp. (NC) 52,200 1,332,666
First Horizon National Corp. (TN) 163,400 7,071,952
First Midwest Bancorp., Inc. (IL) 19,000 663,290
First National Bankshares of Florida (FL) 92,750 2,289,997
First Regional Bancorp. (CA) (I) 100,000 3,753,000
First Regional Bancorp. (CA) (I) 50,000 2,085,000
First State Bancorp. (NM) 65,000 2,294,500
FirstMerit Corp. (OH) 2,950 77,084
FNB Bankshares (ME) (A) 62,340 2,540,978
Fulton Financial Corp. (PA) (L) 106,803 2,291,992
Glacier Bancorp., Inc. (MT) 294,231 9,312,411
Harleysville National Corp. (PA) 137,776 3,522,932
Hibernia Corp. (Class A) (LA) 230,000 6,670,000
Independent Bank Corp. (MI) 308,105 8,371,213
International Bancshares Corp. (TX) 160,270 5,929,990
KeyCorp (OH) (L) 320,000 10,748,800
M&T Bank Corp. (NY) (L) 238,657 24,581,671
Marshall & Ilsley Corp. (WI) (L) 423,795 17,786,676
MB Financial, Inc. (IL) 105,000 4,487,700
Mercantile Bankshares Corp. (MD) 209,500 10,211,030
Merrill Merchants Bankshares, Inc. (ME) 73,687 1,588,692
Mid-State Bancshares (CA) 50,000 1,341,500
National City Corp. (DE) (L) 568,188 22,142,286
North Fork Bancorp., Inc. (NY) 559,695 24,682,550
Northrim Bancorp., Inc. (AK) 70,053 1,593,706
Oriental Financial Group, Inc. (Puerto Rico) 18,395 521,130
Pacific Capital Bancorp. (CA) 364,354 11,597,388
Placer Sierra Bancshares (CA) 14,550 349,200
PNC Financial Services Group (PA) 418,500 21,887,550
Prosperity Bancshares, Inc. (TX) 120,000 3,270,000
Provident Bankshares Corp. (MD) 165,058 5,732,464
Regions Financial Corp. (AL) 127,390 4,468,841
Republic Bancorp., Inc. (MI) 3,000 50,130
S&T Bancorp., Inc. (PA) 154,700 5,575,388
Sandy Spring Bancorp., Inc. (MD) 9,500 328,510
Security Bank Corp. (GA) 35,000 1,233,750
See notes to
financial statements.
8
FINANCIAL STATEMENTS
Issuer Shares Value
Regional Banks (continued)
Sky Financial Group, Inc. (OH) 234,850 $6,312,768
SNB Bancshares, Inc. (TX) (I) 94,340 1,226,420
SouthTrust Corp. (AL) 709,350 30,906,380
Southwest Bancorp. of Texas, Inc. (TX) 520,660 12,204,270
Southwest Bancorp., Inc. (OK) 9,000 211,320
Summit Bancshares, Inc. (TX) 139,500 4,741,605
SunTrust Banks, Inc. (GA) (L) 346,826 24,409,614
Synovus Financial Corp. (GA) 450,000 12,235,500
Taylor Capital Group, Inc. (IL) 213,200 6,257,420
TCF Financial Corp. (MN) (L) 428,016 13,491,064
Texas United Bancshares, Inc. (TX) 47,100 847,329
TriCo Bancshares (CA) 53,000 1,150,630
UCBH Holdings, Inc. (CA) 200,000 8,618,000
Umpqua Holdings Corp. (OR) 177,901 4,426,177
Univest Corp. (PA) 136,812 5,493,002
Valley National Bancorp. (NJ) 149,892 4,250,937
Vineyard National Bancorp., Co. (CA) (I) 150,000 3,944,700
Virginia Commerce Bancorp., Inc. (VA) (I) 13,337 392,108
West Coast Bancorp. (OR) 67,583 1,601,717
Whitney Holding Corp. (LA) 106,500 4,644,465
Wilmington Trust Corp. (DE) 350,000 12,096,000
Yardville National Bancorp. (NJ) 97,400 3,231,732
Zions Bancorp. (UT) 456,825 30,228,110
Thrifts & Mortgage Finance 7.16% 67,510,418
Astoria Financial Corp. (NY) 71,910 2,810,962
Commercial Capital Bancorp., Inc. (CA) 450,000 10,093,500
Countrywide Financial Corp. (CA) 450,000 14,368,500
Fannie Mae (DC) 80,500 5,647,075
Freddie Mac (VA) 140,000 9,324,000
Hingham Institute for Savings (MA) 80,000 3,300,000
LSB Corp. (MA) 65,000 1,257,750
New York Community Bancorp, Inc. (NY) 40,000 734,400
NewAlliance Bancshares, Inc. (CT) 12,581 174,624
PennFed Financial Services, Inc. (NJ) 156,800 5,083,456
Sovereign Bancorp, Inc. (PA) 30,000 649,500
Washington Mutual, Inc. (WA) 276,812 10,715,393
Webster Financial Corp. (CT) 70,110 3,351,258
See notes to
financial statements.
9
FINANCIAL STATEMENTS
Interest Par value
Issuer, description, maturity date rate (000s) Value
Short-term investments 8.51% $80,244,730
(Cost $80,244,730)
Certificates of Deposit 0.01% 73,787
Deposits in mutual banks $74 73,787
Joint Repurchase Agreement 2.01% 18,973,000
Investment in a joint repurchase agreement
transaction with Morgan Stanley --
Dated 10-29-04, due 11-01-04 (secured
by U.S. Treasury Bond 8.125% due
08-15-19, U.S. Treasury Note 5.875%
due 11-15-04, U.S. Treasury Inflation
Indexed Bonds 3.625% due 04-15-28
and 3.375% due 04-15-32, and U.S.
Treasury Inflation Indexed Notes 3.375%
thru 3.875% due 01-15-09 thru 01-15-12) 1.77% 18,973 18,973,000
Shares
Cash Equivalents 6.49% 61,197,943
AIM Cash Investment Trust (T) 61,197,943 61,197,943
Total investments 106.18% $1,001,330,459
Other assets and liabilities, net (6.18%) ($58,283,593)
Total net assets 100.00% $943,046,866
(A) Issuer is an affiliate of John Hancock Advisers, LLC.
(B) This security is fair valued in good faith under procedures established
by the Board of Trustees.
(G) Security rated internally by John Hancock Advisers, LLC.
(I) Non-income-producing security.
(L) All or a portion of this security is on loan as of October 31, 2004.
(T) Represents investment of securities lending collateral.
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.
10
FINANCIAL STATEMENTS
PORTFOLIO
CONCENTRATION
October 31, 2004
(unaudited)
This table shows the
percentages of the
Fund's investments
aggregated by
various industries.
Value as a percentage of
Industry distribution Fund's total investments
-----------------------------------------------------------------------
Asset Management & Custody Banks 4.38%
Consumer Finance 0.26
Diversified Banks 13.31
Investment Banking & Brokerage 0.04
Life & Health Insurance 0.68
Other Diversified Financial Service 4.48
Property & Casualty Insurance 0.22
Regional Banks 61.88
Thrifts & Mortgage Finance 6.74
Short-term investments 8.01
Total investments 100.00%
See notes to
financial statements.
11
FINANCIAL STATEMENTS
ASSETS AND
LIABILITIES
October 31, 2004
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.
Assets
Investments at value, including $60,257,728
of securities loaned
Unaffiliated issuers (cost $468,896,501) $998,789,481
Affiliated issuers (cost $567,150) 2,540,978
Cash 199,510
Receivable for investments sold 2,622,647
Dividends and interest receivable 1,549,907
Other assets 161,896
Total assets 1,005,864,419
Liabilities
Payable for investments purchased 213,180
Payable upon return of securities loaned 61,197,943
Payable to affiliates
Management fees 1,020,046
Other 88,700
Other payables and accrued expenses 297,684
Total liabilities 62,817,553
Net assets
Capital paid-in 396,957,918
Accumulated net realized gain on investments 5,312,042
Net unrealized appreciation of investments 531,866,808
Accumulated net investment income 8,910,098
Net assets $943,046,866
Net asset value per share
Based on 84,400,000 shares of
beneficial interest outstanding --
unlimited number of shares
authorized with no par value $11.17
See notes to
financial statements.
12
FINANCIAL STATEMENTS
OPERATIONS
For the year ended
October 31, 2004
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.
Investment income
Dividends (including $46,339
received from affiliated issuers) $22,805,795
Interest 222,244
Securities lending 178,669
Total investment income 23,206,708
Expenses
Investment management fees 10,444,940
Administration fees 2,270,639
Custodian fees 146,196
Miscellaneous 133,079
Printing 122,698
Registration and filing fees 74,567
Professional fees 59,775
Trustees' fees 54,275
Transfer agent fees 47,460
Securities lending fees 4,684
Interest 182
Total expenses 13,358,495
Less expense reductions (767,650)
Net expenses 12,590,845
Net investment income 10,615,863
Realized and unrealized gain
Net realized gain on investments 73,802,030
Change in net unrealized appreciation (depreciation)
of investments 57,014,888
Net realized and unrealized gain 130,816,918
Increase in net assets from operations $141,432,781
See notes to
financial statements.
13
FINANCIAL STATEMENTS
CHANGES IN
NET ASSETS
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,
and distributions
paid to
shareholders.
Year Year
ended ended
10-31-03 10-31-04
Increase (decrease) in net assets
From operations
Net investment income $10,173,850 $10,615,863
Net realized gain 43,579,476 73,802,030
Change in net unrealized
appreciation (depreciation) 136,897,644 57,014,888
Increase in net assets resulting
from operations 190,650,970 141,432,781
Distributions to shareholders
From net investment income (9,831,756) (9,873,112)
From net realized gain (62,701,604) (111,939,720)
(72,533,360) (121,812,832)
Net assets
Beginning of period 805,309,307 923,426,917
End of period 1 $923,426,917 $943,046,866
1 Includes accumulated net investment income of $8,186,559 and $8,910,098,
respectively.
See notes to
financial statements.
14
FINANCIAL HIGHLIGHTS
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.
Period ended 10-31-00 10-31-01 10-31-02 10-31-03 10-31-04
Per share operating performance
Net asset value,
beginning of period $11.31 $9.53 $9.76 $9.54 $10.94
Net investment income 1 0.19 0.15 0.11 0.12 0.13
Net realized and unrealized
gain (loss) on investments (1.27) 0.86 0.88 2.14 1.55
Total from
investment operations (1.08) 1.01 0.99 2.26 1.68
Less distributions
From net investment income (0.15) (0.21) (0.13) (0.12) (0.12)
From net realized gain (0.55) (0.57) (1.08) (0.74) (1.33)
(0.70) (0.78) (1.21) (0.86) (1.45)
Net asset value, end of period $9.53 $9.76 $9.54 $10.94 $11.17
Per share market value,
end of period $7.81 $7.88 $7.92 $9.65 $10.14
Total return at market value 2 (%) (10.58) 9.56 3 15.39 3 35.54 3 21.37 3
Ratios and supplemental data
Net assets, end of period
(in millions) $804 $823 $805 $923 $943
Ratio of expenses
to average net assets (%) 1.47 1.43 1.43 1.43 1.39
Ratio of adjusted expenses
to average net assets 4 (%) -- 1.45 1.46 1.48 1.47
Ratio of net investment income
to average net assets (%) 2.18 1.51 1.11 1.28 1.17
Portfolio turnover (%) 13 27 20 4 5
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.
15
NOTES TO
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 may be
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 John Hancock Financial Services,
Inc., 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.
Expenses
The majority of 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. 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, 2004, the Fund loaned securities
16
having a market value of $60,257,728 collateralized by cash in the amount of
$61,197,943. The cash collateral was invested in a short-term instrument.
Securities lending expenses are paid by the Fund to the Adviser.
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. During
the year ended October 31, 2004, the tax character of distributions paid
was as follows: ordinary income $12,023,624 and long-term capital gains
$109,789,189.
As of October 31, 2004, the components of distributable earnings on a tax
basis included $10,086,081 of undistributed ordinary income and $4,397,653
of undistributed long-term capital 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 perform certain
administrative services for the Fund. The compensation for the year was at
an annual rate of 0.25% of the average weekly net asset value of the Fund.
The Adviser agreed to limit the administration fee to 0.20% of the Fund's
average weekly net asset value until July 1, 2004, and to 0.10% of the
Fund's average net asset value effective July 1, 2004. Accordingly, the
expense reductions related to the administration fee amounted to $767,650
for the year ended October 31, 2004. The Adviser reserves the right to
terminate this limitation in the future with Trustees' approval. The net
administrative fee compensation for the year amounted to $1,502,989. The
Fund also paid the Adviser the amount of $858 for certain publishing
services, included in the printing fees.
Mr. James A. Shepherdson is a director and/or officer of the Adviser and/or
its
17
affiliates, as well as Trustee 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 Compen sation 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 years ended October
31, 2003 and October 31, 2004.
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, 2004, aggregated $48,294,666 and $165,868,622,
respectively.
The cost of investments owned on October 31, 2004, including short-term
investments, for federal income tax purposes, was $469,590,530. Gross
unrealized appreciation and depreciation of investments aggregated
$532,913,209 and $1,173,280, respectively, resulting in net unrealized
appreciation of $531,739,929. 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 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, 2004, is set forth below.
Beginning Ending
share share Realized Dividend Ending
Affiliate amount amount gain income value
FNB Bankshares (ME)
common stock
bought: none
sold: none 20,780 62,340* -- $46,339 $2,540,978
Totals -- $46,339 $2,540,978
* Reflects 3-for-1 stock split, record date 3-22-04
Note F
Reclassification of accounts
During the year ended October 31, 2004, the Fund reclassified amounts to
reflect an increase in accumulated net realized gain on investments of $1,035,
a decrease in accumulated net investment income of $19,212 and an increase in
capital paid-in of $18,177. This represents the amounts necessary to report
these balances on a tax basis, ex cluding certain temporary differences, as of
October 31, 2004. Additional
18
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 G
Subsequent event
A special meeting of shareholders was held on December 1, 2004, at which
time one or more new Trustees were elected to the Fund's Board of Trustees.
Several Trustees had reached the age for mandatory retirement and plan to
retire in 2004 and 2005. The Board of Trustees recommended and shareholders
approved a proposal to consolidate the two panels into one Board of
Trustees for all open-end funds within the John Hancock funds complex. The
effective date for the newly elected Trustees to the Fund will be January
1, 2005.
19
AUDITORS'
REPORT
Report of Deloitte
& Touche LLP,
Independent
Registered Public
Accounting Firm
To the Board of Trustees and Shareholders of John Hancock Bank
and Thrift Opportunity Fund,
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, 2004, and the related
statement of operations for the year then ended, the statement of changes
in net assets for the years ended October 31, 2004 and 2003 and the
financial highlights for each of the years in the five-year period ended
October 31, 2004. 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 standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 by
correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Fund as of October 31, 2004, 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 15, 2004
20
TAX
INFORMATION
Unaudited
For federal income tax purposes, the following information is furnished with
respect to the distributions of the Fund, if any, paid during its taxable year
ended October 31, 2004.
The Fund designated distributions to shareholders of $109,789,189 as capital
gain dividends.
With respect to the ordinary dividends paid by the Fund for the fiscal year
ended October 31, 2004, 100.00% of the dividends qualifies for the corporate
dividends-received deduction.
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 2004.
Shareholders will be mailed a 2004 U.S. Treasury Department Form 1099-DIV in
January 2005. This will reflect the total of all distributions that are
taxable for calendar year 2004.
21
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 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
change 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.
By-laws
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 that 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 contact the Secretary of the Fund for additional
information about the advance notice requirements or the other amendments
to the by-laws.
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 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
22
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
23
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 by 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.
24
Shareholder meeting
On March 18, 2004, the Annual Meeting of the Fund was held to elect three
Trustees and to ratify the actions of the Trustees in selecting independent
auditors for the Fund.
Proxies covering 81,234,775 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
--------------------------------------------------------------------------
Patti McGill Peterson 79,074,918 2,159,857
Steven R. Pruchansky 79,411,637 1,823,138
Norman H. Smith 79,015,917 2,218,858
The shareholders ratified the Trustees' selection of Deloitte & Touche LLP
as the Fund's independent auditor for the fiscal year ending October 31,
2004, with votes tabulated as follows: 79,675,601 FOR, 597,378 AGAINST and
961,796 ABSTAINING.
25
TRUSTEES
& OFFICERS
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
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 since 1 by Trustee
Charles L. Ladner, 2 Born: 1938 1994 49
Independent Chairman (since 2004); Chairman and Trustee, Dunwoody
Village, Inc. (retirement services) (until 2003); 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).
James F. Carlin, Born: 1940 1994 28
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 (engineering) (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 28
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 (until 2004), STC Broadcasting,
Inc. and Sunrise Television Corp. (electronic manufacturing) (until 2001),
Symtx, Inc. (electronic manufacturing) (since 2001), Adorno/Rogers Technology,
Inc. (until 2004), Pinnacle Foods Corporation (until 2003), rateGenius (Internet
service) (until 2003), 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,
26
Independent Trustees (continued)
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 since 1 by Trustee
William H. Cunningham, Born: 1944 (continued) 1995 28
Q Investments (until 2003); Advisory Director, Chase Bank (formerly Texas
Commerce Bank -- Austin) (since 1988), LIN Television (since 2002), WilTel
Communications (until 2003) and Hayes Lemmerz International, Inc.
(diversified automotive parts supply company) (since 2003).
Ronald R. Dion, Born: 1946 1998 28
Chairman and Chief Executive Officer, R.M. Bradley & Co., Inc.; Director,
The New England Council and Massachusetts Roundtable; Trustee, North
Shore Medical Center; Director, Boston Stock Exchange; Director, BJ's
Wholesale Club, Inc. and a corporator of the Eastern Bank; Trustee,
Emmanuel College.
John A. Moore, 2 Born: 1939 2002 31
President and Chief Executive Officer, Institute for Evaluating Health
Risks, (nonprofit institution) (until 2001); Chief Scientist, Sciences
International (health research) (until 2003); Principal, Hollyhouse
(consulting) (since 2000); Director, CIIT (nonprofit research) (since 2002).
Patti McGill Peterson, 2 Born: 1943 2002 31
Executive Director, Council for International Exchange of Scholars and
Vice President, Institute of International Education (since 1998);
Senior Fellow, Cornell Institute of Public Affairs, Cornell University (until
1998); Former President of Wells College and St. Lawrence University;
Director, Niagara Mohawk Power Corporation (until 2003); Director, Ford
Foundation, International Fellowships Program (since 2002); Director,
Lois Roth Endowment (since 2002); Director, Council for International
Educational Exchange (since 2003).
Steven Pruchansky, Born: 1944 1994 28
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 28
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 28
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).
27
Non-Independent Trustees 3
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 since 1 by Trustee
James A. Shepherdson, Born: 1952 2004 49
President and Chief Executive Officer
Executive Vice President, Manulife Financial Corporation (since 2004);
Chairman, Director, President and Chief Executive Officer, John Hancock
Advisers, LLC and The Berkeley Financial Group, LLC (holding company);
Chairman, Director, President and Chief Executive Officer, John Hancock
Funds, LLC; Chairman, President, Director and Chief Executive Officer,
Sovereign Asset Management Corporation ("SAMCorp"); Director, Chairman
and President, NM Capital Management, Inc.; President, John Hancock
Retirement Services, John Hancock Life Insurance Company (until 2004);
Chairman, Essex Corporation (until 2004); Co-Chief Executive Officer,
MetLife Investors Group (until 2003); Senior Vice President, AXA/Equitable
Insurance Company (until 2000).
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
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 Financial Group, LLC;
Vice President, Signature Services (until 2000); Director, Senior Vice President and Secretary,
NM Capital Management, Inc.
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 Non-independent Trustees hold positions with the Fund's investment
adviser, underwriter and certain other affiliates.
28
For more information
The Fund's proxy voting policies, procedures and records are available
without charge, upon request:
By phone On the Fund's Web site On the SEC's Web site
1-800-225-5291 www.jhfunds.com/proxy www.sec.gov
Investment adviser
John Hancock Advisers, LLC
101 Huntington Avenue
Boston, MA 02199-7603
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Transfer agent and
dividend disburser
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Legal counsel
Wilmer Cutler Pickering
Hale and Dorr LLP
60 State Street
Boston, MA 02109-1803
Independent registered
public accounting firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
Stock symbol
Listed New York Stock
Exchange: BTO
For shareholder assistance
refer to page 24
How to contact us
Internet www.jhfunds.com
Mail Regular mail:
Mellon Investor Services
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Phone 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
A listing of month-end portfolio holdings is available on our Web site,
www.jhfunds.com. A more detailed portfolio holdings summary is available on
a quarterly basis 60 days after the fiscal quarter on our Web site or upon
request by calling 1-800-225-5291, or on the Securities and Exchange
Commission's Web site, www.sec.gov.
29
[A 1 1/2" x 1/2" John Hancock (Signature) logo in upper left hand corner.
A tag line below reads "JOHN HANCOCK FUNDS."]
1-800-852-0218
1-800-843-0090 EASI-Line
1-800-231-5469 (TDD)
www.jhfunds.com
---------------
PRESORTED
STANDARD
U. S. POSTAGE
PAID
MIS
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P900A 10/04
12/04
ITEM 2. CODE OF ETHICS.
As of the end of the period, October 31, 2004, 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.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant(s) in
connection with statutory and regulatory filings or engagements amounted to
$35,150 for the fiscal year ended October 31, 2003 and $36,950 for the
fiscal year ended October 31, 2004. These fees were billed to the
registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
There were no audit-related fees during the fiscal year ended October 31,
2003 and fiscal year ended October 31, 2004 billed to the registrant or to
the registrant's investment adviser (not including any sub-adviser whose
role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling,
controlled by, or under common control with the adviser that provides
ongoing services to the registrant ("control affiliates").
(c) Tax Fees
The aggregate fees billed for professional services rendered by the
principal accountant(s) for the tax compliance, tax advice and tax planning
("tax fees") amounted to $2,100 for the fiscal year ended October 31, 2003
and $2,250 for the fiscal year ended October 31, 2004. The nature of the
services comprising the tax fees was the review of the registrant's income
tax returns and tax distribution requirements. These fees were billed to
the registrant and were approved by the registrant's audit committee. There
were no tax fees billed to the control affiliates.
(d) All Other Fees
There were no other fees during the fiscal year ended October 31, 2003 and
fiscal year ended October 31, 2004 billed to the registrant or to the
control affiliates.
(e)(1) See attachment "Approval of Audit, Audit-related, Tax and Other
Services", with the audit committee pre-approval policies and procedures.
(e)(2) There were no fees that were approved by the audit committee
pursuant to the de minimis exception for the fiscal years ended October 31,
2003 and October 31, 2004 on behalf of the registrant or on behalf of the
control affiliates that relate directly to the operations and financial
reporting of the registrant.
(f) According to the registrant's principal accountant, for the fiscal year
ended October 31, 2004, the percentage of hours spent on the audit of the
registrant's financial statements for the most recent fiscal year that were
attributed to work performed by persons who were not full-time, permanent
employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant(s)
for services rendered to the registrant and rendered to the registrant's
control affiliates for each of the last two fiscal years of the registrant
were $149,700 for the fiscal year ended October 31, 2003, and $2,250 for
the fiscal year ended October 31, 2004.
(h) The audit committee of the registrant has considered the non-audit
services provided by the registrant's principal accountant(s) to the
control affiliates and has determined that the services that were not
pre-approved are compatible with maintaining the principal accountant(s)'
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee
comprised of independent trustees. The members of the audit committee are
as follows:
Charles L. Ladner
Dr. John A. Moore
Patti McGill Peterson
John P. Toolan
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
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. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) There were no material changes to previously disclosed John Hancock
Funds - Administration Committee Charter.
ITEM 10. 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
accounting officer have concluded that those disclosure controls and
procedures provide reasonable assurance that the material information
required to be disclosed by the registrant on this report is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's 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 11. 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 accounting 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 accounting 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.
(c)(2) Approval of Audit, Audit-related, Tax and Other Services is
attached.
(c)(3) 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.
John Hancock Bank and Thrift Opportunity Fund
By:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: December 21, 2004
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:
------------------------------
James A. Shepherdson
President and Chief Executive Officer
Date: December 21, 2004
By:
------------------------------
William H. King
Vice President and Treasurer
Date: December 21, 2004