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 811-21777
John Hancock Funds III
(Exact name of registrant as specified in charter)
601 Congress Street, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
601 Congress Street
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-663-4497
Date of fiscal year end: | February 28 |
Date of reporting period: | February 28, 2015 |
ITEM 1. REPORT TO STOCKHOLDERS.
John Hancock
Global Shareholder Yield Fund
Annual report 2/28/15
A message to shareholders
Dear fellow shareholder,
Strong economic growth in the United States set the global standard in 2014, and appears to be continuing to do so in 2015. The portfolio teams in our network are generally optimistic about sustained relative strength in the United States, supported by rising employment, healthy consumer spending, and falling oil prices. Stocks at all-time highs remain vulnerable to a correction, but the long-term bull market appears intact. We believe a more selective approach continues to make sense in overseas markets, but note that opportunities are growing and could reward investors should recoveries in those markets begin in earnest.
Outside of the United States, economies are struggling to replicate the kind of success we have enjoyed at home. The European Central Bank announced dramatic monetary policy measures in January to promote economic activity in the region—similar to the monetary policy activity of the U.S. Federal Reserve (Fed) in recent years. One effect has been to push the value of the euro down relative to the U.S. dollar, which benefits European exporters by making their goods cheaper.
While the U.S. equity market appears strong, this year will likely present greater challenges for bond investors. The Fed has signaled its intention to raise short-term interest rates at some point in 2015, and that change may have an adverse effect on many fixed-income portfolios, particularly those that invest in less liquid asset classes. At John Hancock Investments, we are closely monitoring the liquidity of our fixed-income portfolios and communicating regularly with their portfolio managers about these matters.
A new look
I am pleased to introduce you to our redesigned shareholder reports. As part of an effort to elevate the educational substance in our communications, we undertook an initiative to make our reports more engaging and easier to navigate. Included in the changes are a performance snapshot that shows your fund's performance against that of its benchmark, and a Q&A with your fund's lead portfolio manager. We hope these enhancements give you better insight into your fund's activity and performance.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
This commentary reflects the CEO's views as of February 28, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
John Hancock
Global Shareholder Yield Fund
1
INVESTMENT OBJECTIVE
The fund seeks to provide a high level of income as its primary objective. Capital appreciation is a secondary investment objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 2/28/15 (%)
The MSCI World Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
It is not possible to invest directly in an index.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectuses.
2
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Global stocks advanced
Global equity markets were mixed but generally advanced; the United States posted the strongest results, while European markets generally declined.
Fund advanced
The fund generated a positive return but underperformed its benchmark, the MSCI World Index.
Healthcare detracted
Stock selection in the healthcare sector contributed to the fund's underperformance versus its benchmark.
SECTOR COMPOSITION AS OF 2/28/15 (%)
A note about risks
Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability, and illiquid securities may be difficult to sell at a price approximating their value. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. Fixed-income investments are subject to interest-rate and credit-rate risk; their value will normally decline as interest rates rise or if a creditor, grantor, or counterparty is unable or unwilling to make principal, interest, or settlement payments. Investments in higher-yielding, lower-rated securities include a higher risk of default. Certain market conditions, including reduced trading volume, heightened volatility, and rising interest rates, may impair liquidity, the ability of the fund to sell securities or close derivative positions at advantageous prices. Reduced liquidity in credit and fixed-income markets may adversely affect issuers worldwide. Actively trading securities can increase transaction costs (thus lowering performance) and taxable distributions. Hedging and other strategic transactions may increase volatility and result in losses if not successful. Fund distributions generally depend on income from underlying investments and may vary or cease altogether in the future. Please see the fund's prospectuses for additional risks.
3
![ericlsappenfield.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000608/ericlsappenfield.jpg)
Eric L. Sappenfield
Portfolio Manager
Epoch Investment
Partners, Inc.
Can you describe the market environment over the past 12 months?
Global stocks produced solid gains in dollar terms, with the fund's benchmark, the MSCI World Index, returning 8.45% on a gross basis for the one-year period. U.S. stocks generated the best returns, posting double-digit gains thanks to an improving economy and historically low interest rates. Outside of the United States, a stronger U.S. dollar weighed on equity market performance. For example, as measured by various MSCI indexes, European stocks gained more than 13% for the reporting period in local currencies despite weaker economic growth across the Continent, but they declined by approximately 3% in U.S. dollar terms. Equity markets in the Asia/Pacific region returned more than 22% in local currencies, but only gained 7% in U.S. dollar terms.
Volatility in the global equity markets increased during the latter half of the 12-month period amid falling energy prices, geopolitical turmoil—especially in Ukraine and the Middle East—and diverging central bank activity. On this last point, the U.S. Federal Reserve ended its quantitative easing program in October and signaled its intent to increase short-term interest rates sometime in 2015, while the European Central Bank and Bank of Japan lowered interest rates and began implementing their own quantitative easing plans.
What contributed to the fund's strong absolute return for the period?
We seek to invest in businesses that generate strong and growing free cash flow. It's also important that these companies allocate their cash flow in a way that creates shareholder value. This means either reinvesting in the growth of the business via internal projects and acquisitions or returning capital to shareholders in the form of cash dividends, share buybacks, and debt reduction.
Because this fund focuses on shareholder yield, we are particularly interested in companies that commit to returning a meaningful portion of their cash flows to shareholders. This approach was effective during the reporting period as investor demand for yield in a low global interest-rate environment aided the performance of stocks with above-average dividend yields.
It's important to note that the fund's sector and country weightings are driven entirely by individual stock selection and our investment decision-making process.
4
The fund modestly trailed its benchmark for the reporting period. What factors contributed to this underperformance?
Stock selection in the healthcare sector detracted the most from performance versus the benchmark. One of the most notable detractors in this sector was British drugmaker GlaxoSmithKline PLC. The stock declined during the period after reporting lower sales and disappointing earnings. However, the company has embarked on a restructuring plan to streamline its cost structure, which should help restore its cash flow growth.
Utilities, the largest sector weighting in the portfolio, also detracted from relative results. French electric utility Electricite de France SA was among the most significant detractors in the portfolio. The stock declined as the company reported weaker-than-expected demand for power in its core markets.
Other noteworthy detractors in the portfolio included British utility Centrica PLC, French infrastructure contractor VINCI SA, and U.S. toy manufacturer Mattel, Inc.
Shifting gears, what contributed positively to fund performance during the period?
Stock choices in the consumer staples sector aided performance, and within this sector, tobacco stocks added the most value. The fund held positions in the three largest U.S. tobacco companies—Reynolds American, Inc., Altria Group, Inc., and Lorillard, Inc.—as well as British tobacco producer Imperial Tobacco Group PLC, all of which were among the leading performance contributors. The
TOP 10 HOLDINGS AS OF 2/28/15 (%)
Imperial Tobacco Group PLC | 2.1 |
Reynolds American, Inc. | 1.9 |
Altria Group, Inc. | 1.9 |
Lorillard, Inc. | 1.9 |
National Grid PLC | 1.8 |
Health Care REIT, Inc. | 1.8 |
BCE, Inc. | 1.7 |
Deutsche Telekom AG | 1.7 |
Vodafone Group PLC | 1.7 |
CenturyLink, Inc. | 1.7 |
TOTAL | 18.2 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
5
fund also held shares in Philip Morris International, Inc., which is based in New York but distributes its tobacco products exclusively outside of the United States.
We like tobacco stocks because they typically have relatively high dividend yields and the ability to grow their cash flows via pricing power and controlled capital expenditures. During the first half of the reporting period, tobacco stocks rallied sharply amid speculation about potential merger activity. The rumors came to fruition in July, when Reynolds American announced that it was acquiring Lorillard. The deal is scheduled to close by mid-2015.
What other stocks in the portfolio added value versus the benchmark?
Holdings in the financials sector contributed positively to relative results. In particular, the fund benefited from its position in U.S. real estate company Health Care REIT, Inc., which owns and operates healthcare properties such as medical centers, senior living communities, and life sciences facilities. The company used its cash flow to grow through acquisition while also increasing its dividend during the period.
Other top contributors included U.S. options trading firm CME Group, Inc., U.S. energy pipeline company Kinder Morgan, Inc., Norwegian fertilizer producer Yara International ASA, and British aerospace and defense company BAE Systems PLC.
COUNTRY COMPOSITION AS OF 2/28/15 (%)
United States | 47.9 |
United Kingdom | 17.5 |
France | 7.7 |
Germany | 6.6 |
Canada | 4.8 |
Switzerland | 3.9 |
Australia | 3.6 |
Netherlands | 2.1 |
Norway | 1.9 |
Sweden | 1.3 |
Other countries | 2.7 |
TOTAL | 100.0 |
As a percentage of net assets. |
6
What changes did you make to the portfolio over the past year?
As long-term investors, we tend to keep portfolio turnover fairly low, and the past 12 months were no exception—portfolio turnover was 23%. In a portfolio of approximately 95 stocks, we closed out fund positions in about a dozen companies during the period. Examples include U.S. energy services provider Diamond Offshore Drilling, Inc., British water utility Severn Trent PLC, U.S. machinery manufacturer Honeywell International, Inc., British food services provider Compass Group PLC, and Belgian brewing company Anheuser-Busch InBev NV.
We added a similar number of new holdings to the portfolio during the reporting period. Examples include French real estate company Unibail-Rodamco SE, British mining concern Rio Tinto PLC, U.K.-based data storage device maker Seagate Technology PLC, U.S. energy exploration and production company Occidental Petroleum Corp., and German electrical equipment manufacturer Siemens AG.
These transactions reflect our pursuit of companies that provide superior shareholder value by growing cash flows and returning them to shareholders in the form of dividends, share buybacks, and debt reduction. It is our belief that companies that can consistently grow free cash flow and allocate that cash in a disciplined way should produce attractive returns over the long term.
MANAGED BY
![]() | Eric L. Sappenfield On the fund since inception Investing since 1986 |
![]() | William W. Priest, CFA, CPA On the fund since inception Investing since 1965 |
![]() | John Tobin, Ph.D., CFA On the fund since 2014 Investing since 1981 |
![]() | Kera Van Valen, CFA On the fund since 2014 Investing since 2001 |
![]() | Michael A. Welhoelter, CFA On the fund since inception Investing since 1986 |
![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED FEBRUARY 28, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | SEC 30-day yield (%) subsidized | SEC 30-day yield (%) unsubsidized1 | ||||||||||||||||||||||||||||||||
1-year | 5-year | Since inception | 5-year | Since inception | as of 2-28-15 | as of 2-28-15 | |||||||||||||||||||||||||||||
Class A | 2.68 | 11.52 | 5.45 | 2 | 72.49 | 52.84 | 2 | 2.08% | 2.07% | ||||||||||||||||||||||||||
Class B | 2.26 | 11.60 | 5.38 | 2 | 73.13 | 52.06 | 2 | 1.43% | 1.42% | ||||||||||||||||||||||||||
Class C | 6.42 | 11.89 | 5.40 | 2 | 75.41 | 52.30 | 2 | 1.51% | 1.50% | ||||||||||||||||||||||||||
Class I3 | 8.50 | 13.11 | 6.59 | 2 | 85.16 | 66.66 | 2 | 2.58% | 2.57% | ||||||||||||||||||||||||||
Class R23,4 | 7.93 | 12.01 | 5.16 | 2 | 76.31 | 49.59 | 2 | 2.00% | 1.21% | ||||||||||||||||||||||||||
Class R63,4 | 8.56 | 13.19 | 6.58 | 2 | 85.77 | 66.52 | 2 | 2.57% | -1.82% | ||||||||||||||||||||||||||
Class NAV3 | 8.57 | 13.22 | 7.72 | 5 | 86.03 | 66.26 | 5 | 2.64% | 2.63% | ||||||||||||||||||||||||||
Index† | 8.45 | 12.31 | 4.98 | 2 | 78.67 | 47.55 | 2 | — | — |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1 to 6 according to the following schedule: 5%, 4%, 3%, 3%, 2%, and 1%. No sales charge will be assessed after the sixth year. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class R2, Class R6, and Class NAV shares.
The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Class A | Class B | Class C | Class I | Class R2 | Class R6 | Class NAV | |
Gross (%) | 1.34 | 2.15 | 2.05 | 1.02 | 8.68 | 10.30 | 0.88 |
Net (%) | 1.34 | 2.15 | 2.05 | 1.02 | 1.47 | 0.87 | 0.88 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index is the MSCI World Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Global Shareholder Yield Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the MSCI World Index.
Start date | With maximum sales charge | Without sales charge | Index | |
Class B6 | 3-1-07 | 15,206 | 15,206 | 14,755 |
Class C6 | 3-1-07 | 15,230 | 15,230 | 14,755 |
Class I3 | 3-1-07 | 16,666 | 16,666 | 14,755 |
Class R23 | 3-1-07 | 14,959 | 14,959 | 14,755 |
Class R63 | 3-1-07 | 16,652 | 16,652 | 14,755 |
Class NAV3 | 4-28-08 | 16,626 | 16,626 | 14,060 |
The MSCI World Index (gross of foreign withholding tax on dividends) — is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.
Footnotes related to performance pages
1 | Unsubsidized yields reflect what the yield would have been without the effect of reimbursements and waivers. |
2 | From 3-1-07. |
3 | For certain types of investors, as described in the fund's prospectuses. |
4 | Class R6 and Class R2 shares were first offered 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable. |
5 | From 4-28-08. |
6 | The contingent deferred sales charge is not applicable. |
9
These examples are intended to help you understand your ongoing operating expenses of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. |
• | Ongoing operating expenses, including management fees, distribution and service fees (if applicable), and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
This example is intended to provide information about the fund's actual ongoing operating expenses, and is based on the fund's actual return. It assumes an account value of $1,000.00 on September 1, 2014, with the same investment held until February 28, 2015.
Beginning Account value on 9-1-2014 | Ending value on 2-28-2015 | Expenses paid during period ended 2-28-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,016.20 | $6.60 | 1.32% |
Class B | 1,000.00 | 1,013.00 | 10.53 | 2.11% |
Class C | 1,000.00 | 1,013.30 | 10.08 | 2.02% |
Class I | 1,000.00 | 1,018.70 | 5.01 | 1.00% |
Class R2 | 1,000.00 | 1,016.30 | 7.35 | 1.47% |
Class R6 | 1,000.00 | 1,018.70 | 4.35 | 0.87% |
Class NAV | 1,000.00 | 1,018.60 | 4.35 | 0.87% |
Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at February 28, 2015, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
10
Hypothetical example for comparison purposes
This table allows you to compare the fund's ongoing operating expenses with those of any other fund. It provides an example of the fund's hypothetical account values and hypothetical expenses based on each class's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on September 1, 2014, with the same investment held until February 28, 2015. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Please remember that these hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Beginning Account value on 9-1-2014 | Ending value on 2-28-2015 | Expenses paid during period ended 2-28-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,018.20 | $6.61 | 1.32% |
Class B | 1,000.00 | 1,014.30 | 10.54 | 2.11% |
Class C | 1,000.00 | 1,014.80 | 10.09 | 2.02% |
Class I | 1,000.00 | 1,019.80 | 5.01 | 1.00% |
Class R2 | 1,000.00 | 1,017.50 | 7.35 | 1.47% |
Class R6 | 1,000.00 | 1,020.50 | 4.36 | 0.87% |
Class NAV | 1,000.00 | 1,020.50 | 4.36 | 0.87% |
Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.
1 | Expenses are equal to the fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Fund's investments
As of 2-28-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 96.2% | $2,602,104,720 | |||||||||||||
(Cost $2,153,634,547) | ||||||||||||||
Australia 3.6% | 97,330,670 | |||||||||||||
BHP Billiton, Ltd. | 781,530 | 20,525,337 | ||||||||||||
Commonwealth Bank of Australia | 253,830 | 18,209,392 | ||||||||||||
Telstra Corp., Ltd. | 7,728,630 | 38,415,147 | ||||||||||||
Westpac Banking Corp. | 678,451 | 20,180,794 | ||||||||||||
Canada 4.8% | 129,747,347 | |||||||||||||
BCE, Inc. | 1,081,880 | 47,347,936 | ||||||||||||
Potash Corp. of Saskatchewan, Inc. | 952,260 | 34,186,134 | ||||||||||||
Rogers Communications, Inc. | 781,560 | 27,640,003 | ||||||||||||
Shaw Communications, Inc., Class B | 886,850 | 20,573,274 | ||||||||||||
France 7.7% | 207,188,760 | |||||||||||||
Electricite de France SA | 1,210,560 | 33,405,950 | ||||||||||||
Sanofi | 180,670 | 17,670,944 | ||||||||||||
SCOR SE | 853,600 | 28,100,126 | ||||||||||||
Total SA | 710,580 | 38,175,476 | ||||||||||||
Unibail-Rodamco SE | 96,435 | 27,743,453 | ||||||||||||
Vinci SA | 657,310 | 38,911,092 | ||||||||||||
Vivendi SA | 952,203 | 23,181,719 | ||||||||||||
Germany 6.6% | 178,178,683 | |||||||||||||
BASF SE | 315,960 | 30,274,954 | ||||||||||||
Daimler AG | 279,050 | 27,029,401 | ||||||||||||
Deutsche Post AG | 401,310 | 13,661,678 | ||||||||||||
Deutsche Telekom AG | 2,518,550 | 47,026,433 | ||||||||||||
Muenchener Rueckversicherungs AG | 196,250 | 40,733,763 | ||||||||||||
Siemens AG | 174,020 | 19,452,454 | ||||||||||||
Italy 1.3% | 35,531,655 | |||||||||||||
Terna Rete Elettrica Nazionale SpA | 7,876,110 | 35,531,655 | ||||||||||||
Netherlands 2.1% | 56,836,044 | |||||||||||||
Royal Dutch Shell PLC, ADR, Class A | 607,500 | 39,712,275 | ||||||||||||
Wolters Kluwer NV | 528,780 | 17,123,769 | ||||||||||||
Norway 1.9% | 49,947,873 | |||||||||||||
Orkla ASA | 2,546,330 | 19,976,042 | ||||||||||||
Statoil ASA | 773,730 | 14,534,622 | ||||||||||||
Yara International ASA | 280,660 | 15,437,209 | ||||||||||||
Philippines 0.6% | 16,034,176 | |||||||||||||
Philippine Long Distance Telephone Company, ADR | 223,941 | 16,034,176 |
Shares | Value | |||||||||||||
Spain 0.8% | $20,648,241 | |||||||||||||
Gas Natural SDG SA | 855,770 | 20,648,241 | ||||||||||||
Sweden 1.3% | 36,380,952 | |||||||||||||
Svenska Handelsbanken AB, A Shares | 722,790 | 36,380,952 | ||||||||||||
Switzerland 3.9% | 106,459,650 | |||||||||||||
Nestle SA | 195,060 | 15,244,680 | ||||||||||||
Novartis AG | 286,020 | 29,252,438 | ||||||||||||
Roche Holding AG | 64,255 | 17,508,814 | ||||||||||||
Swisscom AG | 77,550 | 44,453,718 | ||||||||||||
United Kingdom 17.5% | 474,296,185 | |||||||||||||
Aberdeen Asset Management PLC | 2,291,300 | 16,536,042 | ||||||||||||
AstraZeneca PLC, ADR | 373,590 | 25,740,351 | ||||||||||||
BAE Systems PLC | 5,210,070 | 42,702,418 | ||||||||||||
British American Tobacco PLC | 538,730 | 31,409,115 | ||||||||||||
Centrica PLC | 312,602 | 1,176,947 | ||||||||||||
Diageo PLC, ADR | 107,550 | 12,782,318 | ||||||||||||
GlaxoSmithKline PLC | 1,750,410 | 41,504,657 | ||||||||||||
Imperial Tobacco Group PLC | 1,135,170 | 55,864,564 | ||||||||||||
National Grid PLC | 3,579,470 | 48,962,431 | ||||||||||||
Pearson PLC | 1,127,370 | 24,664,970 | ||||||||||||
Rio Tinto PLC | 455,580 | 22,421,219 | ||||||||||||
SSE PLC | 1,822,380 | 44,198,447 | ||||||||||||
Unilever PLC | 432,330 | 19,068,696 | ||||||||||||
United Utilities Group PLC | 2,814,523 | 41,059,523 | ||||||||||||
Vodafone Group PLC | 13,348,812 | 46,204,487 | ||||||||||||
United States 44.1% | 1,193,524,484 | |||||||||||||
AbbVie, Inc. | 354,740 | 21,461,770 | ||||||||||||
Altria Group, Inc. | 929,400 | 52,315,921 | ||||||||||||
Ameren Corp. | 963,340 | 40,855,249 | ||||||||||||
Apple, Inc. | 124,625 | 16,009,328 | ||||||||||||
Arthur J Gallagher & Company | 299,280 | 14,063,167 | ||||||||||||
AT&T, Inc. | 1,233,840 | 42,641,510 | ||||||||||||
Automatic Data Processing, Inc. | 188,470 | 16,743,675 | ||||||||||||
CenturyLink, Inc. | 1,190,510 | 45,072,709 | ||||||||||||
CME Group, Inc. | 207,000 | 19,857,510 | ||||||||||||
ConocoPhillips | 320,370 | 20,888,124 | ||||||||||||
Corrections Corp. of America | 906,785 | 36,171,654 | ||||||||||||
Dominion Resources, Inc. | 196,250 | 14,147,663 | ||||||||||||
Duke Energy Corp. | 543,198 | 42,668,203 | ||||||||||||
EI du Pont de Nemours & Company | 221,740 | 17,262,459 | ||||||||||||
Enterprise Products Partners LP | 563,180 | 18,776,421 | ||||||||||||
Health Care REIT, Inc. | 629,640 | 48,551,540 | ||||||||||||
Johnson & Johnson | 150,790 | 15,457,483 |
Shares | Value | |||||||||||||
United States (continued) | ||||||||||||||
Kimberly-Clark Corp. | 213,990 | $23,466,143 | ||||||||||||
Kinder Morgan, Inc. | 1,052,026 | 43,143,586 | ||||||||||||
KLA-Tencor Corp. | 220,640 | 14,331,671 | ||||||||||||
Lockheed Martin Corp. | 146,340 | 29,275,317 | ||||||||||||
Lorillard, Inc. | 763,740 | 52,255,091 | ||||||||||||
MarkWest Energy Partners LP | 235,030 | 15,265,199 | ||||||||||||
Mattel, Inc. | 568,680 | 14,967,658 | ||||||||||||
McDonald's Corp. | 157,390 | 15,565,871 | ||||||||||||
Merck & Company, Inc. | 333,660 | 19,532,456 | ||||||||||||
Microchip Technology, Inc. | 394,610 | 20,231,655 | ||||||||||||
Microsoft Corp. | 385,720 | 16,913,822 | ||||||||||||
Occidental Petroleum Corp. | 238,320 | 18,560,362 | ||||||||||||
People's United Financial, Inc. | 1,136,240 | 17,191,311 | ||||||||||||
PepsiCo, Inc. | 161,880 | 16,022,882 | ||||||||||||
Philip Morris International, Inc. | 460,060 | 38,166,578 | ||||||||||||
PPL Corp. | 1,143,950 | 39,008,695 | ||||||||||||
Regal Entertainment Group, Class A | 920,030 | 21,749,509 | ||||||||||||
Reynolds American, Inc. | 692,790 | 52,388,780 | ||||||||||||
RR Donnelley & Sons Company | 1,073,010 | 20,462,301 | ||||||||||||
Seagate Technology PLC | 318,100 | 19,442,272 | ||||||||||||
Targa Resources Partners LP | 274,900 | 12,046,118 | ||||||||||||
TECO Energy, Inc. | 1,643,990 | 32,271,524 | ||||||||||||
The Coca-Cola Company | 344,720 | 14,926,376 | ||||||||||||
The Dow Chemical Company | 479,950 | 23,632,738 | ||||||||||||
The Southern Company | 417,950 | 19,137,931 | ||||||||||||
Verizon Communications, Inc. | 887,974 | 43,910,314 | ||||||||||||
Waste Management, Inc. | 312,560 | 17,028,269 | ||||||||||||
Wells Fargo & Company | 403,500 | 22,107,765 | ||||||||||||
Wisconsin Energy Corp. | 344,800 | 17,577,904 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 3.2% | $87,738,888 | |||||||||||||
(Cost $87,738,888) | ||||||||||||||
Money market funds 3.2% | 87,738,888 | |||||||||||||
Federated Treasury Obligations Fund | 0.0100(Y | ) | 87,738,888 | 87,738,888 | ||||||||||
Total investments (Cost $2,241,373,435)† 99.4% | $2,689,843,608 | |||||||||||||
Other assets and liabilities, net 0.6% | $16,019,690 | |||||||||||||
Total net assets 100.0% | $2,705,863,298 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||
Key to Security Abbreviations and Legend | ||||
ADR | American Depositary Receipts | |||
REIT | Real Estate Investment Trust | |||
(Y) | The rate shown is the annualized seven-day yield as of 2-28-15. | |||
† | At 2-28-15, the aggregate cost of investment securities for federal income tax purposes was $2,247,293,313. Net unrealized appreciation aggregated $442,550,295, of which $469,649,563 related to appreciated investment securities and $27,099,268 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 2-28-15
Assets | ||||||||||||||||||||||
Investments, at value (Cost $2,241,373,435) | $2,689,843,608 | |||||||||||||||||||||
Foreign currency, at value (Cost $912,914) | 916,194 | |||||||||||||||||||||
Receivable for investments sold | 20,559,184 | |||||||||||||||||||||
Receivable for fund shares sold | 15,716,022 | |||||||||||||||||||||
Dividends receivable | 10,823,319 | |||||||||||||||||||||
Other receivables and prepaid expenses | 118,105 | |||||||||||||||||||||
Total assets | 2,737,976,432 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||
Payable for investments purchased | 28,542,860 | |||||||||||||||||||||
Payable for fund shares repurchased | 2,466,385 | |||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||
Accounting and legal services fees | 61,104 | |||||||||||||||||||||
Transfer agent fees | 378,450 | |||||||||||||||||||||
Distribution and service fees | 443 | |||||||||||||||||||||
Trustees' fees | 4,546 | |||||||||||||||||||||
Other liabilities and accrued expenses | 659,346 | |||||||||||||||||||||
Total liabilities | 32,113,134 | |||||||||||||||||||||
Net assets | $2,705,863,298 | |||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||
Paid-in capital | $2,242,449,373 | |||||||||||||||||||||
Undistributed net investment income | 7,541,308 | |||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | 7,609,452 | |||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 448,263,165 | |||||||||||||||||||||
Net assets | $2,705,863,298 | |||||||||||||||||||||
Net asset value per share | ||||||||||||||||||||||
Based on net asset values and shares outstanding - The fund has an unlimited number of shares authorized with no par value | ||||||||||||||||||||||
Class A ($580,306,438 ÷ 49,241,748 shares)1 | $11.78 | |||||||||||||||||||||
Class B ($16,617,772 ÷ 1,410,974 shares)1 | $11.78 | |||||||||||||||||||||
Class C ($168,342,052 ÷ 14,281,767 shares)1 | $11.79 | |||||||||||||||||||||
Class I ($1,242,427,999 ÷ 105,043,290 shares) | $11.83 | |||||||||||||||||||||
Class R2 ($1,341,019 ÷ 113,454 shares) | $11.82 | |||||||||||||||||||||
Class R6 ($411,798 ÷ 34,857 shares) | $11.81 | |||||||||||||||||||||
Class NAV ($696,416,220 ÷ 58,907,087 shares) | $11.82 | |||||||||||||||||||||
Maximum offering price per share | ||||||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $12.40 |
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. | ||||||||
2 | On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. |
STATEMENT OF OPERATIONS For the year ended 2-28-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $112,231,021 | |||||||||||||||||||||||||||||||||||||||
Interest | 3,540 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (5,594,452 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 106,640,109 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 19,954,300 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 3,385,619 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 320,164 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 2,192,588 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 37,504 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 190,887 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 159,924 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 134,754 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 1,366,398 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 78,759 | |||||||||||||||||||||||||||||||||||||||
Other | 40,815 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 27,861,712 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (211,856 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 27,649,856 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 78,990,253 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and foreign currency transactions | 61,397,066 | |||||||||||||||||||||||||||||||||||||||
61,397,066 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | 48,574,230 | |||||||||||||||||||||||||||||||||||||||
48,574,230 | ||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 109,971,296 | |||||||||||||||||||||||||||||||||||||||
Increase in net assets from operations | $188,961,549 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | ||||||||||||||||||||||||||||||||||||||||||||||||
From operations | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $78,990,253 | $83,581,596 | ||||||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 61,397,066 | 130,211,445 | ||||||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 48,574,230 | 153,727,257 | ||||||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 188,961,549 | 367,520,298 | ||||||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | ||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | ||||||||||||||||||||||||||||||||||||||||||||||||
Class A | (20,928,672 | ) | (10,212,966 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class B | (486,696 | ) | (270,722 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class C | (4,343,243 | ) | (1,816,114 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class I | (42,929,623 | ) | (22,747,665 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class R2 | (29,513 | ) | (6,285 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class R6 | (12,521 | ) | (5,672 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class NAV | (27,036,853 | ) | (24,197,018 | ) | ||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | ||||||||||||||||||||||||||||||||||||||||||||||||
Class A | (19,485,409 | ) | (17,733,684 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class B | (590,390 | ) | (544,804 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class C | (5,577,950 | ) | (4,176,825 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class I | (42,201,354 | ) | (30,180,114 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class R2 | (36,286 | ) | (11,950 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class R6 | (12,656 | ) | (7,398 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Class NAV | (24,485,458 | ) | (23,183,742 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (188,156,624 | ) | (135,094,959 | ) | ||||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 461,724,827 | 73,530,102 | ||||||||||||||||||||||||||||||||||||||||||||||
Total increase | 462,529,752 | 305,955,441 | ||||||||||||||||||||||||||||||||||||||||||||||
Net assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 2,243,333,546 | 1,937,378,105 | ||||||||||||||||||||||||||||||||||||||||||||||
End of year | $2,705,863,298 | $2,243,333,546 | ||||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $7,541,308 | $26,682,066 |
Financial highlights
Class A Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.74 | $10.46 | $9.81 | $9.50 | $8.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.36 | 0.45 | 2 | 0.29 | 0.26 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.55 | 1.57 | 0.63 | 0.29 | 1.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.91 | 2.02 | 0.92 | 0.55 | 1.64 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.44 | ) | (0.31 | ) | (0.27 | ) | (0.24 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.87 | ) | (0.74 | ) | (0.27 | ) | (0.24 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.78 | $11.74 | $10.46 | $9.81 | $9.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 8.10 | 19.85 | 9.66 | 5.98 | 20.64 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $580 | $553 | $276 | $215 | $56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.33 | 1.34 | 1.43 | 1.53 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.32 | 1.34 | 1.42 | 1.42 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.99 | 4.01 | 2 | 2.92 | 2.78 | 2.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 | 19 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class B Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.74 | $10.46 | $9.81 | $9.49 | $8.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.27 | 0.35 | 2 | 0.22 | 0.20 | 0.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.55 | 1.58 | 0.64 | 0.29 | 1.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.82 | 1.93 | 0.86 | 0.49 | 1.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.35 | ) | (0.22 | ) | (0.21 | ) | (0.17 | ) | (0.18 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.78 | ) | (0.65 | ) | (0.21 | ) | (0.17 | ) | (0.18 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.78 | $11.74 | $10.46 | $9.81 | $9.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 7.26 | 18.95 | 8.90 | 5.33 | 19.65 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $17 | $17 | $11 | $8 | $2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.10 | 2.15 | 2.29 | 2.54 | 2.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.10 | 2.12 | 2.12 | 2.11 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.24 | 3.11 | 2 | 2.21 | 2.17 | 2.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 | 19 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class C Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.74 | $10.46 | $9.81 | $9.50 | $8.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.27 | 0.36 | 2 | 0.22 | 0.20 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.56 | 1.58 | 0.64 | 0.28 | 1.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.83 | 1.94 | 0.86 | 0.48 | 1.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.35 | ) | (0.23 | ) | (0.21 | ) | (0.17 | ) | (0.18 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.78 | ) | (0.66 | ) | (0.21 | ) | (0.17 | ) | (0.18 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.79 | $11.74 | $10.46 | $9.81 | $9.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 7.42 | 18.97 | 8.90 | 5.22 | 19.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $168 | $127 | $65 | $45 | $11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.03 | 2.05 | 2.15 | 2.29 | 2.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.02 | 2.05 | 2.12 | 2.11 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.24 | 3.22 | 2 | 2.22 | 2.13 | 2.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 | 19 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class I Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.78 | $10.49 | $9.84 | $9.53 | $8.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.39 | 0.47 | 2 | 0.31 | 0.32 | 0.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.56 | 1.59 | 0.65 | 0.27 | 1.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.95 | 2.06 | 0.96 | 0.59 | 1.67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.47 | ) | (0.34 | ) | (0.31 | ) | (0.28 | ) | (0.27 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.90 | ) | (0.77 | ) | (0.31 | ) | (0.28 | ) | (0.27 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.83 | $11.78 | $10.49 | $9.84 | $9.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 8.50 | 20.28 | 10.07 | 6.45 | 21.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,242 | $893 | $641 | $249 | $123 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.01 | 1.01 | 1.05 | 1.12 | 1.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.00 | 1.01 | 1.03 | 0.97 | 1.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 3.24 | 4.19 | 2 | 3.10 | 3.43 | 3.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 | 19 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class R2 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.78 | $10.49 | $9.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.31 | 0.50 | 3 | 0.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.58 | 1.52 | 0.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.89 | 2.02 | 0.92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.42 | ) | (0.30 | ) | (0.27 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.85 | ) | (0.73 | ) | (0.27 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.82 | $11.78 | $10.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 7.93 | 19.78 | 9.58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.22 | 8.52 | 19.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.47 | 1.47 | 1.47 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.66 | 4.38 | 3 | 2.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 |
1 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||
3 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | ||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||
5 | Less than $500,000. |
Class R6 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.77 | $10.49 | $9.84 | $9.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.39 | 0.48 | 3 | 0.33 | 0.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.57 | 1.58 | 0.64 | 0.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.96 | 2.06 | 0.97 | 0.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.49 | ) | (0.35 | ) | (0.32 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.92 | ) | (0.78 | ) | (0.32 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.81 | $11.77 | $10.49 | $9.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 8.56 | 20.29 | 10.12 | 7.12 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 6.51 | 10.30 | 10.38 | 15.93 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.87 | 0.97 | 0.97 | 0.97 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 3.32 | 4.26 | 3 | 3.29 | 2.82 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 | 19 | 8 |
1 | The inception date for Class R6 shares is 9-1-11. | |||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||
3 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | |||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||
5 | Not annualized. | |||||||||||||||||||||||||||||||
6 | Less than $500,000. | |||||||||||||||||||||||||||||||
7 | Annualized. | |||||||||||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 3-1-11 to 2-29-12. |
Class NAV Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.78 | $10.49 | $9.84 | $9.53 | $8.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.41 | 0.49 | 2 | 0.35 | 0.29 | 0.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.55 | 1.59 | 0.62 | 0.31 | 1.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.96 | 2.08 | 0.97 | 0.60 | 1.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.49 | ) | (0.36 | ) | (0.32 | ) | (0.29 | ) | (0.28 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.43 | ) | (0.43 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.92 | ) | (0.79 | ) | (0.32 | ) | (0.29 | ) | (0.28 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $11.82 | $11.78 | $10.49 | $9.84 | $9.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 8.57 | 20.47 | 10.17 | 6.53 | 21.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $696 | $653 | $944 | $1,019 | $162 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.88 | 0.88 | 0.90 | 0.99 | 0.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.87 | 0.87 | 0.89 | 0.94 | 0.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 3.42 | 4.35 | 2 | 3.56 | 3.11 | 3.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 23 | 40 | 21 | 19 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net Investment income per share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.08 and 0.72%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Note 1 — Organization
John Hancock Global Shareholder Yield Fund (the fund) is a series of John Hancock Funds III (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The primary objective of the fund is to seek to provide a high level of income. Capital appreciation is a secondary investment objective.
The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class B shares are closed to new investors. Class I shares are offered to institutions and certain investors. Class R2 shares are available only to certain retirement plans. Class R6 shares are available only to certain retirement plans, institutions and other investors. Class NAV shares are offered to John Hancock affiliated funds of funds and certain 529 plans. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ. Class B shares convert to Class A shares eight years after purchase.
Note 2 — Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds are valued at their respective net asset values each business day. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter market are valued using bid prices.
Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund's Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund's Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or
26
issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of February 28, 2015, by major security category or type:
Total market value at 2-28-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Australia | $97,330,670 | — | $97,330,670 | — | |
Canada | 129,747,347 | $129,747,347 | — | — | |
France | 207,188,760 | — | 207,188,760 | — | |
Germany | 178,178,683 | — | 178,178,683 | — | |
Italy | 35,531,655 | — | 35,531,655 | — | |
Netherlands | 56,836,044 | 39,712,275 | 17,123,769 | — | |
Norway | 49,947,873 | — | 49,947,873 | — | |
Philippines | 16,034,176 | 16,034,176 | — | — | |
Spain | 20,648,241 | — | 20,648,241 | — | |
Sweden | 36,380,952 | — | 36,380,952 | — | |
Switzerland | 106,459,650 | — | 106,459,650 | — | |
United Kingdom | 474,296,185 | 38,522,669 | 435,773,516 | — | |
United States | 1,193,524,484 | 1,193,524,484 | — | — | |
Short-term investments | 87,738,888 | 87,738,888 | — | — | |
Total Investments in Securities | $2,689,843,608 | $1,505,279,839 | $1,184,563,769 | — |
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain if amounts are estimable. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.
27
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended February 28, 2015 were $652. For the year ended February 28, 2015, the fund had no borrowings under the line of credit.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify 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.
As of February 28, 2015, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends quarterly. Capital gain distributions, if any, annually.
The tax character of distributions for the years ended February 28, 2015 and 2014 was as follows:
February 28, 2015 | February 28, 2014 | |
Ordinary Income | $95,767,121 | $59,256,442 |
Long-Term Capital Gain | $92,389,503 | $75,838,517 |
Distributions paid by the fund with respect to each class of shares are calculated in the same manner, at the same time and in the same amount, except for the effect of class level expenses that may be applied differently to each class. As of February 28, 2015, the components of distributable earnings on a tax basis consisted of $7,541,487 and $13,529,332 of undistributed ordinary income and undistributed long-term capital gains, respectively.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals and partnerships.
28
Note 3 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, on an annual basis, equal to 0.800% of average daily net assets. The Advisor has a subadvisory agreement with Epoch Investment Partners, Inc. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock 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 February 28, 2015, this waiver amounted to 0.01% of the fund's average net assets on an annualized basis. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to waive all or a portion of its management fees and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.47% and 0.97% for Class R2 and Class R6 shares, respectively, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, acquired fund fees and short dividend expense. These expense limitations shall remain in effect until June 30, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.
Effective July 1, 2014, the Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class B shares of the fund, including Rule 12b-1 fees, transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 1.30% of average annual net assets (on an annualized basis) attributable to Class B shares (the Class Expense Waiver). The Class Expense Waiver expires on June 30, 2015, 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. Prior to July 1, 2014, Class B and Class C shares had fee waivers and/or reimbursements such that the expenses would not exceed 2.12% for Class B and Class C shares, respectively.
For Class R6 shares, the Advisor has contractually agreed to waive and/ or reimburse all class specific expense of the fund, including transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. The fee waiver and/or reimbursement will continue in effect until June 30, 2015, unless renewed by mutual agreement of the fund and Advisor based upon a determination that this is appropriate under the circumstances at the time.
The expense reductions described above amounted to $41,187, $1,208, $10,524, $77,730, $15,431, $17,142 and $47,196 for Class A, Class B, Class C, Class I, Class R2, Class R6 and Class NAV shares, respectively, for the year ended February 28, 2015.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended February 28, 2015 were equivalent to a net annual effective rate of 0.79% of the fund's average daily net assets.
29
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended February 28, 2015 amounted to an annual rate of 0.01% of the fund's average daily net assets.
Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B, Class C and Class R2 pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. In addition, under a service plan for Class R2 shares, the fund pays for certain other services. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund's shares.
Class | Rule 12b-1 fee | Service fee |
Class A | 0.30% | — |
Class B | 1.00% | — |
Class C | 1.00% | — |
Class R2 | 0.25% | 0.25% |
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $3,461,104 for the year ended February 28, 2015. Of this amount, $588,871 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $2,861,516 was paid as sales commissions to broker-dealers and $10,717 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A, Class B and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class B shares that are redeemed within six years of purchase are subject to CDSCs, at declining rates, beginning at 5.00%. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended February 28, 2015, CDSCs received by the Distributor amounted to$2,968, $30,782 and $27,872 for Class A, Class B and Class C shares, respectively.
Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, including payments made to third-parties for recordkeeping services provided to their clients who invest in one or more John Hancock funds. In addition, Signature Services Cost may be reduced by certain fees that Signature Services receives in connection with retirement and small accounts. Signature Services Cost is calculated monthly and allocated, as applicable, to five categories of share classes: Retail Share and Institutional Share Classes of Non-Municipal Bond Funds, Class R6 Shares, Retirement Share Classes and Municipal Bond Share Classes. Within each of these categories, the applicable costs are allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets.
Class level expenses. Class level expenses for the year ended February 28, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | |||||||||||||
Class A | $1,738,136 | $738,349 | $59,324 | $54,685 |
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Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | |||||||||||||
Class B | 170,061 | 21,672 | 15,315 | 1,391 | |||||||||||||
Class C | 1,473,250 | 187,046 | 22,380 | 10,410 | |||||||||||||
Class I | — | 1,245,321 | 60,487 | 93,084 | |||||||||||||
Class R2 | 4,172 | 149 | 16,113 | 186 | |||||||||||||
Class R6 | — | 51 | 16,901 | 168 | |||||||||||||
Class NAV | — | — | 367 | — | |||||||||||||
Total | $3,385,619 | $2,192,588 | $190,887 | $159,924 |
During the year ended February 28, 2015, an unaffiliated blue sky registration agent reimbursed Class A, Class B, Class C and Class I shares for state registration fees of $89, $86, $87 and $1,176, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Interfund lending program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds advised by the Advisor, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans at period end are presented under the caption Payable for interfund lending in the Statement of assets and liabilities. At period end, no interfund loans were outstanding. The fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or lender | Average loan balance | Days outstanding | Weighted average interest rate | Interest expense |
Borrower | $27,417,607 | 3 | 0.45% | $1,017 |
Note 5 — Fund share transactions
Transactions in fund shares for the years ended February 28, 2015 and 2014 were as follows:
Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 20,719,507 | $248,267,051 | 26,838,217 | $304,344,103 | ||||||||||||||||||||||
Distributions reinvested | 3,469,242 | 39,825,466 | 2,481,890 | 27,502,699 | ||||||||||||||||||||||
Repurchased | (22,029,303 | ) | (258,739,581 | ) | (8,581,850 | ) | (96,647,752 | ) | ||||||||||||||||||
Net increase | 2,159,446 | $29,352,936 | 20,738,257 | $235,199,050 | ||||||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 166,047 | $1,961,689 | 403,444 | $4,516,790 | ||||||||||||||||||||||
Distributions reinvested | 74,877 | 856,685 | 54,763 | 606,948 | ||||||||||||||||||||||
Repurchased | (238,338 | ) | (2,849,017 | ) | (141,166 | ) | (1,576,956 | ) | ||||||||||||||||||
Net increase (decrease) | 2,586 | ($30,643 | ) | 317,041 | $3,546,782 | |||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 4,752,670 | $56,729,485 | 5,196,683 | $58,389,022 | ||||||||||||||||||||||
Distributions reinvested | 781,411 | 8,933,617 | 477,452 | 5,299,994 | ||||||||||||||||||||||
Repurchased | (2,090,014 | ) | (24,867,403 | ) | (1,027,271 | ) | (11,556,924 | ) | ||||||||||||||||||
Net increase | 3,444,067 | $40,795,699 | 4,646,864 | $52,132,092 |
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Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 44,841,443 | $538,638,175 | 31,298,034 | $354,437,329 | ||||||||||||||||||||||
Distributions reinvested | 7,155,019 | 82,144,457 | 4,604,700 | 51,029,333 | ||||||||||||||||||||||
Repurchased | (22,743,540 | ) | (270,635,958 | ) | (21,258,484 | ) | (240,965,660 | ) | ||||||||||||||||||
Net increase | 29,252,922 | $350,146,674 | 14,644,250 | $164,501,002 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 75,096 | $890,451 | 38,678 | $439,671 | ||||||||||||||||||||||
Distributions reinvested | 4,971 | 56,777 | 958 | 10,700 | ||||||||||||||||||||||
Repurchased | (11,879 | ) | (134,980 | ) | (5,963 | ) | (68,252 | ) | ||||||||||||||||||
Net increase | 68,188 | $812,248 | 33,673 | $382,119 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 16,700 | $197,531 | 5,745 | $63,944 | ||||||||||||||||||||||
Distributions reinvested | 1,336 | 15,272 | 420 | 4,662 | ||||||||||||||||||||||
Repurchased | (2,266 | ) | (26,284 | ) | (66 | ) | (759 | ) | ||||||||||||||||||
Net increase | 15,770 | $186,519 | 6,099 | $67,847 | ||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 5,275,151 | $63,578,517 | 650,283 | $7,367,511 | ||||||||||||||||||||||
Distributions reinvested | 4,483,816 | 51,522,311 | 4,299,515 | 47,380,760 | ||||||||||||||||||||||
Repurchased | (6,277,534 | ) | (74,639,434 | ) | (39,517,738 | ) | (437,047,061 | ) | ||||||||||||||||||
Net increase (decrease) | 3,481,433 | $40,461,394 | (34,567,940 | ) | $(382,298,790 | ) | ||||||||||||||||||||
Total net increase | 38,424,412 | $461,724,827 | 5,818,244 | $73,530,102 |
Affiliates of the fund owned 9%, 31% and 100% of shares of beneficial interest of Class R2, Class R6 and Class NAV, respectively, on February 28, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $863,458,883 and $550,589,773, respectively, for the year ended February 28, 2015.
Note 7 — Investment by affiliated funds
Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund's net assets. At February 28, 2015, funds within the John Hancock group of funds complex held 25.6% of the fund's net assets. The following funds had an affiliate ownership of 5% or more of the fund's net assets:
Fund | Affiliate concentration |
John Hancock Lifestyle Growth Portfolio | 7.9% |
John Hancock Lifestyle Balanced Portfolio | 7.9% |
32
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of John Hancock Global Shareholder Yield Fund:
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Global Shareholder Yield Fund (the "Fund") at February 28, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 23, 2015
33
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 February 28, 2015.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports 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.
Income derived from foreign sources was $63,109,101. The fund intends to pass through foreign tax credits of $5,512,959.
The fund paid $92,389,503 in capital gain dividends.
Eligible shareholders will be mailed a 2015 Form 1099-DIV in early 2016. This will reflect the tax character of all distributions paid in calendar year 2015.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
34
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, 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 |
James M. Oates, Born: 1946 | 2012 | 222 |
Trustee and Chairperson of the Board Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) (1997-2011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (1995-2007); Director, Connecticut River Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988). Trustee and Chairperson of the Board, John Hancock Collateral Trust (since 2015); Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson of the Board, John Hancock Funds II (since 2005). | ||
Charles L. Bardelis,2 Born: 1941 | 2012 | 222 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). | ||
Peter S. Burgess,2 Born: 1942 | 2012 | 222 |
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 (since 2004); Director, Symetra Financial Corporation (since 2010); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). | ||
William H. Cunningham, Born: 1944 | 2006 | 222 |
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; Director, Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank-Austin) (until 2009); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Grace K. Fey, Born: 1946 | 2012 | 222 |
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, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
35
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 |
Theron S. Hoffman,2 Born: 1947 | 2012 | 222 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). | ||
Deborah C. Jackson, Born: 1952 | 2008 | 222 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); 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, John Hancock retail funds3 (since 2008); Trustee of John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Hassell H. McClellan, Born: 1945 | 2012 | 222 |
Trustee Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). | ||
Steven R. Pruchansky, Born: 1944 | 2006 | 222 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); 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 (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2015). |
36
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 |
Gregory A. Russo, Born: 1949 | 2008 | 222 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Chairman (since 2014) and Director and Member (since 2012) of Finance Committee, 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, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). |
Non-Independent Trustees4
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 |
James R. Boyle, Born: 1959 | 2015 | 222 |
Non-Independent Trustee* Chairman, HealthFleet, Inc. (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial, president and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010); Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). *Effective 3-10-15. | ||
Craig Bromley, Born: 1966 | 2012 | 222 |
Non-Independent Trustee President, John Hancock Financial Service (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005-2012, including prior positions). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Warren A. Thomson, Born: 1955 | 2012 | 222 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). |
37
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2009 |
Executive Vice President President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President (effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust (since 2015). | |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds 3 and John Hancock Variable Insurance Trust; Senior Vice President, Chief Legal Officer and Secretary (since 2015), John Hancock Collateral Trust; Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary, and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. | |
Francis V. Knox, Jr., Born: 1947 | 2006 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust (since 2015). | |
Charles A. Rizzo, Born: 1957 | 2007 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust (since 2015). | |
Salvatore Schiavone, Born: 1965 | 2010 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2010 and 2007-2009, including prior positions); Treasurer, John Hancock Collateral Trust (since 2015). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 35 other John Hancock funds consisting of 25 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
38
Trustees James M. Oates, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Epoch Investment Partners, Inc. Principal distributor John Hancock Funds, LLC Custodian State Street Bank and Trust Company+ Transfer agent John Hancock Signature Services, Inc. Legal counsel K&L Gates LLP Independent registered public accounting firm PricewaterhouseCoopers LLP |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 3-10-15
+Through 2-13-15
^Effective 2-17-15
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
39
Family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity-Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value Large Cap Equity Select Growth Small Cap Equity Small Cap Value Small Company Strategic Growth U.S. Equity U.S. Global Leaders Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Global Equity Global Opportunities Global Shareholder Yield Greater China Opportunities International Core International Growth International Small Company International Value Equity INCOME FUNDS Bond California Tax-Free Income Core High Yield Emerging Markets Debt Floating Rate Income Focused High Yield Global Income Government Income High Yield Municipal Bond Income | INCOME FUNDS (continued) Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Equity Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Natural Resources Redwood Regional Bank Seaport Technical Opportunities ASSET ALLOCATION Income Allocation Fund Lifestyle Aggressive Portfolio Lifestyle Balanced Portfolio Lifestyle Conservative Portfolio Lifestyle Growth Portfolio Lifestyle Moderate Portfolio Retirement Choices Portfolios (2010-2055) Retirement Living Portfolios (2010-2055) Retirement Living II Portfolios (2010-2055) CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
The fund's investment objectives, risks, charges, and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit the fund's website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
John Hancock Investments
A trusted brand
John Hancock has helped individuals and institutions build and
protect wealth since 1862. Today, we are one of America's strongest
and most-recognized brands.
A better way to invest
As a manager of managers, we search the world to find proven
portfolio teams with specialized expertise for every fund we offer,
then apply vigorous investment oversight to ensure they continue
to meet our uncompromising standards.
Results for investors
Our unique approach to asset management has led to a diverse set
of investments deeply rooted in investor needs, along with strong
risk-adjusted returns across asset classes.
![]() | John Hancock Funds, LLC n Member FINRA, SIPC 601 Congress Street n Boston, MA 02210-2805 800-225-5291 n jhinvestments.com | |
This report is for the information of the shareholders of John Hancock Global Shareholder Yield Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
MF221040 | 320A 2/15 4/15 |
John Hancock
International Core Fund
Annual report 2/28/15
A message to shareholders
Dear fellow shareholder,
Strong economic growth in the United States set the global standard in 2014, and appears to be continuing to do so in 2015. The portfolio teams in our network are generally optimistic about sustained relative strength in the United States, supported by rising employment, healthy consumer spending, and falling oil prices. Stocks at all-time highs remain vulnerable to a correction, but the long-term bull market appears intact. We believe a more selective approach continues to make sense in overseas markets, but note that opportunities are growing and could reward investors should recoveries in those markets begin in earnest.
Outside of the United States, economies are struggling to replicate the kind of success we have enjoyed at home. The European Central Bank announced dramatic monetary policy measures in January to promote economic activity in the region—similar to the monetary policy activity of the U.S. Federal Reserve (Fed) in recent years. One effect has been to push the value of the euro down relative to the U.S. dollar, which benefits European exporters by making their goods cheaper.
While the U.S. equity market appears strong, this year will likely present greater challenges for bond investors. The Fed has signaled its intention to raise short-term interest rates at some point in 2015, and that change may have an adverse effect on many fixed-income portfolios, particularly those that invest in less liquid asset classes. At John Hancock Investments, we are closely monitoring the liquidity of our fixed-income portfolios and communicating regularly with their portfolio managers about these matters.
A new look
I am pleased to introduce you to our redesigned shareholder reports. As part of an effort to elevate the educational substance in our communications, we undertook an initiative to make our reports more engaging and easier to navigate. Included in the changes are a performance snapshot that shows your fund's performance against that of its benchmark, and a Q&A with your fund's lead portfolio manager. We hope these enhancements give you better insight into your fund's activity and performance.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
This commentary reflects the CEO's views as of February 28, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
John Hancock
International Core Fund
1
INVESTMENT OBJECTIVE
The fund seeks high total return.
AVERAGE ANNUAL TOTAL RETURNS AS OF 2/28/15 (%)
The MSCI EAFE Index (gross of foreign withholding tax on dividends) (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada.
It is not possible to invest directly in an index.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectuses.
2
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Benchmark posted generally flat performance
Disappointing economic performance and deflationary risks in Europe were slightly offset by policymakers' decisive measures to stimulate growth.
European holdings, energy positions detracted
Overweights in European value stocks and in the energy sector weighed on the fund's relative results.
Postions in telecommunication services, Spanish equities contributed
The fund's overweight in telecommunication services stocks and our stock selection within the sector contributed to relative performance, as did our stock picking in Spain.
SECTOR COMPOSITION AS OF 2/28/15 (%)
A note about risks
Foreign investing has additional risks, such as currency and market volatility, and political and social instability. Hedging and other strategic transactions may increase volatility and result in losses if not successful. Large company stocks could fall out of favor. The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions.Please see the fund's prospectuses for additional risks.
3
![thomasrhancock.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000608/thomasrhancock.jpg)
Thomas R. Hancock, Ph.D.
Portfolio Manager
GMO
Although stocks in developed markets outside the United States were volatile during the 12-month period, the return of the fund's benchmark was slightly positive. What factors drove this result?
Positive investor sentiment during the period's early months about improving economic prospects in Europe and Japan gave way to pessimism as growth fell short of expectations. Policymakers responded by expanding stimulus measures, providing a measure of support for equities. U.S. stocks outperformed, helping to lift equities in developed markets outside North America that make up the fund's benchmark, the MSCI EAFE Index. Value stocks within the index underperformed relatively higher-priced growth stocks. Oil prices fell sharply during the latter half of the period, causing energy sector stocks to underperform. On the currency front, the appreciation of the U.S. dollar relative to currencies such as the euro and Japanese yen negatively affected the dollar-denominated investment returns of non-U.S. equities.
European stocks rallied during the spring of 2014, driven by expectations that an economic recovery in the 19-member eurozone currency union would gain momentum. However, data released in August showed that the eurozone's GDP growth had been flat in the second quarter. The European Central Bank (ECB) helped to lift sentiment by expanding stimulus programs and cutting benchmark lending rates to record lows. Despite these initiatives, inflation remained below policymakers' target level, increasing the risk that the eurozone could fall into a deflationary spiral. In January 2015, the ECB addressed these concerns by approving a more than $1 trillion bond-buying program that was larger in scope than many had anticipated. This initiative provided a catalyst for equities early in 2015.
In Japan, doubts set in about the effectiveness of stimulus measures embraced by Prime Minister Shinzo Abe. Enthusiasm waned after an April 1, 2014, increase in the nation's sales tax had a more damaging effect on retail sales and the broader economy than had been expected. Japan's GDP fell in the second and third quarters, indicating that the economy had slipped into a recession. However, Japanese stocks rebounded after Abe's ruling Liberal Democratic Party won a snap election in December 2014. This outcome was seen as providing the Abe government a mandate to continue
4
How did this environment affect the portfolio team's management of the fund?
The market environment generally does not cause us to alter our approach. With a relatively balanced reliance on valuation-based stock selection techniques combined with our top-down assessment, we maintained an approach that we believe makes the fund flexible and responsive to a variety of market conditions. In our view, the constrained economic outlook for many of the world's developed markets highlights the need for strong investment principles and a disciplined investment process.
The fund underperformed relative to its benchmark during the period. What factors had the most significant negative impact?
Our overweight in European value stocks relative to the benchmark weighed on performance, as these equities underperformed their growth-oriented counterparts. Another significant factor was the fund's overweight in energy, the worst-performing sector during the period. The negative impact from this positioning was eased somewhat by a positive contribution from our stock selection within energy. However, the roughly 50% decline in oil prices over the last eight months of the period reduced profitability for many energy companies, and the three holdings that had the largest negative impact on the fund's relative performance were integrated oil and gas firms whose
TOP 10 HOLDINGS AS OF 2/28/15 (%)
Total SA | 4.3 |
BP PLC | 3.6 |
AstraZeneca PLC | 2.8 |
Royal Dutch Shell PLC, Class A | 2.7 |
Nissan Motor Company, Ltd. | 2.7 |
Telefonica SA | 2.2 |
BASF SE | 2.1 |
Sanofi | 1.8 |
Vodafone Group PLC | 1.7 |
Royal Dutch Shell PLC, Class B | 1.6 |
Total | 25.5 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
5
shares declined sharply: Total SA (France), Eni SpA (Italy), and Statoil ASA (Norway). At the country level, our stock selection in France significantly detracted from relative performance.
What factors had the most positive impact on the fund's relative performance?
At the sector level, the fund's overweight in telecommunication services and our stock selection within the sector aided results, as did stock selection within the materials, financials, and healthcare sectors. At the country level, our stock selection in Spain contributed. Among the fund's Spanish holdings, an overweight in financial services company Banco Santander SA was a notable contributor. We sold the fund's position in Banco Santander prior to the end of the period.
Among other individual positions, the most significant contributors included overweights in telecommunication services company Orange SA (France), automakers Daimler AG (Germany) and Nissan Motor Co., Ltd. (Japan), and pharmaceutical company Shire PLC (Ireland). Shares of Orange soared as the company made a series of strategic moves to revive sales growth and profitability after years of decline. As for the two automakers, the weakening of the euro and the yen, respectively, relative to the U.S. dollar aided Daimler and Nissan, making their automobiles more affordable to foreign buyers. Shares of Shire were lifted in the summer of 2014 by a bid from U.S.-based AbbVie Inc. to acquire Shire. AbbVie backed out of the proposed deal in October 2014, sending Shire's stock lower for a time, but the shares recovered late in the period.
TOP 10 COUNTRIES AS OF 2/28/15 (%)
Japan | 21.9 |
United Kingdom | 16.6 |
France | 16.5 |
Germany | 12.0 |
Netherlands | 6.3 |
Spain | 4.6 |
Italy | 4.5 |
Switzerland | 2.1 |
Sweden | 1.9 |
Norway | 1.7 |
Total | 88.1 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
6
How was the fund positioned at the end of the period?
As has been the case for several years, we continue to favor European value stocks in the international market, owing to valuations that we find attractive. At the end of the period, this positioning left the portfolio significantly overweight in the energy, utilities, telecommunication services, and consumer discretionary sectors. The fund's overweight in energy stems in part from our view that recent share price declines within the sector have left many energy stocks with attractive valuations. As a result, three of the fund's four largest positions at the end of the period were in energy companies Total, BP PLC (U.K.), and Royal Dutch Shell PLC (Netherlands). The most significant underweight at the sector level was in financials. By country, the fund was overweight in France, Germany, Italy, and Spain, among others.
MANAGED BY
![]() | Thomas R. Hancock, Ph.D. On the fund since 2005 Investing since 1995 |
![]() | David Cowan, Ph.D. On the fund since 2009 Investing since 2006 |
![]() | Ben Inker, CFA On the fund since 2014 Investing since 1992 |
![]() | Sam Wilderman, CFA On the fund since 2014 Investing since 1996 |
![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED FEBRUARY 28, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||||||||
1-year | 5-year | Since inception1 | 5-year | Since inception1 | |||||||||||||||||||
Class A | -7.82 | 6.74 | 3.33 | 1 | 38.54 | 36.33 | 1 | ||||||||||||||||
Class B2 | -8.46 | 6.73 | 3.14 | 38.46 | 33.99 | ||||||||||||||||||
Class C2 | -4.70 | 7.03 | 3.15 | 40.48 | 34.01 | ||||||||||||||||||
Class I2,3 | -2.65 | 8.28 | 4.36 | 48.83 | 49.68 | ||||||||||||||||||
Class R12,3 | -3.38 | 7.45 | 3.60 | 43.23 | 39.71 | ||||||||||||||||||
Class R22,3 | -3.15 | 7.19 | 3.02 | 41.53 | 32.51 | ||||||||||||||||||
Class R33 | -3.28 | 7.57 | 8.70 | 4 | 44.02 | 61.88 | 4 | ||||||||||||||||
Class R43 | -2.91 | 7.94 | 9.07 | 4 | 46.50 | 65.09 | 4 | ||||||||||||||||
Class R53 | -2.72 | 8.20 | 9.35 | 4 | 48.33 | 67.53 | 4 | ||||||||||||||||
Class R62,3 | -2.51 | 8.37 | 4.55 | 49.47 | 52.27 | ||||||||||||||||||
Class 13 | -2.56 | 8.36 | 2.48 | 5 | 49.37 | 22.56 | 5 | ||||||||||||||||
Class NAV3 | -2.51 | 8.41 | 2.89 | 6 | 49.76 | 27.37 | 6 | ||||||||||||||||
index† | 0.39 | 8.27 | 5.04 | 1 | 48.76 | 59.22 | 1 |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1 to 6 according to the following schedule: 5%, 4%, 3%, 3%, 2%, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, Class 1, and Class NAV shares.
The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Class A | Class B | Class C | Class I | Class R1 | Class R2 | Class R3 | Class R4 | Class R5 | Class R6 | Class 1 | Class NAV | |
Gross (%) | 1.46 | 2.64 | 2.46 | 1.16 | 5.93 | 16.14 | 19.03 | 21.15 | 16.17 | 14.17 | 1.06 | 1.01 |
Net (%) | 1.46 | 2.31 | 2.30 | 1.16 | 1.90 | 1.65 | 1.80 | 1.40 | 1.20 | 1.01 | 1.06 | 1.01 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index is the MSCI EAFE Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock International Core Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the MSCI EAFE Index.
Start date | With maximum sales charge | Without sales charge | Index | |
Class B2,7 | 9-16-05 | 13,399 | 13,399 | 15,922 |
Class C2,7 | 9-16-05 | 13,401 | 13,401 | 15,922 |
Class I2,3 | 9-16-05 | 14,968 | 14,968 | 15,922 |
Class R12,3 | 9-16-05 | 13,971 | 13,971 | 15,922 |
Class R22,3 | 9-16-05 | 13,251 | 13,251 | 15,922 |
Class R33 | 5-22-09 | 16,188 | 16,188 | 17,667 |
Class R43 | 5-22-09 | 16,509 | 16,509 | 17,667 |
Class R53 | 5-22-09 | 16,753 | 16,753 | 17,667 |
Class R62,3 | 9-16-05 | 15,227 | 15,227 | 15,922 |
Class 13 | 11-6-06 | 12,256 | 12,256 | 12,663 |
Class NAV3 | 8-29-06 | 12,737 | 12,737 | 13,255 |
The MSCI EAFE Index (gross of foreign withholding tax on dividends) (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.
Footnotes related to performance pages
1 | From 9-16-05. On 6-9-06, through a reorganization, the fund acquired all of the assets of the GMO International Disciplined Equity Fund (the predecessor fund). The predecessor fund offered its Class III shares, inception date 9-16-05, in exchange for Class A shares, which were first offered on 6-12-06. The predecessor fund's Class III shares' returns have been recalculated to reflect the gross fees and expenses of Class A shares. |
2 | Class B, Class C, Class I, and Class R1 shares were first offered on 6-12-06; Class R6 shares were first offered on 9-1-11; Class R2 shares were first offered on 3-1-12. Returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class B, Class C, Class I, Class R1, Class R6, and Class R2 shares, as applicable. |
3 | For certain types of investors, as described in the fund's prospectuses. |
4 | From 5-22-09. |
5 | From 11-6-06. |
6 | From 8-29-06. |
7 | The contingent deferred sales charge is not applicable. |
9
These examples are intended to help you understand your ongoing operating expenses of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. |
• | Ongoing operating expenses, including management fees, distribution and service fees (if applicable), and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
This example is intended to provide information about the fund's actual ongoing operating expenses, and is based on the fund's actual return. It assumes an account value of $1,000.00 on September 1, 2014, with the same investment held until February 28, 2015.
Beginning Account value on 9-1-2014 | Ending value on 2-28-2015 | Expenses paid during period ended 2-28-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $973.20 | $7.19 | 1.47% |
Class B | 1,000.00 | 969.50 | 11.28 | 2.31% |
Class C | 1,000.00 | 969.30 | 11.28 | 2.31% |
Class I | 1,000.00 | 974.90 | 5.53 | 1.13% |
Class R1 | 1,000.00 | 971.50 | 9.29 | 1.90% |
Class R2 | 1,000.00 | 972.40 | 8.07 | 1.65% |
Class R3 | 1,000.00 | 971.90 | 8.80 | 1.80% |
Class R4 | 1,000.00 | 973.70 | 6.85 | 1.40% |
Class R5 | 1,000.00 | 974.70 | 5.88 | 1.20% |
Class R6 | 1,000.00 | 975.70 | 4.85 | 0.99% |
Class 1 | 1,000.00 | 975.50 | 5.09 | 1.04% |
Class NAV | 1,000.00 | 975.70 | 4.85 | 0.99% |
Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at February 28, 2015, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
10
Hypothetical example for comparison purposes
This table allows you to compare the fund's ongoing operating expenses with those of any other fund. It provides an example of the fund's hypothetical account values and hypothetical expenses based on each class's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on September 1, 2014, with the same investment held until February 28, 2015. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Please remember that these hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Beginning Account value on 9-1-2014 | Ending value on 2-28-2015 | Expenses paid during period ended 2-28-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,017.60 | $7.35 | 1.47% |
Class B | 1,000.00 | 1,013.30 | 11.53 | 2.31% |
Class C | 1,000.00 | 1,013.30 | 11.53 | 2.31% |
Class I | 1,000.00 | 1,023.50 | 5.66 | 1.13% |
Class R1 | 1,000.00 | 1,015.60 | 9.49 | 1.90% |
Class R2 | 1,000.00 | 1,016.60 | 8.25 | 1.65% |
Class R3 | 1,000.00 | 1,015.90 | 9.00 | 1.80% |
Class R4 | 1,000.00 | 1,017.90 | 7.00 | 1.40% |
Class R5 | 1,000.00 | 1,018.80 | 6.01 | 1.20% |
Class R6 | 1,000.00 | 1,019.90 | 4.96 | 0.99% |
Class 1 | 1,000.00 | 1,019.60 | 5.21 | 1.04% |
Class NAV | 1,000.00 | 1,019.90 | 4.96 | 0.99% |
Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
11
Fund's investments
As of 2-28-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 96.0% | $1,422,724,750 | |||||||||||||
(Cost $1,374,113,565) | ||||||||||||||
Australia 0.2% | 2,368,487 | |||||||||||||
Goodman Fielder, Ltd. | 391,953 | 207,124 | ||||||||||||
Pacific Brands, Ltd. | 283,172 | 104,957 | ||||||||||||
Woodside Petroleum, Ltd. | 74,921 | 2,056,406 | ||||||||||||
Austria 0.4% | 5,687,579 | |||||||||||||
OMV AG | 87,210 | 2,508,679 | ||||||||||||
Voestalpine AG | 81,423 | 3,178,900 | ||||||||||||
Belgium 1.0% | 15,387,348 | |||||||||||||
Belgacom SA | 141,625 | 5,319,413 | ||||||||||||
Delhaize Group SA | 81,793 | 7,343,803 | ||||||||||||
Solvay SA | 15,245 | 2,262,306 | ||||||||||||
Umicore SA | 10,591 | 461,826 | ||||||||||||
Bermuda 0.0% | 410,394 | |||||||||||||
Catlin Group, Ltd. | 38,867 | 410,394 | ||||||||||||
Canada 0.5% | 7,526,415 | |||||||||||||
Suncor Energy, Inc. (L) | 250,700 | 7,526,415 | ||||||||||||
Denmark 1.1% | 16,936,482 | |||||||||||||
A.P. Moeller - Maersk A/S, Series B | 2,228 | 5,121,792 | ||||||||||||
Carlsberg A/S, Class B | 20,852 | 1,782,615 | ||||||||||||
Novo Nordisk A/S, Class B | 58,701 | 2,809,111 | ||||||||||||
Pandora A/S | 31,030 | 2,829,692 | ||||||||||||
TDC A/S | 153,830 | 1,215,339 | ||||||||||||
Vestas Wind Systems A/S (I) | 75,413 | 3,177,933 | ||||||||||||
Finland 1.1% | 15,833,234 | |||||||||||||
Fortum OYJ | 192,729 | 4,384,283 | ||||||||||||
Metso OYJ | 12,559 | 404,039 | ||||||||||||
Neste Oil OYJ | 69,822 | 1,821,364 | ||||||||||||
Nokia OYJ | 471,710 | 3,790,745 | ||||||||||||
Stora Enso OYJ, Series R | 66,972 | 642,996 | ||||||||||||
Tieto OYJ | 49,174 | 1,308,840 | ||||||||||||
UPM-Kymmene OYJ | 185,561 | 3,480,967 | ||||||||||||
France 16.5% | 245,234,171 | |||||||||||||
AXA SA | 93,308 | 2,363,999 | ||||||||||||
BNP Paribas SA | 58,882 | 3,422,150 | ||||||||||||
Bouygues SA | 124,318 | 4,923,275 | ||||||||||||
Carrefour SA | 120,352 | 3,976,886 | ||||||||||||
Casino Guichard Perrachon SA | 22,077 | 2,074,518 |
Shares | Value | |||||||||||||
France (continued) | ||||||||||||||
Christian Dior SA | 3,073 | $594,413 | ||||||||||||
Cie de Saint-Gobain | 108,828 | 4,887,758 | ||||||||||||
Cie Generale des Etablissements Michelin | 86,248 | 8,280,358 | ||||||||||||
Credit Agricole SA | 261,775 | 3,672,696 | ||||||||||||
Electricite de France SA | 99,528 | 2,746,534 | ||||||||||||
GDF Suez | 675,657 | 14,991,619 | ||||||||||||
Hermes International SA | 663 | 213,589 | ||||||||||||
LVMH Moet Hennessy Louis Vuitton SA | 11,492 | 2,101,240 | ||||||||||||
Orange SA | 1,141,572 | 20,820,448 | ||||||||||||
Peugeot SA (I) | 322,280 | 5,383,839 | ||||||||||||
Rallye SA | 28,873 | 1,093,030 | ||||||||||||
Renault SA | 222,094 | 21,297,583 | ||||||||||||
Rexel SA | 46,973 | 916,604 | ||||||||||||
Sanofi | 276,801 | 27,073,461 | ||||||||||||
Schneider Electric SE | 144,011 | 11,571,207 | ||||||||||||
Societe Generale SA | 100,657 | 4,637,922 | ||||||||||||
Suez Environnement Company | 127,698 | 2,274,346 | ||||||||||||
Total SA | 1,195,287 | 64,216,389 | ||||||||||||
Valeo SA | 13,210 | 1,984,054 | ||||||||||||
Vallourec SA | 50,487 | 1,187,630 | ||||||||||||
Veolia Environnement SA | 209,026 | 4,068,131 | ||||||||||||
Vinci SA | 113,511 | 6,719,598 | ||||||||||||
Vivendi SA | 728,714 | 17,740,894 | ||||||||||||
Germany 10.4% | 153,994,159 | |||||||||||||
Allianz SE | 21,026 | 3,520,858 | ||||||||||||
Aurubis AG | 63,913 | 3,852,570 | ||||||||||||
BASF SE | 327,196 | 31,351,732 | ||||||||||||
Bayerische Motoren Werke AG | 78,979 | 9,982,461 | ||||||||||||
Bilfinger SE | 17,130 | 1,019,668 | ||||||||||||
Daimler AG | 246,308 | 23,858,072 | ||||||||||||
Deutsche Lufthansa AG | 210,871 | 3,087,464 | ||||||||||||
Deutsche Telekom AG | 940,713 | 17,565,105 | ||||||||||||
E.ON SE | 1,053,223 | 17,029,183 | ||||||||||||
Freenet AG | 15,391 | 459,457 | ||||||||||||
Fresenius Medical Care AG & Company KGaA | 59,116 | 4,838,729 | ||||||||||||
HeidelbergCement AG | 24,979 | 1,988,558 | ||||||||||||
K&S AG | 142,659 | 4,604,412 | ||||||||||||
Leoni AG | 51,014 | 3,285,782 | ||||||||||||
Metro AG | 81,005 | 2,709,669 | ||||||||||||
Muenchener Rueckversicherungs AG | 18,769 | 3,895,723 | ||||||||||||
ProSiebenSat.1 Media AG | 85,632 | 4,201,980 | ||||||||||||
Rheinmetall AG | 5,626 | 284,890 | ||||||||||||
RWE AG | 274,949 | 7,687,166 |
Shares | Value | |||||||||||||
Germany (continued) | ||||||||||||||
Salzgitter AG | 32,437 | $926,145 | ||||||||||||
Siemens AG | 58,023 | 6,486,011 | ||||||||||||
Suedzucker AG | 2,665 | 40,506 | ||||||||||||
Volkswagen AG | 5,318 | 1,318,018 | ||||||||||||
Hong Kong 1.2% | 18,023,468 | |||||||||||||
Cheung Kong Holdings, Ltd. | 200,000 | 3,958,763 | ||||||||||||
Hong Kong Land Holdings, Ltd. | 42,000 | 317,247 | ||||||||||||
Hutchison Whampoa, Ltd. | 133,000 | 1,816,613 | ||||||||||||
Noble Group, Ltd. | 2,840,000 | 2,022,767 | ||||||||||||
Sun Hung Kai Properties, Ltd. | 283,589 | 4,432,756 | ||||||||||||
Swire Pacific, Ltd., Class A | 276,500 | 3,769,396 | ||||||||||||
The Wharf Holdings, Ltd. | 234,000 | 1,705,926 | ||||||||||||
Ireland 0.7% | 9,845,467 | |||||||||||||
CRH PLC | 209,564 | 5,933,647 | ||||||||||||
Shire PLC | 48,491 | 3,911,820 | ||||||||||||
Israel 0.8% | 11,937,309 | |||||||||||||
Check Point Software Technologies, Ltd. (I) | 97,600 | 8,148,624 | ||||||||||||
Partner Communications Company, Ltd. (I) | 78,394 | 305,266 | ||||||||||||
Teva Pharmaceutical Industries, Ltd. | 61,359 | 3,483,419 | ||||||||||||
Italy 4.5% | 66,441,429 | |||||||||||||
A2A SpA | 969,803 | 982,272 | ||||||||||||
Enel SpA | 3,264,930 | 15,050,527 | ||||||||||||
Eni SpA | 1,297,959 | 24,193,322 | ||||||||||||
Finmeccanica SpA (I) | 519,627 | 6,292,632 | ||||||||||||
Mediaset SpA (I) | 530,948 | 2,445,965 | ||||||||||||
Recordati SpA | 8,496 | 152,911 | ||||||||||||
Snam SpA | 282,927 | 1,431,855 | ||||||||||||
Telecom Italia SpA (I) | 8,894,800 | 10,630,143 | ||||||||||||
Telecom Italia SpA | 5,362,320 | 5,261,802 | ||||||||||||
Japan 21.9% | 324,065,307 | |||||||||||||
Aeon Company, Ltd. (L) | 120,300 | 1,288,439 | ||||||||||||
Aisin Seiki Company, Ltd. | 27,200 | 1,002,761 | ||||||||||||
Asahi Glass Company, Ltd. | 177,000 | 1,117,425 | ||||||||||||
Asahi Kasei Corp. | 132,000 | 1,364,454 | ||||||||||||
Asatsu-DK, Inc. | 4,700 | 128,581 | ||||||||||||
Brother Industries, Ltd. | 9,500 | 160,151 | ||||||||||||
Canon, Inc. | 321,200 | 10,447,232 | ||||||||||||
Central Japan Railway Company, Ltd. | 28,200 | 5,247,139 | ||||||||||||
CyberAgent, Inc. | 83,800 | 4,326,248 | ||||||||||||
Daihatsu Motor Company, Ltd. | 40,900 | 585,315 | ||||||||||||
Daiichi Sankyo Company, Ltd. | 4,700 | 73,626 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Daito Trust Construction Company, Ltd. | 31,000 | $3,360,467 | ||||||||||||
Daiwabo Holdings Company, Ltd. | 349,000 | 583,370 | ||||||||||||
Dena Company, Ltd. (L) | 243,661 | 2,911,509 | ||||||||||||
Fuji Heavy Industries, Ltd. | 70,516 | 2,404,003 | ||||||||||||
Fuji Oil Company, Ltd. | 43,900 | 609,906 | ||||||||||||
FUJIFILM Holdings Corp. | 76,100 | 2,620,174 | ||||||||||||
Gree, Inc. (L) | 442,300 | 2,599,869 | ||||||||||||
Gunze, Ltd. | 86,000 | 234,107 | ||||||||||||
Hanwa Company, Ltd. | 312,000 | 1,210,440 | ||||||||||||
Haseko Corp. | 417,700 | 3,894,923 | ||||||||||||
Hitachi Chemical Company, Ltd. | 23,900 | 528,311 | ||||||||||||
Honda Motor Company, Ltd. | 394,503 | 13,048,266 | ||||||||||||
Hoya Corp. | 56,900 | 2,297,187 | ||||||||||||
Inpex Corp. | 458,300 | 5,417,064 | ||||||||||||
ITOCHU Corp. | 725,400 | 8,124,125 | ||||||||||||
Japan Tobacco, Inc. | 217,089 | 6,852,642 | ||||||||||||
JFE Holdings, Inc. | 129,900 | 3,249,735 | ||||||||||||
JSR Corp. | 23,200 | 424,341 | ||||||||||||
JX Holdings, Inc. | 1,131,600 | 4,585,322 | ||||||||||||
K's Holdings Corp. (L) | 100,100 | 3,090,309 | ||||||||||||
Kawasaki Kisen Kaisha, Ltd. | 1,366,000 | 4,163,148 | ||||||||||||
KDDI Corp. | 99,956 | 6,937,088 | ||||||||||||
Keyence Corp. | 6,600 | 3,375,248 | ||||||||||||
Kobe Steel, Ltd. | 1,216,000 | 2,400,755 | ||||||||||||
Kohnan Shoji Company, Ltd. | 22,300 | 253,065 | ||||||||||||
Kuraray Company, Ltd. | 17,400 | 239,566 | ||||||||||||
Kyocera Corp. | 320,800 | 16,230,867 | ||||||||||||
Leopalace21 Corp. (I) | 469,900 | 2,579,723 | ||||||||||||
Marubeni Corp. | 971,024 | 5,970,313 | ||||||||||||
Medipal Holdings Corp. | 102,235 | 1,302,951 | ||||||||||||
Mitsubishi Chemical Holdings Corp. | 714,849 | 3,985,173 | ||||||||||||
Mitsubishi Corp. | 669,595 | 13,380,999 | ||||||||||||
Mitsubishi Electric Corp. | 133,000 | 1,559,224 | ||||||||||||
Mitsubishi UFJ Financial Group, Inc. | 619,700 | 4,036,075 | ||||||||||||
Mitsui & Company, Ltd. | 853,700 | 11,870,085 | ||||||||||||
Mitsui Engineering & Shipbuilding Company, Ltd. | 840,000 | 1,468,501 | ||||||||||||
Mitsui O.S.K. Lines, Ltd. | 821,000 | 2,936,472 | ||||||||||||
Murata Manufacturing Company, Ltd. | 21,600 | 2,666,568 | ||||||||||||
Nidec Corp. | 37,200 | 2,512,393 | ||||||||||||
Nippon Electric Glass Company, Ltd. | 144,000 | 720,066 | ||||||||||||
Nippon Light Metal Holdings Company, Ltd. | 139,900 | 211,552 | ||||||||||||
Nippon Paper Industries Company, Ltd. | 163,900 | 2,854,894 | ||||||||||||
Nippon Steel & Sumitomo Metal Corp. | 583,000 | 1,550,081 | ||||||||||||
Nippon Telegraph & Telephone Corp. | 239,100 | 14,902,714 |
Shares | Value | |||||||||||||
Japan (continued) | ||||||||||||||
Nippon Yusen KK | 412,000 | $1,237,258 | ||||||||||||
Nipro Corp. | 41,800 | 395,688 | ||||||||||||
Nissan Motor Company, Ltd. | 3,770,067 | 39,718,941 | ||||||||||||
Nitori Holdings Company, Ltd. | 50,100 | 3,318,909 | ||||||||||||
North Pacific Bank, Ltd. | 52,200 | 204,397 | ||||||||||||
NTT DOCOMO, Inc. | 550,943 | 9,795,346 | ||||||||||||
Osaka Gas Company, Ltd. | 124,000 | 511,508 | ||||||||||||
Panasonic Corp. | 183,500 | 2,295,231 | ||||||||||||
Resona Holdings, Inc. | 939,000 | 5,277,928 | ||||||||||||
Ricoh Company, Ltd. | 183,700 | 1,825,677 | ||||||||||||
Ryohin Keikaku Company, Ltd. | 24,200 | 3,154,057 | ||||||||||||
Seiko Epson Corp. | 67,500 | 2,484,337 | ||||||||||||
Sekisui House, Ltd. | 101,600 | 1,368,164 | ||||||||||||
Showa Denko KK | 349,000 | 470,060 | ||||||||||||
SMC Corp. | 6,300 | 1,752,992 | ||||||||||||
Sojitz Corp. | 2,823,900 | 4,320,073 | ||||||||||||
Sumitomo Corp. | 664,100 | 7,304,936 | ||||||||||||
Sumitomo Heavy Industries, Ltd. | 127,000 | 790,522 | ||||||||||||
Sumitomo Metal Mining Company, Ltd. | 169,000 | 2,670,694 | ||||||||||||
Sumitomo Mitsui Financial Group, Inc. | 106,700 | 4,251,309 | ||||||||||||
Sumitomo Rubber Industries, Ltd. | 36,500 | 631,807 | ||||||||||||
Takeda Pharmaceutical Company, Ltd. | 148,189 | 7,589,772 | ||||||||||||
The Yokohama Rubber Company, Ltd. | 42,000 | 427,614 | ||||||||||||
Tokyo Electric Power Company, Inc. (I) | 559,800 | 2,195,637 | ||||||||||||
TonenGeneral Sekiyu KK | 53,133 | 502,062 | ||||||||||||
Tosoh Corp. | 332,000 | 1,665,479 | ||||||||||||
Toyota Tsusho Corp. | 224,600 | 6,227,025 | ||||||||||||
Ube Industries, Ltd. | 265,000 | 432,424 | ||||||||||||
UNY Group Holdings Company, Ltd. (L) | 327,300 | 1,891,246 | ||||||||||||
West Japan Railway Company | 29,600 | 1,688,176 | ||||||||||||
Yamada Denki Company, Ltd. (L) | 1,329,279 | 5,771,076 | ||||||||||||
Luxembourg 0.2% | 2,496,982 | |||||||||||||
ArcelorMittal | 228,565 | 2,496,982 | ||||||||||||
Netherlands 6.3% | 93,625,510 | |||||||||||||
Aegon NV | 390,302 | 3,019,245 | ||||||||||||
Boskalis Westminster NV | 8,186 | 379,735 | ||||||||||||
Corbion NV | 29,009 | 560,140 | ||||||||||||
Delta Lloyd NV | 79,730 | 1,445,888 | ||||||||||||
Heineken NV | 49,527 | 3,861,950 | ||||||||||||
ING Groep NV (I) | 119,759 | 1,776,408 | ||||||||||||
Koninklijke Ahold NV | 400,160 | 7,499,146 | ||||||||||||
Koninklijke BAM Groep NV | 91,895 | 434,132 | ||||||||||||
Koninklijke DSM NV | 27,281 | 1,520,856 |
Shares | Value | |||||||||||||
Netherlands (continued) | ||||||||||||||
Koninklijke KPN NV | 1,618,941 | $5,518,110 | ||||||||||||
PostNL NV (I) | 636,138 | 2,835,514 | ||||||||||||
Royal Dutch Shell PLC, Class A | 1,225,944 | 39,939,406 | ||||||||||||
Royal Dutch Shell PLC, Class B | 717,501 | 24,318,848 | ||||||||||||
SNS REAAL NV (I) | 69,009 | 0 | ||||||||||||
Wolters Kluwer NV | 15,938 | 516,132 | ||||||||||||
New Zealand 0.0% | 423,773 | |||||||||||||
Chorus, Ltd. (I) | 192,037 | 423,773 | ||||||||||||
Norway 1.7% | 25,311,627 | |||||||||||||
Orkla ASA | 30,304 | 237,736 | ||||||||||||
Statoil ASA | 565,593 | 10,624,734 | ||||||||||||
Telenor ASA | 208,012 | 4,168,910 | ||||||||||||
TGS-NOPEC Geophysical Company ASA (L) | 80,809 | 1,966,292 | ||||||||||||
Yara International ASA | 151,154 | 8,313,955 | ||||||||||||
Portugal 0.4% | 5,680,945 | |||||||||||||
EDP - Energias de Portugal SA | 1,441,204 | 5,680,945 | ||||||||||||
Singapore 0.2% | 2,212,504 | |||||||||||||
Golden Agri-Resources, Ltd. | 7,472,000 | 2,212,504 | ||||||||||||
Spain 4.6% | 68,392,679 | |||||||||||||
ACS Actividades de Construccion y Servicios SA | 106,525 | 3,950,364 | ||||||||||||
Enagas SA | 87,641 | 2,685,790 | ||||||||||||
Endesa SA | 7,064 | 142,586 | ||||||||||||
Ferrovial SA | 91,314 | 1,931,920 | ||||||||||||
Gas Natural SDG SA | 239,072 | 5,768,421 | ||||||||||||
Iberdrola SA | 1,825,229 | 12,456,995 | ||||||||||||
Indra Sistemas SA | 23,949 | 254,871 | ||||||||||||
Red Electrica Corp. SA | 12,705 | 1,080,697 | ||||||||||||
Repsol SA | 401,057 | 7,733,176 | ||||||||||||
Telefonica SA | 2,084,808 | 32,387,859 | ||||||||||||
Sweden 1.9% | 28,870,485 | |||||||||||||
Investor AB, B Shares | 67,364 | 2,675,736 | ||||||||||||
NCC AB, B Shares | 48,530 | 1,700,886 | ||||||||||||
Sandvik AB | 131,630 | 1,475,365 | ||||||||||||
Securitas AB, Series B | 29,673 | 422,097 | ||||||||||||
Skanska AB, Series B | 91,461 | 2,279,780 | ||||||||||||
Tele2 AB, B Shares | 31,606 | 370,802 | ||||||||||||
Telefonaktiebolaget LM Ericsson, B Shares | 637,119 | 8,227,797 | ||||||||||||
TeliaSonera AB | 1,309,897 | 8,318,501 | ||||||||||||
Volvo AB, Series B | 281,949 | 3,399,521 |
Shares | Value | |||||||||||||
Switzerland 2.1% | $30,499,794 | |||||||||||||
ABB, Ltd. (I) | 323,586 | 6,934,141 | ||||||||||||
Actelion, Ltd. (I) | 26,748 | 3,202,186 | ||||||||||||
Holcim, Ltd. (I) | 64,196 | 4,952,419 | ||||||||||||
Nestle SA | 114,368 | 8,938,288 | ||||||||||||
Swisscom AG | 5,152 | 2,953,262 | ||||||||||||
Zurich Insurance Group AG (I) | 11,005 | 3,519,498 | ||||||||||||
United Kingdom 16.6% | 246,538,951 | |||||||||||||
AstraZeneca PLC | 599,333 | 41,302,320 | ||||||||||||
Aviva PLC | 269,135 | 2,228,061 | ||||||||||||
BAE Systems PLC | 865,635 | 7,094,840 | ||||||||||||
Balfour Beatty PLC | 112,334 | 434,694 | ||||||||||||
BG Group PLC | 286,603 | 4,219,563 | ||||||||||||
BP PLC | 7,690,446 | 52,961,984 | ||||||||||||
British American Tobacco PLC | 201,666 | 11,757,535 | ||||||||||||
BT Group PLC | 1,028,657 | 7,212,232 | ||||||||||||
Carillion PLC | 75,523 | 420,183 | ||||||||||||
Centrica PLC | 1,674,919 | 6,306,057 | ||||||||||||
Compass Group PLC | 208,633 | 3,699,725 | ||||||||||||
Fiat Chrysler Automobiles NV (I) | 269,304 | 4,157,373 | ||||||||||||
GlaxoSmithKline PLC | 1,020,651 | 24,200,995 | ||||||||||||
Home Retail Group PLC | 785,718 | 2,453,321 | ||||||||||||
Imperial Tobacco Group PLC | 25,742 | 1,266,825 | ||||||||||||
J Sainsbury PLC | 136,235 | 570,372 | ||||||||||||
Kingfisher PLC | 215,441 | 1,214,793 | ||||||||||||
Ladbrokes PLC | 19,133 | 34,932 | ||||||||||||
Marks & Spencer Group PLC | 383,744 | 2,982,248 | ||||||||||||
Next PLC | 29,632 | 3,425,269 | ||||||||||||
Pearson PLC | 145,172 | 3,176,115 | ||||||||||||
Prudential PLC | 77,935 | 1,955,876 | ||||||||||||
Reckitt Benckiser Group PLC | 99,040 | 8,939,533 | ||||||||||||
SSE PLC | 87,678 | 2,126,464 | ||||||||||||
Tesco PLC | 2,676,079 | 10,130,253 | ||||||||||||
Trinity Mirror PLC (I) | 176,425 | 550,161 | ||||||||||||
Unilever NV | 86,849 | 3,774,349 | ||||||||||||
Unilever PLC | 172,509 | 7,608,806 | ||||||||||||
Vodafone Group PLC | 7,195,455 | 24,905,703 | ||||||||||||
WM Morrison Supermarkets PLC | 778,169 | 2,345,904 | ||||||||||||
WPP PLC | 130,467 | 3,082,465 | ||||||||||||
United States 1.7% | 24,980,251 | |||||||||||||
Catamaran Corp. (I) | 228,156 | 11,396,392 | ||||||||||||
Valeant Pharmaceuticals International, Inc. (I) | 68,786 | 13,583,859 |
Shares | Value | |||||||||||||
Preferred securities 1.6% | $24,345,158 | |||||||||||||
(Cost $20,349,827) | ||||||||||||||
Germany 1.6% | 24,345,158 | |||||||||||||
Porsche Automobil Holding SE | 104,445 | 9,674,780 | ||||||||||||
Volkswagen AG | 58,122 | 14,670,378 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Securities lending collateral 1.4% | $21,199,847 | |||||||||||||
(Cost $21,200,059) | ||||||||||||||
John Hancock Collateral Trust (W) | 0.0869(Y | ) | 2,118,883 | 21,199,847 | ||||||||||
Short-term investments 1.9% | $27,698,380 | |||||||||||||
(Cost $27,698,380) | ||||||||||||||
Money market funds 1.9% | 27,698,380 | |||||||||||||
State Street Institutional Treasury Money Market Fund | 0.0000(Y | ) | 27,698,380 | 27,698,380 | ||||||||||
Total investments (Cost $1,443,361,831)† 100.9% | $1,495,968,135 | |||||||||||||
Other assets and liabilities, net (0.9%) | ($13,506,785 | ) | ||||||||||||
Total net assets 100.0% | $1,482,461,350 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||
Key to Security Abbreviations and Legend | ||||
(I) | Non-income producing security. | |||
(L) | A portion of this security is on loan as of 2-28-15. | |||
(W) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending. | |||
(Y) | The rate shown is the annualized seven-day yield as of 2-28-15. | |||
† | At 2-28-15, the aggregate cost of investment securities for federal income tax purposes was $1,473,820,402. Net unrealized appreciation aggregated $22,147,733, of which $92,233,389 related to appreciated investment securities and $70,085,656 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 2-28-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $1,422,161,772), including $20,116,291 of securities loaned | $1,474,768,288 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated funds, at value (Cost $21,200,059) | 21,199,847 | |||||||||||||||||||||||||||||||||||||||
Total investments, at value (cost $1,443,361,831) | $1,495,968,135 | |||||||||||||||||||||||||||||||||||||||
Foreign currency, at value (Cost $1,698,418) | 1,694,540 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 265,800 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 2,708,776 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 4,425,866 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 61,099 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 559 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 51,166 | |||||||||||||||||||||||||||||||||||||||
Total assets | 1,505,175,941 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 818,574 | |||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 21,163,249 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 31,565 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 120,767 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 168 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 2,693 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 577,575 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 22,714,591 | |||||||||||||||||||||||||||||||||||||||
Net assets | $1,482,461,350 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $1,492,206,498 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 574,279 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments, futures contracts and foreign currency transactions | (62,888,288 | ) | ||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 52,568,861 | |||||||||||||||||||||||||||||||||||||||
Net assets | $1,482,461,350 | |||||||||||||||||||||||||||||||||||||||
STATEMENT OF ASSETS AND LIABILITIES (continued)
Net asset value per share | ||||||||||||||||||
Based on net asset values and shares outstanding-the fund has an unlimited number of shares authorized with no par value | ||||||||||||||||||
Class A ($111,526,082 ÷ 3,358,725 shares)1 | $33.20 | |||||||||||||||||
Class B ($2,501,568 ÷ 75,540 shares)1 | $33.12 | |||||||||||||||||
Class C ($12,351,040 ÷ 372,967 shares)1 | $33.12 | |||||||||||||||||
Class I ($541,378,408 ÷ 16,248,829 shares) | $33.32 | |||||||||||||||||
Class R1 ($514,967 ÷ 15,531 shares) | $33.16 | |||||||||||||||||
Class R2 ($214,317 ÷ 6,428 shares) | $33.34 | |||||||||||||||||
Class R3 ($198,292 ÷ 5,944.8 shares) | $33.36 | |||||||||||||||||
Class R4 ($141,103 ÷ 4,236 shares) | $33.31 | |||||||||||||||||
Class R5 ($136,423 ÷ 4,097 shares) | $33.30 | |||||||||||||||||
Class R6 ($169,297 ÷ 5,075 shares) | $33.36 | |||||||||||||||||
Class 1 ($41,932,496 ÷ 1,256,714 shares) | $33.37 | |||||||||||||||||
Class NAV ($771,397,357 ÷ 23,140,727 shares) | $33.34 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $34.95 |
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. | |||||||
2 | On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. |
STATEMENT OF OPERATIONS For the year ended 2-28-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $50,137,690 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 1,884,329 | |||||||||||||||||||||||||||||||||||||||
Interest | 1,958 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (4,196,789 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 47,827,188 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 13,061,038 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 498,458 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 191,219 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 790,615 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 22,918 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 189,621 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 84,468 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 125,762 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 1,409,882 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 39,669 | |||||||||||||||||||||||||||||||||||||||
Other | 32,947 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 16,446,597 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (203,794 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 16,242,803 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 31,584,385 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and foreign currency transactions | 120,517,702 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | 26 | |||||||||||||||||||||||||||||||||||||||
Futures contracts | 1,026,813 | |||||||||||||||||||||||||||||||||||||||
121,544,541 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | (194,624,454 | ) | ||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (348 | ) | ||||||||||||||||||||||||||||||||||||||
(194,624,802 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (73,080,261 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($41,495,876 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 2-28-15 | Year ended 2-28-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $31,584,385 | $46,405,758 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 121,544,541 | 107,879,168 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (194,624,802 | ) | 170,776,450 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (41,495,876 | ) | 325,061,376 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (3,337,701 | ) | (2,725,982 | ) | |||||||||||||||||||||||||||||||||||||||||
Class B | (60,350 | ) | (67,781 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (272,511 | ) | (122,674 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (19,689,726 | ) | (15,844,643 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R1 | (12,379 | ) | (9,593 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (6,327 | ) | (3,451 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R3 | (5,356 | ) | (3,281 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (2,953 | ) | (2,592 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R5 | (4,261 | ) | (3,325 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (5,738 | ) | (4,764 | ) | |||||||||||||||||||||||||||||||||||||||||
Class 1 | (1,452,520 | ) | (1,354,021 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (26,695,437 | ) | (26,043,066 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (51,545,259 | ) | (46,185,173 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 59,050,987 | 97,994,393 | |||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (33,990,148 | ) | 376,870,596 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 1,516,451,498 | 1,139,580,902 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $1,482,461,350 | $1,516,451,498 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $574,279 | $19,791,794 |
Financial highlights
Class A Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.40 | $28.81 | $27.72 | $30.85 | $25.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.62 | 1.05 | 2 | 0.71 | 0.58 | 0.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 6.52 | 1.31 | (3.32 | ) | 5.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.15 | ) | 7.57 | 2.02 | (2.74 | ) | 5.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.05 | ) | (0.98 | ) | (0.93 | ) | (0.39 | ) | (0.31 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.20 | $35.40 | $28.81 | $27.72 | $30.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (2.98 | ) | 26.56 | 7.41 | (8.73 | ) | 21.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $112 | $109 | $91 | $374 | $333 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.47 | 1.46 | 1.58 | 1.58 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.47 | 1.46 | 1.58 | 1.58 | 1.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.81 | 3.27 | 2 | 2.66 | 2.05 | 1.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class B Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.27 | $28.70 | $27.61 | $30.70 | $25.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.34 | 0.73 | 2 | 0.42 | 0.44 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.74 | ) | 6.53 | 1.41 | (3.34 | ) | 5.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.40 | ) | 7.26 | 1.83 | (2.90 | ) | 5.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.75 | ) | (0.69 | ) | (0.74 | ) | (0.19 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.12 | $35.27 | $28.70 | $27.61 | $30.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (3.77 | ) | 25.50 | 6.71 | (9.38 | ) | 20.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $3 | $3 | $3 | $4 | $5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.66 | 2.64 | 2.94 | 2.49 | 2.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.31 | 2.30 | 2.30 | 2.30 | 2.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.02 | 2.28 | 2 | 1.56 | 1.58 | 0.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class C Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.27 | $28.70 | $27.61 | $30.71 | $25.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.29 | 0.83 | 2 | 0.42 | 0.43 | 0.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.68 | ) | 6.43 | 1.41 | (3.34 | ) | 5.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.39 | ) | 7.26 | 1.83 | (2.91 | ) | 5.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.76 | ) | (0.69 | ) | (0.74 | ) | (0.19 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.12 | $35.27 | $28.70 | $27.61 | $30.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (3.76 | ) | 25.50 | 6.71 | (9.41 | ) | 20.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $12 | $8 | $4 | $4 | $5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.30 | 2.46 | 2.77 | 2.50 | 2.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.29 | 2.30 | 2.30 | 2.30 | 2.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.86 | 2.59 | 2 | 1.54 | 1.53 | 0.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class I Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.52 | $28.90 | $27.78 | $30.94 | $25.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.71 | 1.10 | 2 | 0.68 | 0.72 | 0.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.76 | ) | 6.60 | 1.49 | (3.36 | ) | 5.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.05 | ) | 7.70 | 2.17 | (2.64 | ) | 5.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.15 | ) | (1.08 | ) | (1.05 | ) | (0.52 | ) | (0.43 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.32 | $35.52 | $28.90 | $27.78 | $30.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.65 | ) | 26.94 | 7.92 | (8.33 | ) | 21.73 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $541 | $527 | $392 | $411 | $291 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.14 | 1.15 | 1.17 | 1.16 | 1.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.13 | 1.15 | 1.17 | 1.16 | 1.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.08 | 3.42 | 2 | 2.49 | 2.54 | 1.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class R1 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.33 | $28.75 | $27.66 | $30.77 | $25.67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.43 | 0.85 | 2 | 0.51 | 0.53 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.70 | ) | 6.56 | 1.43 | (3.33 | ) | 5.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.27 | ) | 7.41 | 1.94 | (2.80 | ) | 5.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.90 | ) | (0.83 | ) | (0.85 | ) | (0.31 | ) | (0.20 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.16 | $35.33 | $28.75 | $27.66 | $30.77 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (3.38 | ) | 26.00 | 7.10 | (9.00 | ) | 20.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | — | 4 | — | 4 | — | 4 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.91 | 5.71 | 7.16 | 7.37 | 6.88 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.90 | 1.90 | 1.90 | 1.90 | 1.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.26 | 2.67 | 2 | 1.87 | 1.88 | 0.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
4 | Less than $500,000. |
Class R2 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.53 | $28.91 | $27.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.51 | 0.94 | 3 | 0.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.72 | ) | 6.60 | 1.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.21 | ) | 7.54 | 2.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.98 | ) | (0.92 | ) | (0.91 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.34 | $35.53 | $28.91 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (3.15 | ) | 26.32 | 7.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 5 | — | 5 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.98 | 15.89 | 20.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.65 | 1.65 | 1.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.51 | 2.94 | 3 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 |
1 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||
3 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | ||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||
5 | Less than $500,000. |
Class R3 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.54 | $28.92 | $27.80 | $30.94 | $25.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.48 | 1.09 | 2 | 0.53 | 0.57 | 0.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.73 | ) | 6.40 | 1.46 | (3.38 | ) | 5.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.25 | ) | 7.49 | 1.99 | (2.81 | ) | 5.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.93 | ) | (0.87 | ) | (0.87 | ) | (0.33 | ) | (0.23 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.36 | $35.54 | $28.92 | $27.80 | $30.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (3.28 | ) | 26.12 | 7.28 | (8.95 | ) | 20.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 4 | — | 4 | — | 4 | — | 4 | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 9.34 | 18.96 | 47.36 | 45.66 | 44.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.80 | 1.80 | 1.80 | 1.80 | 1.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.40 | 3.36 | 2 | 1.93 | 2.01 | 1.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
4 | Less than $500,000. |
Class R4 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.51 | $28.89 | $27.79 | $30.94 | $25.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.69 | 0.99 | 2 | 0.64 | 0.65 | 0.37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.82 | ) | 6.63 | 1.44 | (3.38 | ) | 5.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.13 | ) | 7.62 | 2.08 | (2.73 | ) | 5.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.07 | ) | (1.00 | ) | (0.98 | ) | (0.42 | ) | (0.31 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.31 | $35.51 | $28.89 | $27.79 | $30.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.91 | ) | 26.66 | 7.61 | (8.67 | ) | 21.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 4 | — | 4 | — | 4 | — | 4 | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.63 | 21.10 | 42.45 | 42.74 | 44.22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.40 | 1.40 | 1.43 | 1.50 | 1.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.01 | 3.05 | 2 | 2.34 | 2.29 | 1.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
4 | Less than $500,000. |
Class R5 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.51 | $28.90 | $27.78 | $30.94 | $25.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.70 | 1.11 | 2 | 0.70 | 0.73 | 0.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 6.57 | 1.45 | (3.38 | ) | 5.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.07 | ) | 7.68 | 2.15 | (2.65 | ) | 5.54 | �� | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.14 | ) | (1.07 | ) | (1.03 | ) | (0.51 | ) | (0.39 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.30 | $35.51 | $28.90 | $27.78 | $30.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.72 | ) | 26.87 | 7.88 | (8.38 | ) | 21.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 4 | — | 4 | — | 4 | — | 4 | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 12.76 | 16.15 | 21.14 | 20.87 | 31.41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.20 | 1.20 | 1.20 | 1.20 | 1.22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.05 | 3.45 | 2 | 2.57 | 2.58 | 1.58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
4 | Less than $500,000. |
Class R6 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.57 | $28.94 | $27.82 | $28.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.76 | 1.13 | 3 | 0.73 | 0.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 6.60 | 1.45 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.01 | ) | 7.73 | 2.18 | 0.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.20 | ) | (1.10 | ) | (1.06 | ) | (0.54 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.36 | $35.57 | $28.94 | $27.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (2.51 | ) | 27.00 | 7.95 | 1.49 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 11.51 | 14.17 | 21.97 | 16.83 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.00 | 1.12 | 1.12 | 1.12 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.22 | 3.50 | 3 | 2.66 | 1.98 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 8 |
1 | The inception date for Class R6 shares is 9-1-11. | |||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||
3 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||
5 | Not annualized. | |||||||||||||||||||||||||||||||
6 | Less than $500,000. | |||||||||||||||||||||||||||||||
7 | Annualized. | |||||||||||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 3-1-11 to 2-29-12. |
Class 1 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.58 | $28.94 | $27.82 | $30.99 | $25.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.76 | 1.14 | 2 | 0.75 | 0.79 | 0.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.78 | ) | 6.61 | 1.44 | (3.41 | ) | 5.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.02 | ) | 7.75 | 2.19 | (2.62 | ) | 5.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.19 | ) | (1.11 | ) | (1.07 | ) | (0.55 | ) | (0.44 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.37 | $35.58 | $28.94 | $27.82 | $30.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.56 | ) | 27.09 | 8.00 | (8.27 | ) | 21.75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $42 | $44 | $37 | $39 | $47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.06 | 1.06 | 1.08 | 1.07 | 1.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.05 | 1.06 | 1.08 | 1.07 | 1.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.20 | 3.53 | 2 | 2.76 | 2.76 | 1.83 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class NAV Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $35.55 | $28.92 | $27.80 | $30.98 | $25.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.77 | 1.14 | 2 | 0.82 | 0.81 | 0.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.78 | ) | 6.62 | 1.38 | (3.43 | ) | 5.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.01 | ) | 7.76 | 2.20 | (2.62 | ) | 5.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (1.20 | ) | (1.13 | ) | (1.08 | ) | (0.56 | ) | (0.45 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $33.34 | $35.55 | $28.92 | $27.80 | $30.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.51 | ) | 27.14 | 8.06 | (8.24 | ) | 21.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $771 | $823 | $611 | $753 | $920 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.01 | 1.01 | 1.03 | 1.02 | 1.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.00 | 1.00 | 1.03 | 1.02 | 1.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.25 | 3.54 | 2 | 3.03 | 2.84 | 1.87 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 81 | 47 | 53 | 42 | 39 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Net investment income per share and ratio of net investment income to average net assets reflect a special dividend received by the fund which amounted to $0.24 and 0.77%, respectively. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Note 1 — Organization
John Hancock International Core Fund (the fund) is a series of John Hancock Funds III (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek high total return.
The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class B shares are closed to new investors. Class I shares are offered to institutions and certain investors. Class R1, Class R2, Class R3, Class R4, and Class R5 shares are available only to certain retirement plans. Class R6 shares are available only to certain retirement plans, institutions and other investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Class NAV shares are offered to John Hancock affiliated funds of funds and certain 529 plans. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ. Class B shares convert to Class A shares eight years after purchase.
Note 2 — Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund.
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Trust (JHCT), are valued at their respective net asset values each business day. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices.
Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund's Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund's Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or
36
issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of February 28, 2015, by major security category or type:
Total market value at 2-28-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Australia | $2,368,487 | — | $2,368,487 | — | |
Austria | 5,687,579 | — | 5,687,579 | — | |
Belgium | 15,387,348 | — | 15,387,348 | — | |
Bermuda | 410,394 | — | 410,394 | — | |
Canada | 7,526,415 | $7,526,415 | — | — | |
Denmark | 16,936,482 | — | 16,936,482 | — | |
Finland | 15,833,234 | — | 15,833,234 | — | |
France | 245,234,171 | — | 245,234,171 | — | |
Germany | 153,994,159 | — | 153,994,159 | — | |
Hong Kong | 18,023,468 | — | 18,023,468 | — | |
Ireland | 9,845,467 | — | 9,845,467 | — | |
Israel | 11,937,309 | 8,148,624 | 3,788,685 | — | |
Italy | 66,441,429 | — | 66,441,429 | — | |
Japan | 324,065,307 | — | 324,065,307 | — | |
Luxembourg | 2,496,982 | — | 2,496,982 | — | |
Netherlands | 93,625,510 | — | 93,625,510 | — | |
New Zealand | 423,773 | — | 423,773 | — | |
Norway | 25,311,627 | — | 25,311,627 | — | |
Portugal | 5,680,945 | — | 5,680,945 | — | |
Singapore | 2,212,504 | — | 2,212,504 | — | |
Spain | 68,392,679 | — | 68,392,679 | — | |
Sweden | 28,870,485 | — | 28,870,485 | — | |
Switzerland | 30,499,794 | — | 30,499,794 | — | |
United Kingdom | 246,538,951 | — | 246,538,951 | — | |
United States | 24,980,251 | 24,980,251 | — | — | |
Preferred securities | 24,345,158 | — | 24,345,158 | — | |
Securities lending collateral | 21,199,847 | 21,199,847 | — | — | |
Short-term investments | 27,698,380 | 27,698,380 | — | — | |
Total Investments in Securities | $1,495,968,135 | $89,553,517 | $1,406,414,618 | — |
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
37
Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCT with respect to the cash collateral.
If a borrower fails to return loaned securities when due, then the lending agent is responsible and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCT.
Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCT is a component of securities lending income as recorded on the Statement of operations.
Obligations to repay collateral received by the fund is shown on the Statement of assets and liabilities as Payable upon return of securities loaned.
Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended February 28, 2015 were $552. For the year ended February 28, 2015, the fund had no borrowings under the line of credit.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an
38
equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify 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.
Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
For federal income tax purposes, as of February 28, 2015, the fund has a capital loss carryforward of $21,824,866 available to offset future net realized capital gains. The following table details the capital loss carryforward available:
Capital Loss Carryforward Expiring February 28, | |
2018 | 2019 |
14,781,454 | 7,043,412 |
Net capital losses of $11,817,778 that are the result of security transactions occurring after October 31, 2014, are treated as occurring on March 1, 2015, the first day of the fund's next taxable year.
As of February 28, 2015, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended February 28, 2015 and 2014 was as follows:
February 28, 2015 | February 28, 2014 | |
Ordinary Income | $51,545,249 | $46,185,173 |
Distributions paid by the fund with respect to each class of shares are calculated in the same manner, at the same time and in the same amount, except for the effect of class level expenses that may be applied differently to each class. As of February 28, 2015, the components of distributable earnings on a tax basis consisted of $1,813,600 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to foreign currency transactions, passive foreign investment companies, and wash sale loss deferrals.
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Note 3 — Derivative instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the OTC market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Forward foreign currency contracts are typically traded through the OTC market and may be regulated by the Commodity Futures Trading Commission (the CFTC) as swaps. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC counterparties. The ISDA gives each party to the agreement the right to terminate all transactions traded under the agreement if there is certain deterioration in the credit quality or contractual default of the other party, as defined in the ISDA. Upon an event of default or a termination of the ISDA, the non-defaulting party has the right to close out all transactions and to net amounts owed.
Futures are traded or cleared on an exchange or central clearinghouse. Exchange-traded or cleared transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member. Margin requirements for exchange-traded derivatives are set by the broker or applicable clearinghouse.
Futures. A futures contract is a contractual agreement to buy or sell a particular currency or financial instrument at a pre-determined price in the future. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in the underlying financial instrument and potential losses in excess of the amounts recognized on the Statement of assets and liabilities. Use of long futures contracts subjects the fund to the risk of loss up to the notional value of the futures contracts. Use of short futures contracts subjects the fund to unlimited risk of loss.
Upon entering into a futures contract, the fund is required to deposit initial margin with the broker in the form of cash or securities. The amount of required margin is generally based on a percentage of the contract value; this amount is the initial margin for the trade. The margin deposit must then be maintained at the established level over the life of the contract. Futures margin receivable / payable is included on the Statement of assets and liabilities. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (variation margin) and unrealized gain or loss is recorded by the fund. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
During the year ended February 28, 2015, the fund used futures contracts to gain exposure to certain securities markets and to maintain diversity and liquidity of the portfolio. During the year ended the February 28, 2015, the fund held futures contracts with notional values up to $42.6 million. There were no open futures contracts as of February 28, 2015.
Forward foreign currency contracts. A forward foreign currency contract is an agreement between two parties to buy and sell specific currencies at a price that is set on the date of the contract. The forward contract calls for delivery of the currencies on a future date that is specified in the contract. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the forward agreement, the failure of the counterparties to timely post collateral if applicable, the risk that currency movements will not favor the fund thereby reducing the fund's total return, and the potential for losses in excess of the amounts recognized on the Statement of assets and liabilities.
The market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked-to-market daily and the change in value is recorded by the fund as an unrealized gain
40
or loss. Realized gains or losses, equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed, are recorded upon delivery or receipt of the currency or settlement with the counterparty.
During the year ended February 28, 2015, the fund used forward foreign currency contracts to manage against anticipated currency exchange rates and to adjust exposure to foreign currencies. During the year ended February 28, 2015, the fund held forward foreign currency contracts with U.S. dollar notional values ranging up to $762 million, as measured at each quarter end. There were no open forward contracts as of February 28, 2015.
Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended February 28, 2015:
Risk | Statement of operations location | Futures contracts | Investments and foreign currency translations* | Total | ||||||||||
Interest rate contracts | Net realized gain (loss) | $1,026,813 | — | $1,026,813 | ||||||||||
Foreign exchange contracts | Net realized gain (loss) | — | ($1,218,099 | ) | (1,218,099 | ) | ||||||||
Total | $1,026,813 | ($1,218,099 | ) | ($191,286 | ) |
* Realized gain/loss associated with forward foreign currency contracts is included in the caption Investments in unaffiliated issuers and foreign currency transactions on the Statement of operations.
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended February 28, 2015:
Risk | Statement of operations location | Investments and translation of assets and liabilities in foreign currencies* |
Foreign exchange contracts | Change in unrealized appreciation (depreciation) | $1,989,880 |
* Change in unrealized appreciation/depreciation associated with forward foreign currency contracts is included in the caption Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies on the Statement of operations.
Note 4 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of MFC.
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, on an annual basis, equal to the sum of: a) 0.920% of the first $100 million of the fund's average daily net assets; b) 0.895% of the next $900 million of the fund's average daily net assets; c) 0.880% of the next $1 billion of the fund's average daily net assets; d) 0.850% of the next $1 billion of the fund's average daily net assets; e) 0.825% of the next $1 billion of the fund's average daily net assets; and f) 0.800% of the fund's average daily net assets in excess of $4 billion. The Advisor has a subadvisory agreement with Grantham, Mayo, Van Otterloo & Co. LLC. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock 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 February 28, 2015, this
41
waiver amounted to 0.01% of the fund's average net assets on an annualized basis.This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
The Advisor has contractually agreed to waive fees and/or reimburse certain expenses for each share class of the fund. This agreement excludes certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, acquired fund fees and expenses paid indirectly and short dividend expense. The fee waivers and/or reimbursements are such that these expenses will not exceed 2.30%, 1.90%, 1.65%, 1.80%, 1.40%, 1.20% and 1.12% of average annual net assets for Class C, Class R1, Class R2, Class R3, Class R4, Class R5 and Class R6 shares, respectively. These expense limitations will remain in effect through June 30, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.
Effective July 1, 2014, the Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class B shares of the fund, including Rule 12b-1 fees, transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 1.30% of average annual net assets (on an annualized basis) attributable to Class B shares (the Class Expense Waiver). The Class Expense Waiver expires on June 30, 2015, 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. Prior to July 1, 2014, Class A and Class B shares had fee waivers and/or reimbursements such that the expenses would not exceed 1.60% and 2.30% for Class A and Class B shares, respectively.
The Advisor has contractually agreed to waive fees and/or reimburse Rule 12b-1 fees, blue sky fees, printing fees, class offering fees and transfer agent expenses for Class R6 shares to the extent that these expenses will not exceed 0.00% of average annual net assets. This expense limitation will remain in effect through June 30, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.
The expense reductions described above for the year ended February 28, 2015 amounted to:
Class | Expense reduction | Class | Expense reduction | |
Class A | 7,698 | Class R4 | 14,360 | |
Class B | 10,492 | Class R5 | 14,365 | |
Class C | 837 | Class R6 | 16,662 | |
Class I | 39,162 | Class NAV | 53,938 | |
Class R1 | 13,245 | Class 1 | 3,047 | |
Class R2 | 14,925 | Total | 202,995 | |
Class R3 | 14,264 |
The investment management fees, including the impact of the waivers and reimbursements described above, incurred for the year ended February 28, 2015 were equivalent to a net annual effective rate of 0.87% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended February 28, 2015 amounted to an annual rate of 0.01% of the fund's average daily net assets.
Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B, Class C, Class R1, Class R2, Class R3, Class R4, Class R5, and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. In addition, under a service plan for Class R1, Class R2, Class R3, Class R4, and Class R5, the fund pays for
42
certain other services. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund's shares.
Class | Rule 12b-1 fee | Service fee | Class | Rule 12b-1 fee | Service fee | |
Class A | 0.30% | — | Class R3 | 0.50% | 0.15% | |
Class B | 1.00% | — | Class R4 | 0.25% | 0.10% | |
Class C | 1.00% | — | Class R5 | — | 0.05% | |
Class R1 | 0.50% | 0.25% | Class 1 | 0.05% | — | |
Class R2 | 0.25% | 0.25% |
The fund's Distributor has contractually agreed to waive 0.10% of 12b-1 fees for Class R4 shares to limit the 12b-1 fees on Class R4 to 0.15% of the average daily net assets of Class R4 shares, until at least June 30, 2015, unless renewed by mutual agreement of the fund and the Distributor based upon a determination that this is appropriate under the circumstances at the time. Reimbursements related to this contractual waiver amounted to $102 for Class R4 shares for the year ended February 28, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $774,823 for the year ended February 28, 2015. Of this amount, $132,759 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $637,215 was paid as sales commissions to broker-dealers and $4,849 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A, Class B and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class B shares that are redeemed within six years of purchase are subject to CDSCs, at declining rates, beginning at 5.00%. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended February 28, 2015, CDSCs received by the Distributor amounted to $10,336, $4,379 and $1,334 for Class A, Class B, and Class C shares, respectively.
Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, including payments made to third-parties for recordkeeping services provided to their clients who invest in one or more John Hancock funds. In addition, Signature Services Cost may be reduced by certain fees that Signature Services receives in connection with retirement and small accounts. Signature Services Cost is calculated monthly and allocated, as applicable, to five categories of share classes: Retail Share and Institutional Share Classes of Non-Municipal Bond Funds, Class R6 Shares, Retirement Share Classes and Municipal Bond Share Classes. Within each of these categories, the applicable costs are allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets.
Class level expenses. Class level expenses for the year ended February 28, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $325,198 | $138,273 | $23,640 | $18,330 | ||||||||||
Class B | 29,952 | 3,833 | 15,230 | 385 | ||||||||||
Class C | 117,042 | 14,841 | 17,130 | 1,498 | ||||||||||
Class I | — | 633,458 | 43,725 | 63,836 | ||||||||||
Class R1 | 2,537 | 76 | 14,477 | 115 |
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Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class R2 | 717 | 35 | 15,429 | 53 | ||||||||||
Class R3 | 1,192 | 33 | 14,501 | 50 | ||||||||||
Class R4 | 318 | 18 | 14,501 | 28 | ||||||||||
Class R5 | 50 | 21 | 14,501 | 37 | ||||||||||
Class R6 | — | 27 | 16,487 | 136 | ||||||||||
Class NAV | — | — | — | — | ||||||||||
Class 1 | 21,452 | — | — | — | ||||||||||
Total | $498,458 | $790,615 | $189,621 | $84,468 |
During the year ended Feburary 28, 2015, an unaffiliated blue sky registration agent reimbursed Class A, Class B, Class C, Class I, Class R1, Class R3, Class R4, and Class R5 shares for state registration fees of $87, $87, $87, $91, $86, $87, $86, and $86, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 6 — Fund share transactions
Transactions in fund shares for the years ended February 28, 2015 and 2014 were as follows:
Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 1,241,454 | $42,456,199 | 1,193,640 | $38,456,859 | ||||||||||||||||||||||
Distributions reinvested | 107,972 | 3,280,189 | 81,472 | 2,673,898 | ||||||||||||||||||||||
Repurchased | (1,080,319 | ) | (37,612,136 | ) | (1,331,870 | ) | (42,221,240 | ) | ||||||||||||||||||
Net increase (decrease) | 269,107 | $8,124,252 | (56,758 | ) | ($1,090,483 | ) | ||||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 9,074 | $315,452 | 13,546 | $440,429 | ||||||||||||||||||||||
Distributions reinvested | 1,872 | 56,821 | 1,976 | 64,743 | ||||||||||||||||||||||
Repurchased | (31,309 | ) | (1,037,633 | ) | (29,505 | ) | (928,889 | ) | ||||||||||||||||||
Net decrease | (20,363 | ) | ($665,360 | ) | (13,983 | ) | ($423,717 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 231,098 | $7,958,404 | 117,924 | $3,922,667 | ||||||||||||||||||||||
Distributions reinvested | 8,342 | 253,168 | 3,341 | 109,417 | ||||||||||||||||||||||
Repurchased | (101,787 | ) | (3,421,510 | ) | (39,449 | ) | (1,256,759 | ) | ||||||||||||||||||
Net increase | 137,653 | $4,790,062 | 81,816 | $2,775,325 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 5,235,922 | $179,552,256 | 4,439,315 | $141,793,583 | ||||||||||||||||||||||
Distributions reinvested | 632,252 | 19,258,385 | 476,506 | 15,681,818 | ||||||||||||||||||||||
Repurchased | (4,446,623 | ) | (145,611,804 | ) | (3,669,369 | ) | (120,019,840 | ) | ||||||||||||||||||
Net increase | 1,421,551 | $53,198,837 | 1,246,452 | $37,455,561 |
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Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 3,746 | $124,458 | 1,918 | $59,034 | ||||||||||||||||||||||
Distributions reinvested | 246 | 7,481 | 193 | 6,367 | ||||||||||||||||||||||
Repurchased | (308 | ) | (10,445 | ) | (671 | ) | (22,021 | ) | ||||||||||||||||||
Net increase | 3,684 | $121,494 | 1,440 | $43,380 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 2,960 | $102,837 | 1,462 | $51,139 | ||||||||||||||||||||||
Distributions reinvested | 79 | 2,425 | 4 | 113 | ||||||||||||||||||||||
Repurchased | (1,674 | ) | (56,687 | ) | — | — | ||||||||||||||||||||
Net increase | 1,365 | $48,575 | 1,466 | $51,252 | ||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 1,076 | $38,435 | 3,627 | $118,957 | ||||||||||||||||||||||
Distributions reinvested | 143 | 4,360 | 71 | 2,354 | ||||||||||||||||||||||
Repurchased | (6 | ) | (192 | ) | (176 | ) | (5,970 | ) | ||||||||||||||||||
Net increase | 1,213 | $42,603 | 3,522 | $115,341 | ||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 1,715 | $55,440 | 1,820 | $58,734 | ||||||||||||||||||||||
Distributions reinvested | 59 | 1,808 | 46 | 1,518 | ||||||||||||||||||||||
Repurchased | (777 | ) | (28,484 | ) | (3 | ) | (104 | ) | ||||||||||||||||||
Net increase | 997 | $28,764 | 1,863 | $60,148 | ||||||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 1,031 | $35,089 | 615 | $19,956 | ||||||||||||||||||||||
Distributions reinvested | 100 | 3,041 | 66 | 2,178 | ||||||||||||||||||||||
Repurchased | (390 | ) | (14,135 | ) | (88 | ) | (2,755 | ) | ||||||||||||||||||
Net increase | 741 | $23,995 | 593 | $19,379 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 630 | $21,025 | 629 | $21,064 | ||||||||||||||||||||||
Distributions reinvested | 47 | 1,437 | 26 | 843 | ||||||||||||||||||||||
Repurchased | (53 | ) | (1,830 | ) | (3 | ) | (99 | ) | ||||||||||||||||||
Net increase | 624 | $20,632 | 652 | $21,808 | ||||||||||||||||||||||
Class 1 shares | ||||||||||||||||||||||||||
Sold | 162,098 | $5,543,589 | 135,764 | $4,396,731 | ||||||||||||||||||||||
Distributions reinvested | 47,624 | 1,452,520 | 41,081 | 1,354,021 | ||||||||||||||||||||||
Repurchased | (202,727 | ) | (6,836,578 | ) | (219,509 | ) | (7,109,480 | ) | ||||||||||||||||||
Net increase | 6,995 | $159,531 | (42,664 | ) | ($1,358,728 | ) | ||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 1,300,450 | $43,997,681 | 2,032,900 | $61,320,907 | ||||||||||||||||||||||
Distributions reinvested | 876,122 | 26,695,437 | 790,861 | 26,043,066 | ||||||||||||||||||||||
Repurchased | (2,193,503 | ) | (77,535,516 | ) | (787,930 | ) | (27,038,846 | ) | ||||||||||||||||||
Net increase (decrease) | (16,931 | ) | ($6,842,398 | ) | 2,035,831 | $60,325,127 | ||||||||||||||||||||
Total net increase | 1,806,636 | $59,050,987 | 3,260,230 | $97,994,393 |
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Affiliates of the fund owned 24%, 55%, 18%, 25%, 26%, and 71% of shares of beneficial interest of Class R1, Class R2, Class R3, Class R4, Class R5, and Class 6, respectively, on February 28, 2015.
Note 7 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $1,215,597,068 and $1,173,784,675, respectively, for the year ended February 28, 2015.
Note 8 — Investment by affiliated funds
Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund's net assets. At February 28, 2015, funds within the John Hancock group of funds complex held 52.0% of the fund's net assets. The following funds had an affiliate ownership of 5% or more of the fund's net assets:
Portfolio | Affiliated Concentration |
Lifestyle Growth Fund | 19.6% |
Lifestyle Balanced Fund | 16.2% |
Lifestyle Aggressive Fund | 8.0% |
46
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of John Hancock Funds III International Core Fund:
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock International Core Fund (the "Fund") at February 28, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian and transfer agent, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 23, 2015
47
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 February 28, 2015.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports 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.
Income derived from foreign sources was $38,996,751. The fund intends to pass through foreign tax credits of $2,463,843.
Eligible shareholders will be mailed a 2015 Form 1099-DIV in early 2016. This will reflect the tax character of all distributions paid in calendar year 2015.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
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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, 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 |
James M. Oates, Born: 1946 | 2012 | 222 |
Trustee and Chairperson of the Board Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) (1997-2011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (1995-2007); Director, Connecticut River Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988). Trustee and Chairperson of the Board, John Hancock Collateral Trust (since 2015); Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson of the Board, John Hancock Funds II (since 2005). | ||
Charles L. Bardelis,2 Born: 1941 | 2012 | 222 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). | ||
Peter S. Burgess,2 Born: 1942 | 2012 | 222 |
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 (since 2004); Director, Symetra Financial Corporation (since 2010); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). | ||
William H. Cunningham, Born: 1944 | 2006 | 222 |
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; Director, Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank-Austin) (until 2009); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Grace K. Fey, Born: 1946 | 2012 | 222 |
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, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
49
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 |
Theron S. Hoffman,2 Born: 1947 | 2012 | 222 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). | ||
Deborah C. Jackson, Born: 1952 | 2008 | 222 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); 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, John Hancock retail funds3 (since 2008); Trustee of John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Hassell H. McClellan, Born: 1945 | 2012 | 222 |
Trustee Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). | ||
Steven R. Pruchansky, Born: 1944 | 2006 | 222 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); 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 (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2015). |
50
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 |
Gregory A. Russo, Born: 1949 | 2008 | 222 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Chairman (since 2014) and Director and Member (since 2012) of Finance Committee, 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, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). |
Non-Independent Trustees4
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 |
James R. Boyle, Born: 1959 | 2015 | 222 |
Non-Independent Trustee* Chairman, HealthFleet, Inc. (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial, president and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010); Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). *Effective 3-10-15. | ||
Craig Bromley, Born: 1966 | 2012 | 222 |
Non-Independent Trustee President, John Hancock Financial Service (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005-2012, including prior positions). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Warren A. Thomson, Born: 1955 | 2012 | 222 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). |
51
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2009 |
Executive Vice President President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President (effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust (since 2015). | |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds 3 and John Hancock Variable Insurance Trust; Senior Vice President, Chief Legal Officer and Secretary (since 2015), John Hancock Collateral Trust; Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary, and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. | |
Francis V. Knox, Jr., Born: 1947 | 2006 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust (since 2015). | |
Charles A. Rizzo, Born: 1957 | 2007 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust (since 2015). | |
Salvatore Schiavone, Born: 1965 | 2010 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2010 and 2007-2009, including prior positions); Treasurer, John Hancock Collateral Trust (since 2015). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 35 other John Hancock funds consisting of 25 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
52
Trustees James M. Oates, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Grantham, Mayo, Van Otterloo & Co. LLC Principal distributor John Hancock Funds, LLC Custodian State Street Bank and Trust Company+ Transfer agent John Hancock Signature Services, Inc. Legal counsel K&L Gates LLP Independent registered public accounting firm PricewaterhouseCoopers LLP |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 3-10-15
+Through 4-24-15
^Effective 4-27-15
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
53
Family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity-Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value Large Cap Equity Select Growth Small Cap Equity Small Cap Value Small Company Strategic Growth U.S. Equity U.S. Global Leaders Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Global Equity Global Opportunities Global Shareholder Yield Greater China Opportunities International Core International Growth International Small Company International Value Equity INCOME FUNDS Bond California Tax-Free Income Core High Yield Emerging Markets Debt Floating Rate Income Focused High Yield Global Income Government Income High Yield Municipal Bond Income | INCOME FUNDS (continued) Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Equity Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Natural Resources Redwood Regional Bank Seaport Technical Opportunities ASSET ALLOCATION Income Allocation Fund Lifestyle Aggressive Portfolio Lifestyle Balanced Portfolio Lifestyle Conservative Portfolio Lifestyle Growth Portfolio Lifestyle Moderate Portfolio Retirement Choices Portfolios (2010-2055) Retirement Living Portfolios (2010-2055) Retirement Living II Portfolios (2010-2055) CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
The fund's investment objectives, risks, charges, and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit the fund's website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
John Hancock Investments
A trusted brand
John Hancock has helped individuals and institutions build and
protect wealth since 1862. Today, we are one of America's strongest
and most-recognized brands.
A better way to invest
As a manager of managers, we search the world to find proven
portfolio teams with specialized expertise for every fund we offer,
then apply vigorous investment oversight to ensure they continue
to meet our uncompromising standards.
Results for investors
Our unique approach to asset management has led to a diverse set
of investments deeply rooted in investor needs, along with strong
risk-adjusted returns across asset classes.
![]() | John Hancock Funds, LLC n Member FINRA, SIPC 601 Congress Street n Boston, MA 02210-2805 800-225-5291 n jhinvestments.com | |
This report is for the information of the shareholders of John Hancock International Core Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
MF221042 | 66A 2/15 4/15 |
John Hancock
International Growth Fund
Annual report 2/28/15
A message to shareholders
Dear fellow shareholder,
Strong economic growth in the United States set the global standard in 2014, and appears to be continuing to do so in 2015. The portfolio teams in our network are generally optimistic about sustained relative strength in the United States, supported by rising employment, healthy consumer spending, and falling oil prices. Stocks at all-time highs remain vulnerable to a correction, but the long-term bull market appears intact. We believe a more selective approach continues to make sense in overseas markets, but note that opportunities are growing and could reward investors should recoveries in those markets begin in earnest.
Outside of the United States, economies are struggling to replicate the kind of success we have enjoyed at home. The European Central Bank announced dramatic monetary policy measures in January to promote economic activity in the region—similar to the monetary policy activity of the U.S. Federal Reserve (Fed) in recent years. One effect has been to push the value of the euro down relative to the U.S. dollar, which benefits European exporters by making their goods cheaper.
While the U.S. equity market appears strong, this year will likely present greater challenges for bond investors. The Fed has signaled its intention to raise short-term interest rates at some point in 2015, and that change may have an adverse effect on many fixed-income portfolios, particularly those that invest in less liquid asset classes. At John Hancock Investments, we are closely monitoring the liquidity of our fixed-income portfolios and communicating regularly with their portfolio managers about these matters.
A new look
I am pleased to introduce you to our redesigned shareholder reports. As part of an effort to elevate the educational substance in our communications, we undertook an initiative to make our reports more engaging and easier to navigate. Included in the changes are a performance snapshot that shows your fund's performance against that of its benchmark, and a Q&A with your fund's lead portfolio manager. We hope these enhancements give you better insight into your fund's activity and performance.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to thank you for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
This commentary reflects the CEO's views as of February 28, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
John Hancock
International Growth Fund
1
INVESTMENT OBJECTIVE
The fund seeks high total return primarily through capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 2/28/15 (%)
The MSCI AC World ex-USA Growth Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization index that is designed to measure the equity performance of growth oriented stocks in developed (excluding the U.S.) and emerging markets.
The MSCI EAFE Growth Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization index that is designed to measure the performance of growth-oriented developed market stocks within Europe, Australasia, and the Far East.
The MSCI EAFE Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
It is not possible to invest directly in an index.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will vary. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectuses.
2
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Accommodative monetary policy supported equities
Many international stocks overcame tepid global economic growth and heightened geopolitical risks to post modestly positive returns for the period.
Stock selection and sector allocation drove results
The fund outperformed the MSCI AC World ex-USA Growth Index, primarily due to stock selection in the financials and information technology sectors, as well as an underweight in the energy sector.
Emerging-market exposure also helped
Emerging markets outperformed developed markets for the period; the fund was overweight in the asset class compared with the benchmark.
SECTOR COMPOSITION AS OF 2/28/15 (%)
A note about risks
Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Growth stocks may be subject to greater price fluctuations because their prices tend to place greater emphasis on earnings expectations. The value of a company's equity securities is subject to changes in the company's financial condition, and overall market and economic conditions. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors, and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Hedging and other strategic transactions may increase the volatility of a fund and, if the transaction is not successful, could result in a significant loss. Actively trading securities can increase transaction costs (thus lowering performance) and taxable distributions. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. Please see the fund's prospectuses for additional risks.
3
![johnaboselli.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000608/johnaboselli.jpg)
John A. Boselli, CFA
Portfolio Manager
Wellington Management Company LLP
Can you talk about changes in management and changes to the fund's benchmark index?
Effective on the close of business July 15, 2014, Wellington Management Company LLP (Wellington) replaced GMO as the fund's investment manager. As part of this transition, the fund's benchmark was changed from the MSCI EAFE Growth Index to the MSCI AC World ex-USA Growth Index to better reflect the fund's investments under Wellington's management. Performance prior to July 15, 2014, reflects the management of the fund by GMO, while performance afterward reflects the management by Wellington.
Global markets climbed for much of the past twelve months. What kept stocks in the win column?
Stocks in developed and emerging markets climbed higher during the 12-month period ended February 28, 2015, as measured by the fund's benchmark.
Markets benefited from several positive factors early in the period, including generally solid profits from U.S. companies and encouraging economic data in Europe. Investors were reassured by comments from the European Central Bank (ECB) and Chinese government suggesting that they would apply more stimulus to their economies. The ECB followed through in the second quarter of 2014 by introducing a set of policies to fight deflation and jump-start growth. In addition, the People's Bank of China announced a cut in a bank reserve requirement in order to stimulate lending and growth.
Despite risks stemming from heightened military tensions in Ukraine and a growing terrorist threat in the Middle East, tepid economic data out of Europe, and a negative first-quarter growth reading in the United States, investors continued to bid up stocks through the first half of 2014.
Global stocks fell for the first time in the period in July, and risk levels remained heightened through the end of 2014 as oil prices plunged, Japan's recession deepened, and both Europe and China produced lackluster economic growth.
4
Yet stocks were able to withstand these risks due to the continuation of supportive economic policies. The latest catalyst was provided by the ECB, which late in the period announced a €1.0 trillion (US$1.3 trillion) bond-buying program intended to discourage holding cash and to instead spur investment.
How did the fund's management respond to these market conditions?
As global economic growth slowed, we sought out companies that were increasing productivity to improve profits and lower expenses. This trend has led us to overweight outsourcing and software stocks such as Israel's Check Point Software Technologies Ltd., which offers low-cost outsourcing of information technology (IT) security to global business customers. We also favored stocks such as Netherlands-based ASML Holding NV, which makes the most critical equipment used by semiconductor makers and is benefiting from growing demand for chips in a wide variety of products.
We have also been overweighting healthcare, focusing on companies that are leaders in the development of innovative treatments that target the immune system to battle cancer. These include top holding Novartis AG (Switzerland), Novo Nordisk A/S (Denmark), ONO Pharmaceutical Company, Ltd. (Japan), and AstraZeneca PLC (United Kingdom).
What factors at the sector and country level impacted performance?
For the 12 months ended February 28, 2015, the fund outperformed its benchmark by a meaningful
TOP 10 HOLDINGS AS OF 2/28/15 (%)
Novartis AG | 4.0 |
Roche Holding AG | 3.3 |
Taiwan Semiconductor Manufacturing Company, Ltd., ADR | 2.7 |
British American Tobacco PLC | 2.6 |
Anheuser-Busch InBev NV | 2.6 |
Novo Nordisk A/S, Class B | 2.6 |
Tencent Holdings, Ltd. | 2.3 |
AIA Group, Ltd. | 2.0 |
Compass Group PLC | 1.8 |
Next PLC | 1.7 |
Total | 25.6 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
5
margin. Strong stock selection was the leading contributor, particularly in the financials and IT sectors. An underweight in energy and an overweight in healthcare also helped returns.
Adverse stock picking and a slight underweight in the consumer discretionary sector were the primary detractors from the fund's performance.
From a regional perspective, stock selection in Europe, particularly the United Kingdom, and emerging markets helped performance.
What stocks had the greatest impact on performance during the year?
Novartis, which delivered strong revenue and profit growth from its eye care and generic drug businesses, was one of the top contributors. Its shares rose in anticipation of launches of treatments for psoriasis and heart failure.
Shares of Taiwan Semiconductor Manufacturing Company, Ltd. also performed well, boosted by profit and sales results that beat expectations of increasing demand for chips used in smartphones. Also contributing was Check Point Software, whose shares rose as improved profits were driven by an increase in large deals.
Asian financials companies were also major contributors. PICC Property & Casualty Company, Ltd., a Chinese property and casualty insurer, saw its shares rise as losses in its auto business dropped
TOP 10 COUNTRIES AS OF 2/28/15 (%)
United Kingdom | 22.5 |
Switzerland | 13.3 |
China | 10.4 |
Taiwan | 7.9 |
Denmark | 5.8 |
Netherlands | 5.4 |
United States | 4.5 |
Japan | 4.0 |
India | 3.4 |
Hong Kong | 3.3 |
Total | 80.5 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
6
and underwriting improved, while shares of India-based HDFC Bank, Ltd. rose thanks to government reforms to stimulate infrastructure spending.
Among the positions that detracted from returns were Henderson Group PLC, a U.K.-based investment manager, whose shares declined as inflows of assets were lower than expected while European equity markets fell in value. Sands China Ltd., a leading casino operator in Macau, was hurt by declining gambling activity in the region, while Methanex Corp., the world's largest methanol producer, saw its shares fall as sharply declining oil prices pressured the stock. We sold the fund's positions in Methanex and Henderson Group during the period.
How was the fund positioned at the end of the period?
The fund's largest overweights continued to be in the healthcare, IT, and financials sectors while its top underweights included industrials, materials, consumer staples, and energy. On a regional basis, we maintained the fund's overweights in Europe, the United Kingdom in particular, as well as emerging markets, led by allocations to China and Taiwan.
MANAGED BY
![]() | John A. Boselli, CFA On the fund since 2014 Investing since 1996 |
7
TOTAL RETURNS FOR THE PERIOD ENDED FEBRUARY 28, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||
1-year | 5-year | Since inception1 | 5-year | Since inception1 | |||
Class A | 0.63 | 10.14 | 5.52 | 62.11 | 59.77 | ||
Class B | 0.67 | 10.17 | 5.35 | 62.27 | 57.59 | ||
Class C | 4.23 | 10.43 | 5.34 | 64.21 | 57.37 | ||
Class I2 | 6.33 | 11.69 | 6.57 | 73.80 | 74.26 | ||
Class 12 | 6.39 | 11.76 | 6.62 | 74.36 | 74.92 | ||
Index 1† | 3.24 | 7.76 | 4.99 | 45.27 | 52.93 | ||
Index 2† | 1.88 | 8.95 | 4.86 | 53.50 | 51.22 | ||
Index 3† | 0.39 | 8.27 | 4.15 | 48.76 | 42.57 |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The Class B shares' CDSC declines annually between years 1 to 6 according to the following schedule: 5%, 4%, 3%, 3%, 2%, and 1%. No sales charge will be assessed after the sixth year. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I and Class 1 shares.
The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Class A | Class B | Class C | Class I | Class 1 | |
Gross (%) | 1.56 | 3.29 | 2.62 | 1.22 | 1.12 |
Net (%) | 1.56 | 2.37 | 2.30 | 1.22 | 1.12 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index 1 is the MSCI AC World ex-USA Growth Index; Index 2 is the MSCI EAFE Growth Index; Index 3 is the MSCI EAFE Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock International Growth Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in three separate indexes.
Start date | With maximum sales charge | Without sales charge | Index 1 | Index 2 | Index 3 | |
Class B3 | 6-12-06 | 15,759 | 15,759 | 15,293 | 15,122 | 14,257 |
Class C3 | 6-12-06 | 15,737 | 15,737 | 15,293 | 15,122 | 14,257 |
Class I2 | 6-12-06 | 17,426 | 17,426 | 15,293 | 15,122 | 14,257 |
Class 12 | 6-12-06 | 17,492 | 17,492 | 15,293 | 15,122 | 14,257 |
The MSCI AC World ex-USA Growth Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization index that is designed to measure the equity performance of growth oriented stocks in developed (excluding the U.S.) and emerging markets.
The MSCI EAFE Growth Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization index that is designed to measure the performance of growth-oriented developed market stocks within Europe, Australasia, and the Far East.
The MSCI EAFE Index (gross of foreign withholding tax on dividends) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.
Footnotes related to performance pages
1 | From 6-12-06. |
2 | For certain types of investors, as described in the fund's prospectuses. |
3 | The contingent deferred sales charge is not applicable. |
9
These examples are intended to help you understand your ongoing operating expenses of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. |
• | Ongoing operating expenses, including management fees, distribution and service fees (if applicable), and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
This example is intended to provide information about the fund's actual ongoing operating expenses, and is based on the fund's actual return. It assumes an account value of $1,000.00 on September 1, 2014, with the same investment held until February 28, 2015.
Beginning Account value on 9-1-2014 | Ending value on 2-28-2015 | Expenses paid during period ended 2-28-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,042.20 | $7.70 | 1.52% |
Class B | 1,000.00 | 1,038.00 | 11.98 | 2.37% |
Class C | 1,000.00 | 1,037.90 | 11.62 | 2.30% |
Class I | 1,000.00 | 1,043.80 | 6.03 | 1.19% |
Class 1 | 1,000.00 | 1,044.00 | 5.47 | 1.08% |
Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at February 28, 2015, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
10
Hypothetical example for comparison purposes
This table allows you to compare the fund's ongoing operating expenses with those of any other fund. It provides an example of the fund's hypothetical account values and hypothetical expenses based on each class's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on September 1, 2014, with the same investment held until February 28, 2015. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Please remember that these hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Beginning Account value on 9-1-2014 | Ending value on 2-28-2015 | Expenses paid during period ended 2-28-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,017.30 | $7.60 | 1.52% |
Class B | 1,000.00 | 1,013.00 | 11.83 | 2.37% |
Class C | 1,000.00 | 1,013.40 | 11.48 | 2.30% |
Class I | 1,000.00 | 1,018.90 | 5.96 | 1.19% |
Class 1 | 1,000.00 | 1,019.40 | 5.41 | 1.08% |
Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
11
Fund's investments
As of 2-28-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 97.8% | $320,231,975 | |||||||||||||
(Cost $299,008,485) | ||||||||||||||
Australia 1.0% | 3,193,625 | |||||||||||||
Seek, Ltd. | 236,884 | 3,193,625 | ||||||||||||
Belgium 2.6% | 8,515,098 | |||||||||||||
Anheuser-Busch InBev NV | 67,122 | 8,515,098 | ||||||||||||
Canada 1.7% | 5,442,374 | |||||||||||||
Magna International, Inc. | 50,070 | 5,442,374 | ||||||||||||
China 10.4% | 34,139,179 | |||||||||||||
AAC Technologies Holdings, Inc. | 753,990 | 5,006,183 | ||||||||||||
Baidu, Inc., ADR (I) | 19,825 | 4,039,344 | ||||||||||||
China Construction Bank Corp., H Shares | 4,477,540 | 3,728,523 | ||||||||||||
Lenovo Group, Ltd. | 3,222,000 | 4,963,348 | ||||||||||||
PICC Property & Casualty Company, Ltd., H Shares | 2,458,450 | 5,279,216 | ||||||||||||
Tencent Holdings, Ltd. | 425,570 | 7,425,236 | ||||||||||||
Vipshop Holdings, Ltd., ADR (I) | 151,220 | 3,697,329 | ||||||||||||
Denmark 5.8% | 18,901,378 | |||||||||||||
DSV A/S | 154,137 | 4,983,901 | ||||||||||||
Novo Nordisk A/S, Class B | 175,665 | 8,406,371 | ||||||||||||
Pandora A/S | 60,434 | 5,511,106 | ||||||||||||
Finland 3.0% | 9,915,811 | |||||||||||||
Kone OYJ, Class B (L) | 103,144 | 4,751,535 | ||||||||||||
Sampo OYJ, Class A | 102,313 | 5,164,276 | ||||||||||||
France 1.5% | 4,790,559 | |||||||||||||
L'Oreal SA | 26,432 | 4,790,559 | ||||||||||||
Germany 2.9% | 9,573,240 | |||||||||||||
ProSiebenSat.1 Media AG | 98,027 | 4,810,205 | ||||||||||||
United Internet AG | 106,215 | 4,763,035 | ||||||||||||
Hong Kong 3.3% | 10,920,470 | |||||||||||||
AIA Group, Ltd. | 1,091,300 | 6,403,860 | ||||||||||||
Guangdong Investment, Ltd. | 3,488,405 | 4,516,610 | ||||||||||||
India 3.4% | 10,985,177 | |||||||||||||
Axis Bank, Ltd., GDR | 82,371 | 3,793,185 | ||||||||||||
HDFC Bank, Ltd., ADR | 52,417 | 3,250,378 | ||||||||||||
ICICI Bank, Ltd., ADR | 338,336 | 3,941,614 | ||||||||||||
Ireland 1.0% | 3,145,033 | |||||||||||||
Medtronic PLC | 40,534 | 3,145,033 |
Shares | Value | |||||||||||||
Israel 1.5% | $4,823,635 | |||||||||||||
Check Point Software Technologies, Ltd. (I) | 57,775 | 4,823,635 | ||||||||||||
Japan 4.0% | 13,243,762 | |||||||||||||
Astellas Pharma, Inc. | 305,590 | 4,861,281 | ||||||||||||
Daito Trust Construction Company, Ltd. | 38,975 | 4,224,974 | ||||||||||||
Ono Pharmaceutical Company, Ltd. | 41,720 | 4,157,507 | ||||||||||||
Netherlands 5.4% | 17,791,707 | |||||||||||||
AerCap Holdings NV (I) | 100,147 | 4,456,542 | ||||||||||||
ASML Holding NV | 49,856 | 5,374,276 | ||||||||||||
NXP Semiconductors NV (I) | 57,573 | 4,887,660 | ||||||||||||
Sensata Technologies Holding NV (I) | 57,187 | 3,073,229 | ||||||||||||
Sweden 1.0% | 3,405,263 | |||||||||||||
Electrolux AB, Series B | 104,309 | 3,405,263 | ||||||||||||
Switzerland 13.3% | 43,652,370 | |||||||||||||
Actelion, Ltd. (I) | 43,720 | 5,234,021 | ||||||||||||
Givaudan SA (I) | 2,518 | 4,835,514 | ||||||||||||
Novartis AG | 126,593 | 12,947,185 | ||||||||||||
Partners Group Holding AG | 16,578 | 5,092,767 | ||||||||||||
Roche Holding AG | 40,027 | 10,906,932 | ||||||||||||
Zurich Insurance Group AG (I) | 14,496 | 4,635,951 | ||||||||||||
Taiwan 7.9% | 25,838,971 | |||||||||||||
Catcher Technology Company, Ltd. | 124,000 | 1,128,157 | ||||||||||||
Catcher Technology Company, Ltd., GDR | 55,521 | 2,532,313 | ||||||||||||
Delta Electronics, Inc. | 707,000 | 4,548,242 | ||||||||||||
Largan Precision Company, Ltd. | 60,000 | 5,100,465 | ||||||||||||
MediaTek, Inc. | 249,000 | 3,738,757 | ||||||||||||
Taiwan Semiconductor Manufacturing Company, Ltd., ADR | 358,379 | 8,791,037 | ||||||||||||
Thailand 1.1% | 3,708,193 | |||||||||||||
Kasikornbank PCL, Foreign Shares | 555,100 | 3,708,193 | ||||||||||||
Turkey 1.0% | 3,306,756 | |||||||||||||
Turkiye Garanti Bankasi AS | 923,440 | 3,306,756 | ||||||||||||
United Kingdom 22.5% | 73,614,311 | |||||||||||||
Aon PLC | 48,299 | 4,847,288 | ||||||||||||
AstraZeneca PLC | 66,650 | 4,593,105 | ||||||||||||
Booker Group PLC | 1,326,125 | 3,282,564 | ||||||||||||
British American Tobacco PLC | 147,051 | 8,573,370 | ||||||||||||
Compass Group PLC | 331,309 | 5,875,160 | ||||||||||||
Direct Line Insurance Group PLC | 980,148 | 4,942,244 | ||||||||||||
IG Group Holdings PLC | 419,676 | 4,728,516 | ||||||||||||
Imperial Tobacco Group PLC | 104,255 | 5,130,637 | ||||||||||||
Next PLC | 49,395 | 5,709,745 |
Shares | Value | |||||||||||||
United Kingdom (continued) | ||||||||||||||
Persimmon PLC (I) | 138,753 | $3,767,647 | ||||||||||||
Reckitt Benckiser Group PLC | 60,445 | 5,455,877 | ||||||||||||
Sky PLC | 352,594 | 5,413,255 | ||||||||||||
Smith & Nephew PLC | 192,144 | 3,517,698 | ||||||||||||
St James's Place PLC | 250,311 | 3,654,689 | ||||||||||||
The Sage Group PLC | 551,941 | 4,122,516 | ||||||||||||
United States 3.5% | 11,325,063 | |||||||||||||
Actavis PLC (I) | 11,001 | 3,205,251 | ||||||||||||
Amdocs, Ltd. | 64,635 | 3,393,338 | ||||||||||||
WABCO Holdings, Inc. (I) | 40,456 | 4,726,474 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Securities lending collateral 1.0% | $3,332,016 | |||||||||||||
(Cost $3,332,048) | ||||||||||||||
John Hancock Collateral Trust (W) | 0.0869(Y | ) | 333,028 | 3,332,016 | ||||||||||
Total investments (Cost $302,340,533)† 98.8% | $323,563,991 | |||||||||||||
Other assets and liabilities, net 1.2% | $3,901,155 | |||||||||||||
Total net assets 100.0% | $327,465,146 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | ||||
Key to Security Abbreviations and Legend | ||||
ADR | American Depositary Receipts | |||
GDR | Global Depositary Receipts | |||
(I) | Non-income producing security. | |||
(L) | A portion of this security is on loan as of 2-28-15. | |||
(W) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending. | |||
(Y) | The rate shown is the annualized seven-day yield as of 2-28-15. | |||
† | At 2-28-15, the aggregate cost of investment securities for federal income tax purposes was $302,789,558. Net unrealized appreciation aggregated $20,774,433, of which $23,325,115 related to appreciated investment securities and $2,550,682 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 2-28-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $299,008,485) including $3,141,476 of securities loaned | $320,231,975 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated funds, at value (Cost $3,332,048) | 3,332,016 | |||||||||||||||||||||||||||||||||||||||
Total investments, at value (Cost $302,340,533) | $323,563,991 | |||||||||||||||||||||||||||||||||||||||
Cash | 12,985,200 | |||||||||||||||||||||||||||||||||||||||
Foreign currency, at value (Cost $98,667) | 98,749 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 4,060,347 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 5,477,995 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 815,043 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 9,921 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 21,708 | |||||||||||||||||||||||||||||||||||||||
Total assets | 347,032,954 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 15,680,998 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 330,127 | |||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 3,332,049 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 6,578 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 52,368 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 780 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 164,908 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 19,567,808 | |||||||||||||||||||||||||||||||||||||||
Net assets | $327,465,146 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $306,979,833 | |||||||||||||||||||||||||||||||||||||||
Accumulated distributions in excess of net investment income | (35,771 | ) | ||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments, futures contracts and foreign currency transactions | (662,859 | ) | ||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 21,183,943 | |||||||||||||||||||||||||||||||||||||||
Net assets | $327,465,146 | |||||||||||||||||||||||||||||||||||||||
STATEMENT OF ASSETS AND LIABILITIES (continued)
Net asset value per share | ||||||||||||||||||
Based on net asset values and shares outstanding-the fund has an unlimited number of shares authorized with no par value | ||||||||||||||||||
Class A ($140,218,699 ÷ 6,480,784 shares)1 | $21.64 | |||||||||||||||||
Class B ($1,729,410 ÷ 80,269 shares)1 | $21.55 | |||||||||||||||||
Class C ($13,355,672 ÷ 621,441 shares)1 | $21.49 | |||||||||||||||||
Class I ($152,371,292 ÷ 7,032,969 shares) | $21.67 | |||||||||||||||||
Class 1 ($19,790,073 ÷ 913,971 shares) | $21.65 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $22.78 |
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. | |||||||
2 | On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced. |
STATEMENT OF OPERATIONS For the year ended 2-28-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $10,488,519 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 213,330 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (796,688 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 9,905,161 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 3,446,901 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 453,846 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 48,171 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 441,292 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 7,443 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 99,604 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 41,629 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 93,956 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 369,728 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 38,872 | |||||||||||||||||||||||||||||||||||||||
Other | 18,986 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 5,060,428 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (49,712 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 5,010,716 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 4,894,445 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and foreign currency transactions | 53,363,994 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | 1,206 | |||||||||||||||||||||||||||||||||||||||
Futures contracts | 297,537 | |||||||||||||||||||||||||||||||||||||||
53,662,737 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | (41,189,043 | ) | ||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (103 | ) | ||||||||||||||||||||||||||||||||||||||
(41,189,146 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 12,473,591 | |||||||||||||||||||||||||||||||||||||||
Increase in net assets from operations | $17,368,036 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 2-28-15 | Year ended 2-28-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $4,894,445 | $3,642,320 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 53,662,737 | 14,470,681 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (41,189,146 | ) | 36,019,820 | ||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 17,368,036 | 54,132,821 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (2,076,485 | ) | (764,184 | ) | |||||||||||||||||||||||||||||||||||||||||
Class B | (18,824 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class C | (111,601 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class I | (3,224,326 | ) | (2,279,857 | ) | |||||||||||||||||||||||||||||||||||||||||
Class 1 | (377,806 | ) | (155,256 | ) | |||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (15,751,297 | ) | (3,721,079 | ) | |||||||||||||||||||||||||||||||||||||||||
Class B | (246,055 | ) | (49,417 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (1,372,983 | ) | (172,706 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (20,794,947 | ) | (6,999,524 | ) | |||||||||||||||||||||||||||||||||||||||||
Class 1 | (2,333,810 | ) | (436,335 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (46,308,134 | ) | (14,578,358 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (88,615,950 | ) | 239,542,949 | ||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (117,556,048 | ) | 279,097,412 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 445,021,194 | 165,923,782 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $327,465,146 | $445,021,194 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed (accumulated distributions in excess of) net investment income | ($35,771 | ) | $1,479,942 |
Financial highlights
Class A Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.60 | $21.28 | $19.98 | $20.99 | $17.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.24 | 0.25 | 0.23 | 0.30 | 0.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.83 | 3.94 | 2.65 | (1.12 | ) | 3.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.07 | 4.19 | 2.88 | (0.82 | ) | 3.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.47 | ) | (0.15 | ) | (0.42 | ) | (0.19 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (3.56 | ) | (0.72 | ) | (1.16 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (4.03 | ) | (0.87 | ) | (1.58 | ) | (0.19 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.64 | $24.60 | $21.28 | $19.98 | $20.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 5.91 | 19.95 | 14.82 | (3.80 | ) | 21.58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $140 | $130 | $73 | $49 | $45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.53 | 1.56 | 1.68 | 1.66 | 1.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.52 | 1.55 | 1.60 | 1.59 | 1.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.02 | 1.09 | 1.13 | 1.50 | 0.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 204 | 42 | 61 | 55 | 48 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. |
Class B Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.50 | $21.22 | $19.94 | $20.93 | $17.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | — | 2 | 0.10 | 0.10 | 0.12 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.88 | 3.90 | 2.62 | (1.06 | ) | 3.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.88 | 4.00 | 2.72 | (0.94 | ) | 3.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.27 | ) | — | (0.28 | ) | (0.05 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (3.56 | ) | (0.72 | ) | (1.16 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (3.83 | ) | (0.72 | ) | (1.44 | ) | (0.05 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.55 | $24.50 | $21.22 | $19.94 | $20.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 5.07 | 19.07 | 14.00 | (4.47 | ) | 20.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2 | $2 | $1 | $1 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.18 | 3.29 | 3.92 | 4.00 | 4.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.34 | 2.30 | 2.30 | 2.33 | 2.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | — | 5 | 0.46 | 0.47 | 0.63 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 204 | 42 | 61 | 55 | 48 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Less than $0.005 per share. | |||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
4 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||
5 | Less than 0.005%. |
Class C Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.45 | $21.18 | $19.91 | $20.91 | $17.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | (0.03 | ) | 0.07 | 0.10 | 0.10 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.92 | 3.92 | 2.61 | (1.05 | ) | 3.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.89 | 3.99 | 2.71 | (0.95 | ) | 3.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.29 | ) | — | (0.28 | ) | (0.05 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (3.56 | ) | (0.72 | ) | (1.16 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (3.85 | ) | (0.72 | ) | (1.44 | ) | (0.05 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.49 | $24.45 | $21.18 | $19.91 | $20.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 5.11 | 19.05 | 13.97 | (4.52 | ) | 20.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $13 | $7 | $2 | $2 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.40 | 2.62 | 3.32 | 3.34 | 3.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.30 | 2.30 | 2.30 | 2.33 | 2.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.11 | ) | 0.32 | 0.48 | 0.52 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 204 | 42 | 61 | 55 | 48 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||
3 | Does not reflect the effect of sales charges, if any. |
Class I Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.62 | $21.31 | $20.01 | $21.04 | $17.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.35 | 0.31 | 0.43 | 0.37 | 0.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.81 | 3.95 | 2.53 | (1.12 | ) | 3.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.16 | 4.26 | 2.96 | (0.75 | ) | 3.83 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.55 | ) | (0.23 | ) | (0.50 | ) | (0.28 | ) | (0.19 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (3.56 | ) | (0.72 | ) | (1.16 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (4.11 | ) | (0.95 | ) | (1.66 | ) | (0.28 | ) | (0.19 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.67 | $24.62 | $21.31 | $20.01 | $21.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 6.33 | 20.31 | 15.23 | (3.42 | ) | 22.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $152 | $290 | $79 | $162 | $204 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.19 | 1.21 | 1.27 | 1.20 | 1.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.18 | 1.21 | 1.25 | 1.20 | 1.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.46 | 1.33 | 2.09 | 1.88 | 1.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 204 | 42 | 61 | 55 | 48 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class 1 Shares Period ended | 2-28-15 | 2-28-14 | 2-28-13 | 2-29-12 | 2-28-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $24.61 | $21.30 | $20.00 | $21.02 | $17.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.28 | 0.37 | 0.34 | 0.36 | 0.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.90 | 3.92 | 2.63 | (1.09 | ) | 3.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.18 | 4.29 | 2.97 | (0.73 | ) | 3.83 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.58 | ) | (0.26 | ) | (0.51 | ) | (0.29 | ) | (0.19 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (3.56 | ) | (0.72 | ) | (1.16 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (4.14 | ) | (0.98 | ) | (1.67 | ) | (0.29 | ) | (0.19 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.65 | $24.61 | $21.30 | $20.00 | $21.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 6.39 | 20.43 | 15.29 | (3.33 | ) | 22.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $20 | $16 | $11 | $9 | $8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.10 | 1.12 | 1.19 | 1.16 | 1.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.09 | 1.12 | 1.15 | 1.14 | 1.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.18 | 1.59 | 1.68 | 1.83 | 1.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 204 | 42 | 61 | 55 | 48 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Note 1 — Organization
John Hancock International Growth Fund (the fund) is a series of John Hancock Funds III (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek high total return, primarily through capital appreciation.
The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class B shares are closed to new investors. Class I shares are offered to institutions and certain investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ. Class B shares convert to Class A shares eight years after purchase.
Note 2 — Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund.
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Trust (JHCT), are valued at their respective net asset values each business day. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices.
Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund's Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund's Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing
24
securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of February 28, 2015, by major security category or type:
Total market value at 2-28-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Australia | $3,193,625 | — | $3,193,625 | — | |
Belgium | 8,515,098 | — | 8,515,098 | — | |
Canada | 5,442,374 | $5,442,374 | — | — | |
China | 34,139,179 | 7,736,673 | 26,402,506 | — | |
Denmark | 18,901,378 | — | 18,901,378 | — | |
Finland | 9,915,811 | — | 9,915,811 | — | |
France | 4,790,559 | — | 4,790,559 | — | |
Germany | 9,573,240 | — | 9,573,240 | — | |
Hong Kong | 10,920,470 | — | 10,920,470 | — | |
India | 10,985,177 | 7,191,992 | 3,793,185 | — | |
Ireland | 3,145,033 | 3,145,033 | — | — | |
Israel | 4,823,635 | 4,823,635 | — | — | |
Japan | 13,243,762 | — | 13,243,762 | — | |
Netherlands | 17,791,707 | 12,417,431 | 5,374,276 | — | |
Sweden | 3,405,263 | — | 3,405,263 | — | |
Switzerland | 43,652,370 | — | 43,652,370 | — | |
Taiwan | 25,838,971 | 8,791,037 | 17,047,934 | — | |
Thailand | 3,708,193 | — | 3,708,193 | — | |
Turkey | 3,306,756 | — | 3,306,756 | — | |
United Kingdom | 73,614,311 | 4,847,288 | 68,767,023 | — | |
United States | 11,325,063 | 11,325,063 | — | — | |
Securities lending collateral | 3,332,016 | 3,332,016 | — | — | |
Total Investments in Securities | $323,563,991 | $69,052,542 | $254,511,449 | — |
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCT with respect to the cash collateral.
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If a borrower fails to return loaned securities when due, then the lending agent is responsible and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCT.
Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCT is a component of securities lending income as recorded on the Statement of operations.
Obligations to repay collateral received by the fund is shown on the Statements of assets and liabilities as Payable upon return of securities loaned.
Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.
Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended February 28, 2015 were $311. For the year ended February 28, 2015, the fund had no borrowings under the line of credit.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
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Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify 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.
For federal income tax purposes, net capital losses of $213,834 that are the result of security transactions occurring after October 31, 2014, are treated as occurring on March 1, 2015, the first day of the fund's next taxable year. Qualified late year ordinary losses of $37,706 are treated as occurring on March 1, 2015, the first day of the fund's next taxable year.
As of February 28, 2015, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended February 28, 2015 and 2014 was as follows:
February 28, 2015 | February 28, 2014 | |
Ordinary Income | $12,161,897 | $6,097,352 |
Long-term capital gains | 34,146,237 | 8,481,006 |
Distributions paid by the fund with respect to each class of shares are calculated in the same manner, at the same time and in the same amount, except for the effect of class level expenses that may be applied differently to each class. As of February 28, 2015, the fund has no distributable earnings on a tax basis.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to foreign currency transactions, passive foreign investment companies, wash sale loss deferrals, and treating a portion of the proceeds from redemptions as distributions for tax purposes.
Note 3 — Derivative instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the OTC market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Forward foreign currency contracts are typically traded through the OTC market and may be regulated by the Commodity Futures Trading Commission (the CFTC) as swaps. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an
27
International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC counterparties. The ISDA gives each party to the agreement the right to terminate all transactions traded under the agreement if there is certain deterioration in the credit quality or contractual default of the other party, as defined in the ISDA. Upon an event of default or a termination of the ISDA, the non-defaulting party has the right to close out all transactions and to net amounts owed.
Futures are traded or cleared on an exchange or central clearinghouse. Exchange-traded transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member. Margin requirements for exchange-traded derivatives are set by the broker or applicable clearinghouse.
Futures. A futures contract is a contractual agreement to buy or sell a particular currency or financial instrument at a pre-determined price in the future. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in the underlying financial instrument and potential losses in excess of the amounts recognized on the Statement of assets and liabilities. Use of long futures contracts subjects the fund to the risk of loss up to the notional value of the futures contracts. Use of short futures contracts subjects the fund to unlimited risk of loss.
Upon entering into a futures contract, the fund is required to deposit initial margin with the broker in the form of cash or securities. The amount of required margin is generally based on a percentage of the contract value; this amount is the initial margin for the trade. The margin deposit must then be maintained at the established level over the life of the contract. Futures margin receivable / payable is included on the Statement of assets and liabilities. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (variation margin) and unrealized gain or loss is recorded by the fund. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
During the year ended February 28, 2015, the fund used futures contracts to gain exposure to certain securities markets and maintain diversity and liquidity of the portfolio. During the year ended February 28, 2015, the fund held futures contracts with notional values up to $15.8 million. There were no open futures contracts as of February 28, 2015.
Forward foreign currency contracts. A forward foreign currency contract is an agreement between two parties to buy and sell specific currencies at a price that is set on the date of the contract. The forward contract calls for delivery of the currencies on a future date that is specified in the contract. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the forward agreement, the failure of the counterparties to timely post collateral if applicable, the risk that currency movements will not favor the fund thereby reducing the fund's total return, and the potential for losses in excess of the amounts recognized on the Statement of assets and liabilities.
The market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked-to-market daily and the change in value is recorded by the fund as an unrealized gain or loss. Realized gains or losses, equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed, are recorded upon delivery or receipt of the currency or settlement with the counterparty.
During the year ended February 28, 2015, the fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates. During the year ended February 28, 2015, the fund held forward foreign currency contracts with U.S. dollar notional values up to $261.4 million as measured at each quarter end. The fund did not hold any forward foreign currency contracts at February 28, 2015.
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Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended February 28, 2015:
Risk | Statement of operations location | Futures contracts | Investments and foreign currency translations* | Total | ||||||||||
Interest rate contracts | Net realized gain (loss) | $297,537 | — | $297,537 | ||||||||||
Foreign exchange contracts | Net realized gain (loss) | — | ($1,185,205 | ) | (1,185,205 | ) | ||||||||
Total | $297,537 | ($1,185,205 | ) | ($887,668 | ) |
* Realized gain/loss associated with forward foreign currency contracts is included in the caption Investments in unaffiliated issuers and foreign currency transactions on the Statement of operations.
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended February 28, 2015:
Risk | Statement of operations location | Investments and translation of assets and liabilities in foreign currencies* |
Foreign exchange contracts | Change in unrealized appreciation (depreciation) | $555,943 |
* Change in unrealized appreciation/depreciation associated with forward foreign currency contracts is included in the caption Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies on the Statement of operations.
Note 4 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of MFC.
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, on an annual basis, equal to the sum of: (a) 0.900% of the first $500 million of the fund's average daily net assets; (b) 0.850% of the next $500 million of the fund's average daily net assets, and (c) 0.800% of the fund's average daily net assets in excess of $1 billion. Prior to July 15, 2014, the investment management agreement was (a) 0.920% of the first $100 million of the fund's average daily net assets; (b) 0.895% of the next $900 million of the fund's average daily net assets; (c) 0.880% of the next $1 billion of the fund's average daily net assets; (d) 0.850% of the next $1 billion of the fund's average daily net assets; (e) 0.825% of the next $1 billion of the fund's average daily net assets; and (f) 0.800% of the fund's average daily net assets in excess of $4 billion. Effective at the close of business July 15, 2014, the Advisor has a subadvisory agreement with Wellington Management Company, LLP. Prior to the close of business on July 15, 2014, the Advisor had a subadvisory agreement with Grantham, Mayo, Van Otterloo & Co. LLC. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock 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 February 28, 2015, this waiver amounted to 0.01% of the fund's average net assets on an annualized basis.This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
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The Advisor has contractually agreed to waive fees and/or reimburse certain expenses for each share class of the fund. This agreement excludes taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, acquired fees and expenses paid indirectly and short dividend expense. The fee waivers and/or reimbursements are such that these expenses will not exceed 1.60%, 2.30%, 1.24% and 1.15% for Class A, Class C, Class I and Class 1 shares, respectively. The current expense limitation agreement will remain in effect through June 30, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time. Effective July 1, 2014, the Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class B shares of the fund, including Rule 12b-1 fees, transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 1.30% of average annual net assets (on an annualized basis) attributable to Class B shares (the Class Expense Waiver). The Class Expense Waiver expires on June 30, 2015, 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. Prior to July 1, 2014, Class B shares had fee waivers and/or reimbursements such that the expenses would not exceed 2.30% for Class B shares.
The expense reductions described above for the year ended February 28, 2015 amounted to:
Class | Expense reduction | Class | Expense reduction | |
Class A | $8,072 | Class I | $16,985 | |
Class B | 14,703 | Class 1 | 1,148 | |
Class C | 8,458 | Total | $49,366 |
The investment management fees incurred for the year ended February 28, 2015 were equivalent to a net annual effective rate of 0.89% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended February 28, 2015 amounted to an annual rate of 0.01% of the fund's average daily net assets.
Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B, Class C, and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund's shares.
Class | Rule 12b-1 fee |
Class A | 0.30% |
Class B | 1.00% |
Class C | 1.00% |
Class 1 | 0.05% |
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $1,192,870 for the year ended February 28, 2015. Of this amount, $205,050 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $987,403 was paid as sales commissions to broker-dealers and $417 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A, Class B and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class B shares that are redeemed within six years of purchase are subject to CDSCs, at declining rates,
30
beginning at 5.00%. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended February 28, 2015, CDSCs received by the Distributor amounted to $627, $12,751 and $2,868, for Class A, Class B and Class C shares, respectively.
Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, including payments made to third-parties for recordkeeping services provided to their clients who invest in one or more John Hancock funds. In addition, Signature Services Cost may be reduced by certain fees that Signature Services receives in connection with retirement and small accounts. Signature Services Cost is calculated monthly and allocated, as applicable, to five categories of share classes: Retail Share and Institutional Share Classes of Non-Municipal Bond Funds, Class R6 Shares, Retirement Share Classes and Municipal Bond Share Classes. Within each of these categories, the applicable costs are allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets.
Class level expenses. Class level expenses for the year ended February 28, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $342,113 | $146,167 | $37,832 | $19,375 |
Class B | 17,700 | 2,259 | 17,161 | 440 |
Class C | 85,994 | 10,923 | 17,552 | 1,813 |
Class I | — | 281,943 | 27,059 | 20,001 |
Class 1 | 8,039 | — | — | — |
Total | $453,846 | $441,292 | $99,604 | $41,629 |
During the year ended Feburary 28, 2015, an unaffiliated blue sky registration agent reimbursed Class A, Class B, Class C, and Class I shares for state registration fees of $86, $87, $86, and $87, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 6 — Fund share transactions
Transactions in fund shares for the years ended February 28, 2015 and 2014 were as follows:
Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 3,872,773 | $89,197,062 | 3,235,096 | $75,156,421 | ||||||||||||||||||||||
Distributions reinvested | 870,844 | 17,190,462 | 193,802 | 4,465,193 | ||||||||||||||||||||||
Repurchased | (3,537,619 | ) | (86,355,594 | ) | (1,562,025 | ) | (35,832,571 | ) | ||||||||||||||||||
Net increase | 1,205,998 | $20,031,930 | 1,866,873 | $43,789,043 | ||||||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 11,751 | $269,871 | 21,901 | $505,815 | ||||||||||||||||||||||
Distributions reinvested | 11,409 | 224,646 | 1,775 | 40,800 | ||||||||||||||||||||||
Repurchased | (17,977 | ) | (410,047 | ) | (11,137 | ) | (258,126 | ) | ||||||||||||||||||
Net increase | 5,183 | $84,470 | �� | 12,539 | $288,489 |
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Year ended 2-28-15 | Year ended 2-28-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 353,368 | $7,865,929 | 207,578 | $4,815,191 | ||||||||||||||||||||||
Distributions reinvested | 58,230 | 1,143,641 | 5,905 | 135,452 | ||||||||||||||||||||||
Repurchased | (92,860 | ) | (2,139,704 | ) | (20,333 | ) | (470,103 | ) | ||||||||||||||||||
Net increase | 318,738 | $6,869,866 | 193,150 | $4,480,540 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 7,959,907 | $188,904,055 | 9,271,192 | $215,856,877 | ||||||||||||||||||||||
Distributions reinvested | 959,666 | 18,953,405 | 31,652 | 729,589 | ||||||||||||||||||||||
Repurchased | (13,666,278 | ) | (328,851,005 | ) | (1,224,470 | ) | (28,870,886 | ) | ||||||||||||||||||
Net increase (decrease) | (4,746,705 | ) | ($120,993,545 | ) | 8,078,374 | $187,715,580 | ||||||||||||||||||||
Class 1 shares | ||||||||||||||||||||||||||
Sold | 269,172 | $6,025,547 | 250,909 | $5,836,220 | ||||||||||||||||||||||
Distributions reinvested | 137,367 | 2,711,616 | 25,677 | 591,591 | ||||||||||||||||||||||
Repurchased | (142,058 | ) | (3,345,834 | ) | (138,631 | ) | (3,158,514 | ) | ||||||||||||||||||
Net increase | 264,481 | $5,391,329 | 137,955 | $3,269,297 | ||||||||||||||||||||||
Total net increase (decrease) | (2,952,305 | ) | ($88,615,950 | ) | 10,288,891 | $239,542,949 |
Note 7 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $760,955,615 and $880,759,105, respectively, for the year ended February 28, 2015.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of John Hancock Funds III International Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including the fund's investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock International Growth Fund (the "Fund") at February 28, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the 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 are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at February 28, 2015 by correspondence with the custodian, transfer agent, and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 23, 2015
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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 February 28, 2015.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports 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.
Income derived from foreign sources was $8,064,275. The fund intends to pass through foreign tax credits of $434,416.
The fund is reporting $54,015,389 in capital gain dividends.
Eligible shareholders will be mailed a 2015 Form 1099-DIV in early 2016. This will reflect the tax character of all distributions paid in calendar year 2015.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
34
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, 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 |
James M. Oates, Born: 1946 | 2012 | 222 |
Trustee and Chairperson of the Board Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) (1997-2011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (1995-2007); Director, Connecticut River Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988). Trustee and Chairperson of the Board, John Hancock Collateral Trust (since 2015); Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson of the Board, John Hancock Funds II (since 2005). | ||
Charles L. Bardelis,2 Born: 1941 | 2012 | 222 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). | ||
Peter S. Burgess,2 Born: 1942 | 2012 | 222 |
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 (since 2004); Director, Symetra Financial Corporation (since 2010); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). | ||
William H. Cunningham, Born: 1944 | 2006 | 222 |
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; Director, Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank-Austin) (until 2009); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Grace K. Fey, Born: 1946 | 2012 | 222 |
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, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
35
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 |
Theron S. Hoffman,2 Born: 1947 | 2012 | 222 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). | ||
Deborah C. Jackson, Born: 1952 | 2008 | 222 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); 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, John Hancock retail funds3 (since 2008); Trustee of John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Hassell H. McClellan, Born: 1945 | 2012 | 222 |
Trustee Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). | ||
Steven R. Pruchansky, Born: 1944 | 2006 | 222 |
Trustee and Vice Chairperson of the Board Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); 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 (since 2014); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2015). |
36
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 |
Gregory A. Russo, Born: 1949 | 2008 | 222 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Chairman (since 2014) and Director and Member (since 2012) of Finance Committee, 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, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). |
Non-Independent Trustees4
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 |
James R. Boyle, Born: 1959 | 2015 | 222 |
Non-Independent Trustee* Chairman, HealthFleet, Inc. (healthcare) (since 2014); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial, president and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010); Trustee, John Hancock Collateral Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). *Effective 3-10-15. | ||
Craig Bromley, Born: 1966 | 2012 | 222 |
Non-Independent Trustee President, John Hancock Financial Service (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005-2012, including prior positions). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). | ||
Warren A. Thomson, Born: 1955 | 2012 | 222 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2015). |
37
Principal officers who are not Trustees
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Officer of the Trust since |
Andrew G. Arnott, Born: 1971 | 2009 |
Executive Vice President President Senior Vice President, John Hancock Financial Services (since 2009); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President (effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust (since 2015). | |
John J. Danello, Born: 1955 | 2014 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds 3 and John Hancock Variable Insurance Trust; Senior Vice President, Chief Legal Officer and Secretary (since 2015), John Hancock Collateral Trust; Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary, and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. | |
Francis V. Knox, Jr., Born: 1947 | 2006 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust (since 2015). | |
Charles A. Rizzo, Born: 1957 | 2007 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust (since 2015). | |
Salvatore Schiavone, Born: 1965 | 2010 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2010 and 2007-2009, including prior positions); Treasurer, John Hancock Collateral Trust (since 2015). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 35 other John Hancock funds consisting of 25 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
38
Trustees James M. Oates, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Wellington Management Company, LLP Principal distributor John Hancock Funds, LLC Custodian State Street Bank and Trust Company+ Transfer agent John Hancock Signature Services, Inc. Legal counsel K&L Gates LLP Independent registered public accounting firm PricewaterhouseCoopers LLP |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 3-10-15
+Through 4-24-15
^Effective 4-27-15
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
39
Family of funds
DOMESTIC EQUITY FUNDS Balanced Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity-Income Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value Large Cap Equity Select Growth Small Cap Equity Small Cap Value Small Company Strategic Growth U.S. Equity U.S. Global Leaders Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Global Equity Global Opportunities Global Shareholder Yield Greater China Opportunities International Core International Growth International Small Company International Value Equity INCOME FUNDS Bond California Tax-Free Income Core High Yield Emerging Markets Debt Floating Rate Income Focused High Yield Global Income Government Income High Yield Municipal Bond Income | INCOME FUNDS (continued) Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Equity Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Natural Resources Redwood Regional Bank Seaport Technical Opportunities ASSET ALLOCATION Income Allocation Fund Lifestyle Aggressive Portfolio Lifestyle Balanced Portfolio Lifestyle Conservative Portfolio Lifestyle Growth Portfolio Lifestyle Moderate Portfolio Retirement Choices Portfolios (2010-2055) Retirement Living Portfolios (2010-2055) Retirement Living II Portfolios (2010-2055) CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
The fund's investment objectives, risks, charges, and expenses are included in the prospectus and should be considered carefully before investing. For a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit the fund's website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
John Hancock Investments
A trusted brand
John Hancock has helped individuals and institutions build and
protect wealth since 1862. Today, we are one of America's strongest
and most-recognized brands.
A better way to invest
As a manager of managers, we search the world to find proven
portfolio teams with specialized expertise for every fund we offer,
then apply vigorous investment oversight to ensure they continue
to meet our uncompromising standards.
Results for investors
Our unique approach to asset management has led to a diverse set
of investments deeply rooted in investor needs, along with strong
risk-adjusted returns across asset classes.
![]() | John Hancock Funds, LLC n Member FINRA, SIPC 601 Congress Street n Boston, MA 02210-2805 800-225-5291 n jhinvestments.com | |
This report is for the information of the shareholders of John Hancock International Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
MF221043 | 87A 2/15 4/15 |
ITEM 2. CODE OF ETHICS.
As of the end of the year, February 28, 2015, 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.
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, for the audits of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements amounted to the following for the fiscal years ended February 28, 2015 and February 28, 2014. These fees were billed to the registrant and were approved by the registrant’s audit committee.
Fund | February 28, 2015 | February 28, 2014 |
John Hancock Global Shareholder Yield Fund | $ 39,077 | $ 30,621 |
John Hancock International Growth Fund | 39,355 | 34,178 |
John Hancock International Core Fund | 44,943 | 41,689 |
Total | $ 123,375 | $ 106,488 |
(b) Audit-Related Services
Audit-related service fees for assurance and related services by the principal accountant are 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 (“control affiliates”) that provides ongoing services to the registrant. The nature of the services provided was affiliated service provider internal controls reviews. In addition, amounts billed to control affiliates for service provider internal controls reviews were $103,940 and $98,642 for the fiscal years ended February 28, 2015 and 2014, respectively.
Fund | February 28, 2014 | February 28, 2013 |
John Hancock Global Shareholder Yield Fund | $ 519 | $ 1,692 |
John Hancock International Growth Fund | 519 | 1,692 |
John Hancock International Core Fund | 519 | 1,692 |
Total | $ 1,557 | $ 5,076 |
(c) Tax Fees
The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning (“tax fees”) amounted to the following for the fiscal years ended February 28, 2015 and February 28, 2014. 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.
Fund | February 28, 2015 | February 28, 2014 |
John Hancock Global Shareholder Yield Fund | $ 3,450 | $ 3,164 |
John Hancock International Growth Fund | 3,900 | 4,017 |
John Hancock International Core Fund | 3,900 | 4,930 |
Total | $ 11,250 | $ 12,111 |
(d) All Other Fees
Other fees amounted to the following for the fiscal years ended February 28, 2015 and February 28, 2014 billed to the registrant or to the control affiliates.
Fund | February 28, 2015 | February 28, 2014 |
John Hancock Global Shareholder Yield Fund | $ 120 | $ 408 |
John Hancock International Growth Fund | 120 | 408 |
John Hancock International Core Fund | 120 | 408 |
Total | $ 360 | $ 1,224 |
(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 year/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 year/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 February 28, 2015, 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 principal accountant for non-audit services rendered to the registrant and rendered to the registrant's control affiliates were $6,279,236 for the fiscal year ended February 28, 2015 and $5,874,702 for the fiscal year ended February 28, 2014.
(h) The audit committee of the registrant has considered the non-audit services provided by the registrant’s principal accountant 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
Charles L. Bardelis
Theron S. Hoffman
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.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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, Governance and Administration 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 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 12. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Nominating, Governance and Administration Committee Charter”.
(c)(2) 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 Funds III
By: | /s/ Andrew Arnott |
Andrew Arnott | |
President |
Date: April 14, 2015
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: April 14, 2015
By: | /s/ Charles A. Rizzo |
Charles A. Rizzo | |
Chief Financial Officer |
Date: April 14, 2015