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: | March 31 |
Date of reporting period: | March 31, 2015 |
ITEM 1. REPORTS TO STOCKHOLDERS.
John Hancock
Select Growth Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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
Select Growth Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
15 | Financial statements | |||||||
19 | Financial highlights | |||||||
32 | Notes to financial statements | |||||||
41 | Auditor's report | |||||||
42 | Tax information | |||||||
43 | Trustees and Officers | |||||||
47 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks to maximize long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The Russell 1000 Growth Index is an unmanaged index containing those securities in the Russell 1000 Index with a greater-than-average growth orientation.
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.
1. On 4-25-08, through a reorganization, the fund acquired all of the assets of Rainier Large Cap Growth Equity Portfolio (the predecessor fund). On that date, the predecessor fund's Original shares and Institutional shares were exchanged for Class A and Class I shares, respectively, of John Hancock Select Growth Fund. Class A shares were first offered on 4-28-08. Class A shares' returns shown above are those of the predecessor fund's Original shares that have been recalculated to reflect the gross fees and expenses of Class A shares.
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
U.S. stocks advanced
An improving U.S. economy fueled a sharp rally in the U.S. equity market, led by large-cap growth stocks.
Fund performance trailed the benchmark
The fund posted a positive return for the one-year period but underperformed the Russell 1000 Growth Index.
Technology and healthcare detracted
Stock selection in the information technology and healthcare sectors contributed the most to the fund's underperformance.
PORTFOLIO COMPOSITION AS OF 3/31/15 (%)
A note about risks
Growth stocks may be more susceptible to earnings disappointments as compared to value stocks, and market values can be more volatile. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Large company stocks could fall out of favor. 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. The value of a company's equity securities is subject to changes in the company's financial condition, and overall market and economic conditions. The securities of growth companies are subject to greater price fluctuations than other types of stocks because their market prices tend to place greater emphasis on future earnings expectations. Actively trading securities can increase transaction costs (thus lowering performance) and taxable distributions. Please see the fund's prospectuses for additional risks.
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![ianctabberer.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000763/ianctabberer.jpg)
Ian C. Tabberer
Portfolio Manager
Baillie Gifford
Effective May 1, 2015, Ian C. Tabberer is no longer managing the fund. The fund will be managed by Gary Robinson, CFA.
Can you briefly describe the market environment over the past 12 months?
The major U.S. stock indexes—including the fund's benchmark, the Russell 1000 Growth Index—reached all-time highs during the reporting period. Fears over the termination of the U.S. Federal Reserve's (Fed's) quantitative easing program eased and were ultimately outweighed by further evidence of economic recovery slowly percolating from Wall Street to Main Street. Inflation remained well below its historical long-term average as energy prices fell sharply, especially over the latter half of the period, and weaker economic growth outside the United States contributed to a stronger U.S. dollar. Large-cap and growth-oriented stocks led the equity market's advance over the past year.
Let's turn to the portfolio. What factors contributed to the fund's underperformance of its benchmark index?
When we assumed management of the fund about a year ago, we made a number of significant changes based on our investment approach, which emphasizes individual stock selection and a long-term time horizon. One of the changes we made was to meaningfully increase the fund's exposure to domestic banks, which should benefit from a strong domestic economy and an eventual rise in interest rates.
However, as the Fed continued to hold short-term interest rates near zero, our emphasis on the banking industry hurt performance. In addition, the fund's holdings in the information technology sector detracted as a slower-than-anticipated recovery in corporate technology spending weighed on computer hardware stocks.
Given your focus on individual stocks, can you give some examples of holdings that detracted from fund performance during the period?
One example was iconic motorcycle manufacturer Harley-Davidson, Inc., which delivered weaker-than-expected results in 2014. Early in the period, earnings reports showed that the company was
4
Energy producer Ultra Petroleum Corp. also struggled during the period, suffering the impact of falling oil prices. We fear that oversupply and low commodity prices may persist for a prolonged period, pressuring Ultra's growth prospects, so we reduced the fund's position in the stock over the latter half of the reporting period. More broadly, the fund has been relatively insulated from the downdraft in energy stocks by the sale of selected holdings in this sector over the past 12 months.
It's worth noting that the fund's lack of exposure to the benchmark's largest constituent, consumer electronics maker Apple, Inc., was a meaningful detractor from relative performance. When we took over management of the fund early in the reporting period, we eliminated the fund's position in Apple, reflecting our view that the gap between the company and its competitors was shrinking, and the inevitable end result would be operating margins trending toward the industry average. Although our opinion has been out of step with the market, this remains our fundamental view.
SECTOR COMPOSITION AS OF 3/31/15 (%)
5
What holdings contributed positively to performance during the reporting period?
Anthem, Inc., the health insurer formerly known as WellPoint, was the largest positive contributor over the past year. As the second-largest health insurer in the United States, Anthem has benefited from the widespread shift from public to private healthcare coverage following the implementation of the Affordable Care Act. With strong brands such as Blue Cross/Blue Shield in its stable, Anthem has been well positioned to take the largest number of new members across healthcare exchanges. The cost advantages should allow the company to profitably take market share and enable management to shift incentives out from one to three years. Given our long-term investment viewpoint, we find this to be an encouraging development.
Auto parts distributor O'Reilly Automotive, Inc. continued to deliver strong results, gaining market share and improving profit margins. The company's scale and focus on efficiency allow it to offer customers an attractive combination of price and quality, along with an excellent level of service. The industry remains fragmented, and we believe O'Reilly can continue its aggressive store rollout plan for several years.
Another strong contributor over the course of the year was heating and air-conditioning distributor Watsco, Inc. The stock underperformed early in the period as unseasonably cool summer weather led to weaker demand, but the stock subsequently rebounded as the recovering domestic economy
TEN LARGEST HOLDINGS AS OF 3/31/15 (%)
Anthem, Inc. | 6.9 | ||||
Watsco, Inc. | 5.7 | ||||
O'Reilly Automotive, Inc. | 4.9 | ||||
Harley-Davidson, Inc. | 4.6 | ||||
M&T Bank Corp. | 4.3 | ||||
First Republic Bank | 4.3 | ||||
MasterCard, Inc., Class A | 4.2 | ||||
Fairfax Financial Holdings, Ltd. | 4.1 | ||||
PepsiCo, Inc. | 4.0 | ||||
Altria Group, Inc. | 3.8 | ||||
TOTAL | 46.8 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
6
and housing market helped drive strong results for the company. We believe increased regulation to improve energy efficiency and mitigate environmental impact, combined with a fragmented market, offers Watsco plenty of opportunity for long-term growth and market share gains.
Looking ahead, how is the fund positioned?
We are optimistic about the path of the U.S. economy, and we remain encouraged by the operating performance of a wide range of portfolio holdings that possess excellent long-term prospects. Our upbeat view is based on America's strong enterprise culture, significant innovation, and efficient manufacturing base. With that in mind, we have incrementally allocated capital to businesses positioned to profit from, or contribute to, the continued healing of the American economy. The American banking system is significantly stronger than it was six years ago; it is now in a position to support households and businesses with capital that is the lifeblood of economic growth.
For this reason, the fund has significant exposure to domestic regional banks with exceptional management teams, including M&T Bank Corp. and First Republic Bank. We have also identified and invested in businesses with strong competitive positions and talented management teams, such as the aforementioned O'Reilly Automotive, Watsco, and Anthem, as well as building materials producer Martin Marietta Materials, Inc. Other additions to the portfolio include two dynamic growth companies, online retailer Amazon.com, Inc. and electronic bond platform MarketAxess Holdings, Inc.
MANAGED BY
![]() | Ian C. Tabberer On the fund since 2014 Investing since 2001 ![]() |
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TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||||||||
1-year | 5-year | 10-year | 5-year | 10-year | |||||||||||||||||||
Class A1 | -0.13 | 10.00 | 6.55 | 61.05 | 88.55 | ||||||||||||||||||
Class B1 | 0.44 | 9.95 | 6.07 | 60.70 | 80.25 | ||||||||||||||||||
Class C1 | 3.50 | 10.21 | 6.06 | 62.57 | 80.11 | ||||||||||||||||||
Class I1,2 | 5.35 | 11.48 | 7.44 | 72.22 | 105.00 | ||||||||||||||||||
Class R11,2 | 4.59 | 10.61 | 6.46 | 65.60 | 87.06 | ||||||||||||||||||
Class R21,2 | 4.89 | 10.35 | 5.86 | 63.61 | 76.81 | ||||||||||||||||||
Class R31,2 | 4.71 | 10.73 | 6.57 | 66.46 | 89.02 | ||||||||||||||||||
Class R41,2 | 5.15 | 11.12 | 6.93 | 69.44 | 95.35 | ||||||||||||||||||
Class R51,2 | 5.39 | 11.40 | 7.22 | 71.59 | 100.77 | ||||||||||||||||||
Class R61,2 | 5.58 | 11.60 | 7.51 | 73.08 | 106.28 | ||||||||||||||||||
Class T1,2 | -0.17 | 9.88 | 6.13 | 60.21 | 81.29 | ||||||||||||||||||
Class ADV1,2 | 5.20 | 11.23 | 7.19 | 70.26 | 100.17 | ||||||||||||||||||
Class NAV1,2 | 5.57 | 11.63 | 7.55 | 73.31 | 107.13 | ||||||||||||||||||
Index 1† | 16.09 | 15.63 | 9.36 | 106.75 | 144.61 | ||||||||||||||||||
Index 2† | 12.73 | 14.47 | 8.01 | 96.50 | 116.10 |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charge on Class A and Class T 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 sold within one year of purchase 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 ADV, 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 T | Class ADV | Class NAV | |||||||||||||||||||||||||||||
Gross (%) | 1.18 | 1.99 | 2.02 | 0.93 | 4.23 | 15.75 | 13.14 | 11.01 | 12.43 | 1.09 | 1.26 | 1.24 | 0.77 | ||||||||||||||||||||||||||||
Net (%) | 1.18 | 1.99 | 2.02 | 0.93 | 1.70 | 1.45 | 1.60 | 1.20 | 1.00 | 0.78 | 1.26 | 1.14 | 0.77 |
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 Russell 1000 Growth Index; Index 2 is the S&P 500 Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Select Growth Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index 1 ($) | Index 2 ($) | |||||||||||||
Class B1,3 | 3-31-05 | 18,025 | 18,025 | 24,461 | 21,610 | ||||||||||||
Class C1,3 | 3-31-05 | 18,011 | 18,011 | 24,461 | 21,610 | ||||||||||||
Class I1,2 | 3-31-05 | 20,500 | 20,500 | 24,461 | 21,610 | ||||||||||||
Class R11,2 | 3-31-05 | 18,706 | 18,706 | 24,461 | 21,610 | ||||||||||||
Class R21,2 | 3-31-05 | 17,681 | 17,681 | 24,461 | 21,610 | ||||||||||||
Class R31,2 | 3-31-05 | 18,902 | 18,902 | 24,461 | 21,610 | ||||||||||||
Class R41,2 | 3-31-05 | 19,535 | 19,535 | 24,461 | 21,610 | ||||||||||||
Class R51,2 | 3-31-05 | 20,077 | 20,077 | 24,461 | 21,610 | ||||||||||||
Class R61,2 | 3-31-05 | 20,628 | 20,628 | 24,461 | 21,610 | ||||||||||||
Class T1,2 | 3-31-05 | 18,129 | 19,080 | 24,461 | 21,610 | ||||||||||||
Class ADV1,2 | 3-31-05 | 20,017 | 20,017 | 24,461 | 21,610 | ||||||||||||
Class NAV1,2 | 3-31-05 | 20,713 | 20,713 | 24,461 | 21,610 |
The Russell 1000 Growth Index is an unmanaged index containing those securities in the Russell 1000 Index with a greater-than-average growth orientation.
The S&P 500 Index is an unmanaged index that includes 500 widely traded common stocks.
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 | On 4-25-08, through a reorganization, the fund acquired all of the assets of Rainier Large Cap Growth Equity Portfolio (the predecessor fund). On that date, the predecessor fund's Original shares and Institutional shares were exchanged for Class A and Class I shares, respectively, of John Hancock Select Growth Fund, which were first offered on 4-28-08. Class A, Class B, Class C, Class I, Class R1, Class R3, Class R4, Class R5, Class ADV, and Class NAV shares of John Hancock Rainier Growth Fund were first offered on 4-28-08; Class T shares were first offered on 10-6-08; Class R6 shares were first offered on 9-1-11; Class R2 shares were first offered on 3-1-12. The returns prior to these dates are those of the predecessor fund's Original shares that have been recalculated to reflect the gross fees and expenses of Class A, Class B, Class C, Class I, Class R1, Class R3, Class R4, Class R5, Class ADV, Class NAV, Class T, Class R6, and Class R2 shares, as applicable. |
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 October 31, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,092.60 | $6.16 | 1.18% | ||||||||||
Class B | 1,000.00 | 1,087.50 | 10.62 | 2.04% | ||||||||||
Class C | 1,000.00 | 1,087.60 | 10.67 | 2.05% | ||||||||||
Class I | 1,000.00 | 1,093.10 | 5.27 | 1.01% | ||||||||||
Class R1 | 1,000.00 | 1,089.40 | 8.86 | 1.70% | ||||||||||
Class R2 | 1,000.00 | 1,090.70 | 7.56 | 1.45% | ||||||||||
Class R3 | 1,000.00 | 1,089.60 | 8.34 | 1.60% | ||||||||||
Class R4 | 1,000.00 | 1,092.00 | 6.26 | 1.20% | ||||||||||
Class R5 | 1,000.00 | 1,093.70 | 5.22 | 1.00% | ||||||||||
Class R6 | 1,000.00 | 1,094.70 | 4.02 | 0.77% | ||||||||||
Class T | 1,000.00 | 1,092.20 | 6.57 | 1.26% | ||||||||||
Class ADV | 1,000.00 | 1,092.10 | 5.95 | 1.14% | ||||||||||
Class NAV | 1,000.00 | 1,094.50 | 4.02 | 0.77% |
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 March 31, 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 October 31, 2014, with the same investment held until March 31, 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.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | 1,019.00 | 5.94 | 1.18% | ||||||||||
Class B | 1,000.00 | 1,014.80 | 10.25 | 2.04% | ||||||||||
Class C | 1,000.00 | 1,014.70 | 10.30 | 2.05% | ||||||||||
Class I | 1,000.00 | 1,019.90 | 5.09 | 1.01% | ||||||||||
Class R1 | 1,000.00 | 1,016.50 | 8.55 | 1.70% | ||||||||||
Class R2 | 1,000.00 | 1,017.70 | 7.29 | 1.45% | ||||||||||
Class R3 | 1,000.00 | 1,017.00 | 8.05 | 1.60% | ||||||||||
Class R4 | 1,000.00 | 1,018.90 | 6.04 | 1.20% | ||||||||||
Class R5 | 1,000.00 | 1,019.90 | 5.04 | 1.00% | ||||||||||
Class R6 | 1,000.00 | 1,021.10 | 3.88 | 0.77% | ||||||||||
Class T | 1,000.00 | 1,018.80 | 6.34 | 1.26% | ||||||||||
Class ADV | 1,000.00 | 1,019.20 | 5.74 | 1.14% | ||||||||||
Class NAV | 1,000.00 | 1,021.10 | 3.88 | 0.77% |
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 182/365 (to reflect the one-half year period). |
11
Fund's investments
As of 3-31-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 97.9% | $398,252,557 | |||||||||||||
(Cost $363,287,599) | ||||||||||||||
Consumer discretionary 15.6% | 63,500,199 | |||||||||||||
Automobiles 4.6% | ||||||||||||||
Harley-Davidson, Inc. | 305,448 | 18,552,912 | ||||||||||||
Internet and catalog retail 4.5% | ||||||||||||||
Amazon.com, Inc. (I) | 20,860 | 7,762,006 | ||||||||||||
TripAdvisor, Inc. (I) | 127,760 | 10,625,799 | ||||||||||||
Specialty retail 6.5% | ||||||||||||||
CarMax, Inc. (I) | 95,740 | 6,607,017 | ||||||||||||
O'Reilly Automotive, Inc. (I) | 92,270 | 19,952,465 | ||||||||||||
Consumer staples 10.9% | 44,370,983 | |||||||||||||
Beverages 6.1% | ||||||||||||||
Brown-Forman Corp., Class B | 43,210 | 3,904,024 | ||||||||||||
PepsiCo, Inc. | 171,810 | 16,428,472 | ||||||||||||
The Boston Beer Company, Inc., Class A (I) | 16,020 | 4,283,748 | ||||||||||||
Household products 1.0% | ||||||||||||||
Colgate-Palmolive Company | 61,740 | 4,281,052 | ||||||||||||
Tobacco 3.8% | ||||||||||||||
Altria Group, Inc. | 309,350 | 15,473,687 | ||||||||||||
Energy 0.7% | 2,596,301 | |||||||||||||
Oil, gas and consumable fuels 0.7% | ||||||||||||||
Apache Corp. | 31,966 | 1,928,509 | ||||||||||||
Ultra Petroleum Corp. (I) | 42,725 | 667,792 | ||||||||||||
Financials 25.5% | 103,657,658 | |||||||||||||
Banks 11.5% | ||||||||||||||
First Republic Bank | 305,340 | 17,431,861 | ||||||||||||
M&T Bank Corp. | 138,155 | 17,545,684 | ||||||||||||
U.S. Bancorp | 266,540 | 11,639,802 | ||||||||||||
Capital markets 1.7% | ||||||||||||||
TD Ameritrade Holding Corp. | 187,000 | 6,967,620 | ||||||||||||
Consumer finance 0.9% | ||||||||||||||
American Express Company | 48,890 | 3,819,287 | ||||||||||||
Diversified financial services 3.7% | ||||||||||||||
Berkshire Hathaway, Inc., Class B (I) | 81,720 | 11,793,830 | ||||||||||||
MarketAxess Holdings, Inc. | 36,260 | 3,005,954 | ||||||||||||
Insurance 7.7% | ||||||||||||||
Fairfax Financial Holdings, Ltd. | 29,399 | 16,480,431 | ||||||||||||
Markel Corp. (I) | 19,472 | 14,973,189 |
Shares | Value | |||||||||||||
Health care 12.3% | $50,087,477 | |||||||||||||
Biotechnology 2.3% | ||||||||||||||
Genomic Health, Inc. (I) | 216,793 | 6,623,026 | ||||||||||||
Seattle Genetics, Inc. (I) | 75,300 | 2,661,855 | ||||||||||||
Health care equipment and supplies 2.2% | ||||||||||||||
IDEXX Laboratories, Inc. (I) | 57,807 | 8,930,025 | ||||||||||||
Health care providers and services 6.8% | ||||||||||||||
Anthem, Inc. | 180,667 | 27,896,791 | ||||||||||||
Pharmaceuticals 1.0% | ||||||||||||||
Bristol-Myers Squibb Company | 61,640 | 3,975,780 | ||||||||||||
Industrials 9.1% | 37,049,469 | |||||||||||||
Air freight and logistics 1.3% | ||||||||||||||
United Parcel Service, Inc., Class B | 55,870 | 5,416,038 | ||||||||||||
Industrial conglomerates 1.2% | ||||||||||||||
Danaher Corp. | 54,780 | 4,650,822 | ||||||||||||
Trading companies and distributors 6.6% | ||||||||||||||
NOW, Inc. (I) | 184,320 | 3,988,685 | ||||||||||||
Watsco, Inc. | 182,927 | 22,993,924 | ||||||||||||
Information technology 17.9% | 72,849,990 | |||||||||||||
Internet software and services 9.5% | ||||||||||||||
eBay, Inc. (I) | 148,413 | 8,560,462 | ||||||||||||
Facebook, Inc., Class A (I) | 109,040 | 8,964,724 | ||||||||||||
Google, Inc., Class A (I) | 17,540 | 9,729,438 | ||||||||||||
Google, Inc., Class C (I) | 15,827 | 8,673,196 | ||||||||||||
Zillow Group, Inc., Class A (I) | 28,300 | 2,838,490 | ||||||||||||
IT services 4.4% | ||||||||||||||
MasterCard, Inc., Class A | 198,310 | 17,132,001 | ||||||||||||
Source HOV (R) | 510 | 660,643 | ||||||||||||
Semiconductors and semiconductor equipment 0.9% | ||||||||||||||
Altera Corp. | 62,356 | 2,675,696 | ||||||||||||
Xilinx, Inc. | 25,478 | 1,077,719 | ||||||||||||
Software 3.1% | ||||||||||||||
Oracle Corp. | 290,559 | 12,537,621 | ||||||||||||
Materials 5.9% | 24,140,480 | |||||||||||||
Chemicals 1.2% | ||||||||||||||
Monsanto Company | 42,880 | 4,825,715 | ||||||||||||
Construction materials 4.7% | ||||||||||||||
Martin Marietta Materials, Inc. | 63,900 | 8,933,220 | ||||||||||||
Vulcan Materials Company | 123,150 | 10,381,545 |
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 2.1% | $8,429,893 | |||||||||||||
(Cost $8,429,893) | ||||||||||||||
Money market funds 2.1% | 8,429,893 | |||||||||||||
State Street Institutional Liquid Reserves Fund (Y) | 0.0986 | 8,429,893 | 8,429,893 | |||||||||||
Total investments (Cost $371,717,492)† 100.0% | $406,682,450 | |||||||||||||
Other assets and liabilities, net 0.0% | ($160,069 | ) | ||||||||||||
Total net assets 100.0% | $406,522,381 |
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. | ||||||
(R) | Direct placement securities are restricted as to resale and the fund has limited rights to registration under the Securities Act of 1933. For more information on this security refer to Note 9 of the Notes to financial statements. | ||||||
(Y) | The rate shown is the annualized seven-day yield as of 3-31-15. | ||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $372,046,935. Net unrealized appreciation aggregated $34,635,515, of which $46,411,335 related to appreciated investment securities and $11,775,820 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments, at value (Cost $371,717,492) | $406,682,450 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 282,449 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 332,139 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 483 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 126,723 | |||||||||||||||||||||||||||||||||||||||
Total assets | 407,424,244 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 745,112 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 6,133 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 40,109 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 120 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 1,098 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 109,291 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 901,863 | |||||||||||||||||||||||||||||||||||||||
Net assets | $406,522,381 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $379,035,859 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments, futures contracts and foreign currency transactions | (7,478,436 | ) | ||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 34,964,958 | |||||||||||||||||||||||||||||||||||||||
Net assets | $406,522,381 | |||||||||||||||||||||||||||||||||||||||
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 ($273,695,259 ÷ 13,177,271 shares)1 | $20.77 | |||||||||||||||||
Class B ($13,199,610 ÷ 684,882 shares)1 | $19.27 | |||||||||||||||||
Class C ($17,483,439 ÷ 907,986 shares)1 | $19.26 | |||||||||||||||||
Class I ($13,058,005 ÷ 607,461 shares) | $21.50 | |||||||||||||||||
Class R1 ($684,786 ÷ 34,263 shares) | $19.99 | |||||||||||||||||
Class R2 ($123,901 ÷ 5,856 shares) | $21.16 | |||||||||||||||||
Class R3 ($129,402 ÷ 6,407 shares) | $20.20 | |||||||||||||||||
Class R4 ($135,788 ÷ 6,503 shares) | $20.88 | |||||||||||||||||
Class R5 ($95,254 ÷ 4,460 shares) | $21.36 | |||||||||||||||||
Class R6 ($3,362,998 ÷ 155,619 shares) | $21.61 | |||||||||||||||||
Class T ($70,865,484 ÷ 3,456,861 shares) | $20.50 | |||||||||||||||||
Class ADV ($2,046,061 ÷ 96,884 shares) | $21.12 | |||||||||||||||||
Class NAV ($11,642,394 ÷ 537,683 shares) | $21.65 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $21.86 | |||||||||||||||||
Class T (net asset value per share ÷ 95%)2 | $21.58 |
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 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $6,022,517 | |||||||||||||||||||||||||||||||||||||||
Interest | 9,425 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (55,611 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 5,976,331 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 3,360,122 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 1,274,791 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 37,613 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 523,946 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 6,658 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 238,003 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 104,955 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 88,031 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 57,880 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 47,629 | |||||||||||||||||||||||||||||||||||||||
Other | 23,843 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 5,763,471 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (178,396 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 5,585,075 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 391,256 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments and foreign currency transactions | 173,909,526 | |||||||||||||||||||||||||||||||||||||||
Futures contracts | 2,776,741 | |||||||||||||||||||||||||||||||||||||||
176,686,267 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments and translation of assets and liabilities in foreign currencies | (177,443,971 | ) | ||||||||||||||||||||||||||||||||||||||
(177,443,971 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (757,704 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($366,448 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | $391,256 | ($4,259,446 | ) | ||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 176,686,267 | 192,541,547 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (177,443,971 | ) | 17,140,001 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (366,448 | ) | 205,422,102 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class I | — | (64,935 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R5 | — | (56 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (7,092 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (520,067 | ) | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (82,788,478 | ) | (37,507,368 | ) | |||||||||||||||||||||||||||||||||||||||||
Class B | (4,836,642 | ) | (2,216,885 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (4,983,406 | ) | (2,125,586 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (15,648,152 | ) | (8,992,315 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R1 | (154,733 | ) | (64,246 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (28,961 | ) | (13,688 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (31,001 | ) | (14,056 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (39,217 | ) | (18,019 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R5 | (28,514 | ) | (13,704 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (1,660,185 | ) | (790,768 | ) | |||||||||||||||||||||||||||||||||||||||||
Class T | �� | (19,276,497 | ) | (8,578,092 | ) | ||||||||||||||||||||||||||||||||||||||||
Class ADV | (4,206,121 | ) | (2,113,395 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (96,887,085 | ) | (45,556,116 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (230,568,992 | ) | (108,596,388 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (373,649,348 | ) | (153,179,068 | ) | |||||||||||||||||||||||||||||||||||||||||
Total decrease | (604,584,788 | ) | (56,353,354 | ) | |||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 1,011,107,169 | 1,067,460,523 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $406,522,381 | $1,011,107,169 |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.39 | $24.32 | $22.84 | $21.32 | $18.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.03 | (0.15 | ) | (0.01 | ) | (0.09 | ) | (0.06 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.74 | 5.29 | 1.49 | 1.61 | 3.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.77 | 5.14 | 1.48 | 1.52 | 3.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | �� | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.77 | $26.39 | $24.32 | $22.84 | $21.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 5.13 | 21.38 | 6.48 | 7.13 | 16.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $274 | $356 | $356 | $369 | $413 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.21 | 1.19 | 1.25 | 1.27 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.20 | 1.19 | 1.25 | 1.27 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.15 | (0.58 | ) | (0.04 | ) | (0.45 | ) | (0.33 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class B Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.12 | $23.46 | $22.22 | $20.90 | $18.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss1 | (0.13 | ) | (0.35 | ) | (0.19 | ) | (0.25 | ) | (0.21 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.67 | 5.08 | 1.43 | 1.57 | 3.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.54 | 4.73 | 1.24 | 1.32 | 2.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.27 | $25.12 | $23.46 | $22.22 | $20.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 4.27 | 20.38 | 5.58 | 6.32 | 15.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $13 | $20 | $20 | $25 | $31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.04 | 2.00 | 2.06 | 2.07 | 2.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.03 | 2.00 | 2.06 | 2.07 | 2.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.69 | ) | (1.39 | ) | (0.86 | ) | (1.24 | ) | (1.13 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class C Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.10 | $23.45 | $22.21 | $20.90 | $18.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss1 | (0.13 | ) | (0.36 | ) | (0.19 | ) | (0.26 | ) | (0.21 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.68 | 5.08 | 1.43 | 1.57 | 3.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.55 | 4.72 | 1.24 | 1.31 | 2.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.26 | $25.10 | $23.45 | $22.21 | $20.90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 4.26 | 20.35 | 5.58 | 6.27 | 15.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $17 | $19 | $17 | $20 | $22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.05 | 2.03 | 2.07 | 2.11 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.04 | 2.02 | 2.07 | 2.10 | 2.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.69 | ) | (1.42 | ) | (0.88 | ) | (1.27 | ) | (1.13 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class I Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.03 | $24.80 | $23.24 | $21.61 | $18.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.07 | (0.08 | ) | 0.06 | (0.02 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.79 | 5.41 | 1.52 | 1.65 | 3.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.86 | 5.33 | 1.58 | 1.63 | 3.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.03 | ) | (0.02 | ) | — | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (6.39 | ) | (3.10 | ) | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.50 | $27.03 | $24.80 | $23.24 | $21.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 5.35 | 21.71 | 6.81 | 7.54 | 16.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $13 | $72 | $113 | $256 | $237 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.00 | 0.91 | 0.91 | 0.91 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.99 | 0.91 | 0.91 | 0.91 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.31 | (0.28 | ) | 0.25 | (0.08 | ) | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 R1 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.74 | $23.90 | $22.55 | $21.14 | $18.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss1 | (0.07 | ) | (0.29 | ) | (0.11 | ) | (0.17 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.71 | 5.20 | 1.46 | 1.58 | 3.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.64 | 4.91 | 1.35 | 1.41 | 2.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.99 | $25.74 | $23.90 | $22.55 | $21.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 4.59 | 20.77 | 5.99 | 6.67 | 15.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 3 | — | 3 | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.13 | 4.13 | 5.79 | 7.03 | 8.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.70 | 1.70 | 1.70 | 1.70 | 1.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.34 | ) | (1.12 | ) | (0.49 | ) | (0.86 | ) | (0.75 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 | Less than $500,000. |
Class R2 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.81 | $24.72 | $23.27 | $22.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.02 | ) | (0.23 | ) | (0.06 | ) | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.76 | 5.39 | 1.51 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.74 | 5.16 | 1.45 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.16 | $26.81 | $24.72 | $23.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 4.89 | 21.10 | 6.23 | 3.65 | 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 | 17.03 | 15.50 | 20.41 | 15.96 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.45 | 1.45 | 1.45 | 1.45 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.09 | ) | (0.85 | ) | (0.24 | ) | (0.12 | ) 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 8 |
1 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||
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 4-1-11 to 3-31-12. |
Class R3 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $25.92 | $24.03 | $22.65 | $21.21 | $18.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss1 | (0.05 | ) | (0.26 | ) | (0.09 | ) | (0.16 | ) | (0.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.72 | 5.22 | 1.47 | 1.60 | 3.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.67 | 4.96 | 1.38 | 1.44 | 2.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.20 | $25.92 | $24.03 | $22.65 | $21.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 4.71 | 20.87 | 6.09 | 6.79 | 16.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 3 | — | 3 | — | 3 | — | 3 | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 16.32 | 12.99 | 15.02 | 15.86 | 16.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.60 | 1.60 | 1.60 | 1.59 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.24 | ) | (1.00 | ) | (0.39 | ) | (0.76 | ) | (0.64 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 | Less than $500,000. |
Class R4 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.49 | $24.40 | $22.91 | $21.40 | $18.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.03 | (0.17 | ) | — | 2 | (0.10 | ) | (0.06 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.75 | 5.33 | 1.49 | 1.61 | 3.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.78 | 5.16 | 1.49 | 1.51 | 3.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.88 | $26.49 | $24.40 | $22.91 | $21.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 5.15 | 21.39 | 6.50 | 7.06 | 16.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 13.72 | 10.91 | 14.55 | 15.46 | 16.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.20 | 1.20 | 1.22 | 1.29 | 1.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.13 | (0.62 | ) | 0.01 | (0.46 | ) | (0.34 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 | Less than $500,000. |
Class R5 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.90 | $24.71 | $23.16 | $21.56 | $18.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.07 | (0.11 | ) | 0.05 | (0.03 | ) | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.78 | 5.39 | 1.51 | 1.63 | 3.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.85 | 5.28 | 1.56 | 1.60 | 3.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | �� | (0.02 | ) | (0.01 | ) | — | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (6.39 | ) | (3.09 | ) | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.36 | $26.90 | $24.71 | $23.16 | $21.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 5.39 | 21.58 | 6.74 | 7.42 | 16.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 3 | — | 3 | — | 3 | — | 3 | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 18.28 | 12.38 | 14.16 | 15.07 | 16.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.00 | 1.00 | 1.00 | 0.99 | 1.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.34 | (0.40 | ) | 0.21 | (0.16 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 | Less than $500,000. |
Class R6 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.10 | $24.84 | $23.27 | $20.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.11 | (0.07 | ) | 0.08 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.79 | 5.43 | 1.51 | 3.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.90 | 5.36 | 1.59 | 3.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.03 | ) | (0.02 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (6.39 | ) | (3.10 | ) | (0.02 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.61 | $27.10 | $24.84 | $23.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 5.58 | 21.82 | 6.86 | 16.29 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $3 | $8 | $4 | $4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.27 | 1.09 | 1.33 | 1.58 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.79 | 0.86 | 0.86 | 0.86 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.52 | (0.27 | ) | 0.34 | 0.20 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 6 |
1 | The inception date for Class R6 shares is 9-1-11. | ||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class T Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.14 | $24.13 | $22.69 | $21.20 | $18.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | (0.17 | ) | (0.03 | ) | (0.11 | ) | (0.09 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.74 | 5.25 | 1.47 | 1.60 | 3.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.75 | 5.08 | 1.44 | 1.49 | 2.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.50 | $26.14 | $24.13 | $22.69 | $21.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 5.10 | 21.29 | 6.35 | 7.03 | 16.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of year (in millions) | $71 | $78 | $73 | $77 | $83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.28 | 1.27 | 1.33 | 1.37 | 1.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.27 | 1.26 | 1.33 | 1.37 | 1.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.07 | (0.66 | ) | (0.13 | ) | (0.54 | ) | (0.50 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class ADV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $26.70 | $24.57 | $23.05 | $21.49 | $18.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.03 | (0.14 | ) | 0.02 | (0.06 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.78 | 5.34 | 1.50 | 1.62 | 3.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.81 | 5.20 | 1.52 | 1.56 | 3.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.12 | $26.70 | $24.57 | $23.05 | $21.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 5.20 | 21.40 | 6.59 | 7.26 | 16.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2 | $19 | $20 | $20 | $22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.49 | 1.26 | 1.33 | 1.35 | 1.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.14 | 1.14 | 1.14 | 1.14 | 1.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.13 | (0.53 | ) | 0.08 | (0.31 | ) | (0.17 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 NAV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.14 | $24.86 | $23.28 | $21.63 | $18.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.04 | (0.04 | ) | 0.09 | 0.01 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.86 | 5.43 | 1.52 | 1.64 | 3.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.90 | 5.39 | 1.61 | 1.65 | 3.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.04 | ) | (0.03 | ) | — | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (6.39 | ) | (3.07 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (6.39 | ) | (3.11 | ) | (0.03 | ) | — | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.65 | $27.14 | $24.86 | $23.28 | $21.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 5.57 | 21.92 | 6.94 | 7.63 | 17.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $12 | $438 | $463 | $487 | $813 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.78 | 0.77 | 0.79 | 0.80 | 0.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.77 | 0.77 | 0.79 | 0.80 | 0.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.18 | (0.16 | ) | 0.39 | 0.05 | 0.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 155 | 81 | 92 | 90 | 90 |
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 Select 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 to maximize long-term 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 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 B, Class T and Class ADV shares are closed to new 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.
Effective April 17, 2014, John Hancock Rainer Growth Fund changed its name to John Hancock Select Growth Fund.
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 management investment companies are valued at their respective net asset values each business day. 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.
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 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.
32
The following is a summary of the values by input classification of the fund's investments as of March 31, 2015, by major security category or type:
Total market value at 3-31-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||||||||||||
Common stocks | |||||||||||||||
Consumer discretionary | $63,500,199 | $63,500,199 | — | — | |||||||||||
Consumer staples | 44,370,983 | 44,370,983 | — | — | |||||||||||
Energy | 2,596,301 | 2,596,301 | — | — | |||||||||||
Financials | 103,657,658 | 103,657,658 | — | — | |||||||||||
Health care | 50,087,477 | 50,087,477 | — | — | |||||||||||
Industrials | 37,049,469 | 37,049,469 | — | — | |||||||||||
Information technology | 72,849,990 | 72,189,347 | — | $660,643 | |||||||||||
Materials | 24,140,480 | 24,140,480 | — | — | |||||||||||
Short-term investments | 8,429,893 | 8,429,893 | — | — | |||||||||||
Total investments in securities | $406,682,450 | $406,021,807 | — | $660,643 |
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.
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 March 31, 2015 were $266.
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
33
and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily for each class, based on the net asset value of the 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 March 31, 2015, the fund has a capital loss carryforward of $14,905,995 available to offset future net realized capital gains. The following table details the capital loss carryforward available:
Capital loss carryforward expiring March 31 | ||||||||
2016 | 2017 | 2018 | ||||||
$436,782 | $5,342,835 | $9,126,378 |
Availability of a certain amount of the loss carryforward, which was acquired in a merger, may be limited in a given year.
As of March 31, 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 March 31, 2015 and 2014 was as follows:
March 31, 2015 | March 31, 2014 | |||||||
Ordinary Income | $58,022,280 | $21,462,352 | ||||||
Long-Term Capital Gain | $172,546,712 | $87,134,036 | ||||||
Total | $230,568,992 | $108,596,388 |
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $7,757,002 of undistributed long-term capital gain.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from 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, characterization of distributions and redemptions-in-kind.
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 over-the-counter 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
34
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.
Futures are traded or cleared on an exchange. Exchange-traded transactions generally present less counterparty risk to a fund than OTC transactions. The exchange stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange and the clearing member.
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 March 31, 2015, the fund used futures contracts to gain exposure to certain securities markets and as a substitute for securities purchased. During the year ended March 31, 2015, the fund held futures contracts with notional values up to $416.3 million. There were no open futures contracts as of March 31, 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 March 31, 2015:
Risk | Statement of operations location | Futures contracts | ||||||
Equity contracts | Net realized gain (loss) | $2,776,741 |
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 Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management contract 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) 0.730% of the first $3.0 billion of the fund's average daily net assets; (b) 0.725% of the next $3.0 billion of the fund's average daily net assets; and (c) 0.700% of the fund's average daily net assets in excess of $6.0 billion. The Advisor has a subadvisory agreement with Baille Gifford
35
Overseas Limited. Prior to April 18, 2014, the Advisor had a subadvisory agreement with Rainier Investment Management, 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 March 31, 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 reduce its management fee or, if necessary, make payment to the fund to the extent necessary to maintain the fund's total operating expenses at 1.70%, 1.45%, 1.60% 1.20%, 1.00%, 0.86% and 1.14% for Class R1, Class R2, Class R3, Class R4, Class R5, Class R6 and Class ADV shares, respectively. 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 fund fees and expenses paid indirectly and short dividend expense. For all the classes indicated, this expense limitation shall remain in effect through June 30, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that is appropriate under the circumstances at that time.
The Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for class R6 shares 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 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.
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 agent fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 1.30% of average 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 Advisor and the fund based upon a determination that this is appropriate under the circumstances at the time.
For the year ended March 31, 2015, the expense reductions described above amounted to the following:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $32,979 | Class R4 | $15,993 | |||||||||||
Class B | 1,825 | Class R5 | 16,044 | |||||||||||
Class C | 1,975 | Class R6 | 19,753 | |||||||||||
Class I | 3,182 | Class T | 5,360 | |||||||||||
Class R1 | 15,042 | Class NAV | 2,081 | |||||||||||
Class R2 | 15,813 | Class ADV | 32,272 | |||||||||||
Class R3 | 15,948 | Total | $178,267 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.70% 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 March 31, 2015, amounted to an annual rate of 0.01% of the fund's average daily net assets.
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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 T and Class ADV 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 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 T | 0.30% | — | |||||||||||||||
Class R2 | 0.25% | 0.25% | Class ADV | 0.25% | — |
Currently only 0.25% is charged to Class A shares for Rule 12b-1 fees.
The Distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares to limit the Rule 12b-1 fees on Class R4 shares 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. Accordingly, the fee limitation amounted to $129 for Class R4 shares for the year ended March 31, 2015.
Sales charges. Class A and Class T shares are assessed up-front sales charges of up to 5% of net asset value of such shares. The following summarizes the net up front sales charges received by the Distributor during the year ended March 31, 2015:
Class A | Class T | |||||||
Retained for printing prospectuses, advertising and sales literature | $117,914 | $3,263 | ||||||
Sales commission to unrelated broker-dealers | 555,431 | 12,965 | ||||||
Sales commission to affiliated sales personnel | 22,857 | 5,618 | ||||||
Net sales charges | $696,202 | $21,846 |
Class A, Class B, Class C and Class T shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A and Class T 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 March 31, 2015, CDSCs received by the Distributor amounted to $3,032, $16,759, $3,136 and $456 for Class A, Class B, Class C and Class T 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.
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Class level expenses. Class level expenses for the year ended March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $700,899 | $351,200 | $40,423 | $64,940 | ||||||||||
Class B | 156,059 | 19,577 | 17,012 | 2,136 | ||||||||||
Class C | 175,882 | 22,038 | 17,081 | 5,918 | ||||||||||
Class I | — | 29,483 | 20,780 | 1,792 | ||||||||||
Class R1 | 4,202 | 103 | 16,208 | 151 | ||||||||||
Class R2 | 275 | 17 | 16,172 | 19 | ||||||||||
Class R3 | 567 | 18 | 16,209 | 33 | ||||||||||
Class R4 | 381 | 22 | 16,209 | 30 | ||||||||||
Class R5 | — | 15 | 16,209 | 14 | ||||||||||
Class R6 | — | 702 | 18,381 | 375 | ||||||||||
Class T | 213,784 | 89,265 | 17,764 | 26,396 | ||||||||||
Class ADV | 22,742 | 11,506 | 25,555 | 3,151 | ||||||||||
Total | $1,274,791 | $523,946 | $238,003 | $104,955 |
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 March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 1,594,677 | $32,566,080 | 2,282,983 | $60,333,638 | ||||||||||||||||||||||
Distributions reinvested | 4,084,927 | 79,703,498 | 1,393,162 | 36,096,825 | ||||||||||||||||||||||
Repurchased | (6,000,597 | ) | (122,896,343 | ) | (4,813,552 | ) | (128,874,741 | ) | ||||||||||||||||||
Net decrease | (320,993 | ) | ($10,626,765 | ) | (1,137,407 | ) | ($32,444,278 | ) | ||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 6,791 | $133,579 | 72,114 | $1,860,291 | ||||||||||||||||||||||
Distributions reinvested | 261,367 | 4,775,451 | 87,755 | 2,170,185 | ||||||||||||||||||||||
Repurchased | (362,154 | ) | (6,862,245 | ) | (244,375 | ) | (6,136,925 | ) | ||||||||||||||||||
Net decrease | (93,996 | ) | ($1,953,215 | ) | (84,506 | ) | ($2,106,449 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 88,923 | $1,668,019 | 82,458 | $2,116,832 | ||||||||||||||||||||||
Distributions reinvested | 236,281 | 4,313,585 | 74,095 | 1,830,897 | ||||||||||||||||||||||
Repurchased | (192,450 | ) | (3,650,364 | ) | (122,170 | ) | (3,073,186 | ) | ||||||||||||||||||
Net increase | 132,754 | $2,331,240 | 34,383 | $874,543 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 178,835 | $3,825,264 | 515,753 | $13,908,811 | ||||||||||||||||||||||
Distributions reinvested | 759,379 | 15,298,480 | 334,370 | 8,870,839 | ||||||||||||||||||||||
Repurchased | (2,991,369 | ) | (61,609,116 | ) | (2,731,871 | ) | (74,145,725 | ) | ||||||||||||||||||
Net decrease | (2,053,155 | ) | ($42,485,372 | ) | (1,881,748 | ) | ($51,366,075 | ) |
38
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 9,405 | $182,794 | 5,835 | $143,781 | ||||||||||||||||||||||
Distributions reinvested | 5,105 | 96,316 | 1,452 | 36,770 | ||||||||||||||||||||||
Repurchased | (3,277 | ) | (64,675 | ) | (506 | ) | (13,326 | ) | ||||||||||||||||||
Net increase | 11,233 | $214,435 | 6,781 | $167,225 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 1,364 | $27,983 | 13 | $373 | ||||||||||||||||||||||
Distributions reinvested | 25 | 482 | — | — | ||||||||||||||||||||||
Net increase | 1,389 | $28,465 | 13 | $373 | ||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 2,310 | $45,979 | 490 | $13,090 | ||||||||||||||||||||||
Distributions reinvested | 133 | 2,534 | 15 | 374 | ||||||||||||||||||||||
Repurchased | (794 | ) | (16,024 | ) | (199 | ) | (5,432 | ) | ||||||||||||||||||
Net increase | 1,649 | $32,489 | 306 | $8,032 | ||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 1,287 | $26,768 | 1,439 | $38,950 | ||||||||||||||||||||||
Distributions reinvested | 548 | 10,751 | 167 | 4,338 | ||||||||||||||||||||||
Repurchased | (1,415 | ) | (27,985 | ) | (1 | ) | (19 | ) | ||||||||||||||||||
Net increase | 420 | $9,534 | 1,605 | $43,269 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 67,594 | $1,413,018 | 139,312 | $3,968,690 | ||||||||||||||||||||||
Distributions reinvested | 82,171 | 1,660,185 | 30,006 | 797,860 | ||||||||||||||||||||||
Repurchased | (274,859 | ) | (5,727,525 | ) | (54,532 | ) | (1,528,395 | ) | ||||||||||||||||||
Net increase (decrease) | (125,094 | ) | ($2,654,322 | ) | 114,786 | $3,238,155 | ||||||||||||||||||||
Class T shares | ||||||||||||||||||||||||||
Sold | 41,904 | $841,233 | 41,771 | $1,095,454 | ||||||||||||||||||||||
Distributions reinvested | 938,410 | 18,081,064 | 310,378 | 7,970,498 | ||||||||||||||||||||||
Repurchased | (501,662 | ) | (9,963,242 | ) | (395,807 | ) | (10,355,540 | ) | ||||||||||||||||||
Net increase (decrease) | 478,652 | $8,959,055 | (43,658 | ) | ($1,289,588 | ) | ||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | 51,204 | $1,153,970 | 53,909 | $1,425,182 | ||||||||||||||||||||||
Distributions reinvested | 211,182 | 4,186,945 | 80,558 | 2,112,223 | ||||||||||||||||||||||
Repurchased | (876,241 | ) | (17,829,367 | ) | (253,110 | ) | (6,719,773 | ) | ||||||||||||||||||
Net decrease | (613,855 | ) | ($12,488,452 | ) | (118,643 | ) | ($3,182,368 | ) | ||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 443,565 | $11,546,739 | 231,437 | $6,130,434 | ||||||||||||||||||||||
Distributions reinvested | 4,784,638 | 96,887,085 | 1,730,886 | 46,076,183 | ||||||||||||||||||||||
Repurchased | (20,846,865 | ) | (423,450,264 | ) | (4,431,072 | ) | (119,328,524 | ) | ||||||||||||||||||
Net decrease | (15,618,662 | ) | ($315,016,440 | ) | (2,468,749 | ) | ($67,121,907 | ) | ||||||||||||||||||
Total net decrease | (18,199,658 | ) | ($373,649,348 | ) | (5,576,837 | ) | ($153,179,068 | ) |
There were no share transactions for the years ended March 31, 2015 and 2014 for Class R5.
Affiliates of the fund owned 29%, 76%, 64%, 77%, 100% and 100% of shares of beneficial interest of Class R1, Class R2, Class R3, Class R4, Class R5 and Class NAV, respectively, on March 31, 2015.
39
Note 7 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $712,101,037 and $1,289,100,923, respectively, for the year ended March 31, 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 March 31, 2015, there were no affiliated funds with an ownership of 5% or more of the fund's net assets.
Note 9 — Direct placement securities
The fund may hold private placement securities which are restricted as to resale and the fund has limited rights to registration under the Securities Act of 1933. The following table summarizes the direct placement securities held at March 31, 2015.
Issuer, description | Original acquisition date | Acquisition cost | Beginning share amount | Ending share amount | Value as a percentage of fund's net assets | Value as of 3-31-15 | ||||||||||||||
Source HOV | 10-31-14 | — | — | 510 | 0.16% | $660,643 | ||||||||||||||
Bought: 510 shares |
40
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock Select 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 Select Growth Fund (the "Fund") at March 31, 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 March 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 18, 2015
41
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 March 31, 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.
The fund paid $172,546,712 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.
42
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
43
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
44
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
45
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. |
46
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 Baillie Gifford Overseas Limited (BG Overseas) 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
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. |
47
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 Select Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202367 | 334A 3/15 5/15 |
John Hancock
Disciplined Value Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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
Disciplined Value Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
16 | Financial statements | |||||||
20 | Financial highlights | |||||||
31 | Notes to financial statements | |||||||
39 | Auditor's report | |||||||
40 | Tax information | |||||||
41 | Trustees and Officers | |||||||
45 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks to provide long-term growth of capital primarily through investments in equity securities. Current income is a secondary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The Russell 1000 Value Index is an unmanaged index containing those securities in the Russell 1000 Index with a lower price-to-book ratio and less-than-average growth orientation.
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.
1 On 12-19-08, through a reorganization, the fund acquired all of the assets of Robeco Boston Partners Large Cap Value Fund (the predecessor fund). On that date, the predecessor fund's Investor shares were exchanged for Class A shares and its Institutional shares were exchanged for Class I shares of John Hancock Disciplined Value Fund. Class A shares were first offered on 12-22-08. Class A shares' performance shown above for periods prior to this date is that of the predecessor fund's Investor shares that have been recalculated to reflect the gross fees and expenses of Class A shares.
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
Equity markets benefited from continued stimulus from the U.S. Federal Reserve in the form of quantitative easing for most of the period and near-zero interest rates.
Large value stocks lagged the broad market
Large-cap value stocks lagged the broad market as investors sought out companies growing earnings at higher rates.
Stock selection adversely impacted results
The fund underperformed the Russell 1000 Value Index, primarily due to stock selection in the financials and healthcare sectors.
PORTFOLIO COMPOSITION AS OF 3/31/15 (%)
A note about risks
Value stocks may decline in price. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Large company stocks could fall out of favor, and illiquid securities may be difficult to sell at a price approximating their value. 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. Please see the fund's prospectuses for additional risks.
3
![markedonovan.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000763/markedonovan.jpg)
Mark E. Donovan, CFA
Portfolio Manager
Boston Partners
The bull market in U.S. stocks continued over the past twelve months. What kept stocks on a positive trajectory?
U.S. stocks followed up a stellar 2013 by continuing to advance, with most major indexes setting new highs during the reporting period. The S&P 500 Index returned 12.73%, while large-cap value stocks, as measured by the fund's benchmark, the Russell 1000 Value Index, advanced 9.33% during the 12-month period ended March 31, 2015.
Stocks benefited from several catalysts over the course of the fiscal year. The U.S. Federal Reserve (Fed) continued its quantitative easing program for the first half of the period and maintained its zero interest-rate policy, encouraging investors to embrace riskier assets in pursuit of returns. This also provided companies with affordable financing for merger activity and shareholder-friendly actions such as dividend payments and share buybacks. A steadily improving job market also provided support to economic expansion as the first half of the period saw the United States produce its strongest back-to-back quarters of gross domestic product growth since 2003, making it one of the bright spots in an otherwise tepid global economy. And finally, U.S. companies continued to increase earnings at a solid pace with the majority of S&P 500 constituents topping Wall Street expectations.
The strength of the economy and investor confidence enabled stocks to overcome risks that led to sporadic sell-offs throughout the period. Equities were challenged during the year by escalating geopolitical risk in Ukraine and the Middle East, uncertainty over the fate of Greece in the eurozone, sharply falling oil prices, and a strengthening U.S. dollar. Yet in each instance, equities bounced back.
One constant throughout has been a supportive Fed. Since becoming Fed chair in February 2014, Janet Yellen has mostly soothed markets by communicating patience and signaling that interest rates would remain low amid a sluggish recovery in growth and wages.
4
The fund underperformed its benchmark index. What factors contributed to this?
Less economically sensitive U.S. growth stocks outperformed the value stocks that we target in the fund as investors were willing to pay for faster earnings growth. We believe stock prices follow earnings and cash flows over time, and the sharp slowdown in earnings growth in the fourth quarter caused by a strengthening U.S. dollar adversely impacted stock prices, especially the large-cap stocks that the fund owns.
Within the fund, stock selection in the financials sector, which was our largest allocation, and in the two best performing sectors for the year—healthcare and consumer discretionary—were the primary contributors to underperformance.
Can you discuss some of the stocks that detracted the most from the fund's performance?
Within financials, the main detractors from the fund's overall absolute performance were its investments in banking stocks Bank of America Corp. and Fifth Third Bancorp, which underperformed other banks and the overall financials sector by a wide margin. In the healthcare sector, the fund was hurt by its pharmaceutical holdings. Within the consumer discretionary sector, Apollo Education Group, Inc. was the single largest detractor. The owner of the for-profit University
SECTOR COMPOSITION AS OF 3/31/15 (%)
5
of Phoenix suffered from declining enrollment as it faces more competition from traditional colleges in a recovering economy.
What factors aided the fund's performance?
Prudent diversification resulting from bottom up selection of quality companies at attractive prices is a key feature of our investment approach. The fund's performance was helped by holding a diverse set of companies whose growth catalysts were realized during the reporting period.
The fund's overweight in information technology was a significant contributor to returns, with Apple, Inc. being the greatest individual contributor. The company continued to benefit from robust global demand for its newest iPhone. Stock selection in the energy sector was also positive. The fund benefited from an underweight in Exxon Mobil Corp. and not holding Chevron Corp., two large positions in the benchmark that were hurt by the steep drop in oil prices. An out-of-benchmark holding in aerospace and defense contractor Lockheed Martin Corp. (industrials), as well as consumer stocks Home Depot, Inc. and Time Warner, Inc. also helped returns.
How was the fund positioned at the end of the period?
We continue to overweight the information technology sector, where the fund favors companies with valuations that we believe are inexpensive compared to their normalized earnings and free cash flow characteristics. The fund's overweight position in consumer discretionary stocks has the
TEN LARGEST HOLDINGS AS OF 3/31/15 (%)
Wells Fargo & Company | 3.9 | ||||
Berkshire Hathaway, Inc., Class B | 3.9 | ||||
JPMorgan Chase & Co. | 3.6 | ||||
Pfizer, Inc. | 3.2 | ||||
Capital One Financial Corp. | 2.9 | ||||
Apple, Inc. | 2.9 | ||||
Johnson & Johnson | 2.4 | ||||
Citigroup, Inc. | 2.3 | ||||
CVS Health Corp. | 2.3 | ||||
Cisco Systems, Inc. | 2.2 | ||||
TOTAL | 29.6 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
6
potential to benefit from the realization of the "gasoline dividend" should consumers choose to start spending the cost savings from lower gas prices rather than save and pay down debt as they have thus far this year. With the likelihood of higher interest rates growing closer, the fund remains underweight in rate-sensitive sectors with rich valuations, which include real estate investment trusts, utilities, and telecoms.
While a strengthening dollar has caused earnings growth to stall, free cash flow growth and capital returns to shareholders have continued to increase. Current free cash flow yields continue to look very attractive compared to U.S. corporate bond yields. As investors gain confidence that the economy will improve and earnings growth will reappear in the second half of 2015 and in 2016, U.S. equity markets should continue to modestly improve.
MANAGED BY
![]() | Mark E. Donovan, CFA On the fund since inception Investing since 1981 | ||||
![]() | David J. Pyle, CFA On the fund since 2000 Investing since 1995 ![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||||||||||||||
1-year | 5-year | 10-year | Since inception | 5-year | 10-year | Since inception | |||||||||||||||||||||||
Class A1 | 2.15 | 12.44 | 8.21 | — | 79.76 | 120.11 | — | ||||||||||||||||||||||
Class B1 | 1.68 | 12.41 | 7.76 | — | 79.50 | 111.13 | — | ||||||||||||||||||||||
Class C1 | 5.78 | 12.72 | 7.79 | — | 82.00 | 111.72 | — | ||||||||||||||||||||||
Class I1,2 | 7.86 | 13.97 | 9.13 | — | 92.28 | 139.63 | — | ||||||||||||||||||||||
Class I21,2 | 7.85 | 13.98 | 9.03 | — | 92.37 | 137.47 | — | ||||||||||||||||||||||
Class R11,2 | 7.09 | 13.13 | 8.35 | — | 85.33 | 122.90 | — | ||||||||||||||||||||||
Class R21,2 | 7.39 | 13.35 | 8.53 | — | 87.11 | 126.76 | — | ||||||||||||||||||||||
Class R31,2 | 7.20 | 13.25 | 8.46 | — | 86.30 | 125.18 | — | ||||||||||||||||||||||
Class R41,2 | 7.67 | 13.68 | 8.83 | — | 89.89 | 132.98 | — | ||||||||||||||||||||||
Class R51,2 | 7.98 | 14.02 | 9.15 | — | 92.67 | 139.96 | — | ||||||||||||||||||||||
Class R61,2 | 7.99 | 14.04 | 9.19 | — | 92.87 | 140.83 | — | ||||||||||||||||||||||
Class NAV2,3 | 7.98 | 14.10 | — | 17.39 | 93.37 | — | 155.04 | ||||||||||||||||||||||
Index 1† | 9.33 | 13.75 | 7.21 | — | 90.48 | 100.67 | — | ||||||||||||||||||||||
Index 2† | 12.73 | 14.47 | 8.01 | — | 96.50 | 116.10 | — |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charge 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 sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class I2, Class R1, Class R2, Class R3, Class R4, Class R5, 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 I2 | Class R1 | Class R2 | Class R3 | Class R4 | Class R5 | Class R6 | Class NAV | |||||||||||||||||||||||||||
Gross (%) | 1.11 | 1.95 | 1.87 | 0.84 | 0.88 | 1.66 | 1.38 | 1.59 | 1.12 | 0.79 | 0.74 | 0.71 | ||||||||||||||||||||||||||
Net (%) | 1.11 | 1.95 | 1.87 | 0.84 | 0.85 | 1.57 | 1.32 | 1.47 | 1.02 | 0.79 | 0.71 | 0.71 |
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 Russell 1000 Value Index; Index 2 is the S&P 500 Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Disciplined Value Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index 1 ($) | Index 2 ($) | |||||||||||||
Class B1,4 | 3-31-05 | 21,113 | 21,113 | 20,067 | 21,610 | ||||||||||||
Class C1,4 | 3-31-05 | 21,172 | 21,172 | 20,067 | 21,610 | ||||||||||||
Class I1,2 | 3-31-05 | 23,963 | 23,963 | 20,067 | 21,610 | ||||||||||||
Class I21,2 | 3-31-05 | 23,747 | 23,747 | 20,067 | 21,610 | ||||||||||||
Class R11,2 | 3-31-05 | 22,290 | 22,290 | 20,067 | 21,610 | ||||||||||||
Class R21,2 | 3-31-05 | 22,676 | 22,676 | 20,067 | 21,610 | ||||||||||||
Class R31,2 | 3-31-05 | 22,518 | 22,518 | 20,067 | 21,610 | ||||||||||||
Class R41,2 | 3-31-05 | 23,298 | 23,298 | 20,067 | 21,610 | ||||||||||||
Class R51,2 | 3-31-05 | 23,996 | 23,996 | 20,067 | 21,610 | ||||||||||||
Class R61,2 | 3-31-05 | 24,083 | 24,083 | 20,067 | 21,610 | ||||||||||||
Class NAV2 | 5-29-09 | 25,504 | 25,504 | 25,195 | 25,782 |
The Russell 1000 Value Index is an unmanaged index containing those securities in the Russell 1000 Index with a lower price-to-book ratio and less-than-average growth orientation.
The S&P 500 Index is an unmanaged index that includes 500 widely traded common stocks.
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 | On 12-19-08, through a reorganization, the fund acquired all of the assets of Robeco Boston Partners Large Cap Value Fund (the predecessor fund). On that date, the predecessor fund's Investor shares were exchanged for Class A shares and its Institutional shares were exchanged for Class I shares of John Hancock Disciplined Value Fund. Class A, Class B, and Class C shares were first offered on 12-22-08. The returns prior to this date are those of the predecessor fund's Investor shares that have been recalculated to reflect the gross fees and expenses of Class A, Class B, and Class C shares, as applicable. Class I and Class I2 shares were first offered on 12-22-08. The returns prior to this date are those of the predecessor fund's institutional shares that have been recalculated to reflect the gross fees and expenses of Class I and Class I2 shares, as applicable. Class R3, Class R4, and Class R5 shares were first offered on 5-22-09; Class R1 shares were first offered on 7-13-09; Class R6 shares were first offered on 9-1-11; Class R2 shares were first offered on 3-1-12. The returns prior to these dates are those of Class A shares that have been recalculated to reflect the gross fees and expenses of Class R3, Class R4, Class R5, Class R1, Class R6, and Class R2 shares, as applicable. |
2 | For certain types of investors, as described in the fund's prospectuses. |
3 | From 5-29-09. |
4 | 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 October 1, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,049.30 | $5.52 | 1.08% | ||||||||||
Class B | 1,000.00 | 1,045.30 | 9.74 | 1.91% | ||||||||||
Class C | 1,000.00 | 1,045.80 | 9.33 | 1.83% | ||||||||||
Class I | 1,000.00 | 1,050.70 | 4.09 | 0.80% | ||||||||||
Class I2 | 1,000.00 | 1,051.10 | 4.24 | 0.83% | ||||||||||
Class R1 | 1,000.00 | 1,047.10 | 7.86 | 1.54% | ||||||||||
Class R2 | 1,000.00 | 1,048.40 | 6.38 | 1.25% | ||||||||||
Class R3 | 1,000.00 | 1,047.60 | 7.30 | 1.43% | ||||||||||
Class R4 | 1,000.00 | 1,050.50 | 4.96 | 0.97% | ||||||||||
Class R5 | 1,000.00 | 1,051.30 | 3.73 | 0.73% | ||||||||||
Class R6 | 1,000.00 | 1,052.00 | 3.53 | 0.69% | ||||||||||
Class NAV | 1,000.00 | 1,051.90 | 3.53 | 0.69% |
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 March 31, 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 October 1, 2014, with the same investment held until March 31, 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.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,019.50 | $5.44 | 1.08% | ||||||||||
Class B | 1,000.00 | 1,015.40 | 9.60 | 1.91% | ||||||||||
Class C | 1,000.00 | 1,015.80 | 9.20 | 1.83% | ||||||||||
Class I | 1,000.00 | 1,020.90 | 4.03 | 0.80% | ||||||||||
Class I2 | 1,000.00 | 1,020.80 | 4.18 | 0.83% | ||||||||||
Class R1 | 1,000.00 | 1,017.30 | 7.75 | 1.54% | ||||||||||
Class R2 | 1,000.00 | 1,018.70 | 6.29 | 1.25% | ||||||||||
Class R3 | 1,000.00 | 1,017.80 | 7.19 | 1.43% | ||||||||||
Class R4 | 1,000.00 | 1,020.10 | 4.89 | 0.97% | ||||||||||
Class R5 | 1,000.00 | 1,021.30 | 3.68 | 0.73% | ||||||||||
Class R6 | 1,000.00 | 1,021.50 | 3.48 | 0.69% | ||||||||||
Class NAV | 1,000.00 | 1,021.50 | 3.48 | 0.69% |
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 182/365 (to reflect the one-half year period). |
11
Fund's investments
As of 3-31-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 98.3% | $12,984,847,321 | |||||||||||||
(Cost $11,365,449,005) | ||||||||||||||
Consumer discretionary 9.1% | 1,206,039,786 | |||||||||||||
Auto components 0.6% | ||||||||||||||
Lear Corp. | 739,752 | 81,979,318 | ||||||||||||
Diversified consumer services 0.4% | ||||||||||||||
Apollo Education Group, Inc. (I) | 2,509,960 | 47,488,443 | ||||||||||||
Hotels, restaurants and leisure 0.8% | ||||||||||||||
McDonald's Corp. | 411,085 | 40,056,122 | ||||||||||||
Six Flags Entertainment Corp. | 1,443,620 | 69,885,644 | ||||||||||||
Media 5.1% | ||||||||||||||
Comcast Corp., Class A | 1,927,673 | 108,855,694 | ||||||||||||
Liberty Broadband Corp., Series C (I) | 1,000,817 | 56,646,242 | ||||||||||||
Liberty Global PLC, Series C (I) | 4,547,431 | 226,507,538 | ||||||||||||
Liberty Media Corp., Series A (I) | 1,105,526 | 42,618,027 | ||||||||||||
Liberty Media Corp., Series C (I) | 2,210,852 | 84,454,546 | ||||||||||||
Omnicom Group, Inc. | 747,096 | 58,258,546 | ||||||||||||
Scripps Networks Interactive, Inc., Class A | 962,495 | 65,988,657 | ||||||||||||
Time, Inc. | 1,364,810 | 30,626,336 | ||||||||||||
Multiline retail 0.6% | ||||||||||||||
Macy's, Inc. | 1,334,545 | 86,625,316 | ||||||||||||
Specialty retail 1.6% | ||||||||||||||
The Gap, Inc. | 2,823,627 | 122,347,758 | ||||||||||||
The Home Depot, Inc. | 736,745 | 83,701,599 | ||||||||||||
Consumer staples 3.9% | 509,119,177 | |||||||||||||
Food and staples retailing 2.3% | ||||||||||||||
CVS Health Corp. | 2,895,134 | 298,806,780 | ||||||||||||
Food products 1.6% | ||||||||||||||
Kellogg Company | 625,580 | 41,257,001 | ||||||||||||
Tyson Foods, Inc., Class A | 4,413,979 | 169,055,396 | ||||||||||||
Energy 8.7% | 1,150,851,747 | |||||||||||||
Oil, gas and consumable fuels 8.7% | ||||||||||||||
Anadarko Petroleum Corp. | 1,117,420 | 92,533,550 | ||||||||||||
Canadian Natural Resources, Ltd. | 4,110,670 | 126,238,676 | ||||||||||||
Energen Corp. | 1,204,660 | 79,507,560 | ||||||||||||
EOG Resources, Inc. | 1,296,726 | 118,896,807 | ||||||||||||
EQT Corp. | 1,231,845 | 102,082,995 | ||||||||||||
Marathon Petroleum Corp. | 1,535,030 | 157,171,722 | ||||||||||||
Occidental Petroleum Corp. | 2,080,728 | 151,893,144 | ||||||||||||
Phillips 66 | 2,926,415 | 230,016,219 |
Shares | Value | |||||||||||||
Energy (continued) | ||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||
QEP Resources, Inc. | 3,448,505 | $71,901,329 | ||||||||||||
Rice Energy, Inc. (I) | 947,139 | 20,609,745 | ||||||||||||
Financials 27.2% | 3,596,529,798 | |||||||||||||
Banks 11.0% | ||||||||||||||
BB&T Corp. | 2,507,360 | 97,761,966 | ||||||||||||
Citigroup, Inc. | 5,990,801 | 308,646,068 | ||||||||||||
Fifth Third Bancorp | 3,295,027 | 62,111,259 | ||||||||||||
JPMorgan Chase & Co. | 7,748,852 | 469,425,454 | ||||||||||||
Wells Fargo & Company | 9,522,129 | 518,003,818 | ||||||||||||
Consumer finance 4.8% | ||||||||||||||
Ally Financial, Inc. (I) | 3,255,350 | 68,297,243 | ||||||||||||
Capital One Financial Corp. | 4,842,598 | 381,693,574 | ||||||||||||
Discover Financial Services | 3,252,134 | 183,257,751 | ||||||||||||
Diversified financial services 3.9% | ||||||||||||||
Berkshire Hathaway, Inc., Class B (I) | 3,572,862 | 515,635,444 | ||||||||||||
Insurance 7.2% | ||||||||||||||
ACE, Ltd. | 1,712,712 | 190,950,261 | ||||||||||||
Aon PLC | 825,235 | 79,321,588 | ||||||||||||
MetLife, Inc. | 1,465,973 | 74,104,935 | ||||||||||||
Prudential Financial, Inc. | 1,330,095 | 106,819,929 | ||||||||||||
The Allstate Corp. | 3,513,582 | 250,061,631 | ||||||||||||
The Travelers Companies, Inc. | 1,456,195 | 157,458,365 | ||||||||||||
Validus Holdings, Ltd. | 619,725 | 26,090,423 | ||||||||||||
XL Group PLC | 1,824,305 | 67,134,424 | ||||||||||||
Real estate investment trusts 0.3% | ||||||||||||||
American Homes 4 Rent, Class A | 2,402,155 | 39,755,665 | ||||||||||||
Health care 18.2% | 2,399,029,477 | |||||||||||||
Biotechnology 0.9% | ||||||||||||||
Gilead Sciences, Inc. (I) | 1,220,195 | 119,737,735 | ||||||||||||
Health care equipment and supplies 2.8% | ||||||||||||||
Medtronic PLC | 3,352,697 | 261,476,839 | ||||||||||||
Zimmer Holdings, Inc. | 874,020 | 102,714,830 | ||||||||||||
Health care providers and services 4.3% | ||||||||||||||
Anthem, Inc. | 662,075 | 102,231,001 | ||||||||||||
Express Scripts Holding Company (I) | 2,667,632 | 231,470,429 | ||||||||||||
Omnicare, Inc. | 1,721,315 | 132,644,534 | ||||||||||||
Quest Diagnostics, Inc. | 1,345,980 | 103,438,563 | ||||||||||||
Pharmaceuticals 10.2% | ||||||||||||||
AbbVie, Inc. | 2,282,615 | 133,624,282 | ||||||||||||
Johnson & Johnson | 3,161,387 | 318,035,532 |
Shares | Value | |||||||||||||
Health care (continued) | ||||||||||||||
Pharmaceuticals (continued) | ||||||||||||||
Merck & Company, Inc. | 4,359,440 | $250,580,611 | ||||||||||||
Pfizer, Inc. | 12,245,912 | 426,035,278 | ||||||||||||
Shire PLC, ADR | 250,265 | 59,885,912 | ||||||||||||
Teva Pharmaceutical Industries, Ltd., ADR | 2,522,535 | 157,153,931 | ||||||||||||
Industrials 9.4% | 1,245,785,748 | |||||||||||||
Aerospace and defense 6.3% | ||||||||||||||
General Dynamics Corp. | 544,395 | 73,890,733 | ||||||||||||
Honeywell International, Inc. | 607,859 | 63,405,772 | ||||||||||||
Lockheed Martin Corp. | 1,362,477 | 276,528,332 | ||||||||||||
Raytheon Company | 1,727,065 | 188,681,851 | ||||||||||||
United Technologies Corp. | 1,952,355 | 228,816,006 | ||||||||||||
Airlines 1.5% | ||||||||||||||
Delta Air Lines, Inc. | 3,228,885 | 145,170,670 | ||||||||||||
United Continental Holdings, Inc. (I) | 892,720 | 60,035,420 | ||||||||||||
Electrical equipment 0.4% | ||||||||||||||
Emerson Electric Company | 941,550 | 53,310,561 | ||||||||||||
Machinery 1.2% | ||||||||||||||
AGCO Corp. | 8,340 | 397,318 | ||||||||||||
Crane Company | 1,357,415 | 84,716,270 | ||||||||||||
Ingersoll-Rand PLC | 1,040,435 | 70,832,815 | ||||||||||||
Information technology 16.0% | 2,114,855,110 | |||||||||||||
Communications equipment 3.2% | ||||||||||||||
Brocade Communications Systems, Inc. | 7,537,233 | 89,429,270 | ||||||||||||
Cisco Systems, Inc. | 10,562,401 | 290,730,088 | ||||||||||||
Harris Corp. | 451,545 | 35,563,684 | ||||||||||||
Electronic equipment, instruments and components 1.1% | ||||||||||||||
TE Connectivity, Ltd. | 2,116,297 | 151,569,191 | ||||||||||||
IT services 0.5% | ||||||||||||||
Fidelity National Information Services, Inc. | 918,455 | 62,510,047 | ||||||||||||
Semiconductors and semiconductor equipment 1.0% | ||||||||||||||
NXP Semiconductors NV (I) | 811,740 | 81,466,226 | ||||||||||||
ON Semiconductor Corp. (I) | 4,119,429 | 49,886,285 | ||||||||||||
Software 4.3% | ||||||||||||||
Activision Blizzard, Inc. | 5,205,125 | 118,286,466 | ||||||||||||
Microsoft Corp. | 6,428,560 | 261,353,107 | ||||||||||||
Oracle Corp. | 4,405,850 | 190,112,428 | ||||||||||||
Technology hardware, storage and peripherals 5.9% | ||||||||||||||
Apple, Inc. | 3,049,125 | 379,402,624 | ||||||||||||
EMC Corp. | 8,295,375 | 212,029,785 | ||||||||||||
Seagate Technology PLC | 1,024,591 | 53,309,470 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Technology hardware, storage and peripherals (continued) | ||||||||||||||
Western Digital Corp. | 1,529,573 | $139,206,439 | ||||||||||||
Materials 3.7% | 483,250,623 | |||||||||||||
Chemicals 0.7% | ||||||||||||||
Huntsman Corp. | 4,408,925 | 97,745,867 | ||||||||||||
Containers and packaging 1.9% | ||||||||||||||
Avery Dennison Corp. | 1,322,910 | 69,995,168 | ||||||||||||
Crown Holdings, Inc. (I) | 1,765,503 | 95,372,472 | ||||||||||||
MeadWestvaco Corp. | 1,576,165 | 78,603,349 | ||||||||||||
Metals and mining 0.3% | ||||||||||||||
Barrick Gold Corp. | 3,251,980 | 35,641,701 | ||||||||||||
Paper and forest products 0.8% | ||||||||||||||
International Paper Company | 1,908,309 | 105,892,066 | ||||||||||||
Telecommunication services 1.1% | 142,498,544 | |||||||||||||
Diversified telecommunication services 1.1% | ||||||||||||||
Verizon Communications, Inc. | 2,930,260 | 142,498,544 | ||||||||||||
Utilities 1.0% | 136,887,311 | |||||||||||||
Independent power and renewable electricity producers 1.0% | ||||||||||||||
AES Corp. | 10,652,709 | 136,887,311 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 1.6% | $208,720,429 | |||||||||||||
(Cost $208,720,429) | ||||||||||||||
Money market funds 1.6% | 208,720,429 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund | 0.0000(Y | ) | 208,720,429 | 208,720,429 | ||||||||||
Total investments (Cost $11,574,169,434)† 99.9% | $13,193,567,750 | |||||||||||||
Other assets and liabilities, net 0.1% | $9,603,075 | |||||||||||||
Total net assets 100.0% | $13,203,170,825 |
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 | |||||||
(I) | Non-income producing security. | |||||||
(Y) | The rate shown is the annualized seven-day yield as of 3-31-15. | |||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $11,577,682,233. Net unrealized appreciation aggregated $1,615,885,517, of which $1,885,347,358 related to appreciated investment securities and $269,461,841 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments, at value (Cost $11,574,169,434) | $13,193,567,750 | |||||||||||||||||||||||||||||||||||||||
Cash | 291,889 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 20,542,230 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 44,255,107 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 15,642,558 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 34,144 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 1,016 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 381,556 | |||||||||||||||||||||||||||||||||||||||
Total assets | 13,274,716,250 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 37,731,534 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 31,390,093 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 190,478 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 988,871 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 63,679 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 13,702 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 1,167,068 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 71,545,425 | |||||||||||||||||||||||||||||||||||||||
Net assets | $13,203,170,825 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $11,375,961,752 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 72,933,906 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 134,875,601 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 1,619,399,566 | |||||||||||||||||||||||||||||||||||||||
Net assets | $13,203,170,825 | |||||||||||||||||||||||||||||||||||||||
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 ($2,705,176,637 ÷ 139,131,278 shares)1 | $19.44 | ||||||||||||||||
Class B ($18,680,672 ÷ 1,016,167 shares)1 | $18.38 | ||||||||||||||||
Class C ($302,262,032 ÷ 16,399,390 shares)1 | $18.43 | ||||||||||||||||
Class I ($7,026,412,658 ÷ 371,490,403 shares) | $18.91 | ||||||||||||||||
Class I2 ($89,136,152 ÷ 4,712,441 shares) | $18.92 | ||||||||||||||||
Class R1 ($21,743,396 ÷ 1,150,494 shares) | $18.90 | ||||||||||||||||
Class R2 ($119,720,661 ÷ 6,333,264 shares) | $18.90 | ||||||||||||||||
Class R3 ($27,725,186 ÷ 1,467,634 shares) | $18.89 | ||||||||||||||||
Class R4 ($228,150,324 ÷ 12,058,810 shares) | $18.92 | ||||||||||||||||
Class R5 ($375,587,606 ÷ 19,832,368 shares) | $18.94 | ||||||||||||||||
Class R6 ($1,444,195,186 ÷ 76,271,073 shares) | $18.94 | ||||||||||||||||
Class NAV ($844,380,315 ÷ 44,580,595 shares) | $18.94 | ||||||||||||||||
Maximum offering price per share | |||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $20.46 |
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 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $245,802,969 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 270,444 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (1,157,711 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 244,915,702 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 75,451,528 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 10,505,924 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 1,306,185 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 10,744,883 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 164,958 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 527,536 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 573,753 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 241,711 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 1,320,826 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 559,264 | |||||||||||||||||||||||||||||||||||||||
Other | 122,416 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 101,518,984 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (1,225,924 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 100,293,060 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 144,622,642 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 566,410,856 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (1,995 | ) | ||||||||||||||||||||||||||||||||||||||
566,408,861 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | 175,799,432 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (3,553 | ) | ||||||||||||||||||||||||||||||||||||||
175,795,879 | ||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 742,204,740 | |||||||||||||||||||||||||||||||||||||||
Increase in net assets from operations | $886,827,382 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | ||||||||||||||||||||||||||||||||||||||||||||
From operations | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $144,622,642 | $55,528,024 | ||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 566,408,861 | 582,513,722 | ||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 175,795,879 | 772,950,701 | ||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 886,827,382 | 1,410,992,447 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | ||||||||||||||||||||||||||||||||||||||||||||
From net investment income | ||||||||||||||||||||||||||||||||||||||||||||
Class A | (12,683,136 | ) | (11,464,453 | ) | ||||||||||||||||||||||||||||||||||||||||
Class I | (51,067,801 | ) | (22,650,482 | ) | ||||||||||||||||||||||||||||||||||||||||
Class I2 | (680,456 | ) | (473,383 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R1 | (13,155 | ) | (7,951 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R2 | (439,223 | ) | (42,873 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R3 | (52,490 | ) | (15,558 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R4 | (1,076,510 | ) | (314,258 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R5 | (3,033,264 | ) | (4,780,156 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R6 | (11,805,127 | ) | (2,064,564 | ) | ||||||||||||||||||||||||||||||||||||||||
Class NAV | (7,020,069 | ) | (4,585,039 | ) | ||||||||||||||||||||||||||||||||||||||||
From net realized gain | ||||||||||||||||||||||||||||||||||||||||||||
Class A | (103,062,586 | ) | (107,405,752 | ) | ||||||||||||||||||||||||||||||||||||||||
Class B | (791,952 | ) | (881,403 | ) | ||||||||||||||||||||||||||||||||||||||||
Class C | (10,999,627 | ) | (5,916,683 | ) | ||||||||||||||||||||||||||||||||||||||||
Class I | (274,429,513 | ) | (143,285,296 | ) | ||||||||||||||||||||||||||||||||||||||||
Class I2 | (3,703,254 | ) | (2,920,019 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R1 | (838,821 | ) | (471,703 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R2 | (4,578,609 | ) | (637,097 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R3 | (1,002,415 | ) | (420,155 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R4 | (7,472,393 | ) | (2,669,244 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R5 | (14,084,398 | ) | (26,267,192 | ) | ||||||||||||||||||||||||||||||||||||||||
Class R6 | (54,545,637 | ) | (11,281,958 | ) | ||||||||||||||||||||||||||||||||||||||||
Class NAV | (32,436,257 | ) | (24,877,000 | ) | ||||||||||||||||||||||||||||||||||||||||
Total distributions | (595,816,693 | ) | (373,432,219 | ) | ||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 4,642,210,923 | 2,887,914,251 | ||||||||||||||||||||||||||||||||||||||||||
Total increase | 4,933,221,612 | 3,925,474,479 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | ||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 8,269,949,213 | 4,344,474,734 | ||||||||||||||||||||||||||||||||||||||||||
End of year | $13,203,170,825 | $8,269,949,213 | ||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $72,933,906 | $16,195,686 |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.94 | $15.94 | $14.33 | $13.83 | $12.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.20 | 0.12 | 0.14 | 0.11 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.19 | 3.85 | 2.09 | 0.77 | 1.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.39 | 3.97 | 2.23 | 0.88 | 1.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.10 | ) | (0.09 | ) | (0.12 | ) | (0.07 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.89 | ) | (0.97 | ) | (0.62 | ) | (0.38 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.44 | $18.94 | $15.94 | $14.33 | $13.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 7.53 | 25.30 | 16.04 | 6.91 | 13.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2,705 | $2,702 | $1,481 | $1,068 | $601 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.08 | 1.12 | 1.20 | 1.24 | 1.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.08 | 1.11 | 1.20 | 1.24 | 1.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.04 | 0.68 | 0.95 | 0.82 | 0.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class B Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.00 | $15.24 | $13.73 | $13.30 | $11.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.04 | (0.03 | ) | 0.01 | — | 2 | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.13 | 3.67 | 2.01 | 0.74 | 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.17 | 3.64 | 2.02 | 0.74 | 1.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | (0.01 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.79 | ) | (0.88 | ) | (0.51 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.38 | $18.00 | $15.24 | $13.73 | $13.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 6.68 | 24.21 | 15.09 | 5.99 | 12.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $19 | $19 | $14 | $10 | $8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.91 | 1.96 | 2.08 | 2.14 | 2.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.90 | 1.96 | 2.05 | 2.05 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.20 | (0.17 | ) | 0.10 | 0.01 | (0.45 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||
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 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.03 | $15.26 | $13.74 | $13.30 | $11.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.07 | (0.02 | ) | 0.02 | 0.01 | (0.05 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.12 | 3.67 | 2.01 | 0.74 | 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.19 | 3.65 | 2.03 | 0.75 | 1.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | (0.01 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.79 | ) | (0.88 | ) | (0.51 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.43 | $18.03 | $15.26 | $13.74 | $13.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | 6.78 | 24.25 | 15.19 | 6.07 | 12.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $302 | $171 | $59 | $40 | $30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.84 | 1.88 | 1.98 | 2.02 | 2.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.83 | 1.88 | 1.98 | 2.02 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.35 | (0.09 | ) | 0.17 | 0.04 | (0.45 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class I Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.44 | $15.54 | $13.99 | $13.52 | $12.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.25 | 0.17 | 0.18 | 0.15 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.16 | 3.75 | 2.04 | 0.75 | 1.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.41 | 3.92 | 2.22 | 0.90 | 1.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.15 | ) | (0.14 | ) | (0.17 | ) | (0.12 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.94 | ) | (1.02 | ) | (0.67 | ) | (0.43 | ) | (0.14 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.91 | $18.44 | $15.54 | $13.99 | $13.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%) | 7.86 | 25.61 | 16.40 | 7.27 | 13.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $7,026 | $3,671 | $1,680 | $711 | $399 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.81 | 0.83 | 0.87 | 0.88 | 0.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.81 | 0.83 | 0.87 | 0.88 | 0.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.34 | 0.96 | 1.26 | 1.18 | 0.75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
1 | Based on average daily shares outstanding. |
Class I2 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.45 | $15.55 | $13.99 | $13.53 | $12.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.24 | 0.17 | 0.18 | 0.15 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.17 | 3.75 | 2.05 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.41 | 3.92 | 2.23 | 0.90 | 1.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.15 | ) | (0.14 | ) | (0.17 | ) | (0.13 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.94 | ) | (1.02 | ) | (0.67 | ) | (0.44 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.92 | $18.45 | $15.55 | $13.99 | $13.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 7.85 | 25.63 | 16.51 | 7.24 | 13.65 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $89 | $75 | $34 | $25 | $23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.84 | 0.87 | 0.92 | 0.93 | 0.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.83 | 0.85 | 0.85 | 0.85 | 0.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.28 | 0.96 | 1.29 | 1.21 | 0.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
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 R1 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.43 | $15.54 | $13.99 | $13.52 | $12.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.12 | 0.04 | 0.08 | 0.06 | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.15 | 3.75 | 2.04 | 0.74 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.27 | 3.79 | 2.12 | 0.80 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.01 | ) | (0.02 | ) | (0.07 | ) | (0.02 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.80 | ) | (0.90 | ) | (0.57 | ) | (0.33 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.90 | $18.43 | $15.54 | $13.99 | $13.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.09 | 24.69 | 15.63 | 6.41 | 12.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $22 | $13 | $6 | $3 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.54 | 1.67 | 1.85 | 2.16 | 3.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.53 | 1.57 | 1.58 | 1.65 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.63 | 0.22 | 0.56 | 0.45 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
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. |
Class R2 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.44 | $15.55 | $14.00 | $13.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.19 | 0.08 | 0.12 | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.14 | 3.75 | 2.04 | 0.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.33 | 3.83 | 2.16 | 0.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.08 | ) | (0.06 | ) | (0.11 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.87 | ) | (0.94 | ) | (0.61 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.90 | $18.44 | $15.55 | $14.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 7.39 | 24.98 | 15.90 | 3.78 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $120 | $38 | $4 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.25 | 1.33 | 3.02 | 15.96 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.24 | 1.32 | 1.32 | 1.40 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.99 | 0.45 | 0.80 | 0.41 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 8 |
1 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||
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 4-1-11 to 3-31-12. |
Class R3 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.43 | $15.54 | $13.99 | $13.52 | $12.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.14 | 0.06 | 0.10 | 0.07 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.15 | 3.74 | 2.04 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.29 | 3.80 | 2.14 | 0.82 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.04 | ) | (0.03 | ) | (0.09 | ) | (0.04 | ) | — | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.83 | ) | (0.91 | ) | (0.59 | ) | (0.35 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.89 | $18.43 | $15.54 | $13.99 | $13.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.20 | 24.81 | 15.75 | 6.52 | 12.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $28 | $15 | $4 | — | 4 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.43 | 1.57 | 2.33 | 11.16 | 20.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.42 | 1.47 | 1.48 | 1.55 | 1.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.73 | 0.35 | 0.67 | 0.54 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
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 | Less than $500,000. |
Class R4 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.45 | $15.54 | $13.99 | $13.52 | $12.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.25 | 0.13 | 0.16 | 0.11 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.12 | 3.76 | 2.03 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.37 | 3.89 | 2.19 | 0.86 | 1.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.11 | ) | (0.10 | ) | (0.14 | ) | (0.08 | ) | (0.04 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.90 | ) | (0.98 | ) | (0.64 | ) | (0.39 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.92 | $18.45 | $15.54 | $13.99 | $13.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 7.67 | 25.44 | 16.19 | 6.86 | 13.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $228 | $75 | $5 | $1 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.08 | 1.11 | 1.63 | 2.35 | 2.81 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.97 | 1.01 | 1.09 | 1.25 | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.31 | 0.75 | 1.09 | 0.85 | 0.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
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 R5 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.47 | $15.57 | $14.00 | $13.53 | $12.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.24 | 0.18 | 0.20 | 0.15 | 0.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.19 | 3.76 | 2.04 | 0.74 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.43 | 3.94 | 2.24 | 0.89 | 1.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.17 | ) | (0.16 | ) | (0.17 | ) | (0.11 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.96 | ) | (1.04 | ) | (0.67 | ) | (0.42 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.94 | $18.47 | $15.57 | $14.00 | $13.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 7.98 | 25.71 | 16.55 | 7.20 | 13.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $376 | $591 | $415 | $33 | $15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.73 | 0.74 | 0.78 | 0.90 | 1.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.72 | 0.73 | 0.78 | 0.90 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.27 | 1.05 | 1.42 | 1.19 | 0.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
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 R6 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.47 | $15.57 | $14.00 | $12.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.31 | 0.19 | 0.19 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.12 | 3.75 | 2.06 | 2.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.43 | 3.94 | 2.25 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.17 | ) | (0.16 | ) | (0.18 | ) | (0.13 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.96 | ) | (1.04 | ) | (0.68 | ) | (0.44 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.94 | $18.47 | $15.57 | $14.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.99 | 25.72 | 16.60 | 19.09 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,444 | $356 | $118 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.72 | 0.74 | 0.82 | 2.32 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 0.73 | 0.82 | 0.86 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.63 | 1.06 | 1.28 | 1.31 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 6 |
1 | The inception date for Class R6 shares is 9-1-11. | ||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class NAV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.47 | $15.57 | $14.00 | $13.53 | $12.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.27 | 0.19 | 0.20 | 0.16 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.16 | 3.75 | 2.05 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.43 | 3.94 | 2.25 | 0.91 | 1.64 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.17 | ) | (0.16 | ) | (0.18 | ) | (0.13 | ) | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.79 | ) | (0.88 | ) | (0.50 | ) | (0.31 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.96 | ) | (1.04 | ) | (0.68 | ) | (0.44 | ) | (0.15 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.94 | $18.47 | $15.57 | $14.00 | $13.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 7.98 | 25.73 | 16.66 | 7.38 | 13.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $844 | $543 | $524 | $338 | $405 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.69 | 0.71 | 0.74 | 0.77 | 0.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 0.71 | 0.74 | 0.77 | 0.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.45 | 1.09 | 1.40 | 1.28 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 44 | 45 | 44 | 44 | 50 |
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 Disciplined Value 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 provide long-term growth of capital primarily through investments in equity securities. Current income is a secondary 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 I shares are offered to institutions and certain investors. Class B and Class I2 shares are closed to new 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 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, and 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. 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.
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, including registered investment companies. 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 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.
As of March 31, 2015, all investments are categorized as Level 1 under the hierarchy described above.
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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. 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. 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 John Hancock Collateral Trust (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.
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 March 31, 2015 were $3,309. For the year ended March 31, 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
32
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 March 31, 2015, the fund has a capital loss carryforward of $53,166,533 available to offset future net realized capital gains. This carryforward expires as follows: March 31, 2016 - $10,552,858 and March 31, 2017 - $42,613,675.
It is estimated that $50,300,349 of the loss carryforward, which was acquired on July 10, 2009, in a merger with John Hancock Classic Value Fund II, will likely expire unused because of limitations of its use under tax rules.
As of March 31, 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 March 31, 2015 and 2014 was as follows:
March 31, 2015 | March 31, 2014 | |||||||
Ordinary Income | $153,764,113 | $123,594,138 | ||||||
Long-Term Capital Gain | 442,052,580 | 249,838,081 | ||||||
Total | $595,816,693 | $373,432,219 |
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $90,423,723 of undistributed ordinary income and $174,065,116 of undistributed long-term capital gain.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from 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.
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
33
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. Effective January 1, 2015, 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) 0.750% of the first $500 million of the fund's average daily net assets; (b) 0.725% of the next $500 million of the fund's average daily net assets; (c) 0.700% of the next $500 million of the fund's average daily net assets; (d) 0.675% of the next $1 billion of the fund's average daily net assets; (e) 0.650% of the next $10 billion of the fund's average daily net assets; and (f) 0.625% of the fund's average daily net assets in excess of $12.5 billion. The Advisor has a subadvisory agreement with Boston Partners, a division of Robeco Investment Management, Inc. The fund is not responsible for payment of subadvisory fees.
Prior to January 1, 2015, the fund had an investment management agreement with the Advisor under which the fund paid a daily management fee to the Advisor, on an annual basis, equal to the sum of: (a) 0.750% of the first $500 million of the fund's average daily net assets; (b) 0.725% of the next $500 million of the fund's average daily net assets; (c) 0.700% of the next $500 million of the fund's average daily net assets; (d) 0.675% of the next $1 billion of the fund's average daily net assets; and (e) 0.650% of the fund's average daily net assets in excess of $2.5 billion.
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 March 31, 2015, the 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 reimburse or limit certain expenses for certain share classes of the fund. This agreement excludes certain expenses such as taxes, brokerage commissions, interest expense, acquired fund fees and expenses paid indirectly, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business and short dividend expense. These reimbursements and limits are such that these expenses will not exceed 0.85%, 1.57%, 1.32%, 1.47% and 1.07% for Class I2, Class R1, Class R2, Class R3 and Class R4 shares, respectively. The fee waivers and/or expense reimbursements will continue 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 agent 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 Advisor and the fund based upon a determination that this is appropriate under the circumstances at the time.
Prior to July 1, 2014, the Advisor had contractually agreed to reimburse or limit certain expenses for Class B and Class R6 shares of the fund. This agreement excludes certain expenses such as taxes, brokerage commissions, interest expense, acquired fund fees and expenses paid indirectly, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business and short dividend expense. These reimbursements and limits were such that these expenses would not exceed 2.05% and 0.82% for Class B and Class R6 shares, respectively.
34
The Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund, including transfer agent 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 (on an annualized basis) attributable to Class R6 shares (the Class Expense Waiver). The Class Expense Waiver expires on June 30, 2015, unless renewed by mutual agreement of the Advisor and the fund based upon a determination that this is appropriate under the circumstances at the time.
For the year ended March 31, 2015, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $237,157 | Class R3 | $2,121 | |||||||||||
Class B | 1,811 | Class R4 | 10,921 | |||||||||||
Class C | 17,790 | Class R5 | 42,964 | |||||||||||
Class I | �� | 439,829 | Class R6 | 261,438 | ||||||||||
Class I2 | 6,903 | Class NAV | 54,229 | |||||||||||
Class R1 | 1,767 | Total | $1,083,531 | |||||||||||
Class R2 | 6,601 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.65% 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 March 31, 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, and Class R4 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 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 R2 | 0.25% | 0.25% | |||||||||||||||
Class B | 1.00% | — | Class R3 | 0.50% | 0.15% | |||||||||||||||
Class C | 1.00% | — | Class R4 | 0.25% | 0.10% | |||||||||||||||
Class R1 | 0.50% | 0.25% | Class R5 | — | 0.05% |
Class A shares are currently charged 0.25% for Rule 12b-1 fees.
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 $142,393 for Class R4 shares for the year ended March 31, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $6,702,425 for the year ended March 31, 2015. Of this amount, $1,106,385 was retained and used for
35
printing prospectuses, advertising, sales literature and other purposes, $5,569,480 was paid as sales commissions to broker-dealers and $26,560 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 March 31, 2015, CDSCs received by the Distributor amounted to $3,633, $16,958 and $49,842 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 March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $6,614,919 | $3,316,839 | $204,613 | $218,646 | ||||||||||
Class B | 191,127 | 23,942 | 15,995 | 1,346 | ||||||||||
Class C | 2,381,433 | 297,792 | 31,208 | 16,302 | ||||||||||
Class I | — | 6,723,726 | 108,299 | 294,969 | ||||||||||
Class I2 | — | 101,360 | 23,424 | 1,923 | ||||||||||
Class R1 | 136,752 | 3,042 | 15,041 | 902 | ||||||||||
Class R2 | 435,764 | 14,218 | 24,430 | 2,746 | ||||||||||
Class R3 | 150,751 | 3,852 | 15,656 | 650 | ||||||||||
Class R4 | 495,214 | 23,375 | 24,381 | 6,198 | ||||||||||
Class R5 | 99,964 | 101,507 | 17,792 | 12,662 | ||||||||||
Class R6 | — | 135,230 | 46,697 | 17,409 | ||||||||||
Total | $10,505,924 | $10,744,883 | $527,536 | $573,753 |
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.
36
Note 5 — Fund share transactions
Transactions in fund shares for the years ended March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 56,841,350 | $1,096,662,923 | 66,468,713 | $1,184,749,184 | ||||||||||||||||||||||
Distributions reinvested | 6,096,271 | 113,512,560 | 6,584,301 | 117,266,393 | ||||||||||||||||||||||
Repurchased | (66,480,727 | ) | (1,293,771,383 | ) | (23,301,466 | ) | (412,475,664 | ) | ||||||||||||||||||
Net increase (decrease) | (3,543,106 | ) | ($83,595,900 | ) | 49,751,548 | $889,539,913 | ||||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 153,510 | $2,811,812 | 299,991 | $5,048,977 | ||||||||||||||||||||||
Distributions reinvested | 41,496 | 732,408 | 47,326 | 803,124 | ||||||||||||||||||||||
Repurchased | (241,758 | ) | (4,433,014 | ) | (187,971 | ) | (3,146,399 | ) | ||||||||||||||||||
Net increase (decrease) | (46,752 | ) | ($888,794 | ) | 159,346 | $2,705,702 | ||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 8,106,379 | $148,626,164 | 6,130,668 | $105,059,369 | ||||||||||||||||||||||
Distributions reinvested | 496,009 | 8,774,404 | 291,483 | 4,955,207 | ||||||||||||||||||||||
Repurchased | (1,710,943 | ) | (31,451,792 | ) | (763,651 | ) | (12,969,431 | ) | ||||||||||||||||||
Net increase | 6,891,445 | $125,948,776 | 5,658,500 | $97,045,145 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 247,842,283 | $4,642,725,693 | 157,732,340 | $2,694,195,154 | ||||||||||||||||||||||
Distributions reinvested | 15,934,799 | 288,419,864 | 8,290,598 | 143,676,056 | ||||||||||||||||||||||
Repurchased | (91,316,321 | ) | (1,722,347,847 | ) | (75,045,001 | ) | (1,302,744,499 | ) | ||||||||||||||||||
Net increase | 172,460,761 | $3,208,797,710 | 90,977,937 | $1,535,126,711 | ||||||||||||||||||||||
Class I2 shares | ||||||||||||||||||||||||||
Sold | 1,656,290 | $30,693,940 | 2,574,220 | $43,632,873 | ||||||||||||||||||||||
Distributions reinvested | 241,901 | 4,378,406 | 195,555 | 3,388,966 | ||||||||||||||||||||||
Repurchased | (1,269,673 | ) | (23,897,663 | ) | (880,136 | ) | (15,317,752 | ) | ||||||||||||||||||
Net increase | 628,518 | $11,174,683 | 1,889,639 | $31,704,087 | ||||||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 664,083 | $12,450,925 | 576,595 | $9,969,871 | ||||||||||||||||||||||
Distributions reinvested | 33,470 | 606,476 | 20,136 | 349,360 | ||||||||||||||||||||||
Repurchased | (264,782 | ) | (4,984,982 | ) | (240,894 | ) | (4,145,634 | ) | ||||||||||||||||||
Net increase | 432,771 | $8,072,419 | 355,837 | $6,173,597 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 6,005,834 | $112,997,028 | 1,928,799 | $34,271,275 | ||||||||||||||||||||||
Distributions reinvested | 215,651 | 3,905,448 | 35,013 | 607,469 | ||||||||||||||||||||||
Repurchased | (1,928,853 | ) | (36,498,709 | ) | (206,368 | ) | (3,669,309 | ) | ||||||||||||||||||
Net increase | 4,292,632 | $80,403,767 | 1,757,444 | $31,209,435 | ||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 1,086,659 | $20,350,336 | 616,053 | $10,858,653 | ||||||||||||||||||||||
Distributions reinvested | 58,249 | 1,054,888 | 25,112 | 435,694 | ||||||||||||||||||||||
Repurchased | (509,459 | ) | (9,588,533 | ) | (87,994 | ) | (1,516,936 | ) | ||||||||||||||||||
Net increase | 635,449 | $11,816,691 | 553,171 | $9,777,411 |
37
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 9,353,161 | $178,036,022 | 3,965,095 | $66,564,803 | ||||||||||||||||||||||
Distributions reinvested | 472,054 | 8,548,903 | 172,059 | 2,983,502 | ||||||||||||||||||||||
Repurchased | (1,824,905 | ) | (34,592,289 | ) | (419,640 | ) | (7,305,850 | ) | ||||||||||||||||||
Net increase | 8,000,310 | $151,992,636 | 3,717,514 | $62,242,455 | ||||||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 23,298,183 | $442,099,467 | 6,759,505 | $117,417,509 | ||||||||||||||||||||||
Distributions reinvested | 944,683 | 17,117,662 | 1,789,472 | 31,047,348 | ||||||||||||||||||||||
Repurchased | (36,393,140 | ) | (710,984,144 | ) | (3,235,655 | ) | (57,063,767 | ) | ||||||||||||||||||
Net increase (decrease) | (12,150,274 | ) | ($251,767,015 | ) | 5,313,322 | $91,401,090 | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 59,066,693 | $1,140,106,261 | 13,376,512 | $233,137,306 | ||||||||||||||||||||||
Distributions reinvested | 3,663,764 | 66,350,764 | 769,696 | 13,346,522 | ||||||||||||||||||||||
Repurchased | (5,757,098 | ) | (109,055,462 | ) | (2,434,397 | ) | (42,833,354 | ) | ||||||||||||||||||
Net increase | 56,973,359 | $1,097,401,563 | 11,711,811 | $203,650,474 | ||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 14,604,013 | $274,185,711 | 208,369 | $3,641,852 | ||||||||||||||||||||||
Distributions reinvested | 2,177,501 | 39,456,326 | 1,698,100 | 29,462,039 | ||||||||||||||||||||||
Repurchased | (1,608,154 | ) | (30,787,650 | ) | (6,139,985 | ) | (105,765,660 | ) | ||||||||||||||||||
Net increase (decrease) | 15,173,360 | $282,854,387 | (4,233,516 | ) | ($72,661,769 | ) | ||||||||||||||||||||
Total net increase | 249,748,473 | $4,642,210,923 | 167,612,553 | $2,887,914,251 |
Affiliates of the fund owned 100% of shares of beneficial interest of Class NAV on March 31, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $8,943,699,989 and $4,811,001,415, respectively, for the year ended March 31, 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 March 31, 2015, there were no affiliated funds with an ownership of 5%or more of the fund's net assets.
38
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock Disciplined Value 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 Disciplined Value Fund (the "Fund") at March 31, 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 March 31, 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
May 18, 2015
39
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 March 31, 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.
The fund paid $442,052,580 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.
40
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
41
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
42
Independent Trustees (continued)
Name, year of birth Position(s) held with fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee | ||||||
Gregory A. Russo, Born: 1949 | 2008 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
43
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. |
44
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 Robeco Investment Management, 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
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. |
45
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 Disciplined Value Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202362 | 340A 3/15 5/15 |
John Hancock
Core High Yield Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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
Core High Yield Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
22 | Financial statements | |||||||
26 | Financial highlights | |||||||
31 | Notes to financial statements | |||||||
41 | Auditor's report | |||||||
42 | Tax information | |||||||
43 | Trustees and Officers | |||||||
47 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks total return, consisting of a high level of current income and capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index is an unmanaged index composed of U.S. currency high-yield bonds issued by U.S. and non-U.S. issuers.
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
The fund underperformed its benchmark
Positioning in the energy sector contributed to the fund's underperformance relative to the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index.
Duration positioning acted as a headwind
The fund had a lower duration than its benchmark, which detracted from performance at a time of falling yields.
Individual security selection was a positive factor in fund performance
Positions in certain outperforming bonds aided returns during the annual period, as did an emphasis on higher-yielding securities.
PORTFOLIO COMPOSITION AS OF 3/31/15 (%)
A note about risks
Fixed-income investments are subject to interest-rate and credit 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. Frequent trading may increase fund transaction costs and increase taxable distributions. 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. Loan participations and assignments involve special types of risks, including credit risk, interest-rate risk, counterparty risk, liquidity risk, and the risks of being a lender. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. 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
An interview with Portfolio Manager Terry Carr, CFA, John Hancock Asset Management a division of Manulife Asset Management (North America) LLC
![terrycarr.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000763/terrycarr.jpg)
Terry Carr, CFA
Portfolio Manager
John Hancock Asset Management
Can you describe the market environment of the past 12 months?
The 12-month period brought substantial shifts within the high-yield market. During the first three months of the reporting period, high-yield bonds performed very well as investors responded favorably to the backdrop of improving economic growth and low defaults among high-yield issuers. In addition, the unattractive yields on government bonds worldwide helped fuel continued demand for higher-yielding investments.
In July, however, the environment began to shift due to weakness in the price of oil. Energy companies represent a relatively large percentage of the issuers in the high-yield market, so falling oil prices fueled selling in this sector. As the downturn in oil prices accelerated through the second half of 2014, the weakness in the energy sector spilled over to the entire market as investors pulled cash from high-yield mutual funds and exchange-traded portfolios. The sell-off reached a crescendo in the illiquid holiday market conditions of mid-December, but the market subsequently rebounded due to a stabilization in oil prices and growing confidence that the U.S. Federal Reserve (Fed) will raise interest rates in a gradual fashion. The late rally enabled the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index, the fund's benchmark, to finish the 12-month period in positive territory.
What aspects of the fund's positioning hurt performance?
Two factors stood out as being detractors from the fund's 12-month results. First, the fund came into the fourth calendar quarter with an overweight (above-benchmark position) in the energy sector, which meant that it was negatively impacted by the sharp downturn in the sector. The largest individual detractors were weaker energy services and exploration and production issuers such as Midstates Petroleum Company, Inc., Halcon Resources Corp., and Permian Holdings, Inc., among
4
QUALITY COMPOSITION AS OF 3/31/15 (%)
5
What factors helped fund performance during the period?
In addition, the fund benefited from our emphasis on higher-yielding securities within the asset class. At a time of weak price performance for the high-yield bond market, yield played a meaningful role in total return.
How was the fund positioned at the end of the period?
We have gradually increased the fund's credit quality by reducing its allocation to CCC-rated debt and raising its weighting in BB-rated securities. We believe this is an appropriate positioning for an environment likely to be characterized by elevated headline risk and above-average volatility.
SECTOR COMPOSITION AS OF 3/31/15 (%)
6
The fund continues to hold a modest allocation to senior loans, or term loans. We are focused on security-specific opportunities in this area, as we don't see a meaningful degree of upside for the asset class as a whole. While investors have been attracted to senior loans due to their floating rates, it's important to keep in mind that most senior loans have floors, or a minimum level that the federal funds rate or London Interbank Offered Rate need to reach before the floating-rate feature kicks in. Since both rates are well below these floors, we do not see a great deal of value in paying for this feature.
The vast majority of the portfolio is invested in the United States, as we continue to find the best values in the domestic market. European high-yield debt has rallied quite a bit in recent months, so the risk/reward profile has become less compelling. The fund does hold a modest weighting in Europe, however, with an emphasis on security-specific opportunities where valuations remain attractive.
MANAGED BY
![]() | Terry Carr, CFA On the fund since inception Investing since 1986 | ||||
![]() | Konstantin Kizunov, CFA On the fund since inception Investing since 1996 | ||||
![]() | Richard Kos, CFA On the fund since inception Investing since 1993 | ||||
![]() |
COUNTRY COMPOSITION AS OF 3/31/15 (%)
United States | 78.0 | ||||
Canada | 12.0 | ||||
Luxembourg | 4.0 | ||||
United Kingdom | 1.8 | ||||
France | 1.2 | ||||
Greece | 1.0 | ||||
Switzerland | 0.7 | ||||
Barbados | 0.6 | ||||
Australia | 0.5 | ||||
Cayman Islands | 0.1 | ||||
Finland | 0.1 | ||||
Total | 100.0 | ||||
As a percentage of net assets. |
7
TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 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 inception2 | 5-year | Since inception2 | as of 3-31-15 | as of 3-31-15 | |||||||||||||||||||||||||||||
Class A | -4.03 | 8.46 | 12.48 | 50.09 | 100.64 | 6.28 | 6.27 | ||||||||||||||||||||||||||||
Class C3 | -1.80 | 8.13 | 11.98 | 47.80 | 95.37 | 5.77 | 5.77 | ||||||||||||||||||||||||||||
Class I4 | 0.14 | 9.67 | 13.60 | 58.66 | 112.74 | 6.82 | 6.81 | ||||||||||||||||||||||||||||
Class R23,4 | -0.33 | 9.10 | 13.01 | 54.54 | 106.34 | — | — | ||||||||||||||||||||||||||||
Class R43,4 | -0.18 | 9.26 | 13.18 | 55.69 | 108.16 | — | — | ||||||||||||||||||||||||||||
Class R63,4 | 0.25 | 9.73 | 13.68 | 59.12 | 113.60 | — | — | ||||||||||||||||||||||||||||
Class NAV3,4 | 0.35 | 9.74 | 13.68 | 59.14 | 113.60 | 6.94 | 6.93 | ||||||||||||||||||||||||||||
Index† | 2.06 | 8.39 | 13.74 | 49.58 | 114.35 | — | — |
Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 4% and the applicable contingent deferred sales charge (CDSC) on Class C shares. The returns for Class A shares have been adjusted to reflect the reduction in the maximum sales charge from 4.5% to 4.0%, effective 2-3-14. 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 R4, 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 C | Class I | Class R2 | Class R4 | Class R6 | Class NAV | |||||||||||||||||
Gross (%) | 1.14 | 2.20 | 0.90 | 1.40 | 1.25 | 0.81 | 0.72 | ||||||||||||||||
Net (%) | 1.14 | 1.93 | 0.87 | 1.32 | 1.07 | 0.72 | 0.72 |
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 Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Core High Yield Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index ($) | |||||||||||
Class C3,5 | 4-30-09 | 19,537 | 19,537 | 21,435 | ||||||||||
Class I4 | 4-30-09 | 21,274 | 21,274 | 21,435 | ||||||||||
Class R23,4 | 4-30-09 | 20,634 | 20,634 | 21,435 | ||||||||||
Class R43,4 | 4-30-09 | 20,816 | 20,816 | 21,435 | ||||||||||
Class R63,4 | 4-30-09 | 21,360 | 21,360 | 21,435 | ||||||||||
Class NAV3,4 | 4-30-09 | 21,360 | 21,360 | 21,435 |
The values shown in the chart for Class A shares with maximum sales charge have been adjusted to reflect the reduction in the Class A maximum sales charge from 4.5% to 4.0%, which became effective on 2-3-14.
The Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index is an unmanaged index composed of U.S. currency high-yield bonds issued by U.S. and non-U.S. issuers.
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 yield reflects what the yield would have been without the effect of reimbursements and waivers. |
2 | From 4-30-09. |
3 | Class C shares were first offered on 3-27-13; Class NAV shares were first offered on 8-28-14; Class R2, Class R4, and Class R6 shares were first offered on 3-27-15. The returns prior to these dates are those of Class A shares that have been recalculated to reflect the gross fees and expenses of Class C, Class NAV, Class R2, Class R4, and Class R6 shares, as applicable. |
4 | For certain types of investors, as described in the fund's prospectuses. |
5 | 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 October 1, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $988.30 | $5.25 | 1.06% | ||||||||||
Class C | 1,000.00 | 983.50 | 9.10 | 1.84% | ||||||||||
Class I | 1,000.00 | 989.60 | 3.97 | 0.80% | ||||||||||
Class R22 | 1,000.00 | 1,001.90 | 0.15 | 1.32% | ||||||||||
Class R42 | 1,000.00 | 1,001.90 | 0.12 | 1.07% | ||||||||||
Class R62 | 1,000.00 | 1,001.90 | 0.07 | 0.67% | ||||||||||
Class NAV | 1,000.00 | 989.40 | 3.32 | 0.67% |
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 March 31, 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 October 1, 2014, with the same investment held until March 31, 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.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,019.60 | $5.34 | 1.06% | ||||||||||
Class C | 1,000.00 | 1,015.80 | 9.25 | 1.84% | ||||||||||
Class I | 1,000.00 | 1,020.90 | 4.03 | 0.80% | ||||||||||
Class R2 | 1,000.00 | 1,018.30 | 6.64 | 1.32% | ||||||||||
Class R4 | 1,000.00 | 1,019.60 | 5.39 | 1.07% | ||||||||||
Class R6 | 1,000.00 | 1,021.60 | 3.38 | 0.67% | ||||||||||
Class NAV | 1,000.00 | 1,021.60 | 3.38 | 0.67% |
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 182/365 (to reflect the one-half year period). |
2 | The inception date for Class R2, Class R4 and Class R6 shares is 3-27-15. Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 4/365 (to reflect the period). |
11
Fund's investments
As of 3-31-15 | ||||||||||||||||||||||||||
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Corporate bonds 81.8% | $676,823,709 | |||||||||||||||||||||||||
(Cost $707,437,030) | ||||||||||||||||||||||||||
Consumer discretionary 15.3% | 126,932,719 | |||||||||||||||||||||||||
Auto components 1.2% | ||||||||||||||||||||||||||
Icahn Enterprises LP | 5.875 | 02-01-22 | 5,000,000 | 5,150,000 | ||||||||||||||||||||||
Stackpole International Intermediate Company SA (S) | 7.750 | 10-15-21 | 4,840,000 | 4,791,600 | ||||||||||||||||||||||
Diversified consumer services 0.1% | ||||||||||||||||||||||||||
Speedy Cash Intermediate Holdings Corp. (S) | 10.750 | 05-15-18 | 1,000,000 | 972,500 | ||||||||||||||||||||||
Hotels, restaurants and leisure 1.2% | ||||||||||||||||||||||||||
Caesars Entertainment Operating Company, Inc. (H) | 11.250 | 06-01-17 | 250,000 | 181,250 | ||||||||||||||||||||||
Great Canadian Gaming Corp. | 6.625 | 07-25-22 | CAD | 2,000,000 | 1,661,995 | |||||||||||||||||||||
Scientific Games International, Inc. (S) | 7.000 | 01-01-22 | 8,000,000 | 8,180,000 | ||||||||||||||||||||||
Household durables 3.3% | ||||||||||||||||||||||||||
Argos Merger Sub, Inc. (S) | 7.125 | 03-15-23 | 1,400,000 | 1,450,750 | ||||||||||||||||||||||
Beazer Homes USA, Inc. | 9.125 | 05-15-19 | 3,000,000 | 3,112,500 | ||||||||||||||||||||||
Brookfield Residential Properties, Inc. (S) | 6.500 | 12-15-20 | 3,340,000 | 3,490,300 | ||||||||||||||||||||||
Century Communities,Inc. | 6.875 | 05-15-22 | 945,000 | 935,550 | ||||||||||||||||||||||
Meritage Homes Corp. | 7.000 | 04-01-22 | 1,000,000 | 1,072,500 | ||||||||||||||||||||||
Modular Space Corp. (S) | 10.250 | 01-31-19 | 9,125,000 | 7,254,375 | ||||||||||||||||||||||
Standard Pacific Corp. | 5.875 | 11-15-24 | 1,690,000 | 1,736,475 | ||||||||||||||||||||||
The Ryland Group, Inc. | 5.375 | 10-01-22 | 1,000,000 | 997,500 | ||||||||||||||||||||||
William Lyon Homes, Inc. | 5.750 | 04-15-19 | 640,000 | 646,400 | ||||||||||||||||||||||
William Lyon Homes, Inc. | 7.000 | 08-15-22 | 6,210,000 | 6,404,050 | ||||||||||||||||||||||
Internet and catalog retail 0.3% | ||||||||||||||||||||||||||
Netflix, Inc. | 5.750 | 03-01-24 | 2,125,000 | 2,164,844 | ||||||||||||||||||||||
Media 6.2% | ||||||||||||||||||||||||||
Altice Financing SA (S) | 6.500 | 01-15-22 | 1,520,000 | 1,562,750 | ||||||||||||||||||||||
Altice Financing SA (S) | 6.625 | 02-15-23 | 3,000,000 | 3,090,000 | ||||||||||||||||||||||
Altice Finco SA (S) | 8.125 | 01-15-24 | 2,700,000 | 2,856,938 | ||||||||||||||||||||||
Altice SA (S) | 7.625 | 02-15-25 | 3,000,000 | 3,005,625 | ||||||||||||||||||||||
Altice SA (S) | 7.750 | 05-15-22 | 5,000,000 | 5,087,500 | ||||||||||||||||||||||
American Media, Inc. | 11.500 | 12-15-17 | 2,094,000 | 2,135,880 | ||||||||||||||||||||||
DISH DBS Corp. | 5.875 | 11-15-24 | 2,570,000 | 2,573,213 | ||||||||||||||||||||||
Gannett Company, Inc. (S) | 4.875 | 09-15-21 | 5,000,000 | 5,100,000 | ||||||||||||||||||||||
Gibson Brands, Inc. (S) | 8.875 | 08-01-18 | 490,000 | 490,613 | ||||||||||||||||||||||
LIN Television Corp. (S) | 5.875 | 11-15-22 | 825,000 | 841,500 | ||||||||||||||||||||||
Postmedia Network, Inc. | 12.500 | 07-15-18 | 2,000,000 | 2,090,000 | ||||||||||||||||||||||
Quebecor Media, Inc. (S) | 6.625 | 01-15-23 | CAD | 3,000,000 | 2,463,385 | |||||||||||||||||||||
Sinclair Television Group, Inc. (S) | 5.625 | 08-01-24 | 5,000,000 | 5,087,500 | ||||||||||||||||||||||
Sirius XM Radio, Inc. (S) | 6.000 | 07-15-24 | 9,500,000 | 9,975,000 | ||||||||||||||||||||||
SiTV LLC (S) | 10.375 | 07-01-19 | 2,250,000 | 2,013,750 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Consumer discretionary (continued) | ||||||||||||||||||||||||||
Media (continued) | ||||||||||||||||||||||||||
Videotron, Ltd. (S) | 5.375 | 06-15-24 | 3,055,000 | $3,146,650 | ||||||||||||||||||||||
Multiline retail 0.9% | ||||||||||||||||||||||||||
Family Tree Escrow LLC (S) | 5.250 | 03-01-20 | 3,955,000 | 4,142,863 | ||||||||||||||||||||||
Family Tree Escrow LLC (S) | 5.750 | 03-01-23 | 3,245,000 | 3,407,250 | ||||||||||||||||||||||
Specialty retail 2.1% | ||||||||||||||||||||||||||
Conn's, Inc. (S) | 7.250 | 07-15-22 | 3,500,000 | 3,150,000 | ||||||||||||||||||||||
DriveTime Automotive Group, Inc. (S) | 8.000 | 06-01-21 | 4,000,000 | 3,810,000 | ||||||||||||||||||||||
GRD Holdings III Corp. (S) | 10.750 | 06-01-19 | 3,000,000 | 3,262,500 | ||||||||||||||||||||||
Group 1 Automotive, Inc. (S) | 5.000 | 06-01-22 | 2,500,000 | 2,506,250 | ||||||||||||||||||||||
The Men's Wearhouse, Inc. (S) | 7.000 | 07-01-22 | 4,685,000 | 4,930,963 | ||||||||||||||||||||||
Consumer staples 5.2% | 42,619,801 | |||||||||||||||||||||||||
Food and staples retailing 0.8% | ||||||||||||||||||||||||||
Simmons Foods, Inc. (S) | 7.875 | 10-01-21 | 1,500,000 | 1,481,250 | ||||||||||||||||||||||
SUPERVALU, Inc. | 7.750 | 11-15-22 | 4,500,000 | 4,792,500 | ||||||||||||||||||||||
Food products 2.6% | ||||||||||||||||||||||||||
AGT Food & Ingredients, Inc. (S) | 9.000 | 02-14-18 | CAD | 2,000,000 | 1,682,776 | |||||||||||||||||||||
Dean Foods Company (S) | 6.500 | 03-15-23 | 6,000,000 | 6,030,000 | ||||||||||||||||||||||
Post Holdings, Inc. (S) | 6.000 | 12-15-22 | 580,000 | 559,700 | ||||||||||||||||||||||
Post Holdings, Inc. (S) | 6.750 | 12-01-21 | 6,775,000 | 6,842,750 | ||||||||||||||||||||||
Post Holdings, Inc. | 7.375 | 02-15-22 | 1,100,000 | 1,138,500 | ||||||||||||||||||||||
Southern States Cooperative, Inc. (S) | 10.000 | 08-15-21 | 6,000,000 | 5,670,000 | ||||||||||||||||||||||
Household products 0.4% | ||||||||||||||||||||||||||
HRG Group, Inc. | 7.875 | 07-15-19 | 2,830,000 | 2,978,575 | ||||||||||||||||||||||
Tobacco 1.4% | ||||||||||||||||||||||||||
Alliance One International, Inc. | 9.875 | 07-15-21 | 7,000,000 | 6,125,000 | ||||||||||||||||||||||
Vector Group, Ltd. | 7.750 | 02-15-21 | 5,000,000 | 5,318,750 | ||||||||||||||||||||||
Energy 9.4% | 77,452,585 | |||||||||||||||||||||||||
Energy equipment and services 1.4% | ||||||||||||||||||||||||||
Offshore Group Investment, Ltd. | 7.125 | 04-01-23 | 2,000,000 | 1,122,500 | ||||||||||||||||||||||
Parker Drilling Company | 6.750 | 07-15-22 | 290,000 | 229,825 | ||||||||||||||||||||||
Permian Holdings, Inc. (S) | 10.500 | 01-15-18 | 3,764,000 | 2,070,200 | ||||||||||||||||||||||
PHI, Inc. | 5.250 | 03-15-19 | 1,340,000 | 1,212,700 | ||||||||||||||||||||||
Pioneer Energy Services Corp. | 6.125 | 03-15-22 | 440,000 | 334,400 | ||||||||||||||||||||||
Seventy Seven Energy, Inc. | 6.500 | 07-15-22 | 5,130,000 | 2,385,450 | ||||||||||||||||||||||
Teine Energy, Ltd. (S) | 6.875 | 09-30-22 | 2,185,000 | 1,988,350 | ||||||||||||||||||||||
TerraForm Power Operating LLC (S) | 5.875 | 02-01-23 | 2,103,000 | 2,181,863 | ||||||||||||||||||||||
Oil, gas and consumable fuels 8.0% | ||||||||||||||||||||||||||
Arch Coal, Inc. (S) | 8.000 | 01-15-19 | 560,000 | 267,750 | ||||||||||||||||||||||
Bill Barrett Corp. | 7.625 | 10-01-19 | 1,000,000 | 940,000 | ||||||||||||||||||||||
BreitBurn Energy Partners LP | 7.875 | 04-15-22 | 3,000,000 | 2,160,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Energy (continued) | ||||||||||||||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||||||||||||||
Calumet Specialty Products Partners LP (S) | 6.500 | 04-15-21 | 8,000,000 | $7,760,000 | ||||||||||||||||||||||
Calumet Specialty Products Partners LP | 7.625 | 01-15-22 | 1,450,000 | 1,464,500 | ||||||||||||||||||||||
Citgo Holding, Inc. (S) | 10.750 | 02-15-20 | 5,000,000 | 5,150,000 | ||||||||||||||||||||||
Crestwood Midstream Partners LP (S) | 6.250 | 04-01-23 | 2,500,000 | 2,525,000 | ||||||||||||||||||||||
CSI Compressco LP (S) | 7.250 | 08-15-22 | 2,865,000 | 2,492,550 | ||||||||||||||||||||||
Energy XXI Gulf Coast, Inc. (S) | 11.000 | 03-15-20 | 3,000,000 | 2,853,750 | ||||||||||||||||||||||
EPL Oil & Gas, Inc. | 8.250 | 02-15-18 | 1,500,000 | 1,110,000 | ||||||||||||||||||||||
FTS International, Inc. (S) | 6.250 | 05-01-22 | 3,000,000 | 2,205,000 | ||||||||||||||||||||||
Halcon Resources Corp. | 8.875 | 05-15-21 | 2,400,000 | 1,674,000 | ||||||||||||||||||||||
Halcon Resources Corp. | 9.250 | 02-15-22 | 3,500,000 | 2,415,000 | ||||||||||||||||||||||
Jones Energy Holdings LLC | 6.750 | 04-01-22 | 805,000 | 752,675 | ||||||||||||||||||||||
Legacy Reserves LP | 8.000 | 12-01-20 | 4,000,000 | 3,280,000 | ||||||||||||||||||||||
Linn Energy LLC | 6.500 | 05-15-19 | 6,000,000 | 5,043,750 | ||||||||||||||||||||||
Midstates Petroleum Company, Inc. | 10.750 | 10-01-20 | 3,000,000 | 1,620,000 | ||||||||||||||||||||||
Rockies Express Pipeline LLC (S) | 6.850 | 07-15-18 | 8,000,000 | 8,640,000 | ||||||||||||||||||||||
Targa Resources Partners LP (S) | 5.000 | 01-15-18 | 3,000,000 | 3,090,000 | ||||||||||||||||||||||
Tesoro Logistics LP (S) | 5.500 | 10-15-19 | 805,000 | 829,150 | ||||||||||||||||||||||
Trilogy Energy Corp. (S) | 7.250 | 12-13-19 | CAD | 3,500,000 | 2,639,059 | |||||||||||||||||||||
Tullow Oil PLC (S) | 6.000 | 11-01-20 | 730,000 | 635,100 | ||||||||||||||||||||||
Tullow Oil PLC (S) | 6.250 | 04-15-22 | 1,590,000 | 1,375,350 | ||||||||||||||||||||||
Ultra Petroleum Corp. (S) | 5.750 | 12-15-18 | 2,500,000 | 2,256,250 | ||||||||||||||||||||||
Ultra Petroleum Corp. (S) | 6.125 | 10-01-24 | 2,000,000 | 1,715,000 | ||||||||||||||||||||||
WPX Energy, Inc. | 5.250 | 09-15-24 | 1,175,000 | 1,033,413 | ||||||||||||||||||||||
Financials 12.9% | 106,738,188 | |||||||||||||||||||||||||
Banks 2.8% | ||||||||||||||||||||||||||
Barclays Bank PLC | 7.625 | 11-21-22 | 3,000,000 | 3,511,875 | ||||||||||||||||||||||
Citigroup, Inc. (5.800% to 11-15-19, then 3 month LIBOR + 4.093%) (Q) | 5.800 | 11-15-19 | 5,000,000 | 5,012,500 | ||||||||||||||||||||||
Credit Agricole SA (8.125% to 9-19-18, then 5 year U.S. Swap Rate + 6.283%) (S) | 8.125 | 09-19-33 | 4,000,000 | 4,545,000 | ||||||||||||||||||||||
HSBC Holdings PLC (5.625% to 1-17-20, then 5 year ISDAFIX + 3.626%) (Q) | 5.625 | 01-17-20 | 1,630,000 | 1,655,469 | ||||||||||||||||||||||
HSBC Holdings PLC (6.375% to 3-30-25, then 5 year ISDAFIX + 4.368%) (Q) | 6.375 | 03-30-25 | 3,000,000 | 3,075,000 | ||||||||||||||||||||||
Societe Generale SA (8.250% to 11-29-18, then 5 year U.S. Swap Rate + 6.394%) (Q) | 8.250 | 11-29-18 | 5,000,000 | 5,312,500 | ||||||||||||||||||||||
Capital markets 1.2% | ||||||||||||||||||||||||||
Credit Suisse Group AG (7.500% to 12-11-23, then 5 year U.S. Swap Rate + 4.598%) (Q)(S) | 7.500 | 12-11-23 | 5,620,000 | 6,034,475 | ||||||||||||||||||||||
GFI Group, Inc. | 10.375 | 07-19-18 | 2,000,000 | 2,127,500 | ||||||||||||||||||||||
KCG Holdings, Inc. (S) | 8.250 | 06-15-18 | 2,000,000 | 2,110,000 | ||||||||||||||||||||||
Consumer finance 3.0% | ||||||||||||||||||||||||||
Cash America International, Inc. | 5.750 | 05-15-18 | 5,000,000 | 5,200,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Financials (continued) | ||||||||||||||||||||||||||
Consumer finance (continued) | ||||||||||||||||||||||||||
Credit Acceptance Corp. | 6.125 | 02-15-21 | 6,271,000 | $6,004,483 | ||||||||||||||||||||||
DFC Finance Corp. (S) | 10.500 | 06-15-20 | 4,000,000 | 3,130,000 | ||||||||||||||||||||||
Enova International, Inc. (S) | 9.750 | 06-01-21 | 2,000,000 | 1,900,000 | ||||||||||||||||||||||
First Cash Financial Services, Inc. | 6.750 | 04-01-21 | 2,605,000 | 2,683,150 | ||||||||||||||||||||||
TMX Finance LLC (S) | 8.500 | 09-15-18 | 7,948,000 | 5,643,080 | ||||||||||||||||||||||
Diversified financial services 2.5% | ||||||||||||||||||||||||||
General Electric Capital Corp. (6.250% to 12-15-22, then 3 month LIBOR + 4.704%) (Q) | 6.250 | 12-15-22 | 1,500,000 | 1,687,500 | ||||||||||||||||||||||
iPayment, Inc. (S) | 9.500 | 12-15-19 | 3,562,500 | 3,330,938 | ||||||||||||||||||||||
Jefferies Finance LLC (S) | 6.875 | 04-15-22 | 3,000,000 | 2,790,000 | ||||||||||||||||||||||
Jefferies Finance LLC (S) | 7.500 | 04-15-21 | 6,000,000 | 5,790,000 | ||||||||||||||||||||||
Nationstar Mortgage LLC | 6.500 | 06-01-22 | 7,000,000 | 6,720,000 | ||||||||||||||||||||||
Real estate investment trusts 0.8% | ||||||||||||||||||||||||||
CNL Lifestyle Properties, Inc. | 7.250 | 04-15-19 | 750,000 | 765,000 | ||||||||||||||||||||||
DuPont Fabros Technology LP | 5.875 | 09-15-21 | 1,100,000 | 1,135,750 | ||||||||||||||||||||||
iStar Financial, Inc. | 5.000 | 07-01-19 | 4,890,000 | 4,890,000 | ||||||||||||||||||||||
Real estate management and development 1.7% | ||||||||||||||||||||||||||
Forestar USA Real Estate Group, Inc. (S) | 8.500 | 06-01-22 | 1,665,000 | 1,606,725 | ||||||||||||||||||||||
Greystar Real Estate Partners LLC (S) | 8.250 | 12-01-22 | 7,000,000 | 7,332,500 | ||||||||||||||||||||||
Mattamy Group Corp. (S) | 6.500 | 11-15-20 | 3,500,000 | 3,368,750 | ||||||||||||||||||||||
Mattamy Group Corp. (S) | 6.875 | 11-15-20 | CAD | 2,000,000 | 1,579,093 | |||||||||||||||||||||
Thrifts and mortgage finance 0.9% | ||||||||||||||||||||||||||
Ladder Capital Finance Holdings LLLP (S) | 5.875 | 08-01-21 | 6,420,000 | 6,066,900 | ||||||||||||||||||||||
Ocwen Financial Corp. (S) | 6.625 | 05-15-19 | 2,000,000 | 1,730,000 | ||||||||||||||||||||||
Health care 4.1% | 34,140,074 | |||||||||||||||||||||||||
Health care equipment and supplies 1.2% | ||||||||||||||||||||||||||
Acadia Healthcare Company, Inc. (S) | 5.625 | 02-15-23 | 1,500,000 | 1,526,250 | ||||||||||||||||||||||
Centric Health Corp. | 8.625 | 04-18-18 | CAD | 10,000,000 | 6,317,950 | |||||||||||||||||||||
Universal Hospital Services, Inc. | 7.625 | 08-15-20 | 3,000,000 | 2,625,000 | ||||||||||||||||||||||
Health care providers and services 1.0% | ||||||||||||||||||||||||||
BioScrip, Inc. (S) | 8.875 | 02-15-21 | 2,625,000 | 2,359,219 | ||||||||||||||||||||||
OnCure Holdings, Inc. | 11.750 | 01-15-17 | 62,499 | 70,936 | ||||||||||||||||||||||
Vantage Oncology LLC (S) | 9.500 | 06-15-17 | 6,000,000 | 5,790,000 | ||||||||||||||||||||||
Pharmaceuticals 1.9% | ||||||||||||||||||||||||||
Endo Finance LLC (S) | 6.000 | 02-01-25 | 4,000,000 | 4,100,000 | ||||||||||||||||||||||
Valeant Pharmaceuticals International, Inc. (S) | 5.500 | 03-01-23 | 3,175,000 | 3,210,719 | ||||||||||||||||||||||
VRX Escrow Corp. (S) | 5.375 | 03-15-20 | 4,000,000 | 4,040,000 | ||||||||||||||||||||||
VRX Escrow Corp. (S) | 5.875 | 05-15-23 | 4,000,000 | 4,100,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Industrials 10.5% | $87,096,150 | |||||||||||||||||||||||||
Aerospace and defense 1.6% | ||||||||||||||||||||||||||
LMI Aerospace, Inc. (S) | 7.375 | 07-15-19 | 8,040,000 | 8,100,300 | ||||||||||||||||||||||
TransDigm, Inc. | 6.000 | 07-15-22 | 5,670,000 | 5,662,913 | ||||||||||||||||||||||
Building products 1.2% | ||||||||||||||||||||||||||
Associated Materials LLC | 9.125 | 11-01-17 | 3,000,000 | 2,617,500 | ||||||||||||||||||||||
NCI Building Systems, Inc. (S) | 8.250 | 01-15-23 | 2,000,000 | 2,115,000 | ||||||||||||||||||||||
Summit Materials LLC | 10.500 | 01-31-20 | 4,780,000 | 5,305,800 | ||||||||||||||||||||||
Commercial services and supplies 1.1% | ||||||||||||||||||||||||||
Casella Waste Systems, Inc. | 7.750 | 02-15-19 | 2,600,000 | 2,600,000 | ||||||||||||||||||||||
Garda World Security Corp. (S) | 7.250 | 11-15-21 | 110,000 | 108,075 | ||||||||||||||||||||||
GFL Environmental Corp. (S) | 7.500 | 06-18-18 | CAD | 1,196,000 | 930,322 | |||||||||||||||||||||
Safway Group Holding LLC (S) | 7.000 | 05-15-18 | 480,000 | 475,200 | ||||||||||||||||||||||
Tervita Corp. (S) | 10.875 | 02-15-18 | 450,000 | 249,750 | ||||||||||||||||||||||
The ADT Corp. | 4.125 | 06-15-23 | 5,000,000 | 4,675,000 | ||||||||||||||||||||||
Construction and engineering 1.6% | ||||||||||||||||||||||||||
AECOM (S) | 5.750 | 10-15-22 | 7,500,000 | 7,762,500 | ||||||||||||||||||||||
Evolution Escrow Issuer LLC (S) | 7.500 | 03-15-22 | 4,500,000 | 4,556,250 | ||||||||||||||||||||||
Michael Baker International, Inc. (S) | 8.250 | 10-15-18 | 900,000 | 884,250 | ||||||||||||||||||||||
Construction materials 0.3% | ||||||||||||||||||||||||||
Weekley Homes LLC | 6.000 | 02-01-23 | 2,500,000 | 2,393,750 | ||||||||||||||||||||||
Machinery 0.1% | ||||||||||||||||||||||||||
BlueLine Rental Finance Corp. (S) | 7.000 | 02-01-19 | 440,000 | 453,200 | ||||||||||||||||||||||
Marine 1.0% | ||||||||||||||||||||||||||
Navios Maritime Holdings, Inc. (S) | 7.375 | 01-15-22 | 8,810,000 | 8,215,325 | ||||||||||||||||||||||
Oil, gas and consumable fuels 0.6% | ||||||||||||||||||||||||||
Teekay Offshore Partners LP | 6.000 | 07-30-19 | 5,540,000 | 5,013,700 | ||||||||||||||||||||||
Professional services 0.4% | ||||||||||||||||||||||||||
Mustang Merger Corp. (S) | 8.500 | 08-15-21 | 3,000,000 | 3,037,500 | ||||||||||||||||||||||
Road and rail 0.2% | ||||||||||||||||||||||||||
The Hertz Corp. | 5.875 | 10-15-20 | 2,000,000 | 2,055,000 | ||||||||||||||||||||||
Trading companies and distributors 1.6% | ||||||||||||||||||||||||||
Aircastle, Ltd. | 5.500 | 02-15-22 | 6,205,000 | 6,600,569 | ||||||||||||||||||||||
Reliance Intermediate Holdings LP (S) | 6.500 | 04-01-23 | 6,000,000 | 6,135,000 | ||||||||||||||||||||||
WESCO Distribution, Inc. | 5.375 | 12-15-21 | 335,000 | 340,863 | ||||||||||||||||||||||
Transportation infrastructure 0.8% | ||||||||||||||||||||||||||
CHC Helicopter SA | 9.250 | 10-15-20 | 3,600,000 | 3,042,000 | ||||||||||||||||||||||
CHC Helicopter SA | 9.375 | 06-01-21 | 1,743,555 | 1,046,133 | ||||||||||||||||||||||
Florida East Coast Holdings Corp. (S) | 6.750 | 05-01-19 | 2,700,000 | 2,720,250 | ||||||||||||||||||||||
Information technology 3.2% | 26,727,756 | |||||||||||||||||||||||||
Communications equipment 0.6% | ||||||||||||||||||||||||||
Avaya, Inc. (S) | 7.000 | 04-01-19 | 3,000,000 | 2,977,500 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Information technology (continued) | ||||||||||||||||||||||||||
Communications equipment (continued) | ||||||||||||||||||||||||||
Avaya, Inc. (S) | 9.000 | 04-01-19 | 2,000,000 | $2,050,000 | ||||||||||||||||||||||
Electronic equipment, instruments and components 0.6% | ||||||||||||||||||||||||||
Zebra Technologies Corp. (S) | 7.250 | 10-15-22 | 4,740,000 | 5,107,350 | ||||||||||||||||||||||
Semiconductors and semiconductor equipment 1.8% | ||||||||||||||||||||||||||
Advanced Micro Devices, Inc. | 7.750 | 08-01-20 | 4,500,000 | 4,300,313 | ||||||||||||||||||||||
Entegris, Inc. (S) | 6.000 | 04-01-22 | 961,000 | 1,001,843 | ||||||||||||||||||||||
Micron Technology, Inc. (S) | 5.250 | 08-01-23 | 4,750,000 | 4,833,125 | ||||||||||||||||||||||
Micron Technology, Inc. (S) | 5.500 | 02-01-25 | 4,350,000 | 4,382,625 | ||||||||||||||||||||||
Software 0.2% | ||||||||||||||||||||||||||
Open Text Corp. (S) | 5.625 | 01-15-23 | 2,000,000 | 2,075,000 | ||||||||||||||||||||||
Materials 13.0% | 107,796,539 | |||||||||||||||||||||||||
Building materials 0.6% | ||||||||||||||||||||||||||
Building Materials Corp. of America (S) | 5.375 | 11-15-24 | 4,845,000 | 4,917,675 | ||||||||||||||||||||||
Chemicals 1.6% | ||||||||||||||||||||||||||
Hexion US Finance Corp. | 8.875 | 02-01-18 | 3,000,000 | 2,647,500 | ||||||||||||||||||||||
Momentive Performance Materials, Inc. | 3.880 | 10-24-21 | 2,000,000 | 1,770,000 | ||||||||||||||||||||||
Platform Specialty Products Corp. (S) | 6.500 | 02-01-22 | 5,125,000 | 5,355,625 | ||||||||||||||||||||||
Rain CII Carbon LLC (S) | 8.250 | 01-15-21 | 3,375,000 | 3,147,188 | ||||||||||||||||||||||
Construction materials 2.2% | ||||||||||||||||||||||||||
Algeco Scotsman Global Finance PLC (S) | 8.500 | 10-15-18 | 5,000,000 | 4,956,250 | ||||||||||||||||||||||
American Gilsonite Company (S) | 11.500 | 09-01-17 | 4,500,000 | 4,151,250 | ||||||||||||||||||||||
Hardwoods Acquisition, Inc. (S) | 7.500 | 08-01-21 | 9,300,000 | 8,881,500 | ||||||||||||||||||||||
Containers and packaging 1.3% | ||||||||||||||||||||||||||
Cascades, Inc. (S) | 5.500 | 07-15-22 | 7,460,000 | 7,571,900 | ||||||||||||||||||||||
Sealed Air Corp. (S) | 4.875 | 12-01-22 | 1,710,000 | 1,744,200 | ||||||||||||||||||||||
Sealed Air Corp. (S) | 5.125 | 12-01-24 | 1,710,000 | 1,769,850 | ||||||||||||||||||||||
Metals and mining 4.4% | ||||||||||||||||||||||||||
Essar Steel Algoma, Inc. (S) | 9.500 | 11-15-19 | 4,000,000 | 3,470,000 | ||||||||||||||||||||||
First Quantum Minerals, Ltd. (S) | 7.250 | 10-15-19 | 6,000,000 | 5,610,000 | ||||||||||||||||||||||
First Quantum Minerals, Ltd. (S) | 7.250 | 05-15-22 | 2,750,000 | 2,536,875 | ||||||||||||||||||||||
FMG Resources August 2006 Pty, Ltd. (S) | 6.000 | 04-01-17 | 4,000,000 | 3,960,000 | ||||||||||||||||||||||
Hecla Mining Company | 6.875 | 05-01-21 | 1,800,000 | 1,593,000 | ||||||||||||||||||||||
Optima Specialty Steel, Inc. (S) | 12.500 | 12-15-16 | 250,000 | 255,000 | ||||||||||||||||||||||
Signode Industrial Group Lux SA (S) | 6.375 | 05-01-22 | 7,410,000 | 7,363,688 | ||||||||||||||||||||||
Taseko Mines, Ltd. | 7.750 | 04-15-19 | 6,000,000 | 4,320,000 | ||||||||||||||||||||||
Thompson Creek Metals Company, Inc. | 9.750 | 12-01-17 | 1,500,000 | 1,545,000 | ||||||||||||||||||||||
Thompson Creek Metals Company, Inc. | 12.500 | 05-01-19 | 7,000,000 | 6,020,000 | ||||||||||||||||||||||
Paper and forest products 2.9% | ||||||||||||||||||||||||||
Mercer International, Inc. | 7.000 | 12-01-19 | 4,000,000 | 4,140,000 | ||||||||||||||||||||||
Mercer International, Inc. | 7.750 | 12-01-22 | 2,000,000 | 2,120,000 | ||||||||||||||||||||||
Resolute Forest Products, Inc. | 5.875 | 05-15-23 | 7,358,000 | 7,071,038 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Materials (continued) | ||||||||||||||||||||||||||
Paper and forest products (continued) | ||||||||||||||||||||||||||
Tembec Industries, Inc. (S) | 9.000 | 12-15-19 | 10,000,000 | $10,150,000 | ||||||||||||||||||||||
UPM-Kymmene OYJ (S) | 7.450 | 11-26-27 | 600,000 | 729,000 | ||||||||||||||||||||||
Telecommunication services 5.2% | 43,014,915 | |||||||||||||||||||||||||
Diversified telecommunication services 4.1% | ||||||||||||||||||||||||||
Cincinnati Bell, Inc. | 8.375 | 10-15-20 | 1,000,000 | 1,063,750 | ||||||||||||||||||||||
Columbus International, Inc. (S) | 7.375 | 03-30-21 | 4,700,000 | 4,940,875 | ||||||||||||||||||||||
Frontier Communications Corp. | 6.250 | 09-15-21 | 1,130,000 | 1,135,650 | ||||||||||||||||||||||
Frontier Communications Corp. | 7.125 | 01-15-23 | 7,500,000 | 7,668,750 | ||||||||||||||||||||||
Frontier Communications Corp. | 8.500 | 04-15-20 | 1,000,000 | 1,122,500 | ||||||||||||||||||||||
GCI, Inc. (S) | 6.875 | 04-15-25 | 3,000,000 | 3,022,500 | ||||||||||||||||||||||
Goodman Networks, Inc. | 12.125 | 07-01-18 | 3,600,000 | 3,348,000 | ||||||||||||||||||||||
T-Mobile USA, Inc. | 6.000 | 03-01-23 | 6,000,000 | 6,148,140 | ||||||||||||||||||||||
Wind Acquisition Finance SA (S) | 7.375 | 04-23-21 | 5,000,000 | 5,187,500 | ||||||||||||||||||||||
Wireless telecommunication services 1.1% | ||||||||||||||||||||||||||
Sprint Capital Corp. | 6.900 | 05-01-19 | 1,000,000 | 1,033,750 | ||||||||||||||||||||||
Sprint Communications, Inc. | 6.000 | 11-15-22 | 2,000,000 | 1,900,000 | ||||||||||||||||||||||
Sprint Corp. | 7.125 | 06-15-24 | 6,575,000 | 6,443,500 | ||||||||||||||||||||||
Utilities 3.0% | 24,304,982 | |||||||||||||||||||||||||
Electric utilities 1.1% | ||||||||||||||||||||||||||
RJS Power Holdings LLC (S) | 5.125 | 07-15-19 | 8,900,000 | 8,766,500 | ||||||||||||||||||||||
Independent power and renewable electricity producers 1.9% | ||||||||||||||||||||||||||
Dynegy Finance I, Inc. (S) | 6.750 | 11-01-19 | 1,170,000 | 1,210,950 | ||||||||||||||||||||||
Dynegy Finance I, Inc. (S) | 7.625 | 11-01-24 | 1,615,000 | 1,691,713 | ||||||||||||||||||||||
Dynegy, Inc. | 5.875 | 06-01-23 | 6,585,000 | 6,403,913 | ||||||||||||||||||||||
GenOn Energy, Inc. | 7.875 | 06-15-17 | 2,000,000 | 1,990,000 | ||||||||||||||||||||||
NRG Energy, Inc. | 6.250 | 07-15-22 | 1,675,000 | 1,723,156 | ||||||||||||||||||||||
NRG Energy, Inc. | 6.250 | 05-01-24 | 2,500,000 | 2,518,750 | ||||||||||||||||||||||
Term loans (M) 11.9% | $98,865,247 | |||||||||||||||||||||||||
(Cost $103,401,498) | ||||||||||||||||||||||||||
Consumer discretionary 2.8% | 23,321,110 | |||||||||||||||||||||||||
Diversified consumer services 0.3% | ||||||||||||||||||||||||||
Orchard Acquisition Company | 7.000 | 02-07-19 | 2,345,217 | 2,278,770 | ||||||||||||||||||||||
Hotels, restaurants and leisure 0.2% | ||||||||||||||||||||||||||
Marina District Finance Company, Inc. | 6.500 | 08-15-18 | 1,680,184 | 1,688,165 | ||||||||||||||||||||||
Household durables 0.5% | ||||||||||||||||||||||||||
Norcraft Companies LP | 5.250 | 12-13-20 | 3,950,000 | 3,954,938 | ||||||||||||||||||||||
Media 0.5% | ||||||||||||||||||||||||||
Getty Images, Inc. | 4.750 | 10-18-19 | 2,962,121 | 2,491,144 | ||||||||||||||||||||||
SESAC Holdco II LLC | 5.000 | 02-08-19 | 1,943,855 | 1,937,781 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Consumer discretionary (continued) | ||||||||||||||||||||||||||
Specialty retail 0.7% | ||||||||||||||||||||||||||
Payless, Inc. | 5.000 | 03-11-21 | 1,985,000 | $1,891,209 | ||||||||||||||||||||||
Payless, Inc. | 8.500 | 03-11-22 | 210,000 | 193,200 | ||||||||||||||||||||||
Toys R Us Property Company I LLC | 6.000 | 08-21-19 | 4,396,850 | 4,188,000 | ||||||||||||||||||||||
Textiles, apparel and luxury goods 0.6% | ||||||||||||||||||||||||||
Charlotte Russe, Inc. | 6.750 | 05-21-19 | 3,940,000 | 3,841,500 | ||||||||||||||||||||||
Charlotte Russe, Inc. | 6.750 | 05-22-19 | 878,363 | 856,403 | ||||||||||||||||||||||
Consumer staples 1.2% | 10,032,323 | |||||||||||||||||||||||||
Food and staples retailing 0.4% | ||||||||||||||||||||||||||
Reddy Ice Corp. | 6.751 | 05-01-19 | 3,430,000 | 3,005,538 | ||||||||||||||||||||||
Reddy Ice Corp. | 10.750 | 11-01-19 | 500,000 | 380,000 | ||||||||||||||||||||||
Household products 0.8% | ||||||||||||||||||||||||||
The Sun Products Corp. | 5.500 | 03-23-20 | 6,910,237 | 6,646,785 | ||||||||||||||||||||||
Energy 2.2% | 18,309,396 | |||||||||||||||||||||||||
Energy equipment and services 0.4% | ||||||||||||||||||||||||||
Preferred Proppants LLC | 6.750 | 07-27-20 | 3,980,000 | 3,472,550 | ||||||||||||||||||||||
Oil, gas and consumable fuels 1.8% | ||||||||||||||||||||||||||
Arch Coal, Inc. | 6.250 | 05-16-18 | 7,901,304 | 6,093,880 | ||||||||||||||||||||||
Citgo Holding, Inc. | 9.500 | 05-12-18 | 4,987,500 | 4,956,328 | ||||||||||||||||||||||
Fieldwood Energy LLC | 8.375 | 09-30-20 | 5,205,000 | 3,786,638 | ||||||||||||||||||||||
Financials 1.2% | 9,850,813 | |||||||||||||||||||||||||
Diversified financial services 1.2% | ||||||||||||||||||||||||||
iPayment, Inc. | 6.750 | 05-08-17 | 4,000,000 | 3,911,000 | ||||||||||||||||||||||
PGX Holdings, Inc. | 6.250 | 09-29-20 | 5,925,000 | 5,939,813 | ||||||||||||||||||||||
Health care 0.5% | 4,362,761 | |||||||||||||||||||||||||
Health care providers and services 0.2% | ||||||||||||||||||||||||||
Western Dental Services, Inc. | 6.000 | 11-01-18 | 2,458,877 | 2,163,811 | ||||||||||||||||||||||
Pharmaceuticals 0.3% | ||||||||||||||||||||||||||
Qol Meds LLC | 5.500 | 07-15-20 | 2,198,950 | 2,198,950 | ||||||||||||||||||||||
Industrials 1.2% | 9,458,071 | |||||||||||||||||||||||||
Airlines 0.3% | ||||||||||||||||||||||||||
Air Canada | 5.500 | 09-26-19 | 2,654,938 | 2,682,594 | ||||||||||||||||||||||
Machinery 0.4% | ||||||||||||||||||||||||||
CPM Holdings, Inc. | 10.250 | 03-01-18 | 3,000,000 | 3,000,000 | ||||||||||||||||||||||
Road and rail 0.5% | ||||||||||||||||||||||||||
Livingston International, Inc. | 5.000 | 04-18-19 | 1,965,000 | 1,937,981 | ||||||||||||||||||||||
Livingston International, Inc. | 9.000 | 04-18-20 | 1,954,783 | 1,837,496 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Information technology 1.3% | $10,949,561 | |||||||||||||||||||||||||
Electronic equipment, instruments and components 0.6% | ||||||||||||||||||||||||||
Blue Coat Systems, Inc. | 9.500 | 06-28-20 | 5,000,000 | 5,112,500 | ||||||||||||||||||||||
IT services 0.1% | ||||||||||||||||||||||||||
Deltek, Inc. | 10.000 | 10-10-19 | 1,000,000 | 1,007,500 | ||||||||||||||||||||||
Software 0.6% | ||||||||||||||||||||||||||
Compuware Corp. | 6.250 | 12-15-21 | 4,987,500 | 4,829,561 | ||||||||||||||||||||||
Materials 0.6% | 4,962,375 | |||||||||||||||||||||||||
Chemicals 0.6% | ||||||||||||||||||||||||||
American Pacific Corp. | 7.000 | 02-27-19 | 4,950,000 | 4,962,375 | ||||||||||||||||||||||
Telecommunication services 0.9% | 7,618,837 | |||||||||||||||||||||||||
Diversified telecommunication services 0.9% | ||||||||||||||||||||||||||
Birch Communications, Inc. | 7.750 | 07-17-20 | 7,715,278 | 7,618,837 | ||||||||||||||||||||||
Shares | Value | |||||||||||||||||||||||||
Common stocks 0.1% | $821,460 | |||||||||||||||||||||||||
(Cost $598,460) | ||||||||||||||||||||||||||
Energy 0.0% | 40,960 | |||||||||||||||||||||||||
Energy equipment and services 0.0% | ||||||||||||||||||||||||||
TPT Acquisition, Inc. (I) | 2,560 | 40,960 | ||||||||||||||||||||||||
Financials 0.1% | 780,500 | |||||||||||||||||||||||||
Diversified financial services 0.1% | ||||||||||||||||||||||||||
iPayment, Inc. (I) | 223,000 | 780,500 | ||||||||||||||||||||||||
Preferred securities 0.8% | $6,722,223 | |||||||||||||||||||||||||
(Cost $6,679,500) | ||||||||||||||||||||||||||
Financials 0.7% | 5,617,735 | |||||||||||||||||||||||||
Consumer finance 0.7% | ||||||||||||||||||||||||||
Ally Financial, Inc., 7.000% (S) | 5,500 | 5,617,735 | ||||||||||||||||||||||||
Utilities 0.1% | 1,104,488 | |||||||||||||||||||||||||
Multi-utilities 0.1% | ||||||||||||||||||||||||||
Dominion Resources, Inc., 6.375% | 22,820 | 1,104,488 | ||||||||||||||||||||||||
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Escrow certificates 0.0% | $3,420 | |||||||||||||||||||||||||
(Cost $6,924) | ||||||||||||||||||||||||||
Health care 0.0% | 3,420 | |||||||||||||||||||||||||
OnCure Holdings, Inc. (I) | 11.750 | 05-15-17 | 175,000 | 3,420 |
Par value | Value | |||||||||||||||||||||||||
Short-term investments 1.9% | $15,916,000 | |||||||||||||||||||||||||
(Cost $15,916,000) | ||||||||||||||||||||||||||
Repurchase agreement 1.9% | 15,916,000 | |||||||||||||||||||||||||
Repurchase Agreement with State Street Corp. dated 3-31-15 at 0.000% to be repurchased at $15,916,000 on 4-1-15, collateralized by $14,710,000 U.S. Treasury Notes, 3.625% due 8-15-19 (valued at $16,236,898, including interest) | 15,916,000 | 15,916,000 | ||||||||||||||||||||||||
Total investments (Cost $834,039,412)† 96.5% | $799,152,059 | |||||||||||||||||||||||||
Other assets and liabilities, net 3.5% | $28,570,349 | |||||||||||||||||||||||||
Total net assets 100.0% | $827,722,408 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | |||||||||||
^All par values are denominated in U.S. dollars unless otherwise indicated. | |||||||||||
Key to Currency Abbreviations | |||||||||||
CAD | Canadian Dollar | ||||||||||
Key to Security Abbreviations and Legend | |||||||||||
ISDAFIX | International Swaps and Derivatives Association Fixed Interest Rate Swap Rate | ||||||||||
LIBOR | London Interbank Offered Rate | ||||||||||
(H) | Non-income producing - Issuer is in default. | ||||||||||
(I) | Non-income producing security. | ||||||||||
(M) | Term loans are variable rate obligations. The coupon rate shown represents the rate at period end. | ||||||||||
(Q) | Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date. | ||||||||||
(S) | These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $426,273,198 or 51.5% of the fund's net assets as of 3-31-15. | ||||||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $834,916,494. Net unrealized depreciation aggregated $35,764,435, of which $11,872,999 related to appreciated investment securities and $47,637,434 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | |||||||||||||||
Investments, at value (Cost $834,039,412) | $799,152,059 | ||||||||||||||
Cash | 15,685,631 | ||||||||||||||
Foreign currency, at value (Cost $332,198) | 327,762 | ||||||||||||||
Receivable for investments sold | 2,864,396 | ||||||||||||||
Receivable for fund shares sold | 2,548,427 | ||||||||||||||
Receivable for forward foreign currency exchange contracts | 313,875 | ||||||||||||||
Dividends and interest receivable | 14,824,764 | ||||||||||||||
Receivable due from advisor | 117 | ||||||||||||||
Other receivables and prepaid expenses | 164,608 | ||||||||||||||
Total assets | 835,881,639 | ||||||||||||||
Liabilities | |||||||||||||||
Payable for investments purchased | 2,973,150 | ||||||||||||||
Payable for fund shares repurchased | 4,777,717 | ||||||||||||||
Distributions payable | 81,416 | ||||||||||||||
Payable to affiliates | |||||||||||||||
Accounting and legal services fees | 12,605 | ||||||||||||||
Transfer agent fees | 70,232 | ||||||||||||||
Trustees' fees | 819 | ||||||||||||||
Other liabilities and accrued expenses | 243,292 | ||||||||||||||
Total liabilities | 8,159,231 | ||||||||||||||
Net assets | $827,722,408 | ||||||||||||||
Net assets consist of | |||||||||||||||
Paid-in capital | $871,365,779 | ||||||||||||||
Undistributed net investment income | 1,778,376 | ||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | (10,817,633 | ) | |||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | (34,604,114 | ) | |||||||||||||
Net assets | $827,722,408 | ||||||||||||||
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 ($373,232,027 ÷ 36,008,289 shares) | $10.37 | |||||||||||
Class C ($63,989,849 ÷ 6,174,703 shares) | $10.36 | |||||||||||
Class I ($277,156,718 ÷ 26,733,646 shares) | $10.37 | |||||||||||
Class R2 ($100,233 ÷ 9,662 shares) | $10.37 | |||||||||||
Class R4 ($100,236 ÷ 9,662 shares) | $10.37 | |||||||||||
Class R6 ($100,241 ÷ 9,662 shares) | $10.37 | |||||||||||
Class NAV ($113,043,104 ÷ 10,901,914 shares) | $10.37 | |||||||||||
Maximum offering price per share | ||||||||||||
Class A (net asset value per share ÷ 96%) | $10.80 |
STATEMENT OF OPERATIONS For the year ended 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Interest | $48,830,768 | |||||||||||||||||||||||||||||||||||||||
Dividends | 150,804 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 48,981,572 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 4,416,185 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 1,416,350 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 83,690 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 766,711 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 9,934 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 81,411 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 53,175 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 80,269 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 95,062 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 85,203 | |||||||||||||||||||||||||||||||||||||||
Other | 11,171 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 7,099,161 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (51,920 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 7,047,241 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 41,934,331 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments and foreign currency transactions | (6,813,349 | ) | ||||||||||||||||||||||||||||||||||||||
(6,813,349 | ) | |||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments and translation of assets and liabilities in foreign currencies | (44,471,026 | ) | ||||||||||||||||||||||||||||||||||||||
(44,471,026 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (51,284,375 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($9,350,044 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $41,934,331 | $21,572,753 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) | (6,813,349 | ) | 2,484,425 | ||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (44,471,026 | ) | 2,339,310 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (9,350,044 | ) | 26,396,488 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (22,338,021 | ) | (17,157,660 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (2,756,952 | ) | (609,633 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (14,286,376 | ) | (4,729,965 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (4,714,036 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (1,434,267 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (77,571 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (413,673 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | (44,095,385 | ) | (24,422,769 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 420,856,660 | 210,110,747 | |||||||||||||||||||||||||||||||||||||||||||
Total increase | 367,411,231 | 212,084,466 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 460,311,177 | 248,226,711 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $827,722,408 | $460,311,177 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $1,778,376 | $596,995 |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.03 | $11.02 | $10.52 | $11.35 | $11.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.63 | 0.71 | 0.74 | 1.07 | 1.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.63 | ) | 0.10 | 0.53 | (0.25 | ) | 0.92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | — | 0.81 | 1.27 | 0.82 | 2.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.66 | ) | (0.74 | ) | (0.76 | ) | (1.04 | ) | (1.20 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.06 | ) | (0.01 | ) | (0.61 | ) | (1.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.66 | ) | (0.80 | ) | (0.77 | ) | (1.65 | ) | (2.32 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.37 | $11.03 | $11.02 | $10.52 | $11.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2,3 | (0.03 | ) | 7.62 | 12.59 | 8.12 | 19.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $373 | $313 | $208 | $16 | $17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.08 | 1.15 | 1.30 | 1.68 | 1.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.07 | 1.15 | 1.18 | 1.24 | 1.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 5.87 | 6.45 | 6.83 | 9.82 | 9.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 26 | 15 | 64 | 207 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||
2 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class C Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.03 | $11.02 | $11.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.55 | 0.61 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.64 | ) | 0.10 | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.09 | ) | 0.71 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.58 | ) | (0.64 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.06 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.58 | ) | (0.70 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.36 | $11.03 | $11.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (0.86 | ) | 6.73 | 0.09 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $64 | $28 | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.83 | 2.22 | 16.98 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.82 | 1.93 | 1.93 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 5.12 | 5.58 | 5.54 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 26 | 15 | 9 |
1 | The inception date for Class C shares is 3-27-13. | ||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||
4 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||
7 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||
8 | Annualized. | ||||||||||||||||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 4-1-12 to 3-31-13. |
Class I Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.04 | $11.02 | $10.52 | $11.36 | $11.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income1 | 0.66 | 0.73 | 0.77 | 1.10 | 1.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.64 | ) | 0.12 | 0.53 | (0.26 | ) | 0.92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.02 | 0.85 | 1.30 | 0.84 | 2.13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.69 | ) | (0.77 | ) | (0.79 | ) | (1.07 | ) | (1.24 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.06 | ) | (0.01 | ) | (0.61 | ) | (1.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.69 | ) | (0.83 | ) | (0.80 | ) | (1.68 | ) | (2.36 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.37 | $11.04 | $11.02 | $10.52 | $11.36 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)2 | 0.14 | 8.01 | 12.90 | 8.39 | 19.87 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $277 | $119 | $40 | — | 3 | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.81 | 0.89 | 1.07 | 4.23 | 1.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.80 | 0.87 | 0.87 | 0.90 | 0.85 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.13 | 6.71 | 7.06 | 10.17 | 10.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 26 | 15 | 64 | 207 |
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 | Less than $500,000. |
Class R2 Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.35 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.01 | ||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.01 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.02 | ||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.37 | ||||||||||||||||||||||||||||||||||||
Total return (%) | 0.19 | 3 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 4 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.03 | 5 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.32 | 5 | |||||||||||||||||||||||||||||||||||
Net investment income | 7.59 | 5 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 6 |
1 | The inception date for Class R2 shares is 3-27-15. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Not annualized. | ||||||||||||||||||||||
4 | Less than $500,000. | ||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class R4 Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.35 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.01 | ||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.01 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.02 | ||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.37 | ||||||||||||||||||||||||||||||||||||
Total return (%) | 0.19 | 3 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 4 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.03 | 5 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.07 | 5 | |||||||||||||||||||||||||||||||||||
Net investment income | 7.84 | 5 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 6 |
1 | The inception date for Class R4 shares is 3-27-15. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Not annualized. | ||||||||||||||||||||||
4 | Less than $500,000. | ||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class R6 Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.35 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.01 | ||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.01 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.02 | ||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.37 | ||||||||||||||||||||||||||||||||||||
Total return (%) | 0.19 | 3 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 4 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.86 | 5 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.67 | 5 | |||||||||||||||||||||||||||||||||||
Net investment income | 8.24 | 5 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 6 |
1 | The inception date for Class R6 shares is 3-27-15. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Not annualized. | ||||||||||||||||||||||
4 | Less than $500,000. | ||||||||||||||||||||||
5 | Annualized. | ||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class NAV Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $11.08 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.40 | ||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss on investments | (0.69 | ) | |||||||||||||||||||||||||||||||||||
Total from investment operations | (0.29 | ) | |||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||
From net investment income | (0.42 | ) | |||||||||||||||||||||||||||||||||||
Net asset value, end of period | $10.37 | ||||||||||||||||||||||||||||||||||||
Total return (%) | (2.58 | )3 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $113 | ||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.67 | 4 | |||||||||||||||||||||||||||||||||||
Expenses including reductions and credits | 0.67 | 4 | |||||||||||||||||||||||||||||||||||
Net investment income | 6.40 | 4 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 28 | 5 |
1 | The inception date for Class NAV shares is 8-28-14. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Not annualized. | ||||||||||||||||||||||
4 | Annualized. | ||||||||||||||||||||||
5 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Note 1 — Organization
John Hancock Core High 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 investment objective of the fund is to seek total return, consisting of a high level of current income and 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 I shares are offered to institutions and certain investors. Class R2 and Class R4 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, and transfer agent fees, state registration fees and printing and postage for each class may differ.
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. Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Foreign securities and currencies, including forward foreign currency contracts, 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 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
31
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 March 31, 2015, by major security category or type:
Total market value at 3-31-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||||||||||||
Corporate bonds | |||||||||||||||
Consumer discretionary | $126,932,719 | — | $126,932,719 | — | |||||||||||
Consumer staples | 42,619,801 | — | 42,619,801 | — | |||||||||||
Energy | 77,452,585 | — | 77,452,585 | — | |||||||||||
Financials | 106,738,188 | — | 106,738,188 | — | |||||||||||
Health care | 34,140,074 | — | 34,140,074 | — | |||||||||||
Industrials | 87,096,150 | — | 87,096,150 | — | |||||||||||
Information technology | 26,727,756 | — | 26,727,756 | — | |||||||||||
Materials | 107,796,539 | — | 107,796,539 | — | |||||||||||
Telecommunication services | 43,014,915 | — | 43,014,915 | — | |||||||||||
Utilities | 24,304,982 | — | 24,304,982 | — | |||||||||||
Term loans | 98,865,247 | — | 98,865,247 | — | |||||||||||
Common stocks | |||||||||||||||
Energy | 40,960 | — | — | $40,960 | |||||||||||
Financials | 780,500 | — | 780,500 | — | |||||||||||
Preferred securities | |||||||||||||||
Financials | 5,617,735 | — | 5,617,735 | — | |||||||||||
Utilities | 1,104,488 | $1,104,488 | — | — | |||||||||||
Escrow certificates | |||||||||||||||
Health care | 3,420 | — | — | 3,420 | |||||||||||
Short-term investments | 15,916,000 | — | 15,916,000 | — | |||||||||||
Total investments in securities | $799,152,059 | $1,104,488 | $798,003,191 | $44,380 | |||||||||||
Other financial instruments | |||||||||||||||
Forward foreign currency contracts | $313,875 | — | $313,875 | — |
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund's custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund's investments as part of the caption related to the repurchase agreement.
Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.
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Term loans (Floating rate loans). The fund may invest in term loans, which often include debt securities that are rated below investment grade at the time of purchase. Term loans are generally subject to legal or contractual restrictions on resale. The liquidity of term loans, including the volume and frequency of secondary market trading in such loans, varies significantly over time and among individual loans, and may be impacted by elongated settlement periods. During periods of infrequent trading, valuing a term loan can be more difficult and buying and selling a term loan at an acceptable price can be more difficult and delayed, which could result in a loss.
The fund's ability to receive payments of principal, interest and other amounts in connection with term loans will depend primarily on the financial condition of the borrower. The fund's failure to receive scheduled payments on a term loan due to a default, bankruptcy or other reason, would adversely affect the fund's income and would likely reduce the value of its assets. Because many term loans are not rated by independent credit rating agencies, a decision to invest in a particular loan could depend exclusively on the subadvisor's credit analysis of the borrower and/or term loan agents. The fund may have limited rights to enforce the terms of an underlying loan.
At March 31, 2015, the fund had $8,000,000 in unfunded loan commitments outstanding.
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. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. 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. 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.
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.
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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 March 31, 2015 were $455. For the year ended March 31, 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.
For federal income tax purposes, as of March 31, 2015, the fund has a short-term capital loss carryforward of $6,286,049 and a long-term capital loss carryforward of $3,654,502 available to offset future net realized capital gains. These carryforwards do not expire.
As of March 31, 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 dividends daily and pays them monthly. Capital gain distributions, if any, are distributed annually. The tax character of distributions for the years ended March 31, 2015 and 2014 was as follows:
March 31, 2015 | March 31, 2014 | |||||||
Ordinary Income | $44,095,385 | $23,544,725 | ||||||
Long term capital gain | — | 878,044 | ||||||
Total | $44,095,385 | $24,422,769 |
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $2,173,667 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 and amortization and accretion on debt securities.
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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 over-the-counter 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. Certain forwards are 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.
For financial reporting purposes, the fund does not offset OTC derivative assets or liabilities that are subject to master netting arrangements, as defined by the ISDAs, in the Statement of assets and liabilities. In the event of default by the counterparty or a termination of the agreement, the ISDA allows an offset of amounts across the various transactions between the fund and the applicable counterparty.
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 March 31, 2015, the fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currencies, and to maintain diversity and liquidity of the fund. During the year ended March 31, 2015, the fund held forward foreign currency contracts with U.S. Dollar notional values ranging from $14.4 million to $64.3 million, as measured at each quarter end. The following table summarizes the contracts held at March 31, 2015:
Contract to buy | Contract to sell | Counterparty | Contractual settlement date | Unrealized appreciation | Unrealized depreciation | Net unrealized appreciation/ (depreciation) | ||||||||||||||||||||
CAD 1,200,000 | USD 938,879 | State Street Bank and Trust Company | 5/12/2015 | $8,074 | — | $8,074 | ||||||||||||||||||||
USD 18,841,487 | CAD 23,488,834 | Toronto Dominion Bank | 5/12/2015 | 305,801 | — | 305,801 | ||||||||||||||||||||
$313,875 | — | $313,875 |
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Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at March 31, 2015 by risk category:
Risk | Statement of assets and liabilities location | Financial instruments location | Asset derivatives fair value | Liabilities derivatives fair value | ||||||||||
Foreign exchange contracts | Receivable/payable for forward foreign currency exchange contracts | Forward foreign currency contracts | $313,875 | — |
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 March 31, 2015:
Risk | Statement of operations location | Investments and foreign currency transactions* | ||||||
Foreign currency contracts | Net realized gain (loss) on | $2,382,638 |
*Realized gain/loss associated with forward foreign currency contracts is included in this caption 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 March 31, 2015:
Risk | Statement of operations location | Investments and translation of assets and liabilities in foreign currencies* | ||||||
Foreign currency contracts | Change in unrealized appreciation (depreciation) | $340,502 |
*Change in unrealized appreciation/depreciation associated with forward foreign currency contracts is included in this caption 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 Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust 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 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 equivalent, on an annual basis, to the sum of: (a) 0.650% of the first $250 million of the fund's average daily net assets; (b) 0.625% of the next $250 million of the fund's average daily net assets; (c) 0.600% of the next $500 million of the fund's average daily net assets; (d) 0.550% of the next $1.5 billion of the fund's average daily net assets; and (e) 0.525% of the fund's average daily net assets in excess of $2.5 billion. The Advisor has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset Management (North America) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. 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
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participating portfolios in proportion to the daily net assets of each fund. During the year ended March 31, 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 fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.18%, 1.93%, 0.87%, 1.32% and 1.07% for Class A, Class C, Class I, Class R2 and Class R4 shares, respectively. 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 current expense limitation agreement expires on June 30, 2015 for Class A, Class C and Class I shares, and June 30, 2016 for Class R2 and Class R4 shares, unless renewed by the mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.
The Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund, including transfer agent 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 attributable to Class R6 shares, on an annualized basis. The waiver expires on June 30, 2016, 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.
For the year ended March 31, 2015, the expense reductions described above amounted to the following:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $26,368 | Class R4 | $152 | |||||||||||
Class C | 3,706 | Class R6 | 167 | |||||||||||
Class I | 16,183 | Class NAV | 5,193 | |||||||||||
Class R2 | 150 | Total | $51,919 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.62% 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 March 31, 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 C, Class R2 and Class R4 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 and Class R4, 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 fees | Service fees | Class | Rule 12b-1 fees | Service fees | |||||||||||||||
Class A | 0.30% | — | Class R2 | 0.25% | 0.25% | |||||||||||||||
Class C | 1.00% | — | Class R4 | 0.25% | 0.10% |
Class A shares are currently charged 0.25% for Rule 12b-1 fees.
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, 2016, unless renewed by mutual
37
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 $1 for Class R4 shares for the period ended March 31, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $1,467,021 for the year ended March 31, 2015. Of this amount, $196,928 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $36,490 was paid as sales commissions to broker-dealers and $1,233,603 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A 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 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 March 31, 2015, CDSCs received by the Distributor amounted to $4,322 and $24,022 for Class A 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 March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $908,461 | $454,407 | $39,557 | $31,869 | ||||||||||
Class C | 507,883 | 63,334 | 7,073 | 4,915 | ||||||||||
Class I | — | 248,970 | 34,307 | 16,391 | ||||||||||
Class R2 | 3 | — | 154 | — | ||||||||||
Class R4 | 3 | — | 154 | — | ||||||||||
Class R6 | — | — | 166 | — | ||||||||||
Total | $1,416,350 | $766,711 | $81,411 | $53,175 |
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.
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Interfund lending program Pursuant to an Exemptive Order issued by the SEC, 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. 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 | Weighted average loan balance | Days outstanding | Weighted average interest rate | Interest income | ||||||||||
Lender | $15,181,789 | 4 | 0.45% | $759 |
Note 6 — Fund share transactions
Transactions in fund shares for the years ended March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 22,340,271 | $241,569,465 | 19,301,582 | $211,075,579 | ||||||||||||||||||||||
Distributions reinvested | 1,997,259 | 21,385,159 | 1,616,342 | 17,648,347 | ||||||||||||||||||||||
Repurchased | (16,744,517 | ) | (178,572,004 | ) | (11,401,812 | ) | (124,433,850 | ) | ||||||||||||||||||
Net increase | 7,593,013 | $84,382,620 | 9,516,112 | $104,290,076 | ||||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 4,676,512 | $50,683,255 | 2,648,097 | $28,987,094 | ||||||||||||||||||||||
Distributions reinvested | 249,024 | 2,651,961 | 59,918 | 654,590 | ||||||||||||||||||||||
Repurchased | (1,294,897 | ) | (13,633,334 | ) | (173,034 | ) | (1,888,225 | ) | ||||||||||||||||||
Net increase | 3,630,639 | $39,701,882 | 2,534,981 | $27,753,459 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 29,631,814 | $321,444,280 | 8,609,064 | $94,175,596 | ||||||||||||||||||||||
Distributions reinvested | 1,319,756 | 14,053,244 | 451,962 | 4,937,845 | ||||||||||||||||||||||
Repurchased | (14,979,167 | ) | (159,837,253 | ) | (1,925,517 | ) | (21,046,229 | ) | ||||||||||||||||||
Net increase | 15,972,403 | $175,660,271 | 7,135,509 | $78,067,212 | ||||||||||||||||||||||
Class R2 shares1 | ||||||||||||||||||||||||||
Sold | 9,662 | $100,000 | — | — | ||||||||||||||||||||||
Net increase | 9,662 | $100,000 | — | — | ||||||||||||||||||||||
Class R4 shares1 | ||||||||||||||||||||||||||
Sold | 9,662 | $100,000 | — | — | ||||||||||||||||||||||
Net increase | 9,662 | $100,000 | — | — | ||||||||||||||||||||||
Class R6 Shares1 | ||||||||||||||||||||||||||
Sold | 9,662 | $100,000 | — | — | ||||||||||||||||||||||
Net increase | 9,662 | $100,000 | — | — | ||||||||||||||||||||||
Class NAV shares2 | ||||||||||||||||||||||||||
Sold | 11,716,804 | $129,314,621 | — | — | ||||||||||||||||||||||
Distributions reinvested | 448,496 | 4,714,036 | — | — | ||||||||||||||||||||||
Repurchased | (1,263,386 | ) | (13,216,770 | ) | — | — | ||||||||||||||||||||
Net increase | 10,901,914 | $120,811,887 | — | — | ||||||||||||||||||||||
Total net increase | 38,126,955 | $420,856,660 | 19,186,602 | $210,110,747 |
1 The inception date for Class R2, Class R4 and Class R6 shares is 3-27-15.
2 The inception date for Class NAV shares is 8-28-14.
Affiliates of the fund owned 100% of shares of beneficial interest of Class R2, Class R4, Class R6 and Class NAV, respectively, on March 31, 2015.
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Note 7 — Purchases and sales of securities
Purchases and sales of securities, other than short-term investments, amounted to $614,930,363 and $183,105,733, respectively, for the year ended March 31, 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 March 31, 2015, funds within the John Hancock group of funds complex held 13.7% of the fund's net assets. John Hancock Lifestyle Conservative Portfolio had an affiliate ownership of 8.6% of the fund's net assets.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock Core High 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 Core High Yield Fund (the "Fund") at March 31, 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 March 31, 2015 by correspondence with the custodian, agent banks 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
May 18, 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 March 31, 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.
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
43
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
44
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
45
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. |
46
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 John Hancock Asset Management a division of Manulife Asset Management (North America) Limited 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
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. |
47
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 Core High Yield Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202361 | 346A 3/15 5/15 |
John Hancock
Small Company Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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
Small Company Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
16 | Financial statements | |||||||
20 | Financial highlights | |||||||
29 | Notes to financial statements | |||||||
35 | Auditor's report | |||||||
36 | Tax information | |||||||
37 | Trustees and Officers | |||||||
41 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks maximum long-term total return.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The Russell 2000 Index is an index that measures performance of the 2,000 smallest companies in the Russell 3000 Index.
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.
1. On 12-11-09, through a reorganization, the fund acquired all of the assets of the FMA Small Company Portfolio (the predecessor fund). On that date, the predecessor fund offered its Investor shares in exchange for Class A shares and its Institutional shares in exchange for Class I shares of John Hancock Small Company Fund, which were first offered on 12-14-09. Class A shares' returns shown above for periods prior to this date are those of the predecessor fund's Investor shares that have been recalculated to reflect the gross fees and expenses of Class A shares.
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
Growth outperformed value
In the small-cap stock market, shares of growth companies outperformed their value counterparts, which proved to be a headwind for the fund's performance because of its value focus.
Challenges among industrials
The fund was hurt the most by disappointing security selection in the industrials sector.
Sources of strength in several sectors
Stock picking proved beneficial in the consumer discretionary, materials, and healthcare sectors, although underweighting this last group was a partially offsetting negative.
PORTFOLIO COMPOSITION AS OF 3/31/15 (%)
A note about risks
The stock prices of small companies can change more frequently and dramatically than those of large companies. Value stocks may decline in price. Frequent trading may increase fund transaction costs. 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. Please see the fund's prospectuses for additional risks.
3
![kathrynavorisek.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000763/kathrynavorisek.jpg)
Kathryn A. Vorisek
Portfolio Manager
Fiduciary ManagementAssociates, LLC
How did the fund perform relative to the benchmark for the year ended March 31, 2015, and which sectors were notable contributors and detractors?
The fund lagged its benchmark, the Russell 2000 Index. Small-cap growth stocks significantly outpaced their value counterparts for the year, and this provided a headwind for the fund's performance, given that our management strategy regularly favors value-oriented names.
Looking specifically at the fund's positioning, the biggest detractor by a wide margin was disappointing security selection in the industrials sector, as the stocks the fund held in this group underperformed those in the benchmark.
In contrast, stock picking was very favorable in the consumer discretionary and materials sectors. Positive security selection in healthcare was mostly offset by the fund's substantial underweighting in this outperforming category. An underweight in healthcare is typical for the fund, given that the index includes a number of relatively expensive biotechnology stocks that do not meet our valuation criteria.
Would you provide examples of stocks that were particularly meaningful relative detractors from the fund's results?
As we mentioned, stock selection within industrials proved challenging. Several names in this group stood out on the downside: MasTec, Inc., an infrastructure construction company; H&E Equipment Services, Inc., a provider of equipment for construction and industrial customers; and Chart Industries, Inc., which makes equipment to produce and store energy-related and industrial gases. All three stocks were hurt by their business exposure to struggling energy markets, which weighed on their financial results and called their future performance into question. As we did not know how long these troubles would last or how they would affect future revenue or earnings growth, we opted to reduce risk by selling all three holdings from the fund.
Various stocks from other sectors detracted as well, such as InvenSense, Inc., a maker of gyroscopic technology for mobile devices. The information technology company's shares fell sharply in October after InvenSense announced a long-awaited contract to supply Apple products that, unfortunately,
4
Which stocks made notable contributions to the fund's relative performance?
Several consumer discretionary stocks stood out on the positive side, led by Gentherm, Inc., a maker of temperature-controlled products for vehicles, such as heated seats and cup holders. Gentherm continued to produce good financial results throughout the period, generating growth by entering new markets and establishing a competitive foothold in new product categories. Vail Resorts, Inc., an operator of ski and other vacation resorts, benefited from an improving economy that in turn has led to an increase in leisure spending. Fast-food restaurant group Popeyes Louisiana Kitchen, Inc. also added value. The lower- and middle-income consumers that make up the company's target market have benefited from lower gas prices, which has boosted their disposable income.
SECTOR COMPOSITION AS OF 3/31/15 (%)
5
Elsewhere, International Rectifier Corp. was another big contributor. Shares of this maker of power management semiconductors benefited from two primary catalysts. First, the company was well positioned to benefit from the burgeoning Internet of Things market, in which traditional household devices such as dishwashers or electric lights gain network connectivity. Second, International Rectifier's shares soared last August after the company agreed to be acquired for a significant premium. Soon after the acquisition announcement, we sold the fund's stake.
In healthcare, the fund benefited from a position in pharmaceutical company Akorn, Inc., whose stock was helped when several of the company's new products received regulatory approval, and by a successful price increase for one of its products. We sold the fund's position prior to period end, based on its higher valuation.
What notable shifts did you make to the fund's portfolio during the past 12 months?
As the period went on, we reduced the fund's weighting in cyclical (economically sensitive) industrial stocks while simultaneously building exposure to cyclical, U.S.-focused consumer stocks. This move reflected our view that a changing macroeconomic environment was creating new opportunities for certain consumer-oriented businesses able to benefit from lower energy prices,
TEN LARGEST HOLDINGS AS OF 3/31/15 (%)
PNM Resources, Inc. | 1.8 | ||||
CACI International, Inc., Class A | 1.7 | ||||
Webster Financial Corp. | 1.7 | ||||
Verint Systems, Inc. | 1.6 | ||||
Wintrust Financial Corp. | 1.5 | ||||
Curtiss-Wright Corp. | 1.5 | ||||
La Quinta Holdings, Inc. | 1.5 | ||||
CLARCOR, Inc. | 1.5 | ||||
Barnes Group, Inc. | 1.5 | ||||
Huron Consulting Group, Inc. | 1.5 | ||||
TOTAL | 15.8 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
6
higher wages, better job growth, and increased consumer confidence. At the same time, a stronger U.S. dollar hurt industrial firms with significant business abroad, and oil prices remaining low over the long term threatened companies whose success depends on a thriving energy sector.
Accordingly, at period end, the fund was meaningfully overweighted in the consumer discretionary sector while roughly neutrally weighted in industrials, down from a meaningful overweighting one year earlier. The industrial stocks that the fund continued to own tend to do more of their business in the United States.
Another meaningful trend was our management of exposure to stocks with particular sensitivity to interest rates. These included real estate investment trusts and utilities, two relatively high-dividend-yielding categories that benefited from investors' desire for income in a low rate environment. As these stocks' valuations rose over time, we saw an increasingly unfavorable risk/reward trade-off among these companies, and starting late in 2014 began looking elsewhere in the market for stocks we believed provided better long-term potential.
MANAGED BY
![]() | Kathryn A. Vorisek On the fund since 1996 Investing since 1984 | ||||
![]() | Leo Harmon, CFA On the fund since 2003 Investing since 1993 | ||||
![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||||||||
1-year | 5-year | 10-year | 5-year | 10-year | |||||||||||||||||||
Class A1 | 1.91 | 10.82 | 7.80 | 67.11 | 111.96 | ||||||||||||||||||
Class I1,2 | 7.61 | 12.32 | 8.74 | 78.79 | 131.07 | ||||||||||||||||||
Class R11,2 | 6.86 | 11.55 | 7.93 | 72.74 | 114.57 | ||||||||||||||||||
Class R21,2 | 7.18 | 11.22 | 7.20 | 70.22 | 100.37 | ||||||||||||||||||
Class R31,2 | 7.02 | 11.66 | 8.04 | 73.61 | 116.73 | ||||||||||||||||||
Class R41,2 | 7.42 | 12.06 | 8.39 | 76.71 | 123.92 | ||||||||||||||||||
Class R51,2 | 7.64 | 12.33 | 8.69 | 78.87 | 130.07 | ||||||||||||||||||
Class R61,2 | 7.80 | 12.43 | 8.80 | 79.61 | 132.41 | ||||||||||||||||||
Class ADV1,2 | 7.39 | 12.07 | 8.31 | 76.78 | 122.25 | ||||||||||||||||||
Index† | 8.21 | 14.57 | 8.82 | 97.37 | 132.80 |
Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class I, Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class ADV shares.
The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers 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. The expense ratios are as follows:
Class A | Class I | Class R1 | Class R2 | Class R3 | Class R4 | Class R5 | Class R6 | Class ADV | |||||||||||||||||||||
Gross (%) | 1.46 | 1.17 | 2.96 | 8.12 | 10.87 | 19.03 | 6.04 | 7.66 | 4.50 | ||||||||||||||||||||
Net (%) | 1.46 | 1.15 | 1.81 | 1.56 | 1.71 | 1.31 | 1.11 | 0.99 | 1.35 |
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 Russell 2000 Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Small Company Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the Russell 2000 Index.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index ($) | |||||||||||
Class I1,2 | 3-31-05 | 23,107 | 23,107 | 23,280 | ||||||||||
Class R11,2 | 3-31-05 | 21,457 | 21,457 | 23,280 | ||||||||||
Class R21,2 | 3-31-05 | 20,037 | 20,037 | 23,280 | ||||||||||
Class R31,2 | 3-31-05 | 21,673 | 21,673 | 23,280 | ||||||||||
Class R41,2 | 3-31-05 | 22,392 | 22,392 | 23,280 | ||||||||||
Class R51,2 | 3-31-05 | 23,007 | 23,007 | 23,280 | ||||||||||
Class R61,2 | 3-31-05 | 23,241 | 23,241 | 23,280 | ||||||||||
Class ADV1,2 | 3-31-05 | 22,225 | 22,225 | 23,280 |
The Russell 2000 Index is an index that measures performance of the 2,000 smallest companies in the Russell 3000 Index.
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 | On 12-11-09, through a reorganization, the fund acquired all of the assets of the FMA Small Company Portfolio (the predecessor fund). On that date, the predecessor fund offered its Investor shares in exchange for Class A shares and the Institutional shares in exchange for Class I shares of John Hancock Small Company Fund, which were first offered on 12-14-09. In addition to Class A and Class I shares, Class ADV shares were also offered on 12-14-09. The returns of Class A, Class ADV, and Class I shares prior to this date are those of the predecessor fund's Investor shares that have been recalculated to apply the gross fees and expenses of Class A, Class ADV, and Class I shares, as applicable. Class R1, Class R3, Class R4, and Class R5 shares were first offered on 4-30-10; 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 recalculated to apply the gross fees and expenses of Class R1, Class R3, Class R4, Class R5, Class R6, and Class R2 shares, as applicable. |
2 | For certain types of investors, as described in the fund's prospectuses. |
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 October 1, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,117.60 | $7.50 | 1.42% | ||||||||||
Class I | 1,000.00 | 1,119.30 | 5.92 | 1.12% | ||||||||||
Class R1 | 1,000.00 | 1,115.20 | 9.49 | 1.80% | ||||||||||
Class R2 | 1,000.00 | 1,117.20 | 8.18 | 1.55% | ||||||||||
Class R3 | 1,000.00 | 1,116.20 | 8.97 | 1.70% | ||||||||||
Class R4 | 1,000.00 | 1,118.50 | 6.87 | 1.30% | ||||||||||
Class R5 | 1,000.00 | 1,119.20 | 5.81 | 1.10% | ||||||||||
Class R6 | 1,000.00 | 1,120.00 | 5.13 | 0.97% | ||||||||||
Class ADV | 1,000.00 | 1,118.20 | 7.08 | 1.34% |
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 March 31, 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 October 1, 2014, with the same investment held until March 31, 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.
Account value on 10-1-14 | Ending value on 3-31-15 | Expenses paid during period ended 3-31-151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,017.90 | $7.14 | 1.42% | ||||||||||
Class I | 1,000.00 | 1,019.30 | 5.64 | 1.12% | ||||||||||
Class R1 | 1,000.00 | 1,016.00 | 9.05 | 1.80% | ||||||||||
Class R2 | 1,000.00 | 1,017.20 | 7.80 | 1.55% | ||||||||||
Class R3 | 1,000.00 | 1,016.50 | 8.55 | 1.70% | ||||||||||
Class R4 | 1,000.00 | 1,018.40 | 6.54 | 1.30% | ||||||||||
Class R5 | 1,000.00 | 1,019.40 | 5.54 | 1.10% | ||||||||||
Class R6 | 1,000.00 | 1,020.10 | 4.89 | 0.97% | ||||||||||
Class ADV | 1,000.00 | 1,018.20 | 6.74 | 1.34% |
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 182/365 (to reflect the one-half year period). |
11
Fund's investments
As of 3-31-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 96.9% | $219,811,168 | |||||||||||||
(Cost $185,229,888) | ||||||||||||||
Consumer discretionary 18.7% | 42,364,749 | |||||||||||||
Auto components 1.2% | ||||||||||||||
Gentherm, Inc. (I) | 56,060 | 2,831,582 | ||||||||||||
Distributors 2.4% | ||||||||||||||
Core-Mark Holding Company, Inc. | 34,696 | 2,231,647 | ||||||||||||
Pool Corp. | 45,225 | 3,154,896 | ||||||||||||
Diversified consumer services 1.4% | ||||||||||||||
Bright Horizons Family Solutions, Inc. (I) | 63,855 | 3,273,846 | ||||||||||||
Hotels, restaurants and leisure 5.1% | ||||||||||||||
La Quinta Holdings, Inc. (I) | 143,260 | 3,392,397 | ||||||||||||
Marriott Vacations Worldwide Corp. | 39,175 | 3,175,134 | ||||||||||||
Popeyes Louisiana Kitchen, Inc. (I) | 36,932 | 2,209,272 | ||||||||||||
Vail Resorts, Inc. | 26,710 | 2,762,348 | ||||||||||||
Household durables 2.4% | ||||||||||||||
La-Z-Boy, Inc. | 112,400 | 3,159,564 | ||||||||||||
Universal Electronics, Inc. (I) | 41,830 | 2,360,885 | ||||||||||||
Leisure products 1.4% | ||||||||||||||
Vista Outdoor, Inc. (I) | 71,430 | 3,058,633 | ||||||||||||
Media 1.4% | ||||||||||||||
AMC Entertainment Holdings, Inc., Class A | 86,245 | 3,060,835 | ||||||||||||
Multiline retail 1.3% | ||||||||||||||
Big Lots, Inc. | 63,255 | 3,038,138 | ||||||||||||
Specialty retail 1.1% | ||||||||||||||
Boot Barn Holdings, Inc. (I) | 100,385 | 2,401,209 | ||||||||||||
Textiles, apparel and luxury goods 1.0% | ||||||||||||||
Wolverine World Wide, Inc. | 67,395 | 2,254,363 | ||||||||||||
Consumer staples 1.1% | 2,467,632 | |||||||||||||
Food products 1.1% | ||||||||||||||
Snyder's-Lance, Inc. | 77,210 | 2,467,632 | ||||||||||||
Energy 2.9% | 6,524,454 | |||||||||||||
Energy equipment and services 2.1% | ||||||||||||||
Oil States International, Inc. (I) | 56,600 | 2,250,982 | ||||||||||||
Superior Energy Services, Inc. | 110,350 | 2,465,219 | ||||||||||||
Oil, gas and consumable fuels 0.8% | ||||||||||||||
Carrizo Oil & Gas, Inc. (I) | 36,420 | 1,808,253 |
Shares | Value | |||||||||||||
Financials 25.9% | $58,850,206 | |||||||||||||
Banks 11.0% | ||||||||||||||
Columbia Banking System, Inc. | 97,975 | 2,838,336 | ||||||||||||
Fulton Financial Corp. | 249,730 | 3,081,668 | ||||||||||||
IBERIABANK Corp. | 50,655 | 3,192,785 | ||||||||||||
PrivateBancorp, Inc. | 83,480 | 2,935,992 | ||||||||||||
TCF Financial Corp. | 207,135 | 3,256,162 | ||||||||||||
Webster Financial Corp. | 101,855 | 3,773,728 | ||||||||||||
Western Alliance Bancorp (I) | 80,585 | 2,388,539 | ||||||||||||
Wintrust Financial Corp. | 73,175 | 3,488,984 | ||||||||||||
Capital markets 2.5% | ||||||||||||||
Evercore Partners, Inc., Class A | 64,135 | 3,313,214 | ||||||||||||
Stifel Financial Corp. (I) | 44,440 | 2,477,530 | ||||||||||||
Insurance 2.8% | ||||||||||||||
StanCorp Financial Group, Inc. | 47,560 | 3,262,616 | ||||||||||||
The Hanover Insurance Group, Inc. | 41,700 | 3,026,586 | ||||||||||||
Real estate investment trusts 6.7% | ||||||||||||||
Brandywine Realty Trust | 205,015 | 3,276,140 | ||||||||||||
Chesapeake Lodging Trust | 66,535 | 2,250,879 | ||||||||||||
DCT Industrial Trust, Inc. | 33,845 | 1,173,068 | ||||||||||||
Lexington Realty Trust | 222,730 | 2,189,436 | ||||||||||||
Medical Properties Trust, Inc. | 210,690 | 3,105,571 | ||||||||||||
National Health Investors, Inc. | 45,675 | 3,243,382 | ||||||||||||
Thrifts and mortgage finance 2.9% | ||||||||||||||
Capitol Federal Financial, Inc. | 263,790 | 3,297,375 | ||||||||||||
EverBank Financial Corp. | 181,820 | 3,278,215 | ||||||||||||
Health care 10.0% | 22,718,147 | |||||||||||||
Biotechnology 2.8% | ||||||||||||||
Emergent Biosolutions, Inc. (I) | 103,810 | 2,985,576 | ||||||||||||
Ligand Pharmaceuticals, Inc. (I) | 43,230 | 3,333,465 | ||||||||||||
Health care equipment and supplies 4.2% | ||||||||||||||
AngioDynamics, Inc. (I) | 125,840 | 2,238,694 | ||||||||||||
Globus Medical, Inc., Class A (I) | 130,415 | 3,291,675 | ||||||||||||
Greatbatch, Inc. (I) | 22,340 | 1,292,369 | ||||||||||||
Halyard Health, Inc. (I) | 57,640 | 2,835,888 | ||||||||||||
Health care providers and services 1.5% | ||||||||||||||
Amsurg Corp. (I) | 54,639 | 3,361,391 | ||||||||||||
Pharmaceuticals 1.5% | ||||||||||||||
Prestige Brands Holdings, Inc. (I) | 78,785 | 3,379,089 | ||||||||||||
Industrials 13.4% | 30,361,833 | |||||||||||||
Aerospace and defense 2.6% | ||||||||||||||
Astronics Corp. (I) | 33,415 | 2,462,686 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Aerospace and defense (continued) | ||||||||||||||
Curtiss-Wright Corp. | 46,150 | $3,412,331 | ||||||||||||
Air freight and logistics 1.4% | ||||||||||||||
Forward Air Corp. | 59,800 | 3,247,140 | ||||||||||||
Building products 1.2% | ||||||||||||||
Apogee Enterprises, Inc. | 64,670 | 2,793,744 | ||||||||||||
Commercial services and supplies 1.4% | ||||||||||||||
Healthcare Services Group, Inc. | 98,950 | 3,179,264 | ||||||||||||
Machinery 4.2% | ||||||||||||||
Barnes Group, Inc. | 83,575 | 3,383,952 | ||||||||||||
CLARCOR, Inc. | 51,295 | 3,388,548 | ||||||||||||
John Bean Technologies Corp. | 73,540 | 2,626,849 | ||||||||||||
Professional services 1.5% | ||||||||||||||
Huron Consulting Group, Inc. (I) | 51,095 | 3,379,934 | ||||||||||||
Trading companies and distributors 1.1% | ||||||||||||||
WESCO International, Inc. (I) | 35,590 | 2,487,385 | ||||||||||||
Information technology 15.7% | 35,536,550 | |||||||||||||
Electronic equipment, instruments and components 1.3% | ||||||||||||||
Rogers Corp. (I) | 34,855 | 2,865,430 | ||||||||||||
Internet software and services 1.2% | ||||||||||||||
Dealertrack Technologies, Inc. (I) | 68,615 | 2,643,050 | ||||||||||||
IT services 1.7% | ||||||||||||||
CACI International, Inc., Class A (I) | 43,230 | 3,887,242 | ||||||||||||
Semiconductors and semiconductor equipment 3.7% | ||||||||||||||
Advanced Energy Industries, Inc. (I) | 87,495 | 2,245,122 | ||||||||||||
Entegris, Inc. (I) | 243,350 | 3,331,462 | ||||||||||||
Intersil Corp., Class A | 200,630 | 2,873,022 | ||||||||||||
Software 6.6% | ||||||||||||||
ACI Worldwide, Inc. (I) | 129,765 | 2,810,710 | ||||||||||||
Blackbaud, Inc. | 66,935 | 3,171,380 | ||||||||||||
Mentor Graphics Corp. | 129,830 | 3,119,815 | ||||||||||||
Take-Two Interactive Software, Inc. (I) | 93,835 | 2,388,570 | ||||||||||||
Verint Systems, Inc. (I) | 57,130 | 3,538,061 | ||||||||||||
Technology hardware, storage and peripherals 1.2% | ||||||||||||||
Cray, Inc. (I) | 94,825 | 2,662,686 | ||||||||||||
Materials 4.6% | 10,427,986 | |||||||||||||
Chemicals 1.9% | ||||||||||||||
Balchem Corp. | 33,750 | 1,869,075 | ||||||||||||
Sensient Technologies Corp. | 34,605 | 2,383,592 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Construction materials 1.3% | ||||||||||||||
Headwaters, Inc. (I) | 160,795 | $2,948,980 | ||||||||||||
Containers and packaging 1.4% | ||||||||||||||
Berry Plastics Group, Inc. (I) | 89,150 | 3,226,339 | ||||||||||||
Utilities 4.6% | 10,559,611 | |||||||||||||
Electric utilities 4.6% | ||||||||||||||
ALLETE, Inc. | 63,065 | 3,327,309 | ||||||||||||
PNM Resources, Inc. | 141,980 | 4,145,816 | ||||||||||||
UIL Holdings Corp. | 60,025 | 3,086,486 | ||||||||||||
Exchange-traded funds 0.2% | $561,440 | |||||||||||||
(Cost $569,568) | ||||||||||||||
iShares Russell 2000 ETF | 4,515 | 561,440 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 3.4% | $7,765,139 | |||||||||||||
(Cost $7,765,139) | ||||||||||||||
Money market funds 3.4% | 7,765,139 | |||||||||||||
State Street Institutional Liquid Reserves Fund | 0.0986(Y | ) | 7,765,139 | 7,765,139 | ||||||||||
Total investments (Cost $193,564,595)† 100.5% | $228,137,747 | |||||||||||||
Other assets and liabilities, net (0.5%) | ($1,198,953 | ) | ||||||||||||
Total net assets 100.0% | $226,938,794 |
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 | |||||||
ETF | Exchange-Traded Fund | ||||||
(I) | Non-income producing security. | ||||||
(Y) | The rate shown is the annualized seven-day yield as of 3-31-15. | ||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $193,773,356. Net unrealized appreciation aggregated $34,364,391, of which $36,824,935 related to appreciated investment securities and $2,460,544 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments, at value (Cost $193,564,595) | $228,137,747 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 1,313,122 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 457,610 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 259,592 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 436 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 93,063 | |||||||||||||||||||||||||||||||||||||||
Total assets | 230,261,570 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 3,141,169 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 73,003 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 3,162 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 22,186 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 419 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 323 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 82,514 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 3,322,776 | |||||||||||||||||||||||||||||||||||||||
Net assets | $226,938,794 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $186,204,686 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 6,160,956 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 34,573,152 | |||||||||||||||||||||||||||||||||||||||
Net assets | $226,938,794 | |||||||||||||||||||||||||||||||||||||||
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 ($179,748,159 ÷ 6,477,931 shares)1 | $27.75 | |||||||||||||||||
Class I ($43,266,570 ÷ 1,533,126 shares) | $28.22 | |||||||||||||||||
Class R1 ($1,362,301 ÷ 50,021 shares) | $27.23 | |||||||||||||||||
Class R2 ($571,099 ÷ 20,524 shares) | $27.83 | |||||||||||||||||
Class R3 ($236,792 ÷ 8,649 shares) | $27.38 | |||||||||||||||||
Class R4 ($73,159 ÷ 2,620 shares) | $27.92 | |||||||||||||||||
Class R5 ($330,027 ÷ 11,685 shares) | $28.24 | |||||||||||||||||
Class R6 ($789,742 ÷ 27,866 shares) | $28.34 | |||||||||||||||||
Class ADV ($560,945 ÷ 20,107 shares) | $27.90 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $29.21 |
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 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $2,700,407 | |||||||||||||||||||||||||||||||||||||||
Interest | 5,187 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 2,705,594 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 1,940,116 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 510,162 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 23,736 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 261,309 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 3,249 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 145,801 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 38,319 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 51,129 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 26,598 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 45,990 | |||||||||||||||||||||||||||||||||||||||
Other | 12,894 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 3,059,303 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (120,550 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 2,938,753 | |||||||||||||||||||||||||||||||||||||||
Net investment loss | (233,159 | ) | ||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments | 16,082,230 | |||||||||||||||||||||||||||||||||||||||
16,082,230 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments | (413,140 | ) | ||||||||||||||||||||||||||||||||||||||
(413,140 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 15,669,090 | |||||||||||||||||||||||||||||||||||||||
Increase in net assets from operations | $15,435,931 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | ($233,159 | ) | ($751,344 | ) | |||||||||||||||||||||||||||||||||||||||||
Net realized gain | 16,082,230 | 30,405,996 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (413,140 | ) | 7,354,143 | ||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 15,435,931 | 37,008,795 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (15,753,572 | ) | (2,829,841 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (4,348,300 | ) | (906,306 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R1 | (132,775 | ) | (24,020 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (44,943 | ) | (5,689 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R3 | (20,688 | ) | (2,815 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (6,731 | ) | (1,609 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R5 | (30,858 | ) | (5,888 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (31,652 | ) | (7,401 | ) | |||||||||||||||||||||||||||||||||||||||||
Class ADV | (51,546 | ) | (10,404 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (20,421,065 | ) | (3,793,973 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 16,173,082 | 10,957,047 | |||||||||||||||||||||||||||||||||||||||||||
Total increase | 11,187,948 | 44,171,869 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 215,750,846 | 171,578,977 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $226,938,794 | $215,750,846 | |||||||||||||||||||||||||||||||||||||||||||
Accumulated net investment loss | — | ($339,231 | ) |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.67 | $24.10 | $20.86 | $21.44 | $17.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss1 | (0.05 | ) | (0.13 | ) | (0.07 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.87 | 5.23 | 3.31 | (0.57 | ) | 3.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.82 | 5.10 | 3.24 | (0.58 | ) | 3.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.75 | $28.67 | $24.10 | $20.86 | $21.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 7.28 | 21.26 | 15.53 | (2.71 | ) | 20.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $180 | $162 | $120 | $129 | $88 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.43 | 1.47 | 1.54 | 1.54 | 1.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.43 | 1.47 | 1.50 | 1.44 | 1.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.17 | ) | (0.47 | ) | (0.36 | ) | (0.07 | ) | (0.17 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 |
1 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||
2 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | |||||||||||||||||||||||||||||||||||||||||||||
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 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $29.02 | $24.32 | $20.96 | $21.51 | $17.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | 0.03 | (0.04 | ) | — | 2 | 0.07 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.91 | 5.27 | 3.36 | (0.58 | ) | 3.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.94 | 5.23 | 3.36 | (0.51 | ) | 3.64 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | (0.04 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $28.22 | $29.02 | $24.32 | $20.96 | $21.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 7.61 | 21.61 | 16.03 | (2.34 | ) | 20.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $43 | $50 | $49 | $69 | $67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.14 | 1.15 | 1.18 | 1.16 | 1.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.13 | 1.14 | 1.11 | 1.04 | 1.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.12 | (0.15 | ) | 0.02 | 0.34 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||
2 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||
3 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | ||||||||||||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
Class R1 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.29 | $23.87 | $20.71 | $21.37 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.15 | ) | (0.21 | ) | (0.13 | ) | (0.08 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.83 | 5.16 | 3.29 | (0.58 | ) | 2.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.68 | 4.95 | 3.16 | (0.66 | ) | 1.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.23 | $28.29 | $23.87 | $20.71 | $21.37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 6.86 | 20.84 | 15.26 | (3.09 | ) | 10.27 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.84 | 2.94 | 4.37 | 13.34 | 7.22 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.80 | 1.80 | 1.80 | 1.80 | 1.80 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.55 | ) | (0.82 | ) | (0.60 | ) | (0.40 | ) | (0.42 | )7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 | 8 |
1 | The inception date for Class R1 shares is 4-30-10. | |||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||
3 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | |||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R2 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.77 | $24.21 | $20.96 | $20.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.08 | ) | (0.14 | ) | (0.08 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.88 | 5.23 | 3.33 | 0.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.80 | 5.09 | 3.25 | 0.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.83 | $28.77 | $24.21 | $20.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.18 | 21.12 | 15.51 | 1.95 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | — | 5 | — | 5 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.66 | 7.99 | 20.22 | 16.31 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.55 | 1.55 | 1.55 | 1.55 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.29 | ) | (0.54 | ) | (0.39 | ) | 1.31 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 7 |
1 | The inception date for Class R2 shares is 3-1-12. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
5 | Less than $500,000. | |||||||||||||||||||||||||||||||||||||||
6 | Annualized. | |||||||||||||||||||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class R3 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.39 | $23.94 | $20.76 | $21.39 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.12 | ) | (0.19 | ) | (0.12 | ) | (0.06 | ) | (0.10 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.85 | 5.17 | 3.30 | (0.57 | ) | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.73 | 4.98 | 3.18 | (0.63 | ) | 1.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.38 | $28.39 | $23.94 | $20.76 | $21.39 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 7.02 | 20.90 | 15.32 | (2.95 | ) | 10.37 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | — | 6 | — | 6 | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 9.06 | 10.89 | 5.15 | 4.65 | 3.00 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.70 | 1.70 | 1.70 | 1.70 | 1.70 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.43 | ) | (0.75 | ) | (0.56 | ) | (0.32 | ) | (0.52 | )7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 | 8 |
1 | The inception date for Class R3 shares is 4-30-10. | |||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||
3 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | |||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R4 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.79 | $24.17 | $20.87 | $21.44 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.01 | ) | (0.08 | ) | (0.03 | ) | (0.01 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.88 | 5.23 | 3.33 | (0.56 | ) | 2.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.87 | 5.15 | 3.30 | (0.57 | ) | 2.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.92 | $28.79 | $24.17 | $20.87 | $21.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 7.42 | 21.41 | 15.81 | (2.66 | ) | 10.63 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | — | 6 | — | 6 | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 19.97 | 18.99 | 18.82 | 28.72 | 7.40 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.30 | 1.30 | 1.31 | 1.40 | 1.40 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.05 | ) | (0.31 | ) | (0.17 | ) | (0.03 | ) | (0.16 | )7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 | 8 |
1 | The inception date for Class R4 shares is 4-30-10. | |||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||
3 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | |||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R5 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $29.03 | $24.32 | $20.96 | $21.50 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.04 | (0.03 | ) | 0.01 | 0.05 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.91 | 5.27 | 3.35 | (0.56 | ) | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.95 | 5.24 | 3.36 | (0.51 | ) | 2.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $28.24 | $29.03 | $24.32 | $20.96 | $21.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 7.64 | 21.65 | 16.03 | (2.34 | ) | 10.94 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | — | 6 | — | 6 | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 5.61 | 6.05 | 7.78 | 8.75 | 3.66 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.10 | 1.10 | 1.10 | 1.10 | 1.10 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.16 | (0.11 | ) | 0.05 | 0.28 | 0.05 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 | 8 |
1 | The inception date for Class R5 shares is 4-30-10. | |||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||
3 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | |||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R6 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $29.08 | $24.34 | $20.97 | $18.69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.09 | (0.02 | ) | 0.02 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.91 | 5.29 | 3.35 | 2.26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.00 | 5.27 | 3.37 | 2.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | (0.04 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $28.34 | $29.08 | $24.34 | $20.97 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.80 | 21.75 | 16.07 | 12.45 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.54 | 7.66 | 18.63 | 15.46 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.97 | 1.04 | 1.04 | 1.04 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.32 | (0.06 | ) | 0.11 | 0.55 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 7 |
1 | The inception date for Class R6 shares is 9-1-11. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
5 | Less than $500,000. | |||||||||||||||||||||||||||||||||||||||
6 | Annualized. | |||||||||||||||||||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class ADV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.78 | $24.17 | $20.88 | $21.44 | $17.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)1 | (0.03 | ) | (0.09 | ) | (0.04 | ) | 0.01 | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.89 | 5.23 | 3.33 | (0.57 | ) | 3.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.86 | 5.14 | 3.29 | (0.56 | ) | 3.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | 0.03 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $27.90 | $28.78 | $24.17 | $20.88 | $21.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.39 | 21.37 | 15.76 | (2.61 | ) | 20.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 4 | $1 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.17 | 4.51 | 4.91 | 4.34 | 4.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.34 | 1.34 | 1.34 | 1.34 | 1.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.09 | ) | (0.35 | ) | (0.20 | ) | 0.03 | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 79 | 85 | 97 | 133 | 159 |
1 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||
2 | Reflects a non-recurring reimbursement pursuant to a settlement between the SEC and Millennium Partners, L.P., Millennium Management, L.L.C., and Millennium International Management, L.L.C., which amounted to $0.03 per share. | ||||||||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||
4 | Less than $500,000. |
Note 1 — Organization
John Hancock Small Company 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 maximum long-term 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 shares are offered to all 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 ADV shares are available to investors who acquired Class A shares as a result of the reorganization of the FMA Small Company Portfolio into the fund and are closed to new investors. 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.
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, including exchange-traded funds, 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 management investment companies are valued at their respective net asset values each business day. 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.
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 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.
As of March 31, 2015, all investments are categorized as Level 1 under the hierarchy described above.
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. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
29
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
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 March 31, 2015 were $323. For the year ended March 31, 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 March 31, 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 March 31, 2015 and 2014 was $20,421,065 and $3,793,973 of long-term capital gain, respectively.
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $6,369,717 of undistributed long-term capital gain.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from 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 net operating losses.
30
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 the sum of: (a) 0.90% of the first $500 million of the fund's average daily net assets; (b) 0.85% of the next $500 million of the fund's average daily net assets; and (c) 0.80% of the fund's average daily net assets in excess of $1 billion. The Advisor has a subadvisory agreement with Fiduciary Management Associates, 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 March 31, 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 reduce its management fee or, if necessary, make payment to the fund to the extent necessary to maintain the fund's total operating expenses at 1.50%, 1.14%, 1.80%, 1.55%, 1.70%, 1.30%, 1.10%, 1.04%, and 1.34% for Class A, Class I, Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class ADV 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 expenses paid indirectly and short dividend expense. The current expense limitation agreement 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.
For Class R6 shares, the Advisor has contractually agreed to waive and/or reimburse all class specific expenses 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 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.
For the year ended March 31, 2015, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $12,356 | Class R4 | $14,846 | |||||||||||
Class I | 3,522 | Class R5 | 14,656 | |||||||||||
Class R1 | 14,125 | Class R6 | 16,491 | |||||||||||
Class R2 | 14,084 | Class ADV | 15,670 | |||||||||||
Class R3 | 14,721 | Total | $120,471 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.84% of the fund's average daily net assets.
31
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 March 31, 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 R1, Class R2, Class R3, Class R4 and Class ADV 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 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 | Rule 12b-1 fee | Service fee | |||||||||||||||
Class A | 0.30% | — | Class R4 | 0.25% | 0.10% | |||||||||||||||
Class R1 | 0.50% | 0.25% | Class R5 | — | 0.05% | |||||||||||||||
Class R2 | 0.25% | 0.25% | Class ADV | 0.25% | — | |||||||||||||||
Class R3 | 0.50% | 0.15% |
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 $79 for Class R4 shares for the year ended March 31, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $753,435 for the year ended March 31, 2015. Of this amount, $127,813 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $621,420 was paid as sales commissions to broker-dealers and $4,202 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A 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. 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 March 31, 2015, CDSCs received by the Distributor amounted to $1,079 for Class A shares.
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.
32
Class level expenses. Class level expenses for the year ended March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $495,068 | $206,700 | $25,294 | $29,445 | ||||||||||
Class I | — | 53,425 | 15,763 | 7,918 | ||||||||||
Class R1 | 10,066 | 228 | 14,664 | 247 | ||||||||||
Class R2 | 1,912 | 76 | 14,576 | 114 | ||||||||||
Class R3 | 1,299 | 33 | 14,665 | 54 | ||||||||||
Class R4 | 250 | 14 | 14,665 | 12 | ||||||||||
Class R5 | 171 | 54 | 14,665 | 48 | ||||||||||
Class R6 | — | 79 | 16,153 | 223 | ||||||||||
Class ADV | 1,396 | 700 | 15,356 | 258 | ||||||||||
Total | $510,162 | $261,309 | $145,801 | $38,319 |
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 5 — Fund share transactions
Transactions in fund shares for the years ended March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 1,216,719 | $33,765,371 | 1,552,359 | $41,079,484 | ||||||||||||||||||||||
Distributions reinvested | 615,709 | 15,558,946 | 102,300 | 2,786,664 | ||||||||||||||||||||||
Repurchased | (1,018,751 | ) | (28,165,325 | ) | (960,191 | ) | (25,436,592 | ) | ||||||||||||||||||
Net increase | 813,677 | $21,158,992 | 694,468 | $18,429,556 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 193,349 | $5,479,237 | 193,388 | $5,151,488 | ||||||||||||||||||||||
Distributions reinvested | 169,243 | 4,346,160 | 32,858 | 905,580 | ||||||||||||||||||||||
Repurchased | (549,058 | ) | (15,317,986 | ) | (535,308 | ) | (14,085,302 | ) | ||||||||||||||||||
Net decrease | (186,466 | ) | ($5,492,589 | ) | (309,062 | ) | ($8,028,234 | ) | ||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 12,602 | $336,999 | 29,686 | $738,827 | ||||||||||||||||||||||
Distributions reinvested | 2,662 | 66,104 | 403 | 10,853 | ||||||||||||||||||||||
Repurchased | (13,846 | ) | (376,272 | ) | (20,611 | ) | (529,775 | ) | ||||||||||||||||||
Net increase | 1,418 | $26,831 | 9,478 | $219,905 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 7,432 | $202,439 | 10,063 | $267,926 | ||||||||||||||||||||||
Distributions reinvested | 284 | 7,204 | 13 | 347 | ||||||||||||||||||||||
Repurchased | (1,088 | ) | (28,525 | ) | (1,044 | ) | (30,046 | ) | ||||||||||||||||||
Net increase | 6,628 | $181,118 | 9,032 | $238,227 | ||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 2,095 | $57,825 | 2,952 | $75,875 | ||||||||||||||||||||||
Distributions reinvested | 829 | 20,688 | 104 | 2,815 | ||||||||||||||||||||||
Repurchased | (337 | ) | (8,949 | ) | (15,649 | ) | (367,890 | ) | ||||||||||||||||||
Net increase (decrease) | 2,587 | $69,564 | (12,593 | ) | ($289,200 | ) |
33
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 185 | $5,140 | 210 | $5,535 | ||||||||||||||||||||||
Distributions reinvested | 126 | 3,200 | 34 | 930 | ||||||||||||||||||||||
Repurchased | (799 | ) | (21,874 | ) | (638 | ) | (15,038 | ) | ||||||||||||||||||
Net decrease | (488 | ) | ($13,534 | ) | (394 | ) | ($8,573 | ) | ||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 1,753 | $49,707 | 2,823 | $74,455 | ||||||||||||||||||||||
Distributions reinvested | 1,201 | 30,858 | 214 | 5,888 | ||||||||||||||||||||||
Repurchased | (2,380 | ) | (66,340 | ) | (2,372 | ) | (62,424 | ) | ||||||||||||||||||
Net increase | 574 | $14,225 | 665 | $17,919 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 18,765 | $503,716 | 14,968 | $422,603 | ||||||||||||||||||||||
Distributions reinvested | 659 | 17,006 | 166 | 4,584 | ||||||||||||||||||||||
Repurchased | (10,003 | ) | (286,860 | ) | (2,233 | ) | (59,675 | ) | ||||||||||||||||||
Net increase | 9,421 | $233,862 | 12,901 | $367,512 | ||||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Distributions reinvested | 2,029 | 51,546 | 381 | 10,404 | ||||||||||||||||||||||
Repurchased | (2,065 | ) | (56,933 | ) | (20 | ) | (469 | ) | ||||||||||||||||||
Net increase (decrease) | (36 | ) | ($5,387 | ) | 361 | $9,935 | ||||||||||||||||||||
Total net increase | 647,315 | $16,173,082 | 404,856 | $10,957,047 |
Affiliates of the fund owned 24%, 49% and 19% of shares of beneficial interest of Class R2, Class R4 and Class R6, respectively, on March 31, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $165,694,098 and 169,931,643, respectively, for the year ended March 31, 2015.
34
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock Small Company 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 Small Company Fund (the "Fund") at March 31, 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 March 31, 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
May 18, 2015
35
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 March 31, 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.
The fund paid $20,421,065 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.
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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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
37
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
38
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
39
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. |
40
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 Fiduciary Management Associates, 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
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. |
41
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 Small Company Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202368 | 348A 3/15 5/15 |
John Hancock
Disciplined Value Mid Cap Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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
Disciplined Value Mid Cap Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
18 | Financial statements | |||||||
22 | Financial highlights | |||||||
29 | Notes to financial statements | |||||||
36 | Auditor's report | |||||||
37 | Tax information | |||||||
38 | Trustees and Officers | |||||||
42 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks to provide long-term growth of capital with current income as a secondary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell midcap companies with lower price-to-book ratios and lower forecasted growth values.
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.
1. After the close of business on 7-9-10, holders of Investor shares and Institutional shares of the former Robeco Boston Partners Mid Cap Value Fund (the predecessor fund) became owners of an equal number of full and fractional Class A and Class I shares, respectively, of John Hancock Disciplined Value Mid Cap Fund, which were first offered on 7-12-10. Class A shares' performance shown above for periods prior to this date is that of the predecessor fund's Investor shares that have been recalculated to reflect the gross fees and expenses of Class A shares.
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
Equity markets benefited from continued stimulus from the U.S. Federal Reserve in the form of quantitative easing for most of the period and near-zero interest rates.
Stock selection led to outperformance
The fund outperformed the Russell Midcap Value Index and its mid-cap value peers, primarily due to stock selection in the information technology and energy sectors.
Fund benefited in rocky second half
Our focus on quality companies was rewarded in the second half of the period as market volatility rose.
PORTFOLIO COMPOSITION AS OF 3/31/15 (%)
A note about risks
The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies. Value stocks may decline in price. Foreign investing has additional risks, such as currency and market volatility and political and social instability. 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. 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. Actively trading securities can increase transaction costs (thus lowering performance) and taxable distributions. Please see the fund's prospectuses for additional risks.
3
![](https://capedge.com/proxy/N-CSR/0001145443-15-000763/stephenlpollack.jpg)
Steven L. Pollack, CFA
Portfolio Manager
Boston Partners
The bull market in U.S. stocks continued over the past twelve months. What kept stocks on a positive trajectory?
U.S. stocks followed up a stellar 2013 by continuing to advance, with most major indices setting new highs during the reporting period. The S&P 500 Index returned 12.73% while mid-cap value stocks, as measured by the fund's benchmark, the Russell Midcap Value Index, advanced 11.70% during the 12-month period ended March 31, 2015.
Stocks benefited from several catalysts over the course of the fiscal year. The U.S. Federal Reserve (Fed) continued its quantitative easing program for the first half of the period and maintained its zero interest-rate policy, encouraging investors to embrace riskier assets in pursuit of returns. This also provided companies with affordable financing for merger activity and shareholder-friendly actions such as dividend payments and share buybacks. A steadily improving job market also provided support to economic expansion as the first half of the period saw the United States produce its strongest back-to-back quarters of GDP growth since 2003, making it one of the bright spots in an otherwise tepid global economy. And finally, U.S. companies continued to increase earnings at a solid pace with the majority of S&P 500 Index constituents topping Wall Street expectations.
The strength of the economy and investor confidence enabled stocks to overcome risks that led to sporadic selloffs throughout the period. Equities were challenged during the year by escalating geopolitical risk in Ukraine and the Middle East, uncertainty over the fate of Greece in the eurozone, and sharply falling oil prices, and a strengthening U.S. dollar. Yet in each instance, equities bounced back quickly.
One constant throughout has been a supportive Fed. Since becoming Fed chair in February 2014, Janet Yellen has mostly soothed markets by communicating patience and signaling that interest rates would remain low amid a sluggish recovery in growth and wages.
4
What factors drove the fund's outperformance for the year, relative to its benchmark?
As active managers, performance is a function of the bottom-up analysis that drives our stock selection. We are constantly on the lookout for investment opportunities within our three-circle discipline of attractive valuation, sound fundamentals, and a catalyst for improvement. We were able to identify a number of such companies during the year, allowing the fund to add value over its benchmark across most industry sectors. In particular, significant contributions to the fund's outperformance came from stocks in the cyclical sectors of information technology, energy, industrials, and materials.
Can you discuss some of the stock-specific factors that contributed the most to the fund's performance?
Robert Half International, Inc., an out-of-benchmark provider of staffing in accounting and finance in the industrials sector and the fund's second largest holding, was a significant contributor to performance for the period as the company benefited from an increase in the placement of temporary workers. Lear Corp., a supplier of electrical and seating systems to the auto industry in the consumer discretionary sector, and the fund's largest position, gained from strengthening auto sales. Within information technology, Avago Technologies, Ltd. continued to benefit from its leadership position as a supplier of smartphone technologies while out-of-benchmark semiconductor holdings NXP Semiconductors NV and ON Semiconductor Corp. were lifted by
SECTOR COMPOSITION AS OF 3/31/15 (%)
5
consolidation in the chip space. Meanwhile, Graphic Packaging Holding Company, in the materials sector, continued to deliver strong results from a healthier balance sheet and improved productivity as product volumes normalized. An out-of-benchmark holding in Marathon Petroleum Corp., in the energy sector, benefited from lower oil prices in its refining business.
What factors and specific stocks detracted from the fund's performance?
Within the consumer discretionary sector, Apollo Education Group, Inc. was a significant detractor. The owner of the for-profit University of Phoenix suffered from declining enrollment as it faces more competition from traditional colleges in a recovering economy. The fund's position in Apollo was sold prior to period end. The fund's healthcare holdings lagged slightly due in part to the fund's positions in healthcare providers, where we passed on holding several strong-performing HMOs and hospital operators.
How was the fund positioned at the end of the period?
Our focus remains on owning good businesses with differentiated products that can continue to perform well facing the likelihood of higher interest rates and uncertainty over the strength of the U.S. economy. We continue to maintain the fund's overweight in technology, investing in stock-specific opportunities with reasonable valuations compared to their earnings and cash flow
TEN LARGEST HOLDINGS AS OF 3/31/15 (%)
Lear Corp. | 1.8 | ||||
Robert Half International, Inc. | 1.8 | ||||
TD Ameritrade Holding Corp. | 1.8 | ||||
Western Digital Corp. | 1.7 | ||||
Omnicare, Inc. | 1.6 | ||||
Boston Properties, Inc. | 1.6 | ||||
Equity Residential | 1.5 | ||||
Graphic Packaging Holding Company | 1.5 | ||||
Amdocs, Ltd. | 1.4 | ||||
The Allstate Corp. | 1.4 | ||||
TOTAL | 16.1 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
6
characteristics. Industrials that are well-positioned to benefit from improving cyclical conditions represent another overweight in the fund. Financials are the fund's largest allocation; its largest underweight is to the richly-valued, rate-sensitive utilities sector.
A strengthening dollar has caused earnings growth to stall, yet free cash flow growth and capital returns to shareholders have continued to increase. Current free cash flow yields continue to look very attractive compared to U.S. corporate bond yields. As investors gain confidence that the economy will improve and earnings growth will reappear in the second half of 2015 and 2016, we believe U.S. equity markets should continue to modestly improve.
MANAGED BY
![]() | Steven L. Pollack, CFA On the fund since 2000 Investing since 1984 | ||||
![]() | Joseph F. Feeney, Jr., CFA On the fund since 2010 Investing since 1985 | ||||
![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||||||||
1-year | 5-year | 10-year | 5-year | 10-year | |||||||||||||||||||
Class A1 | 8.08 | 15.97 | 11.32 | 109.72 | 192.21 | ||||||||||||||||||
Class C1 | 11.90 | 16.26 | 11.02 | 112.38 | 184.52 | ||||||||||||||||||
Class I1,2 | 14.13 | 17.52 | 12.28 | 124.13 | 218.51 | ||||||||||||||||||
Class R21,2 | 13.66 | 16.99 | 11.71 | 119.19 | 202.69 | ||||||||||||||||||
Class R41,2 | 13.93 | 17.32 | 12.10 | 122.22 | 213.37 | ||||||||||||||||||
Class R61,2 | 14.21 | 17.62 | 12.36 | 125.10 | 220.76 | ||||||||||||||||||
Class ADV1,2 | 13.67 | 17.11 | 11.86 | 120.28 | 206.79 | ||||||||||||||||||
Index† | 11.70 | 15.84 | 9.61 | 108.63 | 150.25 |
Performance figures assume all distributions are reinvested. Figures reflect maximum sales charges on Class A shares of 5% and the applicable contingent deferred sales charge (CDSC) on Class C shares. 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 R4, Class R6, and Class ADV 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 C | Class I | Class R2 | Class R4 | Class R6 | Class ADV | |||||||||||||||||
Gross (%) | 1.18 | 1.94 | 0.90 | 1.32 | 1.32 | 0.81 | 3.45 | ||||||||||||||||
Net (%) | 1.18 | 1.94 | 0.90 | 1.32 | 1.15 | 0.77 | 1.25 |
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 Russell Midcap Value Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Disciplined Value Mid Cap Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the Russell Midcap Value Index.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index ($) | |||||||||||
Class C1,3 | 3-31-05 | 28,452 | 28,452 | 25,025 | ||||||||||
Class I1,2 | 3-31-05 | 31,851 | 31,851 | 25,025 | ||||||||||
Class R21,2 | 3-31-05 | 30,269 | 30,269 | 25,025 | ||||||||||
Class R41,2 | 3-31-05 | 31,337 | 31,337 | 25,025 | ||||||||||
Class R61,2 | 3-31-05 | 32,076 | 32,076 | 25,025 | ||||||||||
Class ADV1,2 | 3-31-05 | 30,679 | 30,679 | 25,025 |
The Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell midcap companies with lower price-to-book ratios and lower forecasted growth values.
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 | After the close of business on 7-9-10, holders of Investor shares and Institutional shares of the former Robeco Boston Partners Mid Cap Value Fund (the predecessor fund) became owners of an equal number of full and fractional Class A and Class I shares, respectively, of John Hancock Disciplined Value Mid Cap Fund. Class A, Class I, and Class ADV shares were first offered on 7-12-10. The returns prior to this date for Class A and Class ADV shares are those of the predecessor fund's Investor shares that have been recalculated to reflect the gross fees and expenses of the fund's Class A and Class ADV shares. For Class I shares, the returns prior to this date are those of the predecessor fund's Institutional shares that have been recalculated to reflect the gross fees and expenses of the fund's Class I shares. Class C, Class R6, Class R2, and Class R4 shares were first offered on 8-15-11, 9-1-11, 3-1-12, and 7-2-13, 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 C, Class R6, Class R2, and Class R4 shares, as applicable. |
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 October 1, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-14 | Ending value on 3-31-15 | Expenses paid during period ended 3-31-151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,127.90 | $5.94 | 1.12% | ||||||||||
Class C | 1,000.00 | 1,123.60 | 9.95 | 1.88% | ||||||||||
Class I | 1,000.00 | 1,129.90 | 4.57 | 0.86% | ||||||||||
Class R2 | 1,000.00 | 1,127.00 | 6.79 | 1.28% | ||||||||||
Class R4 | 1,000.00 | 1,129.10 | 5.52 | 1.04% | ||||||||||
Class R6 | 1,000.00 | 1,130.10 | 4.09 | 0.77% | ||||||||||
Class ADV | 1,000.00 | 1,127.40 | 6.63 | 1.25% |
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 March 31, 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 October 1, 2014, with the same investment held until March 31, 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.
Account value on 10-1-14 | Ending value on 3-31-15 | Expenses paid during period ended 3-31-151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,019.30 | $5.64 | 1.12% | ||||||||||
Class C | 1,000.00 | 1,015.60 | 9.45 | 1.88% | ||||||||||
Class I | 1,000.00 | 1,020.60 | 4.33 | 0.86% | ||||||||||
Class R2 | 1,000.00 | 1,018.50 | 6.44 | 1.28% | ||||||||||
Class R4 | 1,000.00 | 1,019.70 | 5.24 | 1.04% | ||||||||||
Class R6 | 1,000.00 | 1,021.10 | 3.88 | 0.77% | ||||||||||
Class ADV | 1,000.00 | 1,018.70 | 6.29 | 1.25% |
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 182/365 (to reflect the one-half year period). |
11
Fund's investments
As of 3-31-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 97.7% | $10,562,010,991 | |||||||||||||
(Cost $8,002,416,150) | ||||||||||||||
Consumer discretionary 9.7% | 1,049,578,909 | |||||||||||||
Auto components 3.0% | ||||||||||||||
Lear Corp. | 1,770,834 | 196,243,824 | ||||||||||||
Tenneco, Inc. (I) | 1,193,235 | 68,515,554 | ||||||||||||
TRW Automotive Holdings Corp. (I) | 562,687 | 58,997,732 | ||||||||||||
Automobiles 0.4% | ||||||||||||||
Harley-Davidson, Inc. | 659,695 | 40,069,874 | ||||||||||||
Diversified consumer services 0.7% | ||||||||||||||
H&R Block, Inc. | 2,358,940 | 75,651,206 | ||||||||||||
Household durables 1.1% | ||||||||||||||
Newell Rubbermaid, Inc. | 3,177,549 | 124,146,839 | ||||||||||||
Internet and catalog retail 0.9% | ||||||||||||||
Expedia, Inc. | 1,068,340 | 100,562,844 | ||||||||||||
Leisure products 0.7% | ||||||||||||||
Brunswick Corp. | 1,401,979 | 72,131,820 | ||||||||||||
Media 1.3% | ||||||||||||||
CBS Corp., Class B | 1,059,990 | 64,267,194 | ||||||||||||
Omnicom Group, Inc. | 968,345 | 75,511,543 | ||||||||||||
Multiline retail 1.0% | ||||||||||||||
Macy's, Inc. | 1,673,570 | 108,631,429 | ||||||||||||
Specialty retail 0.6% | ||||||||||||||
Foot Locker, Inc. | 1,029,350 | 64,849,050 | ||||||||||||
Consumer staples 3.1% | 330,308,026 | |||||||||||||
Beverages 1.7% | ||||||||||||||
Coca-Cola Enterprises, Inc. | 930,080 | 41,109,536 | ||||||||||||
Constellation Brands, Inc., Class A (I) | 1,155,490 | 134,279,493 | ||||||||||||
Food and staples retailing 0.3% | ||||||||||||||
Rite Aid Corp. (I) | 3,925,130 | 34,109,380 | ||||||||||||
Food products 0.5% | ||||||||||||||
Tyson Foods, Inc., Class A | 1,454,490 | 55,706,967 | ||||||||||||
Tobacco 0.6% | ||||||||||||||
Lorillard, Inc. | 996,215 | 65,102,650 | ||||||||||||
Energy 4.0% | 430,307,032 | |||||||||||||
Oil, gas and consumable fuels 4.0% | ||||||||||||||
Energen Corp. | 1,457,775 | 96,213,150 | ||||||||||||
EQT Corp. | 723,615 | 59,965,975 | ||||||||||||
Kosmos Energy, Ltd. (I) | 2,336,467 | 18,481,454 |
Shares | Value | |||||||||||||
Energy (continued) | ||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||
Marathon Petroleum Corp. | 1,040,635 | $106,550,618 | ||||||||||||
Parsley Energy, Inc., Class A (I) | 1,990,630 | 31,810,267 | ||||||||||||
QEP Resources, Inc. | 2,054,145 | 42,828,923 | ||||||||||||
Rice Energy, Inc. (I)(L) | 1,347,965 | 29,331,718 | ||||||||||||
Western Refining, Inc. | 913,645 | 45,124,927 | ||||||||||||
Financials 30.2% | 3,263,934,680 | |||||||||||||
Banks 5.4% | ||||||||||||||
BB&T Corp. | 3,653,835 | 142,463,027 | ||||||||||||
East West Bancorp, Inc. | 2,600,525 | 105,217,242 | ||||||||||||
Fifth Third Bancorp | 6,510,210 | 122,717,459 | ||||||||||||
Huntington Bancshares, Inc. | 10,393,790 | 114,851,380 | ||||||||||||
SunTrust Banks, Inc. | 2,288,135 | 94,019,467 | ||||||||||||
Capital markets 4.9% | ||||||||||||||
Raymond James Financial, Inc. | 2,549,720 | 144,773,102 | ||||||||||||
SEI Investments Company | 1,820,146 | 80,250,237 | ||||||||||||
State Street Corp. | 648,820 | 47,707,735 | ||||||||||||
TD Ameritrade Holding Corp. | 5,086,700 | 189,530,442 | ||||||||||||
The Charles Schwab Corp. | 2,310,890 | 70,343,492 | ||||||||||||
Consumer finance 1.7% | ||||||||||||||
Discover Financial Services | 1,870,840 | 105,421,834 | ||||||||||||
Navient Corp. | 2,137,265 | 43,450,597 | ||||||||||||
SLM Corp. | 3,776,105 | 35,042,254 | ||||||||||||
Diversified financial services 1.2% | ||||||||||||||
McGraw-Hill Financial, Inc. | 750,654 | 77,617,624 | ||||||||||||
Moody's Corp. | 457,400 | 47,478,120 | ||||||||||||
Insurance 8.5% | ||||||||||||||
Alleghany Corp. (I) | 223,318 | 108,755,866 | ||||||||||||
Aon PLC | 1,112,860 | 106,968,103 | ||||||||||||
Loews Corp. | 1,294,180 | 52,841,369 | ||||||||||||
Marsh & McLennan Companies, Inc. | 2,290,405 | 128,468,816 | ||||||||||||
Reinsurance Group of America, Inc. | 1,240,725 | 115,623,163 | ||||||||||||
Symetra Financial Corp. | 1,821,826 | 42,740,038 | ||||||||||||
The Allstate Corp. | 2,058,570 | 146,508,427 | ||||||||||||
Torchmark Corp. | 1,887,706 | 103,672,814 | ||||||||||||
W.R. Berkley Corp. | 941,825 | 47,571,581 | ||||||||||||
XL Group PLC | 1,822,305 | 67,060,824 | ||||||||||||
Real estate investment trusts 8.5% | ||||||||||||||
American Assets Trust, Inc. | 833,767 | 36,085,436 | ||||||||||||
American Homes 4 Rent, Class A | 240,045 | 3,972,745 | ||||||||||||
Boston Properties, Inc. | 1,224,905 | 172,074,654 | ||||||||||||
Douglas Emmett, Inc. | 1,472,610 | 43,898,504 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Real estate investment trusts (continued) | ||||||||||||||
Equity Residential | 2,144,605 | $166,978,945 | ||||||||||||
Essex Property Trust, Inc. | 367,373 | 84,459,053 | ||||||||||||
Kilroy Realty Corp. | 705,205 | 53,715,465 | ||||||||||||
Kimco Realty Corp. | 3,264,520 | 87,652,362 | ||||||||||||
LaSalle Hotel Properties | 993,000 | 38,587,980 | ||||||||||||
Regency Centers Corp. | 1,641,349 | 111,677,386 | ||||||||||||
SL Green Realty Corp. | 963,835 | 123,737,137 | ||||||||||||
Health care 8.0% | 865,017,945 | |||||||||||||
Health care equipment and supplies 2.4% | ||||||||||||||
Becton, Dickinson and Company | 386,794 | 55,539,750 | ||||||||||||
Boston Scientific Corp. (I) | 3,855,680 | 68,438,320 | ||||||||||||
St. Jude Medical, Inc. | 883,755 | 57,797,577 | ||||||||||||
Zimmer Holdings, Inc. | 647,710 | 76,118,879 | ||||||||||||
Health care providers and services 4.5% | ||||||||||||||
AmerisourceBergen Corp. | 317,885 | 36,133,988 | ||||||||||||
Cardinal Health, Inc. | 1,109,235 | 100,130,643 | ||||||||||||
DaVita HealthCare Partners, Inc. (I) | 444,005 | 36,088,726 | ||||||||||||
Laboratory Corp. of America Holdings (I) | 533,205 | 67,231,818 | ||||||||||||
McKesson Corp. | 330,195 | 74,690,109 | ||||||||||||
Omnicare, Inc. | 2,254,665 | 173,744,485 | ||||||||||||
Life sciences tools and services 1.1% | ||||||||||||||
Bruker Corp. (I) | 1,699,700 | 31,393,459 | ||||||||||||
ICON PLC (I) | 1,243,587 | 87,710,191 | ||||||||||||
Industrials 13.8% | 1,495,762,287 | |||||||||||||
Aerospace and defense 1.6% | ||||||||||||||
Curtiss-Wright Corp. | 531,742 | 39,317,003 | ||||||||||||
Exelis, Inc. | 1,572,245 | 38,315,611 | ||||||||||||
Huntington Ingalls Industries, Inc. | 683,982 | 95,860,077 | ||||||||||||
Airlines 0.4% | ||||||||||||||
Delta Air Lines, Inc. | 1,015,665 | 45,664,298 | ||||||||||||
Building products 1.0% | ||||||||||||||
Masco Corp. | 3,876,205 | 103,494,674 | ||||||||||||
Construction and engineering 0.4% | ||||||||||||||
Fluor Corp. | 749,025 | 42,814,269 | ||||||||||||
Electrical equipment 0.2% | ||||||||||||||
Hubbell, Inc., Class B | 230,847 | 25,305,448 | ||||||||||||
Industrial conglomerates 0.5% | ||||||||||||||
Carlisle Companies, Inc. | 603,755 | 55,925,826 | ||||||||||||
Machinery 4.0% | ||||||||||||||
Dover Corp. | 1,074,859 | 74,294,254 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Machinery (continued) | ||||||||||||||
Ingersoll-Rand PLC | 1,030,270 | $70,140,782 | ||||||||||||
Parker Hannifin Corp. | 1,074,090 | 127,580,410 | ||||||||||||
Stanley Black & Decker, Inc. | 411,805 | 39,269,725 | ||||||||||||
Terex Corp. | 1,256,645 | 33,414,191 | ||||||||||||
The Timken Company | 1,112,025 | 46,860,734 | ||||||||||||
WABCO Holdings, Inc. (I) | 381,690 | 46,902,067 | ||||||||||||
Professional services 5.0% | ||||||||||||||
Equifax, Inc. | 1,331,610 | 123,839,730 | ||||||||||||
ManpowerGroup, Inc. | 1,126,440 | 97,042,806 | ||||||||||||
Robert Half International, Inc. | 3,191,066 | 193,123,314 | ||||||||||||
Towers Watson & Company, Class A | 942,131 | 124,535,586 | ||||||||||||
Trading companies and distributors 0.7% | ||||||||||||||
WESCO International, Inc. (I) | 1,031,070 | 72,061,482 | ||||||||||||
Information technology 17.9% | 1,938,554,010 | |||||||||||||
Communications equipment 1.9% | ||||||||||||||
Brocade Communications Systems, Inc. | 6,259,810 | 74,272,646 | ||||||||||||
Harris Corp. | 798,450 | 62,885,922 | ||||||||||||
Motorola Solutions, Inc. | 1,043,640 | 69,579,479 | ||||||||||||
Electronic equipment, instruments and components 4.3% | ||||||||||||||
Arrow Electronics, Inc. (I) | 1,752,387 | 107,158,465 | ||||||||||||
Avnet, Inc. | 2,143,949 | 95,405,731 | ||||||||||||
Flextronics International, Ltd. (I) | 4,282,698 | 54,283,193 | ||||||||||||
Jabil Circuit, Inc. | 3,384,900 | 79,138,962 | ||||||||||||
Knowles Corp. (I)(L) | 782,159 | 15,072,204 | ||||||||||||
TE Connectivity, Ltd. | 1,520,449 | 108,894,557 | ||||||||||||
Zebra Technologies Corp., Class A (I) | 56,050 | 5,084,576 | ||||||||||||
Internet software and services 0.8% | ||||||||||||||
InterActiveCorp | 474,334 | 32,003,315 | ||||||||||||
NetEase, Inc., ADR | 573,020 | 60,339,006 | ||||||||||||
IT services 4.0% | ||||||||||||||
Alliance Data Systems Corp. (I) | 262,235 | 77,687,119 | ||||||||||||
Amdocs, Ltd. | 2,756,050 | 149,929,120 | ||||||||||||
Fidelity National Information Services, Inc. | 1,469,900 | 100,041,394 | ||||||||||||
Global Payments, Inc. | 514,725 | 47,189,988 | ||||||||||||
Total System Services, Inc. | 1,396,825 | 53,288,874 | ||||||||||||
Semiconductors and semiconductor equipment 3.4% | ||||||||||||||
Avago Technologies, Ltd. | 991,170 | 125,858,767 | ||||||||||||
Microsemi Corp. (I) | 1,707,535 | 60,446,739 | ||||||||||||
NXP Semiconductors NV (I) | 823,945 | 82,691,120 | ||||||||||||
ON Semiconductor Corp. (I) | 8,302,444 | 100,542,597 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Software 1.2% | ||||||||||||||
Activision Blizzard, Inc. | 5,784,945 | $131,462,875 | ||||||||||||
Technology hardware, storage and peripherals 2.3% | ||||||||||||||
Seagate Technology PLC | 1,153,410 | 60,011,922 | ||||||||||||
Western Digital Corp. | 2,035,880 | 185,285,439 | ||||||||||||
Materials 5.5% | 589,290,808 | |||||||||||||
Chemicals 1.1% | ||||||||||||||
Huntsman Corp. | 1,720,205 | 38,136,945 | ||||||||||||
The Valspar Corp. | 956,365 | 80,363,351 | ||||||||||||
Containers and packaging 3.7% | ||||||||||||||
Avery Dennison Corp. | 924,055 | 48,891,750 | ||||||||||||
Crown Holdings, Inc. (I) | 2,313,730 | 124,987,695 | ||||||||||||
Graphic Packaging Holding Company | 10,999,921 | 159,938,851 | ||||||||||||
Packaging Corp. of America | 791,350 | 61,875,657 | ||||||||||||
Paper and forest products 0.7% | ||||||||||||||
International Paper Company | 1,353,335 | 75,096,559 | ||||||||||||
Utilities 5.5% | 599,257,294 | |||||||||||||
Electric utilities 3.4% | ||||||||||||||
American Electric Power Company, Inc. | 2,039,990 | 114,749,438 | ||||||||||||
Edison International | 1,800,740 | 112,492,228 | ||||||||||||
FirstEnergy Corp. | 872,085 | 30,575,300 | ||||||||||||
Great Plains Energy, Inc. | 2,302,254 | 61,424,137 | ||||||||||||
Westar Energy, Inc. | 1,335,900 | 51,779,484 | ||||||||||||
Independent power and renewable electricity producers 0.5% | ||||||||||||||
AES Corp. | 4,452,089 | 57,209,344 | ||||||||||||
Multi-utilities 1.6% | ||||||||||||||
Alliant Energy Corp. | 1,251,464 | 78,842,232 | ||||||||||||
Ameren Corp. | 1,142,065 | 48,195,143 | ||||||||||||
PG&E Corp. | 828,905 | 43,989,988 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Securities lending collateral 0.2% | $21,541,976 | |||||||||||||
(Cost $21,542,072) | ||||||||||||||
John Hancock Collateral Trust (W) | 0.1102(Y | ) | 2,153,121 | 21,541,976 | ||||||||||
Short-term investments 1.8% | $191,155,065 | |||||||||||||
(Cost $191,155,065) | ||||||||||||||
Money market funds 1.8% | 191,155,065 | |||||||||||||
State Street Institutional US Government Money Market Fund | 0.0000(Y | ) | 191,155,065 | 191,155,065 | ||||||||||
Total investments (Cost $8,215,113,287)† 99.7% | $10,774,708,032 | |||||||||||||
Other assets and liabilities, net 0.3% | $32,128,104 | |||||||||||||
Total net assets 100.0% | $10,806,836,136 |
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 | |||||||
(I) | Non-income producing security. | |||||||
(L) | A portion of this security is on loan as of 3-31-15. | |||||||
(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 3-31-15. | |||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $8,243,287,535. Net unrealized appreciation aggregated $2,531,420,497, of which $2,591,581,625 related to appreciated investment securities and $60,161,128 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $8,193,571,215) including $21,123,577 of securities loaned | $10,753,166,056 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers, at value (Cost $21,542,072) | 21,541,976 | |||||||||||||||||||||||||||||||||||||||
Total investments, at value (Cost $8,215,113,287) | 10,774,708,032 | |||||||||||||||||||||||||||||||||||||||
Cash | 286,673 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 51,334,637 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 37,354,190 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 16,365,144 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 7,477 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 74 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 284,295 | |||||||||||||||||||||||||||||||||||||||
Total assets | 10,880,340,522 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 28,021,735 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 22,006,209 | |||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 21,544,825 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 145,726 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 915,755 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 62,805 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 11,840 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 795,491 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 73,504,386 | |||||||||||||||||||||||||||||||||||||||
Net assets | $10,806,836,136 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $8,044,429,542 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 7,307,844 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 195,504,005 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 2,559,594,745 | |||||||||||||||||||||||||||||||||||||||
Net assets | $10,806,836,136 | |||||||||||||||||||||||||||||||||||||||
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 ($2,148,330,758 ÷ 106,398,884 shares)1 | $20.19 | |||||||||||||||||
Class C ($366,067,650 ÷ 17,914,858 shares) 1 | $20.43 | |||||||||||||||||
Class I ($7,116,411,198 ÷ 341,205,499 shares) | $20.86 | |||||||||||||||||
Class R2 ($249,728,582 ÷ 12,000,537 shares) | $20.81 | |||||||||||||||||
Class R4 ($118,144,366 ÷ 5,667,430 shares) | $20.85 | |||||||||||||||||
Class R6 ($807,219,188 ÷ 38,721,456 shares) | $20.85 | |||||||||||||||||
Class ADV ($934,394 ÷ 46,372 shares) | $20.15 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $21.25 |
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 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $137,378,149 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 262,724 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 137,640,873 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 66,828,540 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 10,519,226 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 1,116,981 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 9,985,204 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 142,856 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 494,279 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 641,064 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 236,668 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 1,093,062 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 182,108 | |||||||||||||||||||||||||||||||||||||||
Other | 122,584 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 91,362,572 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (800,424 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 90,562,148 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 47,078,725 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 369,710,682 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (2,567 | ) | ||||||||||||||||||||||||||||||||||||||
369,708,115 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 845,455,926 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (4,959 | ) | ||||||||||||||||||||||||||||||||||||||
845,450,967 | ||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 1,215,159,082 | |||||||||||||||||||||||||||||||||||||||
Increase in net assets from operations | $1,262,237,807 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $47,078,725 | $23,438,954 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 369,708,115 | 133,782,192 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 845,450,967 | 1,183,040,804 | |||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 1,262,237,807 | 1,340,261,950 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (5,490,148 | ) | (6,093,145 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (33,378,448 | ) | (14,534,231 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (344,941 | ) | (209,855 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (435,019 | ) | (24,622 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (4,227,049 | ) | (1,302,378 | ) | |||||||||||||||||||||||||||||||||||||||||
Class ADV | (1,901 | ) | (1,510 | ) | |||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (45,312,346 | ) | (45,165,032 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (7,850,524 | ) | (4,668,972 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (142,457,350 | ) | (57,231,207 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (5,341,303 | ) | (1,998,367 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (2,434,355 | ) | (163,136 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (14,736,399 | ) | (4,161,455 | ) | |||||||||||||||||||||||||||||||||||||||||
Class ADV | (20,467 | ) | (14,505 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (262,030,250 | ) | (135,568,415 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 1,530,028,017 | 3,934,879,351 | |||||||||||||||||||||||||||||||||||||||||||
Total increase | 2,530,235,574 | 5,139,572,886 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 8,276,600,562 | 3,137,027,676 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $10,806,836,136 | $8,276,600,562 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $7,307,844 | $4,106,624 |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | 8-31-10 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.23 | $14.51 | $12.41 | $11.98 | $8.66 | $8.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income4 | 0.05 | 0.05 | 0.05 | 0.04 | 0.01 | 0.01 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.42 | 4.03 | 2.09 | 0.42 | 3.32 | 0.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.47 | 4.08 | 2.14 | 0.46 | 3.33 | 0.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.04 | ) | (0.04 | ) | — | (0.01 | ) | (0.05 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | — | (0.03 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.51 | ) | (0.36 | ) | (0.04 | ) | (0.03 | ) | (0.01 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.19 | $18.23 | $14.51 | $12.41 | $11.98 | $8.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5,6 | �� | 13.78 | 28.30 | 17.31 | 3.92 | 38.47 | 7 | 7.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2,148 | $3,086 | $1,169 | $517 | $171 | $75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.13 | 1.18 | 1.27 | 1.33 | 1.35 | 8 | 1.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.13 | 1.17 | 1.27 | 1.29 | 1.25 | 8 | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.28 | 0.32 | 0.38 | 0.32 | 0.10 | 8 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 55 | 41 | 27 | 38 |
1 | For the seven month fiscal period ended 3-31-11. The fund changed its fiscal year end from August 31 to March 31. | |||||||||||||||||||||||||||||||||||||||||||||
2 | After the close of business on 7-9-10, holders of Investor Class Shares of the former Robeco Boston Partners Mid Cap Value Fund (the predecessor fund) became owners of an equal number of full and fractional Class A shares of the John Hancock Disciplined Value Mid Cap Fund. These shares were first offered on 7-12-10. Additionally, the accounting and performance history of the Investor Class Shares of the predecessor fund was redesignated as that of John Hancock Disciplined Value Mid Cap Fund Class A. | |||||||||||||||||||||||||||||||||||||||||||||
3 | The amount shown for a share outstanding may differ with the distributions from net investment income for the period due to the timing of distributions in relations to fluctuations of shares outstanding during the period | |||||||||||||||||||||||||||||||||||||||||||||
4 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||||||||
6 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | |||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. |
Class C Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.53 | $14.82 | $12.74 | $10.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.08 | ) | (0.07 | ) | (0.05 | ) | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.43 | 4.10 | 2.13 | 2.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.35 | 4.03 | 2.08 | 2.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | — | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.43 | $18.53 | $14.82 | $12.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 12.90 | 27.32 | 16.33 | 20.22 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $366 | $329 | $90 | $20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.89 | 1.94 | 2.08 | 2.10 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.88 | 1.93 | 2.08 | 2.10 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.42 | ) | (0.43 | ) | (0.39 | ) | (0.26 | )6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 55 | 41 | 7 |
1 | The inception date for Class C shares is 8-15-11. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
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. | |||||||||||||||||||||||||||||||||||||||
5 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
6 | Annualized. | |||||||||||||||||||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class I Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | 8-31-10 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.81 | $14.95 | $12.79 | $12.33 | $8.92 | $8.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.12 | 0.10 | 0.09 | 0.07 | 0.03 | 0.04 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.49 | 4.16 | 2.15 | 0.45 | 3.41 | 0.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.61 | 4.26 | 2.24 | 0.52 | 3.44 | 0.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.11 | ) | (0.08 | ) | (0.08 | ) | (0.03 | ) | (0.03 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | — | (0.03 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.56 | ) | (0.40 | ) | (0.08 | ) | (0.06 | ) | (0.03 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.86 | $18.81 | $14.95 | $12.79 | $12.33 | $8.92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 14.13 | 28.67 | 17.64 | 4.28 | 38.64 | 6 | 7.76 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $7,116 | $4,168 | $1,762 | $948 | $254 | $87 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.87 | 0.89 | 0.93 | 0.98 | 0.99 | 7 | 1.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.86 | 0.89 | 0.93 | 0.98 | 0.99 | 7 | 1.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.63 | 0.59 | 0.71 | 0.63 | 0.37 | 7 | 0.41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 55 | 41 | 27 | 38 |
1 | For the seven month fiscal period ended 3-31-11. The fund changed its fiscal year end from August 31 to March 31. | |||||||||||||||||||||||||||||||||||||||||||||
2 | After the close of business on 7-9-10, holders of Institutional Class Shares of the former Robeco Boston Partners Mid Cap Value Fund (the predecessor fund) became owners of an equal number of full and fractional Class I shares of the John Hancock Disciplined Value Mid Cap Fund. These shares were first offered on 7-12-10. Additionally, the accounting and performance history of the Institutional Class Shares of the predecessor fund was redesignated as that of John Hancock Disciplined Value Mid Cap Fund Class I. | |||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||
4 | The amount shown for a share outstanding may differ with the distributions from net investment income for the period due to the timing of distributions in relations to fluctuations of shares outstanding during the period. | |||||||||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | |||||||||||||||||||||||||||||||||||||||||||||
7 | Annualized. |
Class R2 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.77 | $14.94 | $12.78 | $12.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.04 | 0.04 | 0.05 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.48 | 4.14 | 2.14 | 0.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.52 | 4.18 | 2.19 | 0.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.03 | ) | (0.03 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.48 | ) | (0.35 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.81 | $18.77 | $14.94 | $12.78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 13.66 | 28.15 | 17.15 | 2.82 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $250 | $205 | $15 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.29 | 1.28 | 2.15 | 16.13 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.28 | 1.27 | 1.40 | 1.45 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.19 | 0.25 | 0.33 | 1.00 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 55 | 41 | 7 |
1 | The inception date for Class R2 shares is 3-1-12. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
5 | Less than $500,000. | |||||||||||||||||||||||||||||||||||||||
6 | Annualized. | |||||||||||||||||||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class R4 Shares Period ended | 3-31-15 | 3-31-14 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.81 | $15.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.47 | 3.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.57 | 3.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.08 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.53 | ) | (0.37 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.85 | $18.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 13.93 | 22.85 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $118 | $44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.15 | 1.30 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.04 | 1.14 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.49 | 0.44 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 6 |
1 | The inception date for Class R4 shares is 7-2-13. | |||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||
4 | Not annualized. | |||||||||||||||||||||||||||||
5 | Annualized. | |||||||||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-13 to 3-31-14. |
Class R6 Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.81 | $14.95 | $12.79 | $10.95 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.14 | 0.12 | 0.11 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.48 | 4.16 | 2.14 | 1.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.62 | 4.28 | 2.25 | 1.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.13 | ) | (0.10 | ) | (0.09 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | — | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.58 | ) | (0.42 | ) | (0.09 | ) | (0.06 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.85 | $18.81 | $14.95 | $12.79 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 14.21 | 28.81 | 17.68 | 17.45 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $807 | $444 | $100 | $2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.78 | 0.81 | 0.89 | 4.22 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.77 | 0.80 | 0.89 | 0.99 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.73 | 0.71 | 0.84 | 1.25 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 55 | 41 | 6 |
1 | The inception date for Class R6 shares is 9-1-11. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
4 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
5 | Annualized. | |||||||||||||||||||||||||||||||||||||||
6 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class ADV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | 8-31-10 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.20 | $14.49 | $12.40 | $11.97 | $8.65 | $8.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | 0.04 | 0.03 | 0.04 | 0.04 | 0.01 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.40 | 4.03 | 2.10 | 0.43 | 3.32 | (0.21 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.44 | 4.06 | 2.14 | 0.47 | 3.33 | (0.21 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.04 | ) | (0.03 | ) | (0.05 | ) | (0.01 | ) | (0.01 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.45 | ) | (0.32 | ) | — | (0.03 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.49 | ) | (0.35 | ) | (0.05 | ) | (0.04 | ) | (0.01 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.15 | $18.20 | $14.49 | $12.40 | $11.97 | $8.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 13.67 | 28.19 | 17.33 | 3.94 | 38.50 | 6 | (2.37 | )6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | $1 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.12 | 3.46 | 3.74 | 4.18 | 5.78 | 8 | 1.42 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 | 8 | 1.25 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.21 | 0.19 | 0.35 | 0.37 | 0.15 | 8 | (0.37 | )8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 35 | 39 | 55 | 41 | 27 | 38 | 9 |
1 | For the seven month fiscal period ended 3-31-11. The fund changed its fiscal year end from August 31 to March 31. | |||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class ADV shares is 7-12-10. | |||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||
4 | Less than $0.005 per share. | |||||||||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | |||||||||||||||||||||||||||||||||||||||||||||
7 | Less than $500,000. | |||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. | |||||||||||||||||||||||||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 9-1-09 to 8-31-10. |
Note 1 — Organization
John Hancock Disciplined Value Mid Cap 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 long-term growth of capital with current income as a secondary 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 I shares are offered to institutions and certain investors. Class R2 and Class R4 shares are available only to certain retirement plans. Class R6 shares are available only to certain retirement plans, institutions and other investors. Class ADV shares are available only to investors who acquired Class A shares as a result of the reorganization of the Robeco Boston Partners Mid Cap Value Fund (the predecessor fund) into the fund. 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.
Effective January 31, 2014, the fund was closed to new investors.
Note 2 — Significant accounting policy
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. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost. Other fund 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.
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 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.
As of March 31, 2015, all investments are categorized as Level 1 under the hierarchy described above.
29
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.
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
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.
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 March 31, 2015 were $3,052. For the year ended March 31, 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
30
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 March 31, 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 March 31, 2015 and 2014 was as follows:
March 31, 2015 | March 31, 2014 | |||||||
Ordinary Income | $112,302,853 | $97,122,777 | ||||||
Long-Term Capital Gain | 149,727,397 | 38,445,637 | ||||||
Total | $262,030,250 | $135,568,414 |
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $51,731,621 of undistributed ordinary income and $179,254,476 of undistributed long-term capital gain.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from 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.
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 equivalent, on an annual basis, to the sum of: (a) 0.800% of the first $500 million of
31
the fund's average daily net assets; (b) 0.775% of the next $500 million of the fund's average daily net assets; (c) 0.750% of the next $500 million of the fund's average daily net assets; (d) 0.725% of the next $1 billion of the fund's average daily net assets; and (e) 0.700% of the fund's average daily net assets in excess of $2.5 billion. The Advisor has a subadvisory agreement with Boston Partners, a division of Robeco Investment Management, 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 March 31, 2015, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the funds and with approval of the Board of Trustees.
The Advisor has contractually agreed to reimburse or limit certain expenses for certain share classes of the fund. This agreement excludes certain expenses such as taxes, brokerage commissions, interest expense, acquired fund fees and expenses paid indirectly, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business and short dividend expense. These reimbursements and limits are such that these expenses will not exceed 1.15% and 1.25% for Class R4 and Class ADV shares, respectively. The fee waivers and/or expense reimbursements will continue 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.
For the year ended March 31, 2015, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $169,439 | Class R4 | $6,976 | |||||||||||
Class C | 24,691 | Class R6 | 44,775 | |||||||||||
Class I | 431,184 | Class ADV | 16,114 | |||||||||||
Class R2 | 16,914 | Total | $710,093 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.71% 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 March 31, 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 C, Class R2, Class R4 and Class ADV 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 and Class R4, 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 | Rule 12b-1 fee | Service fee | |||||||||||||||
Class A | 0.30% | — | Class R4 | 0.25% | 0.10% | |||||||||||||||
Class C | 1.00% | — | Class ADV | 0.25% | — | |||||||||||||||
Class R2 | 0.25% | 0.25% |
32
Currently only 0.25% is charged to Class A shares for Rule 12b-1 fees. 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 $90,331 for Class R4 shares for the year ended March 31, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $1,242,833 for the year ended March 31, 2015. Of this amount, $171,093 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $1,066,323 was paid as sales commissions to broker-dealers and $5,417 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A 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 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 March 31, 2015, CDSCs received by the Distributor amounted to $2,306 and $44,356 for Class A 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 March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $5,637,273 | $2,832,919 | $170,509 | $151,694 | ||||||||||
Class C | 3,396,714 | 425,555 | 38,898 | 27,410 | ||||||||||
Class I | — | 6,569,633 | 169,055 | 394,740 | ||||||||||
Class R2 | 1,168,790 | 38,911 | 22,042 | 22,950 | ||||||||||
Class R4 | 314,267 | 15,014 | 19,062 | 11,877 | ||||||||||
Class R6 | — | 102,078 | 57,585 | 32,273 | ||||||||||
Class ADV | 2,182 | 1,094 | 17,128 | 120 | ||||||||||
Total | $10,519,226 | $9,985,204 | $494,279 | $641,064 |
33
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 5 — Fund share transactions
Transactions in fund shares for the years ended March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 32,606,414 | $614,618,999 | 112,071,109 | $1,839,347,952 | ||||||||||||||||||||||
Distributions reinvested | 2,469,274 | 45,632,185 | 2,821,616 | 48,051,850 | ||||||||||||||||||||||
Repurchased | (97,962,941 | ) | (1,825,851,830 | ) | (26,206,076 | ) | (433,557,584 | ) | ||||||||||||||||||
Net increase (decrease) | (62,887,253 | ) | ($1,165,600,646 | ) | 88,686,649 | $1,453,842,218 | ||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 1,863,493 | $35,732,899 | 12,392,250 | $206,888,537 | ||||||||||||||||||||||
Distributions reinvested | 319,998 | 5,996,751 | 207,929 | 3,607,565 | ||||||||||||||||||||||
Repurchased | (2,013,291 | ) | (38,394,466 | ) | (909,781 | ) | (15,444,379 | ) | ||||||||||||||||||
Net increase | 170,200 | $3,335,184 | 11,690,398 | $195,051,723 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 179,397,290 | $3,490,528,185 | 141,646,631 | $2,421,566,726 | ||||||||||||||||||||||
Distributions reinvested | 7,680,784 | 146,549,365 | 3,115,082 | 54,700,838 | ||||||||||||||||||||||
Repurchased | (67,435,720 | ) | (1,322,571,055 | ) | (41,066,594 | ) | (701,790,233 | ) | ||||||||||||||||||
Net increase | 119,642,354 | $2,314,506,495 | 103,695,119 | $1,774,477,331 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 4,744,884 | $91,982,585 | 11,612,161 | $199,320,000 | ||||||||||||||||||||||
Distributions reinvested | 238,454 | 4,544,932 | 90,769 | 1,593,002 | ||||||||||||||||||||||
Repurchased | (3,924,520 | ) | (77,036,868 | ) | (1,786,411 | ) | (31,002,655 | ) | ||||||||||||||||||
Net increase | 1,058,818 | $19,490,649 | 9,916,519 | $169,910,347 | ||||||||||||||||||||||
Class R4 shares1 | ||||||||||||||||||||||||||
Sold | 4,157,048 | $79,815,427 | 2,386,534 | $43,658,507 | ||||||||||||||||||||||
Distributions reinvested | 150,209 | 2,865,994 | 10,553 | 185,418 | ||||||||||||||||||||||
Repurchased | (963,521 | ) | (18,992,090 | ) | (73,393 | ) | (1,340,621 | ) | ||||||||||||||||||
Net increase | 3,343,736 | $63,689,331 | 2,323,694 | $42,503,304 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 19,293,797 | $376,912,961 | 18,629,374 | $327,775,557 | ||||||||||||||||||||||
Distributions reinvested | 994,934 | 18,963,448 | 311,330 | 5,463,834 | ||||||||||||||||||||||
Repurchased | (5,177,399 | ) | (101,270,715 | ) | (1,990,057 | ) | (34,122,943 | ) | ||||||||||||||||||
Net increase | 15,111,332 | $294,605,694 | 16,950,647 | $299,116,448 | ||||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | — | — | 1,353 | $21,000 | ||||||||||||||||||||||
Distributions reinvested | 1,212 | 22,368 | 941 | 16,015 | ||||||||||||||||||||||
Repurchased | (1,170 | ) | (21,058 | ) | (3,754 | ) | (59,035 | ) | ||||||||||||||||||
Net increase (decrease) | 42 | $1,310 | (1,460 | ) | ($22,020 | ) | ||||||||||||||||||||
Total net increase | 76,439,229 | $1,530,028,017 | 233,261,566 | $3,934,879,351 |
1The inception date for class R4 shares is 7-2-13.
34
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $4,731,425,566 and $3,208,739,700 respectively, for the year ended March 31, 2015.
35
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock Disciplined Value Mid Cap 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 Disciplined Value Mid Cap Fund (the "Fund") at March 31, 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 March 31, 2015 by correspondence with the custodian, transfer agents 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
May 18, 2015
36
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 March 31, 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.
The fund paid $149,727,397 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.
37
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
38
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
39
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
40
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. |
41
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 Robeco Investment Management, 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
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. |
42
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 Disciplined Value Mid Cap Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202363 | 363A 3/15 5/15 |
John Hancock
International Value Equity Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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 Value Equity Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
17 | Financial statements | |||||||
21 | Financial highlights | |||||||
28 | Notes to financial statements | |||||||
36 | Auditor's report | |||||||
37 | Tax information | |||||||
38 | Trustees and Officers | |||||||
42 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The MSCI World ex-USA Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States of America.
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.
1 After the close of business on 2-11-11, holders of the former Optique International Value Fund (the predecessor fund, first offered on 4-1-98) became owners of an equal number of full and fractional Class A shares or Class I shares of John Hancock International Value Equity Fund, which were first offered on 2-14-11. Class A shares' performance shown above for periods prior to this date reflects the historical performance of Optique International Value Fund.
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
Many international indexes were weak
Disappointing economic performance and deflationary risks in Europe were slightly offset by policymakers' decisive measures to stimulate growth.
Positions in industrials sector hampered relative performance
The fund underperformed its benchmark as our stock picking in the industrials sector weighed on the fund's relative results.
Most emerging-market positions aided relative results
Most of the fund's out-of-benchmark positions in emerging-market equities contributed to relative performance, as did our stock selection in the materials and telecommunication services sectors.
SECTOR COMPOSITION AS OF 3/31/15 (%)
A note about risks
Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. The value of a company's equity securities is subject to changes in the company's financial condition and overall market and economic conditions. An issuer of a security may perform poorly and, therefore, the value of its security may decline. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. The stock prices of midsize companies can change more frequently and dramatically than those of large companies. Please see the fund's prospectuses for additional risks.
3
An interview with Portfolio Manager Wendell Perkins, CFA, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
![wendellperkins.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000763/wendellperkins.jpg)
Wendell Perkins, CFA
Portfolio Manager
John Hancock Asset Management
The fund's benchmark, the MSCI World ex-USA Index, posted a slightly negative return during the 12 months ended March 31, 2015. How would you describe the market environment that led to 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 in Europe and Japan responded by expanding stimulus measures, providing a measure of support for equities in developed markets outside the United States. Within the broader ex-U.S. developed market, value stocks underperformed.
Although the European Central Bank (ECB) cut benchmark lending rates to record lows, inflation remained well below policymakers' target level across most of the nations that use the euro as a currency, increasing the risk that the eurozone could fall into a deflationary spiral. In January 2015, the ECB addressed these concerns by approving a sovereign bond-buying program that was larger in scope than many had anticipated. This initiative provided a catalyst for equities early in 2015. In the United Kingdom, the economy continued to recover during the period. However, the slowdown affecting many of the nation's eurozone trading partners weighed on U.K. equities.
In Japan, equities outperformed relative to the benchmark. During the early months of the period, doubts set in about the effectiveness of stimulus measures embraced by Prime Minister Shinzo Abe 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. Japanese stocks rebounded as the economy began to recover in late 2014 and Abe's ruling Liberal Democratic Party won a snap election. The Bank of Japan continued to embrace accommodative monetary policies, and stocks rallied further in early 2015 as wages and corporate earnings began to show modest improvement.
From a global standpoint, crude oil prices began to sharply decline in mid-2014, causing energy sector stocks to underperform. On the currency front, the appreciation of the U.S. dollar relative to
4
How did this environment affect the portfolio management team's management of the fund and the team's views on the market?
We continued to evaluate stocks primarily on a value-oriented, bottom-up basis, based on our assessment of the risks and opportunities specific to each stock, and whether those factors appear to be reflected in each stock's current price. We did, however, factor in the broader market considerations resulting from economic developments at the country, regional, and global levels, as well as shifts in investor sentiment. Across developed markets, the fund's portfolio did not have substantial differences in regional weightings relative to the benchmark during the period. However, the fund continued to invest selectively in emerging-market equities, which are not components of the benchmark. This factor can often result in significant performance differences versus the benchmark.
We have long been cautious about the outlook across the eurozone and mindful of the obstacles that eurozone companies face in returning to sustainable profit and revenue growth, particularly in the financials sector. As of the end of the reporting period, we had yet to see substantial profit growth in the currency union. We viewed the rally in European equities in early 2015 as being driven
TOP 10 COUNTRIES AS OF 3/31/15 (%)
Japan | 18.4 | ||||
United Kingdom | 16.4 | ||||
France | 11.1 | ||||
Germany | 10.7 | ||||
Switzerland | 7.0 | ||||
Netherlands | 5.9 | ||||
Canada | 5.8 | ||||
Australia | 4.0 | ||||
Hong Kong | 3.4 | ||||
Singapore | 2.7 | ||||
Total | 85.4 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
5
primarily by rising expectations resulting from accommodative monetary policies, rather than by evidence of any sustainable improvement in economic conditions.
Similarly, we view the recent equity gains in Japan with caution, as the nation continues to face many challenges in implementing the fundamental economic reforms that we believe are needed to ensure the success of the Abe government's monetary and fiscal initiatives.
What factors at the sector and geographic levels affected the fund's performance?
By sector, our stock selection in industrials weighed on relative results and was a significant factor in the fund's underperformance versus the benchmark. However, certain geographic allocations contributed, and the fund outperformed the average return of the foreign large value fund category as tracked by Morningstar, Inc. Most of the fund's out-of-benchmark positions in emerging-market equities contributed to results relative to the benchmark.
Which holdings had the largest impact on the fund's relative performance?
The positions that had the largest negative impact were oil exploration and production companies Premier Oil PLC (U.K.) and Santos, Ltd. (Australia). Shares of both companies dropped sharply as the decline in oil prices fueled concerns about the sustainability of the companies' production costs
TEN LARGEST HOLDINGS AS OF 3/31/15 (%)
Novartis AG | 1.3 | ||||
Fresenius SE & Company KGaA | 1.1 | ||||
Merck KGaA | 1.1 | ||||
Toyota Motor Corp. | 1.1 | ||||
HSBC Holdings PLC | 1.0 | ||||
Teva Pharmaceutical Industries, Ltd. | 1.0 | ||||
Banco Santander SA | 1.0 | ||||
Sumitomo Chemical Company, Ltd. | 1.0 | ||||
DBS Group Holdings, Ltd. | 1.0 | ||||
MS&AD Insurance Group Holdings, Inc. | 1.0 | ||||
Total | 10.6 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
6
absent any significant rebound in oil prices. The timing of the oil price decline was particularly troublesome for Santos, which faced rising capital expenses as the company sought to bring a major new energy production project online.
Another position that weighed on relative results was Bombardier, Inc. (Canada). Shares of the aircraft maker fell sharply as the company experienced delays and higher-than-expected costs in its development of a new midsize passenger jet.
A position in Modern Times Group AB (Sweden) also hampered relative performance. The chief negative factor for the television and radio broadcasting company was its stake in a broadcast property in Russia, as Russia's government moved to tighten restrictions on foreign ownership of media assets. Positions in Barrick Gold Corp. (Canada) and C&C Group PLC (Ireland) also weighed on relative results.
On the positive side, positions in two Hong Kong-listed emerging-market stocks, China Mobile, Ltd. and Guangdong Investment, Ltd., strongly aided relative performance. Shares of China Mobile rallied as demand for mobile telephone and data services grew across China, where the company is the largest wireless provider. Guangdong's stock rose sharply as the company posted strong results from its investment and ownership stakes in water supply projects and other infrastructure and commercial ventures in mainland China and Hong Kong.
Two positions in Japanese chemicals manufacturers, Sumitomo Chemical Company, Ltd. and Asahi Kasei Corp., also strongly contributed. Shares of both companies surged as lower prices for oil and other commodities helped the companies reduce their materials costs and improve profit margins. Positions in pharmaceutical company Merck KGaA (Germany) and Nutreco NV (Netherlands) also had positive impacts on relative performance. Shares of Nutreco, a maker of livestock feeds, surged as a result of the company's proposed acquisition by SHV Holdings. We sold the fund's position in Nutreco during the period.
MANAGED BY
![]() | Wendell Perkins, CFA On the fund since 1998 Investing since 1985 | ||||
![]() | Edward Maraccini, CFA On the fund since 2007 Investing since 1995 | ||||
![]() | Margaret McKay, CFA On the fund since 2001 Investing since 1992 | ||||
![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||||||||
1-year | 5-year | 10-year | 5-year | 10-year | |||||||||||||||||||
Class A1,2 | -7.33 | 3.49 | 3.87 | 18.72 | 46.22 | ||||||||||||||||||
Class C1,2 | -4.18 | 3.88 | 3.66 | 20.96 | 43.28 | ||||||||||||||||||
Class I1,2,3 | -2.20 | 4.84 | 4.55 | 26.67 | 56.05 | ||||||||||||||||||
Class R21,2,3 | -2.63 | 4.56 | 4.33 | 24.97 | 52.75 | ||||||||||||||||||
Class R41,2,3 | -2.36 | 4.82 | 4.59 | 26.54 | 56.60 | ||||||||||||||||||
Class R61,2,3 | -2.04 | 5.11 | 4.86 | 28.29 | 60.75 | ||||||||||||||||||
Class NAV1,2,3 | -2.03 | 5.14 | 4.89 | 28.47 | 61.22 | ||||||||||||||||||
Index 1† | -0.93 | 6.23 | 5.53 | 35.30 | 71.31 | ||||||||||||||||||
Index 2† | -3.49 | 5.53 | 5.01 | 30.89 | 63.00 |
Performance figures assume all distributions are reinvested. Figures reflect the maximum sales charge on Class A shares of 5% and the applicable contingent deferred sales charge (CDSC) on Class C shares. 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 R4, 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 C* | Class I | Class R2 | Class R4 | Class R6 | Class NAV | |||||||||||||||||
Gross (%) | 1.62 | 2.33 | 1.47 | 6.21 | 15.59 | 16.37 | 1.03 | ||||||||||||||||
Net (%) | 1.60 | 2.33 | 1.29 | 1.68 | 1.43 | 1.03 | 1.03 |
* | Expenses have been estimated for the class's first year of operations. |
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 World ex-USA Index; Index 2 is the MSCI World ex-USA Value Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock International Value Equity Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in two separate indexes.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index 1 ($) | Index 2 ($) | |||||||||||||
Class C1,2,4 | 3-31-05 | 14,328 | 14,328 | 17,131 | 16,300 | ||||||||||||
Class I1,2,3 | 3-31-05 | 15,605 | 15,605 | 17,131 | 16,300 | ||||||||||||
Class R21,2,3 | 3-31-05 | 15,275 | 15,275 | 17,131 | 16,300 | ||||||||||||
Class R41,2,3 | 3-31-05 | 15,660 | 15,660 | 17,131 | 16,300 | ||||||||||||
Class R61,2,3 | 3-31-05 | 16,075 | 16,075 | 17,131 | 16,300 | ||||||||||||
Class NAV1,2,3 | 3-31-05 | 16,122 | 16,122 | 17,131 | 16,300 |
The MSCI World ex-USA Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States of America.
The MSCI World ex-USA Value Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States of America, that have higher than average value characteristics.
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 | After the close of business on 2-11-11, holders of the former Optique International Value Fund (the predecessor fund, first offered on 4-1-98) became owners of an equal number of full and fractional Class A shares or Class I shares of John Hancock International Value Equity Fund, which were first offered on 2-14-11. The performance shown for Class A and Class I shares for periods prior to this date reflects the historical performance of Optique International Value Fund. Class NAV shares were first offered on 12-16-11; Class R2, Class R4, and Class R6 shares were first offered on 7-2-13; Class C shares were first offered on 8-28-14. The returns prior to these dates are those of Class A shares that have been recalculated to reflect the gross fees and expenses of Class NAV, Class R2, Class R4, Class R6, and Class C shares, as applicable. |
2 | In October 2011, the adviser made a voluntary payment to the fund of $6,950, or approximately $0.018 per share. Without this payment, performance would have been lower. |
3 | For certain types of investors, as described in the fund's prospectuses. |
4 | 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 October 1, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $996.90 | $7.67 | 1.54% | ||||||||||
Class C | 1,000.00 | 992.20 | 11.67 | 2.35% | ||||||||||
Class I | 1,000.00 | 998.30 | 6.43 | 1.29% | ||||||||||
Class R2 | 1,000.00 | 995.00 | 8.36 | 1.68% | ||||||||||
Class R4 | 1,000.00 | 997.80 | 7.12 | 1.43% | ||||||||||
Class R6 | 1,000.00 | 998.80 | 5.23 | 1.05% | ||||||||||
Class NAV | 1,000.00 | 998.90 | 5.18 | 1.04% |
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 March 31, 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 October 1, 2014, with the same investment held until March 31, 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.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,017.30 | $7.75 | 1.54% | ||||||||||
Class C | 1,000.00 | 1,013.20 | 11.80 | 2.35% | ||||||||||
Class I | 1,000.00 | 1,018.50 | 6.49 | 1.29% | ||||||||||
Class R2 | 1,000.00 | 1,016.60 | 8.45 | 1.68% | ||||||||||
Class R4 | 1,000.00 | 1,017.80 | 7.19 | 1.43% | ||||||||||
Class R6 | 1,000.00 | 1,019.70 | 5.29 | 1.05% | ||||||||||
Class NAV | 1,000.00 | 1,019.70 | 5.24 | 1.04% |
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 182/365 (to reflect the one-half year period). |
11
Fund's investments
As of 3-31-15 | |||||||||||||||||
Shares | Value | ||||||||||||||||
Common stocks 95.5% | $428,285,756 | ||||||||||||||||
(Cost $400,247,386) | |||||||||||||||||
Australia 4.0% | 18,039,472 | ||||||||||||||||
AGL Energy, Ltd. | 286,363 | 3,310,586 | |||||||||||||||
Australia & New Zealand Banking Group, Ltd. | 136,709 | 3,803,265 | |||||||||||||||
BHP Billiton, Ltd. | 104,467 | 2,428,232 | |||||||||||||||
National Australia Bank, Ltd. | 122,194 | 3,577,142 | |||||||||||||||
QBE Insurance Group, Ltd. | 340,651 | 3,367,270 | |||||||||||||||
Santos, Ltd. | 287,089 | �� | 1,552,977 | ||||||||||||||
Canada 5.8% | 26,218,876 | ||||||||||||||||
Agrium, Inc. (L) | 38,033 | 3,963,804 | |||||||||||||||
Bank of Montreal | 60,919 | 3,650,667 | |||||||||||||||
Barrick Gold Corp. (L) | 219,465 | 2,399,898 | |||||||||||||||
Bombardier, Inc., Class B | 885,659 | 1,748,172 | |||||||||||||||
Husky Energy, Inc. | 155,825 | 3,180,353 | |||||||||||||||
Magna International, Inc. | 76,852 | 4,108,522 | |||||||||||||||
Suncor Energy, Inc. | 117,469 | 3,432,575 | |||||||||||||||
The Toronto-Dominion Bank | 87,261 | 3,734,885 | |||||||||||||||
China 1.6% | 6,947,910 | ||||||||||||||||
China Petroleum & Chemical Corp., H Shares | 4,321,162 | 3,443,590 | |||||||||||||||
CNOOC, Ltd. | 2,483,000 | 3,504,320 | |||||||||||||||
Denmark 1.6% | 7,235,313 | ||||||||||||||||
Carlsberg A/S, Class B (L) | 43,740 | 3,606,638 | |||||||||||||||
Danske Bank A/S | 137,642 | 3,628,675 | |||||||||||||||
Finland 0.9% | 3,968,034 | ||||||||||||||||
Kesko OYJ, B Shares | 92,948 | 3,968,034 | |||||||||||||||
France 11.1% | 49,768,225 | ||||||||||||||||
Arkema SA | 46,265 | 3,663,995 | |||||||||||||||
AtoS | 52,263 | 3,597,583 | |||||||||||||||
AXA SA | 146,110 | 3,677,469 | |||||||||||||||
BNP Paribas SA | 53,630 | 3,263,171 | |||||||||||||||
Cie de Saint-Gobain | 67,323 | 2,955,970 | |||||||||||||||
Danone SA | 52,443 | 3,535,070 | |||||||||||||||
GDF Suez | 155,519 | 3,070,415 | |||||||||||||||
Kering | 16,735 | 3,266,986 | |||||||||||||||
Orange SA | 212,406 | 3,411,148 | |||||||||||||||
Sanofi | 42,622 | 4,209,306 | |||||||||||||||
Societe BIC SA | 27,441 | 3,906,531 | |||||||||||||||
Total SA | 64,622 | 3,212,166 | |||||||||||||||
Vinci SA | 69,063 | 3,945,824 |
Shares | Value | ||||||||||||||||
France (continued) | |||||||||||||||||
Vivendi SA | 163,228 | $4,052,591 | |||||||||||||||
Germany 10.7% | 47,966,724 | ||||||||||||||||
Allianz SE | 23,027 | 3,997,870 | |||||||||||||||
BASF SE | 38,605 | 3,821,723 | |||||||||||||||
Bayerische Motoren Werke AG | 35,386 | 4,406,800 | |||||||||||||||
Deutsche Bank AG | 101,283 | 3,510,239 | |||||||||||||||
Deutsche Boerse AG | 50,631 | 4,131,942 | |||||||||||||||
E.ON SE | 184,983 | 2,750,498 | |||||||||||||||
Fresenius SE & Company KGaA | 85,785 | 5,114,201 | |||||||||||||||
Merck KGaA | 44,330 | 4,961,318 | |||||||||||||||
Muenchener Rueckversicherungs AG | 18,801 | 4,039,999 | |||||||||||||||
Rheinmetall AG | 62,155 | 2,989,603 | |||||||||||||||
SAP SE | 61,299 | 4,430,529 | |||||||||||||||
Siemens AG | 35,246 | 3,812,002 | |||||||||||||||
Hong Kong 3.4% | 15,401,611 | ||||||||||||||||
China Mobile, Ltd. | 296,677 | 3,866,410 | |||||||||||||||
Guangdong Investment, Ltd. | 3,168,098 | 4,154,549 | |||||||||||||||
Hang Lung Group, Ltd. | 803,000 | 3,667,414 | |||||||||||||||
Yue Yuen Industrial Holdings, Ltd. | 1,049,400 | 3,713,238 | |||||||||||||||
Ireland 0.6% | 2,848,953 | ||||||||||||||||
C&C Group PLC | 695,959 | 2,848,953 | |||||||||||||||
Israel 1.0% | 4,684,417 | ||||||||||||||||
Teva Pharmaceutical Industries, Ltd. | 74,954 | 4,684,417 | |||||||||||||||
Japan 18.4% | 82,337,904 | ||||||||||||||||
Asahi Kasei Corp. | 402,504 | 3,843,760 | |||||||||||||||
Bridgestone Corp. | 103,700 | 4,152,140 | |||||||||||||||
East Japan Railway Company | 46,000 | 3,686,163 | |||||||||||||||
Ebara Corp. | 806,653 | 3,395,944 | |||||||||||||||
Fujitsu, Ltd. | 568,106 | 3,874,277 | |||||||||||||||
Honda Motor Company, Ltd. | 113,030 | 3,689,630 | |||||||||||||||
Inpex Corp. | 248,333 | 2,736,328 | |||||||||||||||
Komatsu, Ltd. | 181,400 | 3,555,925 | |||||||||||||||
Kyocera Corp. | 81,519 | 4,455,236 | |||||||||||||||
Mitsubishi Corp. | 190,000 | 3,817,828 | |||||||||||||||
Mitsubishi UFJ Financial Group, Inc. | 703,500 | 4,357,065 | |||||||||||||||
Mitsui Fudosan Company, Ltd. | 118,000 | 3,465,423 | |||||||||||||||
Mizuho Financial Group, Inc. | 1,837,400 | 3,229,187 | |||||||||||||||
MS&AD Insurance Group Holdings, Inc. | 159,890 | 4,476,284 | |||||||||||||||
Nippon Telegraph & Telephone Corp. | 67,100 | 4,142,151 | |||||||||||||||
Nippon Television Holdings, Inc. | 253,468 | 4,219,080 | |||||||||||||||
Nissan Motor Company, Ltd. | 408,989 | 4,159,640 |
Shares | Value | ||||||||||||||||
Japan (continued) | |||||||||||||||||
Sumitomo Chemical Company, Ltd. | 889,000 | $4,562,751 | |||||||||||||||
Toshiba Corp. | 856,374 | 3,588,260 | |||||||||||||||
Toyo Suisan Kaisha, Ltd. | 114,000 | 4,010,787 | |||||||||||||||
Toyota Motor Corp. | 70,484 | 4,920,045 | |||||||||||||||
Netherlands 5.9% | 26,478,569 | ||||||||||||||||
Aegon NV | 429,085 | 3,387,910 | |||||||||||||||
Heineken Holding NV | 54,680 | 3,762,774 | |||||||||||||||
ING Groep NV (I) | 295,283 | 4,325,299 | |||||||||||||||
Koninklijke KPN NV | 1,018,965 | 3,453,935 | |||||||||||||||
Royal Dutch Shell PLC, A Shares | 132,038 | 3,939,838 | |||||||||||||||
TNT Express NV | 555,216 | 3,526,621 | |||||||||||||||
Wolters Kluwer NV | 125,011 | 4,082,192 | |||||||||||||||
Singapore 2.7% | 12,079,704 | ||||||||||||||||
DBS Group Holdings, Ltd. | 306,500 | 4,544,737 | |||||||||||||||
Sembcorp Industries, Ltd. | 1,165,179 | 3,576,997 | |||||||||||||||
Singapore Telecommunications, Ltd. (L) | 1,243,000 | 3,957,970 | |||||||||||||||
South Africa 0.5% | 2,073,437 | ||||||||||||||||
Tiger Brands, Ltd. | 82,402 | 2,073,437 | |||||||||||||||
Spain 2.4% | 10,532,086 | ||||||||||||||||
Banco Santander SA | 624,803 | 4,683,756 | |||||||||||||||
Ebro Foods SA | 144,912 | 2,702,443 | |||||||||||||||
Telefonica SA | 221,082 | 3,145,887 | |||||||||||||||
Sweden 1.5% | 6,653,875 | ||||||||||||||||
Getinge AB, B Shares | 139,031 | 3,435,288 | |||||||||||||||
Modern Times Group AB, B Shares | 105,101 | 3,218,587 | |||||||||||||||
Switzerland 7.0% | 31,518,844 | ||||||||||||||||
Bucher Industries AG | 9,496 | 2,286,803 | |||||||||||||||
Credit Suisse Group AG (I) | 128,881 | 3,467,404 | |||||||||||||||
Glencore PLC (I) | 663,759 | 2,802,217 | |||||||||||||||
Lonza Group AG (I) | 34,930 | 4,348,715 | |||||||||||||||
Nestle SA | 56,597 | 4,261,888 | |||||||||||||||
Novartis AG | 61,283 | 6,048,661 | |||||||||||||||
Roche Holding AG | 14,612 | 4,015,261 | |||||||||||||||
Zurich Insurance Group AG (I) | 12,686 | 4,287,895 | |||||||||||||||
United Kingdom 16.4% | 73,531,802 | ||||||||||||||||
Anglo American PLC | 155,286 | 2,319,191 | |||||||||||||||
Antofagasta PLC | 233,640 | 2,527,583 | |||||||||||||||
AstraZeneca PLC | 55,871 | 3,833,782 | |||||||||||||||
Barclays PLC | 1,054,206 | 3,805,183 | |||||||||||||||
BP PLC | 494,111 | 3,202,907 |
Shares | Value | ||||||||||||||||
United Kingdom (continued) | |||||||||||||||||
Debenhams PLC | 3,346,299 | $3,723,953 | |||||||||||||||
Diageo PLC | 132,957 | 3,674,177 | |||||||||||||||
GlaxoSmithKline PLC | 167,267 | 3,850,476 | |||||||||||||||
HSBC Holdings PLC | 551,373 | 4,698,479 | |||||||||||||||
Imperial Tobacco Group PLC | 75,486 | 3,311,287 | |||||||||||||||
Informa PLC | 423,914 | 3,538,774 | |||||||||||||||
Kingfisher PLC | 668,250 | 3,770,314 | |||||||||||||||
Meggitt PLC | 471,374 | 3,831,636 | |||||||||||||||
Premier Oil PLC | 613,761 | 1,193,736 | |||||||||||||||
Rexam PLC | 476,244 | 4,081,574 | |||||||||||||||
RSA Insurance Group PLC | 440,705 | 2,746,924 | |||||||||||||||
Sky PLC | 260,712 | 3,835,591 | |||||||||||||||
Smith & Nephew PLC | 235,331 | 4,012,759 | |||||||||||||||
Standard Chartered PLC | 190,787 | 3,090,122 | |||||||||||||||
Unilever PLC | 106,409 | 4,439,748 | |||||||||||||||
Vodafone Group PLC | 1,235,699 | 4,043,606 | |||||||||||||||
Rights 0.0% | $35,658 | ||||||||||||||||
(Cost $0) | |||||||||||||||||
Spain 0.0% | 35,658 | ||||||||||||||||
Telefonica SA (Expiration Date: 4-16-15) (I)(N) | 221,082 | 35,658 | |||||||||||||||
Yield (%) | Shares | Value | |||||||||||||||
Securities lending collateral 1.9% | $8,706,351 | ||||||||||||||||
(Cost $8,706,438) | |||||||||||||||||
John Hancock Collateral Trust (W) | 0.1102(Y) | 870,200 | 8,706,351 | ||||||||||||||
Par value | Value | ||||||||||||||||
Short-term investments 2.5% | $11,056,000 | ||||||||||||||||
(Cost $11,056,000) | |||||||||||||||||
Repurchase agreement 2.5% | 11,056,000 | ||||||||||||||||
Barclays Capital Tri-Party Repurchase Agreement dated 3-31-15 at 0.130% to be repurchased at $6,687,024 on 4-1-15, collateralized by $6,289,200 U.S. Treasury Inflation Indexed Notes, 0.250% - 0.625% due 4-15-15 to 1-15-25 (valued at $6,820,772, including interest) | 6,687,000 | 6,687,000 | |||||||||||||||
Repurchase Agreement with State Street Corp. dated 3-31-15 at 0.000% to be repurchased at $4,369,000 on 4-1-15, collateralized by $4,040,000 U.S. Treasury Notes, 3.625% due 8-15-19, (valued at $4,459,352, including interest) | 4,369,000 | 4,369,000 | |||||||||||||||
Total investments (Cost $420,009,824)† 99.9% | $448,083,765 | ||||||||||||||||
Other assets and liabilities, net 0.1% | $436,729 | ||||||||||||||||
Total net assets 100.0% | $448,520,494 |
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 3-31-15. | |||||||
(N) | Strike price and/or expiration date not available. | |||||||
(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 3-31-15. | |||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $420,620,436. Net unrealized appreciation aggregated $27,463,329, of which $58,103,379 related to appreciated investment securities and $30,640,050 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $411,303,386) including $8,288,638 of securities loaned | $439,377,414 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers, at value (Cost $8,706,438) | 8,706,351 | |||||||||||||||||||||||||||||||||||||||
Total investments, at value (Cost $420,009,824) | 448,083,765 | |||||||||||||||||||||||||||||||||||||||
Cash | 4,306,023 | |||||||||||||||||||||||||||||||||||||||
Foreign currency, at value (Cost $3,429,889) | 3,221,516 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 106,655 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 1,644,930 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 13,747 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 1,008 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 54,093 | |||||||||||||||||||||||||||||||||||||||
Total assets | 457,431,737 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 5,489 | |||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 8,706,470 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 6,342 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 2,600 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 333 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 752 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 189,257 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 8,911,243 | |||||||||||||||||||||||||||||||||||||||
Net assets | $448,520,494 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $417,159,030 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 835,180 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | 2,687,294 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 27,838,990 | |||||||||||||||||||||||||||||||||||||||
Net assets | $448,520,494 | |||||||||||||||||||||||||||||||||||||||
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 ($22,299,950 ÷ 2,691,028 shares)1 | $8.29 | |||||||||||||||||
Class C ($279,445 ÷ 33,464 shares)1 | $8.35 | |||||||||||||||||
Class I ($2,837,095 ÷ 342,386 shares) | $8.29 | |||||||||||||||||
Class R2 ($1,564,295 ÷ 188,203 shares) | $8.31 | |||||||||||||||||
Class R4 ($97,272 ÷ 11,723 shares) | $8.30 | |||||||||||||||||
Class R6 ($4,277,589 ÷ 516,314 shares) | $8.28 | |||||||||||||||||
Class NAV ($417,164,848 ÷ 50,321,567 shares) | $8.29 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $8.73 |
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 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $14,657,513 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 345,886 | |||||||||||||||||||||||||||||||||||||||
Interest | 7,956 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (1,201,385 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 13,809,970 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 3,955,120 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 58,640 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 45,735 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 33,269 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 7,029 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 97,174 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 7,954 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 70,523 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 505,262 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 57,950 | |||||||||||||||||||||||||||||||||||||||
Other | 14,182 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 4,852,838 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (102,417 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 4,750,421 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 9,059,549 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and foreign currency transactions | 17,205,784 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (26 | ) | ||||||||||||||||||||||||||||||||||||||
17,205,758 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | (35,101,771 | ) | ||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (181 | ) | ||||||||||||||||||||||||||||||||||||||
(35,101,952 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (17,896,194 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($8,836,645 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $9,059,549 | $9,724,045 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 17,205,758 | 22,196,283 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (35,101,952 | ) | 25,835,599 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (8,836,645 | ) | 57,755,927 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (436,690 | ) | (138,050 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (1,748 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class I | (77,715 | ) | (87,399 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (30,910 | ) | (962 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (2,362 | ) | (1,240 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (132,686 | ) | (1,608 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (10,843,162 | ) | (6,214,133 | ) | |||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (1,291,448 | ) | (589,399 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (8,516 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class I | (207,524 | ) | (280,932 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (99,379 | ) | (4,488 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R4 | (6,715 | ) | (4,488 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R6 | (318,341 | ) | (4,488 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (26,014,960 | ) | (17,109,762 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (39,472,156 | ) | (24,436,949 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 36,851,531 | 105,809,113 | |||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (11,457,270 | ) | 139,128,091 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 459,977,764 | 320,849,673 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $448,520,494 | $459,977,764 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $835,180 | $3,798,567 |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1,2 | 10-31-10 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.33 | $8.66 | $8.22 | $9.09 | $11.26 | $9.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income4 | 0.13 | 0.17 | 5 | 0.12 | 0.14 | 0.02 | 0.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.41 | ) | 0.97 | 0.54 | (0.92 | )6 | 0.79 | 1.39 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.28 | ) | 1.14 | 0.66 | (0.78 | ) | 0.81 | 1.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.19 | ) | (0.09 | ) | (0.08 | ) | (0.06 | ) | (0.28 | ) | (0.06 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | (0.38 | ) | (0.14 | ) | (0.05 | ) | (2.70 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.76 | ) | (0.47 | ) | (0.22 | ) | (0.11 | ) | (2.98 | ) | (0.06 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contribution from adviser | — | — | — | 0.02 | 8 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.29 | $9.33 | $8.66 | $8.22 | $9.09 | $11.26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)9,10 | (2.45 | ) | 13.51 | 8.16 | (8.20 | )8 | 9.13 | 11 | 14.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $22 | $18 | $7 | $3 | $3 | $3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.53 | 1.63 | 1.99 | 3.73 | 16.05 | 12 | 6.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.52 | 1.60 | 1.60 | 1.60 | 1.77 | 12 | 1.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.50 | 1.85 | 5 | 1.52 | 1.68 | 0.48 | 12 | 0.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 38 | 27 | 21 | 12 | 13 | 80 |
1 | For the five month period ended 3-31-11. The fund changed its fiscal year end from October 31 to March 31. | |||||||||||||||||||||||||||||||||||||||||||||
2 | After the close of business on 2-11-11, holders of Class A shares of the former Optique International Value Fund (the predecessor fund) became owners of an equal number of full and fractional Class A shares of the John Hancock International Value Equity Fund. These shares were first offered on 2-14-11. Additionally, the accounting and performance history of the Class A shares of the predecessor fund was redesignated as that of John Hancock International Value Equity Fund Class A. | |||||||||||||||||||||||||||||||||||||||||||||
3 | Audited by previous independent registered public accounting firm. | |||||||||||||||||||||||||||||||||||||||||||||
4 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||
5 | 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 $0.04 and 0.41%, respectively. | |||||||||||||||||||||||||||||||||||||||||||||
6 | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund. | |||||||||||||||||||||||||||||||||||||||||||||
7 | Includes redemption fees retained by the fund. Such redemption fees represent less than $0.01 per share. | |||||||||||||||||||||||||||||||||||||||||||||
8 | In October 2011, the advisor made a voluntary payment to the fund of $6,950. Without this payment, performance would have been lower. | |||||||||||||||||||||||||||||||||||||||||||||
9 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||||||||||||
10 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||||||||
11 | Not annualized. | |||||||||||||||||||||||||||||||||||||||||||||
12 | Annualized. | |||||||||||||||||||||||||||||||||||||||||||||
13 | The portfolio turnover is shown for the period from 11-1-10 to 3-31-11. |
Class C Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.63 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.01 | ||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss on investments | (0.60 | ) | |||||||||||||||||||||||||||||||||||
Total from investment operations | (0.59 | ) | |||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||
From net investment income | (0.12 | ) | |||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | |||||||||||||||||||||||||||||||||||
Total distributions | (0.69 | ) | |||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.35 | ||||||||||||||||||||||||||||||||||||
Total return (%)3 | (5.72 | )4 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 5 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 13.81 | 6 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.35 | 6 | |||||||||||||||||||||||||||||||||||
Net investment income | 0.11 | 6 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 7 |
1 | The inception date for Class C shares is 8-28-14. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the period. | ||||||||||||||||||||||
4 | Not annualized. | ||||||||||||||||||||||
5 | Less than $500,000. | ||||||||||||||||||||||
6 | Annualized. | ||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class I Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.33 | $8.66 | $8.21 | $9.09 | $8.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.18 | 0.20 | 3 | 0.13 | 0.19 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.44 | ) | 0.97 | 0.57 | (0.95 | )4 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.26 | ) | 1.17 | 0.70 | (0.76 | ) | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.21 | ) | (0.12 | ) | (0.11 | ) | (0.09 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | (0.38 | ) | (0.14 | ) | (0.05 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.78 | ) | (0.50 | ) | (0.25 | ) | (0.14 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contribution from adviser | — | — | — | 0.02 | 5 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.29 | $9.33 | $8.66 | $8.21 | $9.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | (2.20 | ) | 13.87 | 8.61 | (7.87 | )5 | 1.22 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $3 | $8 | $6 | $1 | — | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.41 | 1.46 | 2.08 | 7.59 | 12.90 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.29 | 1.29 | 1.28 | 1.18 | 1.18 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.93 | 2.20 | 3 | 1.52 | 2.36 | 1.89 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 38 | 27 | 21 | 12 | 10 |
1 | The inception date for Class I shares is 2-14-11. | |||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||
3 | 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 $0.04 and 0.41%, respectively. | |||||||||||||||||||||||||||||||||||||||||||
4 | The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the fund. | |||||||||||||||||||||||||||||||||||||||||||
5 | In October 2011, the advisor made a voluntary payment to the fund of $6,950. Without this payment, performance would have been lower. | |||||||||||||||||||||||||||||||||||||||||||
6 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | |||||||||||||||||||||||||||||||||||||||||||
8 | Less than $500,000. | |||||||||||||||||||||||||||||||||||||||||||
9 | Annualized. | |||||||||||||||||||||||||||||||||||||||||||
10 | The portfolio turnover is shown for the period from 11-1-10 to 3-31-11. |
Class R2 Shares Period ended | 3-31-15 | 3-31-14 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.35 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.11 | 0.19 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.40 | ) | 1.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.29 | ) | 1.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.18 | ) | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | (0.38 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.75 | ) | (0.46 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.31 | $9.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (2.63 | ) | 15.38 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.76 | 5.96 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.68 | 1.68 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.20 | 2.84 | 3,6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 38 | 7 |
1 | The inception date for Class R2 shares is 7-2-13. | |||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||
3 | 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 $0.04 and 0.41%, respectively. | |||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||
5 | Not annualized. | |||||||||||||||||||||||||||||
6 | Annualized. | |||||||||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-13 to 3-31-14. |
Class R4 Shares Period ended | 3-31-15 | 3-31-14 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.34 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.15 | 0.10 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.42 | ) | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.27 | ) | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.20 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | (0.38 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.77 | ) | (0.49 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.30 | $9.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (2.36 | ) | 15.55 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 18.12 | 15.49 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.43 | 1.43 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.67 | 1.43 | 3,7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 38 | 8 |
1 | The inception date for Class R4 shares is 7-2-13. | |||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||
3 | 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 $0.04 and 0.41%, 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 4-1-13 to 3-31-14. |
Class R6 Shares Period ended | 3-31-15 | 3-31-14 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.33 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.12 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.34 | ) | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.24 | ) | 1.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.24 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | (0.38 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.81 | ) | (0.52 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.28 | $9.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (2.04 | ) | 15.83 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $4 | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.32 | 16.37 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.04 | 1.10 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.15 | 1.76 | 3,7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 38 | 8 |
1 | The inception date for Class R6 shares is 7-2-13. | |||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||
3 | 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 $0.04 and 0.41%, 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 4-1-13 to 3-31-14. |
Class NAV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $9.34 | $8.66 | $8.22 | $7.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.18 | 0.21 | 3 | 0.15 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.42 | ) | 0.99 | 0.55 | 0.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.24 | ) | 1.20 | 0.70 | 1.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.24 | ) | (0.14 | ) | (0.12 | ) | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (0.57 | ) | (0.38 | ) | (0.14 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.81 | ) | (0.52 | ) | (0.26 | ) | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.29 | $9.34 | $8.66 | $8.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (2.03 | ) | 14.23 | 8.69 | 14.05 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $417 | $433 | $307 | $114 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.04 | 1.03 | 1.08 | 1.08 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.03 | 1.03 | 1.08 | 1.08 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.05 | 2.37 | 3 | 1.78 | 2.21 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 25 | 38 | 27 | 21 | 8 |
1 | The inception date for Class NAV shares is 12-16-11. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | 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 $0.04 and 0.41%, respectively. | |||||||||||||||||||||||||||||||||||||||
4 | Less than $0.005 per share. | |||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
7 | Annualized. | |||||||||||||||||||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Note 1 — Organization
John Hancock International Value Equity Fund (the fund) is a series of John Hancock Fund 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 long-term 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 I shares are offered to institutions and certain investors. Class R2 and Class R4 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, and transfer agent fees, state registration fees and printing and postage for each class may differ.
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
28
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 March 31, 2015, by major security category or type:
Total market value at 3-31-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||||||||||||
Common stocks | |||||||||||||||
Australia | $18,039,472 | — | $18,039,472 | — | |||||||||||
Canada | 26,218,876 | $26,218,876 | — | — | |||||||||||
China | 6,947,910 | — | 6,947,910 | — | |||||||||||
Denmark | 7,235,313 | — | 7,235,313 | — | |||||||||||
Finland | 3,968,034 | — | 3,968,034 | — | |||||||||||
France | 49,768,225 | — | 49,768,225 | — | |||||||||||
Germany | 47,966,724 | — | 47,966,724 | — | |||||||||||
Hong Kong | 15,401,611 | — | 15,401,611 | — | |||||||||||
Ireland | 2,848,953 | — | 2,848,953 | — | |||||||||||
Israel | 4,684,417 | — | 4,684,417 | — | |||||||||||
Japan | 82,337,904 | — | 82,337,904 | — | |||||||||||
Netherlands | 26,478,569 | — | 26,478,569 | — | |||||||||||
Singapore | 12,079,704 | — | 12,079,704 | — | |||||||||||
South Africa | 2,073,437 | — | 2,073,437 | — | |||||||||||
Spain | 10,532,086 | — | 10,532,086 | — | |||||||||||
Sweden | 6,653,875 | — | 6,653,875 | — | |||||||||||
Switzerland | 31,518,844 | — | 31,518,844 | — | |||||||||||
United Kingdom | 73,531,802 | — | 73,531,802 | — | |||||||||||
Rights | |||||||||||||||
Spain | 35,658 | 35,658 | — | — | |||||||||||
Securities lending collateral | 8,706,351 | 8,706,351 | — | — | |||||||||||
Short-term investments | 11,056,000 | — | 11,056,000 | — | |||||||||||
Total investments in securities | $448,083,765 | $34,960,885 | $413,122,880 | — |
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund's custodian, or for tri-party repurchase agreements, collateral is held at a third-party custodian bank in a segregated account for the benefit of the fund. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund's investments as part of the caption related to the repurchase agreement.
Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.
29
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.
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. 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.
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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 March 31, 2015, were $372. For the year ended March 31, 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 March 31, 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 March 31, 2015 and 2014 was as follows:
March 31, 2015 | March 31, 2014 | |||||||
Ordinary Income | $17,454,124 | $18,005,709 | ||||||
Long-Term Capital Gain | 22,018,032 | 6,431,240 | ||||||
Total | $39,472,156 | $24,436,949 |
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $1,488,582 of undistributed ordinary income and $2,644,506 undistributed long-term capital gain.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from 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 and investments in passive foreign investment companies.
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
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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 equivalent, on an annual basis, to the sum of: (a) 0.900% of the first $100 million of the fund's average daily net assets; (b) 0.875% of the next $900 million of the fund's average daily net assets; (c) 0.850% of the next $1 billion of the fund's average daily net assets; (d) 0.825% of the next $1 billion of the fund's average daily net assets; (e) 0.800% of the next $1 billion of the fund's average daily net assets; and (f) 0.775% of the fund's average daily net assets in excess of $4 billion. The Advisor has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset Management (US) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. 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 March 31, 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 fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.60%, 2.35%, 1.29%, 1.68%, 1.43% and 1.10% of average annual net assets for Class A, Class C, Class I, Class R2, Class R4 and Class R6 shares, respectively. 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. These expense limitations shall remain in effect until at least June 30, 2015 for all classes except for Class C shares which shall remain in effect until at least June 30, 2016, 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 Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund, including transfer agent 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 (on an annualized basis) attributable to Class R6 shares (the Class Expense Waiver). The Class Expense Waiver expires on June 30, 2015, unless renewed by mutual agreement of the Advisor and the fund based upon a determination that this is appropriate under the circumstances at the time.
The expense reductions described above amounted to the following for the year ended March 31, 2015:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $1,568 | Class R4 | $17,565 | |||||||||||
Class C | 9,161 | Class R6 | 19,571 | |||||||||||
Class I | 7,791 | Class NAV | 30,279 | |||||||||||
Class R2 | 16,376 | Total | $102,311 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.86% of the fund's average daily net assets.
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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 March 31, 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 C, Class R2 and Class R4 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 and Class R4, 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 | Rule 12b-1 fee | Service fee | |||||||||||||||
Class A | 0.30% | — | Class R2 | 0.25% | 0.25% | |||||||||||||||
Class C | 1.00% | — | Class R4 | 0.25% | 0.10% |
Class A shares are currently charged 0.25% for Rule 12b-1 fees.
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 $106 for Class R4 shares for the year ended March 31, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $149,821 for the year ended March 31, 2015. Of this amount, $25,517 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $123,779 was paid as sales commissions to broker-dealers and $525 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A 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 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 March 31, 2015, CDSCs received by the Distributor amounted to $ 1,069 for Class A shares.
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.
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Class level expenses. Class level expenses for the year ended March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $49,964 | $25,046 | $18,022 | $5,345 | ||||||||||
Class C | 799 | 99 | 9,270 | 24 | ||||||||||
Class I | — | 7,611 | 15,308 | 1,844 | ||||||||||
Class R2 | 7,612 | 256 | 17,730 | 562 | ||||||||||
Class R4 | 265 | 18 | 17,730 | 77 | ||||||||||
Class R6 | — | 239 | 19,114 | 102 | ||||||||||
Total | 58,640 | 33,269 | 97,174 | 7,954 |
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 5 — Fund share transactions
Transactions in fund shares for the year ended March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 885,731 | $7,909,041 | 1,185,406 | $10,582,199 | ||||||||||||||||||||||
Distributions reinvested | 220,604 | 1,727,328 | 82,431 | 727,044 | ||||||||||||||||||||||
Repurchased | (317,567 | ) | (2,806,805 | ) | (220,373 | ) | (1,999,433 | ) | ||||||||||||||||||
Net increase | 788,768 | $6,829,564 | 1,047,464 | $9,309,810 | ||||||||||||||||||||||
Class C shares1 | ||||||||||||||||||||||||||
Sold | 33,264 | $292,650 | — | — | ||||||||||||||||||||||
Distributions reinvested | 391 | 3,095 | — | — | ||||||||||||||||||||||
Repurchased | (191 | ) | (1,506 | ) | — | — | ||||||||||||||||||||
Net increase | 33,464 | $294,239 | — | — | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 200,945 | $1,806,486 | 144,124 | $1,307,769 | ||||||||||||||||||||||
Distributions reinvested | 35,355 | 276,472 | 41,127 | 362,742 | ||||||||||||||||||||||
Repurchased | (728,720 | ) | (6,344,131 | ) | (51,387 | ) | (476,315 | ) | ||||||||||||||||||
Net increase (decrease) | (492,420 | ) | ($4,261,173 | ) | 133,864 | $1,194,196 | ||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 68,675 | $653,805 | 127,696 | $1,132,865 | ||||||||||||||||||||||
Distributions reinvested | 15,456 | 121,485 | — | — | ||||||||||||||||||||||
Repurchased | (20,446 | ) | (180,182 | ) | (3,178 | ) | (29,319 | ) | ||||||||||||||||||
Net increase | 63,685 | $595,108 | 124,518 | $1,103,546 | ||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | — | — | 11,723 | $100,000 | ||||||||||||||||||||||
Net increase | — | — | 11,723 | $100,000 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 544,642 | $4,830,146 | 11,723 | $100,000 | ||||||||||||||||||||||
Distributions reinvested | 56,459 | 441,512 | — | — | ||||||||||||||||||||||
Repurchased | (96,510 | ) | (809,843 | ) | — | — | ||||||||||||||||||||
Net increase | 504,591 | $4,461,815 | 11,723 | $100,000 |
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Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 1,517,012 | $13,856,834 | 10,079,797 | $87,417,169 | ||||||||||||||||||||||
Distributions reinvested | 4,713,315 | 36,858,122 | 2,638,142 | 23,268,405 | ||||||||||||||||||||||
Repurchased | (2,295,671 | ) | (21,782,978 | ) | (1,823,021 | ) | (16,684,013 | ) | ||||||||||||||||||
Net increase | 3,934,656 | $28,931,978 | 10,894,918 | $94,001,561 | ||||||||||||||||||||||
Total net increase | 4,832,744 | $36,851,531 | 12,224,210 | $105,809,113 |
1 The inception date for Class C shares is 8-28-14.
Affiliates of the Trust owned 31%, 3%, 6%, 100%, 2%, and 100% of shares of beneficial interest of Class C, Class I, Class R2, Class R4, Class R6, and Class NAV, respectively, on March 31, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $114,533,869 and $110,086,419, respectively, for the year ended March 31, 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 March 31, 2015, funds within the John Hancock group of funds complex held 93.0% 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 | 36.3% | ||||
John Hancock Lifestyle Balanced Portfolio | 29.3% | ||||
John Hancock Lifestyle Aggressive Portfolio | 14.6% | ||||
John Hancock Lifestyle Moderate Portfolio | 5.8% |
35
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock International Value Equity 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 Value Equity Fund (the "Fund") at March 31, 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 March 31, 2015 by correspondence with the custodian, transfer agent and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 18, 2015
36
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 March 31, 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 $11,201,460. The fund intends to pass through foreign tax credits of $710,860.
The fund paid $22,018,032 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.
37
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
38
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
39
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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). |
40
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. |
41
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 John Hancock Asset Management a division of Manulife Asset Management (US) 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
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. |
42
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 Value Equity Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202364 | 366A 3/15 5/15 |
John Hancock
Strategic Growth Fund
Annual report 3/31/15
A message to shareholders
Dear fellow shareholder,
The U.S. economy continues to improve, with many indicators suggesting that the rising tide of growth is broadening out, becoming more self-sustaining, and benefiting a greater portion of the population. Last year marked the strongest year for job creation since 1999, with nearly three million jobs created and the unemployment rate declining across all 50 states. Consumer spending, a significant driver of economic activity, has been robust thanks to the jobs picture and to sharply lowered fuel prices. Inflation and interest rates remain low, and corporate earnings are strong. Good economic and business news has translated into good news for U.S. investors, with continued solid results for a range of U.S. equity indexes in the first quarter of 2015. Many fixed-income indexes also gained in this environment.
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 in recent years. As was the case in the United States beginning in 2009, financial markets in Europe and Japan may turn positive in advance of real economic progress. In fact, our network of asset managers and research firms believes that these central bank programs, also known as quantitative easing, may prove to be the single biggest driver of international market returns in 2015.
While maintaining adequate portfolio diversification is vital in any market environment, we believe it is especially important today given the dramatic central bank interventions of the past few years and the very real geopolitical risk around the world. The uncertainty of today's global financial markets is one of the reasons we at John Hancock Investments believe it is important for long-term portfolios to have exposure to alternative investments. Alternative strategies seek patterns of performance that differ from both stocks and bonds so that they can help bolster a portfolio's performance when volatility strikes. With market volatility climbing in recent months, now may be a good time to discuss the resilience of your portfolio with your financial advisor and whether alternative investments should play a role.
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 March 31, 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
Strategic Growth Fund
Table of contents
2 | Your fund at a glance | |||||||
4 | Discussion of fund performance | |||||||
8 | A look at performance | |||||||
10 | Your expenses | |||||||
12 | Fund's investments | |||||||
16 | Financial statements | |||||||
19 | Financial highlights | |||||||
26 | Notes to financial statements | |||||||
33 | Auditor's report | |||||||
34 | Tax information | |||||||
35 | Trustees and Officers | |||||||
39 | More information |
1
INVESTMENT OBJECTIVE
The fund seeks long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 3/31/15 (%)
The Russell 1000 Growth Index is an unmanaged index which measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
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
Strong results in absolute terms
The fund posted a double-digit return but trailed the Russell 1000 Growth Index for the 12-month reporting period.
Challenges in healthcare
Weak security selection in healthcare hurt, although overweighting the strong-performing sector tempered the relative underperformance.
Favorable positioning and security selection
A combination of a helpful underweighting and good security selection in the energy sector added value, as did stock picking in materials and information technology.
PORTFOLIO COMPOSITION AS OF 3/31/15 (%)
A note about risks
Growth stocks may be more susceptible to earnings disappointments as compared to value stocks, and market values can be more volatile. The value of a company's equity securities is subject to change in the company's financial condition and overall market and economic conditions. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Sector investing is subject to greater risks than the market as a whole. Events in the financial markets have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused on one sector may fluctuate more widely than investments diversified across sectors. Illiquid securities may be difficult to sell at a price approximating their value. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Please see the fund's prospectuses for additional risks.
3
An interview with Portfolio Manager W. Shannon Reid, CFA, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
![wshannonreid.jpg](https://capedge.com/proxy/N-CSR/0001145443-15-000763/wshannonreid.jpg)
W. Shannon Reid, CFA
Portfolio Manager
John Hancock Asset Management
The fund underperformed its benchmark, the Russell 1000 Growth Index. What factors influenced relative performance?
For the 12 months ended March 31, 2015, the fund struggled in healthcare, as weak security selection overshadowed the fund's relative overweighting in this strong-performing sector.
In contrast, positioning in the energy sector proved helpful, as the fund was underweighted in this poor-performing group. Strong stock picking in materials and information technology also contributed.
Which stocks detracted from the fund's results?
One of the biggest individual detractors in the fund was biotechnology company Gilead Sciences, Inc. Although the fund had been a longtime holder of Gilead, we sold the fund's stake early in the period because of our emerging concerns about the potential regulation and pricing of Sovaldi, the company's hepatitis C drug. These concerns did not materialize as expected, and we ultimately reacquired the stock in September 2014, shortly before a leading pharmacy benefit manager announced an exclusive agreement with a Gilead competitor. Nevertheless, at period end, we maintained the fund's holding in Gilead, whose valuation we still found attractive relative to its growth potential.
Also in healthcare, Allscripts Healthcare Solutions, Inc., detracted. We originally invested in this provider of electronic health records systems for medical professionals because we believed that the company's new management, installed in 2011, would be able to turn around the company. Unfortunately, Allscripts produced disappointing financial results during the period, and we sold the fund's position last October.
Several consumer-oriented stocks hurt as well, including casino gaming company Las Vegas Sands Corp. and natural foods retailer Whole Foods Market, Inc. Las Vegas Sands faced significant challenges with respect to its business in the Chinese territory of Macau. Whole Foods faced increasing competition in the market for organic foods, and we sold this stock from the fund last summer.
4
Which individual stocks meaningfully contributed to relative performance?
Favorable security selection in materials was driven by The Sherwin-Williams Company, a maker of paint products. Although we do not often find attractive opportunities in this sector, we made an exception with Sherwin-Williams after conducting thorough research on the name, as we thought the market was significantly underestimating its earnings power. During the year, the company benefited from lower raw material costs and its ability to increase market share.
In the information technology sector, the fund benefited from a position in Facebook, Inc. The social networking company continued to produce strong financial results and grow revenues in the increasingly important market of mobile advertising. In consumer discretionary, investments in home improvement retailers Lowe's Companies, Inc. and Home Depot, Inc. were helpful; both stocks benefited from a stronger housing market and an increase in home remodeling activity.
A few healthcare stocks also added value, despite the fund's relative underperformance in this group. Biotechnology company Celgene Corp. continued to generate strong earnings from Revlimid, its treatment for multiple myeloma, and also benefited from a favorable trial of a prospective drug to treat Crohn's disease. Bristol-Myers Squibb Company, another notable contributor, received positive results from a trial of a lung cancer drug the company is developing.
Of final note, the fund was meaningfully helped by a position in American Airlines Group, Inc., which rose significantly during the period. In following our management approach, we had long steered
SECTOR COMPOSITION AS OF 3/31/15 (%)
5
clear of airline companies because we found the investment case for this industry lacking, given fierce competition and its highly cyclical nature. In recent years, however, the airline business has changed, with reduced competition, fewer unsold seats, better pricing, and new streams of revenues in the form of various passenger fees. Last fall, we acted on an opportunity to acquire an airline stock for the fund, purchasing shares of American Airlines when the stock traded down in the wake of worry about the Ebola virus's potential to limit air travel. We thought this situation would be temporary and would have little impact on the company's earnings.
What changes did you make to the fund's portfolio during the reporting period?
Beginning last fall, we became increasingly concerned about the global economy. Although economic growth was steady in the United States, we became more nervous about the prospects for Europe as well as China and other emerging economies, and the impact of a stronger dollar on U.S. exports. Accordingly, we began to look for ways to appropriately position the fund for this environment. Around this time, we sold certain information technology, industrials, and energy stocks while increasing its exposure to consumer-related stocks.
As a result of these moves, the fund's beta (meaning expected volatility relative to the market) declined, while its emphasis on larger-cap stocks with a business focus on the U.S. market grew. We were comfortable with this increased domestic focus, given what we saw as the stronger economic
TEN LARGEST HOLDINGS AS OF 3/31/15 (%)
Apple, Inc. | 8.0 | ||||
Facebook, Inc., Class A | 3.0 | ||||
The Walt Disney Company | 2.8 | ||||
The Home Depot, Inc. | 2.7 | ||||
Google, Inc., Class C | 2.5 | ||||
Visa, Inc., Class A | 2.5 | ||||
Comcast Corp., Class A | 2.3 | ||||
Gilead Sciences, Inc. | 2.3 | ||||
Amazon.com, Inc. | 2.2 | ||||
Lowe's Companies, Inc. | 2.1 | ||||
TOTAL | 30.4 | ||||
As a percentage of net assets. | |||||
Cash and cash equivalents are not included. |
6
prospects of the United States. All of these moves were consistent with our bottom-up, stock-by-stock investment approach.
That said, it's worth emphasizing that these were incremental changes intended to position the fund somewhat more defensively in a riskier economic environment, and not a fundamental reshaping of the fund's portfolio, whose basic positioning we continued to like.
MANAGED BY
![]() | W. Shannon Reid, CFA On the fund since 2011 Investing since 1981 | ||||
![]() | David M. Chow, CFA On the fund since 2011 Investing since 1992 | ||||
![]() | Curtis Ifill, CFA On the fund since 2011 Investing since 1996 | ||||
![]() | Jay Zelko On the fund since 2011 Investing since 1987 | ||||
![]() |
7
TOTAL RETURNS FOR THE PERIOD ENDED MARCH 31, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||||||||||
1-year | Since inception1 | Since inception1 | |||||||||||||||
Class A | 8.94 | 18.64 | 75.48 | ||||||||||||||
Class C2 | 13.20 | 20.35 | 83.95 | ||||||||||||||
Class I3 | 15.07 | 20.95 | 86.96 | ||||||||||||||
Class R22,3 | 14.75 | 20.52 | 84.83 | ||||||||||||||
Class R42,3 | 14.75 | 20.52 | 84.83 | ||||||||||||||
Class R62,3 | 14.75 | 20.52 | 84.83 | ||||||||||||||
Class NAV3 | 15.43 | 21.18 | 88.16 | ||||||||||||||
Index† | 16.09 | 20.66 | 85.34 |
Performance figures assume all distributions are reinvested. Figures reflect the maximum sales charge on Class A shares of 5% and the applicable contingent deferred sales charge (CDSC) on Class C shares. 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 R4, Class R6, and Class NAV shares.
The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers 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. The expense ratios are as follows:
Class A | Class C | Class I | Class R2 | Class R4 | Class R6 | Class NAV | |||||||||||||||||
Gross (%) | 1.51 | 2.03 | 2.63 | 1.42 | 1.27 | 0.83 | 0.74 | ||||||||||||||||
Net (%) | 1.30 | 2.03 | 0.94 | 1.42 | 1.17 | 0.74 | 0.74 |
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 Russell 1000 Growth Index. |
See the following page for footnotes.
8
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Strategic Growth Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the Russell 1000 Growth Index.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index ($) | |||||||||||
Class C2,4 | 12-19-11 | 18,395 | 18,395 | 18,534 | ||||||||||
Class I3 | 12-19-11 | 18,696 | 18,696 | 18,534 | ||||||||||
Class R22,3 | 12-19-11 | 18,483 | 18,483 | 18,534 | ||||||||||
Class R42,3 | 12-19-11 | 18,483 | 18,483 | 18,534 | ||||||||||
Class R62,3 | 12-19-11 | 18,483 | 18,483 | 18,534 | ||||||||||
Class NAV3 | 12-19-11 | 18,816 | 18,816 | 18,534 |
The Russell 1000 Growth Index is an unmanaged index which measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
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 12-19-11. |
2 | Class C shares were first offered on 8-28-14. The returns prior to this date are those of Class A shares, which have lower expenses than Class C. Had the returns reflected Class C expenses, returns would be lower. Class R2, Class R4, and Class R6 shares were first offered on 3-27-15. The returns prior to this date are those of Class A shares, which have higher expenses than Class R2, Class R4 and Class R6. Had the returns reflected Class R2, Class R4, or Class R6 expenses, returns would be higher. |
3 | For certain types of investors, as described in the fund's prospectuses. |
4 | 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 October 1, 2014, with the same investment held until March 31, 2015.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,098.60 | $6.80 | 1.30% | ||||||||||
Class C | 1,000.00 | 1,095.30 | 10.71 | 2.05% | ||||||||||
Class I | 1,000.00 | 1,100.60 | 4.92 | 0.94% | ||||||||||
Class R22 | 1,000.00 | 1,003.00 | 0.16 | 1.43% | ||||||||||
Class R42 | 1,000.00 | 1,003.00 | 0.13 | 1.18% | ||||||||||
Class R62 | 1,000.00 | 1,003.00 | 0.09 | 0.81% | ||||||||||
Class NAV | 1,000.00 | 1,102.70 | 3.72 | 0.71% |
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 March 31, 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 October 1, 2014, with the same investment held until March 31, 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.
Account value on 10-1-2014 | Ending value on 3-31-2015 | Expenses paid during period ended 3-31-20151 | Annualized expense ratio | |||||||||||
Class A | $1,000.00 | $1,018.40 | $6.54 | 1.30% | ||||||||||
Class C | 1,000.00 | 1,014.70 | 10.30 | 2.05% | ||||||||||
Class I | 1,000.00 | 1,020.20 | 4.73 | 0.94% | ||||||||||
Class R2 | 1,000.00 | 1,017.80 | 7.19 | 1.43% | ||||||||||
Class R4 | 1,000.00 | 1,019.00 | 5.94 | 1.18% | ||||||||||
Class R6 | 1,000.00 | 1,020.90 | 4.08 | 0.81% | ||||||||||
Class NAV | 1,000.00 | 1,021.40 | 3.58 | 0.71% |
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 182/365 (to reflect the one-half year period). |
2 | The inception date for Class R2, Class R4 and Class R6 shares is 03-27-15. Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 4/365 (to reflect the period). |
11
Fund's investments
As of 3-31-15 | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 94.3% | $1,989,367,935 | |||||||||||||
(Cost $1,562,849,502) | ||||||||||||||
Consumer discretionary 25.0% | 526,988,898 | |||||||||||||
Auto components 1.0% | ||||||||||||||
Delphi Automotive PLC | 274,431 | 21,883,127 | ||||||||||||
Hotels, restaurants and leisure 1.6% | ||||||||||||||
Las Vegas Sands Corp. | 336,817 | 18,538,408 | ||||||||||||
Starbucks Corp. | 155,618 | 14,737,025 | ||||||||||||
Household durables 0.7% | ||||||||||||||
Harman International Industries, Inc. | 105,255 | 14,065,226 | ||||||||||||
Internet and catalog retail 3.3% | ||||||||||||||
Amazon.com, Inc. (I) | 122,860 | 45,716,206 | ||||||||||||
The Priceline Group, Inc. (I) | 19,925 | 23,195,689 | ||||||||||||
Leisure products 0.6% | ||||||||||||||
Polaris Industries, Inc. | 83,934 | 11,843,087 | ||||||||||||
Media 6.4% | ||||||||||||||
Comcast Corp., Class A | 872,340 | 49,261,040 | ||||||||||||
The Walt Disney Company | 564,277 | 59,187,015 | ||||||||||||
Time Warner, Inc. | 319,973 | 27,018,520 | ||||||||||||
Multiline retail 2.6% | ||||||||||||||
Dollar Tree, Inc. (I) | 383,143 | 31,090,139 | ||||||||||||
Target Corp. | 291,333 | 23,909,699 | ||||||||||||
Specialty retail 7.7% | ||||||||||||||
Best Buy Company, Inc. | 719,652 | 27,195,649 | ||||||||||||
Lowe's Companies, Inc. | 591,088 | 43,971,036 | ||||||||||||
The Home Depot, Inc. | 496,098 | 56,361,694 | ||||||||||||
Tractor Supply Company | 249,669 | 21,236,845 | ||||||||||||
Williams-Sonoma, Inc. | 175,791 | 14,012,301 | ||||||||||||
Textiles, apparel and luxury goods 1.1% | ||||||||||||||
Michael Kors Holdings, Ltd. (I) | 361,463 | 23,766,192 | ||||||||||||
Consumer staples 7.5% | 157,562,726 | |||||||||||||
Food and staples retailing 3.9% | ||||||||||||||
Costco Wholesale Corp. | 221,625 | 33,575,079 | ||||||||||||
CVS Health Corp. | 239,761 | 24,745,733 | ||||||||||||
The Kroger Company | 163,814 | 12,557,981 | ||||||||||||
Walgreens Boots Alliance, Inc. | 137,943 | 11,681,013 | ||||||||||||
Food products 0.7% | ||||||||||||||
The WhiteWave Foods Company (I) | 302,356 | 13,406,465 | ||||||||||||
Tobacco 2.9% | ||||||||||||||
Altria Group, Inc. | 544,417 | 27,231,738 | ||||||||||||
Philip Morris International, Inc. | 456,189 | 34,364,717 |
Shares | Value | |||||||||||||
Energy 2.3% | $48,584,071 | |||||||||||||
Energy equipment and services 0.4% | ||||||||||||||
Schlumberger, Ltd. | 113,719 | 9,488,713 | ||||||||||||
Oil, gas and consumable fuels 1.9% | ||||||||||||||
ConocoPhillips | 214,064 | 13,327,625 | ||||||||||||
EOG Resources, Inc. | 69,859 | 6,405,372 | ||||||||||||
The Williams Companies, Inc. | 382,731 | 19,362,361 | ||||||||||||
Financials 4.9% | 103,433,012 | |||||||||||||
Banks 1.6% | ||||||||||||||
Signature Bank (I) | 250,479 | 32,457,069 | ||||||||||||
Capital markets 1.7% | ||||||||||||||
KKR & Company LP | 951,389 | 21,701,183 | ||||||||||||
The Blackstone Group LP | 382,879 | 14,890,164 | ||||||||||||
Real estate investment trusts 1.6% | ||||||||||||||
Crown Castle International Corp. | 416,581 | 34,384,596 | ||||||||||||
Health care 18.2% | 384,820,991 | |||||||||||||
Biotechnology 8.7% | ||||||||||||||
Alexion Pharmaceuticals, Inc. (I) | 169,995 | 29,460,134 | ||||||||||||
Amgen, Inc. | 150,470 | 24,052,630 | ||||||||||||
Biogen, Inc. (I) | 97,852 | 41,317,028 | ||||||||||||
Celgene Corp. (I) | 341,748 | 39,396,709 | ||||||||||||
Gilead Sciences, Inc. (I) | 498,610 | 48,928,599 | ||||||||||||
Health care equipment and supplies 1.1% | ||||||||||||||
Zimmer Holdings, Inc. | 197,845 | 23,250,744 | ||||||||||||
Health care providers and services 3.8% | ||||||||||||||
AmerisourceBergen Corp. | 200,309 | 22,769,124 | ||||||||||||
Cardinal Health, Inc. | 277,303 | 25,032,142 | ||||||||||||
McKesson Corp. | 148,150 | 33,511,530 | ||||||||||||
Pharmaceuticals 4.6% | ||||||||||||||
Actavis PLC (I) | 65,104 | 19,376,252 | ||||||||||||
Bristol-Myers Squibb Company | 460,210 | 29,683,545 | ||||||||||||
Mylan NV (I) | 398,909 | 23,675,249 | ||||||||||||
Perrigo Company PLC | 147,190 | 24,367,305 | ||||||||||||
Industrials 10.0% | 211,595,414 | |||||||||||||
Aerospace and defense 3.1% | ||||||||||||||
B/E Aerospace, Inc. | 370,736 | 23,586,224 | ||||||||||||
The Boeing Company | 284,436 | 42,688,155 | ||||||||||||
Air freight and logistics 1.0% | ||||||||||||||
FedEx Corp. | 121,322 | 20,072,725 | ||||||||||||
Airlines 1.5% | ||||||||||||||
American Airlines Group, Inc. | 593,975 | 31,350,001 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Machinery 3.0% | ||||||||||||||
Cummins, Inc. | 171,686 | $23,802,547 | ||||||||||||
Trinity Industries, Inc. | 551,064 | 19,568,283 | ||||||||||||
Wabtec Corp. | 218,029 | 20,714,935 | ||||||||||||
Road and rail 1.4% | ||||||||||||||
Union Pacific Corp. | 275,252 | 29,812,544 | ||||||||||||
Information technology 24.1% | 508,342,521 | |||||||||||||
Communications equipment 0.6% | ||||||||||||||
QUALCOMM, Inc. | 194,354 | 13,476,506 | ||||||||||||
Internet software and services 5.5% | ||||||||||||||
Facebook, Inc., Class A (I) | 771,180 | 63,402,564 | ||||||||||||
Google, Inc., Class C (I) | 96,535 | 52,901,180 | ||||||||||||
IT services 4.6% | ||||||||||||||
Alliance Data Systems Corp. (I) | 116,624 | 34,549,860 | ||||||||||||
MasterCard, Inc., Class A | 132,008 | 11,404,171 | ||||||||||||
Visa, Inc., Class A | 795,336 | 52,022,928 | ||||||||||||
Semiconductors and semiconductor equipment 1.2% | ||||||||||||||
NXP Semiconductors NV (I) | 245,583 | 24,646,710 | ||||||||||||
Software 4.2% | ||||||||||||||
Microsoft Corp. | 1,025,329 | 41,684,751 | ||||||||||||
ServiceNow, Inc. (I) | 199,278 | 15,699,121 | ||||||||||||
Synchronoss Technologies, Inc. (I) | 332,050 | 15,759,093 | ||||||||||||
Workday, Inc., Class A (I) | 178,390 | 15,057,900 | ||||||||||||
Technology hardware, storage and peripherals 8.0% | ||||||||||||||
Apple, Inc. | 1,348,049 | 167,737,737 | ||||||||||||
Materials 2.3% | 48,040,302 | |||||||||||||
Chemicals 2.3% | ||||||||||||||
PPG Industries, Inc. | 68,376 | 15,421,523 | ||||||||||||
The Sherwin-Williams Company | 114,653 | 32,618,779 | ||||||||||||
Par value | Value | |||||||||||||
Short-term investments 2.9% | $61,543,000 | |||||||||||||
(Cost $61,543,000) | ||||||||||||||
Repurchase agreement 2.9% | 61,543,000 | |||||||||||||
Repurchase Agreement with State Street Corp. dated 3-31-15 at 0.000% to be repurchased at $61,543,000 on 4-1-15, collateralized by $56,875,000 U.S. Treasury Notes, 3.625% due 8-15-19 (valued at $62,778,625, including interest) | 61,543,000 | 61,543,000 | ||||||||||||
Total investments (Cost $1,624,392,502)† 97.2% | $2,050,910,935 | |||||||||||||
Other assets and liabilities, net 2.8% | $58,548,239 | |||||||||||||
Total net assets 100.0% | $2,109,459,174 |
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. | ||||||
† | At 3-31-15, the aggregate cost of investment securities for federal income tax purposes was $1,627,058,028. Net unrealized appreciation aggregated $423,852,907, of which $439,217,614 related to appreciated investment securities and $15,364,707 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 3-31-15
Assets | |||||||||||||||
Investments, at value (Cost $1,624,392,502) | $2,050,910,935 | ||||||||||||||
Cash | 60,650,760 | ||||||||||||||
Receivable for fund shares sold | 497,302 | ||||||||||||||
Dividends receivable | 1,805,294 | ||||||||||||||
Receivable due from advisor | 271 | ||||||||||||||
Other receivables and prepaid expenses | 110,173 | ||||||||||||||
Total assets | 2,113,974,735 | ||||||||||||||
Liabilities | |||||||||||||||
Payable for fund shares repurchased | 4,243,990 | ||||||||||||||
Payable to affiliates | |||||||||||||||
Accounting and legal services fees | 29,379 | ||||||||||||||
Transfer agent fees | 2,701 | ||||||||||||||
Trustees' fees | 2,694 | ||||||||||||||
Other liabilities and accrued expenses | 236,797 | ||||||||||||||
Total liabilities | 4,515,561 | ||||||||||||||
Net assets | $2,109,459,174 | ||||||||||||||
Net assets consist of | |||||||||||||||
Paid-in capital | $1,616,819,445 | ||||||||||||||
Undistributed net investment income | 4,849,319 | ||||||||||||||
Accumulated net realized gain (loss) on investments | 61,271,977 | ||||||||||||||
Net unrealized appreciation (depreciation) on investments | 426,518,433 | ||||||||||||||
Net assets | $2,109,459,174 | ||||||||||||||
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 ($17,720,213 ÷ 1,077,695 shares) | $16.44 | ||||||||||||||
Class C ($816,508 ÷ 49,451 shares) | $16.51 | ||||||||||||||
Class I ($12,277,151 ÷ 742,651 shares) | $16.53 | ||||||||||||||
Class R2 ($100,283 ÷ 6,061 shares) | $16.55 | ||||||||||||||
Class R4 ($100,285 ÷ 6,061 shares) | $16.55 | ||||||||||||||
Class R6 ($100,289 ÷ 6,061 shares) | $16.55 | ||||||||||||||
Class NAV ($2,078,344,445 ÷ 125,612,610 shares) | $16.55 | ||||||||||||||
Maximum offering price per share | |||||||||||||||
Class A (net asset value per share ÷ 95%) | $17.31 |
STATEMENT OF OPERATIONS For the year ended 3-31-15
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $29,026,682 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 22,316 | |||||||||||||||||||||||||||||||||||||||
Interest | 1,017 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 29,050,015 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 13,934,677 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 38,872 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 230,851 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 18,779 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 31,940 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 45,295 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 4,781 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 73,979 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 237,053 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 125,998 | |||||||||||||||||||||||||||||||||||||||
Other | 29,699 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 14,771,924 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (175,037 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 14,596,887 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 14,453,128 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 140,863,170 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (672 | ) | ||||||||||||||||||||||||||||||||||||||
140,862,498 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 145,255,712 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (892 | ) | ||||||||||||||||||||||||||||||||||||||
145,254,820 | ||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain | 286,117,318 | |||||||||||||||||||||||||||||||||||||||
Increase in net assets from operations | $300,570,446 |
STATEMENTS OF CHANGES IN NET ASSETS
Year ended 3-31-15 | Year ended 3-31-14 | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $14,453,128 | $3,262,930 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 140,862,498 | 129,670,522 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 145,254,820 | 169,983,842 | |||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 300,570,446 | 302,917,294 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class I | (7,670 | ) | (2,416 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (10,952,106 | ) | (5,281,030 | ) | |||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (998,273 | ) | (287,371 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (16,646 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class I | (165,697 | ) | (38,354 | ) | |||||||||||||||||||||||||||||||||||||||||
Class NAV | (151,510,488 | ) | (49,131,097 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (163,650,880 | ) | (54,740,268 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 508,654,024 | 196,795,714 | |||||||||||||||||||||||||||||||||||||||||||
Total increase | 645,573,590 | 444,972,740 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of year | 1,463,885,584 | 1,018,912,844 | |||||||||||||||||||||||||||||||||||||||||||
End of year | $2,109,459,174 | $1,463,885,584 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $4,849,319 | $1,355,967 |
Financial highlights
Class A Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $15.50 | $12.62 | $12.14 | $10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.03 | (0.04 | ) | 0.02 | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.14 | 3.46 | 0.49 | 2.15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.17 | 3.42 | 0.51 | 2.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.44 | $15.50 | $12.62 | $12.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | 14.68 | 27.27 | 4.25 | 21.41 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $18 | $10 | $5 | $3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.33 | 1.51 | 2.01 | 2.05 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.30 | 1.30 | 1.30 | 1.30 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.16 | (0.29 | ) | 0.18 | (0.32 | )7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 91 | 100 | 26 |
1 | Period from 12-19-11 (commencement of operations) to 3-31-12. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | |||||||||||||||||||||||||||||||||||||||
4 | Does not reflect the effect of sales charges, if any. | |||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
7 | Annualized. |
Class C Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.49 | ||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.04 | ) | |||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 1.29 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.25 | ||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||
From net realized gain | (1.23 | ) | |||||||||||||||||||||||||||||||||||
Total distributions | (1.23 | ) | |||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.51 | ||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 8.20 | 5 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | ||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 7.03 | 6 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.05 | 6 | |||||||||||||||||||||||||||||||||||
Net investment loss | (0.42 | )6 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 7 |
1 | The inception date for Class C shares is 8-28-14. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Total returns would have been lower had certain expenses not been reduced during the period. | ||||||||||||||||||||||
4 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||
6 | Annualized. | ||||||||||||||||||||||
7 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class I Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $15.58 | $12.67 | $12.16 | $10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.01 | 0.06 | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.14 | 3.47 | 0.50 | 2.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.24 | 3.48 | 0.56 | 2.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.06 | ) | (0.03 | ) | (0.02 | ) | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (1.29 | ) | (0.57 | ) | (0.05 | ) | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.53 | $15.58 | $12.67 | $12.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 15.07 | 27.68 | 4.62 | 21.63 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $12 | $2 | $1 | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.50 | 2.62 | 5.88 | 11.44 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.94 | 0.94 | 0.94 | 0.94 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.62 | 0.09 | 0.51 | 0.14 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 91 | 100 | 26 |
1 | Period from 12-19-11 (commencement of operations) to 3-31-12. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | |||||||||||||||||||||||||||||||||||||||
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. |
Class R2 Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.50 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | — | 3 | |||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.05 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.05 | ||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.55 | ||||||||||||||||||||||||||||||||||||
Total return (%)4 | 0.30 | 5 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.09 | 7 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.43 | 7 | |||||||||||||||||||||||||||||||||||
Net investment income | — | 7,8 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 9 |
1 | The inception date for Class R2 shares is 3-27-15. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the period. | ||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||
6 | Less than $500,000. | ||||||||||||||||||||||
7 | Annualized. | ||||||||||||||||||||||
8 | Less than 0.005%. | ||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class R4 Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.50 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | — | 3 | |||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.05 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.05 | ||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.55 | ||||||||||||||||||||||||||||||||||||
Total return (%)4 | 0.30 | 5 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.09 | 7 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.18 | 7 | |||||||||||||||||||||||||||||||||||
Net investment income | 0.18 | 7 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 8 |
1 | The inception date for Class R4 shares is 3-27-15. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the period. | ||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||
6 | Less than $500,000. | ||||||||||||||||||||||
7 | Annualized. | ||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class R6 Shares Period ended | 3-31-15 | 1 | |||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.50 | ||||||||||||||||||||||||||||||||||||
Net investment income2 | — | 3 | |||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 0.05 | ||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.05 | ||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.55 | ||||||||||||||||||||||||||||||||||||
Total return (%)4 | 0.30 | 5 | |||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | |||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||
Expenses before reductions | 15.91 | 7 | |||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.81 | 7 | |||||||||||||||||||||||||||||||||||
Net investment income | 0.63 | 7 | |||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 8 |
1 | The inception date for Class R6 shares is 3-27-15. | ||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the period. | ||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||
6 | Less than $500,000. | ||||||||||||||||||||||
7 | Annualized. | ||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class NAV Shares Period ended | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $15.58 | $12.67 | $12.16 | $10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.12 | 0.04 | 0.08 | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain on investments | 2.17 | 3.47 | 0.50 | 2.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.29 | 3.51 | 0.58 | 2.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.09 | ) | (0.06 | ) | (0.04 | ) | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (1.32 | ) | (0.60 | ) | (0.07 | ) | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $16.55 | $15.58 | $12.67 | $12.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 15.43 | 27.88 | 4.80 | 21.63 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2,078 | $1,452 | $1,013 | $336 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.72 | 0.74 | 0.78 | 0.85 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.72 | 0.73 | 0.78 | 0.85 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.72 | 0.26 | 0.71 | 0.15 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 109 | 91 | 100 | 26 |
1 | Period from 12-19-11 (commencement of operations) to 3-31-12. | |||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | |||||||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | |||||||||||||||||||||||||||||||||||||||
5 | Not annualized. | |||||||||||||||||||||||||||||||||||||||
6 | Annualized. |
Note 1 — Organization
John Hancock Strategic 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 long-term 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 I shares are offered to institutions and certain investors. Class R2 and Class R4 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, and transfer agent fees, state registration fees and printing and postage for each class may differ.
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. 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.
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 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.
As of March 31, 2015, all investments are categorized as Level 1 under the hierarchy described above, except for repurchase agreements which are categorized as Level 2.
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund's custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund's investments as part of the caption related to the repurchase agreement.
26
Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.
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. 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 John Hancock Collateral Trust (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.
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 March 31, 2015 were $846. For the year ended March 31, 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.
27
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 March 31, 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 March 31, 2015 and 2014 was as follows:
March 31, 2015 | March 31, 2014 | |||||||
Ordinary Income | $65,969,894 | $41,180,204 | ||||||
Long term capital gain | 97,680,986 | 13,560,064 | ||||||
Total | $163,650,880 | $54,740,268 |
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 March 31, 2015, the components of distributable earnings on a tax basis consisted of $28,913,021 of undistributed ordinary income and $39,873,801 of undistributed long-term capital gain.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from 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.
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 Trust enters into contracts with service providers that contain general indemnification clauses. The Trust's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust 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 equivalent, on an annual basis, to the sum of: (a) 0.725% of the first $500 million of the fund's average daily net assets; (b) 0.700% of the next $500 million of the fund's average daily net assets; (c) 0.675% of the next $500 million of the fund's average daily net assets; and (d) 0.650% of the fund's average daily net assets in excess of $1.5 billion. The Advisor has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset
28
Management (US) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. 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 March 31, 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 fee and reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.30%, 2.05%, 0.94%, 1.43% and 1.18% for Class A, Class C, Class I, Class R2 and Class R4 shares, respectively. 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 current expense limitation agreement expires on June 30, 2015 for Class A and Class I shares, and June 30, 2016 for Class C, Class R2 and Class R4 shares, unless renewed by the mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.
The Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund, including transfer agent 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 attributable to Class R6 shares, on an annualized basis. The waiver expires on June 30, 2016, 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.
For the year ended March 31, 2015, the expense reductions described above amounted to the following:
Class | Expense reduction | Class | Expense reduction | |||||||||||
Class A | $3,166 | Class R4 | $152 | |||||||||||
Class C | 9,496 | Class R6 | 167 | |||||||||||
Class I | 15,457 | Class NAV | 146,447 | |||||||||||
Class R2 | 151 | Total | $175,036 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended March 31, 2015 were equivalent to a net annual effective rate of 0.68% 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 March 31, 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 C, Class R2 and Class R4 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 and Class R4, 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 fees | Service fees | ||||||
Class A | 0.30% | — |
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Class | Rule 12b-1 fees | Service fees | ||||||
Class C | 1.00% | — | ||||||
Class R2 | 0.25% | 0.25% | ||||||
Class R4 | 0.25% | 0.10% |
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, 2016, 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 $1 for Class R4 shares for the period ended March 31, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $49,724 for the year ended March 31, 2015. Of this amount, $8,204 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $40,174 was paid as sales commissions to broker-dealers and $1,346 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A 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 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 March 31, 2015, there were no CDSCs received by the Distributor for Class A and Class C shares.
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 March 31, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | ||||||||||
Class A | $36,961 | $15,420 | $18,124 | $3,792 | ||||||||||
Class C | 1,905 | 237 | 9,823 | 57 | ||||||||||
Class I | — | 3,122 | 16,874 | 932 | ||||||||||
Class R2 | 3 | — | 154 | — | ||||||||||
Class R4 | 3 | — | 154 | — | ||||||||||
Class R6 | — | — | 166 | — | ||||||||||
Total | $38,872 | $18,779 | $45,295 | $4,781 |
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.
30
Interfund lending program Pursuant to an Exemptive Order issued by the SEC, 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. 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 | Weighted average loan balance | Days outstanding | Weighted average interest rate | Interest income | ||||||||||
Lender | $27,417,607 | 3 | 0.45% | $1,028 |
Note 5 — Fund share transactions
Transactions in fund shares for the years ended March 31, 2015 and 2014 were as follows:
Year ended 3-31-15 | Year ended 3-31-14 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 545,810 | $8,919,693 | 294,034 | $4,371,215 | ||||||||||||||||||||||
Distributions reinvested | 50,333 | 764,053 | 12,334 | 184,513 | ||||||||||||||||||||||
Repurchased | (168,439 | ) | (2,718,915 | ) | (52,908 | ) | (762,600 | ) | ||||||||||||||||||
Net increase | 427,704 | $6,964,831 | 253,460 | $3,793,128 | ||||||||||||||||||||||
Class C shares1 | ||||||||||||||||||||||||||
Sold | 51,000 | $837,082 | — | — | ||||||||||||||||||||||
Distributions reinvested | 600 | 9,170 | — | — | ||||||||||||||||||||||
Repurchased | (2,149 | ) | (34,571 | ) | — | — | ||||||||||||||||||||
Net increase | 49,451 | $811,681 | — | — | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 640,174 | $10,595,132 | 69,453 | $1,090,446 | ||||||||||||||||||||||
Distributions reinvested | 10,523 | 160,469 | 2,331 | 35,016 | ||||||||||||||||||||||
Repurchased | (39,542 | ) | (632,486 | ) | (3,167 | ) | (45,530 | ) | ||||||||||||||||||
Net increase | 611,155 | $10,123,115 | 68,617 | $1,079,932 | ||||||||||||||||||||||
Class R2 shares2 | ||||||||||||||||||||||||||
Sold | 6,061 | $100,000 | — | — | ||||||||||||||||||||||
Net increase | 6,061 | $100,000 | — | — | ||||||||||||||||||||||
Class R4 shares2 | ||||||||||||||||||||||||||
Sold | 6,061 | $100,000 | — | — | ||||||||||||||||||||||
Net increase | 6,061 | $100,000 | — | — | ||||||||||||||||||||||
Class R6 Shares2 | ||||||||||||||||||||||||||
Sold | 6,061 | $100,000 | — | — | ||||||||||||||||||||||
Net increase | 6,061 | $100,000 | — | — | ||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 43,936,891 | $695,148,002 | 18,773,217 | $272,807,361 | ||||||||||||||||||||||
Distributions reinvested | 10,653,285 | 162,462,594 | 3,625,058 | 54,412,127 | ||||||||||||||||||||||
Repurchased | (22,138,313 | ) | (367,156,199 | ) | (9,225,312 | ) | (135,296,834 | ) | ||||||||||||||||||
Net increase | 32,451,863 | $490,454,397 | 13,172,963 | $191,922,654 | ||||||||||||||||||||||
Total net increase | 33,558,356 | $508,654,024 | 13,495,040 | $196,795,714 |
1 The inception date for Class C shares is 8-28-14
2 The inception date for Class R2, Class R4 and Class R6 shares is 3-27-15.
Affiliates of the fund owned 18%,12%, 100%, 100%, 100% and 100% of shares of beneficial interest of Class A, Class C, Class R2, Class R4, Class R6 and Class NAV, respectively, on March 31, 2015.
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Note 6 — Purchases and sales of securities
Purchases and sales of securities, other than short-term investments, amounted to $2,399,094,668 and $2,134,230,390, respectively, for the year ended March 31, 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 March 31, 2015, funds within the John Hancock group of funds complex held 98.6% of the fund's net assets. The following funds had an affiliate ownership of 5% or more of the fund's net assets:
Fund | Affiliated concentration | ||||
John Hancock Lifestyle Growth Fund | 28.9% | ||||
John Hancock Lifestyle Balanced Fund | 20.7% | ||||
John Hancock Lifestyle Growth MVP | 16.0% | ||||
John Hancock Lifestyle Aggressive Fund | 10.5% | ||||
John Hancock Lifestyle Balanced MVP | 8.0% |
32
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Funds III and Shareholders of
John Hancock Strategic 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 Strategic Growth Fund (the "Fund") at March 31, 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 March 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
May 18, 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 March 31, 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.
The fund paid $97,680,986 in capital gains 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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 | 221 | ||||||
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 John Hancock Asset Management a division of Manulife Asset Management (US) 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
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 Strategic Growth Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||||||||
MF202369 | 393A 3/15 5/15 |
ITEM 2. CODE OF ETHICS.
As of the end of the year, March 31, 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 “Covered Officers”). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Peter S. Burgess is the audit committee financial expert and is “independent”, pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the principal accountant 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 March 31, 2015 and 2014. These fees were billed to the registrant and were approved by the registrant’s audit committee.
Fund | March 31, 2015 | March 31, 2014 |
Core High Yield Fund | $ 66,141 | $ 57,759 |
Disciplined Value Fund | 34,907 | 31,949 |
Disciplined Value Mid Cap Fund | 43,045 | 40,439 |
International Value Equity Fund | 45,306 | 37,934 |
Select Growth Fund | 40,895 | 36,568 |
Small Company Fund | 42,303 | 39,586 |
Strategic Growth Fund | 35,609 | 28,642 |
Total | $ 308,206 | $ 272,877 |
(b) Audit-Related Services
Audit-related 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. Amounts billed to the registrant were as follows:
Fund | March 31, 2015 | March 31, 2014 |
Core High Yield Fund | $ 519 | $ 558 |
Disciplined Value Fund | 519 | 558 |
Disciplined Value Mid Cap Fund | 519 | 558 |
International Value Equity Fund | 519 | 558 |
Select Growth Fund | 519 | 558 |
Small Company Fund | 519 | 558 |
Strategic Growth Fund | 519 | 558 |
Total | $ 3,633 | $ 3,906 |
Amounts billed to control affiliates were $103,940 and $98,642 for the fiscal years ended March 31, 2015 and 2014, respectively.
(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 March 31, 2015 and 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 | March 31, 2015 | March 31, 2014 |
Core High Yield Fund | $ 3,450 | $ 4,300 |
Disciplined Value Fund | 3,450 | 2,380 |
Disciplined Value Mid Cap Fund | 3,450 | 2,675 |
International Value Equity Fund | 3,900 | 4,018 |
Select Growth Fund | 3,450 | 1,879 |
Small Company Fund | 3,450 | 2,590 |
Strategic Growth Fund | 3,450 | 3,502 |
Total | $ 24,600 | $ 21,344 |
(d) All Other Fees
Other fees billed for professional services rendered by the principal accountant to the registrant or to the control affiliates amounted to the following:
Fund | March 31, 2015 | March 31, 2014 |
Core High Yield Fund | $ 216 | $ 382 |
Disciplined Value Fund | 216 | 122 |
Disciplined Value Mid Cap Fund | 216 | 122 |
International Value Equity Fund | 216 | 382 |
Select Growth Fund | 216 | 122 |
Small Company Fund | 216 | 122 |
Strategic Growth Fund | 216 | 122 |
Total | $ 1,512 | $ 1,374 |
(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 March 31, 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 $6,756,525 for the fiscal year ended March 31, 2015 and $5,510,826 for the fiscal year ended March 31, 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
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 Covered 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: May 18, 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: May 18, 2015
By: | /s/ Charles A. Rizzo |
Charles A. Rizzo | |
Chief Financial Officer |
Date: May 18, 2015