Explanatory Note
The Registrant is filing this amendment to its Form N-CSR for the period ended December 31, 2021, originally filed with the Securities and Exchange Commission on February 18, 2022 (Accession Number 0001683863-22-000829). The sole purpose of this filing is to include an additional exhibit in Item 13, which was inadvertently omitted in the original filing.
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 811-08568
John Hancock Financial Opportunities Fund (Exact name of registrant as specified in charter)
200 Berkeley Street, Boston, Massachusetts 02116 (Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
200 Berkeley Street
Boston, Massachusetts 02116
(Name and address of agent for service) Registrant's telephone number, including area code: 617-543-9634
Date of fiscal year end: | December 31 |
Date of reporting period: | December 31, 2021 |
ITEM 1. REPORTS TO STOCKHOLDERS.
President and CEO,
John Hancock Investment Management
Head of Wealth and Asset Management,
United States and Europe
1 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 2 |
3 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
TOP 10 HOLDINGS AS OF 12/31/2021 (% of total investments) | |
The Blackstone Group, Inc. | 2.2 |
Huntington Bancshares, Inc. | 2.2 |
Bank of America Corp. | 2.1 |
KKR & Company, Inc. | 2.1 |
Fifth Third Bancorp | 2.0 |
Zions Bancorp NA | 1.9 |
The PNC Financial Services Group, Inc. | 1.9 |
Citizens Financial Group, Inc. | 1.8 |
KeyCorp | 1.8 |
Ares Management Corp., Class A | 1.8 |
TOTAL | 19.8 |
Cash and cash equivalents are not included. |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 4 |
5 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
Average annual total returns (%) | Cumulative total returns (%) | ||||
1-Year | 5-Year | 10-Year | 5-year | 10-Year | |
At Net asset value | 47.83 | 9.25 | 16.18 | 55.63 | 348.15 |
At Market price | 62.31 | 11.92 | 19.81 | 75.61 | 509.31 |
S&P Composite 1500 Banks Index | 35.69 | 10.21 | 14.71 | 62.61 | 294.50 |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 6 |
7 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
Shares | Value | ||||
Common stocks 112.6% (97.1% of Total investments) | $852,501,201 | ||||
(Cost $453,089,741) | |||||
Financials 111.8% | 846,763,793 | ||||
Banks 92.4% | |||||
1st Source Corp. | 121,706 | 6,036,618 | |||
American Business Bank (A)(B)(C) | 74,896 | 2,957,643 | |||
American National Bankshares, Inc. | 85,338 | 3,215,536 | |||
American Riviera Bank (C) | 200,863 | 4,075,510 | |||
Ameris Bancorp | 266,062 | 13,217,960 | |||
Atlantic Capital Bancshares, Inc. (C) | 210,961 | 6,069,348 | |||
Atlantic Union Bankshares Corp. | 240,957 | 8,985,287 | |||
Avidbank Holdings, Inc. (C) | 200,000 | 5,020,000 | |||
Bank of America Corp. (A)(B) | 409,620 | 18,223,994 | |||
Bank of Marin Bancorp | 162,958 | 6,066,926 | |||
Bank7 Corp. | 77,220 | 1,776,060 | |||
Bar Harbor Bankshares | 134,902 | 3,902,715 | |||
BayCom Corp. (C) | 175,855 | 3,299,040 | |||
Bremer Financial Corp. (D)(E) | 41,667 | 4,410,583 | |||
Bryn Mawr Bank Corp. | 80,000 | 3,600,800 | |||
Business First Bancshares, Inc. | 148,207 | 4,195,740 | |||
C&F Financial Corp. | 22,445 | 1,148,960 | |||
California BanCorp (C) | 121,815 | 2,441,173 | |||
Cambridge Bancorp | 78,431 | 7,340,357 | |||
Camden National Corp. | 68,551 | 3,301,416 | |||
CB Financial Services, Inc. (A)(B) | 54,602 | 1,315,908 | |||
Central Valley Community Bancorp | 111,386 | 2,313,487 | |||
Centric Financial Corp. (C) | 278,484 | 2,701,295 | |||
Citigroup, Inc. | 206,810 | 12,489,257 | |||
Citizens Community Bancorp, Inc. | 169,116 | 2,328,727 | |||
Citizens Financial Group, Inc. | 340,789 | 16,102,280 | |||
Civista Bancshares, Inc. | 171,523 | 4,185,161 | |||
Coastal Financial Corp. (C) | 134,013 | 6,783,738 | |||
Codorus Valley Bancorp, Inc. | 92,622 | 2,000,635 | |||
Columbia Banking System, Inc. | 66,697 | 2,182,326 | |||
Comerica, Inc. | 167,706 | 14,590,422 | |||
Communities First Financial Corp. (C) | 115,523 | 6,503,945 | |||
ConnectOne Bancorp, Inc. | 28,194 | 922,226 | |||
Cullen/Frost Bankers, Inc. (A)(B) | 101,941 | 12,851,702 | |||
CVB Financial Corp. | 106,152 | 2,272,714 | |||
Eagle Bancorp Montana, Inc. | 127,715 | 2,934,891 | |||
East West Bancorp, Inc. | 43,408 | 3,415,341 | |||
Equity Bancshares, Inc., Class A | 148,933 | 5,053,297 | |||
Evans Bancorp, Inc. | 69,760 | 2,811,328 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 8 |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Farmers & Merchants Bancorp, Inc. | 114,822 | $3,769,606 | |||
Farmers National Banc Corp. | 149,103 | 2,765,861 | |||
Fifth Third Bancorp | 408,959 | 17,810,164 | |||
First Business Financial Services, Inc. | 91,858 | 2,679,498 | |||
First Community Corp. | 132,912 | 2,759,253 | |||
First Financial Bancorp (A)(B) | 403,431 | 9,835,648 | |||
First Horizon Corp. (A)(B) | 333,111 | 5,439,703 | |||
First Merchants Corp. | 114,010 | 4,775,879 | |||
First Mid Bancshares, Inc. | 76,166 | 3,259,143 | |||
First Northwest Bancorp | 75,171 | 1,520,709 | |||
First Reliance Bancshares, Inc. (C)(F) | 426,454 | 4,349,831 | |||
Flushing Financial Corp. | 74,442 | 1,808,941 | |||
German American Bancorp, Inc. | 110,169 | 4,294,388 | |||
Glacier Bancorp, Inc. (A)(B) | 66,564 | 3,774,179 | |||
Great Southern Bancorp, Inc. | 40,257 | 2,385,227 | |||
Great Western Bancorp, Inc. | 155,189 | 5,270,218 | |||
Hancock Whitney Corp. | 238,868 | 11,948,177 | |||
HBT Financial, Inc. | 199,367 | 3,734,144 | |||
Heritage Commerce Corp. | 519,533 | 6,203,224 | |||
Heritage Financial Corp. | 92,643 | 2,264,195 | |||
Horizon Bancorp, Inc. | 438,980 | 9,152,733 | |||
Huntington Bancshares, Inc. | 1,232,654 | 19,007,525 | |||
Independent Bank Corp. (Massachusetts) | 79,360 | 6,470,221 | |||
Independent Bank Corp. (Michigan) | 163,971 | 3,913,988 | |||
JPMorgan Chase & Co. (A)(B) | 100,408 | 15,899,607 | |||
KeyCorp (A)(B) | 693,596 | 16,042,875 | |||
Landmark Bancorp, Inc. | 45,246 | 1,289,511 | |||
Level One Bancorp, Inc. | 81,429 | 3,211,560 | |||
Limestone Bancorp, Inc. (C) | 37,248 | 694,675 | |||
Live Oak Bancshares, Inc. (A)(B) | 100,017 | 8,730,484 | |||
M&T Bank Corp. | 98,700 | 15,158,346 | |||
Metrocity Bankshares, Inc. | 65,263 | 1,796,690 | |||
Mid Penn Bancorp, Inc. (B) | 64,256 | 2,039,485 | |||
MidWestOne Financial Group, Inc. (B) | 116,362 | 3,766,638 | |||
NBT Bancorp, Inc. (B) | 101,770 | 3,920,180 | |||
Nicolet Bankshares, Inc. (A)(B)(C) | 95,864 | 8,220,338 | |||
Northrim BanCorp, Inc. (B) | 97,720 | 4,246,911 | |||
Ohio Valley Banc Corp. (B) | 39,260 | 1,140,503 | |||
Old National Bancorp (A)(B) | 364,040 | 6,596,405 | |||
Old Second Bancorp, Inc. (B) | 318,549 | 4,010,532 | |||
Orange County Bancorp, Inc. | 43,740 | 1,842,766 | |||
Pacific Premier Bancorp, Inc. (B) | 285,177 | 11,415,635 | |||
PacWest Bancorp (A)(B) | 183,961 | 8,309,518 |
9 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Pinnacle Financial Partners, Inc. (B) | 126,415 | $12,072,633 | |||
Plumas Bancorp (A)(B) | 53,328 | 1,801,953 | |||
Popular, Inc. (B) | 138,844 | 11,390,762 | |||
Prime Meridian Holding Company | 125,087 | 3,532,457 | |||
Private Bancorp of America, Inc. (C) | 118,082 | 3,182,310 | |||
QCR Holdings, Inc. | 71,593 | 4,009,208 | |||
Red River Bancshares, Inc. | 48,664 | 2,603,524 | |||
Regions Financial Corp. | 634,883 | 13,840,449 | |||
Renasant Corp. | 166,995 | 6,337,460 | |||
SB Financial Group, Inc. | 247,702 | 4,822,758 | |||
Shore Bancshares, Inc. | 209,035 | 4,358,380 | |||
Sierra Bancorp | 104,579 | 2,839,320 | |||
South Atlantic Bancshares, Inc. (C) | 289,568 | 4,470,930 | |||
Southern California Bancorp (C) | 95,439 | 1,430,631 | |||
Southern First Bancshares, Inc. (C) | 131,586 | 8,222,809 | |||
SouthState Corp. (A)(B) | 29,868 | 2,392,725 | |||
Stock Yards Bancorp, Inc. | 94,346 | 6,026,822 | |||
Suncrest Bank | 124,406 | 2,187,057 | |||
Synovus Financial Corp. | 230,856 | 11,051,077 | |||
The Community Financial Corp. | 89,596 | 3,522,019 | |||
The First Bancorp, Inc. | 245,664 | 7,713,850 | |||
The First Bancshares, Inc. | 210,000 | 8,110,200 | |||
The PNC Financial Services Group, Inc. (B) | 82,262 | 16,495,176 | |||
Third Coast Bancshares, Inc. (C) | 75,223 | 1,954,294 | |||
TriCo Bancshares | 204,465 | 8,783,816 | |||
Truist Financial Corp. | 266,891 | 15,626,468 | |||
U.S. Bancorp | 280,111 | 15,733,835 | |||
Umpqua Holdings Corp. | 257,141 | 4,947,393 | |||
United BanCorp of Alabama, Inc., Class A | 170,487 | 4,978,220 | |||
United Bankshares, Inc. (A)(B) | 136,598 | 4,955,775 | |||
Univest Financial Corp. | 127,725 | 3,821,532 | |||
Washington Trust Bancorp, Inc. | 112,988 | 6,369,134 | |||
WTB Financial Corp., Class B | 6,902 | 2,657,270 | |||
Zions Bancorp NA | 264,029 | 16,676,072 | |||
Capital markets 10.9% | |||||
Ares Management Corp., Class A | 195,864 | 15,917,867 | |||
Brookfield Asset Management, Inc., Class A (A)(B) | 95,834 | 5,786,457 | |||
Invesco, Ltd. (B) | 114,189 | 2,628,631 | |||
KKR & Company, Inc. | 240,867 | 17,944,592 | |||
Oaktree Specialty Lending Corp. | 873,464 | 6,516,041 | |||
Onex Corp. | 124,888 | 9,801,874 | |||
Sixth Street Specialty Lending, Inc. | 178,694 | 4,179,653 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 10 |
Shares | Value | ||||
Financials (continued) | |||||
Capital markets (continued) | |||||
The Blackstone Group, Inc. | 151,920 | $19,656,929 | |||
Consumer finance 0.9% | |||||
Discover Financial Services | 57,696 | 6,667,350 | |||
Diversified financial services 1.7% | |||||
Equitable Holdings, Inc. | 145,837 | 4,781,995 | |||
Eurazeo SE | 91,873 | 8,015,486 | |||
Insurance 0.5% | |||||
Assured Guaranty, Ltd. | 82,048 | 4,118,810 | |||
Thrifts and mortgage finance 5.4% | |||||
ESSA Bancorp, Inc. | 69,450 | 1,203,569 | |||
OP Bancorp (B) | 170,717 | 2,178,349 | |||
Premier Financial Corp. | 424,815 | 13,131,032 | |||
Provident Financial Holdings, Inc. | 106,084 | 1,755,690 | |||
Riverview Bancorp, Inc. | 87,864 | 675,674 | |||
Southern Missouri Bancorp, Inc. | 105,980 | 5,528,977 | |||
Territorial Bancorp, Inc. | 60,055 | 1,516,389 | |||
Timberland Bancorp, Inc. | 97,500 | 2,700,750 | |||
Westbury Bancorp, Inc. (C) | 103,507 | 3,112,455 | |||
WSFS Financial Corp. | 188,696 | 9,457,444 | |||
Real estate 0.8% | 5,737,408 | ||||
Equity real estate investment trusts 0.8% | |||||
Plymouth Industrial REIT, Inc. | 179,294 | 5,737,408 | |||
Preferred securities 2.7% (2.4% of Total investments) | $20,900,008 | ||||
(Cost $20,498,200) | |||||
Financials 2.5% | 18,942,449 | ||||
Banks 2.1% | |||||
Atlantic Union Bankshares Corp., 6.875% | 57,500 | 1,610,000 | |||
CNB Financial Corp., 7.125% | 60,000 | 1,611,600 | |||
Level One Bancorp, Inc., 7.500% | 50,000 | 1,374,500 | |||
Northpointe Bancshares, Inc. (8.250% to 12-30-25, then SOFR + 7.990%) (C)(G) | 160,000 | 4,280,000 | |||
Pinnacle Financial Partners, Inc., 6.750% | 71,825 | 2,037,675 | |||
Tectonic Financial, Inc. (9.000% to 5-15-24, then 3 month LIBOR + 6.720%) | 186,840 | 1,971,162 | |||
United Community Banks, Inc., 6.875% | 57,500 | 1,614,600 | |||
WesBanco, Inc. (6.750% to 11-15-25, then 5 Year CMT + 6.557%) (A)(B) | 50,000 | 1,451,000 | |||
Mortgage real estate investment trusts 0.4% | |||||
Invesco Mortgage Capital, Inc. (7.750% to 12-27-24, then 3 month LIBOR + 5.180%) | 121,425 | 2,991,912 | |||
Real estate 0.2% | 1,957,559 | ||||
Equity real estate investment trusts 0.2% | |||||
Sotherly Hotels, Inc., 8.000% (C) | 50,424 | 825,945 |
11 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Real estate (continued) | |||||
Equity real estate investment trusts (continued) | |||||
Sotherly Hotels, Inc., 8.250% (C) | 67,358 | $1,131,614 | |||
Rate (%) | Maturity date | Par value^ | Value | ||
Certificate of deposit 0.0% (0.0% of Total investments) | $78,676 | ||||
(Cost $78,676) | |||||
Country Bank for Savings | 1.140 | 08-29-22 | 2,104 | 2,104 | |
East Boston Savings Bank | 0.150 | 11-01-23 | 1,938 | 1,938 | |
Eastern Savings Bank FSB | 0.200 | 04-24-23 | 1,962 | 1,962 | |
First Bank Richmond NA | 1.250 | 12-05-22 | 21,642 | 21,642 | |
First Federal of Northern Michigan | 0.100 | 01-07-22 | 3,054 | 3,054 | |
First National Bank | 0.400 | 06-17-22 | 1,360 | 1,360 | |
First Savings Bank of Percaise | 0.600 | 04-05-23 | 5,138 | 5,138 | |
Home National Bank | 0.200 | 11-04-22 | 18,927 | 18,927 | |
Hudson United Bank | 0.800 | 04-24-23 | 2,260 | 2,260 | |
Machias Savings Bank | 0.150 | 05-31-22 | 2,016 | 2,016 | |
Milford Federal Bank | 0.100 | 04-28-22 | 2,063 | 2,063 | |
Mt. McKinley Bank | 0.500 | 12-02-22 | 1,734 | 1,734 | |
MutualOne Bank | 0.500 | 09-11-23 | 4,265 | 4,265 | |
Newburyport Five Cents Savings Bank | 0.700 | 10-19-22 | 2,152 | 2,152 | |
Newtown Savings Bank | 0.250 | 06-01-22 | 1,991 | 1,991 | |
Rosedale Federal Savings & Loan Association | 0.500 | 06-01-22 | 2,050 | 2,050 | |
Sunshine Federal Savings and Loan Association | 0.500 | 05-10-23 | 2,087 | 2,087 | |
The Milford Bank | 0.250 | 06-12-23 | 1,933 | 1,933 | |
Par value^ | Value | ||||
Short-term investments 0.6% (0.5% of Total investments) | $4,024,000 | ||||
(Cost $4,024,000) | |||||
Repurchase agreement 0.6% | 4,024,000 | ||||
Repurchase Agreement with State Street Corp. dated 12-31-21 at 0.000% to be repurchased at $4,024,000 on 1-3-22, collateralized by $4,146,300 U.S. Treasury Notes, 1.250% due 6-30-28 (valued at $4,104,514) | 4,024,000 | 4,024,000 |
Total investments (Cost $477,690,617) 115.9% | $877,503,885 | ||||
Other assets and liabilities, net (15.9%) | (120,265,472) | ||||
Total net assets 100.0% | $757,238,413 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund unless otherwise indicated. | |
^All par values are denominated in U.S. dollars unless otherwise indicated. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 12 |
Security Abbreviations and Legend | |
CMT | Constant Maturity Treasury |
LIBOR | London Interbank Offered Rate |
SOFR | Secured Overnight Financing Rate |
(A) | All or a portion of this security is on loan as of 12-31-21, and is a component of the fund’s leverage under the Liquidity Agreement. |
(B) | All or a portion of this security is pledged as collateral pursuant to the Liquidity Agreement. Total collateral value at 12-31-21 was $163,978,734. A portion of the securities pledged as collateral were loaned pursuant to the Liquidity Agreement. The value of securities on loan amounted to $81,942,983. |
(C) | Non-income producing security. |
(D) | Restricted security as to resale, excluding 144A securities. For more information on this security refer to the Notes to financial statements. |
(E) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. Refer to Note 2 to the financial statements. |
(F) | The fund owns 5% or more of the outstanding voting shares of the issuer and the security is considered an affiliate of the fund. For more information on this security refer to the Notes to financial statements. |
(G) | These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. |
13 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Interest rate swaps | ||||||||||
Counterparty (OTC)/ Centrally cleared | Notional amount | Currency | Payments made | Payments received | Fixed payment frequency | Floating payment frequency | Maturity date | Unamortized upfront payment paid (received) | Unrealized appreciation (depreciation) | Value |
Centrally cleared | 5,000,000 | USD | Fixed 1.790% | USD 3 month LIBOR BBA(a) | Semi-Annual | Quarterly | Aug 2022 | — | $(76,602) | $(76,602) |
Centrally cleared | 15,000,000 | USD | Fixed 1.220% | USD 3 month LIBOR BBA(a) | Semi-Annual | Quarterly | Mar 2030 | — | 294,444 | 294,444 |
Centrally cleared | 25,000,000 | USD | Fixed 1.136% | USD 3 month LIBOR BBA(a) | Semi-Annual | Quarterly | Mar 2030 | — | 661,822 | 661,822 |
Centrally cleared | 25,000,000 | USD | Fixed 1.077% | USD 3 month LIBOR BBA(a) | Semi-Annual | Quarterly | Mar 2030 | — | 783,400 | 783,400 |
— | $1,663,064 | $1,663,064 |
(a) | At 12-31-21, the 3 month LIBOR was 0.209%. |
Derivatives Currency Abbreviations | |
USD | U.S. Dollar |
Derivatives Abbreviations | |
BBA | The British Banker’s Association |
LIBOR | London Interbank Offered Rate |
OTC | Over-the-counter |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 14 |
Assets | |
Unaffiliated investments, at value (Cost $473,807,650) | $873,154,054 |
Affiliated investments, at value (Cost $3,882,967) | 4,349,831 |
Total investments, at value (Cost $477,690,617) | 877,503,885 |
Receivable for centrally cleared swaps | 2,259,413 |
Cash | 881,071 |
Dividends and interest receivable | 1,364,745 |
Receivable for investments sold | 354,658 |
Receivable from affiliates | 110,637 |
Other assets | 236,798 |
Total assets | 882,711,207 |
Liabilities | |
Liquidity agreement | 125,000,000 |
Payable for investments purchased | 2,653 |
Interest payable | 75,759 |
Payable to affiliates | |
Administrative services fees | 184,395 |
Trustees’ fees | 18 |
Other liabilities and accrued expenses | 209,969 |
Total liabilities | 125,472,794 |
Net assets | $757,238,413 |
Net assets consist of | |
Paid-in capital | $344,869,756 |
Total distributable earnings (loss) | 412,368,657 |
Net assets | $757,238,413 |
Net asset value per share | |
Based on 19,014,318 shares of beneficial interest outstanding - unlimited number of shares authorized with no par value | $39.82 |
15 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Investment income | |
Dividends | $21,259,884 |
Interest | 91,444 |
Less foreign taxes withheld | (55,314) |
Total investment income | 21,296,014 |
Expenses | |
Investment management fees | 8,981,799 |
Interest expense | 886,077 |
Administrative services fees | 2,056,028 |
Transfer agent fees | 29,369 |
Trustees’ fees | 43,643 |
Custodian fees | 85,947 |
Printing and postage | 194,627 |
Professional fees | 105,023 |
Stock exchange listing fees | 23,749 |
Other | 46,538 |
Total expenses | 12,452,800 |
Less expense reductions | (1,307,724) |
Net expenses | 11,145,076 |
Net investment income | 10,150,938 |
Realized and unrealized gain (loss) | |
Net realized gain (loss) on | |
Unaffiliated investments and foreign currency transactions | 41,380,134 |
Swap contracts | (712,284) |
40,667,850 | |
Change in net unrealized appreciation (depreciation) of | |
Unaffiliated investments and translation of assets and liabilities in foreign currencies | 199,113,370 |
Affiliated investments | 466,864 |
Swap contracts | 3,622,447 |
203,202,681 | |
Net realized and unrealized gain | 243,870,531 |
Increase in net assets from operations | $254,021,469 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 16 |
Year ended 12-31-21 | Year ended 12-31-20 | |
Increase (decrease) in net assets | ||
From operations | ||
Net investment income | $10,150,938 | $11,253,641 |
Net realized gain | 40,667,850 | 28,899,576 |
Change in net unrealized appreciation (depreciation) | 203,202,681 | (146,174,762) |
Increase (decrease) in net assets resulting from operations | 254,021,469 | (106,021,545) |
Distributions to shareholders | ||
From earnings | (41,495,291) | (41,170,080) |
Total distributions | (41,495,291) | (41,170,080) |
Fund share transactions | ||
Issued in shelf offering | 7,430,959 | — |
Issued pursuant to Dividend Reinvestment Plan | 2,545,932 | 1,872,121 |
Total from fund share transactions | 9,976,891 | 1,872,121 |
Total increase (decrease) | 222,503,069 | (145,319,504) |
Net assets | ||
Beginning of year | 534,735,344 | 680,054,848 |
End of year | $757,238,413 | $534,735,344 |
Share activity | ||
Shares outstanding | ||
Beginning of year | 18,772,598 | 18,691,524 |
Issued in shelf offering | 176,852 | — |
Issued pursuant to Dividend Reinvestment Plan | 64,868 | 81,074 |
End of year | 19,014,318 | 18,772,598 |
17 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Cash flows from operating activities | |
Net increase in net assets from operations | $254,021,469 |
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities: | |
Long-term investments purchased | (114,045,315) |
Long-term investments sold | 128,030,870 |
Net purchases and sales in short-term investments | 4,485,492 |
Net amortization of premium (discount) | 43,994 |
(Increase) Decrease in assets: | |
Receivable for centrally cleared swaps | 782,807 |
Dividends and interest receivable | (53,967) |
Receivable for investments sold | (354,658) |
Receivable from affiliates | (28,040) |
Other assets | (226,273) |
Increase (Decrease) in liabilities: | |
Payable for investments purchased | (669,374) |
Interest payable | (4,877) |
Payable to affiliates | 46,589 |
Other liabilities and accrued expenses | 123,229 |
Net change in unrealized (appreciation) depreciation on: | |
Investments | (199,582,681) |
Net realized (gain) loss on: | |
Unaffiliated investments | (41,342,902) |
Proceeds received as return of capital | 548,470 |
Net cash provided by operating activities | $31,774,833 |
Cash flows provided by (used in) financing activities | |
Distributions to shareholders | $(38,949,359) |
Fund shares issued in shelf offering | 7,430,959 |
Net cash used in financing activities | $(31,518,400) |
Net increase in cash | $256,433 |
Cash at beginning of year | $624,638 |
Cash at end of year | $881,071 |
Supplemental disclosure of cash flow information: | |
Cash paid for interest | $(890,954) |
Noncash financing activities not included herein consists of reinvestment distributions | $2,545,932 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 18 |
Period ended | 12-31-21 | 12-31-20 | 12-31-19 | 12-31-18 | 12-31-17 |
Per share operating performance | |||||
Net asset value, beginning of period | $28.48 | $36.38 | $29.06 | $36.94 | $34.98 |
Net investment income1 | 0.54 | 0.60 | 0.50 | 0.39 | 0.37 |
Net realized and unrealized gain (loss) on investments | 12.96 | (6.30) | 9.02 | (6.61) | 3.07 |
Total from investment operations | 13.50 | (5.70) | 9.52 | (6.22) | 3.44 |
Less distributions | |||||
From net investment income | (0.62) | (0.65) | (0.48) | (0.40) | (0.42) |
From net realized gain | (1.58) | (1.55) | (1.72) | (1.26) | (1.06) |
Total distributions | (2.20) | (2.20) | (2.20) | (1.66) | (1.48) |
Anti-dilutive impact of shelf offering | 0.04 | — | — | — | — |
Net asset value, end of period | $39.82 | $28.48 | $36.38 | $29.06 | $36.94 |
Per share market value, end of period | $46.59 | $30.35 | $36.30 | $27.93 | $39.33 |
Total return at net asset value (%)2,3 | 47.83 | (13.38) | 33.71 | (17.42) | 10.08 |
Total return at market value (%)2 | 62.31 | (7.49) | 38.81 | (25.46) | 13.03 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $757 | $535 | $680 | $543 | $689 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 1.78 | 2.21 | 2.27 | 2.04 | 1.93 |
Expenses including reductions4 | 1.60 | 2.01 | 2.08 | 1.86 | 1.75 |
Net investment income | 1.45 | 2.50 | 1.52 | 1.04 | 1.07 |
Portfolio turnover (%) | 14 | 10 | 13 | 11 | 5 |
Senior securities | |||||
Total debt outstanding end of period (in millions) | $125 | $125 | $125 | $120 | $110 |
Asset coverage per $1,000 of debt5 | $7,058 | $5,278 | $6,440 | $5,522 | $7,265 |
1 | Based on average daily shares outstanding. |
2 | Total return based on net asset value reflects changes in the fund’s net asset value during each period. Total return based on market value reflects changes in market value. Each figure assumes that distributions from income, capital gains and tax return of capital, if any, were reinvested. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
4 | Expenses including reductions excluding interest expense were 1.47%, 1.69%, 1.50%, 1.44% and 1.45% for the periods ended 12-31-21, 12-31-20, 12-31-19, 12-31-18 and 12-31-17, respectively. |
5 | Asset coverage equals the total net assets plus borrowings divided by the borrowings of the fund outstanding at period end (Note 8). As debt outstanding changes, the level of invested assets may change accordingly. Asset coverage ratio provides a measure of leverage. |
19 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 20 |
Total value at 12-31-21 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |
Investments in securities: | ||||
Assets | ||||
Common stocks | ||||
Financials | ||||
Banks | $699,487,779 | $695,077,196 | — | $4,410,583 |
Capital markets | 82,432,044 | 82,432,044 | — | — |
Consumer finance | 6,667,350 | 6,667,350 | — | — |
Diversified financial services | 12,797,481 | 4,781,995 | $8,015,486 | — |
Insurance | 4,118,810 | 4,118,810 | — | — |
Thrifts and mortgage finance | 41,260,329 | 41,260,329 | — | — |
Real estate | ||||
Equity real estate investment trusts | 5,737,408 | 5,737,408 | — | — |
Preferred securities | ||||
Financials | ||||
Banks | 15,950,537 | 11,670,537 | 4,280,000 | — |
Mortgage real estate investment trusts | 2,991,912 | 2,991,912 | — | — |
Real estate | ||||
Equity real estate investment trusts | 1,957,559 | 1,957,559 | — | — |
Certificate of deposit | 78,676 | — | 78,676 | — |
Short-term investments | 4,024,000 | — | 4,024,000 | — |
Total investments in securities | $877,503,885 | $856,695,140 | $16,398,162 | $4,410,583 |
21 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT |
Total value at 12-31-21 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |
Derivatives: | ||||
Assets | ||||
Swap contracts | $1,739,666 | — | $1,739,666 | — |
Liabilities | ||||
Swap contracts | (76,602) | — | (76,602) | — |
ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 22 |
23 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT |
December 31, 2021 | December 31, 2020 | |
Ordinary income | $14,398,979 | $12,092,108 |
Long-term capital gains | 27,096,312 | 29,077,972 |
Total | $41,495,291 | $41,170,080 |
ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 24 |
Risk | Statement of assets and liabilities location | Financial instruments location | Assets derivatives fair value | Liabilities derivatives fair value |
Interest rate | Swap contracts, at value1 | Interest rate swaps | $1,739,666 | $(76,602) |
1 | Reflects cumulative value of swap contracts. Receivable/payable for centrally cleared swaps, which includes value and margin, are shown separately on the Statement of assets and liabilities. |
Statement of operations location - Net realized gain (loss) on: | |
Risk | Swap contracts |
Interest rate | $(712,284) |
25 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT |
Statement of operations location - Change in net unrealized appreciation (depreciation) of: | |
Risk | Swap contracts |
Interest rate | $3,622,447 |
ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 26 |
• | the likelihood of greater volatility of NAV and market price of shares; |
• | fluctuations in the interest rate paid for the use of the LA; |
• | increased operating costs, which may reduce the fund’s total return; |
• | the potential for a decline in the value of an investment acquired through leverage, while the fund’s obligations under such leverage remains fixed; and |
• | the fund is more likely to have to sell securities in a volatile market in order to meet asset coverage or other debt compliance requirements. |
27 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 28 |
29 | JOHN HANCOCK Financial Opportunities Fund | ANNUAL REPORT |
Issuer, Description | Original acquisition date | Acquisition cost | Beginning share amount | Shares purchased | Shares sold | Ending share amount | Value as a percentage of net assets | Ending value |
Bremer Financial Corp. | 10-25-19 | $5,000,040 | 41,667 | — | — | 41,667 | 0.6% | $4,410,583 |
Dividends and distributions | |||||||||
Affiliate | Ending share amount | Beginning value | Cost of purchases | Proceeds from shares sold | Realized gain (loss) | Change in unrealized appreciation (depreciation) | Income distributions received | Capital gain distributions received | Ending value |
First Reliance Bancshares, Inc. | 426,454 | — | $3,882,967 | — | — | $466,864 | — | — | $4,349,831 |
ANNUAL REPORT | JOHN HANCOCK Financial Opportunities Fund | 30 |
31 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 32 |
33 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 34 |
35 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 36 |
Payment Date | Income Distributions |
March 31, 2021 | $0.5500 |
June 30, 2021 | 0.5500 |
September 30, 2021 | 0.5500 |
December 31, 2021 | 0.5500 |
Total | $2.2000 |
37 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
Senior securities | 12-31-16 | 12-31-15 | 10-31-15 | 10-31-14 | 10-31-13 | 10-31-12 |
Total debt outstanding end of period (in millions) | $110 | $110 | $110 | $110 | $95 | $— |
Asset coverage per $1,000 of debt1 | $6,922 | $5,419 | $5,385 | $5,244 | $5,487 | $— |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 38 |
1 | Asset coverage equals the total net assets plus borrowings divided by the borrowings of the fund outstanding at period end (Note 8). As debt outstanding changes, the level of invested assets may change accordingly. Asset coverage ratio provides a measure of leverage. |
Shareholder Transaction Expenses | |
Sales load (as a percentage of offering price)1 | —% |
Offering expenses (as a percentage of offering price)1 | —% |
Dividend Reinvestment Plan fees2 | None |
Annual Expenses (Percentage of Net Assets Attributable to Common Shares) | |
Management fees3 | 1.29% |
Interest payments on borrowed funds4 | 0.13% |
Other expenses | 0.36% |
Total Annual Operating Expenses | 1.78% |
Contractual Expense Reimbursement5 | (0.18)% |
Total Annual Fund Operating Expenses After Expense Reimbursements | 1.60% |
1 | If common shares are sold to or through underwriters, the fund’s prospectus will set forth any applicable sales load and the estimated offering expenses. |
2 | Participants in the fund’s dividend reinvestment plan do not pay brokerage charges with respect to common shares issued directly by the fund. However, whenever common shares are purchased or sold on the NYSE or otherwise on the open market, each participant will pay a pro rata portion of brokerage trading fees, currently $0.05 per share purchased or sold. Brokerage trading fees will be deducted from amounts to be invested. Shareholders participating in the Plan may buy additional common shares of the fund through the Plan at any time and will be charged a $5 transaction fee plus $0.05 per share brokerage trading fee for each order. See “Dividends and distributions” and “Dividend reinvestment plan”. |
3 | See "Note 5 – Fees and transactions with affiliates.” |
4 | The fund uses leverage by borrowing under a liquidity agreement. “Interest payments on borrowed funds” includes all interest paid in connection with outstanding loans. See “Note 8 - “Liquidity Agreement.” |
5 | The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended December 31, 2021, this waiver amounted to 0.01% of the fund’s average daily net assets. This arrangement expires on July 31, 2023, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.The Advisor contractually agrees to limit its administration fee to 0.10% of the fund’s average weekly gross assets. This agreement expires on April 30, 2023, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time. |
39 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
1 Year | 3 Years | 5 Years | 10 Years | |
Total Expenses | $16 | $54 | $95 | $208 |
Market Price | NAV per Share on Data of Market Price High and Low | Premium/(Discount) on Date of Market Price High and Low | ||||
Fiscal Quarter Ended | High | Low | High | Low | High | Low |
March 31, 2020 | $36.81 | $12.35 | $36.44 | $14.87 | 1.02% | -16.95% |
June 30, 2020 | $27.45 | $16.16 | $26.00 | $16.33 | 5.58% | -1.04% |
September 30, 2020 | $24.10 | $19.76 | $22.58 | $19.61 | 6.73% | 0.76% |
December 31, 2020 | $30.93 | $21.23 | $28.33 | $19.51 | 9.18% | 8.82% |
March 31, 2021 | $39.09 | $29.41 | $37.77 | $28.18 | 3.49% | 4.36% |
June 30, 2021 | $44.45 | $35.95 | $39.67 | $35.51 | 12.05% | 1.24% |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 40 |
Market Price | NAV per Share on Data of Market Price High and Low | Premium/(Discount) on Date of Market Price High and Low | ||||
Fiscal Quarter Ended | High | Low | High | Low | High | Low |
September 30, 2021 | $44.10 | $37.43 | $37.70 | $34.04 | 16.98% | 9.96% |
December 31, 2021 | $46.59 | $41.47 | $39.82 | $38.74 | 17.00% | 7.05% |
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41 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
Independent Trustees | ||
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2012 | 191 |
Trustee and Chairperson of the Board | ||
Director/Trustee, Virtus Funds (2008-2020); Director, The Barnes Group (2010-2021); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2005) and Chairperson of the Board (since 2017) of various trusts within the John Hancock Fund Complex. | ||
James R. Boyle, Born: 1959 | 2015 | 191 |
Trustee | ||
Foresters Financial, Chief Executive Officer (since 2018) and board member (since 2017). Manulife Financial and John Hancock, more than 20 years, retiring in 2012 as Chief Executive Officer, John Hancock and Senior Executive Vice President, Manulife Financial. Trustee of various trusts within the John Hancock Fund Complex (2005–2014 and since 2015). | ||
Peter S. Burgess,2 Born: 1942 | 2012 | 191 |
Trustee | ||
Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (2004-2021); Director, Symetra Financial Corporation (2010–2016); Director, PMA Capital Corporation (2004–2010). Trustee of various trusts within the John Hancock Fund Complex (since 2005). | ||
William H. Cunningham,2 Born: 1944 | 1995 | 191 |
Trustee | ||
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000). Trustee of various trusts within the John Hancock Fund Complex (since 1986). | ||
Grace K. Fey, Born: 1946 | 2012 | 191 |
Trustee | ||
Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988–2007); Director, Fiduciary Trust (since 2009). Trustee of various trusts within the John Hancock Fund Complex (since 2008). | ||
Deborah C. Jackson, Born: 1952 | 2008 | 191 |
Trustee | ||
President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, Amwell Corporation (since 2020); Board of Directors, Massachusetts Women’s Forum (2018-2020); Board of Directors, National Association of Corporate Directors/New England (2015-2020); Board of Directors, Association of Independent Colleges and Universities of Massachusetts (2014-2017); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002–2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996–2009); Board of Directors of Boston Stock Exchange (2002–2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007–2011). Trustee of various trusts within the John Hancock Fund Complex (since 2008). |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 42 |
Independent Trustees (continued) | ||
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Steven R. Pruchansky, Born: 1944 | 1994 | 191 |
Trustee and Vice Chairperson of the Board | ||
Managing Director, Pru Realty (since 2017); Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (2014-2020); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (2014-2017); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992), Chairperson of the Board (2011–2012), and Vice Chairperson of the Board (since 2012) of various trusts within the John Hancock Fund Complex. | ||
Frances G. Rathke,2 Born: 1960 | 2020 | 191 |
Trustee | ||
Director, Audit Committee Chair, Oatly Group AB (plant-based drink company) (since 2021); Director, Audit Committee Chair and Compensation Committee Member, Green Mountain Power Corporation (since 2016); Director, Treasurer and Finance & Audit Committee Chair, Flynn Center for Performing Arts (since 2016); Director, Audit Committee Chair and Compensation Committee Member, Planet Fitness (since 2016); Chief Financial Officer and Treasurer, Keurig Green Mountain, Inc. (2003-retired 2015). Trustee of various trusts within the John Hancock Fund Complex (since 2020). | ||
Gregory A. Russo, Born: 1949 | 2008 | 191 |
Trustee | ||
Director and Audit Committee Chairman (2012-2020), and Member, Audit Committee and Finance Committee (2011-2020), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (2012-2018) and Finance Committee Chairman (2014-2018), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002–2006); Vice Chairman, Industrial Markets, KPMG (1998–2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986–1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989–1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990–1995). Trustee of various trusts within the John Hancock Fund Complex (since 2008). |
Non-Independent Trustees3 | ||
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Andrew G. Arnott, Born: 1971 | 2017 | 191 |
President and Non-Independent Trustee | ||
Head of Wealth and Asset Management, United States and Europe, for John Hancock and Manulife (since 2018); Director and Executive Vice President, John Hancock Investment Management LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Variable Trust Advisers LLC (since 2006, including prior positions); President, John Hancock Investment Management Distributors LLC (since 2004, including prior positions); President of various trusts within the John Hancock Fund Complex (since 2007, including prior positions). Trustee of various trusts within the John Hancock Fund Complex (since 2017). |
43 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
Non-Independent Trustees3 (continued) | ||
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Marianne Harrison, Born: 1963 | 2018 | 191 |
Non-Independent Trustee | ||
President and CEO, John Hancock (since 2017); President and CEO, Manulife Canadian Division (2013–2017); Member, Board of Directors, Boston Medical Center (since 2021); Member, Board of Directors, CAE Inc. (since 2019); Member, Board of Directors, MA Competitive Partnership Board (since 2018); Member, Board of Directors, American Council of Life Insurers (ACLI) (since 2018); Member, Board of Directors, Communitech, an industry-led innovation center that fosters technology companies in Canada (2017-2019); Member, Board of Directors, Manulife Assurance Canada (2015-2017); Board Member, St. Mary’s General Hospital Foundation (2014-2017); Member, Board of Directors, Manulife Bank of Canada (2013- 2017); Member, Standing Committee of the Canadian Life & Health Assurance Association (2013-2017); Member, Board of Directors, John Hancock USA, John Hancock Life & Health, John Hancock New York (2012–2013). Trustee of various trusts within the John Hancock Fund Complex (since 2018). |
Principal officers who are not Trustees | |
Name, year of birth Position(s) held with fund Principal occupation(s) during past 5 years | Current Position(s) with the Trust since |
Charles A. Rizzo, Born: 1957 | 2007 |
Chief Financial Officer | |
Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2008); Chief Financial Officer of various trusts within the John Hancock Fund Complex (since 2007). | |
Salvatore Schiavone, Born: 1965 | 2010 |
Treasurer | |
Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2007); Treasurer of various trusts within the John Hancock Fund Complex (since 2007, including prior positions). | |
Christopher (Kit) Sechler, Born: 1973 | 2018 |
Secretary and Chief Legal Officer | |
Vice President and Deputy Chief Counsel, John Hancock Investment Management (since 2015); Assistant Vice President and Senior Counsel (2009–2015), John Hancock Investment Management; Assistant Secretary of John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2009); Chief Legal Officer and Secretary of various trusts within the John Hancock Fund Complex (since 2009, including prior positions). | |
Trevor Swanberg, Born: 1979 | 2020 |
Chief Compliance Officer | |
Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2020); Deputy Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (2019–2020); Assistant Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (2016–2019); Vice President, State Street Global Advisors (2015–2016); Chief Compliance Officer of various trusts within the John Hancock Fund Complex (since 2016, including prior positions). |
ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 44 |
1 | Mr. Arnott, Ms. Jackson and Mr. Pruchansky serve as Trustees for a term expiring in 2022; Mr. Boyle, Dr. Cunningham, Ms. Fey, Dr. McClellan and Mr. Russo serve as Trustees for a term expiring in 2023; Mr. Burgess, Ms. Harrison and Ms. Rathke serve as Trustees for a term expiring in 2024; Mr. Boyle has served as Trustee at various times prior to date listed in the table. |
2 | Member of the Audit Committee. |
3 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain of its affiliates. |
45 | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | ANNUAL REPORT |
Steven R. Pruchansky, Vice Chairperson
Andrew G. Arnott†
James R. Boyle
Peter S. Burgess*
William H. Cunningham*
Grace K. Fey
Marianne Harrison†
Deborah C. Jackson
Frances G. Rathke*
Gregory A. Russo
President
Chief Financial Officer
Treasurer
Secretary and Chief Legal Officer
Chief Compliance Officer
Ryan P. Lentell, CFA
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800-852-0218 | Regular mail: | Express mail: |
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ANNUAL REPORT | JOHN HANCOCK FINANCIAL OPPORTUNITIES FUND | 46 |
GOVERNANCE FUNDS
with a heritage of financial stewardship dating back to 1862. Helping
our shareholders pursue their financial goals is at the core of everything
we do. It’s why we support the role of professional financial advice
and operate with the highest standards of conduct and integrity.
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising
standards and serve the best interests of our shareholders.
a diverse set of investments backed by some of the world’s best
managers, along with strong risk-adjusted returns across asset classes.
MF1976891 | P9A 12/21 |
ITEM 2. CODE OF ETHICS.
As of the end of the period, December 31, 2021, 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 "Covered Officers"). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Peter S. Burgess 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 John Hancock Financial Opportunities Fund 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 $44,192 for the fiscal period ended December 31, 2021, and $43,115 for the fiscal year ended December 31, 2020. These fees were billed to the registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
The aggregate fees for John Hancock Financial Opportunities Fund for audit-related fees amounted to $6,747 for the fiscal year ended December 31, 2021 and $5 for the fiscal year ended December 31, 2020. These fees were 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"). The nature of the services provided was related to a software licensing fee, internal controls reviews and registration statement review.
(c) Tax Fees
The aggregate fees for John Hancock Financial Opportunities Fund billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning ("tax fees") amounted to $3,914 for the fiscal period ended December 31, 2021
and $3,837 for the fiscal period ended December 31, 2020. The nature of the services comprising the tax fees was the review of the registrant's tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrant's audit committee.
(d) All Other Fees
All other fees for John Hancock Financial Opportunities Fund billed to the registrant or control affiliates for products and services provided by the principal accountant were $289 for the fiscal year ended December 31, 2021 and $89 for the fiscal year ended December 31, 2020. The nature of the services comprising all other fees is advisory services provided to the investment manager. These fees were approved by the registrant's audit committee.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the "Auditor") relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X: Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f)According to the registrant's principal accountant, for the fiscal year ended December 31, 2021, 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 $1,166,147 for the fiscal period ended December 31, 2021 and $1,433,589 for the fiscal year ended December 31, 2020.
(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:
Peter S. Burgess - Chairman William H. Cunningham Frances G. Rathke
ITEM 6. SCHEDULE OF INVESTMENTS. (a)Not applicable.
(b)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.
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information about the Manulife Investment Management (US) LLC ("Manulife IM (US)") portfolio managers
Below is a list of the Manulife Investment Management (US) LLC "Manulife IM (US)" portfolio managers who share joint responsibility for the day-to-day investment management of the Fund subject to oversight by John Hancock Investment Management LLC (the "Adviser"). It provides a brief summary of their business careers over the past five years. The information provided is as of the filing date of this N-CSR.
Susan A. Curry
Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 2006
Managed the Fund since 2004
Began business career in 1993
Ryan P. Lentell, CFA
Managing Director and Portfolio Manager
Manulife Investment Management (US) LLC since 2008
Managed the Fund since 2008
Began business career in 1999
Other Accounts the Portfolio Managers are Managing
The table below indicates, for each portfolio manager, information about the accounts over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of December 31, 2021. For purposes of the table, "Other Pooled Investment Vehicles" may include investment partnerships and group trusts, and "Other Accounts" may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts.
| Registered Investment | Other Pooled |
|
| ||
| Companies | Investment Vehicles | Other Accounts | |||
| Number | Total | Number | Total | Number | Total |
| of | Assets | of | Assets | of | Assets |
| Accounts | $Million | Accounts | $Million | Accounts | $Million |
Susan A. | 4 | 6,959 | 2 | 414 | 0 | 0 |
Curry |
|
|
|
|
|
|
Ryan P. | 3 | 2,279 | 2 | 414 | 0 | 0 |
Lentell, CFA |
|
|
|
|
|
|
Accounts within the total accounts that are subject to a performance-based advisory fee: None.
Conflicts of Interest. When a portfolio manager is responsible for the management of more than one account, the potential arises for the portfolio manager to favor one account over another. The principal types of potential conflicts of interest that may arise are discussed below. For the reasons outlined below, the Fund does not believe that any material conflicts are likely to arise out of a portfolio manager's responsibility for the management of the Fund as well as one or more other accounts. The Advisor and Subadvisor have adopted procedures that are intended to monitor compliance with the policies referred to in the following paragraphs. Generally, the risks of such conflicts of interests are increased to the extent that a portfolio manager has a financial
incentive to favor one account over another. The Advisor and Subadvisor have structured their compensation arrangements in a manner that is intended to limit such potential for conflicts of interests. See "Compensation of Portfolio Managers" below.
•A portfolio manager could favor one account over another in allocating new investment opportunities that have limited supply, such as initial public offerings and private placements. If, for example, an initial public offering that was expected to appreciate in value significantly shortly after the offering was allocated to a single account, that account may be expected to have better investment performance than other accounts that did not receive an allocation on the initial public offering. The Subadvisor has policies that require a portfolio manager to allocate such investment opportunities in an equitable manner and generally to allocate such investments proportionately among all accounts with similar investment objectives.
•A portfolio manager could favor one account over another in the order in which trades for the accounts are placed. If a portfolio manager determines to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions. The less liquid the market for the security or the greater the percentage that the proposed aggregate purchases or sales represent of average daily trading volume, the greater the potential for accounts that make subsequent purchases or sales to receive a less favorable price. When a portfolio manager intends to trade the same security for more than one account, the policies of the Subadvisor generally require that such trades be "bunched," which means that the trades for the individual accounts are aggregated and each account receives the same price. There are some types of accounts as to which bunching may not be possible for contractual reasons (such as directed brokerage arrangements). Circumstances may also arise where the trader believes that bunching the orders may not result in the best possible price. Where those accounts or circumstances are involved, the Subadvisor will place the order in a manner intended to result in as favorable a price as possible for such client.
•A portfolio manager could favor an account if the portfolio manager's compensation is tied to the performance of that account rather than all accounts managed by the portfolio manager. If, for example, the portfolio manager receives a bonus based upon the performance of certain accounts relative to a benchmark while other accounts are disregarded for this purpose, the portfolio manager will have a financial incentive to seek to have the accounts that determine the portfolio manager's bonus achieve the best possible performance to the possible detriment of other accounts. Similarly, if the Subadvisor receives a performance-based advisory fee, the portfolio manager may favor that account, whether or not the performance of that account directly determines the portfolio manager's compensation. The investment performance on specific accounts is not a factor in determining the portfolio manager's compensation. See "Compensation of Portfolio Managers" below. Neither the Advisor nor the Subadvisor receives a performance-based fee with respect to any of the accounts managed by the portfolio managers.
•A portfolio manager could favor an account if the portfolio manager has a beneficial interest in the account, in order to benefit a large client or to compensate a client that had poor returns. For example, if the portfolio manager held an interest in an investment partnership that was one of the accounts managed by the portfolio manager, the portfolio manager would have an economic incentive to favor the account in which the portfolio manager held an interest. The Subadvisor imposes certain trading restrictions and reporting requirements for accounts in which a portfolio manager or certain family
members have a personal interest in order to confirm that such accounts are not favored over other accounts.
•If the different accounts have materially and potentially conflicting investment objectives or strategies, a conflict of interest may arise. For example, if a portfolio manager purchases a security for one account and sells the same security short for another account, such trading pattern could disadvantage either the account that is long or short. In making portfolio manager assignments, the Subadvisor seeks to avoid such potentially conflicting situations. However, where a portfolio manager is responsible for accounts with differing investment objectives and policies, it is possible that the portfolio manager will conclude that it is in the best interest of one account to sell a portfolio security while another account continues to hold or increase the holding in such security.
Compensation of Portfolio Managers. The Subadvisor has adopted a system of compensation for portfolio managers and others involved in the investment process that is applied systematically among investment professionals. At the Subadvisor, the structure of compensation of investment professionals is currently composed of the following basic components: base salary and short- and long-term incentives. The following describes each component of the compensation package for the individuals identified as a portfolio manager for the Funds.
•Base salary. Base compensation is fixed and normally reevaluated on an annual basis. The Subadvisor seeks to set compensation at market rates, taking into account the experience and responsibilities of the investment professional.
•Incentives. Only investment professionals are eligible to participate in the short-and long-term incentive plan. Under the plan, investment professionals are eligible for an annual cash award. The plan is intended to provide a competitive level of annual bonus compensation that is tied to the investment professional achieving superior investment performance and aligns the financial incentives of the Subadvisor and the investment professional. Any bonus under the plan is completely discretionary, with a maximum annual bonus that may be well in excess of base salary. Payout of a portion of this bonus may be deferred for up to five years. While the amount of any bonus is discretionary, the following factors are generally used in determining bonuses under the plan:
•Investment Performance: The investment performance of all accounts managed by the investment professional over one, three and five-year periods are considered. With respect to fixed income accounts, relative yields are also used to measure performance. The pre-tax performance of each account is measured relative to an appropriate benchmark and universe as identified in the table below.
•Financial Performance: The profitability of the Subadvisor and its parent company are also considered in determining bonus awards.
•In addition to the above, compensation may also include a revenue component for an investment team derived from a number of factors including, but not limited to client assets under management, investment performance, and firm metrics.
•Manulife Equity Awards. A limited number of senior investment professionals may receive options to purchase shares of Manulife Financial stock. Generally, such option would permit the investment professional to purchase a set amount of stock at the market price on the date of grant. The option can be exercised for a set period (normally a number of years or until termination of employment) and the investment
professional would exercise the option if the market value of Manulife Financial stock increases. Some investment professionals may receive restricted stock grants, where the investment professional is entitled to receive the stock at no or nominal cost, provided that the stock is forgone if the investment professional's employment is terminated prior to a vesting date.
•Deferred Incentives. Investment professionals may receive deferred incentives which are fully invested in strategies managed by the team/individuals as well as other Manulife Asset Management strategies.
The Subadvisor also permits investment professionals to participate on a voluntary basis in a deferred compensation plan, under which the investment professional may elect on an annual basis to defer receipt of a portion of their compensation until retirement. Participation in the plan is voluntary.
Share Ownership by Portfolio Managers. The following table indicates as of December 31, 2021, the value of shares beneficially owned by the portfolio managers in the Fund.
| Range of Beneficial |
Portfolio Manager | Ownership |
Susan A. Curry | $10,001-$50,000 |
Ryan P. Lentell, CFA | $500,001-$1,000,000 |
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
(a)Not applicable.
REGISTRANT PURCHASES OF EQUITY SECURITIES
|
|
| Total Number | Maximum |
|
|
| of | Number |
|
|
| Shares | of Shares |
|
|
| Purchased | that May |
| Total | Average | as Part of | Yet Be |
| Number of | Price | Publicly | Purchased |
| Shares |
| Announced | Under the |
Period | Purchased | per Share | Plans* | Plans |
Jan-21 | - | - | - | 1,877,260 |
Feb-21 | - | - | - | 1,877,260 |
Mar-21 | - | - | - | 1,877,260 |
Apr-21 | - | - | - | 1,877,260 |
May-21 | - | - | - | 1,877,260 |
Jun-21 | - | - | - | 1,877,260 |
Jul-21 | - | - | - | 1,877,260 |
Aug-21 | - | - | - | 1,877,260 |
Sep-21 | - | - | - | 1,877,260 |
Oct-21 | - | - | - | 1,877,260 |
Nov-21 | - | - | - | 1,877,260 |
Dec-21 | - | - | - | 1,877,260 |
Total | - | - | - |
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a)The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached "John Hancock Funds – Nominating and Governance Committee Charter".
ITEM 11. 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 period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
The Fund did not participate directly in securities lending activities. See Note 8 to financial statements in Item 1.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Financial Opportunities Fund
By: | /s/ Andrew Arnott |
| ------------------------------ |
| Andrew Arnott |
| President |
Date: | February 25, 2022 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Andrew Arnott |
| ------------------------------- |
| Andrew Arnott |
| President |
Date: | February 25, 2022 |
By: | /s/ Charles A. Rizzo |
| -------------------------------- |
| Charles A. Rizzo |
| Chief Financial Officer |
Date: | February 25, 2022 |