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 |
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Date of reporting period: | September 30, 2015 |
ITEM 1. REPORTS TO SHAREHOLDERS.
John Hancock
Select Growth Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
Global financial markets were especially rocky in mid-2015. The pullback we had anticipated for some months took place in August, and U.S. equities experienced their first official correction—a decline of more than 10% in the stock market—in more than four years. There were several headwinds restraining stock prices from moving higher all year, but the trigger for this summer's correction was the news of slowing economic growth in China and the effect that might have on global growth. For the time being, global economic data continues to be a leading driver of markets worldwide.
The asset managers in our network believe, on balance, that investors should stay the course when it comes to U.S. equities. Our economy continues to grow at a healthy pace, driven by strong housing and jobs data, falling commodity prices, solid consumer spending, and low inflation. While the U.S. Federal Reserve (Fed) chose to leave the federal funds rate unchanged at its September meeting, Fed Chair Janet Yellen cited a number of positives in the U.S. economy and signaled that the Fed will likely raise interest rates soon in response to stronger growth.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
Select Growth Fund
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INVESTMENT OBJECTIVE
The fund seeks to maximize long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/15 (%)
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. Index figures do not reflect expenses or sales charges, which would result in lower returns.
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 were exchanged for Class A shares of John Hancock Select Growth Fund (formerly, Rainier 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.
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PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS
U.S. stocks declined
Concerns about slowing global economic growth and the potential ripple effects on the U.S. economy put downward pressure on the U.S. equity market.
The fund declined but outperformed its benchmark
Declines in the healthcare and industrials sectors led to a negative overall return for the fund, but it held up better than the Russell 1000 Growth Index.
Materials and financials added value
Stock selection in the materials and financials sectors contributed the most to the fund's outperformance compared with the index.
SECTOR COMPOSITION AS OF 9/30/15 (%)
A note about risks
Large company stocks could fall out of favor. The value of a company's equity securities is subject to changes 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. 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 than investments in a wider variety of sectors. Frequent trading may increase fund transaction costs. Please see the fund's prospectuses for additional risks.
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![garyrobinson.jpg](https://capedge.com/proxy/N-CSRS/0001145443-15-001273/garyrobinson.jpg)
Gary Robinson, CFA
Portfolio Manager
Baillie Gifford
Can you briefly describe the market environment over the past six months?
The S&P 500 Index, a broad measure of U.S. stock performance, declined by 6.18% for the six-month period as market volatility increased dramatically. Investors fretted over renewed debt problems in Greece, including the possibility of the country exiting the euro, and an economic slowdown in China that led to a surprise devaluation of the Chinese yuan. China has been an engine of global growth for decades, but it faces challenges in the transition from an economy driven by investments in infrastructure and corporate development to one driven by domestic consumption. The weakness in China spread to other countries, particularly emerging markets and nearby trading partners in the Asia-Pacific region.
At the beginning of the year, the U.S. Federal Reserve (Fed) signaled that it planned to raise short-term interest rates sometime in 2015, but the Fed held rates steady throughout the reporting period, which raised concerns that the U.S. economic expansion may be faltering. However, the domestic economic backdrop remained encouraging, with falling unemployment and tentative, early signs of wage inflation. Lower energy prices serve as a de facto tax cut for consumers and non-energy-related businesses, which should support additional growth.
Although we pay attention to macro-economic data, our efforts are substantially focused on analyzing the individual businesses held in the fund and on unearthing new growth stock opportunities, from the perspective of a three- to five-year time horizon. We believe that stock market returns ultimately follow earnings and cash flows, but this truism often requires patience.
Turning to the portfolio, what factors contributed to the fund's performance relative to its benchmark index?
The fund is constructed on the basis of individual stock selection, with sector positioning largely an outcome of the individual companies in which we invest rather than deliberate policy. The fund was positioned with a domestic bias, and this emphasis on U.S.-focused businesses was a contributing factor to the fund's outperformance compared with its benchmark, the Russell 1000 Growth Index.
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From a sector perspective, the fund's holdings in the materials and financials sectors contributed the most to the fund's relative performance. In addition, there were a number of significant investments in broadly defined technology software network businesses that benefited from an increasing user base. Payment systems, social networks, and e-commerce marketplaces are among those that tend to exhibit these network effects, resulting in sustainable leading market positions and high long-term profitability. A number of these businesses were among the fund's top contributors during the reporting period.
Can you give some examples?
The top contributor for the reporting period was online retailer Amazon.com, Inc. The company's strong results were aided by rapid and accelerating growth from two businesses that were launched a decade ago. Amazon Web Services, which can boast NASA and Netflix as customers, is significantly larger than its competitors in providing cloud-based services and is already very profitable, while Amazon Prime subscriptions are growing by 50% per year. We continue to be excited by Amazon's long-term potential, with U.S. e-commerce penetration at just 7%, compared to 14% in the U.K. Furthermore, Amazon is investing to create an increasingly powerful network, which is successfully expanding its initial online retail business.
Other notable contributors in the technology space included social media giant Facebook, Inc., online advertising and search firm Alphabet, Inc. (formerly known as Google), credit card company MasterCard, Inc., and electronic bond platform MarketAxess Holdings, Inc.
TOP 10 HOLDINGS AS OF 9/30/15 (%)
Amazon.com, Inc. | 7.0 |
First Republic Bank | 4.8 |
M&T Bank Corp. | 4.7 |
MasterCard, Inc., Class A | 4.4 |
Watsco, Inc. | 4.2 |
Markel Corp. | 3.6 |
Martin Marietta Materials, Inc. | 3.6 |
TripAdvisor, Inc. | 3.3 |
PepsiCo, Inc. | 3.1 |
Chipotle Mexican Grill, Inc. | 3.1 |
TOTAL | 41.8 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
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Outside of these technology-oriented stocks, what other holdings aided performance?
A couple of stocks that hurt relative performance last year were significant contributors during the reporting period. For example, building materials producer Martin Marietta Materials, Inc., which was negatively affected by severe winter weather last year, rebounded during the past six months as a broadening U.S. economic recovery lifted demand for aggregates. First Republic Bank struggled with greater regulatory costs earlier in the year, but it has continued its impressive long-term track record of double-digit loan and deposit growth.
What holdings detracted from performance during the reporting period?
One of the largest individual detractors was online travel company TripAdvisor, Inc., which declined as earnings fell short of expectations. However, we are encouraged that TripAdvisor is investing in its brand through advertising and Instant Booking, the company's direct booking platform, which now features six of the ten largest global hotel chains.
The fund has limited exposure to the energy sector, but the few energy holdings in the portfolio detracted from results during the period. Energy prices continued to fall amid an excess supply of oil and gas resulting from Saudi Arabia operating near full capacity, widespread usage of new extraction technologies, and slowing economic growth in China. Fund holdings affected by these developments included energy producers Ultra Petroleum Corp. and Apache Corp., as well as NOW Inc., an industrial manufacturer that produces parts and equipment used by energy companies.
How was the fund positioned at the end of the period?
Because we are optimistic about the path of the U.S. economy as it shifts from recovery to expansion, we currently have a bias toward companies that derive the majority of their revenues from the United States. A large position in predominantly domestic financial stocks remains a prominent feature of the portfolio. The fund has no exposure to large investment banks; instead, it holds a diverse mix of rapidly growing stocks and selected high-quality insurers and banks.
More recently, we have identified biotechnology innovation as one of our key research priorities. Our enthusiasm stems from a belief that technology and innovation will open up new routes to
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better disease identification and therapy, significantly improve the chances of successful outcomes for patients, and save billions of dollars in the process. The fund holds Bristol-Myers Squibb Company, which we view as the large drug maker with the most interesting product pipeline, along with smaller biotech company Seattle Genetics, Inc. and diagnostics business firm Genomic Health, Inc. We are just scratching the surface, however, and while we will always judge companies on their individual merit, we believe that our research prioritization will uncover some exciting and investable biotech holdings in the coming years.
MANAGED BY
![]() | Gary Robinson, CFA On the fund since 2015 Investing since 2003 |
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TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||
1-year | 5-year | 10-year | 6-month | 5-year | 10-year | ||
Class A1 | 0.74 | 9.37 | 5.14 | -7.78 | 56.48 | 65.06 | |
Class B1 | 0.14 | 9.31 | 4.69 | -8.16 | 56.08 | 58.21 | |
Class C1 | 4.20 | 9.58 | 4.69 | -4.24 | 58.03 | 58.16 | |
Class I1,2 | 6.25 | 10.83 | 6.02 | -2.79 | 67.23 | 79.47 | |
Class R11,2 | 5.51 | 9.98 | 5.08 | -3.15 | 60.91 | 64.14 | |
Class R21,2 | 5.72 | 9.85 | 4.54 | -3.07 | 59.96 | 55.82 | |
Class R31,2 | 5.61 | 10.10 | 5.19 | -3.07 | 61.78 | 65.92 | |
Class R41,2 | 6.01 | 10.50 | 5.54 | -2.92 | 64.76 | 71.49 | |
Class R51,2 | 6.24 | 10.75 | 5.82 | -2.86 | 66.59 | 76.10 | |
Class R61,2 | 6.43 | 10.94 | 6.09 | -2.78 | 68.06 | 80.58 | |
Class T1,2 | 0.65 | 9.28 | 4.76 | -7.83 | 55.84 | 59.20 | |
Class ADV1,2 | 6.05 | 10.59 | 5.77 | -2.89 | 65.43 | 75.29 | |
Index 1† | 3.17 | 14.47 | 8.09 | -5.18 | 96.58 | 117.64 | |
Index 2† | -0.61 | 13.34 | 6.80 | -6.18 | 87.02 | 93.05 |
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%, and 1%. No sales charge will be assessed after the sixth year. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class 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 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 | |
Gross (%) | 1.24 | 1.99 | 1.99 | 0.98 | 1.64 | 1.39 | 1.54 | 1.24 | 0.94 | 0.89 | 1.29 | 1.24 |
Net (%) | 1.20 | 1.99 | 1.99 | 0.95 | 1.64 | 1.39 | 1.54 | 1.14 | 0.94 | 0.87 | 1.25 | 1.14 |
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.
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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 | 9-30-05 | 15,821 | 15,821 | 21,764 | 19,305 |
Class C1,3 | 9-30-05 | 15,816 | 15,816 | 21,764 | 19,305 |
Class I1,2 | 9-30-05 | 17,947 | 17,947 | 21,764 | 19,305 |
Class R11,2 | 9-30-05 | 16,414 | 16,414 | 21,764 | 19,305 |
Class R21,2 | 9-30-05 | 15,582 | 15,582 | 21,764 | 19,305 |
Class R31,2 | 9-30-05 | 16,592 | 16,592 | 21,764 | 19,305 |
Class R41,2 | 9-30-05 | 17,149 | 17,149 | 21,764 | 19,305 |
Class R51,2 | 9-30-05 | 17,610 | 17,610 | 21,764 | 19,305 |
Class R61,2 | 9-30-05 | 18,058 | 18,058 | 21,764 | 19,305 |
Class T1,2 | 9-30-05 | 15,920 | 16,756 | 21,764 | 19,305 |
Class ADV1,2 | 9-30-05 | 17,529 | 17,529 | 21,764 | 19,305 |
Russell 1000 Growth Index is an unmanaged index containing those securities in the Russell 1000 Index with a greater-than-average growth orientation.
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 result in lower returns.
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 (formerly, Rainier 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, and Class ADV 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 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. |
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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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $970.60 | $5.91 | 1.20% |
Class B | 1,000.00 | 966.80 | 9.78 | 1.99% |
Class C | 1,000.00 | 967.30 | 9.79 | 1.99% |
Class I | 1,000.00 | 972.10 | 4.88 | 0.99% |
Class R1 | 1,000.00 | 968.50 | 8.32 | 1.69% |
Class R2 | 1,000.00 | 969.30 | 7.09 | 1.44% |
Class R3 | 1,000.00 | 969.30 | 7.83 | 1.59% |
Class R4 | 1,000.00 | 970.80 | 5.91 | 1.20% |
Class R5 | 1,000.00 | 971.40 | 4.88 | 0.99% |
Class R6 | 1,000.00 | 972.20 | 4.09 | 0.83% |
Class T | 1,000.00 | 970.20 | 6.21 | 1.26% |
Class ADV | 1,000.00 | 971.10 | 5.62 | 1.14% |
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 September 30, 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:
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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 April 1, 2015, with the same investment held until September 30, 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 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,019.00 | $6.06 | 1.20% |
Class B | 1,000.00 | 1,015.10 | 10.03 | 1.99% |
Class C | 1,000.00 | 1,015.10 | 10.03 | 1.99% |
Class I | 1,000.00 | 1,020.10 | 5.00 | 0.99% |
Class R1 | 1,000.00 | 1,016.60 | 8.52 | 1.69% |
Class R2 | 1,000.00 | 1,017.80 | 7.26 | 1.44% |
Class R3 | 1,000.00 | 1,017.10 | 8.02 | 1.59% |
Class R4 | 1,000.00 | 1,019.00 | 6.06 | 1.20% |
Class R5 | 1,000.00 | 1,020.00 | 5.00 | 0.99% |
Class R6 | 1,000.00 | 1,020.90 | 4.19 | 0.83% |
Class T | 1,000.00 | 1,018.70 | 6.42 | 1.26% |
Class ADV | 1,000.00 | 1,019.30 | 5.76 | 1.14% |
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 183/366 (to reflect the one-half year period). |
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Fund's investments
As of 9-30-15 (unaudited) | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 96.5% | $347,715,534 | |||||||||||||
(Cost $339,504,022) | ||||||||||||||
Consumer discretionary 19.9% | 71,757,412 | |||||||||||||
Automobiles 1.9% | ||||||||||||||
Harley-Davidson, Inc. | 125,801 | 6,906,475 | ||||||||||||
Hotels, restaurants and leisure 3.1% | ||||||||||||||
Chipotle Mexican Grill, Inc. (I) | 15,340 | 11,048,635 | ||||||||||||
Internet and catalog retail 10.3% | ||||||||||||||
Amazon.com, Inc. (I) | 49,314 | 25,243,343 | ||||||||||||
TripAdvisor, Inc. (I) | 189,855 | 11,964,662 | ||||||||||||
Specialty retail 4.6% | ||||||||||||||
CarMax, Inc. (I) | 95,740 | 5,679,297 | ||||||||||||
O'Reilly Automotive, Inc. (I) | 43,660 | 10,915,000 | ||||||||||||
Consumer staples 6.3% | 22,706,399 | |||||||||||||
Beverages 5.2% | ||||||||||||||
Brown-Forman Corp., Class B | 43,210 | 4,187,049 | ||||||||||||
PepsiCo, Inc. | 119,060 | 11,227,358 | ||||||||||||
The Boston Beer Company, Inc., Class A (I) | 16,020 | 3,373,972 | ||||||||||||
Household products 1.1% | ||||||||||||||
Colgate-Palmolive Company | 61,740 | 3,918,020 | ||||||||||||
Energy 0.7% | 2,685,309 | |||||||||||||
Oil, gas and consumable fuels 0.7% | ||||||||||||||
Apache Corp. | 31,966 | 1,251,789 | ||||||||||||
Ultra Petroleum Corp. (I) | 224,338 | 1,433,520 | ||||||||||||
Financials 25.2% | 90,819,531 | |||||||||||||
Banks 12.0% | ||||||||||||||
First Republic Bank | 274,330 | 17,219,694 | ||||||||||||
M&T Bank Corp. | 138,155 | 16,848,002 | ||||||||||||
U.S. Bancorp | 222,000 | 9,104,220 | ||||||||||||
Capital markets 1.7% | ||||||||||||||
TD Ameritrade Holding Corp. | 187,000 | 5,954,080 | ||||||||||||
Consumer finance 1.0% | ||||||||||||||
American Express Company | 48,890 | 3,624,216 | ||||||||||||
Diversified financial services 5.6% | ||||||||||||||
Berkshire Hathaway, Inc., Class B (I) | 73,240 | 9,550,496 | ||||||||||||
MarketAxess Holdings, Inc. | 114,820 | 10,664,482 | ||||||||||||
Insurance 4.9% | ||||||||||||||
Fairfax Financial Holdings, Ltd. | 10,431 | 4,750,345 | ||||||||||||
Markel Corp. (I) | 16,342 | 13,103,996 |
Shares | Value | |||||||||||||
Health care 9.3% | $33,362,251 | |||||||||||||
Biotechnology 2.1% | ||||||||||||||
Genomic Health, Inc. (I) | 216,793 | 4,587,340 | ||||||||||||
Seattle Genetics, Inc. (I) | 75,300 | 2,903,568 | ||||||||||||
Health care equipment and supplies 2.4% | ||||||||||||||
IDEXX Laboratories, Inc. (I) | 115,614 | 8,584,340 | ||||||||||||
Health care providers and services 1.8% | ||||||||||||||
Anthem, Inc. | 47,052 | 6,587,280 | ||||||||||||
Life sciences tools and services 2.0% | ||||||||||||||
Waters Corp. (I) | 59,645 | 7,050,635 | ||||||||||||
Pharmaceuticals 1.0% | ||||||||||||||
Bristol-Myers Squibb Company | 61,640 | 3,649,088 | ||||||||||||
Industrials 8.1% | 29,275,988 | |||||||||||||
Air freight and logistics 1.5% | ||||||||||||||
United Parcel Service, Inc., Class B | 55,870 | 5,513,810 | ||||||||||||
Industrial conglomerates 1.3% | ||||||||||||||
Danaher Corp. | 54,780 | 4,667,804 | ||||||||||||
Trading companies and distributors 5.3% | ||||||||||||||
NOW, Inc. (I) | 275,099 | 4,071,465 | ||||||||||||
Watsco, Inc. | 126,797 | 15,022,909 | ||||||||||||
Information technology 19.3% | 69,509,484 | |||||||||||||
Internet software and services 11.1% | ||||||||||||||
eBay, Inc. (I) | 148,413 | 3,627,214 | ||||||||||||
Facebook, Inc., Class A (I) | 109,040 | 9,802,696 | ||||||||||||
Google, Inc., Class A (I) | 16,130 | 10,296,908 | ||||||||||||
Google, Inc., Class C (I) | 15,870 | 9,655,625 | ||||||||||||
GrubHub, Inc. (I) | 168,100 | 4,091,554 | ||||||||||||
Zillow Group, Inc., Class A (I) | 28,300 | 813,059 | ||||||||||||
Zillow Group, Inc., Class C (I) | 56,600 | 1,528,200 | ||||||||||||
IT services 5.8% | ||||||||||||||
MasterCard, Inc., Class A | 178,080 | 16,048,570 | ||||||||||||
PayPal Holdings, Inc. (I) | 148,413 | 4,606,740 | ||||||||||||
Source HOV (R) | 510 | 335,922 | ||||||||||||
Semiconductors and semiconductor equipment 0.3% | ||||||||||||||
Xilinx, Inc. | 25,478 | 1,080,267 | ||||||||||||
Software 2.1% | ||||||||||||||
Oracle Corp. | 211,039 | 7,622,729 | ||||||||||||
Materials 7.7% | 27,599,160 | |||||||||||||
Chemicals 1.0% | ||||||||||||||
Monsanto Company | 42,880 | 3,659,379 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Construction materials 6.7% | ||||||||||||||
Martin Marietta Materials, Inc. | 85,257 | $12,954,801 | ||||||||||||
Vulcan Materials Company | 123,150 | 10,984,980 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 3.8% | $13,952,247 | |||||||||||||
(Cost $13,952,247) | ||||||||||||||
Money market funds 3.8% | 13,952,247 | |||||||||||||
State Street Institutional Liquid Reserves Fund | 0.1305(Y | ) | 13,952,247 | 13,952,247 | ||||||||||
Total investments (Cost $353,456,269)† 100.3% | $361,667,781 | |||||||||||||
Other assets and liabilities, net (0.3%) | ($1,233,702 | ) | ||||||||||||
Total net assets 100.0% | $360,434,079 |
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 the Notes to financial statements. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 9-30-15. | |||||||||||||
† | At 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $353,785,712. Net unrealized appreciation aggregated $7,882,069, of which $36,206,318 related to appreciated investment securities and $28,324,249 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments, at value (Cost $353,456,269) | $361,667,781 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 190,968 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 126,186 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 310 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 108,647 | |||||||||||||||||||||||||||||||||||||||
Total assets | 362,093,892 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 1,523,984 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 8,149 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 37,179 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 133 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 2,090 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 88,278 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 1,659,813 | |||||||||||||||||||||||||||||||||||||||
Net assets | $360,434,079 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $344,287,019 | |||||||||||||||||||||||||||||||||||||||
Accumulated net investment loss | (843,626 | ) | ||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | 8,779,174 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 8,211,512 | |||||||||||||||||||||||||||||||||||||||
Net assets | $360,434,079 | |||||||||||||||||||||||||||||||||||||||
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 ($251,347,460 ÷ 12,485,131 shares)1 | $20.13 | |||||||||||||||||
Class B ($10,937,123 ÷ 587,825 shares)1 | $18.61 | |||||||||||||||||
Class C ($15,808,944 ÷ 850,447 shares)1 | $18.59 | |||||||||||||||||
Class I ($10,695,178 ÷ 512,750 shares) | $20.86 | |||||||||||||||||
Class R1 ($512,166 ÷ 26,503 shares) | $19.32 | |||||||||||||||||
Class R2 ($229,922 ÷ 11,224 shares) | $20.48 | |||||||||||||||||
Class R3 ($200,697 ÷ 10,272 shares) | $19.54 | |||||||||||||||||
Class R4 ($130,778 ÷ 6,461 shares) | $20.24 | |||||||||||||||||
Class R5 ($92,421 ÷ 4,460 shares) | $20.72 | |||||||||||||||||
Class R6 ($4,128,237 ÷ 196,720 shares) | $20.99 | |||||||||||||||||
Class T ($65,031,573 ÷ 3,273,959 shares) | $19.86 | |||||||||||||||||
Class ADV ($1,319,580 �� 64,447 shares) | $20.48 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $21.19 | |||||||||||||||||
Class T (net asset value per share ÷ 95%)2 | $20.91 |
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 six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $1,601,457 | |||||||||||||||||||||||||||||||||||||||
Interest | 4,938 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 1,606,395 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 1,430,232 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 591,943 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 24,165 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 237,019 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 3,302 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 85,397 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 43,454 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 37,810 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 24,707 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 25,270 | |||||||||||||||||||||||||||||||||||||||
Other | 8,741 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 2,512,040 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (62,019 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 2,450,021 | |||||||||||||||||||||||||||||||||||||||
Net investment loss | (843,626 | ) | ||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments and foreign currency transactions | 16,257,610 | |||||||||||||||||||||||||||||||||||||||
16,257,610 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments and translation of assets and liabilities in foreign currencies | (26,753,446 | ) | ||||||||||||||||||||||||||||||||||||||
(26,753,446 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (10,495,836 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($11,339,462 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | ($843,626 | ) | $391,256 | ||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 16,257,610 | 176,686,267 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (26,753,446 | ) | (177,443,971 | ) | |||||||||||||||||||||||||||||||||||||||||
Decrease in net assets resulting from operations | (11,339,462 | ) | (366,448 | ) | |||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (82,788,478 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class B | — | (4,836,642 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (4,983,406 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (15,648,152 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R1 | — | (154,733 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (28,961 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (31,001 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (39,217 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R5 | — | (28,514 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (1,660,185 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class T | — | (19,276,497 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class ADV | — | (4,206,121 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (96,887,085 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (230,568,992 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (34,748,840 | ) | (373,649,348 | ) | |||||||||||||||||||||||||||||||||||||||||
Total decrease | (46,088,302 | ) | (604,584,788 | ) | |||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 406,522,381 | 1,011,107,169 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $360,434,079 | $406,522,381 | |||||||||||||||||||||||||||||||||||||||||||
Accumulated net investment loss | ($843,626 | ) | $— |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 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 | $20.77 | $26.39 | $24.32 | $22.84 | $21.32 | $18.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.04 | ) | 0.03 | (0.15 | ) | (0.01 | ) | (0.09 | ) | (0.06 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.60 | ) | 0.74 | 5.29 | 1.49 | 1.61 | 3.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.64 | ) | 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 | $20.13 | $20.77 | $26.39 | $24.32 | $22.84 | $21.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (2.94 | ) 5 | 5.13 | 21.38 | 6.48 | 7.13 | 16.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $251 | $274 | $356 | $356 | $369 | $413 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.22 | 6 | 1.21 | 1.19 | 1.25 | 1.27 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.20 | 6 | 1.20 | 1.19 | 1.25 | 1.27 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.38 | ) 6 | 0.15 | (0.58 | ) | (0.04 | ) | (0.45 | ) | (0.33 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class B Shares Period ended | 9-30-15 | 1 | 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 | $19.27 | $25.12 | $23.46 | $22.22 | $20.90 | $18.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.11 | ) | (0.13 | ) | (0.35 | ) | (0.19 | ) | (0.25 | ) | (0.21 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.55 | ) | 0.67 | 5.08 | 1.43 | 1.57 | 3.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.66 | ) | 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 | $18.61 | $19.27 | $25.12 | $23.46 | $22.22 | $20.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (3.32 | ) 5 | 4.27 | 20.38 | 5.58 | 6.32 | 15.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $11 | $13 | $20 | $20 | $25 | $31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.00 | 5 | 2.04 | 2.00 | 2.06 | 2.07 | 2.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.99 | 6 | 2.03 | 2.00 | 2.06 | 2.07 | 2.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (1.17 | ) 6 | (0.69 | ) | (1.39 | ) | (0.86 | ) | (1.24 | ) | (1.13 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class C Shares Period ended | 9-30-15 | 1 | 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 | $19.26 | $25.10 | $23.45 | $22.21 | $20.90 | $18.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.11 | ) | (0.13 | ) | (0.36 | ) | (0.19 | ) | (0.26 | ) | (0.21 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.56 | ) | 0.68 | 5.08 | 1.43 | 1.57 | 3.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.67 | ) | 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 | $18.59 | $19.26 | $25.10 | $23.45 | $22.21 | $20.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (3.27 | ) 5 | 4.26 | 20.35 | 5.58 | 6.27 | 15.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $16 | $17 | $19 | $17 | $20 | $22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.00 | 6 | 2.05 | 2.03 | 2.07 | 2.11 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.99 | 6 | 2.04 | 2.02 | 2.07 | 2.10 | 2.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (1.17 | ) 6 | (0.69 | ) | (1.42 | ) | (0.88 | ) | (1.27 | ) | (1.13 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class I Shares Period ended | 9-30-15 | 1 | 1 | 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 | $21.50 | $27.03 | $24.80 | $23.24 | $21.61 | $18.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.02 | ) | 0.07 | (0.08 | ) | 0.06 | (0.02 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.62 | ) | 0.79 | 5.41 | 1.52 | 1.65 | 3.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.64 | ) | 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 | $20.86 | $21.50 | $27.03 | $24.80 | $23.24 | $21.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.79 | ) 4 | 5.35 | 21.71 | 6.81 | 7.54 | 16.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $11 | $13 | $72 | $113 | $256 | $237 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.01 | 5 | 1.00 | 0.91 | 0.91 | 0.91 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.99 | 5 | 0.99 | 0.91 | 0.91 | 0.91 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.14 | ) 5 | 0.31 | (0.28 | ) | 0.25 | (0.08 | ) | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R1 Shares Period ended | 9-30-15 | 1 | 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 | $19.99 | $25.74 | $23.90 | $22.55 | $21.14 | $18.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.09 | ) | (0.07 | ) | (0.29 | ) | (0.11 | ) | (0.17 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.58 | ) | 0.71 | 5.20 | 1.46 | 1.58 | 3.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.67 | ) | 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 | $19.32 | $19.99 | $25.74 | $23.90 | $22.55 | $21.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (3.15 | ) 4 | 4.59 | 20.77 | 5.99 | 6.67 | 15.96 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | — | 5 | — | 5 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.25 | 6 | 4.13 | 4.13 | 5.79 | 7.03 | 8.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.69 | 6 | 1.70 | 1.70 | 1.70 | 1.70 | 1.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.87 | ) 6 | (0.34 | ) | (1.12 | ) | (0.49 | ) | (0.86 | ) | (0.75 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R2 Shares Period ended | 9-30-15 | 2 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $21.16 | $26.81 | $24.72 | $23.27 | $22.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | (0.07 | ) | (0.02 | ) | (0.23 | ) | (0.06 | ) | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.61 | ) | 0.76 | 5.39 | 1.51 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.68 | ) | 0.74 | 5.16 | 1.45 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (6.39 | ) | (3.07 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.48 | $21.16 | $26.81 | $24.72 | $23.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (3.07 | ) 6 | 4.89 | 21.10 | 6.23 | 3.65 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 5.90 | 8 | 17.03 | 15.50 | 20.41 | 15.96 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.44 | 8 | 1.45 | 1.45 | 1.45 | 1.45 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.62 | ) 8 | (0.09 | ) | (0.85 | ) | (0.24 | ) | (0.12 | ) 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 9 |
1 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-11 to 3-31-12. |
Class R3 Shares Period ended | 9-30-15 | 1 | 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 | $20.20 | $25.92 | $24.03 | $22.65 | $21.21 | $18.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.08 | ) | (0.05 | ) | (0.26 | ) | (0.09 | ) | (0.16 | ) | (0.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.58 | ) | 0.72 | 5.22 | 1.47 | 1.60 | 3.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.66 | ) | 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 | $19.54 | $20.20 | $25.92 | $24.03 | $22.65 | $21.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (3.07 | ) 4 | 4.71 | 20.87 | 6.09 | 6.79 | 16.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 5 | — | 5 | — | 5 | — | 5 | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.10 | 6 | 16.32 | 12.99 | 15.02 | 15.86 | 16.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.59 | 6 | 1.60 | 1.60 | 1.60 | 1.59 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.77 | ) 6 | (0.24 | ) | (1.00 | ) | (0.39 | ) | (0.76 | ) | (0.64 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R4 Shares Period ended | 9-30-15 | 1 | 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 | $20.88 | $26.49 | $24.40 | $22.91 | $21.40 | $18.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.04 | ) | 0.03 | (0.17 | ) | — | 3 | (0.10 | ) | (0.06 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.60 | ) | 0.75 | 5.33 | 1.49 | 1.61 | 3.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.64 | ) | 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 | $20.24 | $20.88 | $26.49 | $24.40 | $22.91 | $21.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (2.92 | ) 5 | 5.15 | 21.39 | 6.50 | 7.06 | 16.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | — | 6 | — | 6 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.20 | 7 | 13.72 | 10.91 | 14.55 | 15.46 | 16.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.20 | 7 | 1.20 | 1.20 | 1.22 | 1.29 | 1.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.38 | ) 7 | 0.13 | (0.62 | ) | 0.01 | (0.46 | ) | (0.34 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 R5 Shares Period ended | 9-30-15 | 1 | 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 | $21.36 | $26.90 | $24.71 | $23.16 | $21.56 | $18.47 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.02 | ) | 0.07 | (0.11 | ) | 0.05 | (0.03 | ) | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.62 | ) | 0.78 | 5.39 | 1.51 | 1.63 | 3.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.64 | ) | 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 | $20.72 | $21.36 | $26.90 | $24.71 | $23.16 | $21.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.86 | ) 4 | 5.39 | 21.58 | 6.74 | 7.42 | 16.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 5 | — | 5 | — | 5 | — | 5 | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 5.23 | 6 | 18.28 | 12.38 | 14.16 | 15.07 | 16.17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.99 | 6 | 1.00 | 1.00 | 1.00 | 0.99 | 1.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | (0.18 | ) 6 | 0.34 | (0.40 | ) | 0.21 | (0.16 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R6 Shares Period ended | 9-30-15 | 2 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $21.61 | $27.10 | $24.84 | $23.27 | $20.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | — | 4 | 0.11 | (0.07 | ) | 0.08 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.62 | ) | 0.79 | 5.43 | 1.51 | 3.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.62 | ) | 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 | $20.99 | $21.61 | $27.10 | $24.84 | $23.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (2.78 | ) 6 | 5.58 | 21.82 | 6.86 | 16.29 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $4 | $3 | $8 | $4 | $4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.05 | 7 | 1.27 | 1.09 | 1.33 | 1.58 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.83 | 7 | 0.79 | 0.86 | 0.86 | 0.86 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | — | 7,8 | 0.52 | (0.27 | ) | 0.34 | 0.20 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 9 |
1 | The inception date for Class R6 shares is 9-1-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Less than 0.005%. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class T Shares Period ended | 9-30-15 | 1 | 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 | $20.50 | $26.14 | $24.13 | $22.69 | $21.20 | $18.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.05 | ) | 0.01 | (0.17 | ) | (0.03 | ) | (0.11 | ) | (0.09 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.59 | ) | 0.74 | 5.25 | 1.47 | 1.60 | 3.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.64 | ) | 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 | $19.86 | $20.50 | $26.14 | $24.13 | $22.69 | $21.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (2.98 | ) 5 | 5.10 | 21.29 | 6.35 | 7.03 | 16.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $65 | $71 | $78 | $73 | $77 | $83 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.28 | 6 | 1.28 | 1.27 | 1.33 | 1.37 | 1.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.26 | 6 | 1.27 | 1.26 | 1.33 | 1.37 | 1.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.44 | ) 6 | 0.07 | (0.66 | ) | (0.13 | ) | (0.54 | ) | (0.50 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class ADV Shares Period ended | 9-30-15 | 1 | 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 | $21.12 | $26.70 | $24.57 | $23.05 | $21.49 | $18.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.03 | ) | 0.03 | (0.14 | ) | 0.02 | (0.06 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.61 | ) | 0.78 | 5.34 | 1.50 | 1.62 | 3.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.64 | ) | 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 | $20.48 | $21.12 | $26.70 | $24.57 | $23.05 | $21.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (2.89 | ) 4 | 5.20 | 21.40 | 6.59 | 7.26 | 16.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $2 | $19 | $20 | $20 | $22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.74 | 5 | 1.49 | 1.26 | 1.33 | 1.35 | 1.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.14 | 5 | 1.14 | 1.14 | 1.14 | 1.14 | 1.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.32 | ) 5 | 0.13 | (0.53 | ) | 0.08 | (0.31 | ) | (0.17 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 15 | 155 | 81 | 92 | 90 | 90 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
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. 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 August 28, 2015, Class NAV shares were liquidated.
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 and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
31
The following is a summary of the values by input classification of the fund's investments as of September 30, 2015, by major security category or type:
Total value at 9-30-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Consumer discretionary | $71,757,412 | $71,757,412 | — | — | |
Consumer staples | 22,706,399 | 22,706,399 | — | — | |
Energy | 2,685,309 | 2,685,309 | — | — | |
Financials | 90,819,531 | 90,819,531 | — | — | |
Health care | 33,362,251 | 33,362,251 | — | — | |
Industrials | 29,275,988 | 29,275,988 | — | — | |
Information technology | 69,509,484 | 69,173,562 | — | $335,922 | |
Materials | 27,599,160 | 27,599,160 | — | — | |
Short-term investments | 13,952,247 | 13,952,247 | — | — | |
Total investments in securities | $361,667,781 | $361,331,859 | — | $335,922 |
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.
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 funds 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.
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled 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 effective 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 six months ended September 30, 2015 were $285. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees, are calculated daily at the class level based on the net assets of each class and the specific expense rates applicable to each class. Through June 30, 2015, class-specific expenses, such as state registration
32
fees and printing and postage, for all classes,were calculated daily at the class level based on 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 carryforwards of $14,905,995 available to offset future net realized capital gains. The following table details the capital loss carryforwards 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 aquired 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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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, characteriztion of distributions and redemptions-in-kind.
Note 3 — Guarantees and indemnifications
Under the fund'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 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
33
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 Baillie Gifford Overseas Limited. 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 six months ended September 30, 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/or reimburse or pay operating expenses of 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%, and 1.14% for Class R1, Class R2, Class R3, Class R4, Class R5, 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 short dividend expense. These expense limitations shall remain in effect until 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. Prior to July 1, 2015, Class R6 shares had fee waivers and/or reimbursement such that the expenses would not exceed 0.86% Class R6 shares.
Effective July 1, 2015 the Advisor has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.20%, 2.05%, 0.95%, and 1.25% for Class A, Class B, Class I, and Class T shares, respectively, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, acquired fund fees and short dividend expense. These expense limitations shall remain in effect until June 30, 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 to the extent they exceed 0.00% of average annual net assets, on an annualized basis. The expense limitation 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 the time.
Prior to July 1, 2015, the Advisor contractually agreed to waive and/or reimburse all class specific expenses for Class B shares of the fund, including Rule 12b-1 fees and transfer agency fees and service fees, 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).
For the six months ended September 30, 2015, the expense reductions described above amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $31,267 | Class R4 | $1,989 | |
Class B | 486 | Class R5 | 2,036 | |
Class C | 676 | Class R6 | 3,966 | |
Class I | 854 | Class T | 8,125 | |
Class R1 | 1,743 | Class ADV | 4,917 | |
Class R2 | 3,916 | Total | $61,950 | |
Class R3 | 1,975 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 2015 were equivalent to a net annual effective rate of 0.70% of the fund's average daily net assets.
34
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 six months ended September 30, 2015 amounted to an annual rate of 0.01% of the fund's average daily net assets.
Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B, Class C, Class R1, Class R2, Class R3, Class R4, Class T, 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 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. The current waiver agreement expires on 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. The contractual waiver amounted to $69 for Class R4 shares for the six months ended September 30, 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 six months ended September 30, 2015:
Class A | Class T | |
Retained for printing prospectuses, advertising and sales literature | $52,185 | $1,600 |
Sales commission to unrelated broker-dealers | 245,661 | 6,826 |
Sales commission to affiliated sales personnel | 8,207 | 2,165 |
Net sales charges | $306,053 | $10,591 |
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 six months ended September 30, 2015, CDSCs received by the Distributor amounted to $359, $3,834, $466 and $102 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. 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
35
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 six months ended September 30, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $335,167 | $168,346 | $2,908 | $16,191 |
Class B | 61,331 | 7,702 | 2,270 | 532 |
Class C | 85,464 | 10,732 | 2,379 | 1,475 |
Class I | — | 5,013 | 2,548 | 447 |
Class R1 | 2,274 | 48 | 2,105 | 37 |
Class R2 | 304 | 13 | 4,120 | 5 |
Class R3 | 444 | 12 | 2,105 | 8 |
Class R4 | 188 | 10 | 2,105 | 7 |
Class R5 | — | 8 | 2,105 | 4 |
Class R6 | — | 275 | 3,455 | 94 |
Class T | 104,735 | 43,838 | 3,764 | 6,581 |
Class ADV | 2,036 | 1,022 | 3,635 | 785 |
Total | $591,943 | $237,019 | $33,499 | $26,166 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $51,898 and $17,288, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and for the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 601,938 | $12,602,896 | 1,594,677 | $32,566,080 | ||||||||||||||||||||||
Distributions reinvested | — | — | 4,084,927 | 79,703,498 | ||||||||||||||||||||||
Repurchased | (1,294,078 | ) | (27,085,831 | ) | (6,000,597 | ) | (122,896,343 | ) | ||||||||||||||||||
Net decrease | (692,140 | ) | ($14,482,935 | ) | (320,993 | ) | ($10,626,765 | ) | ||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 4,156 | $79,819 | 6,791 | $133,579 | ||||||||||||||||||||||
Distributions reinvested | — | — | 261,367 | 4,775,451 | ||||||||||||||||||||||
Repurchased | (101,213 | ) | (1,963,482 | ) | (362,154 | ) | (6,862,245 | ) | ||||||||||||||||||
Net decrease | (97,057 | ) | ($1,883,663 | ) | (93,996 | ) | ($1,953,215 | ) |
36
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 30,068 | $584,467 | 88,923 | $1,668,019 | ||||||||||||||||||||||
Distributions reinvested | 5 | 99 | 236,281 | 4,313,585 | ||||||||||||||||||||||
Repurchased | (87,612 | ) | (1,701,627 | ) | (192,450 | ) | (3,650,364 | ) | ||||||||||||||||||
Net increase (decrease) | (57,539 | ) | ($1,117,061 | ) | 132,754 | $2,331,240 | ||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 245,205 | $5,323,075 | 178,835 | $3,825,264 | ||||||||||||||||||||||
Distributions reinvested | — | — | 759,379 | 15,298,480 | ||||||||||||||||||||||
Repurchased | (339,916 | ) | (7,340,403 | ) | (2,991,369 | ) | (61,609,116 | ) | ||||||||||||||||||
Net decrease | (94,711 | ) | ($2,017,328 | ) | (2,053,155 | ) | ($42,485,372 | ) | ||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 2,862 | $57,434 | 9,405 | $182,794 | ||||||||||||||||||||||
Distributions reinvested | — | — | 5,105 | 96,316 | ||||||||||||||||||||||
Repurchased | (10,622 | ) | (211,223 | ) | (3,277 | ) | (64,675 | ) | ||||||||||||||||||
Net increase (decrease) | (7,760 | ) | ($153,789 | ) | 11,233 | $214,435 | ||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 5,368 | $114,712 | 1,364 | $27,983 | ||||||||||||||||||||||
Distributions reinvested | — | — | 25 | 482 | ||||||||||||||||||||||
Repurchased | — | — | — | — | ||||||||||||||||||||||
Net increase | 5,368 | $114,712 | 1,389 | $28,465 | ||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 3,887 | $78,527 | 2,310 | $45,979 | ||||||||||||||||||||||
Distributions reinvested | — | — | 133 | 2,534 | ||||||||||||||||||||||
Repurchased | (22 | ) | (448 | ) | (794 | ) | (16,024 | ) | ||||||||||||||||||
Net increase | 3,865 | $78,079 | 1,649 | $32,489 | ||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 125 | $2,649 | 1,287 | $26,768 | ||||||||||||||||||||||
Distributions reinvested | — | — | 548 | 10,751 | ||||||||||||||||||||||
Repurchased | (167 | ) | (3,657 | ) | (1,415 | ) | (27,985 | ) | ||||||||||||||||||
Net increase (decrease) | (42 | ) | ($1,008 | ) | 420 | $9,534 | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 68,247 | $1,496,418 | 67,594 | $1,413,018 | ||||||||||||||||||||||
Distributions reinvested | — | — | 82,171 | 1,660,185 | ||||||||||||||||||||||
Repurchased | (27,146 | ) | (589,857 | ) | (274,859 | ) | (5,727,525 | ) | ||||||||||||||||||
Net increase (decrease) | 41,101 | $906,561 | (125,094 | ) | ($2,654,322 | ) | ||||||||||||||||||||
Class T shares | ||||||||||||||||||||||||||
Sold | 18,542 | $383,025 | 41,904 | $841,233 | ||||||||||||||||||||||
Distributions reinvested | — | — | 938,410 | 18,081,064 | ||||||||||||||||||||||
Repurchased | (201,444 | ) | (4,158,420 | ) | (501,662 | ) | (9,963,242 | ) | ||||||||||||||||||
Net increase (decrease) | (182,902 | ) | ($3,775,395 | ) | 478,652 | $8,959,055 |
37
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | 408 | $8,621 | 51,204 | $1,153,970 | ||||||||||||||||||||||
Distributions reinvested | — | — | 211,182 | 4,186,945 | ||||||||||||||||||||||
Repurchased | (32,845 | ) | (694,243 | ) | (876,241 | ) | (17,829,367 | ) | ||||||||||||||||||
Net decrease | (32,437 | ) | ($685,622 | ) | (613,855 | ) | ($12,488,452 | ) | ||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | — | — | 443,565 | $11,546,739 | ||||||||||||||||||||||
Distributions reinvested | — | — | 4,784,638 | 96,887,085 | ||||||||||||||||||||||
Repurchased | (537,683 | ) | (11,731,391 | ) | (20,846,865 | ) | (423,450,264 | ) | ||||||||||||||||||
Net decrease | (537,683 | ) | ($11,731,391 | ) | (15,618,662 | ) | ($315,016,440 | ) | ||||||||||||||||||
Total net decrease | (1,651,937 | ) | ($34,748,840 | ) | (18,199,658 | ) | ($373,649,348 | ) |
Affiliates of the fund owned 40%, 45%, 77%, and 100% of shares of beneficial interest of Class R2, Class R3, Class R4, and Class R5, respectively, on September 30, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $55,606,346 and $95,601,054, respectively, for the six months ended September 30, 2015.
Note 7 — 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 September 30, 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 9-30-15 | |
Source HOV | 10-31-14 | — | — | 510 | 0.09% | $335,922 | |
Bought: 510 shares |
38
Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Investment Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Baillie Gifford Overseas Limited (BG Overseas) (the Subadvisor), for John Hancock Select Growth Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
39
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund underperformed its benchmark index and its peer group average for the one-, three- and five-year periods ended December 31, 2014. The Board took into account management's discussion of the fund's performance,
40
including differences in the fund's investment strategies relative to the Lipper peer group. The Board concluded that the fund's performance is being monitored and reasonably addressed.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees for the fund are higher than the peer group median and total expenses for this fund are equal to the peer group median.
The Board took into account management's discussion of the fund's expenses. The Board took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm's length with respect to the Subadvisor. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; | |||||||
(i) | noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm's length; and |
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(j) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and | |
(4) | information relating to the nature and scope of any material relationships and their significance to the Trust's Advisor and Subadvisor. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the
42
regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.
The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm's length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board's consideration of the Subadvisory Agreement.
The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |||||||
(2) | the performance of the fund is being monitored and reasonably addressed; | |||||||
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and |
43
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |||||||
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
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 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 |
*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
John Hancock 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 New Opportunities Select Growth Small Cap Equity Small Cap Value Small Company Strategic Growth U.S. Equity U.S. Global Leaders Growth Value Equity GLOBAL/INTERNATIONAL FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Global Equity 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 Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE/SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Real Estate Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
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.
ASSET ALLOCATION PORTFOLIOS 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) EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF 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 |
"As an investment firm,
upholding the proud
tradition of John Hancock
comes down to one thing:
putting shareholders
first. We believe that if
our shareholders are
successful, then we will
be successful."
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock Multifactor ETFs.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing
one of America's most trusted brands, with a heritage of financial
stewardship dating back to 1862. Helping our shareholders pursue
their financial goals is at the core of everything we do. It's why we
support the role of professional financial advice and operate with the
highest standards of conduct and integrity.
A better way to invest
We build funds based on investor needs, then search the world to find
proven portfolio teams with specialized expertise in those strategies.
As a manager of managers, we apply vigorous oversight to ensure that
they continue to meet our uncompromising standards and serve the
best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, 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 | 334SA 9/15 11/15 |
John Hancock
Disciplined Value Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
Global financial markets were especially rocky in mid-2015. The pullback we had anticipated for some months took place in August, and U.S. equities experienced their first official correction—a decline of more than 10% in the stock market—in more than four years. There were several headwinds restraining stock prices from moving higher all year, but the trigger for this summer's correction was the news of slowing economic growth in China and the effect that might have on global growth. For the time being, global economic data continues to be a leading driver of markets worldwide.
The asset managers in our network believe, on balance, that investors should stay the course when it comes to U.S. equities. Our economy continues to grow at a healthy pace, driven by strong housing and jobs data, falling commodity prices, solid consumer spending, and low inflation. While the U.S. Federal Reserve (Fed) chose to leave the federal funds rate unchanged at its September meeting, Fed Chair Janet Yellen cited a number of positives in the U.S. economy and signaled that the Fed will likely raise interest rates soon in response to stronger growth.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
Disciplined Value Fund
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 9/30/15 (%)
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. Index figures do not reflect expenses or sales charges, which would result in lower returns.
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 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 SIX MONTHS
Volatility returned late in the period, generating a market correction
The market was especially volatile in the last few months of the period, as equities experienced their first correction in more than four years.
The fund underperformed its benchmark
The fund slightly underperformed its benchmark, the Russell 1000 Value Index, due to adverse stock selection.
Utilities and materials were the top detractors for the fund
From a sector standpoint, utilities and materials were the top detractors and energy, where the fund was underweight, was the top contributor.
SECTOR COMPOSITION AS OF 9/30/15 (%)
A note about risks
Value stocks may decline in price. Large company stocks could fall out of favor, and illiquid securities may be difficult to sell at a price approximating their value. The value of a company's equity securities is subject to changes in the company's financial condition, and overall market and economic conditions. 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. 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. 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 in a wider variety of sectors. Please see the fund's prospectuses for additional risks.
3
![markedonovan.jpg](https://capedge.com/proxy/N-CSRS/0001145443-15-001273/markedonovan.jpg)
Mark E. Donovan, CFA
Portfolio Manager
Boston Partners
Can you briefly describe the market environment over the past six months?
U.S. equities generally declined over the six-month period ended September 30, 2015. For the first half of the period, the market traded in a tight band and was generally positive. Major indexes reached record highs in May despite increasing volatility. However, those indexes experienced their worst quarterly returns since 2011 in the second half of the period as a significant slowdown in China and a drop in commodity prices signaled a potential for an impending global recession. Prior to the August correction, many economically sensitive industries—such as energy, basic materials, transportation, industrials, and media—had been underperforming, leading to top-heavy sector leadership.
In this environment, the fund's primary benchmark, the Russell 1000 Value Index, was down 8.30%. The materials and energy sectors declined the most, followed by the consumer discretionary and industrials sectors, as valuations were reset.
What factors caused the fund to underperform its benchmark?
Adverse stock selection primarily drove relative underperformance. The utilities sector was the most significant detractor to relative returns due to unfavorable stock selection and a detrimental underweight position. The materials sector also detracted from relative returns due primarily to stock selection.
Within materials, Huntsman Corp. was the top detractor, as its shares dropped at the end of the period. Management disclosed that lower titanium dioxide pricing, currency headwinds, soft demand in the Asia-Pacific region, and lower oil prices would negatively impact the company. The
4
What performed well?
The energy sector was the top contributor to relative performance due to positive stock selection and a favorable underweight position. In information technology, an overweight position in Activision Blizzard, Inc. was beneficial, as the company experienced strong business momentum tied to the game console cycle.
What were some notable additions and deletions to the portfolio?
New positions included drug and medical products distributor Cardinal Health, Inc., which has attractive free cash flow characteristics and is well positioned for continued growth from its joint venture with CVS Health Corp. (which the fund also held) and demographic tailwinds. During the market correction, we purchased eBay Inc., exploiting a valuation opportunity to own a leader in the online e-commerce marketplace that has attractive free cash flow characteristics and keener business clarity after its decision to create a PayPal Holdings, Inc. spin-off. Another new position was
TOP 10 HOLDINGS AS OF 9/30/15 (%)
Berkshire Hathaway, Inc., Class B | 4.4 |
JPMorgan Chase & Co. | 4.2 |
Wells Fargo & Company | 3.9 |
Johnson & Johnson | 3.6 |
Capital One Financial Corp. | 3.1 |
Pfizer, Inc. | 3.0 |
Citigroup, Inc. | 2.9 |
Microsoft Corp. | 2.7 |
Occidental Petroleum Corp. | 2.6 |
Cisco Systems, Inc. | 2.3 |
TOTAL | 32.7 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
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Within financials, we initiated a position in American International Group, Inc. (AIG). The global insurance business' sale of certain equity investments is unlocking shareholder value by funding share buybacks, helping to position AIG for stronger book value growth from currently discounted valuation levels. We sold reinsurance holding Validus Holdings, Ltd. due to soft business momentum.
Within consumer services, we initiated a position in Target Corp. The retailer's sale of its pharmacy assets to CVS and the liquidation of the company's Canadian business should improve free cash flow for share buybacks and operating profitability. Target continues to simplify its business and improve its competitive offerings. We sold education holding Apollo Education Group, Inc. on negative business momentum related to lower-than-expected enrollment and higher expenses.
How would you characterize your overall view of the U.S. equity market at the close of the period?
Corporate earnings in the United States have hit a plateau due to slowing emerging markets, the strong U.S. dollar, and lower oil and commodity prices; however, we do not believe the current earnings recession will lead to an economic recession. Earnings appear to be taking a pause and not collapsing as they did in 2008. The U.S. financial system is quite healthy today, as major banks are among the best capitalized banks in the world and increased regulations are keeping a lid on speculative activities. Aside from pockets of energy loans at selected financial institutions, credit quality remains quite strong. Employment, housing, and consumer spending statistics continue to point toward a healthy, growing economy.
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We will continue to invest on a stock-by-stock basis within our three-circle discipline of attractive valuation, sound fundamentals, and a catalyst for improvement.
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 SEPTEMBER 30, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||||
1-year | 5-year | 10-year | Since inception | 6-month | 5-year | 10-year | Since inception | ||
Class A1 | -9.24 | 11.20 | 6.29 | — | -13.50 | 70.02 | 83.98 | — | |
Class B1 | -9.73 | 11.15 | 5.86 | — | -13.84 | 69.68 | 76.73 | — | |
Class C1 | -6.03 | 11.48 | 5.89 | — | -10.19 | 72.20 | 77.27 | — | |
Class I1,2 | -4.21 | 12.70 | 7.19 | — | -8.83 | 81.80 | 100.18 | — | |
Class I21,2 | -4.22 | 12.70 | 7.10 | — | -8.88 | 81.78 | 98.55 | — | |
Class R11,2 | -4.88 | 11.87 | 6.42 | — | -9.15 | 75.20 | 86.25 | — | |
Class R21,2 | -4.59 | 12.14 | 6.61 | — | -8.99 | 77.34 | 89.65 | — | |
Class R31,2 | -4.78 | 11.98 | 6.53 | — | -9.11 | 76.07 | 88.16 | — | |
Class R41,2 | -4.34 | 12.41 | 6.89 | — | -8.93 | 79.49 | 94.76 | — | |
Class R51,2 | -4.14 | 12.75 | 7.21 | — | -8.82 | 82.19 | 100.55 | — | |
Class R61,2 | -4.08 | 12.78 | 7.24 | — | -8.82 | 82.49 | 101.16 | — | |
Class NAV2,3 | -4.08 | 12.81 | — | 14.23 | -8.82 | 82.69 | — | 132.56 | |
Index 1† | -4.42 | 12.29 | 5.71 | — | -8.30 | 78.50 | 74.23 | — | |
Index 2† | -0.61 | 13.34 | 6.80 | — | -6.18 | 87.02 | 93.05 | — |
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%, and 1%. No sales charge will be assessed after the sixth year. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class 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 (%) | 1.08 | 1.83 | 1.83 | 0.82 | 0.82 | 1.47 | 1.22 | 1.37 | 1.07 | 0.77 | 0.72 | 0.70 |
Net (%) | 1.08 | 1.83 | 1.83 | 0.82 | 0.82 | 1.47 | 1.22 | 1.37 | 0.97 | 0.77 | 0.70 | 0.70 |
Please refer to the most recent prospectuses 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.
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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 | 9-30-05 | 17,673 | 17,673 | 17,423 | 19,305 |
Class C1,4 | 9-30-05 | 17,727 | 17,727 | 17,423 | 19,305 |
Class I1,2 | 9-30-05 | 20,018 | 20,018 | 17,423 | 19,305 |
Class I21,2 | 9-30-05 | 19,855 | 19,855 | 17,423 | 19,305 |
Class R11,2 | 9-30-05 | 18,625 | 18,625 | 17,423 | 19,305 |
Class R21,2 | 9-30-05 | 18,965 | 18,965 | 17,423 | 19,305 |
Class R31,2 | 9-30-05 | 18,816 | 18,816 | 17,423 | 19,305 |
Class R41,2 | 9-30-05 | 19,476 | 19,476 | 17,423 | 19,305 |
Class R51,2 | 9-30-05 | 20,055 | 20,055 | 17,423 | 19,305 |
Class R61,2 | 9-30-05 | 20,116 | 20,116 | 17,423 | 19,305 |
Class NAV2 | 5-29-09 | 23,256 | 23,256 | 23,105 | 24,189 |
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.
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 result in lower returns.
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; and 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 apply 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. |
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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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $910.50 | $5.11 | 1.07% |
Class B | 1,000.00 | 907.00 | 8.82 | 1.85% |
Class C | 1,000.00 | 907.20 | 8.68 | 1.82% |
Class I | 1,000.00 | 911.70 | 3.87 | 0.81% |
Class I2 | 1,000.00 | 911.20 | 3.87 | 0.81% |
Class R1 | 1,000.00 | 908.50 | 7.01 | 1.47% |
Class R2 | 1,000.00 | 910.10 | 5.78 | 1.21% |
Class R3 | 1,000.00 | 908.90 | 6.54 | 1.37% |
Class R4 | 1,000.00 | 910.70 | 4.54 | 0.95% |
Class R5 | 1,000.00 | 911.80 | 3.63 | 0.76% |
Class R6 | 1,000.00 | 911.80 | 3.30 | 0.69% |
Class NAV | 1,000.00 | 911.80 | 3.30 | 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 September 30, 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:
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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 April 1, 2015, with the same investment held until September 30, 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 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,019.70 | $5.40 | 1.07% |
Class B | 1,000.00 | 1,015.80 | 9.32 | 1.85% |
Class C | 1,000.00 | 1,015.90 | 9.17 | 1.82% |
Class I | 1,000.00 | 1,021.00 | 4.09 | 0.81% |
Class I2 | 1,000.00 | 1,021.00 | 4.14 | 0.81% |
Class R1 | 1,000.00 | 1,017.70 | 7.42 | 1.47% |
Class R2 | 1,000.00 | 1,019.00 | 6.11 | 1.21% |
Class R3 | 1,000.00 | 1,018.20 | 6.91 | 1.37% |
Class R4 | 1,000.00 | 1,020.30 | 4.80 | 0.95% |
Class R5 | 1,000.00 | 1,021.20 | 3.84 | 0.76% |
Class R6 | 1,000.00 | 1,021.60 | 3.49 | 0.69% |
Class NAV | 1,000.00 | 1,021.60 | 3.49 | 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 183/366 (to reflect the one-half year period). |
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Fund's investments
As of 9-30-15 (unaudited) | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 97.2% | $12,445,355,825 | |||||||||||||
(Cost $12,375,854,121) | ||||||||||||||
Consumer discretionary 8.1% | 1,032,927,133 | |||||||||||||
Auto components 0.4% | ||||||||||||||
Lear Corp. | 458,747 | 49,902,499 | ||||||||||||
Automobiles 0.6% | ||||||||||||||
Harley-Davidson, Inc. | 1,292,470 | 70,956,604 | ||||||||||||
Hotels, restaurants and leisure 0.5% | ||||||||||||||
Six Flags Entertainment Corp. | 1,235,615 | 56,566,455 | ||||||||||||
Media 4.4% | ||||||||||||||
Comcast Corp., Class A | 2,039,809 | 116,024,336 | ||||||||||||
Liberty Broadband Corp., Series C (I) | 1,059,036 | 54,190,872 | ||||||||||||
Liberty Global PLC LiLAC, Series C (I) | 236,637 | 8,102,451 | ||||||||||||
Liberty Global PLC, Series C (I) | 4,811,961 | 197,386,640 | ||||||||||||
Liberty Media Corp., Series C (I) | 2,339,460 | 80,617,792 | ||||||||||||
Omnicom Group, Inc. | 497,139 | 32,761,460 | ||||||||||||
Time Warner, Inc. | 756,795 | 52,029,656 | ||||||||||||
Time, Inc. | 1,444,203 | 27,512,067 | ||||||||||||
Multiline retail 2.2% | ||||||||||||||
Macy's, Inc. | 1,412,178 | 72,472,975 | ||||||||||||
Target Corp. | 2,725,697 | 214,403,326 | ||||||||||||
Consumer staples 2.9% | 369,080,893 | |||||||||||||
Food and staples retailing 1.2% | ||||||||||||||
CVS Health Corp. | 1,593,542 | 153,744,932 | ||||||||||||
Food products 1.7% | ||||||||||||||
Tyson Foods, Inc., Class A | 4,996,194 | 215,335,961 | ||||||||||||
Energy 9.5% | 1,213,373,653 | |||||||||||||
Oil, gas and consumable fuels 9.5% | ||||||||||||||
Anadarko Petroleum Corp. | 1,182,423 | 71,406,525 | ||||||||||||
Canadian Natural Resources, Ltd. | 4,349,793 | 84,603,474 | ||||||||||||
Energen Corp. | 1,488,740 | 74,228,576 | ||||||||||||
EOG Resources, Inc. | 2,974,129 | 216,516,591 | ||||||||||||
EQT Corp. | 590,504 | 38,246,944 | ||||||||||||
Marathon Petroleum Corp. | 1,825,566 | 84,578,473 | ||||||||||||
Occidental Petroleum Corp. | 5,054,893 | 334,381,172 | ||||||||||||
Phillips 66 | 3,096,648 | 237,946,432 | ||||||||||||
QEP Resources, Inc. | 4,410,959 | 55,269,316 | ||||||||||||
Rice Energy, Inc. (I) | 1,002,237 | 16,196,150 |
Shares | Value | |||||||||||||
Financials 29.1% | $3,726,396,938 | |||||||||||||
Banks 12.3% | ||||||||||||||
BB&T Corp. | 2,653,216 | 94,454,490 | ||||||||||||
Citigroup, Inc. | 7,607,110 | 377,388,727 | ||||||||||||
Fifth Third Bancorp | 3,486,703 | 65,933,554 | ||||||||||||
JPMorgan Chase & Co. | 8,859,871 | 540,186,335 | ||||||||||||
Wells Fargo & Company | 9,785,205 | 502,470,277 | ||||||||||||
Consumer finance 5.5% | ||||||||||||||
Ally Financial, Inc. (I) | 5,367,405 | 109,387,714 | ||||||||||||
Capital One Financial Corp. | 5,449,760 | 395,216,595 | ||||||||||||
Discover Financial Services | 3,441,314 | 178,913,915 | ||||||||||||
Navient Corp. | 2,090,363 | 23,495,680 | ||||||||||||
Diversified financial services 4.4% | ||||||||||||||
Berkshire Hathaway, Inc., Class B (I) | 4,290,048 | 559,422,259 | ||||||||||||
Insurance 6.6% | ||||||||||||||
ACE, Ltd. | 2,079,503 | 215,020,611 | ||||||||||||
American International Group, Inc. | 3,288,029 | 186,825,808 | ||||||||||||
Aon PLC | 1,018,767 | 90,272,944 | ||||||||||||
MetLife, Inc. | 2,050,293 | 96,671,315 | ||||||||||||
The Allstate Corp. | 1,486,966 | 86,600,900 | ||||||||||||
The Travelers Companies, Inc. | 819,448 | 81,559,659 | ||||||||||||
XL Group PLC | 2,311,385 | 83,949,503 | ||||||||||||
Real estate investment trusts 0.3% | ||||||||||||||
American Homes 4 Rent, Class A | 2,402,155 | 38,626,652 | ||||||||||||
Health care 18.4% | 2,359,950,016 | |||||||||||||
Biotechnology 2.2% | ||||||||||||||
AbbVie, Inc. | 1,169,616 | 63,638,807 | ||||||||||||
Gilead Sciences, Inc. | 2,181,778 | 214,228,782 | ||||||||||||
Health care equipment and supplies 2.5% | ||||||||||||||
Medtronic PLC | 3,547,728 | 237,484,912 | ||||||||||||
Zimmer Biomet Holdings, Inc. | 924,864 | 86,872,476 | ||||||||||||
Health care providers and services 4.5% | ||||||||||||||
Anthem, Inc. | 632,805 | 88,592,700 | ||||||||||||
Cardinal Health, Inc. | 980,547 | 75,325,621 | ||||||||||||
Cigna Corp. | 667,747 | 90,159,200 | ||||||||||||
Express Scripts Holding Company (I) | 2,822,811 | 228,534,779 | ||||||||||||
Quest Diagnostics, Inc. | 1,526,052 | 93,806,416 | ||||||||||||
Pharmaceuticals 9.2% | ||||||||||||||
Johnson & Johnson | 4,926,105 | 459,851,902 | ||||||||||||
Merck & Company, Inc. | 4,613,034 | 227,837,749 | ||||||||||||
Pfizer, Inc. | 12,148,025 | 381,569,465 | ||||||||||||
Shire PLC, ADR | 264,824 | 54,349,830 | ||||||||||||
Teva Pharmaceutical Industries, Ltd., ADR | 1,021,916 | 57,697,377 |
Shares | Value | |||||||||||||
Industrials 9.6% | $1,233,258,089 | |||||||||||||
Aerospace and defense 6.6% | ||||||||||||||
General Dynamics Corp. | 1,011,132 | 139,485,659 | ||||||||||||
Honeywell International, Inc. | 643,220 | 60,906,502 | ||||||||||||
Lockheed Martin Corp. | 1,237,352 | 256,515,443 | ||||||||||||
Raytheon Company | 1,827,531 | 199,676,037 | ||||||||||||
Textron, Inc. | 1,328,684 | 50,011,666 | ||||||||||||
United Technologies Corp. | 1,612,086 | 143,459,533 | ||||||||||||
Airlines 2.3% | ||||||||||||||
Delta Air Lines, Inc. | 4,301,505 | 193,008,529 | ||||||||||||
United Continental Holdings, Inc. (I) | 1,870,821 | 99,247,054 | ||||||||||||
Machinery 0.7% | ||||||||||||||
Crane Company | 752,027 | 35,051,978 | ||||||||||||
Ingersoll-Rand PLC | 1,100,959 | 55,895,688 | ||||||||||||
Information technology 13.6% | 1,739,877,922 | |||||||||||||
Communications equipment 3.4% | ||||||||||||||
Brocade Communications Systems, Inc. | 2,088,771 | 21,681,443 | ||||||||||||
Cisco Systems, Inc. | 11,176,830 | 293,391,788 | ||||||||||||
Harris Corp. | 1,639,354 | 119,918,745 | ||||||||||||
Internet software and services 0.5% | ||||||||||||||
eBay, Inc. (I) | 2,450,341 | 59,886,334 | ||||||||||||
Semiconductors and semiconductor equipment 0.7% | ||||||||||||||
NXP Semiconductors NV (I) | 1,004,359 | 87,449,538 | ||||||||||||
Software 4.9% | ||||||||||||||
Activision Blizzard, Inc. | 5,207,365 | 160,855,505 | ||||||||||||
Microsoft Corp. | 7,760,829 | 343,494,292 | ||||||||||||
Oracle Corp. | 3,586,116 | 129,530,510 | ||||||||||||
Technology hardware, storage and peripherals 4.1% | ||||||||||||||
Apple, Inc. | 1,955,884 | 215,734,005 | ||||||||||||
Hewlett-Packard Company | 5,643,891 | 144,540,049 | ||||||||||||
Seagate Technology PLC (L) | 777,188 | 34,818,022 | ||||||||||||
Western Digital Corp. | 1,618,551 | 128,577,691 | ||||||||||||
Materials 3.6% | 456,264,406 | |||||||||||||
Chemicals 0.7% | ||||||||||||||
Huntsman Corp. | 4,665,397 | 45,207,697 | ||||||||||||
Methanex Corp. (L) | 1,280,365 | 42,456,903 | ||||||||||||
Containers and packaging 2.1% | ||||||||||||||
Avery Dennison Corp. | 1,065,405 | 60,269,961 | ||||||||||||
Crown Holdings, Inc. (I) | 2,415,391 | 110,504,138 | ||||||||||||
WestRock Company | 1,796,269 | 92,400,077 | ||||||||||||
Metals and mining 0.2% | ||||||||||||||
Barrick Gold Corp. | 4,577,919 | 29,115,565 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Paper and forest products 0.6% | ||||||||||||||
International Paper Company | 2,019,319 | $76,310,065 | ||||||||||||
Telecommunication services 1.4% | 181,477,077 | |||||||||||||
Diversified telecommunication services 1.4% | ||||||||||||||
Verizon Communications, Inc. | 4,170,928 | 181,477,077 | ||||||||||||
Utilities 1.0% | 132,749,698 | |||||||||||||
Independent power and renewable electricity producers 1.0% | ||||||||||||||
AES Corp. | 13,559,724 | 132,749,698 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Securities lending collateral 0.3% | $43,534,458 | |||||||||||||
(Cost $43,533,588) | ||||||||||||||
John Hancock Collateral Trust (W) | 0.1319(Y | ) | 4,351,140 | 43,534,458 | ||||||||||
Short-term investments 2.4% | $305,590,130 | |||||||||||||
(Cost $305,590,130) | ||||||||||||||
Money market funds 2.4% | 305,590,130 | |||||||||||||
State Street Institutional U.S. Government Money Market Fund | 0.0000(Y | ) | 305,590,130 | 305,590,130 | ||||||||||
Total investments (Cost $12,724,977,839)† 99.9% | $12,794,480,413 | |||||||||||||
Other assets and liabilities, net 0.1% | $10,326,524 | |||||||||||||
Total net assets 100.0% | $12,804,806,937 |
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 9-30-15. | |||||||||||||
(W) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 9-30-15. | |||||||||||||
† | At 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $12,728,490,638. Net unrealized appreciation aggregated $65,989,775, of which $952,535,185 related to appreciated investment securities and $886,545,410 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $12,681,444,251) including $42,579,258 of securities loaned | $12,750,945,955 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers, at value (Cost $43,533,588) | 43,534,458 | |||||||||||||||||||||||||||||||||||||||
Total investments, at value (Cost $12,724,977,839) | 12,794,480,413 | |||||||||||||||||||||||||||||||||||||||
Cash | 781,555 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 188,029,930 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 34,631,639 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 13,974,521 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 45,531 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 631 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 316,782 | |||||||||||||||||||||||||||||||||||||||
Total assets | 13,032,261,002 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 141,558,732 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 39,967,936 | |||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 43,534,147 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 354,337 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 973,149 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 66,586 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 25,396 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 973,782 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 227,454,065 | |||||||||||||||||||||||||||||||||||||||
Net assets | $12,804,806,937 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $12,223,197,198 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 137,210,626 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | 374,904,223 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 69,494,890 | |||||||||||||||||||||||||||||||||||||||
Net assets | $12,804,806,937 | |||||||||||||||||||||||||||||||||||||||
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 ($2,533,242,755 ÷ 143,122,850 shares)1 | $17.70 | |||||||||||||||||
Class B ($15,421,793 ÷ 925,018 shares)1 | $16.67 | |||||||||||||||||
Class C ($300,366,954 ÷ 17,969,276 shares)1 | $16.72 | |||||||||||||||||
Class I ($6,826,251,301 ÷ 395,938,383 shares) | $17.24 | |||||||||||||||||
Class I2 ($68,820,390 ÷ 3,991,697 shares) | $17.24 | |||||||||||||||||
Class R1 ($21,716,972 ÷ 1,264,805 shares) | $17.17 | |||||||||||||||||
Class R2 ($119,227,804 ÷ 6,933,629 shares) | $17.20 | |||||||||||||||||
Class R3 ($26,258,890 ÷ 1,529,219 shares) | $17.17 | |||||||||||||||||
Class R4 ($247,736,653 ÷ 14,375,485 shares) | $17.23 | |||||||||||||||||
Class R5 ($373,483,521 ÷ 21,630,460 shares) | $17.27 | |||||||||||||||||
Class R6 ($1,555,113,752 ÷ 90,047,324 shares) | $17.27 | |||||||||||||||||
Class NAV ($717,166,152 ÷ 41,514,551 shares) | $17.28 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%) 2 | $18.63 |
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 six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $123,585,249 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 108,613 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (534,114 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 123,159,748 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 44,530,428 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 6,073,228 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 910,385 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 6,279,314 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 91,104 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 268,338 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 289,172 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 171,482 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 777,960 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 174,552 | |||||||||||||||||||||||||||||||||||||||
Other | 88,446 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 59,654,409 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (771,381 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 58,883,028 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 64,276,720 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and foreign currency transactions | 240,029,084 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (462 | ) | ||||||||||||||||||||||||||||||||||||||
240,028,622 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | (1,549,905,546 | ) | ||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | 870 | |||||||||||||||||||||||||||||||||||||||
(1,549,904,676 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (1,309,876,054 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($1,245,599,334 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $64,276,720 | $144,622,642 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 240,028,622 | 566,408,861 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (1,549,904,676 | ) | 175,795,879 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (1,245,599,334 | ) | 886,827,382 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (12,683,136 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (51,067,801 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I2 | — | (680,456 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R1 | — | (13,155 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (439,223 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R3 | — | (52,490 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (1,076,510 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R5 | — | (3,033,264 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (11,805,127 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (7,020,069 | ) | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (103,062,586 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class B | — | (791,952 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (10,999,627 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (274,429,513 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I2 | — | (3,703,254 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R1 | — | (838,821 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (4,578,609 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R3 | — | (1,002,415 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (7,472,393 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R5 | — | (14,084,398 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (54,545,637 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (32,436,257 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (595,816,693 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 847,235,446 | 4,642,210,923 | |||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (398,363,888 | ) | 4,933,221,612 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 13,203,170,825 | 8,269,949,213 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $12,804,806,937 | $13,203,170,825 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $137,210,626 | $72,933,906 |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 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 | $19.44 | $18.94 | $15.94 | $14.33 | $13.83 | $12.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.07 | 0.20 | 0.12 | 0.14 | 0.11 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.81 | ) | 1.19 | 3.85 | 2.09 | 0.77 | 1.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.74 | ) | 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 | $17.70 | $19.44 | $18.94 | $15.94 | $14.33 | $13.83 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (8.95 | ) 5 | 7.53 | 25.30 | 16.04 | 6.91 | 13.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2,533 | $2,705 | $2,702 | $1,481 | $1,068 | $601 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.08 | 6 | 1.08 | 1.12 | 1.20 | 1.24 | 1.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.07 | 6 | 1.08 | 1.11 | 1.20 | 1.24 | 1.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.75 | 6 | 1.04 | 0.68 | 0.95 | 0.82 | 0.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class B Shares Period ended | 9-30-15 | 1 | 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 | $18.38 | $18.00 | $15.24 | $13.73 | $13.30 | $11.91 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | — | 3 | 0.04 | (0.03 | ) | 0.01 | — | 3 | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.71 | ) | 1.13 | 3.67 | 2.01 | 0.74 | 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.71 | ) | 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 | $16.67 | $18.38 | $18.00 | $15.24 | $13.73 | $13.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (9.30 | ) 6 | 6.68 | 24.21 | 15.09 | 5.99 | 12.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $15 | $19 | $19 | $14 | $10 | $8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.86 | 7 | 1.91 | 1.96 | 2.08 | 2.14 | 2.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.85 | 7 | 1.90 | 1.96 | 2.05 | 2.05 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.04 | ) 7 | 0.20 | (0.17 | ) | 0.10 | 0.01 | (0.45 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 9-30-15 | 1 | 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 | $18.03 | $15.26 | $13.74 | $13.30 | $11.91 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | — | 3 | 0.07 | (0.02 | ) | 0.02 | 0.01 | (0.05 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.71 | ) | 1.12 | 3.67 | 2.01 | 0.74 | 1.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.71 | ) | 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 | $16.72 | $18.43 | $18.03 | $15.26 | $13.74 | $13.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (9.28 | ) 6 | 6.78 | 24.25 | 15.19 | 6.07 | 12.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $300 | $302 | $171 | $59 | $40 | $30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.83 | 7 | 1.84 | 1.88 | 1.98 | 2.02 | 2.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.82 | 7 | 1.83 | 1.88 | 1.98 | 2.02 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | — | 7,8 | 0.35 | (0.09 | ) | 0.17 | 0.04 | (0.45 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Less than 0.005%. |
Class I Shares Period ended | 9-30-15 | 1 | 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 | $18.91 | $18.44 | $15.54 | $13.99 | $13.52 | $12.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.25 | 0.17 | 0.18 | 0.15 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 1.16 | 3.75 | 2.04 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.67 | ) | 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 | $17.24 | $18.91 | $18.44 | $15.54 | $13.99 | $13.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (8.83 | ) 4 | 7.86 | 25.61 | 16.40 | 7.27 | 13.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $6,826 | $7,026 | $3,671 | $1,680 | $711 | $399 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.81 | 5 | 0.81 | 0.83 | 0.87 | 0.88 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.81 | 5 | 0.81 | 0.83 | 0.87 | 0.88 | 0.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.01 | 5 | 1.34 | 0.96 | 1.26 | 1.18 | 0.75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class I2 Shares Period ended | 9-30-15 | 1 | 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 | $18.92 | $18.45 | $15.55 | $13.99 | $13.53 | $12.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.24 | 0.17 | 0.18 | 0.15 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.78 | ) | 1.17 | 3.75 | 2.05 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.68 | ) | 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 | $17.24 | $18.92 | $18.45 | $15.55 | $13.99 | $13.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (8.88 | ) 4 | 7.85 | 25.63 | 16.51 | 7.24 | 13.65 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $69 | $89 | $75 | $34 | $25 | $23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.82 | 5 | 0.84 | 0.87 | 0.92 | 0.93 | 0.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.81 | 5 | 0.83 | 0.85 | 0.85 | 0.85 | 0.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.00 | 5 | 1.28 | 0.96 | 1.29 | 1.21 | 0.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R1 Shares Period ended | 9-30-15 | 1 | 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 | $18.90 | $18.43 | $15.54 | $13.99 | $13.52 | $12.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.03 | 0.12 | 0.04 | 0.08 | 0.06 | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.76 | ) | 1.15 | 3.75 | 2.04 | 0.74 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.73 | ) | 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 | $17.17 | $18.90 | $18.43 | $15.54 | $13.99 | $13.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (9.15 | ) 5 | 7.09 | 24.69 | 15.63 | 6.41 | 12.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $22 | $22 | $13 | $6 | $3 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.48 | 6 | 1.54 | 1.67 | 1.85 | 2.16 | 3.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.47 | 6 | 1.53 | 1.57 | 1.58 | 1.65 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.35 | 6 | 0.63 | 0.22 | 0.56 | 0.45 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R2 Shares Period ended | 9-30-15 | 2 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.90 | $18.44 | $15.55 | $14.00 | $13.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.06 | 0.19 | 0.08 | 0.12 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.76 | ) | 1.14 | 3.75 | 2.04 | 0.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.70 | ) | 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 | $17.20 | $18.90 | $18.44 | $15.55 | $14.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (8.99 | ) 6 | 7.39 | 24.98 | 15.90 | 3.78 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $119 | $120 | $38 | $4 | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.22 | 8 | 1.25 | 1.33 | 3.02 | 15.96 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.21 | 8 | 1.24 | 1.32 | 1.32 | 1.40 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.61 | 8 | 0.99 | 0.45 | 0.80 | 0.41 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 9 |
1 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-11 to 3-31-12. |
Class R3 Shares Period ended | 9-30-15 | 1 | 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 | $18.89 | $18.43 | $15.54 | $13.99 | $13.52 | $12.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.04 | 0.14 | 0.06 | 0.10 | 0.07 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.76 | ) | 1.15 | 3.74 | 2.04 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.72 | ) | 1.29 | 3.80 | 2.14 | 0.82 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.04 | ) | (0.03 | ) | (0.09 | ) | (0.04 | ) | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | $17.17 | $18.89 | $18.43 | $15.54 | $13.99 | $13.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (9.11 | ) 5 | 7.20 | 24.81 | 15.75 | 6.52 | 12.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $26 | $28 | $15 | $4 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | �� | 1.37 | 7 | 1.43 | 1.57 | 2.33 | 11.16 | 20.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.37 | 7 | 1.42 | 1.47 | 1.48 | 1.55 | 1.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.45 | 7 | 0.73 | 0.35 | 0.67 | 0.54 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 R4 Shares Period ended | 9-30-15 | 1 | 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 | $18.92 | $18.45 | $15.54 | $13.99 | $13.52 | $12.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.08 | 0.25 | 0.13 | 0.16 | 0.11 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 1.12 | 3.76 | 2.03 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.69 | ) | 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 | $17.23 | $18.92 | $18.45 | $15.54 | $13.99 | $13.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (8.93 | ) 4 | 7.67 | 25.44 | 16.19 | 6.86 | 13.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $248 | $228 | $75 | $5 | $1 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.06 | 5 | 1.08 | 1.11 | 1.63 | 2.35 | 2.81 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.95 | 5 | 0.97 | 1.01 | 1.09 | 1.25 | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.88 | 5 | 1.31 | 0.75 | 1.09 | 0.85 | 0.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R5 Shares Period ended | 9-30-15 | 1 | 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 | $18.47 | $15.57 | $14.00 | $13.53 | $12.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.24 | 0.18 | 0.20 | 0.15 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 1.19 | 3.76 | 2.04 | 0.74 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.67 | ) | 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 | $17.27 | $18.94 | $18.47 | $15.57 | $14.00 | $13.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (8.82 | ) 4 | 7.98 | 25.71 | 16.55 | 7.20 | 13.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $373 | $376 | $591 | $415 | $33 | $15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.77 | 5 | 0.73 | 0.74 | 0.78 | 0.90 | 1.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.76 | 5 | 0.72 | 0.73 | 0.78 | 0.90 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.05 | 5 | 1.27 | 1.05 | 1.42 | 1.19 | 0.59 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R6 Shares Period ended | 9-30-15 | 2 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $18.94 | $18.47 | $15.57 | $14.00 | $12.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.11 | 0.31 | 0.19 | 0.19 | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.78 | ) | 1.12 | 3.75 | 2.06 | 2.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.67 | ) | 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 | $17.27 | $18.94 | $18.47 | $15.57 | $14.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (8.82 | ) 5 | 7.99 | 25.72 | 16.60 | 19.09 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,555 | $1,444 | $356 | $118 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.71 | 6 | 0.72 | 0.74 | 0.82 | 2.32 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 6 | 0.69 | 0.73 | 0.82 | 0.86 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.13 | 6 | 1.63 | 1.06 | 1.28 | 1.31 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 7 |
1 | The inception date for Class R6 shares is 9-1-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 NAV Shares Period ended | 9-30-15 | 1 | 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 | $18.47 | $15.57 | $14.00 | $13.53 | $12.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.11 | 0.27 | 0.19 | 0.20 | 0.16 | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.77 | ) | 1.16 | 3.75 | 2.05 | 0.75 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.66 | ) | 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 | $17.28 | $18.94 | $18.47 | $15.57 | $14.00 | $13.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (8.82 | ) 4 | 7.98 | 25.73 | 16.66 | 7.38 | 13.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $717 | $844 | $543 | $524 | $338 | $405 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.69 | 5 | 0.69 | 0.71 | 0.74 | 0.77 | 0.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 5 | 0.69 | 0.71 | 0.74 | 0.77 | 0.79 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.13 | 5 | 1.45 | 1.09 | 1.40 | 1.28 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 44 | 45 | 44 | 44 | 50 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
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, 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. 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 September 30, 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. 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
32
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 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.
The fund has the right to recall loaned securities on demand. 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 are shown on the Statement of assets and liabilities as Payable upon return of securities loaned and are secured by the loaned securities. As of September 30, 2015, the fund common stocks valued at $42,579,258 and received $43,534,147 of cash collateral.
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 funds 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.
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled 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 effective 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 six months ended September 30, 2015 were $6,988. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees, are calculated daily for each class, based on the net asset value of the class and the applicable specific expense rates. Through June 30, 2015, class-specific expenses, such as state registration fees and printing and postage, for all classes, were calculated daily at the class level based on net assets of each class and the specific expense rates applicable to each class.
33
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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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 fund's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to 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) 0.750% 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.
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
34
participating portfolios in proportion to the daily net assets of each fund. During the six months ended September 30, 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 waive all or a portion of its management fee and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 0.85% for Class I2 shares, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, acquired fund fees and short dividend expense. The expense limitation 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 the time. Prior to July 1, 2015, Class R1, Class R2, Class R3, and Class R4 shares had fee waivers and/or reimbursement such that the expenses would not exceed 1.57%, 1.32%, 1.47%, and 1.07% for Class R1, Class R2, Class R3, and Class R4 shares, respectively.
Prior to July 1, 2015, the Advisor contractually agreed to waive and/or reimburse all class specific expenses for Class B shares of the fund, including Rule 12b-1 fees and transfer agency fees and service fees, 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 Advisor has contractually agreed to waive and/or reimburse all class specific expenses for Class R6 shares of the fund to the extent they exceed 0.00% of average annual net assets, on an annualized basis. The expense limitation 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 the time.
For the six months ended September 30, 2015, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $105,547 | Class R3 | $1,087 | |
Class B | 685 | Class R4 | 9,239 | |
Class C | 12,115 | Class R5 | 15,210 | |
Class I | 279,285 | Class R6 | 188,740 | |
Class I2 | 3,313 | Class NAV | 30,968 | |
Class R1 | 884 | Total | $651,755 | |
Class R2 | 4,682 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 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 six months ended September 30, 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% |
35
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 Rule 12b-1 fees for Class R4 shares. The current waiver agreement expires on 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 that time. This contractual waiver amounted to $119,626 for Class R4 shares for the six months ended September 30, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $3,819,066 for the six months ended September 30, 2015. Of this amount, $637,147 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $3,170,191 was paid as sales commissions to broker-dealers and $11,728 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 six months ended September 30, 2015, CDSCs received by the Distributor amounted to $2,672, $9,573, and $27,888 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. 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 six months ended September 30, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $3,415,997 | $1,715,906 | $34,258 | $54,512 |
Class B | 88,742 | 11,147 | 3,392 | 336 |
Class C | 1,568,420 | 196,936 | 7,996 | 4,064 |
Class I | — | 4,126,947 | 51,466 | 73,539 |
Class I2 | — | 48,983 | 5,000 | 480 |
Class R1 | 85,270 | 1,751 | 2,353 | 194 |
Class R2 | 303,360 | 9,284 | 6,293 | 684 |
Class R3 | 90,927 | 2,155 | 2,393 | 162 |
Class R4 | 414,397 | 18,250 | 1,745 | 1,545 |
Class R5 | 106,115 | 30,130 | 2,735 | 3,157 |
Class R6 | — | 117,825 | 7,070 | 4,341 |
Total | $6,073,228 | $6,279,314 | $124,701 | $143,014 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $143,637 and $146,158, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
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Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and for the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 21,068,936 | $407,223,769 | 56,841,350 | $1,096,662,923 | ||||||||||||||||||||||
Distributions reinvested | — | 3 | 6,096,271 | 113,512,560 | ||||||||||||||||||||||
Repurchased | (17,077,364 | ) | (330,008,338 | ) | (66,480,727 | ) | (1,293,771,383 | ) | ||||||||||||||||||
Net increase (decrease) | 3,991,572 | $77,215,434 | (3,543,106 | ) | ($83,595,900 | ) | ||||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 33,689 | $622,667 | 153,510 | $2,811,812 | ||||||||||||||||||||||
Distributions reinvested | — | — | 41,496 | 732,408 | ||||||||||||||||||||||
Repurchased | (124,838 | ) | (2,291,774 | ) | (241,758 | ) | (4,433,014 | ) | ||||||||||||||||||
Net decrease | (91,149 | ) | ($1,669,107 | ) | (46,752 | ) | ($888,794 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 3,133,248 | $57,236,497 | 8,106,379 | $148,626,164 | ||||||||||||||||||||||
Distributions reinvested | — | — | 496,009 | 8,774,404 | ||||||||||||||||||||||
Repurchased | (1,563,362 | ) | (28,656,096 | ) | (1,710,943 | ) | (31,451,792 | ) | ||||||||||||||||||
Net increase | 1,569,886 | $28,580,401 | 6,891,445 | $125,948,776 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 84,029,722 | $1,591,494,180 | 247,842,283 | $4,642,725,693 | ||||||||||||||||||||||
Distributions reinvested | — | — | 15,934,799 | 288,419,864 | ||||||||||||||||||||||
Repurchased | (59,581,742 | ) | (1,126,727,139 | ) | (91,316,321 | ) | (1,722,347,847 | ) | ||||||||||||||||||
Net increase | 24,447,980 | $464,767,041 | 172,460,761 | $3,208,797,710 | ||||||||||||||||||||||
Class I2 shares | ||||||||||||||||||||||||||
Sold | 78,486 | $1,467,442 | 1,656,290 | $30,693,940 | ||||||||||||||||||||||
Distributions reinvested | — | — | 241,901 | 4,378,406 | ||||||||||||||||||||||
Repurchased | (799,230 | ) | (14,391,583 | ) | (1,269,673 | ) | (23,897,663 | ) | ||||||||||||||||||
Net increase (decrease) | (720,744 | ) | ($12,924,141 | ) | 628,518 | $11,174,683 | ||||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 357,698 | $6,761,845 | 664,083 | $12,450,925 | ||||||||||||||||||||||
Distributions reinvested | — | — | 33,470 | 606,476 | ||||||||||||||||||||||
Repurchased | (243,387 | ) | (4,600,405 | ) | (264,782 | ) | (4,984,982 | ) | ||||||||||||||||||
Net increase | 114,311 | $2,161,440 | 432,771 | $8,072,419 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 1,522,165 | $28,246,579 | 6,005,834 | $112,997,028 | ||||||||||||||||||||||
Distributions reinvested | — | — | 215,651 | 3,905,448 | ||||||||||||||||||||||
Repurchased | (921,800 | ) | (17,484,811 | ) | (1,928,853 | ) | (36,498,709 | ) | ||||||||||||||||||
Net increase | 600,365 | $10,761,768 | 4,292,632 | $80,403,767 | ||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 314,706 | $5,949,652 | 1,086,659 | $20,350,336 | ||||||||||||||||||||||
Distributions reinvested | — | — | 58,249 | 1,054,888 | ||||||||||||||||||||||
Repurchased | (253,121 | ) | (4,773,466 | ) | (509,459 | ) | (9,588,533 | ) | ||||||||||||||||||
Net increase | 61,585 | $1,176,186 | 635,449 | $11,816,691 |
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Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 4,727,353 | $89,643,206 | 9,353,161 | $178,036,022 | ||||||||||||||||||||||
Distributions reinvested | — | — | 472,054 | 8,548,903 | ||||||||||||||||||||||
Repurchased | (2,410,678 | ) | (45,189,452 | ) | (1,824,905 | ) | (34,592,289 | ) | ||||||||||||||||||
Net increase | 2,316,675 | $44,453,754 | 8,000,310 | $151,992,636 | ||||||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 3,830,694 | $71,443,189 | 23,298,183 | $442,099,467 | ||||||||||||||||||||||
Distributions reinvested | — | — | 944,683 | 17,117,662 | ||||||||||||||||||||||
Repurchased | (2,032,602 | ) | (38,541,446 | ) | (36,393,140 | ) | (710,984,144 | ) | ||||||||||||||||||
Net increase (decrease) | 1,798,092 | $32,901,743 | (12,150,274 | ) | ($251,767,015 | ) | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 20,821,268 | $390,892,378 | 59,066,693 | $1,140,106,261 | ||||||||||||||||||||||
Distributions reinvested | — | — | 3,663,764 | 66,350,764 | ||||||||||||||||||||||
Repurchased | (7,045,017 | ) | (132,341,433 | ) | (5,757,098 | ) | (109,055,462 | ) | ||||||||||||||||||
Net increase | 13,776,251 | $258,550,945 | 56,973,359 | $1,097,401,563 | ||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 1,336,727 | $25,371,463 | 14,604,013 | $274,185,711 | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,177,501 | 39,456,326 | ||||||||||||||||||||||
Repurchased | (4,402,771 | ) | (84,111,481 | ) | (1,608,154 | ) | (30,787,650 | ) | ||||||||||||||||||
Net increase (decrease) | (3,066,044 | ) | ($58,740,018 | ) | 15,173,360 | $282,854,387 | ||||||||||||||||||||
Total net increase | 44,798,780 | $847,235,446 | 249,748,473 | $4,642,210,923 |
Affiliates of the fund owned 100% of shares of beneficial interest of Class NAV on September 30, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $3,379,918,305 and $2,609,470,970, respectively, for the six months ended September 30, 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 September 30, 2015, funds within the John Hancock group of funds complex held 4.53% of the fund's net assets.
Note 8 — Industry or sector risk
The fund may invest a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's net asset value more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
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Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Robeco Investment Management, Inc. (the Subadvisor), for John Hancock Disciplined Value Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
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Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund underperformed its benchmark index for the one-year period ended December 31, 2014 and outperformed its benchmark index for the three- and five-year periods ended December 31, 2014. The Board also noted that
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the fund outperformed its peer group average for the one-, three- and five-year periods ended December 31, 2014. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the benchmark index for the three- and five-year periods and to the peer group for the one-, three- and five-year periods. The Board concluded that the fund's performance has generally been in line with or outperformed the historical performance of comparable funds and the fund's benchmark index.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are higher than the peer group median.
The Board took into account management's discussion of the fund's expenses. The Board took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm's length with respect to the Subadvisor. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; |
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�� | (h) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; | ||||||
(i) | noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm's length; and | |||||||
(j) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | The historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and | |
(4) | Information relating to the nature and scope of any material relationships and their significance to the Trust's Advisor and Subadvisor. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular,
42
periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.
The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm's length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board's consideration of the Subadvisory Agreement.
The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; |
43
(2) | the performance of the fund has generally been in line with or outperformed the historical performance of comparable funds and the fund's benchmark index; | |||||||
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and | |||||||
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |||||||
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
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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 |
*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. |
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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.
ASSET ALLOCATION PORTFOLIOS 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) EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF 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 |
"As an investment firm,
upholding the proud
tradition of John Hancock
comes down to one thing:
putting shareholders
first. We believe that if
our shareholders are
successful, then we will
be successful."
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock Multifactor ETFs.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing
one of America's most trusted brands, with a heritage of financial
stewardship dating back to 1862. Helping our shareholders pursue
their financial goals is at the core of everything we do. It's why we
support the role of professional financial advice and operate with the
highest standards of conduct and integrity.
A better way to invest
We build funds based on investor needs, then search the world to find
proven portfolio teams with specialized expertise in those strategies.
As a manager of managers, we apply vigorous oversight to ensure that
they continue to meet our uncompromising standards and serve the
best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, 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 | 340SA 9/15 11/15 |
John Hancock
Core High Yield Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
The domestic bond market generated modest returns for the past year, as investors grappled with mixed economic data and uncertainty over the timing of a looming change in policy from the U.S. Federal Reserve. Against this backdrop, longer-term interest rates were volatile, as were the more rate-sensitive segments of the bond market. High-yield bonds and emerging-market debt, meanwhile, struggled in the face of the precipitous drop in commodity prices, particularly energy prices.
Market volatility is unnerving, and high-yield funds are naturally more exposed to certain risks than other types of bond funds. That's why we recommend that investors maintain a regular dialogue with their financial advisors. Your advisor can help put market events into context and determine whether your portfolio is sufficiently diversified and continues to match your long-term financial goals.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
Core High Yield Fund
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 9/30/15 (%)
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 result in lower returns.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower. Since inception returns for the Morningstar fund category average are not available.
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 SIX MONTHS
The high-yield bond market finished with a negative return
Falling energy prices, concerns about slower growth, and rising investor risk aversion contributed to a downturn in high-yield bonds.
Security selection detracted from performance
While we added value through our sector positioning, this was more than offset by the adverse impact of security selection.
Positions in B-rated securities also detracted
At a time when lower-quality bonds lagged, the fund's overweight in securities rated B (and corresponding underweight in those rated BB) detracted from performance.
PORTFOLIO COMPOSITION AS OF 9/30/15 (%)
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. Loan participations and assignments involve additional risks, including credit risk, interest-rate risk, counterparty risk, liquidity risk, extended settlement risk, and the risks of being a lender. Hedging, derivatives, and other strategic transactions could produce disproportionate gains or losses and may increase costs. 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.Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Reduced liquidity in credit and fixed-income markets may adversely affect issuers worldwide. Please see the fund's prospectuses for additional risks.
3
An interview with Portfolio Manager Konstantin Kizunov, CFA, John Hancock Asset Management a division of Manulife Asset Management (North America) Limited
![konstantinkizunov.jpg](https://capedge.com/proxy/N-CSRS/0001145443-15-001273/konstantinkizunov.jpg)
Konstantin Kizunov, CFA
Portfolio Manager
John Hancock Asset Management
Can you describe the market environment of the past six months?
The high-yield market experienced steady weakness during the six months ended September 30, 2015, leading to a loss of 4.92% for the fund's benchmark, the Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index. In the early stages of the reporting period, high-yield bonds were hurt by the continued decline in oil prices and its perceived impact on the creditworthiness of the many energy issuers within the asset class. As the summer progressed, investors increasingly turned their attention to evidence of slowing growth in China and its potential influence on the world economy as a whole. The resulting increase in investors' risk aversion led to heavy outflows from high-yield mutual funds and exchange-traded funds, putting substantial pressure on prices and causing yields to rise dramatically.
What aspects of the fund's positioning helped and hurt performance?
Security selection was the primary factor in the fund's shortfall relative to its benchmark during the past six months. The fund's holdings lagged the benchmark components in both the energy and basic industries groups, which more than offset its stronger showing in financial services, autos, and capital goods. Within energy, the fund's performance was hurt by the underperformance of certain BB- and CCC-rated issuers in which it was invested.
The fund's positioning with regard to credit quality also had a negative impact on performance. It held a significant underweight in BB-rated bonds, which outperformed during the period due to their above-average credit quality. The fund's overweight position in B-rated bonds, which underperformed their BB-rated counterparts, detracted from performance as well. We continued to see favorable risk/return opportunities in the B-rated tier, particularly in the wake of the recent sell-off, given the backdrop of low defaults and positive domestic growth trends. The fund also held a small underweight in the lowest-rated credit tier, CCC and below, which had a slightly positive impact on performance.
The fund's industry allocations were helpful to performance, with the largest impact coming from our decision to underweight the energy sector. Energy-related debt lagged significantly, as investors
4
On the negative side, the fund's underweight in healthcare and overweight in the basic industries group detracted from performance. Healthcare bonds outperformed the broader market due to their defensive nature, while the basic industries segment was hurt by its above-average degree of economic sensitivity.
How was the fund positioned at the end of the period?
We maintained an underweight in energy, based on our belief that the prices of oil and natural gas have the potential to remain low for quite some time. Further, the deterioration of many energy companies' balance sheets raises the likelihood that the sector could experience a number of restructurings during the next 12 months. Within energy, the fund held an underweight position in exploration and production companies and an overweight in refiners, which typically benefit from low oil prices. We have conducted a careful review of each of the fund's holdings in the sector, particularly its recent underperformers, to assess the potential changes in their credit profile under a number of different scenarios for oil prices. While this process led to some modest changes, we retained the majority of the fund's positions in the sector.
QUALITY COMPOSITION AS OF 9/30/15 (%)
5
More broadly speaking, we have found that individual credit selection has become increasingly important given the divergence occurring within the market. While companies with higher leverage and/or sensitivity to commodity prices have generally experienced rising yield spreads, defensive issues have generated stronger relative performance. We have positioned the fund with an overweight in consumer noncyclical and more domestically focused sectors, as we believe demand drivers in these areas remain intact given the continued strengthening of the U.S. economy. We have also sought to maintain a shorter duration; we did not see a favorable risk/return trade-off from taking on above-average interest-rate risk at a time when 10-year U.S. Treasury yields remained low.
The fund continues to hold a modest allocation to senior loans, which are loans to below-investment-grade companies that banks package and sell to investors in the form of securities. While we don't see a meaningful degree of upside for the asset class as a whole, we have established weightings in specific securities where we see compelling bottom-up investment opportunities.
How would you characterize your overall view of the high-yield market at the close of the period?
The six-month reporting period was characterized by significant weakness in the high-yield market, as concerns about global economic growth caused yield spreads to widen. We believe this downturn may have represented an overreaction, since spreads rose to levels typically associated with recessions even though leading indicators continued to point to healthy conditions for the U.S. economy. In our view, accommodative U.S. Federal Reserve policy, rising merger-and-acquisition
SECTOR COMPOSITION AS OF 9/30/15 (%)
6
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 9/30/15 (%)
United States | 80.2 |
Canada | 10.0 |
Luxembourg | 3.0 |
United Kingdom | 1.4 |
Greece | 1.0 |
Switzerland | 0.8 |
France | 0.7 |
Italy | 0.7 |
Barbados | 0.7 |
Netherlands | 0.6 |
Other countries | 0.9 |
TOTAL | 100.0 |
As a percentage of net assets. |
7
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 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 | 6-month | 5-year | Since inception2 | as of 9-30-15 | as of 9-30-15 | ||||
Class A | -10.58 | 5.34 | 10.43 | -9.51 | 29.68 | 89.08 | 7.56 | 7.55 | |||
Class C3,4 | -8.55 | 5.08 | 9.90 | -7.04 | 28.10 | 83.40 | 7.10 | 7.09 | |||
Class I4 | -6.62 | 6.50 | 11.46 | -5.64 | 37.04 | 100.75 | 8.15 | 8.14 | |||
Class R23,4 | -7.10 | 5.97 | 10.90 | -5.82 | 33.64 | 94.33 | 7.74 | 7.73 | |||
Class R43,4 | -6.92 | 6.14 | 11.07 | -5.71 | 34.69 | 96.28 | 7.89 | 7.89 | |||
Class R63,4 | -6.54 | 6.60 | 11.55 | -5.53 | 37.62 | 101.79 | 8.27 | 8.24 | |||
Class NAV3,4 | -6.58 | 6.59 | 11.54 | -5.58 | 37.59 | 101.69 | 8.27 | 8.26 | |||
Index† | -3.54 | 5.94 | 11.73 | -4.92 | 33.43 | 103.81 | — | — |
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 (%) | 1.08 | 1.83 | 0.81 | 1.21 | 1.06 | 0.71 | 0.69 |
Net (%) | 1.08 | 1.83 | 0.81 | 1.21 | 0.96 | 0.69 | 0.69 |
Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
* | Expenses have been estimated for the first year of operation for Class R2, Class R4 and Class R6 shares, respectively. |
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 | 18,340 | 18,340 | 20,381 |
Class I4 | 4-30-09 | 20,075 | 20,075 | 20,381 |
Class R23,4 | 4-30-09 | 19,433 | 19,433 | 20,381 |
Class R43,4 | 4-30-09 | 19,628 | 19,628 | 20,381 |
Class R63,4 | 4-30-09 | 20,179 | 20,179 | 20,381 |
Class NAV3,4 | 4-30-09 | 20,169 | 20,169 | 20,381 |
The values shown in the chart for Class A 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.
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 result in lower returns.
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 this date 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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $942.40 | $5.20 | 1.07% |
Class C | 1,000.00 | 938.70 | 8.87 | 1.83% |
Class I | 1,000.00 | 943.60 | 3.94 | 0.81% |
Class R2 | 1,000.00 | 941.80 | 6.31 | 1.30% |
Class R4 | 1,000.00 | 942.90 | 5.20 | 1.07% |
Class R6 | 1,000.00 | 944.70 | 3.35 | 0.69% |
Class NAV | 1,000.00 | 944.20 | 3.35 | 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 September 30, 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 April 1, 2015, with the same investment held until September 30, 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 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,019.70 | $5.40 | 1.07% |
Class C | 1,000.00 | 1,015.90 | 9.22 | 1.83% |
Class I | 1,000.00 | 1,021.00 | 4.09 | 0.81% |
Class R2 | 1,000.00 | 1,018.50 | 6.56 | 1.30% |
Class R4 | 1,000.00 | 1,019.70 | 5.40 | 1.07% |
Class R6 | 1,000.00 | 1,021.60 | 3.49 | 0.69% |
Class NAV | 1,000.00 | 1,021.60 | 3.49 | 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 183/366 (to reflect the one-half year period). |
11
Fund's investments
As of 9-30-15 (unaudited) | ||||||||||||||||||||||||||
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Corporate bonds 85.5% | $597,623,832 | |||||||||||||||||||||||||
(Cost $686,957,070) | ||||||||||||||||||||||||||
Consumer discretionary 14.5% | 101,555,366 | |||||||||||||||||||||||||
Auto components 1.5% | ||||||||||||||||||||||||||
Icahn Enterprises LP | 5.875 | 02-01-22 | 5,000,000 | 5,031,250 | ||||||||||||||||||||||
Stackpole International Intermediate Company SA (S) | 7.750 | 10-15-21 | 4,840,000 | 5,263,500 | ||||||||||||||||||||||
Automobiles 0.3% | ||||||||||||||||||||||||||
Fiat Chrysler Automobiles NV | 5.250 | 04-15-23 | 2,530,000 | 2,359,221 | ||||||||||||||||||||||
Diversified consumer services 0.1% | ||||||||||||||||||||||||||
Speedy Cash Intermediate Holdings Corp. (S) | 10.750 | 05-15-18 | 1,000,000 | 790,000 | ||||||||||||||||||||||
Hotels, restaurants and leisure 1.4% | ||||||||||||||||||||||||||
Great Canadian Gaming Corp. | 6.625 | 07-25-22 | CAD | 2,000,000 | 1,543,649 | |||||||||||||||||||||
Scientific Games International, Inc. (S) | 7.000 | 01-01-22 | 8,000,000 | 7,900,000 | ||||||||||||||||||||||
Household durables 3.3% | ||||||||||||||||||||||||||
Argos Merger Sub, Inc. (S) | 7.125 | 03-15-23 | 1,400,000 | 1,415,750 | ||||||||||||||||||||||
Beazer Homes USA, Inc. | 9.125 | 05-15-19 | 3,000,000 | 3,060,000 | ||||||||||||||||||||||
Century Communities,Inc. | 6.875 | 05-15-22 | 945,000 | 897,750 | ||||||||||||||||||||||
Meritage Homes Corp. | 6.000 | 06-01-25 | 1,100,000 | 1,105,500 | ||||||||||||||||||||||
Modular Space Corp. (S) | 10.250 | 01-31-19 | 9,125,000 | 6,341,875 | ||||||||||||||||||||||
Standard Pacific Corp. | 5.875 | 11-15-24 | 1,690,000 | 1,732,250 | ||||||||||||||||||||||
Tempur Sealy International, Inc. (S) | 5.625 | 10-15-23 | 1,685,000 | 1,682,894 | ||||||||||||||||||||||
William Lyon Homes, Inc. | 5.750 | 04-15-19 | 640,000 | 643,200 | ||||||||||||||||||||||
William Lyon Homes, Inc. | 7.000 | 08-15-22 | 6,210,000 | 6,380,775 | ||||||||||||||||||||||
Internet and catalog retail 0.1% | ||||||||||||||||||||||||||
Netflix, Inc. | 5.750 | 03-01-24 | 1,000,000 | 1,020,000 | ||||||||||||||||||||||
Media 6.4% | ||||||||||||||||||||||||||
Altice Financing SA (S) | 6.500 | 01-15-22 | 1,520,000 | 1,467,575 | ||||||||||||||||||||||
Altice Financing SA (S) | 6.625 | 02-15-23 | 3,000,000 | 2,880,000 | ||||||||||||||||||||||
Altice Finco SA (S) | 8.125 | 01-15-24 | 2,700,000 | 2,571,750 | ||||||||||||||||||||||
Altice SA (S) | 7.625 | 02-15-25 | 3,000,000 | 2,628,750 | ||||||||||||||||||||||
Altice SA (S) | 7.750 | 05-15-22 | 5,000,000 | 4,550,000 | ||||||||||||||||||||||
American Media, Inc. | 11.500 | 12-15-17 | 2,094,000 | 2,146,350 | ||||||||||||||||||||||
DISH DBS Corp. | 5.875 | 11-15-24 | 2,570,000 | 2,184,500 | ||||||||||||||||||||||
Postmedia Network, Inc. | 12.500 | 07-15-18 | 2,000,000 | 1,980,000 | ||||||||||||||||||||||
Quebecor Media, Inc. (S) | 6.625 | 01-15-23 | CAD | 3,000,000 | 2,326,714 | |||||||||||||||||||||
Sinclair Television Group, Inc. (S) | 5.625 | 08-01-24 | 5,000,000 | 4,543,750 | ||||||||||||||||||||||
Sirius XM Radio, Inc. (S) | 6.000 | 07-15-24 | 8,000,000 | 8,040,000 | ||||||||||||||||||||||
SiTV LLC (S) | 10.375 | 07-01-19 | 2,250,000 | 1,710,000 | ||||||||||||||||||||||
TEGNA, Inc. (S) | 4.875 | 09-15-21 | 5,000,000 | 4,900,000 | ||||||||||||||||||||||
Videotron, Ltd. (S) | 5.375 | 06-15-24 | 3,055,000 | 3,009,175 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Consumer discretionary (continued) | ||||||||||||||||||||||||||
Multiline retail 0.5% | ||||||||||||||||||||||||||
Dollar Tree, Inc. (S) | 5.750 | 03-01-23 | 3,245,000 | $3,366,688 | ||||||||||||||||||||||
Specialty retail 0.9% | ||||||||||||||||||||||||||
DriveTime Automotive Group, Inc. (S) | 8.000 | 06-01-21 | 4,000,000 | 3,620,000 | ||||||||||||||||||||||
Group 1 Automotive, Inc. | 5.000 | 06-01-22 | 2,500,000 | 2,462,500 | ||||||||||||||||||||||
Consumer staples 7.2% | 50,356,169 | |||||||||||||||||||||||||
Food and staples retailing 1.6% | ||||||||||||||||||||||||||
Simmons Foods, Inc. (S) | 7.875 | 10-01-21 | 1,500,000 | 1,385,625 | ||||||||||||||||||||||
SUPERVALU, Inc. | 7.750 | 11-15-22 | 4,500,000 | 4,500,000 | ||||||||||||||||||||||
Tops Holding LLC (S) | 8.000 | 06-15-22 | 5,245,000 | 5,245,000 | ||||||||||||||||||||||
Food products 3.1% | ||||||||||||||||||||||||||
AGT Food & Ingredients, Inc. (S) | 9.000 | 02-14-18 | CAD | 2,000,000 | 1,578,569 | |||||||||||||||||||||
Dean Foods Company (S) | 6.500 | 03-15-23 | 6,000,000 | 6,090,000 | ||||||||||||||||||||||
Post Holdings, Inc. (S) | 6.000 | 12-15-22 | 580,000 | 555,350 | ||||||||||||||||||||||
Post Holdings, Inc. (S) | 6.750 | 12-01-21 | 6,775,000 | 6,775,000 | ||||||||||||||||||||||
Post Holdings, Inc. | 7.375 | 02-15-22 | 1,100,000 | 1,119,250 | ||||||||||||||||||||||
Southern States Cooperative, Inc. (S) | 10.000 | 08-15-21 | 6,000,000 | 5,280,000 | ||||||||||||||||||||||
Household products 0.9% | ||||||||||||||||||||||||||
HRG Group, Inc. (S) | 7.875 | 07-15-19 | 3,500,000 | 3,631,250 | ||||||||||||||||||||||
HRG Group, Inc. | 7.875 | 07-15-19 | 2,830,000 | 2,936,125 | ||||||||||||||||||||||
Tobacco 1.6% | ||||||||||||||||||||||||||
Alliance One International, Inc. | 9.875 | 07-15-21 | 7,000,000 | 5,985,000 | ||||||||||||||||||||||
Vector Group, Ltd. | 7.750 | 02-15-21 | 5,000,000 | 5,275,000 | ||||||||||||||||||||||
Energy 7.9% | 55,445,463 | |||||||||||||||||||||||||
Energy equipment and services 1.2% | ||||||||||||||||||||||||||
CSI Compressco LP | 7.250 | 08-15-22 | 2,865,000 | 2,334,975 | ||||||||||||||||||||||
PHI, Inc. | 5.250 | 03-15-19 | 1,340,000 | 1,152,400 | ||||||||||||||||||||||
Seventy Seven Energy, Inc. | 6.500 | 07-15-22 | 3,130,000 | 1,220,700 | ||||||||||||||||||||||
Teine Energy, Ltd. (S) | 6.875 | 09-30-22 | 2,185,000 | 1,865,444 | ||||||||||||||||||||||
TerraForm Power Operating LLC (S) | 5.875 | 02-01-23 | 2,103,000 | 1,855,898 | ||||||||||||||||||||||
Oil, gas and consumable fuels 6.7% | ||||||||||||||||||||||||||
Bill Barrett Corp. | 7.625 | 10-01-19 | 1,000,000 | 720,000 | ||||||||||||||||||||||
Calumet Specialty Products Partners LP | 6.500 | 04-15-21 | 8,000,000 | 7,200,000 | ||||||||||||||||||||||
Calumet Specialty Products Partners LP | 7.625 | 01-15-22 | 1,450,000 | 1,348,500 | ||||||||||||||||||||||
Chesapeake Energy Corp. | 6.500 | 08-15-17 | 3,000,000 | 2,700,000 | ||||||||||||||||||||||
Citgo Holding, Inc. (S) | 10.750 | 02-15-20 | 5,000,000 | 4,837,500 | ||||||||||||||||||||||
Crestwood Midstream Partners LP (S) | 6.250 | 04-01-23 | 2,500,000 | 2,125,000 | ||||||||||||||||||||||
Energy XXI Gulf Coast, Inc. (S) | 11.000 | 03-15-20 | 4,000,000 | 1,880,000 | ||||||||||||||||||||||
EPL Oil & Gas, Inc. | 8.250 | 02-15-18 | 1,500,000 | 367,500 | ||||||||||||||||||||||
FTS International, Inc. | 6.250 | 05-01-22 | 3,000,000 | 930,000 | ||||||||||||||||||||||
FTS International, Inc. (P)(S) | 7.837 | 06-15-20 | 6,000,000 | 4,441,770 | ||||||||||||||||||||||
Genesis Energy LP | 6.000 | 05-15-23 | 1,205,000 | 1,060,400 |
Rate (%) | Maturity date | Par value^ | �� | Value | ||||||||||||||||||||||
Energy (continued) | ||||||||||||||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||||||||||||||
Halcon Resources Corp. (S) | 8.625 | 02-01-20 | 2,000,000 | $1,662,500 | ||||||||||||||||||||||
Halcon Resources Corp. | 8.875 | 05-15-21 | 2,400,000 | 720,000 | ||||||||||||||||||||||
Halcon Resources Corp. | 9.250 | 02-15-22 | 3,500,000 | 1,085,000 | ||||||||||||||||||||||
Jones Energy Holdings LLC | 6.750 | 04-01-22 | 805,000 | 639,476 | ||||||||||||||||||||||
Legacy Reserves LP | 8.000 | 12-01-20 | 4,000,000 | 2,880,000 | ||||||||||||||||||||||
Linn Energy LLC | 6.500 | 05-15-19 | 6,000,000 | 1,650,000 | ||||||||||||||||||||||
SandRidge Energy, Inc. (S) | 8.750 | 06-01-20 | 2,000,000 | 1,212,500 | ||||||||||||||||||||||
Teekay Offshore Partners LP | 6.000 | 07-30-19 | 5,540,000 | 4,044,200 | ||||||||||||||||||||||
Tullow Oil PLC (S) | 6.000 | 11-01-20 | 730,000 | 512,825 | ||||||||||||||||||||||
Tullow Oil PLC (S) | 6.250 | 04-15-22 | 1,590,000 | 1,113,000 | ||||||||||||||||||||||
Ultra Petroleum Corp. (S) | 5.750 | 12-15-18 | 2,500,000 | 1,800,000 | ||||||||||||||||||||||
Ultra Petroleum Corp. (S) | 6.125 | 10-01-24 | 2,000,000 | 1,140,000 | ||||||||||||||||||||||
WPX Energy, Inc. | 5.250 | 09-15-24 | 1,175,000 | 945,875 | ||||||||||||||||||||||
Financials 14.1% | 98,363,445 | |||||||||||||||||||||||||
Banks 2.2% | ||||||||||||||||||||||||||
Citigroup, Inc. (5.800% to 11-15-19, then 3 month LIBOR + 4.093%) (Q) | 5.800 | 11-15-19 | 5,000,000 | 4,921,250 | ||||||||||||||||||||||
HSBC Holdings PLC (5.625% to 1-17-20, then 5 year ISDAFIX + 3.626%) (Q) | 5.625 | 01-17-20 | 1,630,000 | 1,568,875 | ||||||||||||||||||||||
ING Groep NV (6.000% to 4-16-20, then 5 Year U.S. Swap Rate + 4.445%) (Q) | 6.000 | 04-16-20 | 2,000,000 | 1,962,500 | ||||||||||||||||||||||
ING Groep NV (6.500% to 4-16-25, then 5 Year U.S. Swap Rate + 4.446%) (Q) | 6.500 | 04-16-25 | 2,000,000 | 1,898,750 | ||||||||||||||||||||||
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 | 5,204,750 | ||||||||||||||||||||||
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 | 5,851,825 | ||||||||||||||||||||||
GFI Group, Inc. | 8.375 | 07-19-18 | 2,000,000 | 2,160,000 | ||||||||||||||||||||||
Consumer finance 3.1% | ||||||||||||||||||||||||||
Cash America International, Inc. | 5.750 | 05-15-18 | 5,000,000 | 5,012,500 | ||||||||||||||||||||||
Credit Acceptance Corp. | 6.125 | 02-15-21 | 6,271,000 | 6,176,935 | ||||||||||||||||||||||
DFC Finance Corp. (S) | 10.500 | 06-15-20 | 4,000,000 | 2,350,000 | ||||||||||||||||||||||
Enova International, Inc. | 9.750 | 06-01-21 | 2,000,000 | 1,620,000 | ||||||||||||||||||||||
TMX Finance LLC (S) | 8.500 | 09-15-18 | 7,948,000 | 6,259,050 | ||||||||||||||||||||||
Diversified financial services 3.5% | ||||||||||||||||||||||||||
iPayment, Inc. (S) | 9.500 | 12-15-19 | 3,562,500 | 3,526,875 | ||||||||||||||||||||||
Jefferies Finance LLC (S) | 6.875 | 04-15-22 | 3,000,000 | 2,730,000 | ||||||||||||||||||||||
Jefferies Finance LLC (S) | 7.500 | 04-15-21 | 6,000,000 | 5,610,000 | ||||||||||||||||||||||
Nationstar Mortgage LLC | 6.500 | 06-01-22 | 7,000,000 | 5,582,500 | ||||||||||||||||||||||
NewStar Financial, Inc. (S) | 7.250 | 05-01-20 | 7,000,000 | 6,965,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Financials (continued) | ||||||||||||||||||||||||||
Real estate investment trusts 0.8% | ||||||||||||||||||||||||||
DuPont Fabros Technology LP | 5.875 | 09-15-21 | 1,100,000 | $1,127,500 | ||||||||||||||||||||||
iStar, Inc. | 5.000 | 07-01-19 | 4,890,000 | 4,648,532 | ||||||||||||||||||||||
Real estate management and development 1.6% | ||||||||||||||||||||||||||
Greystar Real Estate Partners LLC (S) | 8.250 | 12-01-22 | 6,000,000 | 6,270,000 | ||||||||||||||||||||||
Mattamy Group Corp. (S) | 6.500 | 11-15-20 | 3,500,000 | 3,395,000 | ||||||||||||||||||||||
Mattamy Group Corp. (S) | 6.875 | 11-15-20 | CAD | 2,000,000 | 1,453,728 | |||||||||||||||||||||
Thrifts and mortgage finance 1.7% | ||||||||||||||||||||||||||
Ladder Capital Finance Holdings LLLP (S) | 5.875 | 08-01-21 | 6,725,000 | 6,287,875 | ||||||||||||||||||||||
Quicken Loans, Inc. (S) | 5.750 | 05-01-25 | 4,000,000 | 3,790,000 | ||||||||||||||||||||||
Stearns Holdings, Inc. (S) | 9.375 | 08-15-20 | 2,000,000 | 1,990,000 | ||||||||||||||||||||||
Health care 4.8% | 33,218,636 | |||||||||||||||||||||||||
Health care equipment and supplies 1.1% | ||||||||||||||||||||||||||
BioScrip, Inc. | 8.875 | 02-15-21 | 2,625,000 | 2,021,250 | ||||||||||||||||||||||
Centric Health Corp. | 8.625 | 04-18-18 | CAD | 9,488,000 | 5,687,823 | |||||||||||||||||||||
Health care providers and services 1.7% | ||||||||||||||||||||||||||
Acadia Healthcare Company, Inc. | 5.625 | 02-15-23 | 1,500,000 | 1,507,500 | ||||||||||||||||||||||
DaVita HealthCare Partners, Inc. | 5.000 | 05-01-25 | 5,000,000 | 4,800,000 | ||||||||||||||||||||||
Vantage Oncology LLC (S) | 9.500 | 06-15-17 | 6,000,000 | 5,370,000 | ||||||||||||||||||||||
Pharmaceuticals 2.0% | ||||||||||||||||||||||||||
Endo Finance LLC (S) | 6.000 | 07-15-23 | 1,750,000 | 1,732,500 | ||||||||||||||||||||||
Mallinckrodt International Finance SA (S) | 5.625 | 10-15-23 | 1,500,000 | 1,368,750 | ||||||||||||||||||||||
Valeant Pharmaceuticals International, Inc. (S) | 5.375 | 03-15-20 | 4,000,000 | 3,887,500 | ||||||||||||||||||||||
Valeant Pharmaceuticals International, Inc. (S) | 5.500 | 03-01-23 | 3,175,000 | 3,008,313 | ||||||||||||||||||||||
Valeant Pharmaceuticals International, Inc. (S) | 5.875 | 05-15-23 | 4,000,000 | 3,835,000 | ||||||||||||||||||||||
Industrials 11.5% | 80,247,587 | |||||||||||||||||||||||||
Aerospace and defense 1.5% | ||||||||||||||||||||||||||
LMI Aerospace, Inc. | 7.375 | 07-15-19 | 8,040,000 | 7,758,600 | ||||||||||||||||||||||
TransDigm, Inc. | 6.000 | 07-15-22 | 2,670,000 | 2,489,775 | ||||||||||||||||||||||
Air freight and logistics 1.2% | ||||||||||||||||||||||||||
XPO Logistics, Inc. (S) | 6.500 | 06-15-22 | 9,900,000 | 8,371,688 | ||||||||||||||||||||||
Building products 1.2% | ||||||||||||||||||||||||||
Builders FirstSource, Inc. (S) | 10.750 | 08-15-23 | 7,000,000 | 6,991,250 | ||||||||||||||||||||||
Summit Materials LLC | 10.500 | 01-31-20 | 1,176,000 | 1,258,320 | ||||||||||||||||||||||
Chemicals 0.2% | ||||||||||||||||||||||||||
Techniplas LLC (S) | 10.000 | 05-01-20 | 1,750,000 | 1,610,000 | ||||||||||||||||||||||
Commercial services and supplies 1.2% | ||||||||||||||||||||||||||
Casella Waste Systems, Inc. | 7.750 | 02-15-19 | 2,600,000 | 2,548,000 | ||||||||||||||||||||||
GFL Environmental Corp. (S) | 7.500 | 06-18-18 | CAD | 1,196,000 | 887,254 | |||||||||||||||||||||
Tervita Corp. (S) | 10.875 | 02-15-18 | 450,000 | 225,000 | ||||||||||||||||||||||
The ADT Corp. | 4.125 | 06-15-23 | 5,000,000 | 4,500,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Industrials (continued) | ||||||||||||||||||||||||||
Construction and engineering 1.6% | ||||||||||||||||||||||||||
AECOM (S) | 5.750 | 10-15-22 | 7,500,000 | $7,556,250 | ||||||||||||||||||||||
Michael Baker International, Inc. (S) | 8.250 | 10-15-18 | 900,000 | 855,000 | ||||||||||||||||||||||
Tronox Finance LLC (S) | 7.500 | 03-15-22 | 4,500,000 | 2,846,250 | ||||||||||||||||||||||
Construction materials 0.3% | ||||||||||||||||||||||||||
Weekley Homes LLC | 6.000 | 02-01-23 | 2,500,000 | 2,318,750 | ||||||||||||||||||||||
Machinery 0.2% | ||||||||||||||||||||||||||
Optimas OE Solutions Holding LLC (S) | 8.625 | 06-01-21 | 1,750,000 | 1,693,125 | ||||||||||||||||||||||
Marine 1.0% | ||||||||||||||||||||||||||
Navios Maritime Holdings, Inc. (S) | 7.375 | 01-15-22 | 8,810,000 | 7,092,050 | ||||||||||||||||||||||
Professional services 0.5% | ||||||||||||||||||||||||||
Mustang Merger Corp. (S) | 8.500 | 08-15-21 | 3,000,000 | 3,112,500 | ||||||||||||||||||||||
Trading companies and distributors 1.2% | ||||||||||||||||||||||||||
Ahern Rentals, Inc. (S) | 7.375 | 05-15-23 | 5,000,000 | 4,350,000 | ||||||||||||||||||||||
Reliance Intermediate Holdings LP (S) | 6.500 | 04-01-23 | 4,000,000 | 4,000,000 | ||||||||||||||||||||||
Transportation infrastructure 1.4% | ||||||||||||||||||||||||||
CHC Helicopter SA | 9.250 | 10-15-20 | 4,500,000 | 2,520,000 | ||||||||||||||||||||||
CHC Helicopter SA | 9.375 | 06-01-21 | 1,836,250 | 697,775 | ||||||||||||||||||||||
Florida East Coast Holdings Corp. (S) | 6.750 | 05-01-19 | 6,700,000 | 6,566,000 | ||||||||||||||||||||||
Information technology 4.4% | 30,384,000 | |||||||||||||||||||||||||
Communications equipment 0.6% | ||||||||||||||||||||||||||
Avaya, Inc. (S) | 7.000 | 04-01-19 | 3,000,000 | 2,377,500 | ||||||||||||||||||||||
Avaya, Inc. (S) | 9.000 | 04-01-19 | 2,000,000 | 1,660,000 | ||||||||||||||||||||||
Semiconductors and semiconductor equipment 1.6% | ||||||||||||||||||||||||||
Advanced Micro Devices, Inc. | 7.750 | 08-01-20 | 4,500,000 | 2,857,500 | ||||||||||||||||||||||
Micron Technology, Inc. (S) | 5.250 | 08-01-23 | 4,750,000 | 4,417,500 | ||||||||||||||||||||||
Micron Technology, Inc. | 5.500 | 02-01-25 | 4,350,000 | 3,980,250 | ||||||||||||||||||||||
Software 2.2% | ||||||||||||||||||||||||||
Blue Coat Holdings, Inc. (S) | 8.375 | 06-01-23 | 6,000,000 | 5,985,000 | ||||||||||||||||||||||
Open Text Corp. (S) | 5.625 | 01-15-23 | 2,000,000 | 1,983,750 | ||||||||||||||||||||||
SS&C Technologies Holdings, Inc. (S) | 5.875 | 07-15-23 | 7,000,000 | 7,122,500 | ||||||||||||||||||||||
Materials 11.5% | 80,607,450 | |||||||||||||||||||||||||
Building materials 0.9% | ||||||||||||||||||||||||||
Building Materials Corp. of America (S) | 5.375 | 11-15-24 | 4,845,000 | 4,784,438 | ||||||||||||||||||||||
Building Materials Corp. of America (S) | 6.000 | 10-15-25 | 1,685,000 | 1,701,850 | ||||||||||||||||||||||
Chemicals 1.2% | ||||||||||||||||||||||||||
Hexion US Finance Corp. | 8.875 | 02-01-18 | 1,000,000 | 792,300 | ||||||||||||||||||||||
Momentive Performance Materials, Inc. | 3.880 | 10-24-21 | 2,000,000 | 1,540,000 | ||||||||||||||||||||||
Platform Specialty Products Corp. (S) | 6.500 | 02-01-22 | 5,125,000 | 4,407,500 | ||||||||||||||||||||||
The Chemours Company (S) | 6.625 | 05-15-23 | 1,685,000 | 1,133,163 | ||||||||||||||||||||||
Tronox Finance LLC | 6.375 | 08-15-20 | 1,000,000 | 635,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Materials (continued) | ||||||||||||||||||||||||||
Construction materials 1.9% | ||||||||||||||||||||||||||
Algeco Scotsman Global Finance PLC (S) | 8.500 | 10-15-18 | 5,000,000 | $4,376,000 | ||||||||||||||||||||||
Hardwoods Acquisition, Inc. (S) | 7.500 | 08-01-21 | 9,300,000 | 8,695,500 | ||||||||||||||||||||||
Containers and packaging 1.2% | ||||||||||||||||||||||||||
Cascades, Inc. (S) | 5.500 | 07-15-22 | 5,460,000 | 5,187,000 | ||||||||||||||||||||||
Sealed Air Corp. (S) | 4.875 | 12-01-22 | 1,710,000 | 1,690,763 | ||||||||||||||||||||||
Sealed Air Corp. (S) | 5.125 | 12-01-24 | 1,710,000 | 1,671,525 | ||||||||||||||||||||||
Metals and mining 4.0% | ||||||||||||||||||||||||||
Essar Steel Algoma, Inc. (S) | 9.500 | 11-15-19 | 4,000,000 | 2,200,000 | ||||||||||||||||||||||
First Quantum Minerals, Ltd. (S) | 7.250 | 10-15-19 | 7,000,000 | 4,900,000 | ||||||||||||||||||||||
First Quantum Minerals, Ltd. (S) | 7.250 | 05-15-22 | 2,750,000 | 1,705,000 | ||||||||||||||||||||||
FMG Resources August 2006 Pty, Ltd. (S) | 9.750 | 03-01-22 | 2,000,000 | 1,862,500 | ||||||||||||||||||||||
Hecla Mining Company | 6.875 | 05-01-21 | 1,800,000 | 1,449,000 | ||||||||||||||||||||||
Optima Specialty Steel, Inc. (S) | 12.500 | 12-15-16 | 213,000 | 200,220 | ||||||||||||||||||||||
Signode Industrial Group Lux SA (S) | 6.375 | 05-01-22 | 7,410,000 | 7,002,450 | ||||||||||||||||||||||
Taseko Mines, Ltd. | 7.750 | 04-15-19 | 6,000,000 | 3,300,000 | ||||||||||||||||||||||
Thompson Creek Metals Company, Inc. | 9.750 | 12-01-17 | 1,500,000 | 1,387,500 | ||||||||||||||||||||||
Thompson Creek Metals Company, Inc. | 12.500 | 05-01-19 | 7,000,000 | 3,710,000 | ||||||||||||||||||||||
Paper and forest products 2.3% | ||||||||||||||||||||||||||
Norbord, Inc. (S) | 6.250 | 04-15-23 | 2,650,000 | 2,592,031 | ||||||||||||||||||||||
Resolute Forest Products, Inc. | 5.875 | 05-15-23 | 7,358,000 | 5,481,710 | ||||||||||||||||||||||
Tembec Industries, Inc. (S) | 9.000 | 12-15-19 | 10,000,000 | 7,500,000 | ||||||||||||||||||||||
UPM-Kymmene OYJ (S) | 7.450 | 11-26-27 | 600,000 | 702,000 | ||||||||||||||||||||||
Telecommunication services 6.4% | 44,825,438 | |||||||||||||||||||||||||
Communications equipment 0.1% | ||||||||||||||||||||||||||
Altice US Finance II Corp. (S) | 7.750 | 07-15-25 | 1,165,000 | 1,031,025 | ||||||||||||||||||||||
Diversified telecommunication services 4.7% | ||||||||||||||||||||||||||
Cincinnati Bell, Inc. | 8.375 | 10-15-20 | 1,000,000 | 1,007,500 | ||||||||||||||||||||||
Columbus International, Inc. (S) | 7.375 | 03-30-21 | 4,700,000 | 4,864,500 | ||||||||||||||||||||||
Frontier Communications Corp. | 6.250 | 09-15-21 | 1,130,000 | 940,725 | ||||||||||||||||||||||
Frontier Communications Corp. | 7.125 | 01-15-23 | 7,500,000 | 6,164,250 | ||||||||||||||||||||||
Frontier Communications Corp. (S) | 8.875 | 09-15-20 | 965,000 | 945,700 | ||||||||||||||||||||||
Frontier Communications Corp. (S) | 10.500 | 09-15-22 | 1,205,000 | 1,171,863 | ||||||||||||||||||||||
Frontier Communications Corp. (S) | 11.000 | 09-15-25 | 1,930,000 | 1,867,275 | ||||||||||||||||||||||
GCI, Inc. | 6.875 | 04-15-25 | 3,000,000 | 3,015,000 | ||||||||||||||||||||||
Goodman Networks, Inc. | 12.125 | 07-01-18 | 3,600,000 | 1,836,000 | ||||||||||||||||||||||
T-Mobile USA, Inc. | 6.000 | 03-01-23 | 6,000,000 | 5,790,000 | ||||||||||||||||||||||
Wind Acquisition Finance SA (S) | 7.375 | 04-23-21 | 5,000,000 | 4,937,500 | ||||||||||||||||||||||
Wireless telecommunication services 1.6% | ||||||||||||||||||||||||||
Digicel, Ltd. (S) | 6.000 | 04-15-21 | 2,000,000 | 1,815,000 | ||||||||||||||||||||||
Sprint Capital Corp. | 6.900 | 05-01-19 | 1,000,000 | 880,000 | ||||||||||||||||||||||
Sprint Communications, Inc. | 6.000 | 11-15-22 | 2,000,000 | 1,505,000 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Telecommunication services (continued) | ||||||||||||||||||||||||||
Wireless telecommunication services (continued) | ||||||||||||||||||||||||||
Sprint Communications, Inc. | 8.375 | 08-15-17 | 2,000,000 | $1,993,980 | ||||||||||||||||||||||
Sprint Corp. | 7.125 | 06-15-24 | 6,575,000 | 5,060,120 | ||||||||||||||||||||||
Utilities 3.2% | 22,620,278 | |||||||||||||||||||||||||
Electric utilities 1.1% | ||||||||||||||||||||||||||
Talen Energy Supply LLC (S) | 4.625 | 07-15-19 | 8,900,000 | 8,099,000 | ||||||||||||||||||||||
Independent power and renewable electricity producers 2.1% | ||||||||||||||||||||||||||
Dynegy, Inc. | 5.875 | 06-01-23 | 6,585,000 | 6,111,703 | ||||||||||||||||||||||
Dynegy, Inc. | 6.750 | 11-01-19 | 1,170,000 | 1,172,925 | ||||||||||||||||||||||
Dynegy, Inc. | 7.625 | 11-01-24 | 1,615,000 | 1,631,150 | ||||||||||||||||||||||
GenOn Energy, Inc. | 7.875 | 06-15-17 | 2,000,000 | 1,875,000 | ||||||||||||||||||||||
NRG Energy, Inc. | 6.250 | 07-15-22 | 1,675,000 | 1,524,250 | ||||||||||||||||||||||
NRG Energy, Inc. | 6.250 | 05-01-24 | 2,500,000 | 2,206,250 | ||||||||||||||||||||||
Term loans (M) 8.5% | $59,152,989 | |||||||||||||||||||||||||
(Cost $70,059,761) | ||||||||||||||||||||||||||
Consumer discretionary 2.1% | 14,515,162 | |||||||||||||||||||||||||
Diversified consumer services 0.3% | ||||||||||||||||||||||||||
Orchard Acquisition Company | 7.000 | 02-07-19 | 2,345,217 | 1,993,435 | ||||||||||||||||||||||
Hotels, restaurants and leisure 0.2% | ||||||||||||||||||||||||||
Marina District Finance Company, Inc. | 6.500 | 08-15-18 | 1,242,537 | 1,246,410 | ||||||||||||||||||||||
Media 0.3% | ||||||||||||||||||||||||||
Getty Images, Inc. | 4.750 | 10-18-19 | 2,946,970 | 1,906,934 | ||||||||||||||||||||||
Specialty retail 0.8% | ||||||||||||||||||||||||||
Payless, Inc. | 5.000 | 03-11-21 | 1,975,000 | 1,540,500 | ||||||||||||||||||||||
Payless, Inc. | 8.500 | 03-11-22 | 210,000 | 163,800 | ||||||||||||||||||||||
Toys R Us Property Company I LLC | 6.000 | 08-21-19 | 4,199,914 | 3,902,422 | ||||||||||||||||||||||
Textiles, apparel and luxury goods 0.5% | ||||||||||||||||||||||||||
Charlotte Russe, Inc. | 6.750 | 05-21-19 | 3,751,135 | 3,075,930 | ||||||||||||||||||||||
Charlotte Russe, Inc. | 6.750 | 05-22-19 | 836,258 | 685,731 | ||||||||||||||||||||||
Consumer staples 1.4% | 9,665,498 | |||||||||||||||||||||||||
Food and staples retailing 0.5% | ||||||||||||||||||||||||||
Reddy Ice Corp. | 6.752 | 05-01-19 | 3,412,500 | 2,832,375 | ||||||||||||||||||||||
Reddy Ice Corp. | 10.750 | 11-01-19 | 500,000 | 337,500 | ||||||||||||||||||||||
Household products 0.9% | ||||||||||||||||||||||||||
The Sun Products Corp. | 5.500 | 03-23-20 | 6,910,237 | 6,495,623 | ||||||||||||||||||||||
Energy 1.4% | 9,529,078 | |||||||||||||||||||||||||
Energy equipment and services 0.4% | ||||||||||||||||||||||||||
Preferred Proppants LLC | 6.750 | 07-27-20 | 3,960,000 | 2,455,200 | ||||||||||||||||||||||
Oil, gas and consumable fuels 1.0% | ||||||||||||||||||||||||||
Arch Coal, Inc. | 6.250 | 05-16-18 | 3,881,292 | 2,160,587 |
Rate (%) | Maturity date | Par value^ | Value | |||||||||||||||||||||||
Energy (continued) | ||||||||||||||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||||||||||||||
Citgo Holding, Inc. | 9.500 | 05-12-18 | 3,517,446 | $3,455,891 | ||||||||||||||||||||||
Fieldwood Energy LLC | 8.375 | 09-30-20 | 5,205,000 | 1,457,400 | ||||||||||||||||||||||
Financials 1.1% | 7,702,857 | |||||||||||||||||||||||||
Diversified financial services 1.1% | ||||||||||||||||||||||||||
iPayment, Inc. | 6.750 | 05-08-17 | 2,000,000 | 1,960,000 | ||||||||||||||||||||||
PGX Holdings, Inc. (S) | 5.750 | 09-29-20 | 5,742,857 | 5,742,857 | ||||||||||||||||||||||
Health care 0.3% | 2,116,159 | |||||||||||||||||||||||||
Health care providers and services 0.3% | ||||||||||||||||||||||||||
Western Dental Services, Inc. | 6.000 | 11-01-18 | 2,446,427 | 2,116,159 | ||||||||||||||||||||||
Industrials 0.5% | 3,650,767 | |||||||||||||||||||||||||
Road and rail 0.5% | ||||||||||||||||||||||||||
Livingston International, Inc. | 5.000 | 04-18-19 | 1,955,000 | 1,891,463 | ||||||||||||||||||||||
Livingston International, Inc. | 9.000 | 04-18-20 | 1,954,783 | 1,759,304 | ||||||||||||||||||||||
Information technology 0.7% | 4,736,086 | |||||||||||||||||||||||||
Software 0.7% | ||||||||||||||||||||||||||
Compuware Corp. | 6.250 | 12-15-21 | 4,962,500 | 4,736,086 | ||||||||||||||||||||||
Materials 0.1% | 1,037,642 | |||||||||||||||||||||||||
Chemicals 0.1% | ||||||||||||||||||||||||||
American Pacific Corp. | 7.000 | 02-27-19 | 3,977,405 | 1,037,642 | ||||||||||||||||||||||
Telecommunication services 0.9% | 6,199,740 | |||||||||||||||||||||||||
Diversified telecommunication services 0.9% | ||||||||||||||||||||||||||
Birch Communications, Inc. | 7.750 | 07-17-20 | 6,215,278 | 6,199,740 | ||||||||||||||||||||||
Shares | Value | |||||||||||||||||||||||||
Common stocks 0.2% | $1,152,169 | |||||||||||||||||||||||||
(Cost $598,460) | ||||||||||||||||||||||||||
Energy 0.0% | 40,960 | |||||||||||||||||||||||||
Energy equipment and services 0.0% | ||||||||||||||||||||||||||
TPT Acquisition, Inc. (I) | 2,560 | 40,960 | ||||||||||||||||||||||||
Financials 0.2% | 1,111,209 | |||||||||||||||||||||||||
Diversified financial services 0.2% | ||||||||||||||||||||||||||
iPayment, Inc. (I) | 223,000 | 1,111,209 | ||||||||||||||||||||||||
Preferred securities 0.5% | $3,893,789 | |||||||||||||||||||||||||
(Cost $3,913,271) | ||||||||||||||||||||||||||
Financials 0.4% | 2,761,689 | |||||||||||||||||||||||||
Consumer finance 0.4% | ||||||||||||||||||||||||||
Ally Financial, Inc., 7.000% (S) | 2,753 | 2,761,689 |
Shares | Value | |||||||||||||||||||||||||
Utilities 0.1% | $1,132,100 | |||||||||||||||||||||||||
Multi-utilities 0.1% | ||||||||||||||||||||||||||
Dominion Resources, Inc., 6.375% | 22,820 | 1,132,100 | ||||||||||||||||||||||||
Par value | Value | |||||||||||||||||||||||||
Short-term investments 0.6% | $4,173,000 | |||||||||||||||||||||||||
(Cost $4,173,000) | ||||||||||||||||||||||||||
Repurchase agreement 0.6% | 4,173,000 | |||||||||||||||||||||||||
Repurchase Agreement with State Street Corp. dated 9-30-15 at 0.000% to be repurchased at $4,173,000 on 10-1-15, collateralized by $4,190,000 U.S. Treasury Notes, 1.625% due 12-31-19 (valued at $4,258,297, including interest) | 4,173,000 | 4,173,000 | ||||||||||||||||||||||||
Total investments (Cost $765,701,562)† 95.3% | $665,995,779 | |||||||||||||||||||||||||
Other assets and liabilities, net 4.7% | $33,178,534 | |||||||||||||||||||||||||
Total net assets 100.0% | $699,174,313 |
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 | |||||||||||||||||||||||||
(I) | Non-income producing security. | |||||||||||||||||||||||||
(M) | Term loans are variable rate obligations. The coupon rate shown represents the rate at period end. | |||||||||||||||||||||||||
(P) | Variable rate obligation. 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 $374,928,034 or 53.6% of the fund's net assets as of 9-30-15. | |||||||||||||||||||||||||
† | At 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $766,647,466. Net unrealized depreciation aggregated $100,651,687, of which $3,003,053 related to appreciated investment securities and $103,654,740 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments, at value (Cost $765,701,562) | $665,995,779 | |||||||||||||||||||||||||||||||||||||||
Cash | 16,552,526 | |||||||||||||||||||||||||||||||||||||||
Foreign currency, at value (Cost $3,126,745) | 3,141,272 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 9,243,589 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 842,501 | |||||||||||||||||||||||||||||||||||||||
Receivable for forward foreign currency exchange contracts | 82,507 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 14,318,466 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 98,094 | |||||||||||||||||||||||||||||||||||||||
Total assets | 710,274,734 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 4,087,667 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 6,741,487 | |||||||||||||||||||||||||||||||||||||||
Distributions payable | 92,720 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 17,747 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 62,254 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 1,575 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 96,971 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 11,100,421 | |||||||||||||||||||||||||||||||||||||||
Net assets | $699,174,313 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $812,192,467 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 1,756,781 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | (15,147,699 | ) | ||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | (99,627,236 | ) | ||||||||||||||||||||||||||||||||||||||
Net assets | $699,174,313 | |||||||||||||||||||||||||||||||||||||||
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 ($318,660,187 ÷ 33,663,293 shares)1 | $9.47 | |||||||||||||||||
Class C ($59,832,978 ÷ 6,321,986 shares)1 | $9.46 | |||||||||||||||||
Class I ($230,219,501 ÷ 24,315,543 shares) | $9.47 | |||||||||||||||||
Class R2 ($91,494 ÷ 9,662 shares) | $9.47 | |||||||||||||||||
Class R4 ($91,496 ÷ 9,662 shares) | $9.47 | |||||||||||||||||
Class R6 ($91,941 ÷ 9,708 shares) | $9.47 | |||||||||||||||||
Class NAV ($90,186,716 ÷ 9,523,887 shares) | $9.47 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 96%)2 | $9.86 |
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 $100,000. On sales of $100,000 or more and on group sales the offering price is reduced. |
STATEMENT OF OPERATIONS For the six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Interest | $28,985,138 | |||||||||||||||||||||||||||||||||||||||
Dividends | 161,568 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (1,002 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 29,145,704 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 2,488,359 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 776,602 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 50,572 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 420,076 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 5,486 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 93,160 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 27,639 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 50,395 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 55,218 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 51,545 | |||||||||||||||||||||||||||||||||||||||
Other | 8,829 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 4,027,881 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (41,754 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 3,986,127 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 25,159,577 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments and foreign currency transactions | (4,330,066 | ) | ||||||||||||||||||||||||||||||||||||||
(4,330,066 | ) | |||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments and translation of assets and liabilities in foreign currencies | (65,023,122 | ) | ||||||||||||||||||||||||||||||||||||||
(65,023,122 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (69,353,188 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($44,193,611 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $25,159,577 | $41,934,331 | |||||||||||||||||||||||||||||||||||||||||||
Net realized loss | (4,330,066 | ) | (6,813,349 | ) | |||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (65,023,122 | ) | (44,471,026 | ) | |||||||||||||||||||||||||||||||||||||||||
Decrease in net assets resulting from operations | (44,193,611 | ) | (9,350,044 | ) | |||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | (11,224,269 | ) | (22,338,021 | ) | |||||||||||||||||||||||||||||||||||||||||
Class C | (1,783,598 | ) | (2,756,952 | ) | |||||||||||||||||||||||||||||||||||||||||
Class I | (8,682,283 | ) | (14,286,376 | ) | |||||||||||||||||||||||||||||||||||||||||
Class R2 | (3,013 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | (3,128 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | (3,324 | ) | — | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | (3,481,557 | ) | (4,714,036 | ) | |||||||||||||||||||||||||||||||||||||||||
Total distributions | (25,181,172 | ) | (44,095,385 | ) | |||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (59,173,312 | ) | 420,856,660 | ||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (128,548,095 | ) | 367,411,231 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 827,722,408 | 460,311,177 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $699,174,313 | $827,722,408 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $1,756,781 | $1,778,376 |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 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 | $10.37 | $11.03 | $11.02 | $10.52 | $11.35 | $11.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.32 | 0.63 | 0.71 | 0.74 | 1.07 | 1.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.90 | ) | (0.63 | ) | 0.10 | 0.53 | (0.25 | ) | 0.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.58 | ) | — | 0.81 | 1.27 | 0.82 | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.32 | ) | (0.66 | ) | (0.74 | ) | (0.76 | ) | (1.04 | ) | (1.20 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.06 | ) | (0.01 | ) | (0.61 | ) | (1.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.32 | ) | (0.66 | ) | (0.80 | ) | (0.77 | ) | (1.65 | ) | (2.32 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.47 | $10.37 | $11.03 | $11.02 | $10.52 | $11.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | (5.76 | ) 5 | (0.03 | ) | 7.62 | 12.59 | 8.12 | 19.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $319 | $373 | $313 | $208 | $16 | $17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.08 | 6 | 1.08 | 1.15 | 1.30 | 1.68 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.07 | 6 | 1.07 | 1.15 | 1.18 | 1.24 | 1.21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.22 | 6 | 5.87 | 6.45 | 6.83 | 9.82 | 9.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 26 | 15 | 64 | 207 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class C Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.36 | $11.03 | $11.02 | $11.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.28 | 0.55 | 0.61 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.90 | ) | (0.64 | ) | 0.10 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.62 | ) | (0.09 | ) | 0.71 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.28 | ) | (0.58 | ) | (0.64 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.06 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.28 | ) | (0.58 | ) | (0.70 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.46 | $10.36 | $11.03 | $11.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5,6 | (6.13 | ) 7 | (0.86 | ) | 6.73 | 0.09 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $60 | $64 | $28 | — | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.84 | 9 | 1.83 | 2.22 | 16.98 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.83 | 9 | 1.82 | 1.93 | 1.93 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 5.47 | 9 | 5.12 | 5.58 | 5.54 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 26 | 15 | 10 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class C shares is 3-27-13. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-12 to 3-31-13. |
Class I Shares Period ended | 9-30-15 | 1 | 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 | $10.37 | $11.04 | $11.02 | $10.52 | $11.36 | $11.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.33 | 0.66 | 0.73 | 0.77 | 1.10 | 1.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.90 | ) | (0.64 | ) | 0.12 | 0.53 | (0.26 | ) | 0.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.57 | ) | 0.02 | 0.85 | 1.30 | 0.84 | 2.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.33 | ) | (0.69 | ) | (0.77 | ) | (0.79 | ) | (1.07 | ) | (1.24 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.06 | ) | (0.01 | ) | (0.61 | ) | (1.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.33 | ) | (0.69 | ) | (0.83 | ) | (0.80 | ) | (1.68 | ) | (2.36 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.47 | $10.37 | $11.04 | $11.02 | $10.52 | $11.36 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | (5.64 | ) 4 | 0.14 | 8.01 | 12.90 | 8.39 | 19.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $230 | $277 | $119 | $40 | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.82 | 6 | 0.81 | 0.89 | 1.07 | 4.23 | 1.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.81 | 6 | 0.80 | 0.87 | 0.87 | 0.90 | 0.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.48 | 6 | 6.13 | 6.71 | 7.06 | 10.17 | 10.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 26 | 15 | 64 | 207 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R2 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.37 | $10.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.31 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.90 | ) | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.59 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.31 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.31 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.47 | $10.37 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (5.82 | ) | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.29 | 7 | 15.03 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.30 | 7 | 1.32 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.01 | 7 | 7.59 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R2 shares is 3-27-15. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-14 to 3-31-15. |
Class R4 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.37 | $10.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.32 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.90 | ) | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.58 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.32 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.32 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.47 | $10.37 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (5.71 | ) | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.29 | 7 | 15.03 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.07 | 7 | 1.07 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.24 | 7 | 7.84 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R4 shares is 3-27-15. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-14 to 3-31-15. |
Class R6 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.37 | $10.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.34 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.90 | ) | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.56 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.34 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | (0.34 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.47 | $10.37 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (5.53 | ) | 0.19 | |||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.57 | 7 | 15.86 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 7 | 0.67 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.62 | 7 | 8.24 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R6 shares is 3-27-15. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-14 to 3-31-15. |
Class NAV Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $10.37 | $11.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.34 | 0.40 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss on investments | (0.90 | ) | (0.69 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.56 | ) | (0.29 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | (0.34 | ) | (0.42 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $9.47 | $10.37 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (5.58 | ) | (2.58 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $90 | $113 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.69 | 6 | 0.67 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 6 | 0.67 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 6.61 | 6 | 6.40 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 17 | 28 | 7 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class NAV shares is 8-28-14. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-14 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, 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 issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing
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securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs 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 September 30, 2015, by major security category or type:
Total value at 9-30-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Corporate bonds | |||||
Consumer discretionary | $101,555,366 | — | $101,555,366 | — | |
Consumer staples | 50,356,169 | — | 50,356,169 | — | |
Energy | 55,445,463 | — | 55,445,463 | — | |
Financials | 98,363,445 | — | 98,363,445 | — | |
Health care | 33,218,636 | — | 33,218,636 | — | |
Industrials | 80,247,587 | — | 80,247,587 | — | |
Information technology | 30,384,000 | — | 30,384,000 | — | |
Materials | 80,607,450 | — | 80,607,450 | — | |
Telecommunication services | 44,825,438 | — | 44,825,438 | — | |
Utilities | 22,620,278 | — | 22,620,278 | — | |
Term loans | |||||
Consumer discretionary | 14,515,162 | — | 14,515,162 | — | |
Consumer staples | 9,665,498 | — | 9,665,498 | — | |
Energy | 9,529,078 | — | 9,529,078 | — | |
Financials | 7,702,857 | — | 7,702,857 | — | |
Health care | 2,116,159 | — | 2,116,159 | — | |
Industrials | 3,650,767 | — | 3,650,767 | — | |
Information technology | 4,736,086 | — | 4,736,086 | — | |
Materials | 1,037,642 | — | 1,037,642 | — | |
Telecommunication services | 6,199,740 | — | 6,199,740 | — | |
Common stocks | |||||
Energy | 40,960 | — | — | $40,960 | |
Financials | 1,111,209 | — | 1,111,209 | — | |
Preferred securities | |||||
Financials | 2,761,689 | — | 2,761,689 | — | |
Utilities | 1,132,100 | $1,132,100 | — | — | |
Short-term investments | 4,173,000 | — | 4,173,000 | — | |
Total investments in securities | $665,995,779 | $1,132,100 | $664,822,719 | $40,960 | |
Other financial instruments | |||||
Forward foreign currency contracts | $82,507 | — | $82,507 | — |
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
33
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.
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 and generally have longer settlement periods than conventional debt securities. Term loans involve special types of risk, including credit risk, interest-rate risk, counterparty risk, risk associated with extended settlement, and the risks of being a lender. 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. 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. Transactions in loan investments typically take a significant amount of time (i.e., seven days or longer) to settle. This could pose a liquidity risk to the fund and, if the fund's exposure to such investments is substantial, could impair the fund's ability to meet redemptions. Because term loans generally 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. There is greater risk that the fund may have limited rights to enforce the terms of an underlying loan than for other types of debt instruments.
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
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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.
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as the administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled 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 effective 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 six months ended September 30, 2015 were $544. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees 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. Through June 30, 2015, class-specific expenses, such as state registration fees and printing and postage, for all classes, were calculated daily at the class level based on 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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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.
Note 3 — Derivative instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the OTC market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the
35
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.
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 six months ended September 30, 2015, the fund used forward foreign currency contracts to gain exposure to foreign currencies. The fund held forward foreign currency contracts with U.S. Dollar notional values ranging from $16.8 million to $19.8 million, as measured at each quarter end. The following table summarizes the contracts held at September 30, 2015:
Contract to buy | Contract to sell | Counterparty | Contractual settlement date | Unrealized appreciation | Unrealized depreciation | Net unrealized appreciation/ (depreciation) | ||||
USD | 16,779,212 | CAD | 22,288,834 | Royal Bank of Canada | 12/16/2015 | $82,507 | — | $82,507 |
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at September 30, 2015 by risk category:
Risk | Statement of assets and liabilities location | Financial instruments location | Asset derivatives fair value | Liabilities derivatives fair value |
Foreign exchange | Receivable/payable for forward foreign currency exchange contracts | Forward foreign currency contracts | $82,507 | — |
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.
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Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the six months ended September 30, 2015:
Risk | Statement of operations location | Investments and foreign currency transactions* |
Forward foreign currency | Net realized gain (loss) on: | $1,090,398 |
*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 six months ended September 30, 2015:
Risk | Statement of operations location | Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies* | ||||||
Foreign currency | Change in unrealized appreciation (depreciation) | ($231,368 | ) |
*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 aggregate daily net assets; (b) 0.625% of the next $250 million of the fund's aggregate daily net assets; (c) 0.600% of the next $500 million of the fund's aggregate daily net assets; (d) 0.550% of the next $1.5 billion of the fund's aggregate daily net assets; and (e) 0.525% of the fund's aggregate daily net assets in excess of $2.5 billion. Aggregate net assets generally include the net assets of the fund and other funds identified in the advisory agreement. The Advisor has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset Management (North America) Limited, 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 six months ended September 30, 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 0.87%, 1.32% and 1.07% for 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
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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, 2016 for Class I, 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. Prior to July 1, 2015, Class A and Class C shares had fee waivers and/or reimbursement such that the expenses would not exceed 1.18% and 1.93% for Class A and Class C shares, respectively.
The Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund 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.
Effective September 1, 2015, the Advisor voluntarily agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.21% and 1.06%, for Class R2 and Class R4 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. These expense limitations shall remain in effect until terminated by the Advisor on notice to the fund.
For the six months ended September 30, 2015, the expense reductions described above amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $13,926 | Class R4 | $3,511 | |
Class C | 2,517 | Class R6 | 3,893 | |
Class I | 10,345 | Class NAV | 4,068 | |
Class R2 | 3,445 | Total | $41,705 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 2015 were equivalent to a net annual effective rate of 0.61% 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 six months ended September 30, 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 fees | Class | Rule 12b-1 fee | 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 Rule 12b-1 fees for Class R4 shares. The current waiver agreement expires on 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. This contractual waiver amounted to $49 for Class R4 shares for the six months ended September 30, 2015.
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Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $373,697 for the six months ended September 30, 2015. Of this amount, $51,788 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $317,962 was paid as sales commissions to broker-dealers and $3,947 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 six months ended September 30, 2015, CDSCs received by the Distributor amounted to $2,370 and $10,627 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. 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 six months ended September 30, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $450,533 | $226,348 | $15,537 | $7,946 |
Class C | 325,823 | 40,917 | 6,027 | 1,225 |
Class I | — | 152,787 | 14,952 | 4,087 |
Class R2 | 123 | 8 | 3,606 | 7 |
Class R4 | 123 | 8 | 3,606 | 7 |
Class R6 | — | 8 | 3,874 | 7 |
Total | $776,602 | $420,076 | $47,602 | $13,279 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $45,558 and $14,360, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Interfund lending program Pursuant to an Exemptive Order issued by the 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 | $26,500,000 | 1 | 0.46% | $339 |
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Note 6 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 4,400,182 | $45,169,254 | 22,340,271 | $241,569,465 | ||||||||||||||||||||||
Distributions reinvested | 1,065,091 | 10,751,530 | 1,997,259 | 21,385,159 | ||||||||||||||||||||||
Repurchased | (7,810,269 | ) | (79,165,683 | ) | (16,744,517 | ) | (178,572,004 | ) | ||||||||||||||||||
Net increase (decrease) | (2,344,996 | ) | ($23,244,899 | ) | 7,593,013 | $84,382,620 | ||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 931,539 | $9,576,924 | 4,676,512 | $50,683,255 | ||||||||||||||||||||||
Distributions reinvested | 172,272 | 1,736,763 | 249,024 | 2,651,961 | ||||||||||||||||||||||
Repurchased | (956,528 | ) | (9,643,913 | ) | (1,294,897 | ) | (13,633,334 | ) | ||||||||||||||||||
Net increase | 147,283 | $1,669,774 | 3,630,639 | $39,701,882 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 7,599,808 | $77,922,484 | 29,631,814 | $321,444,280 | ||||||||||||||||||||||
Distributions reinvested | 858,183 | 8,665,859 | 1,319,756 | 14,053,244 | ||||||||||||||||||||||
Repurchased | (10,876,094 | ) | (110,259,973 | ) | (14,979,167 | ) | (159,837,253 | ) | ||||||||||||||||||
Net increase (decrease) | (2,418,103 | ) | ($23,671,630 | ) | 15,972,403 | $175,660,271 | ||||||||||||||||||||
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 | 45 | $472 | 9,662 | $100,000 | ||||||||||||||||||||||
Distributions reinvested | 1 | 7 | — | — | ||||||||||||||||||||||
Net increase | 46 | $479 | 9,662 | $100,000 | ||||||||||||||||||||||
Class NAV shares2 | ||||||||||||||||||||||||||
Sold | 153,349 | $1,565,337 | 11,716,804 | $129,314,621 | ||||||||||||||||||||||
Distributions reinvested | 344,661 | 3,481,557 | 448,496 | 4,714,036 | ||||||||||||||||||||||
Repurchased | (1,876,037 | ) | (18,973,930 | ) | (1,263,386 | ) | (13,216,770 | ) | ||||||||||||||||||
Net increase (decrease) | (1,378,027 | ) | ($13,927,036 | ) | 10,901,914 | $120,811,887 | ||||||||||||||||||||
Total net increase (decrease) | (5,993,797 | ) | ($59,173,312 | ) | 38,126,955 | $420,856,660 |
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 on September 30, 2015.
Note 7 — Purchases and sales of securities
Purchases and sales of securities, other than short-term investments, amounted to $128,882,514 and $183,427,348, respectively, for the six months ended September 30, 2015.
40
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 September 30, 2015, funds within the John Hancock group of funds complex held 12.9% of the fund's net assets. John Hancock Lifestyle Conservative Portfolio had an affiliate ownership of 8.3% of the fund's net assets.
41
Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with John Hancock Asset Management a division of Manulife Asset Management (North America) Limited (the Subadvisor) for John Hancock Core High Yield Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
42
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund underperformed its benchmark index for the one- and three-year periods and outperformed its benchmark index for the five-year period ended December 31, 2014. The Board also noted that the fund underperformed
43
its peer group average for the one-year period and outperformed its peer group average for the three- and five-year periods ended December 31, 2014. The Board noted the fund's favorable performance relative to the benchmark index for the five-year period and to the peer group for the three- and five-year periods. The Board concluded that the fund's performance has generally been in line with the historical performance of comparable funds and the fund's benchmark.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are higher than the peer group median.
The Board took into account management's discussion of the fund's expenses. The Board also took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the fund's Subadvisor is an affiliate of the Advisor; | |||||||
(i) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; |
44
(j) | noted that the subadvisory fee for the fund is paid by the Advisor; and | |||||||
(k) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the
45
regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the subadvisory fees for this fund are lower than the peer group median. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |
(2) | the performance of the fund has generally been in line with the historical performance of comparable funds and the fund's benchmark index; | |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and | |
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
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 |
*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
John Hancock 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 New Opportunities Select Growth Small Cap Equity Small Cap Value Small Company Strategic Growth U.S. Equity U.S. Global Leaders Growth Value Equity GLOBAL/INTERNATIONAL FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Global Equity 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 Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE/SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Real Estate Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
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.
ASSET ALLOCATION PORTFOLIOS 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) EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Technology ETF 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 |
"As an investment firm,
upholding the proud
tradition of John Hancock
comes down to one thing:
putting shareholders
first. We believe that if
our shareholders are
successful, then we will
be successful."
Andrew G. Arnott
President and Chief Executive Officer
John Hancock Investments
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock Multifactor ETFs.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing
one of America's most trusted brands, with a heritage of financial
stewardship dating back to 1862. Helping our shareholders pursue
their financial goals is at the core of everything we do. It's why we
support the role of professional financial advice and operate with the
highest standards of conduct and integrity.
A better way to invest
We build funds based on investor needs, then search the world to find
proven portfolio teams with specialized expertise in those strategies.
As a manager of managers, we apply vigorous oversight to ensure that
they continue to meet our uncompromising standards and serve the
best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, 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 | 346SA 9/15 11/15 |
John Hancock
Small Company Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
Global financial markets were especially rocky in mid-2015. The pullback we had anticipated for some months took place in August, and U.S. equities experienced their first official correction—a decline of more than 10% in the stock market—in more than four years. There were several headwinds restraining stock prices from moving higher all year, but the trigger for this summer's correction was the news of slowing economic growth in China and the effect that might have on global growth. For the time being, global economic data continues to be a leading driver of markets worldwide.
The asset managers in our network believe, on balance, that investors should stay the course when it comes to U.S. equities. Our economy continues to grow at a healthy pace, driven by strong housing and jobs data, falling commodity prices, solid consumer spending, and low inflation. While the U.S. Federal Reserve (Fed) chose to leave the federal funds rate unchanged at its September meeting, Fed Chair Janet Yellen cited a number of positives in the U.S. economy and signaled that the Fed will likely raise interest rates soon in response to stronger growth.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
Small Company Fund
1
INVESTMENT OBJECTIVE
The fund seeks maximum long-term total return.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/15 (%)
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 result in lower returns.
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 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 SIX MONTHS
Volatility returned, generating a market correction
The market was especially volatile in the last few months of the period, as equities experienced their first correction in more than four years.
Fund outperformed its benchmark
The fund beat its benchmark, the Russell 2000 Index, due mainly to beneficial stock selection.
Information technology and financials were the top contributors
From a sector standpoint, information technology and financials were the top contributors and industrials was the top detractor.
SECTOR COMPOSITION AS OF 9/30/15 (%)
A note about risks
The stock prices of small companies can change more frequently and dramatically than those of large companies. The value of a company's equity securities is subject to changes in the company's financial condition, and overall market and economic conditions. Frequent trading may increase fund transaction costs. Sector investing is subject to greater risks than the market as a whole. Investments focused in one sector may fluctuate more than investments in a wider variety of sectors. Owning an exchange-traded fund generally reflects the risks of owning the underlying securities it is designed to track. Please see the fund's prospectuses for additional risks.
3
![kathrynavorisek.jpg](https://capedge.com/proxy/N-CSRS/0001145443-15-001273/kathrynavorisek.jpg)
Kathryn A. Vorisek
Portfolio Manager
Fiduciary ManagementAssociates, LLC
Can you briefly describe the market environment over the past six months?
U.S. equities declined over the six months ended September 30, 2015. For the first half of the period, the market traded in a tight band and was generally positive. Major indexes reached record highs in May despite increased volatility; however, markets experienced their worst quarterly return since 2011 in the second half of the period, as investors feared a significant slowdown in China and a subsequent drop in commodity prices might signal an impending global recession. Prior to the August correction, many economically sensitive industries—such as energy, basic materials, transportation, industrials, and media—had been underperforming, leading to top-heavy sector leadership. Thus, we view the correction as necessary and healthy for the overall market.
In this environment, the fund's benchmark, the Russell 2000 Index, was down 11.55%. The energy and materials sectors declined the most, followed by the industrials sector. The financials sector was the best-performing sector, but it also produced negative returns.
The fund had a negative return, but outperformed its benchmark. What drove its performance?
Advantageous stock selection primarily drove relative outperformance. The information technology sector was the top-contributing sector to relative returns, due to favorable stock selection. Within the sector, an overweight to DealerTrack Technologies, Inc. was beneficial as the company agreed to be acquired by Cox Automotive, Inc. for a significant premium to its share price at the time. We tendered the fund's shares, locking in the gain. Also in information technology, Blackbaud, Inc., a software provider for educational institutions, made a positive impact as the company's shares gained on greater market penetration.
The financials sector also contributed to returns as top-performer StanCorp Financial Group, Inc. benefited from a takeover bid by Japan-based Meiji Yasuda Life Insurance Co. Again, we tendered the fund's shares. Also, QTS Realty Trust, Inc. was additive as the real estate investment trust (REIT) continued to benefit from the growth of technology-related facilities.
4
What stocks hindered performance?
The industrials sector was the fund's major detracting sector primarily due to an unfavorable overweight position. Within the sector, Astronics Corp. was detrimental due to slowing organic revenue growth in its core aerospace business combined with volatility associated with a recent acquisition.
What were notable additions and deletions to the portfolio?
As mentioned, we eliminated Dealertrack Technologies and StanCorp Financial, as both companies were acquired. We also reduced exposure to some industrial/cyclical names as a result of either deteriorating fundamentals or greater exposure to global growth than we initially believed. Another company we sold was WESCO International, Inc. We added industrial companies that were better positioned or more U.S.-centric, such as EMCOR Group, Inc.
Within financials, the fund eliminated a couple of REIT holdings, including Brandywine Realty Trust and National Health Investors, Inc., and added insurance name Argo Group International Holdings, Ltd. Within the consumer space, we exited Gentherm, Inc. due to slowing catalysts in the automotive end market and a pullback in auto production. We also sold La Quinta Holdings, Inc. on deteriorating fundamentals in the hotel space, particularly in the Texas market where the company
PORTFOLIO COMPOSITION AS OF 9/30/15 (%)
5
Looking ahead, we continue to try to position the fund to benefit from construction trends, specifically nonresidential construction. From a valuation standpoint, we believe the industrial cyclical sectors are attractive, but we continue to see delays in fundamental catalysts.
What economic factors might affect the fund going forward?
We see the overall secular downtrend in commodity prices continuing for well beyond the next six months, with the prospect of intermittent cyclical rebounds. Production cutbacks in energy should continue, following a period of elevated production amid excess supply. Commodity prices and global inflation should remain at relatively low levels during the upcoming period. While valuations look attractive in the industrial cyclical sectors, we would like to see further fundamental catalysts develop before putting more weight into companies exposed to these areas.
We are more optimistic about the developed world economies and are looking for more cyclical opportunities should data continue to stabilize. There are a lot of cross currents in the market, including a lack of macroeconomic growth, that need to be considered, so we are looking for positive year-over-year trend changes on which we can capitalize.
TOP 10 HOLDINGS AS OF 9/30/15 (%)
PNM Resources, Inc. | 1.9 |
Wintrust Financial Corp. | 1.6 |
The Laclede Group, Inc. | 1.6 |
Euronet Worldwide, Inc. | 1.6 |
Take-Two Interactive Software, Inc. | 1.6 |
Portland General Electric Company | 1.6 |
Pool Corp. | 1.5 |
The Hanover Insurance Group, Inc. | 1.5 |
Capitol Federal Financial, Inc. | 1.5 |
Greatbatch, Inc. | 1.5 |
TOTAL | 15.9 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
6
We started to witness an expansion in high-yield spreads, which could make it more difficult for smaller-cap companies to access capital; and although interest rates remain low, widening credit spreads pose an incremental risk. Nevertheless, companies with higher-quality attributes should continue to exhibit leadership, which should be beneficial to managers using an active stock selection process.
MANAGED BY
![]() | Kathryn A. Vorisek On the fund since 1998 Investing since 1984 |
![]() | Leo Harmon, CFA On the fund since 2006 Investing since 1993 |
7
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||
1-year | 5-year | 10-year | 6-month | 5-year | 10-year | ||
Class A1 | -1.52 | 9.44 | 5.94 | -11.88 | 57.02 | 78.06 | |
Class I1,2 | 4.00 | 10.95 | 6.85 | -7.09 | 68.09 | 94.00 | |
Class R11,2 | 3.24 | 10.19 | 6.07 | -7.42 | 62.42 | 80.24 | |
Class R21,2 | 3.53 | 10.00 | 5.41 | -7.33 | 61.02 | 69.37 | |
Class R31,2 | 3.39 | 10.29 | 6.17 | -7.38 | 63.20 | 82.04 | |
Class R41,2 | 3.80 | 10.70 | 6.53 | -7.20 | 66.21 | 88.16 | |
Class R51,2 | 3.99 | 10.95 | 6.81 | -7.08 | 68.13 | 93.28 | |
Class R61,2 | 4.10 | 11.04 | 6.92 | -7.06 | 68.78 | 95.18 | |
Class ADV1,2 | 3.76 | 10.69 | 6.45 | -7.20 | 66.19 | 86.90 | |
Index† | 1.25 | 11.73 | 6.55 | -11.55 | 74.15 | 88.55 |
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. Had the fee waivers and expense limitations not been in place, gross expenses would apply. 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 (%) | 1.49 | 1.18 | 1.83 | 1.58 | 1.73 | 1.43 | 1.13 | 1.08 | 1.44 |
Net (%) | 1.43 | 1.13 | 1.80 | 1.55 | 1.70 | 1.30 | 1.10 | 1.06 | 1.34 |
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 | 9-30-05 | 19,400 | 19,400 | 18,855 |
Class R11,2 | 9-30-05 | 18,024 | 18,024 | 18,855 |
Class R21,2 | 9-30-05 | 16,937 | 16,937 | 18,855 |
Class R31,2 | 9-30-05 | 18,204 | 18,204 | 18,855 |
Class R41,2 | 9-30-05 | 18,816 | 18,816 | 18,855 |
Class R51,2 | 9-30-05 | 19,328 | 19,328 | 18,855 |
Class R61,2 | 9-30-05 | 19,518 | 19,518 | 18,855 |
Class ADV1,2 | 9-30-05 | 18,690 | 18,690 | 18,855 |
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 result in lower returns.
Footnotes related to performance pages
1 | On 12-11-09, through a reorganization, the fund acquired all of the assets of 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. Class A, Class I, and Class ADV shares were first offered on 12-14-09. The returns of Class A, Class I, and Class ADV 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 I, and Class ADV 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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $927.60 | $6.89 | 1.43% |
Class I | 1,000.00 | 929.10 | 5.45 | 1.13% |
Class R1 | 1,000.00 | 925.80 | 8.67 | 1.80% |
Class R2 | 1,000.00 | 926.70 | 7.47 | 1.55% |
Class R3 | 1,000.00 | 926.20 | 8.19 | 1.70% |
Class R4 | 1,000.00 | 928.00 | 6.27 | 1.30% |
Class R5 | 1,000.00 | 929.20 | 5.31 | 1.10% |
Class R6 | 1,000.00 | 929.40 | 4.97 | 1.03% |
Class ADV | 1,000.00 | 928.00 | 6.46 | 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 September 30, 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 April 1, 2015, with the same investment held until September 30, 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 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,017.90 | $7.21 | 1.43% |
Class I | 1,000.00 | 1,019.40 | 5.70 | 1.13% |
Class R1 | 1,000.00 | 1,016.00 | 9.07 | 1.80% |
Class R2 | 1,000.00 | 1,017.30 | 7.82 | 1.55% |
Class R3 | 1,000.00 | 1,016.50 | 8.57 | 1.70% |
Class R4 | 1,000.00 | 1,018.50 | 6.56 | 1.30% |
Class R5 | 1,000.00 | 1,019.50 | 5.55 | 1.10% |
Class R6 | 1,000.00 | 1,019.90 | 5.20 | 1.03% |
Class ADV | 1,000.00 | 1,018.30 | 6.76 | 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 183/366 (to reflect the one-half year period). |
11
Fund's investments
As of 9-30-15 (unaudited) | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 94.9% | $216,592,401 | |||||||||||||
(Cost $209,599,740) | ||||||||||||||
Consumer discretionary 14.5% | 33,041,003 | |||||||||||||
Distributors 3.0% | ||||||||||||||
Core-Mark Holding Company, Inc. | 49,486 | 3,238,860 | ||||||||||||
Pool Corp. | 48,500 | 3,506,550 | ||||||||||||
Hotels, restaurants and leisure 4.9% | ||||||||||||||
ClubCorp Holdings, Inc. | 88,485 | 1,898,888 | ||||||||||||
Marriott Vacations Worldwide Corp. | 42,005 | 2,862,221 | ||||||||||||
Penn National Gaming, Inc. (I) | 189,775 | 3,184,425 | ||||||||||||
Texas Roadhouse, Inc. | 86,880 | 3,231,936 | ||||||||||||
Household durables 0.4% | ||||||||||||||
Universal Electronics, Inc. (I) | 22,975 | 965,639 | ||||||||||||
Leisure products 1.3% | ||||||||||||||
Vista Outdoor, Inc. (I) | 65,720 | 2,919,940 | ||||||||||||
Media 2.0% | ||||||||||||||
AMC Entertainment Holdings, Inc., Class A | 88,015 | 2,217,098 | ||||||||||||
Nexstar Broadcasting Group, Inc., Class A | 50,595 | 2,395,673 | ||||||||||||
Specialty retail 1.9% | ||||||||||||||
Boot Barn Holdings, Inc. (I) | 109,210 | 2,012,740 | ||||||||||||
Select Comfort Corp. (I) | 105,695 | 2,312,607 | ||||||||||||
Textiles, apparel and luxury goods 1.0% | ||||||||||||||
Steven Madden, Ltd. (I) | 62,655 | 2,294,426 | ||||||||||||
Consumer staples 1.1% | 2,399,890 | |||||||||||||
Food products 1.1% | ||||||||||||||
Snyder's-Lance, Inc. | 71,150 | 2,399,890 | ||||||||||||
Energy 2.8% | 6,407,065 | |||||||||||||
Energy equipment and services 1.9% | ||||||||||||||
Oil States International, Inc. (I) | 58,600 | 1,531,218 | ||||||||||||
Patterson-UTI Energy, Inc. | 107,565 | 1,413,404 | ||||||||||||
Superior Energy Services, Inc. | 103,055 | 1,301,585 | ||||||||||||
Oil, gas and consumable fuels 0.9% | ||||||||||||||
Carrizo Oil & Gas, Inc. (I) | 70,755 | 2,160,858 | ||||||||||||
Financials 25.9% | 59,163,843 | |||||||||||||
Banks 12.0% | ||||||||||||||
Columbia Banking System, Inc. | 105,060 | 3,278,923 | ||||||||||||
Fulton Financial Corp. | 245,260 | 2,967,646 | ||||||||||||
Great Western Bancorp, Inc. | 90,405 | 2,293,575 | ||||||||||||
IBERIABANK Corp. | 57,130 | 3,325,537 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Banks (continued) | ||||||||||||||
PrivateBancorp, Inc. | 80,710 | $3,093,614 | ||||||||||||
TCF Financial Corp. | 157,810 | 2,392,400 | ||||||||||||
Webster Financial Corp. | 96,035 | 3,421,727 | ||||||||||||
Western Alliance Bancorp (I) | 95,615 | 2,936,337 | ||||||||||||
Wintrust Financial Corp. | 70,085 | 3,744,636 | ||||||||||||
Capital markets 1.4% | ||||||||||||||
Evercore Partners, Inc., Class A | 63,550 | 3,192,752 | ||||||||||||
Insurance 2.5% | ||||||||||||||
Argo Group International Holdings, Ltd. | 40,990 | 2,319,624 | ||||||||||||
The Hanover Insurance Group, Inc. | 44,715 | 3,474,356 | ||||||||||||
Real estate investment trusts 7.0% | ||||||||||||||
American Homes 4 Rent, Class A | 148,305 | 2,384,744 | ||||||||||||
Chesapeake Lodging Trust | 96,985 | 2,527,429 | ||||||||||||
DCT Industrial Trust, Inc. | 72,850 | 2,452,131 | ||||||||||||
Medical Properties Trust, Inc. | 217,345 | 2,403,836 | ||||||||||||
QTS Realty Trust, Inc., Class A | 71,595 | 3,127,986 | ||||||||||||
WP GLIMCHER, Inc. | 255,060 | 2,974,000 | ||||||||||||
Thrifts and mortgage finance 3.0% | ||||||||||||||
Capitol Federal Financial, Inc. | 282,870 | 3,428,384 | ||||||||||||
EverBank Financial Corp. | 177,420 | 3,424,206 | ||||||||||||
Health care 9.3% | 21,145,136 | |||||||||||||
Biotechnology 2.2% | ||||||||||||||
Emergent BioSolutions, Inc. (I) | 101,585 | 2,894,157 | ||||||||||||
Ligand Pharmaceuticals, Inc. (I) | 25,155 | 2,154,526 | ||||||||||||
Health care equipment and supplies 4.5% | ||||||||||||||
AngioDynamics, Inc. (I) | 165,320 | 2,180,571 | ||||||||||||
Cynosure, Inc., Class A (I) | 70,255 | 2,110,460 | ||||||||||||
Globus Medical, Inc., Class A (I) | 121,930 | 2,519,074 | ||||||||||||
Greatbatch, Inc. (I) | 60,705 | 3,424,976 | ||||||||||||
Health care providers and services 1.4% | ||||||||||||||
Amsurg Corp. (I) | 28,809 | 2,238,747 | ||||||||||||
Kindred Healthcare, Inc. | 58,615 | 923,186 | ||||||||||||
Pharmaceuticals 1.2% | ||||||||||||||
Prestige Brands Holdings, Inc. (I) | 59,775 | 2,699,439 | ||||||||||||
Industrials 14.3% | 32,624,958 | |||||||||||||
Aerospace and defense 1.2% | ||||||||||||||
Astronics Corp. (I) | 14,060 | 568,446 | ||||||||||||
Triumph Group, Inc. | 53,420 | 2,247,914 | ||||||||||||
Air freight and logistics 1.2% | ||||||||||||||
Forward Air Corp. | 64,000 | 2,655,360 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Building products 1.1% | ||||||||||||||
Apogee Enterprises, Inc. | 53,770 | $2,400,831 | ||||||||||||
Commercial services and supplies 2.0% | ||||||||||||||
Interface, Inc. | 142,515 | 3,198,037 | ||||||||||||
Multi-Color Corp. | 17,640 | 1,349,284 | ||||||||||||
Construction and engineering 1.0% | ||||||||||||||
EMCOR Group, Inc. | 50,075 | 2,215,819 | ||||||||||||
Electrical equipment 1.0% | ||||||||||||||
Regal-Beloit Corp. | 42,180 | 2,381,061 | ||||||||||||
Machinery 5.5% | ||||||||||||||
Barnes Group, Inc. | 94,365 | 3,401,858 | ||||||||||||
CIRCOR International, Inc. | 15,650 | 627,878 | ||||||||||||
ITT Corp. | 81,190 | 2,714,182 | ||||||||||||
Proto Labs, Inc. (I) | 48,090 | 3,222,030 | ||||||||||||
Standex International Corp. | 34,815 | 2,623,310 | ||||||||||||
Professional services 1.3% | ||||||||||||||
Huron Consulting Group, Inc. (I) | 48,280 | 3,018,948 | ||||||||||||
Information technology 18.1% | 41,392,049 | |||||||||||||
Communications equipment 1.2% | ||||||||||||||
Infinera Corp. (I) | 143,475 | 2,806,371 | ||||||||||||
Internet software and services 1.3% | ||||||||||||||
j2 Global, Inc. | 40,465 | 2,866,945 | ||||||||||||
IT services 5.1% | ||||||||||||||
CACI International, Inc., Class A (I) | 37,435 | 2,769,067 | ||||||||||||
Convergys Corp. | 103,360 | 2,388,650 | ||||||||||||
Euronet Worldwide, Inc. (I) | 50,178 | 3,717,688 | ||||||||||||
Virtusa Corp. (I) | 52,560 | 2,696,854 | ||||||||||||
Semiconductors and semiconductor equipment 3.8% | ||||||||||||||
Advanced Energy Industries, Inc. (I) | 91,290 | 2,400,927 | ||||||||||||
Entegris, Inc. (I) | 254,575 | 3,357,844 | ||||||||||||
Inphi Corp. (I) | 123,505 | 2,969,060 | ||||||||||||
Software 6.7% | ||||||||||||||
ACI Worldwide, Inc. (I) | 148,425 | 3,134,736 | ||||||||||||
Blackbaud, Inc. | 57,495 | 3,226,619 | ||||||||||||
Mentor Graphics Corp. | 139,035 | 3,424,432 | ||||||||||||
Take-Two Interactive Software, Inc. (I) | 124,030 | 3,563,382 | ||||||||||||
Verint Systems, Inc. (I) | 47,960 | 2,069,474 | ||||||||||||
Materials 3.8% | 8,780,751 | |||||||||||||
Chemicals 1.5% | ||||||||||||||
Chemtura Corp. (I) | 105,235 | 3,011,826 | ||||||||||||
PolyOne Corp. | 16,185 | 474,868 |
Shares | Value | |||||||||||||
Materials (continued) | ||||||||||||||
Construction materials 1.4% | ||||||||||||||
Headwaters, Inc. (I) | 175,730 | $3,303,724 | ||||||||||||
Containers and packaging 0.9% | ||||||||||||||
Berry Plastics Group, Inc. (I) | 66,190 | 1,990,333 | ||||||||||||
Utilities 5.1% | 11,637,706 | |||||||||||||
Electric utilities 3.5% | ||||||||||||||
PNM Resources, Inc. | 154,840 | 4,343,262 | ||||||||||||
Portland General Electric Company | 96,035 | 3,550,414 | ||||||||||||
Gas utilities 1.6% | ||||||||||||||
The Laclede Group, Inc. | 68,660 | 3,744,030 | ||||||||||||
Exchange-traded funds 0.5% | $1,212,666 | |||||||||||||
(Cost $1,283,060) | ||||||||||||||
iShares Russell 2000 ETF | 11,105 | 1,212,666 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Short-term investments 4.3% | $9,730,145 | |||||||||||||
(Cost $9,730,145) | ||||||||||||||
Money market funds 4.3% | 9,730,145 | |||||||||||||
State Street Institutional Liquid Reserves Fund | 0.1305(Y | ) | 9,730,145 | 9,730,145 | ||||||||||
Total investments (Cost $220,612,945)† 99.7% | $227,535,212 | |||||||||||||
Other assets and liabilities, net 0.3% | $763,649 | |||||||||||||
Total net assets 100.0% | $228,298,861 |
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 9-30-15. | |||||||||||||
† | At 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $220,821,706. Net unrealized appreciation aggregated $6,713,506, of which $20,633,297 related to appreciated investment securities and $13,919,791 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments, at value (Cost $220,612,945) | $227,535,212 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 3,984,631 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 385,293 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 305,197 | |||||||||||||||||||||||||||||||||||||||
Receivable due from advisor | 251 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 72,686 | |||||||||||||||||||||||||||||||||||||||
Total assets | 232,283,270 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 3,789,505 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 109,488 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 5,488 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 22,984 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 391 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 621 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 55,932 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 3,984,409 | |||||||||||||||||||||||||||||||||||||||
Net assets | $228,298,861 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $205,360,449 | |||||||||||||||||||||||||||||||||||||||
Accumulated net investment loss | (146,185 | ) | ||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 16,162,330 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 6,922,267 | |||||||||||||||||||||||||||||||||||||||
Net assets | $228,298,861 | |||||||||||||||||||||||||||||||||||||||
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 ($181,212,756 ÷ 7,040,294 shares)1 | $25.74 | |||||||||||||||||
Class I ($40,657,137 ÷ 1,550,810 shares) | $26.22 | |||||||||||||||||
Class R1 ($1,300,123 ÷ 51,560 shares) | $25.22 | |||||||||||||||||
Class R2 ($460,351 ÷ 17,846 shares) | $25.80 | |||||||||||||||||
Class R3 ($252,850 ÷ 9,970 shares) | $25.36 | |||||||||||||||||
Class R4 ($71,265.47 ÷ 2,749.965 shares) | $25.92 | |||||||||||||||||
Class R5 ($77,794 ÷ 2,965 shares) | $26.24 | |||||||||||||||||
Class R6 ($3,699,526 ÷ 140,428 shares) | $26.34 | |||||||||||||||||
Class ADV ($567,059 ÷ 21,903 shares) | $25.89 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%) | $27.09 |
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 six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $1,456,837 | |||||||||||||||||||||||||||||||||||||||
Interest | 4,430 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 1,461,267 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 1,054,442 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 288,257 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 15,113 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 142,623 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 1,622 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 71,943 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 13,778 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 27,149 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 13,474 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 22,082 | |||||||||||||||||||||||||||||||||||||||
Other | 6,271 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 1,656,754 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (49,302 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 1,607,452 | |||||||||||||||||||||||||||||||||||||||
Net investment loss | (146,185 | ) | ||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments | 10,001,374 | |||||||||||||||||||||||||||||||||||||||
10,001,374 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments | (27,650,885 | ) | ||||||||||||||||||||||||||||||||||||||
(27,650,885 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (17,649,511 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($17,795,696 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | ($146,185 | ) | ($233,159 | ) | |||||||||||||||||||||||||||||||||||||||||
Net realized gain | 10,001,374 | 16,082,230 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (27,650,885 | ) | (413,140 | ) | |||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (17,795,696 | ) | 15,435,931 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (15,753,572 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (4,348,300 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R1 | — | (132,775 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (44,943 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R3 | — | (20,688 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (6,731 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R5 | — | (30,858 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (31,652 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class ADV | — | (51,546 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (20,421,065 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 19,155,763 | 16,173,082 | |||||||||||||||||||||||||||||||||||||||||||
Total increase | 1,360,067 | 11,187,948 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 226,938,794 | 215,750,846 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $228,298,861 | $226,938,794 | |||||||||||||||||||||||||||||||||||||||||||
Accumulated net investment loss | ($146,185 | ) | — |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 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 | $27.75 | $28.67 | $24.10 | $20.86 | $21.44 | $17.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.02 | ) | (0.05 | ) | (0.13 | ) | (0.07 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.99 | ) | 1.87 | 5.23 | 3.31 | (0.57 | ) | 3.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.01 | ) | 1.82 | 5.10 | 3.24 | (0.58 | ) | 3.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | — | 0.03 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $25.74 | $27.75 | $28.67 | $24.10 | $20.86 | $21.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (7.24 | ) 6 | 7.28 | 21.26 | 15.53 | (2.71 | ) | 20.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $181 | $180 | $162 | $120 | $129 | $88 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.45 | 7 | 1.43 | 1.47 | 1.54 | 1.54 | 1.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.43 | 7 | 1.43 | 1.47 | 1.50 | 1.44 | 1.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.18 | ) 7 | (0.17 | ) | (0.47 | ) | (0.36 | ) | (0.07 | ) | (0.17 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 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 I Shares Period ended | 9-30-15 | 1 | 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 | $28.22 | $29.02 | $24.32 | $20.96 | $21.51 | $17.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.03 | (0.04 | ) | — | 3 | 0.07 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (2.02 | ) | 1.91 | 5.27 | 3.36 | (0.58 | ) | 3.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.00 | ) | 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 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $26.22 | $28.22 | $29.02 | $24.32 | $20.96 | $21.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.09 | ) 6 | 7.61 | 21.61 | 16.03 | (2.34 | ) | 20.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $41 | $43 | $50 | $49 | $69 | $67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.15 | 7 | 1.14 | 1.15 | 1.18 | 1.16 | 1.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.13 | 7 | 1.13 | 1.14 | 1.11 | 1.04 | 1.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.11 | 7 | 0.12 | (0.15 | ) | 0.02 | 0.34 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Annualized. |
Class R1 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.23 | $28.29 | $23.87 | $20.71 | $21.37 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss3 | (0.08 | ) | (0.15 | ) | (0.21 | ) | (0.13 | ) | (0.08 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.93 | ) | 1.83 | 5.16 | 3.29 | (0.58 | ) | 2.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.01 | ) | 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 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $25.22 | $27.23 | $28.29 | $23.87 | $20.71 | $21.37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.42 | ) 6 | 6.86 | 20.84 | 15.26 | (3.09 | ) | 10.27 | 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 | 2.08 | 8 | 2.84 | 2.94 | 4.37 | 13.34 | 7.22 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.80 | 8 | 1.80 | 1.80 | 1.80 | 1.80 | 1.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.55 | ) 8 | (0.55 | ) | (0.82 | ) | (0.60 | ) | (0.40 | ) | (0.42 | ) 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R1 shares is 4-30-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R2 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.83 | $28.77 | $24.21 | $20.96 | $20.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | (0.04 | ) | (0.08 | ) | (0.14 | ) | (0.08 | ) | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.99 | ) | 1.88 | 5.23 | 3.33 | 0.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.03 | ) | 1.80 | 5.09 | 3.25 | 0.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (2.74 | ) | (0.53 | ) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $25.80 | $27.83 | $28.77 | $24.21 | $20.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (7.33 | ) 5 | 7.18 | 21.12 | 15.51 | 1.95 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 6 | $1 | — | 6 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.12 | 7 | 4.66 | 7.99 | 20.22 | 16.31 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.55 | 7 | 1.55 | 1.55 | 1.55 | 1.55 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.29 | ) 7 | (0.29 | ) | (0.54 | ) | (0.39 | ) | 1.31 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.38 | $28.39 | $23.94 | $20.76 | $21.39 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss3 | (0.06 | ) | (0.12 | ) | (0.19 | ) | (0.12 | ) | (0.06 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.96 | ) | 1.85 | 5.17 | 3.30 | (0.57 | ) | 2.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.02 | ) | 1.73 | 4.98 | 3.18 | (0.63 | ) | 1.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (2.74 | ) | (0.53 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring reimbursement | — | — | — | — | — | 0.03 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $25.36 | $27.38 | $28.39 | $23.94 | $20.76 | $21.39 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.38 | ) 6 | 7.02 | 20.90 | 15.32 | (2.95 | ) | 10.37 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.33 | 8 | 9.06 | 10.89 | 5.15 | 4.65 | 3.00 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.70 | 8 | 1.70 | 1.70 | 1.70 | 1.70 | 1.70 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.45 | ) 8 | (0.43 | ) | (0.75 | ) | (0.56 | ) | (0.32 | ) | (0.52 | ) 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R3 shares is 4-30-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R4 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.92 | $28.79 | $24.17 | $20.87 | $21.44 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | (0.01 | ) | (0.01 | ) | (0.08 | ) | (0.03 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.99 | ) | 1.88 | 5.23 | 3.33 | (0.56 | ) | 2.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.00 | ) | 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 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $25.92 | $27.92 | $28.79 | $24.17 | $20.87 | $21.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.20 | ) 6 | 7.42 | 21.41 | 15.81 | (2.66 | ) | 10.63 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 7.20 | 8 | 19.97 | 18.99 | 18.82 | 28.72 | 7.40 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.30 | 8 | 1.30 | 1.30 | 1.31 | 1.40 | 1.40 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.05 | ) 8 | (0.05 | ) | (0.31 | ) | (0.17 | ) | (0.03 | ) | (0.16 | ) 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 | 9 |
�� | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R4 shares is 4-30-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R5 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.24 | $29.03 | $24.32 | $20.96 | $21.50 | $19.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | 0.02 | 0.04 | (0.03 | ) | 0.01 | 0.05 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (2.02 | ) | 1.91 | 5.27 | 3.35 | (0.56 | ) | 2.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.00 | ) | 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 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $26.24 | $28.24 | $29.03 | $24.32 | $20.96 | $21.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.08 | ) 6 | 7.64 | 21.65 | 16.03 | (2.34 | ) | 10.94 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.02 | 8 | 5.61 | 6.05 | 7.78 | 8.75 | 3.66 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.10 | 8 | 1.10 | 1.10 | 1.10 | 1.10 | 1.10 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.11 | 8 | 0.16 | (0.11 | ) | 0.05 | 0.28 | 0.05 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R5 shares is 4-30-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-10 to 3-31-11. |
Class R6 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.34 | $29.08 | $24.34 | $20.97 | $18.69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | 0.06 | 0.09 | (0.02 | ) | 0.02 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (2.06 | ) | 1.91 | 5.29 | 3.35 | 2.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.00 | ) | 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 | $26.34 | $28.34 | $29.08 | $24.34 | $20.97 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (7.06 | ) 5 | 7.80 | 21.75 | 16.07 | 12.45 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $4 | $1 | $1 | — | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.61 | 7 | 4.54 | 7.66 | 18.63 | 15.46 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.03 | 7 | 0.97 | 1.04 | 1.04 | 1.04 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.48 | 7 | 0.32 | (0.06 | ) | 0.11 | 0.55 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R6 shares is 9-1-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 ADV Shares Period ended | 9-30-15 | 1 | 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 | $27.90 | $28.78 | $24.17 | $20.88 | $21.44 | $17.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.01 | ) | (0.03 | ) | (0.09 | ) | (0.04 | ) | 0.01 | (0.01 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (2.00 | ) | 1.89 | 5.23 | 3.33 | (0.57 | ) | 3.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (2.01 | ) | 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 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $25.89 | $27.90 | $28.78 | $24.17 | $20.88 | $21.44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (7.20 | ) 5 | 7.39 | 21.37 | 15.76 | (2.61 | ) | 20.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | — | 6 | $1 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.66 | 7 | 4.17 | 4.51 | 4.91 | 4.34 | 4.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.34 | 7 | 1.34 | 1.34 | 1.34 | 1.34 | 1.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.09 | ) 7 | (0.09 | ) | (0.35 | ) | (0.20 | ) | 0.03 | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 54 | 79 | 85 | 97 | 133 | 159 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
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 mutual funds 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 and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of September 30, 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.
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as the administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled 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 effective 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 six months ended September 30, 2015 were $254. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees, are calculated daily for each class, based on the net asset value of the class and the applicable specific expense rates. Through June 30, 2015, class-specific expenses, such as state registration fees and printing and postage, for all classes, were calculated daily at the class level based on 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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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 six months ended September 30, 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 1.43%, 1.13%, 1.80%, 1.55%, 1.70%, 1.30%,1.10%, and 1.34% for Class A, Class I, Class R1, Class R2, Class R3, Class R4, Class R5, 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, 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. Prior to July 1, 2015, the fund had contractually agreed to reduce its management fee waivers and/or reimbursements such that expenses would not exceed 1.50%, 1.14%, and 1.04% for Class A, Class I, and Class R6 shares, respectively.
For Class R6 shares, the Advisor has contractually agreed to waive and/or reimburse all class specific expenses of the fund, to the extent they exceed 0.00% of average net assets. The fee waiver and/or reimbursement will continue in effect until June 30, 2016, 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 six months ended September 30, 2015, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $25,293 | Class R4 | $2,144 | |
Class I | 4,414 | Class R5 | 2,127 | |
Class R1 | 1,913 | Class R6 | 3,347 | |
Class R2 | 4,013 | Class ADV | 3,857 | |
Class R3 | 2,157 | Total | $49,265 |
31
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 2015 were equivalent to a net annual effective rate of 0.86% 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 six months ended September 30, 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 Rule 12b-1 fees for Class R4 shares. The current waiver agreement expires on 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. This contractual waiver amounted to $37 for Class R4 shares for the six months ended September 30, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $545,431 for the six months ended September 30, 2015. Of this amount, $92,818 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $450,481 was paid as sales commissions to broker-dealers and $2,132 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 six months ended September 30, 2015, CDSCs received by the Distributor amounted to $733 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. 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 six months ended September 30, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $280,325 | $117,302 | $5,893 | $7,341 |
Class I | — | 24,680 | 3,756 | 1,974 |
Class R1 | 5,015 | 106 | 2,171 | 62 |
Class R2 | 1,162 | 39 | 4,172 | 28 |
Class R3 | 860 | 20 | 2,172 | 14 |
Class R4 | 109 | 6 | 2,171 | 2 |
Class R5 | 54 | 17 | 2,171 | 12 |
Class R6 | — | 86 | 3,161 | 55 |
Class ADV | 732 | 367 | 3,647 | 65 |
Total | $288,257 | $142,623 | $29,314 | $9,553 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $42,629 and $4,225, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and for the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 1,119,819 | $31,085,441 | 1,216,719 | $33,765,371 | ||||||||||||||||||||||
Distributions reinvested | — | — | 615,709 | 15,558,946 | ||||||||||||||||||||||
Repurchased | (557,456 | ) | (15,304,647 | ) | (1,018,751 | ) | (28,165,325 | ) | ||||||||||||||||||
Net increase | 562,363 | $15,780,794 | 813,677 | $21,158,992 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 122,378 | $3,458,239 | 193,349 | $5,479,237 | ||||||||||||||||||||||
Distributions reinvested | — | — | 169,243 | 4,346,160 | ||||||||||||||||||||||
Repurchased | (104,694 | ) | (2,948,705 | ) | (549,058 | ) | (15,317,986 | ) | ||||||||||||||||||
Net increase (decrease) | 17,684 | $509,534 | (186,466 | ) | ($5,492,589 | ) | ||||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 6,671 | $181,444 | 12,602 | $336,999 | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,662 | 66,104 | ||||||||||||||||||||||
Repurchased | (5,132 | ) | (138,424 | ) | (13,846 | ) | (376,272 | ) | ||||||||||||||||||
Net increase | 1,539 | $43,020 | 1,418 | $26,831 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 5,456 | $151,345 | 7,432 | $202,439 | ||||||||||||||||||||||
Distributions reinvested | — | — | 284 | 7,204 | ||||||||||||||||||||||
Repurchased | (8,134 | ) | (227,700 | ) | (1,088 | ) | (28,525 | ) | ||||||||||||||||||
Net increase (decrease) | (2,678 | ) | ($76,355 | ) | 6,628 | $181,118 |
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Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 2,129 | $58,273 | 2,095 | $57,825 | ||||||||||||||||||||||
Distributions reinvested | — | — | 829 | 20,688 | ||||||||||||||||||||||
Repurchased | (808 | ) | (21,013 | ) | (337 | ) | (8,949 | ) | ||||||||||||||||||
Net increase | 1,321 | $37,260 | 2,587 | $69,564 | ||||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 130 | $3,569 | 185 | $5,140 | ||||||||||||||||||||||
Distributions reinvested | — | — | 126 | 3,200 | ||||||||||||||||||||||
Repurchased | — | — | (799 | ) | (21,874 | ) | ||||||||||||||||||||
Net increase (decrease) | 130 | $3,569 | (488 | ) | ($13,534 | ) | ||||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 553 | $15,797 | 1,753 | $49,707 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,201 | 30,858 | ||||||||||||||||||||||
Repurchased | (9,273 | ) | (262,628 | ) | (2,380 | ) | (66,340 | ) | ||||||||||||||||||
Net increase (decrease) | (8,720 | ) | ($246,831 | ) | 574 | $14,225 | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 121,407 | $3,302,659 | 18,765 | $503,716 | ||||||||||||||||||||||
Distributions reinvested | — | — | 659 | 17,006 | ||||||||||||||||||||||
Repurchased | (8,845 | ) | (249,864 | ) | (10,003 | ) | (286,860 | ) | ||||||||||||||||||
Net increase | 112,562 | $3,052,795 | 9,421 | $233,862 | ||||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | 1,814 | $52,477 | — | — | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,029 | 51,546 | ||||||||||||||||||||||
Repurchased | (18 | ) | (500 | ) | (2,065 | ) | (56,933 | ) | ||||||||||||||||||
Net increase (decrease) | 1,796 | $51,977 | (36 | ) | ($5,387 | ) | ||||||||||||||||||||
Total net increase | 685,997 | $19,155,763 | 647,315 | $16,173,082 |
Affiliates of the fund owned 47% of shares of beneficial interest of Class R4 on September 30, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $135,396,985 and $120,248,126 respectively, for the six months ended September 30, 2015.
Note 7 — Industry or sector risk
The fund may invest a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's net asset value more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
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Continuation of Investment Advisory and Subadvisory Agreements
EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Fiduciary Management Associates, LLC (the Subadvisor), for John Hancock Small Company Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
35
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund outperformed its benchmark index and its peer group average for the one-year period ended December 31, 2014 and underperformed its benchmark index and its peer group average for the three- and five-year periods
36
ended December 31, 2014. The Board also noted the fund's favorable performance relative to the benchmark index and to the peer group for the one-year period. The Board concluded that the fund's performance has generally been in line with the historical performance of comparable funds and the fund's benchmark index.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are higher than the peer group median.
The Board took into account management's discussion of the fund's expenses, including action taken that will further reduce certain fund expenses. The Board took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm's length with respect to the Subadvisor. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; | |||||||
(i) | noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm's length; and |
37
(j) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and | |
(4) | information relating to the nature and scope of any material relationships and their significance to the Trust's Advisor and Subadvisor. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the
38
regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.
The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm's length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board's consideration of the Subadvisory Agreement.
The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |||||||
(2) | the performance of the fund has generally been in line with the historical performance of comparable funds and the fund's benchmark index; |
39
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and | |||||||
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |||||||
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
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 |
*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
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managers, 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 | 348SA 9/15 11/15 |
John Hancock
Disciplined Value Mid Cap Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
Global financial markets were especially rocky in mid-2015. The pullback we had anticipated for some months took place in August, and U.S. equities experienced their first official correction—a decline of more than 10% in the stock market—in more than four years. There were several headwinds restraining stock prices from moving higher all year, but the trigger for this summer's correction was the news of slowing economic growth in China and the effect that might have on global growth. For the time being, global economic data continues to be a leading driver of markets worldwide.
The asset managers in our network believe, on balance, that investors should stay the course when it comes to U.S. equities. Our economy continues to grow at a healthy pace, driven by strong housing and jobs data, falling commodity prices, solid consumer spending, and low inflation. While the U.S. Federal Reserve (Fed) chose to leave the federal funds rate unchanged at its September meeting, Fed Chair Janet Yellen cited a number of positives in the U.S. economy and signaled that the Fed will likely raise interest rates soon in response to stronger growth.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
Disciplined Value Mid Cap Fund
1
INVESTMENT OBJECTIVE
The fund seeks long-term growth of capital with current income as a secondary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/15 (%)
Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap Index 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 result in lower returns.
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 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 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 SIX MONTHS
Volatility returned, generating a market correction
The market was especially volatile in the last few months of the period, as equities experienced their first correction in more than four years.
Fund was down, but outperformed its benchmark
The fund outperformed its benchmark, the Russell Midcap Value Index, due to beneficial stock selection.
Energy and information technology were the top relative contributors, but financials detracted
From a sector standpoint, energy and information technology were the top relative contributors; the financials sector was the top detractor on both an absolute and relative basis.
SECTOR COMPOSITION AS OF 9/30/15 (%)
A note about risks
The stock prices of midsize companies can change more frequently and dramatically than those of large companies. Value stocks may decline in price. The value of a company's equity securities is subject to changes 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. 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. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. 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 than investments in a wider variety of sectors. Please see the fund's prospectuses for additional risks.
3
![stevenlpollack.jpg](https://capedge.com/proxy/N-CSRS/0001145443-15-001273/stevenlpollack.jpg)
Steven L. Pollack, CFA
Portfolio Manager
Boston Partners
Can you briefly describe the market environment over the past six months?
U.S. equities generally declined over the period ended September 30, 2015. For the first half of the period, the market traded in a tight band and was positive. Major indexes reached record highs in May despite increasing volatility; however, markets experienced their worst quarterly return since 2011 in the second half of the period, as investors feared a significant slowdown in China and a drop in commodity prices might signal the potential for an impending global recession.
Corporate earnings in the United States hit a plateau due to slowing emerging markets, the strong U.S. dollar, and lower oil and commodity prices; however, we do not believe the current earnings recession will lead to an economic recession. Earnings appear to be taking a pause and not collapsing as they did in 2008. The U.S. financial system is quite healthy today, as major banks are among the best capitalized banks in the world and increased regulations are keeping a lid on speculative activities. Aside from pockets of energy loans at selected financial institutions, credit quality remains quite strong. Employment, housing, and consumer spending statistics continue to point toward a healthy, growing economy.
Prior to the August correction, many economically sensitive segments—such as energy, basic materials, transportation, industrials, and media—had been underperforming, leading to top-heavy sector leadership. Thus, we view the correction as necessary and healthy for the overall market.
4
In this environment, the fund's benchmark, the Russell Midcap Value Index, was down 9.84%. The energy and telecommunications sectors declined the most. The consumer staples and utilities sectors were the best performers, although they both produced negative returns.
The fund outperformed its benchmark. What drove this outperformance?
Advantageous stock selection primarily drove relative outperformance. The energy sector was the most significant contributor to relative returns due to favorable stock selection and an advantageous underweight position in a sector with declining prices. The information technology sector was also beneficial to relative returns; within the sector, an overweight position in Activision Blizzard, Inc. was beneficial as the company experienced strong business momentum tied to the game console cycle. The consumer discretionary sector was also additive to returns, as Expedia, Inc. benefited from earnings that were better than expected on growth in hotel bookings, improving market share, and the sale of their China business.
TOP 10 HOLDINGS AS OF 9/30/15 (%)
Activision Blizzard, Inc. | 2.0 |
Robert Half International, Inc. | 1.8 |
Western Digital Corp. | 1.8 |
Amdocs, Ltd. | 1.8 |
TD Ameritrade Holding Corp. | 1.7 |
Boston Properties, Inc. | 1.6 |
Graphic Packaging Holding Company | 1.6 |
Equifax, Inc. | 1.5 |
Raymond James Financial, Inc. | 1.4 |
Newell Rubbermaid, Inc. | 1.4 |
TOTAL | 16.6 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
5
What hindered performance?
The financials and utilities sectors detracted from relative performance, due to adverse stock selection in financials and negative sector allocation to utilities. In utilities, an overweight in the AES Corp., which reported lower-than-expected earnings due to poor hydrology and demand in Brazil, negatively impacted absolute and relative returns.
What were some notable additions and deletions to the portfolio?
New positions included independent exploration and production businesses Diamondback Energy, Inc. and RSP Permian, Inc. At a compelling discount to its net asset value, Diamondback Energy is a well-run business with attractive acreage that can cost-effectively grow production and create value despite a tough price environment. RSP Permian's resilient cost structure and attractive acreage provide significant upside potential on a risk-adjusted basis, given its attractive valuation relative to its peers.
Another new position was Raytheon Company, an aerospace and defense business with attractive free cash flow characteristics that is experiencing improving business momentum from its considerable international pipeline. We also purchased specialty plastics and polymer market leader PolyOne Corp., which has repositioned itself under astute management, strengthening the business' longer-term earnings power as current industry headwinds subside. We purchased leading disability insurance business Unum Group, which is returning excess capital through share buybacks, and is well positioned for stronger returns on equity based on disciplined underwriting results and an eventual divestment of its long-term care business.
During the period, we liquidated the fund's holdings in drug distributor and healthcare company McKesson Corp., pharmaceutical drug distributor AmerisourceBergen Corp., and specialty printing device business Zebra Technologies Corp. upon reaching target valuation. We also exited specialty
6
chemicals business Huntsman Corp. and global aerial platform and crane business Terex Corp. on deteriorating business momentum.
We will continue to invest on a stock-by-stock basis within our three-circle discipline of attractive valuation, sound fundamentals, and a catalyst for improvement.
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 SEPTEMBER 30, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||
1-year | 5-year | 10-year | 6-month | 5-year | 10-year | ||
Class A1 | -0.40 | 14.50 | 9.66 | -11.67 | 96.81 | 151.54 | |
Class C1 | 3.11 | 14.79 | 9.38 | -8.27 | 99.32 | 145.16 | |
Class I1,2 | 5.19 | 16.01 | 10.61 | -6.90 | 110.15 | 174.18 | |
Class R21,2 | 4.68 | 15.50 | 10.06 | -7.11 | 105.58 | 160.68 | |
Class R41,2 | 5.00 | 15.80 | 10.43 | -7.00 | 108.23 | 169.63 | |
Class R61,2 | 5.26 | 16.11 | 10.69 | -6.86 | 111.02 | 176.12 | |
Class ADV1,2 | 4.79 | 15.64 | 10.20 | -7.05 | 106.79 | 164.16 | |
Index† | -2.07 | 13.15 | 7.42 | -9.84 | 85.50 | 104.54 |
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 (%) | 1.13 | 1.88 | 0.87 | 1.27 | 1.12 | 0.77 | 1.13 |
Net (%) | 1.13 | 1.88 | 0.87 | 1.27 | 1.02 | 0.77 | 1.13 |
Please refer to the most recent prospectuses 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 | 9-30-05 | 24,516 | 24,516 | 20,454 |
Class I1,2 | 9-30-05 | 27,418 | 27,418 | 20,454 |
Class R21,2 | 9-30-05 | 26,068 | 26,068 | 20,454 |
Class R41,2 | 9-30-05 | 26,963 | 26,963 | 20,454 |
Class R61,2 | 9-30-05 | 27,612 | 27,612 | 20,454 |
Class ADV1,2 | 9-30-05 | 26,416 | 26,416 | 20,454 |
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 result in lower returns.
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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-15 | Ending value on 9-30-15 | Expenses paid during period ended 9-30-151 | Annualized expense ratio | |
Class A | $1,000.00 | $929.70 | $5.40 | 1.12% |
Class C | 1,000.00 | 926.60 | 9.01 | 1.87% |
Class I | 1,000.00 | 931.00 | 4.15 | 0.86% |
Class R2 | 1,000.00 | 928.90 | 6.12 | 1.27% |
Class R4 | 1,000.00 | 930.00 | 4.92 | 1.02% |
Class R6 | 1,000.00 | 931.40 | 3.67 | 0.76% |
Class ADV | 1,000.00 | 929.50 | 5.74 | 1.19% |
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 September 30, 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 April 1, 2015, with the same investment held until September 30, 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 4-1-15 | Ending value on 9-30-15 | Expenses paid during period ended 9-30-151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,019.40 | $5.65 | 1.12% |
Class C | 1,000.00 | 1,015.70 | 9.42 | 1.87% |
Class I | 1,000.00 | 1,020.70 | 4.34 | 0.86% |
Class R2 | 1,000.00 | 1,018.70 | 6.41 | 1.27% |
Class R4 | 1,000.00 | 1,019.90 | 5.15 | 1.02% |
Class R6 | 1,000.00 | 1,021.20 | 3.84 | 0.76% |
Class ADV | 1,000.00 | 1,019.10 | 6.01 | 1.19% |
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 183/366 (to reflect the one-half year period). |
11
Fund's investments
As of 9-30-15 (unaudited) | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 97.1% | $10,414,630,775 | |||||||||||||
(Cost $9,001,395,950) | ||||||||||||||
Consumer discretionary 8.5% | 908,640,478 | |||||||||||||
Auto components 1.8% | ||||||||||||||
Lear Corp. | 1,318,733 | 143,451,774 | ||||||||||||
Tenneco, Inc. (I) | 1,114,339 | 49,888,957 | ||||||||||||
Automobiles 0.4% | ||||||||||||||
Harley-Davidson, Inc. | 798,224 | 43,822,498 | ||||||||||||
Diversified consumer services 0.8% | ||||||||||||||
H&R Block, Inc. | 2,481,665 | 89,836,273 | ||||||||||||
Household durables 1.4% | ||||||||||||||
Newell Rubbermaid, Inc. | 3,844,767 | 152,675,698 | ||||||||||||
Internet and catalog retail 1.4% | ||||||||||||||
Expedia, Inc. | 1,285,236 | 151,246,572 | ||||||||||||
Leisure products 0.8% | ||||||||||||||
Brunswick Corp. | 1,696,368 | 81,239,064 | ||||||||||||
Media 1.1% | ||||||||||||||
CBS Corp., Class B | 691,849 | 27,604,775 | ||||||||||||
Omnicom Group, Inc. | 1,315,930 | 86,719,787 | ||||||||||||
Multiline retail 0.3% | ||||||||||||||
Macy's, Inc. | 605,153 | 31,056,452 | ||||||||||||
Specialty retail 0.5% | ||||||||||||||
Foot Locker, Inc. | 709,999 | 51,098,628 | ||||||||||||
Consumer staples 2.1% | 229,023,763 | |||||||||||||
Beverages 1.6% | ||||||||||||||
Coca-Cola Enterprises, Inc. | 1,125,381 | 54,412,171 | ||||||||||||
Constellation Brands, Inc., Class A | 987,506 | 123,645,626 | ||||||||||||
Food products 0.5% | ||||||||||||||
Tyson Foods, Inc., Class A | 1,182,505 | 50,965,966 | ||||||||||||
Energy 4.9% | 528,120,974 | |||||||||||||
Oil, gas and consumable fuels 4.9% | ||||||||||||||
Diamondback Energy, Inc. (I) | 1,362,898 | 88,043,211 | ||||||||||||
Energen Corp. | 2,098,239 | 104,618,197 | ||||||||||||
EQT Corp. | 875,567 | 56,710,475 | ||||||||||||
Kosmos Energy, Ltd. (I) | 2,336,467 | 13,037,486 | ||||||||||||
Marathon Petroleum Corp. | 1,895,427 | 87,815,133 | ||||||||||||
Parsley Energy, Inc., Class A (I) | 2,974,584 | 44,826,981 | ||||||||||||
QEP Resources, Inc. | 2,485,469 | 31,142,927 | ||||||||||||
Rice Energy, Inc. (I) | 1,631,016 | 26,357,219 |
Shares | Value | |||||||||||||
Energy (continued) | ||||||||||||||
Oil, gas and consumable fuels (continued) | ||||||||||||||
RSP Permian, Inc. (I) | 1,323,203 | $26,794,861 | ||||||||||||
Western Refining, Inc. | 1,105,496 | 48,774,484 | ||||||||||||
Financials 32.6% | 3,491,463,027 | |||||||||||||
Banks 5.8% | ||||||||||||||
BB&T Corp. | 3,640,570 | 129,604,292 | ||||||||||||
East West Bancorp, Inc. | 2,761,457 | 106,095,178 | ||||||||||||
Fifth Third Bancorp | 7,877,228 | 148,958,381 | ||||||||||||
Huntington Bancshares, Inc. | 12,576,317 | 133,308,960 | ||||||||||||
SunTrust Banks, Inc. | 2,768,597 | 105,871,149 | ||||||||||||
Capital markets 5.0% | ||||||||||||||
Raymond James Financial, Inc. | 3,085,118 | 153,114,406 | ||||||||||||
SEI Investments Company | 1,820,766 | 87,815,544 | ||||||||||||
State Street Corp. | 785,066 | 52,764,286 | ||||||||||||
TD Ameritrade Holding Corp. | 5,850,736 | 186,287,434 | ||||||||||||
The Charles Schwab Corp. | 1,756,846 | 50,175,522 | ||||||||||||
Consumer finance 2.3% | ||||||||||||||
Ally Financial, Inc. (I) | 3,449,989 | 70,310,776 | ||||||||||||
Discover Financial Services | 2,263,681 | 117,688,775 | ||||||||||||
Navient Corp. | 2,586,041 | 29,067,101 | ||||||||||||
SLM Corp. (I) | 4,569,021 | 33,810,755 | ||||||||||||
Diversified financial services 1.1% | ||||||||||||||
McGraw Hill Financial, Inc. | 727,516 | 62,930,134 | ||||||||||||
Moody's Corp. | 553,451 | 54,348,888 | ||||||||||||
Insurance 8.7% | ||||||||||||||
Alleghany Corp. (I) | 214,999 | 100,643,182 | ||||||||||||
Aon PLC | 1,555,156 | 137,802,373 | ||||||||||||
Loews Corp. | 1,565,931 | 56,592,746 | ||||||||||||
Marsh & McLennan Companies, Inc. | 2,142,589 | 111,885,998 | ||||||||||||
Reinsurance Group of America, Inc. | 873,200 | 79,103,188 | ||||||||||||
Symetra Financial Corp. | 2,170,297 | 68,668,197 | ||||||||||||
The Allstate Corp. | 735,739 | 42,849,439 | ||||||||||||
Torchmark Corp. | 1,447,108 | 81,616,891 | ||||||||||||
Unum Group | 3,283,045 | 105,320,084 | ||||||||||||
W.R. Berkley Corp. | 1,139,593 | 61,959,671 | ||||||||||||
XL Group PLC | 2,204,947 | 80,083,675 | ||||||||||||
Real estate investment trusts 9.7% | ||||||||||||||
American Assets Trust, Inc. | 1,008,844 | 41,221,366 | ||||||||||||
American Homes 4 Rent, Class A | 3,191,734 | 51,323,083 | ||||||||||||
Boston Properties, Inc. | 1,482,115 | 175,482,416 | ||||||||||||
Douglas Emmett, Inc. | 1,781,829 | 51,174,129 | ||||||||||||
Equity Residential | 1,994,792 | 149,848,775 |
Shares | Value | |||||||||||||
Financials (continued) | ||||||||||||||
Real estate investment trusts (continued) | ||||||||||||||
Essex Property Trust, Inc. | 444,529 | $99,316,669 | ||||||||||||
Kilroy Realty Corp. | 853,288 | 55,600,246 | ||||||||||||
Kimco Realty Corp. | 4,407,344 | 107,671,414 | ||||||||||||
LaSalle Hotel Properties | 1,006,256 | 28,567,608 | ||||||||||||
Regency Centers Corp. | 2,164,210 | 134,505,652 | ||||||||||||
SL Green Realty Corp. | 1,166,221 | 126,138,463 | ||||||||||||
The Macerich Company | 285,553 | 21,936,181 | ||||||||||||
Health care 6.2% | 668,041,864 | |||||||||||||
Health care equipment and supplies 2.8% | ||||||||||||||
Becton, Dickinson and Company | 468,030 | 62,088,860 | ||||||||||||
Boston Scientific Corp. (I) | 5,066,656 | 83,143,825 | ||||||||||||
St. Jude Medical, Inc. | 1,116,448 | 70,436,704 | ||||||||||||
Zimmer Biomet Holdings, Inc. | 896,703 | 84,227,313 | ||||||||||||
Health care providers and services 2.1% | ||||||||||||||
Cardinal Health, Inc. | 1,567,945 | 120,449,535 | ||||||||||||
DaVita HealthCare Partners, Inc. (I) | 537,252 | 38,859,437 | ||||||||||||
Laboratory Corp. of America Holdings (I) | 645,173 | 69,981,915 | ||||||||||||
Life sciences tools and services 1.3% | ||||||||||||||
Bruker Corp. (I) | 1,951,596 | 32,064,722 | ||||||||||||
ICON PLC (I) | 1,504,714 | 106,789,553 | ||||||||||||
Industrials 14.0% | 1,497,178,885 | |||||||||||||
Aerospace and defense 2.1% | ||||||||||||||
Curtiss-Wright Corp. | 531,742 | 33,191,336 | ||||||||||||
Huntington Ingalls Industries, Inc. | 683,982 | 73,288,671 | ||||||||||||
Raytheon Company | 501,792 | 54,825,794 | ||||||||||||
Textron, Inc. | 1,804,988 | 67,939,748 | ||||||||||||
Airlines 0.4% | ||||||||||||||
Delta Air Lines, Inc. | 936,778 | 42,033,229 | ||||||||||||
Building products 1.1% | ||||||||||||||
Masco Corp. | 4,690,142 | 118,097,776 | ||||||||||||
Construction and engineering 0.4% | ||||||||||||||
Fluor Corp. | 906,322 | 38,382,737 | ||||||||||||
Electrical equipment 0.3% | ||||||||||||||
Hubbell, Inc., Class B | 410,513 | 34,873,079 | ||||||||||||
Industrial conglomerates 0.6% | ||||||||||||||
Carlisle Companies, Inc. | 730,541 | 63,834,673 | ||||||||||||
Machinery 2.9% | ||||||||||||||
Ingersoll-Rand PLC | 1,435,642 | 72,887,544 | ||||||||||||
Parker-Hannifin Corp. | 656,515 | 63,878,910 | ||||||||||||
Stanley Black & Decker, Inc. | 1,013,328 | 98,272,549 |
Shares | Value | |||||||||||||
Industrials (continued) | ||||||||||||||
Machinery (continued) | ||||||||||||||
The Timken Company | 1,082,022 | $29,744,785 | ||||||||||||
WABCO Holdings, Inc. (I) | 461,849 | 48,415,631 | ||||||||||||
Professional services 5.6% | ||||||||||||||
Equifax, Inc. | 1,611,223 | 156,578,651 | ||||||||||||
ManpowerGroup, Inc. | 1,362,968 | 111,613,450 | ||||||||||||
Robert Half International, Inc. | 3,861,136 | 197,535,718 | ||||||||||||
Towers Watson & Company, Class A | 1,139,969 | 133,809,561 | ||||||||||||
Trading companies and distributors 0.6% | ||||||||||||||
WESCO International, Inc. (I) | 1,247,580 | 57,975,043 | ||||||||||||
Information technology 17.0% | 1,817,851,741 | |||||||||||||
Communications equipment 1.2% | ||||||||||||||
Brocade Communications Systems, Inc. | 2,325,068 | 24,134,206 | ||||||||||||
Harris Corp. | 1,441,249 | 105,427,364 | ||||||||||||
Electronic equipment, instruments and components 3.3% | ||||||||||||||
Arrow Electronics, Inc. (I) | 1,519,821 | 84,015,705 | ||||||||||||
Avnet, Inc. | 1,917,977 | 81,859,258 | ||||||||||||
Flextronics International, Ltd. (I) | 3,872,126 | 40,812,208 | ||||||||||||
Jabil Circuit, Inc. | 4,095,660 | 91,619,914 | ||||||||||||
TE Connectivity, Ltd. | 928,382 | 55,600,798 | ||||||||||||
Internet software and services 0.9% | ||||||||||||||
InterActiveCorp | 443,741 | 28,962,975 | ||||||||||||
NetEase, Inc., ADR | 525,524 | 63,125,943 | ||||||||||||
IT services 4.9% | ||||||||||||||
Alliance Data Systems Corp. (I) | 317,307 | 82,176,167 | ||||||||||||
Amdocs, Ltd. | 3,334,771 | 189,681,774 | ||||||||||||
Fidelity National Information Services, Inc. | 1,778,548 | 119,305,000 | ||||||||||||
Global Payments, Inc. | 518,838 | 59,526,284 | ||||||||||||
Total System Services, Inc. | 1,690,132 | 76,782,697 | ||||||||||||
Semiconductors and semiconductor equipment 2.5% | ||||||||||||||
Avago Technologies, Ltd. | 838,137 | 104,775,506 | ||||||||||||
Microsemi Corp. (I) | 2,066,077 | 67,808,647 | ||||||||||||
NXP Semiconductors NV (I) | 692,119 | 60,262,801 | ||||||||||||
ON Semiconductor Corp. (I) | 3,156,246 | 29,668,712 | ||||||||||||
Software 2.0% | ||||||||||||||
Activision Blizzard, Inc. | 6,999,678 | 216,220,053 | ||||||||||||
Technology hardware, storage and peripherals 2.2% | ||||||||||||||
Seagate Technology PLC (L) | 901,679 | 40,395,219 | ||||||||||||
Western Digital Corp. | 2,463,375 | 195,690,510 |
Shares | Value | |||||||||||||
Materials 5.4% | $583,939,488 | |||||||||||||
Chemicals 1.2% | ||||||||||||||
PolyOne Corp. | 1,121,831 | 32,914,522 | ||||||||||||
The Valspar Corp. | 1,390,043 | 99,916,291 | ||||||||||||
Containers and packaging 3.8% | ||||||||||||||
Avery Dennison Corp. | 1,066,012 | 60,304,299 | ||||||||||||
Crown Holdings, Inc. (I) | 2,799,571 | 128,080,373 | ||||||||||||
Graphic Packaging Holding Company | 13,309,733 | 170,231,485 | ||||||||||||
Packaging Corp. of America | 767,545 | 46,175,507 | ||||||||||||
Paper and forest products 0.4% | ||||||||||||||
International Paper Company | 1,225,642 | 46,317,011 | ||||||||||||
Utilities 6.4% | 690,370,555 | |||||||||||||
Electric utilities 4.2% | ||||||||||||||
American Electric Power Company, Inc. | 2,468,347 | 140,350,210 | ||||||||||||
Edison International | 2,178,870 | 137,421,331 | ||||||||||||
FirstEnergy Corp. | 1,055,213 | 33,038,719 | ||||||||||||
Great Plains Energy, Inc. | 2,785,680 | 75,269,074 | ||||||||||||
Westar Energy, Inc. | 1,616,415 | 62,134,993 | ||||||||||||
Independent power and renewable electricity producers 0.4% | ||||||||||||||
AES Corp. | 4,312,528 | 42,219,649 | ||||||||||||
Multi-utilities 1.8% | ||||||||||||||
Alliant Energy Corp. | 1,514,249 | 88,568,424 | ||||||||||||
Ameren Corp. | 1,381,874 | 58,411,814 | ||||||||||||
PG&E Corp. | 1,002,961 | 52,956,341 | ||||||||||||
Yield (%) | Shares | Value | ||||||||||||
Securities lending collateral 0.3% | $32,084,132 | |||||||||||||
(Cost $32,083,602) | ||||||||||||||
John Hancock Collateral Trust (W) | 0.1319(Y | ) | 3,206,714 | 32,084,132 | ||||||||||
Short-term investments 2.0% | $207,068,383 | |||||||||||||
(Cost $207,068,383) | ||||||||||||||
Money market funds 2.0% | 207,068,383 | |||||||||||||
State Street Institutional US Government Money Market Fund | 0.0000(Y | ) | 207,068,383 | 207,068,383 | ||||||||||
Total investments (Cost $9,240,547,935)† 99.4% | $10,653,783,290 | |||||||||||||
Other assets and liabilities, net 0.6% | $68,913,712 | |||||||||||||
Total net assets 100.0% | $10,722,697,002 |
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 9-30-15. | |||||||||||||
(W) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. | |||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 9-30-15. | |||||||||||||
† | At 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $9,268,722,183. Net unrealized appreciation aggregated $1,385,061,107, of which $1,754,367,237 related to appreciated investment securities and $369,306,130 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $9,208,464,333) including $33,622,400 of securities loaned | $10,621,699,158 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers, at value (Cost $32,083,602) | 32,084,132 | |||||||||||||||||||||||||||||||||||||||
Total investments, at value (Cost $9,240,547,935) | 10,653,783,290 | |||||||||||||||||||||||||||||||||||||||
Cash | 844,073 | |||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 55,839,737 | |||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 65,701,788 | |||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 16,057,064 | |||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 14,679 | |||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 349,404 | |||||||||||||||||||||||||||||||||||||||
Total assets | 10,792,590,035 | |||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 17,127,532 | |||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 18,734,206 | |||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 32,084,550 | |||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 295,668 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 924,632 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 55,549 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 21,075 | |||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 649,821 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 69,893,033 | |||||||||||||||||||||||||||||||||||||||
Net assets | $10,722,697,002 | |||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $8,759,323,561 | |||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 42,763,983 | |||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 507,374,103 | |||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 1,413,235,355 | |||||||||||||||||||||||||||||||||||||||
Net assets | $10,722,697,002 | |||||||||||||||||||||||||||||||||||||||
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 ($1,986,472,600 ÷ 105,823,125 shares)1 | $18.77 | |||||||||||||||||
Class C ($330,025,025 ÷ 17,438,033 shares)1 | $18.93 | |||||||||||||||||
Class I ($7,241,142,032 ÷ 372,952,947 shares) | $19.42 | |||||||||||||||||
Class R2 ($225,961,969 ÷ 11,688,146 shares) | $19.33 | |||||||||||||||||
Class R4 ($107,225,066 ÷ 5,529,747 shares) | $19.39 | |||||||||||||||||
Class R6 ($831,004,931 ÷ 42,799,660 shares) | $19.42 | |||||||||||||||||
Class ADV ($865,379 ÷ 46,210 shares) | $18.73 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $19.76 |
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 six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $88,061,505 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 60,597 | |||||||||||||||||||||||||||||||||||||||
Total investment income | 88,122,102 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 39,719,932 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 5,260,646 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 762,757 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 5,915,215 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 73,055 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 198,299 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 291,267 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 142,780 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 647,509 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 76,483 | |||||||||||||||||||||||||||||||||||||||
Other | 74,777 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 53,162,720 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (496,757 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 52,665,963 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 35,456,139 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 311,870,103 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (5 | ) | ||||||||||||||||||||||||||||||||||||||
311,870,098 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | (1,146,360,016 | ) | ||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | 626 | |||||||||||||||||||||||||||||||||||||||
(1,146,359,390 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (834,489,292 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($799,033,153 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $35,456,139 | $47,078,725 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 311,870,098 | 369,708,115 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (1,146,359,390 | ) | 845,450,967 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (799,033,153 | ) | 1,262,237,807 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (5,490,148 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (33,378,448 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (344,941 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (435,019 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (4,227,049 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class ADV | — | (1,901 | ) | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (45,312,346 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (7,850,524 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (142,457,350 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (5,341,303 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (2,434,355 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (14,736,399 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class ADV | — | (20,467 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (262,030,250 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 714,894,019 | 1,530,028,017 | |||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (84,139,134 | ) | 2,530,235,574 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 10,806,836,136 | 8,276,600,562 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $10,722,697,002 | $10,806,836,136 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $42,763,983 | $7,307,844 |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | 8-31-10 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.19 | $18.23 | $14.51 | $12.41 | $11.98 | $8.66 | $8.10 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income5 | 0.05 | 0.05 | 0.05 | 0.05 | 0.04 | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.47 | ) | 2.42 | 4.03 | 2.09 | 0.42 | 3.32 | 0.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.42 | ) | 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 | $18.77 | $20.19 | $18.23 | $14.51 | $12.41 | $11.98 | $8.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6,7 | (7.03 | ) 8 | 13.78 | 28.30 | 17.31 | 3.92 | 38.47 | 8 | 7.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,986 | $2,148 | $3,086 | $1,169 | $517 | $171 | $75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.13 | 9 | 1.13 | 1.18 | 1.27 | 1.33 | 1.35 | 9 | 1.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.12 | 9 | 1.13 | 1.17 | 1.27 | 1.29 | 1.25 | 9 | 1.25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.45 | 9 | 0.28 | 0.32 | 0.38 | 0.32 | 0.10 | 9 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 55 | 41 | 27 | 38 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | For the seven month fiscal period ended 3-31-11. The fund changed its fiscal year end from August 31 to March 31. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | 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 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | Annualized. |
Class C Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.43 | $18.53 | $14.82 | $12.74 | $10.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss3 | (0.03 | ) | (0.08 | ) | (0.07 | ) | (0.05 | ) | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.47 | ) | 2.43 | 4.10 | 2.13 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.50 | ) | 2.35 | 4.03 | 2.08 | 2.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.45 | ) | (0.32 | ) | — | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.93 | $20.43 | $18.53 | $14.82 | $12.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (7.34 | ) 6 | 12.90 | 27.32 | 16.33 | 20.22 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $330 | $366 | $329 | $90 | $20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.88 | 7 | 1.89 | 1.94 | 2.08 | 2.10 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.87 | 7 | 1.88 | 1.93 | 2.08 | 2.10 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.30 | ) 7 | (0.42 | ) | (0.43 | ) | (0.39 | ) | (0.26 | ) 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 55 | 41 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class C shares is 8-15-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 4-1-11 to 3-31-12. |
Class I Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | 8-31-10 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.86 | $18.81 | $14.95 | $12.79 | $12.33 | $8.92 | $8.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income4 | 0.07 | 0.12 | 0.10 | 0.09 | 0.07 | 0.03 | 0.04 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.51 | ) | 2.49 | 4.16 | 2.15 | 0.45 | 3.41 | 0.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.44 | ) | 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 | $19.42 | $20.86 | $18.81 | $14.95 | $12.79 | $12.33 | $8.92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | (6.90 | ) 7 | 14.13 | 28.67 | 17.64 | 4.28 | 38.64 | 7 | 7.76 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $7,241 | $7,116 | $4,168 | $1,762 | $948 | $254 | $87 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.87 | 8 | 0.87 | 0.89 | 0.93 | 0.98 | 0.99 | 8 | 1.28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.86 | 8 | 0.86 | 0.89 | 0.93 | 0.98 | 0.99 | 8 | 1.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.72 | 8 | 0.63 | 0.59 | 0.71 | 0.63 | 0.37 | 8 | 0.41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 55 | 41 | 27 | 38 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | For the seven month fiscal period ended 3-31-11. The fund changed its fiscal year end from August 31 to March 31. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | 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 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. |
Class R2 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.81 | $18.77 | $14.94 | $12.78 | $12.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.03 | 0.04 | 0.04 | 0.05 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.51 | ) | 2.48 | 4.14 | 2.14 | 0.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.48 | ) | 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 | $19.33 | $20.81 | $18.77 | $14.94 | $12.78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (7.11 | ) 5 | 13.66 | 28.15 | 17.15 | 2.82 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $226 | $250 | $205 | $15 | — | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.27 | 7 | 1.29 | 1.28 | 2.15 | 16.13 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.27 | 7 | 1.28 | 1.27 | 1.40 | 1.45 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.30 | 7 | 0.19 | 0.25 | 0.33 | 1.00 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 55 | 41 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R2 shares is 3-1-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 R4 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.85 | $18.81 | $15.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.06 | 0.10 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.52 | ) | 2.47 | 3.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.46 | ) | 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 | $19.39 | $20.85 | $18.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (7.00 | ) 5 | 13.93 | 22.85 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $107 | $118 | $44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.12 | 6 | 1.15 | 1.30 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.02 | 6 | 1.04 | 1.14 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.55 | 6 | 0.49 | 0.44 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 7 |
1 | Six months ended 9-30-15. Unaudited. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R4 shares is 7-2-13. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 R6 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.85 | $18.81 | $14.95 | $12.79 | $10.95 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.09 | 0.14 | 0.12 | 0.11 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.52 | ) | 2.48 | 4.16 | 2.14 | 1.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.43 | ) | 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 | $19.42 | $20.85 | $18.81 | $14.95 | $12.79 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | (6.86 | ) 5 | 14.21 | 28.81 | 17.68 | 17.45 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $831 | $807 | $444 | $100 | $2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.77 | 6 | 0.78 | 0.81 | 0.89 | 4.22 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.76 | 6 | 0.77 | 0.80 | 0.89 | 0.99 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.82 | 6 | 0.73 | 0.71 | 0.84 | 1.25 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 55 | 41 | 7 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R6 shares is 9-1-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 ADV Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | 8-31-10 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.15 | $18.20 | $14.49 | $12.40 | $11.97 | $8.65 | $8.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income4 | 0.04 | 0.04 | 0.03 | 0.04 | 0.04 | 0.01 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.46 | ) | 2.40 | 4.03 | 2.10 | 0.43 | 3.32 | (0.21 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.42 | ) | 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 | $18.73 | $20.15 | $18.20 | $14.49 | $12.40 | $11.97 | $8.65 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | (7.05 | ) 7 | 13.67 | 28.19 | 17.33 | 3.94 | 38.50 | 7 | (2.37 | ) 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | $1 | $1 | — | 8 | — | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.67 | 9 | 3.12 | 3.46 | 3.74 | 4.18 | 5.78 | 9 | 1.42 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.19 | 9 | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 | 9 | 1.25 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.39 | 9 | 0.21 | 0.19 | 0.35 | 0.37 | 0.15 | 9 | (0.37 | ) 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 20 | 35 | 39 | 55 | 41 | 27 | 38 | 10 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | For the seven month fiscal period ended 3-31-11. The fund changed its fiscal year end from August 31 to March 31. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | The inception date for Class ADV shares is 7-12-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 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, subject to certain exceptions described in the fund's prospectus.
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. 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.
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As of September 30, 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, 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.
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 portfolio, 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.
The fund has the right to recall loaned securities on demand. If a borrower fails to return loaned securities when due, then the lending agent is responsible and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCT.
Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCT is a component of securities lending income as recorded on the Statement of Operations.
Obligations to repay collateral received by the fund is shown on the Statements of assets and liabilities as Payable upon return of securities loaned, and secured by the loaned securities. As of September 30, 2015, the fund loaned common stocks valued at $33,622,400 and received $32,084,550 of cash collateral.
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.
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as the administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled 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 effective line of credit, is charged to each participating fund on a pro rata basis and is
30
reflected in other expenses on the Statement of operations. Commitment fees for the six months ended September 30, 2015 were $5,982. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees, are calculated daily for each class, based on the net asset value of the class and the applicable specific expense rates. Through June 30, 2015, class-specific expenses, such as state registration fees and printing and postage, for all classes, were calculated daily at the class level based on 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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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 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
31
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 six months ended September 30, 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.
Prior to July 1, 2015 the Advisor had contractually agreed to reimburse or limit certain expenses for certain share classes of the fund. This agreement excluded 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 would not exceed 1.15% and 1.25% for Class R4 and Class ADV shares, respectively.
For the six months ended September 30, 2015, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $82,240 | Class R4 | $4,388 | |
Class C | 13,810 | Class R6 | 39,501 | |
Class I | 288,354 | Class ADV | 2,247 | |
Class R2 | 9,403 | Total | $439,943 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 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 six months ended September 30, 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% |
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 Rule 12b-1 fees for Class R4 shares. The current waiver agreement expires on June 30, 2016, unless
32
renewed by mutual agreement of the fund and the Distributor based upon a determination that this is appropriate under the circumstances at the time. This contractual waiver amounted to $56,814 for Class R4 shares for the six months ended September 30, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $494,823 for the six months ended September 30, 2015. Of this amount, $68,410 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $425,416 was paid as sales commissions to broker-dealers and $997 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 six months ended September 30, 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. 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 six months ended September 30, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $2,662,312 | $1,337,303 | $2,291 | $37,820 |
Class C | 1,788,421 | 224,592 | 4,462 | 6,834 |
Class I | — | 4,261,103 | 46,053 | 98,415 |
Class R2 | 609,428 | 18,662 | 5,270 | 5,722 |
Class R4 | 199,328 | 8,711 | 2,783 | 2,961 |
Class R6 | — | 64,263 | 9,041 | 8,046 |
Class ADV | 1,157 | 581 | 2,509 | 30 |
Total | $5,260,646 | $5,915,215 | $72,409 | $159,828 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $125,890 and $131,439, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
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Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and for the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 10,694,109 | $213,635,074 | 32,606,414 | $614,618,999 | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,469,274 | 45,632,185 | ||||||||||||||||||||||
Repurchased | (11,269,868 | ) | (224,444,471 | ) | (97,962,941 | ) | (1,825,851,830 | ) | ||||||||||||||||||
Net decrease | (575,759 | ) | ($10,809,397 | ) | (62,887,253 | ) | ($1,165,600,646 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 677,672 | $13,710,866 | 1,863,493 | $35,732,899 | ||||||||||||||||||||||
Distributions reinvested | — | — | 319,998 | 5,996,751 | ||||||||||||||||||||||
Repurchased | (1,154,497 | ) | (23,241,903 | ) | (2,013,291 | ) | (38,394,466 | ) | ||||||||||||||||||
Net increase (decrease) | (476,825 | ) | ($9,531,037 | ) | 170,200 | $3,335,184 | ||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 67,656,352 | $1,398,484,322 | 179,397,290 | $3,490,528,185 | ||||||||||||||||||||||
Distributions reinvested | — | — | 7,680,784 | 146,549,365 | ||||||||||||||||||||||
Repurchased | (35,908,904 | ) | (737,603,910 | ) | (67,435,720 | ) | (1,322,571,055 | ) | ||||||||||||||||||
Net increase | 31,747,448 | $660,880,412 | 119,642,354 | $2,314,506,495 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 1,648,686 | $33,934,581 | 4,744,884 | $91,982,585 | ||||||||||||||||||||||
Distributions reinvested | — | — | 238,454 | 4,544,932 | ||||||||||||||||||||||
Repurchased | (1,961,077 | ) | (40,263,023 | ) | (3,924,520 | ) | (77,036,868 | ) | ||||||||||||||||||
Net increase (decrease) | (312,391 | ) | ($6,328,442 | ) | 1,058,818 | $19,490,649 | ||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 717,443 | $14,546,992 | 4,157,048 | $79,815,427 | ||||||||||||||||||||||
Distributions reinvested | — | — | 150,209 | 2,865,994 | ||||||||||||||||||||||
Repurchased | (855,126 | ) | (17,633,969 | ) | (963,521 | ) | (18,992,090 | ) | ||||||||||||||||||
Net increase (decrease) | (137,683 | ) | ($3,086,977 | ) | 3,343,736 | $63,689,331 | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 7,040,117 | $144,583,193 | 19,293,797 | $376,912,961 | ||||||||||||||||||||||
Distributions reinvested | — | — | 994,934 | 18,963,448 | ||||||||||||||||||||||
Repurchased | (2,961,913 | ) | (60,810,744 | ) | (5,177,399 | ) | (101,270,715 | ) | ||||||||||||||||||
Net increase | 4,078,204 | $83,772,449 | 15,111,332 | $294,605,694 | ||||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | 441 | $9,000 | — | — | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,212 | 22,368 | ||||||||||||||||||||||
Repurchased | (603 | ) | (11,989 | ) | (1,170 | ) | (21,058 | ) | ||||||||||||||||||
Net increase (decrease) | (162 | ) | ($2,989 | ) | 42 | $1,310 | ||||||||||||||||||||
Total net increase | 34,322,832 | $714,894,019 | 76,439,229 | $1,530,028,017 |
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $2,817,631,625 and $2,130,464,738, respectively, for the six months ended September 30, 2015.
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Note 7 — Industry or sector risk
The fund may invest a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's net asset value more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
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Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Robeco Investment Management, Inc. (the Subadvisor), for John Hancock Disciplined Value Mid Cap Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
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Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund underperformed its benchmark index for the one-year period ended December 31, 2014 and outperformed its benchmark index for the three- and five-year periods ended December 31, 2014. The Board also noted that
37
the fund outperformed its peer group average for the one-, three- and five-year periods ended December 31, 2014. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the benchmark index for the three- and five-year periods and to the peer group for the one-, three- and five-year periods. The Board concluded that the fund's performance has generally been in line with or outperformed the historical performance of comparable funds and the fund's benchmark index.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are equal to the peer group median.
The Board took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm's length with respect to the Subadvisor. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; |
38
(i) | noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm's length; and | |||||||
(j) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and | |
(4) | information relating to the nature and scope of any material relationships and their significance to the Trust's Advisor and Subadvisor. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with
39
the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.
The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm's length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board's consideration of the Subadvisory Agreement.
The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |||||||
(2) | the performance of the fund has generally been in line with or outperformed the historical performance of comparable funds and the fund's benchmark index; |
40
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and | |||||||
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |||||||
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
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 |
*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
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![]() | 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 | 363SA 9/15 11/15 |
John Hancock
International Value Equity Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
Slowing global growth was a key driver of international equity performance in recent months. Stocks fell sharply in August as economic indicators in China weakened and Chinese leaders devalued the nation's currency. The slowdown in the world's second-largest economy weighed on investor sentiment globally and sent commodity prices lower. For the time being, global economic data continues to be a leading driver of markets worldwide.
Market volatility is naturally unnerving, which is why we recommend that investors maintain a regular dialogue with their financial advisors. Your advisor can help put market events into context and determine whether your portfolio is sufficiently diversified and continues to match your long-term financial goals.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
International Value Equity Fund
1
INVESTMENT OBJECTIVE
The fund seeks long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/15 (%)
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. Index figures do not reflect expenses or sales charges, which would result in lower returns.
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 became owners of an equal number of full and fractional Class A 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 SIX MONTHS
Global markets declined amid a challenging economic environment
Most developed-market stocks outside the United States declined as a debt crisis in Greece and a slowdown in China's GDP growth accentuated concerns about the outlook for the global economy.
Fund was down, but effective stock picking contributed to relative outperformance
Although the fund posted a negative overall return, it outperformed its benchmark, the MSCI World ex-USA Index, largely as a result of our effective stock selection, especially in Europe.
Stock picking contributed in consumer discretionary, detracted in utilities and energy
While our security selection in the consumer discretionary sector had a positive impact relative to the benchmark, stock picking in utilities and energy detracted.
SECTOR COMPOSITION AS OF 9/30/15 (%)
A note about risks
Foreign investing has additional risks, such as currency and market volatility and political and social instability. Value stocks may decline in price. The stock prices of midsize companies can change more frequently and dramatically than those of large companies. The value of a company's equity securities is subject to changes in the company's financial condition, and overall market and economic conditions. Hedging, derivatives, and other strategic transactions 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 Wendell Perkins, CFA, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
![wendellperkins.jpg](https://capedge.com/proxy/N-CSRS/0001145443-15-001273/wendellperkins.jpg)
Wendell Perkins, CFA
Portfolio Manager
John Hancock Asset Management
Can you describe the factors behind the negative returns that most non-U.S. developed-market equities posted during the six-month period?
While the U.S. economy remained relatively strong, economic news from other key markets such as Europe, China, and Japan was somewhat disappointing. The outlook for global growth generally worsened, weighing on the fund's benchmark, the MSCI World ex-USA Index.
The early months of the period brought some encouraging signs about growth in Europe, and the European Central Bank continued its program to stimulate markets and the economy through the purchase of sovereign bonds from member countries of the eurozone. Despite this initiative and low interest rates, inflation in the eurozone remained below policymakers' target level. Other economic data was mixed, and a sovereign debt crisis in Greece threatened the country's continued membership in the eurozone as well as the stability of the monetary union itself. The Greek government reached an agreement with creditors in July, providing a fairly orderly resolution over the short term.
In Japan, the economic initiatives of Prime Minister Shinzo Abe's government failed to produce a significant turnaround in the nation's economy. However, Japanese equities were supported by modest improvement in corporate earnings and economic reforms adopted by the Abe government.
Global equities fell sharply in August as economic indicators in China weakened and Chinese leaders devalued the nation's currency. This growth slowdown in the world's second-largest economy weighed on investor sentiment globally and sent commodity prices lower, which had a damaging effect on the economies of many emerging markets outside of China. Uncertainty about the timing of an initial increase in U.S. interest rates also weighed on global investor sentiment, and markets remained volatile in September.
How did this environment affect your team's management of the fund?
We positioned the fund fairly defensively at the start of the period, as we have been skeptical about the long-term sustainability of a global economic recovery that can be traced as much to central bank stimulus as it can to strong economic fundamentals and solid earnings growth, in our view.
4
Although its overall return was negative, the fund outperformed relative to its benchmark. What factors at the regional and sector levels had the most significant impact on this result?
Our security selection in Europe (excluding the United Kingdom) had a positive impact on relative results, helping to mitigate the negative impact from the broader market's decline. Stock picking in the Pacific Rim region also contributed to the fund's relative performance, while security selection in the United Kingdom had a slightly negative impact.
From a sector standpoint, our stock picking in the consumer discretionary, industrials, and healthcare sectors added value relative to the benchmark. On the negative side, our security selection in the energy and utilities sectors weighed on relative performance, although the impact was fairly small.
TOP 10 HOLDINGS AS OF 9/30/15 (%)
Novartis AG | 1.5 |
Fresenius SE & Company KGaA | 1.1 |
Gerresheimer AG | 1.1 |
Smith & Nephew PLC | 1.1 |
Nestle SA | 1.1 |
Bandai Namco Holdings, Inc. | 1.1 |
Roche Holding AG | 1.0 |
Teva Pharmaceutical Industries, Ltd. | 1.0 |
easyJet PLC | 1.0 |
Toyo Suisan Kaisha, Ltd. | 1.0 |
TOTAL | 11.0 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
5
Which positions had the biggest positive impact on performance relative to the benchmark?
The top contributor was an out-of-benchmark position in Gerresheimer AG, a German maker of glass and plastic containers and packaging for pharmaceuticals and other healthcare applications. We added this position to the portfolio during the early months of the period, and its shares surged. Catalysts included Gerresheimer's sale of its pharmaceutical glass tubing business and its subsequent proposed acquisition of a U.S.-based manufacturer of plastic vials for prescription medications.
Another strong contributor was a position that we added during the period in Bandai Namco Holdings, Inc., a Japanese toy and game maker. The company's shares rose sharply as a result of better-than-expected earnings and sales results.
Other positions that were among the top contributors relative to the benchmark were Rheinmetall AG, a German maker of industrial components for the defense and automotive industries; TNT Express NV, a Netherlands-based freight shipping company; Guangdong Investment, Ltd., a Hong Kong-listed investor in water supply projects in mainland China and Hong Kong; and easyJet PLC, a low-cost European airline based in the United Kingdom. We sold the fund's positions in Rheinmetall and TNT Express prior to the end of the period.
TOP 10 COUNTRIES AS OF 9/30/15 (%)
Japan | 19.0 |
United Kingdom | 17.3 |
Germany | 9.3 |
France | 9.1 |
Switzerland | 6.5 |
Canada | 5.3 |
Netherlands | 5.1 |
Australia | 4.1 |
Sweden | 3.4 |
Hong Kong | 3.2 |
TOTAL | 82.3 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
6
Which positions had a significantly negative impact on performance?
A position in Fujitsu, Ltd., a Japanese provider of information technology services, detracted the most from performance relative to the benchmark and was also one of the most substantial detractors from absolute performance. Shares of Fujitsu fell sharply in April after the company released a financial forecast that was below analysts' consensus expectations, due in part to an increase in strategic costs.
Another position that detracted was Santos, Ltd., an Australia-based energy exploration and production company. Its shares were hit hard by the decline in oil prices during the period and by investors' perceptions that the company's balance sheet was precarious.
Other positions that weighed on the fund's relative performance were Standard Chartered PLC, a U.K.-based international bank, E.ON SE, a German electric and gas utility, and Toshiba Corp., a Japan-based diversified industrial company. We sold the fund's position in Toshiba during the period.
How was the fund positioned at the end of the period?
At the sector level, the fund was slightly overweight in consumer discretionary and telecommunication services at the end of the period, while it was underweight in the financials, industrials, and materials sectors. At the regional level, the fund was modestly underweight in Europe and in the Pacific Rim region.
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 SEPTEMBER 30, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | |||||||
1-year | 5-year | 10-year | 6-month | 5-year | 10-year | |||
Class A1,2 | -13.06 | 1.40 | 2.04 | -12.79 | 7.19 | 22.35 | ||
Class C1,2 | -10.05 | 1.76 | 1.84 | -9.42 | 9.13 | 19.98 | ||
Class I1,2,3 | -8.24 | 2.75 | 2.71 | -8.08 | 14.53 | 30.67 | ||
Class R21,2,3 | -8.64 | 2.44 | 2.50 | -8.18 | 12.78 | 27.95 | ||
Class R41,2,3 | -8.40 | 2.66 | 2.74 | -8.19 | 14.04 | 31.00 | ||
Class R61,2,3 | -8.08 | 2.97 | 3.02 | -7.97 | 15.75 | 34.63 | ||
Class NAV1,2,3 | -8.06 | 3.00 | 3.05 | -7.96 | 15.90 | 35.01 | ||
Index 1† | -9.73 | 3.92 | 3.41 | -9.88 | 21.17 | 39.84 | ||
Index 2† | -13.87 | 3.21 | 2.73 | -11.64 | 17.12 | 30.88 |
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 (%) | 1.36 | 2.11 | 1.09 | 1.50 | 1.35 | 1.00 | 0.98 |
Net (%) | 1.36 | 2.11 | 1.09 | 1.50 | 1.25 | 0.98 | 0.98 |
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 | 9-30-05 | 11,998 | 11,998 | 13,984 | 13,088 |
Class I1,2,3 | 9-30-05 | 13,067 | 13,067 | 13,984 | 13,088 |
Class R21,2,3 | 9-30-05 | 12,795 | 12,795 | 13,984 | 13,088 |
Class R41,2,3 | 9-30-05 | 13,100 | 13,100 | 13,984 | 13,088 |
Class R61,2,3 | 9-30-05 | 13,463 | 13,463 | 13,984 | 13,088 |
Class NAV1,2,3 | 9-30-05 | 13,501 | 13,501 | 13,984 | 13,088 |
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.
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 result in lower returns.
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 offerred on 8-28-14. The returns prior to these dates are that of Class A shares 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 advisor 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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | 918.00 | 6.70 | 1.40% |
Class C | 1,000.00 | 915.00 | 11.06 | 2.31% |
Class I | 1,000.00 | 919.20 | 5.70 | 1.19% |
Class R2 | 1,000.00 | 918.20 | 7.57 | 1.58% |
Class R4 | 1,000.00 | 918.10 | 6.16 | 1.29% |
Class R6 | 1,000.00 | 920.30 | 4.68 | 0.97% |
Class NAV | 1,000.00 | 920.40 | 4.70 | 0.98% |
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 September 30, 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 April 1, 2015, with the same investment held until September 30, 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 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | 1,018.00 | 7.05 | 1.40% |
Class C | 1,000.00 | 1,013.50 | 11.63 | 2.31% |
Class I | 1,000.00 | 1,019.10 | 6.00 | 1.19% |
Class R2 | 1,000.00 | 1,017.10 | 7.96 | 1.58% |
Class R4 | 1,000.00 | 1,018.60 | 6.49 | 1.29% |
Class R6 | 1,000.00 | 1,020.10 | 4.92 | 0.97% |
Class NAV | 1,000.00 | 1,020.10 | 4.94 | 0.98% |
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 183/366 (to reflect the one-half year period). |
11
Fund's investments
As of 9-30-15 (unaudited) | |||||||||||||||||
Shares | Value | ||||||||||||||||
Common stocks 93.0% | $474,774,683 | ||||||||||||||||
(Cost $512,059,280) | |||||||||||||||||
Australia 4.1% | 20,805,916 | ||||||||||||||||
AGL Energy, Ltd. | 402,655 | 4,531,723 | |||||||||||||||
Australia & New Zealand Banking Group, Ltd. | 188,953 | 3,610,171 | |||||||||||||||
BHP Billiton, Ltd. | 206,607 | 3,263,223 | |||||||||||||||
National Australia Bank, Ltd. | 191,524 | 4,053,219 | |||||||||||||||
QBE Insurance Group, Ltd. | 426,313 | 3,882,356 | |||||||||||||||
Santos, Ltd. | 517,774 | 1,465,224 | |||||||||||||||
Canada 5.3% | 27,093,720 | ||||||||||||||||
Bank of Montreal | 73,813 | 4,025,560 | |||||||||||||||
Barrick Gold Corp. | 238,209 | 1,515,470 | |||||||||||||||
Bombardier, Inc., Class B | 1,341,763 | 1,679,089 | |||||||||||||||
Husky Energy, Inc. | 218,018 | 3,399,741 | |||||||||||||||
IGM Financial, Inc. (L) | 161,727 | 4,103,467 | |||||||||||||||
Magna International, Inc. | 85,241 | 4,088,630 | |||||||||||||||
Suncor Energy, Inc. | 145,730 | 3,897,418 | |||||||||||||||
The Toronto-Dominion Bank | 111,234 | 4,384,345 | |||||||||||||||
Chile 0.4% | 2,103,115 | ||||||||||||||||
Antofagasta PLC | 277,651 | 2,103,115 | |||||||||||||||
China 1.1% | 5,658,656 | ||||||||||||||||
China Petroleum & Chemical Corp., H Shares | 5,064,279 | 3,102,090 | |||||||||||||||
CNOOC, Ltd. | 2,483,000 | 2,556,566 | |||||||||||||||
Denmark 1.7% | 8,482,619 | ||||||||||||||||
Carlsberg A/S, Class B | 49,064 | 3,770,148 | |||||||||||||||
Danske Bank A/S | 155,937 | 4,712,471 | |||||||||||||||
Finland 0.8% | 4,299,800 | ||||||||||||||||
Kesko OYJ, B Shares | 121,391 | 4,299,800 | |||||||||||||||
France 9.1% | 46,490,273 | ||||||||||||||||
Atos SE | 62,441 | 4,799,640 | |||||||||||||||
AXA SA | 193,684 | 4,702,472 | |||||||||||||||
BNP Paribas SA | 71,965 | 4,236,898 | |||||||||||||||
Cie de Saint-Gobain | 97,692 | 4,239,891 | |||||||||||||||
Engie | 206,022 | 3,333,554 | |||||||||||||||
Kering | 26,673 | 4,366,242 | |||||||||||||||
Orange SA | 287,564 | 4,359,281 | |||||||||||||||
Publicis Groupe SA | 65,198 | 4,455,835 | |||||||||||||||
Sanofi | 48,973 | 4,662,259 | |||||||||||||||
Schneider Electric SE | 74,304 | 4,108,597 |
Shares | Value | ||||||||||||||||
France (continued) | |||||||||||||||||
Total SA | 71,707 | $3,225,604 | |||||||||||||||
Germany 9.3% | 47,542,983 | ||||||||||||||||
Allianz SE | 28,530 | 4,481,887 | |||||||||||||||
BASF SE | 49,413 | 3,779,294 | |||||||||||||||
Bayerische Motoren Werke AG | 47,368 | 4,132,534 | |||||||||||||||
Deutsche Bank AG | 132,743 | 3,582,380 | |||||||||||||||
E.ON SE | 272,805 | 2,341,071 | |||||||||||||||
Fresenius SE & Company KGaA | 85,785 | 5,758,590 | |||||||||||||||
Gerresheimer AG | 77,739 | 5,682,515 | |||||||||||||||
Merck KGaA | 51,733 | 4,580,274 | |||||||||||||||
Muenchener Rueckversicherungs AG | 23,693 | 4,425,036 | |||||||||||||||
SAP SE | 69,876 | 4,526,850 | |||||||||||||||
Siemens AG | 47,601 | 4,252,552 | |||||||||||||||
Hong Kong 3.2% | 16,424,456 | ||||||||||||||||
China Mobile, Ltd. | 327,582 | 3,921,078 | |||||||||||||||
Guangdong Investment, Ltd. | 3,168,098 | 4,729,092 | |||||||||||||||
Hang Lung Group, Ltd. | 906,376 | 3,085,750 | |||||||||||||||
Yue Yuen Industrial Holdings, Ltd. | 1,260,202 | 4,688,536 | |||||||||||||||
Ireland 0.7% | 3,618,492 | ||||||||||||||||
C&C Group PLC | 912,002 | 3,618,492 | |||||||||||||||
Israel 1.0% | 5,254,174 | ||||||||||||||||
Teva Pharmaceutical Industries, Ltd. | 92,971 | 5,254,174 | |||||||||||||||
Japan 19.0% | 97,158,577 | ||||||||||||||||
Asahi Kasei Corp. | 508,248 | 3,583,882 | |||||||||||||||
Bandai Namco Holdings, Inc. | 232,372 | 5,393,056 | |||||||||||||||
Bridgestone Corp. | 121,786 | 4,214,546 | |||||||||||||||
East Japan Railway Company | 51,163 | 4,311,284 | |||||||||||||||
Ebara Corp. | 989,706 | 3,656,135 | |||||||||||||||
Fujitsu, Ltd. | 866,798 | 3,770,397 | |||||||||||||||
Honda Motor Company, Ltd. | 144,317 | 4,307,388 | |||||||||||||||
Inpex Corp. | 364,274 | 3,256,878 | |||||||||||||||
Japan Tobacco, Inc. | 144,119 | 4,470,599 | |||||||||||||||
Komatsu, Ltd. | 242,508 | 3,559,637 | |||||||||||||||
Kyocera Corp. | 88,840 | 4,068,870 | |||||||||||||||
Mitsubishi Corp. | 221,509 | 3,630,879 | |||||||||||||||
Mitsubishi UFJ Financial Group, Inc. | 703,500 | 4,250,716 | |||||||||||||||
Mitsui Fudosan Company, Ltd. | 162,557 | 4,455,912 | |||||||||||||||
Mizuho Financial Group, Inc. | 2,458,484 | 4,598,845 | |||||||||||||||
MS&AD Insurance Group Holdings, Inc. | 159,890 | 4,289,829 | |||||||||||||||
Nippon Telegraph & Telephone Corp. | 134,200 | 4,727,012 | |||||||||||||||
Nippon Television Holdings, Inc. | 253,468 | 4,095,132 |
Shares | Value | ||||||||||||||||
Japan (continued) | |||||||||||||||||
Nissan Motor Company, Ltd. | 435,813 | $4,007,125 | |||||||||||||||
Sumitomo Chemical Company, Ltd. | 889,000 | 4,495,432 | |||||||||||||||
Taiheiyo Cement Corp. | 1,416,467 | 4,244,257 | |||||||||||||||
Toyo Suisan Kaisha, Ltd. | 137,987 | 5,231,370 | |||||||||||||||
Toyota Motor Corp. | 77,533 | 4,539,396 | |||||||||||||||
Netherlands 5.1% | 26,049,156 | ||||||||||||||||
Aegon NV | 603,410 | 3,460,057 | |||||||||||||||
Heineken Holding NV | 69,438 | 4,950,701 | |||||||||||||||
ING Groep NV | 331,929 | 4,702,635 | |||||||||||||||
Koninklijke KPN NV | 1,274,536 | 4,780,060 | |||||||||||||||
Royal Dutch Shell PLC, A Shares | 156,159 | 3,704,083 | |||||||||||||||
Wolters Kluwer NV (L) | 144,348 | 4,451,620 | |||||||||||||||
Singapore 2.2% | 11,088,991 | ||||||||||||||||
DBS Group Holdings, Ltd. | 306,500 | 3,498,496 | |||||||||||||||
Sembcorp Industries, Ltd. | 1,418,658 | 3,462,350 | |||||||||||||||
Singapore Telecommunications, Ltd. | 1,645,118 | 4,128,145 | |||||||||||||||
South Africa 0.6% | 3,197,730 | ||||||||||||||||
Tiger Brands, Ltd. | 145,232 | 3,197,730 | |||||||||||||||
Spain 2.2% | 11,200,909 | ||||||||||||||||
Banco Santander SA | 720,226 | 3,829,759 | |||||||||||||||
Ebro Foods SA | 170,935 | 3,357,370 | |||||||||||||||
Telefonica SA | 330,841 | 4,013,780 | |||||||||||||||
Sweden 3.4% | 17,065,715 | ||||||||||||||||
Getinge AB, B Shares | 184,346 | 4,114,525 | |||||||||||||||
Modern Times Group AB, B Shares | 161,462 | 4,156,580 | |||||||||||||||
SKF AB, B Shares | 245,904 | 4,519,339 | |||||||||||||||
Telefonaktiebolaget LM Ericsson, B Shares | 435,824 | 4,275,271 | |||||||||||||||
Switzerland 6.5% | 32,977,492 | ||||||||||||||||
Aryzta AG (I) | 91,984 | 3,898,594 | |||||||||||||||
Bucher Industries AG | 11,623 | 2,498,992 | |||||||||||||||
Credit Suisse Group AG (I) | 163,312 | 3,925,504 | |||||||||||||||
Glencore PLC (I) | 725,747 | 1,007,381 | |||||||||||||||
Nestle SA | 73,202 | 5,505,207 | |||||||||||||||
Novartis AG | 83,855 | 7,707,271 | |||||||||||||||
Roche Holding AG | 20,040 | 5,320,050 | |||||||||||||||
Zurich Insurance Group AG (I) | 12,686 | 3,114,493 | |||||||||||||||
United Kingdom 17.3% | 88,261,909 | ||||||||||||||||
Anglo American PLC | 184,801 | 1,543,659 | |||||||||||||||
AstraZeneca PLC | 68,130 | 4,320,693 | |||||||||||||||
Barclays PLC | 1,179,487 | 4,365,020 |
Shares | Value | ||||||||||||||||
United Kingdom (continued) | |||||||||||||||||
BP PLC | 606,168 | $3,075,306 | |||||||||||||||
Carillion PLC (L) | 765,234 | 3,502,599 | |||||||||||||||
Debenhams PLC | 3,346,299 | 4,005,093 | |||||||||||||||
Diageo PLC | 169,761 | 4,560,940 | |||||||||||||||
easyJet PLC | 194,330 | 5,245,740 | |||||||||||||||
GlaxoSmithKline PLC | 250,678 | 4,811,473 | |||||||||||||||
HSBC Holdings PLC | 641,258 | 4,837,453 | |||||||||||||||
Imperial Tobacco Group PLC | 100,486 | 5,194,990 | |||||||||||||||
Informa PLC | 550,462 | 4,686,825 | |||||||||||||||
Kingfisher PLC | 863,133 | 4,688,730 | |||||||||||||||
Meggitt PLC | 544,263 | 3,926,375 | |||||||||||||||
Premier Oil PLC (I) | 803,673 | 812,469 | |||||||||||||||
RSA Insurance Group PLC | 723,579 | 4,411,267 | |||||||||||||||
Sky PLC | 305,148 | 4,827,742 | |||||||||||||||
Smith & Nephew PLC | 322,555 | 5,635,415 | |||||||||||||||
Standard Chartered PLC | 425,734 | 4,131,711 | |||||||||||||||
Unilever PLC | 128,345 | 5,227,449 | |||||||||||||||
Vodafone Group PLC | 1,411,178 | 4,450,960 | |||||||||||||||
Yield (%) | Shares | Value | |||||||||||||||
Securities lending collateral 2.2% | $11,188,646 | ||||||||||||||||
(Cost $11,188,619) | |||||||||||||||||
John Hancock Collateral Trust (W) | 0.1319(Y) | 1,118,272 | 11,188,646 | ||||||||||||||
Short-term investments 7.5% | $38,226,983 | ||||||||||||||||
(Cost $38,226,983) | |||||||||||||||||
Money market funds 5.3% | 26,916,983 | ||||||||||||||||
JPMorgan U.S. Treasury Plus Money Market Fund | 0.0057(Y) | 26,916,983 | 26,916,983 | ||||||||||||||
Par value | Value | ||||||||||||||||
Repurchase agreement 2.2% | 11,310,000 | ||||||||||||||||
Barclays Capital Tri-Party Repurchase Agreement dated 9-30-15 at 0.090% to be repurchased at $11,310,028 on 10-1-15, collateralized by $10,930,000 U.S. Treasury Bonds, 3.125% due 8-15-44 (valued at $11,536,246, including interest) | 11,310,000 | $11,310,000 | |||||||||||||||
Total investments (Cost $561,474,882)† 102.7% | $524,190,312 | ||||||||||||||||
Other assets and liabilities, net (2.7%) | ($13,716,181 | ) | |||||||||||||||
Total net assets 100.0% | $510,474,131 |
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 9-30-15. | ||||||||||||||||
(W) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. | ||||||||||||||||
(Y) | The rate shown is the annualized seven-day yield as of 9-30-15. | ||||||||||||||||
† | At 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $562,085,494. Net unrealized depreciation aggregated $37,895,182, of which $37,332,468 related to appreciated investment securities and $75,227,650 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | ||||||||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers, at value (Cost $550,286,263) including $10,639,401 of securities loaned | $513,001,666 | |||||||||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers, at value (Cost $11,188,619) | 11,188,646 | |||||||||||||||||||||||||||||||||||||||||||||
Total investments, at value (Cost $561,474,882) | 524,190,312 | |||||||||||||||||||||||||||||||||||||||||||||
Foreign currency, at value (Cost $666,654) | 663,973 | |||||||||||||||||||||||||||||||||||||||||||||
Receivable for investments sold | 6,225,498 | |||||||||||||||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 32,675 | |||||||||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 1,897,797 | |||||||||||||||||||||||||||||||||||||||||||||
Receivable for securities lending income | 87,220 | |||||||||||||||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 65,192 | |||||||||||||||||||||||||||||||||||||||||||||
Total assets | 533,162,667 | |||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||
Payable for investments purchased | 11,344,214 | |||||||||||||||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 34,319 | |||||||||||||||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 11,188,550 | |||||||||||||||||||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 11,300 | |||||||||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 2,712 | |||||||||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 262 | |||||||||||||||||||||||||||||||||||||||||||||
Trustees' fees | 1,717 | |||||||||||||||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 105,462 | |||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 22,688,536 | |||||||||||||||||||||||||||||||||||||||||||||
Net assets | $510,474,131 | |||||||||||||||||||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $526,320,100 | |||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | 8,125,972 | |||||||||||||||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | 13,340,200 | |||||||||||||||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | (37,312,141 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Net assets | $510,474,131 | |||||||||||||||||||||||||||||||||||||||||||||
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 ($22,965,664 ÷ 3,017,692 shares)1 | $7.61 | ||||||||||||||||||||
Class C ($488,462 ÷ 63,962 shares)1 | $7.64 | ||||||||||||||||||||
Class I ($2,611,776 ÷ 342,847 shares) | $7.62 | ||||||||||||||||||||
Class R2 ($1,303,129 ÷ 170,872 shares) | $7.63 | ||||||||||||||||||||
Class R4 ($89,383 ÷ 11,723 shares) | $7.62 | ||||||||||||||||||||
Class R6 ($361,121 ÷ 47,363 shares) | $7.62 | ||||||||||||||||||||
Class NAV ($482,654,596 ÷ 63,259,419 shares) | $7.63 | ||||||||||||||||||||
Maximum offering price per share | |||||||||||||||||||||
Class A (net assets value per share ÷ 95%)2 | $8.01 |
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 six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $10,837,002 | |||||||||||||||||||||||||||||||||||||||
Interest | 7,226 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 222,453 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (1,081,479 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 9,985,202 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 2,367,720 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 36,103 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 33,948 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 17,327 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 3,715 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 47,512 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 4,674 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 26,122 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 157,030 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 28,742 | |||||||||||||||||||||||||||||||||||||||
Other | 7,149 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 2,730,042 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (35,632 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 2,694,410 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 7,290,792 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and foreign currency transactions | 10,652,983 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (77 | ) | ||||||||||||||||||||||||||||||||||||||
10,652,906 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies | (65,151,245 | ) | ||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | 114 | |||||||||||||||||||||||||||||||||||||||
(65,151,131 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (54,498,225 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($47,207,433 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | ||||||||||||||||||||||||||||||||||||||||||||||||
From operations | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $7,290,792 | $9,059,549 | ||||||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 10,652,906 | 17,205,758 | ||||||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (65,151,131 | ) | (35,101,952 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Decrease in net assets resulting from operations | (47,207,433 | ) | (8,836,645 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | ||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | ||||||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (436,690 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class C | — | (1,748 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class I | — | (77,715 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (30,910 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (2,362 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (132,686 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (10,843,162 | ) | |||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | ||||||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (1,291,448 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class C | — | (8,516 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class I | — | (207,524 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (99,379 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (6,715 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (318,341 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (26,014,960 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (39,472,156 | ) | |||||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | 109,161,070 | 36,851,531 | ||||||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | 61,953,637 | (11,457,270 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Net assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 448,520,494 | 459,977,764 | ||||||||||||||||||||||||||||||||||||||||||||||
End of period | $510,474,131 | $448,520,494 | ||||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $8,125,972 | $835,180 |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2,3 | 10-31-10 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.29 | $9.33 | $8.66 | $8.22 | $9.09 | $11.26 | $9.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income5 | 0.10 | 0.13 | 0.17 | 6 | 0.12 | 0.14 | 0.02 | 0.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.78 | ) | (0.41 | ) | 0.97 | 0.54 | (0.92 | ) 7 | 0.79 | 1.39 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.68 | ) | (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 | 9 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $7.61 | $8.29 | $9.33 | $8.66 | $8.22 | $9.09 | $11.26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)10,11 | (8.20 | ) 12 | (2.45 | ) | 13.51 | 8.16 | (8.20 | ) 9 | 9.13 | 12 | 14.46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $23 | $22 | $18 | $7 | $3 | $3 | $3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.41 | 13 | 1.53 | 1.63 | 1.99 | 3.73 | 16.05 | 13 | 6.71 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.40 | 13 | 1.52 | 1.60 | 1.60 | 1.60 | 1.77 | 13 | 1.85 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.28 | 13 | 1.50 | 1.85 | 6 | 1.52 | 1.68 | 0.48 | 13 | 0.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 38 | 27 | 21 | 12 | 14 | 80 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | For the five month period ended 3-31-11. The fund changed its fiscal year end from October 31 to March 31. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Audited by previous independent registered public accounting firm. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Includes redemption fees retained by the fund. Such redemption fees represent less than $0.01 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | In October 2011, the advisor made a voluntary payment to the fund of $6,950. Without this payment, performance would have been lower. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14 | The portfolio turnover is shown for the period from 11-1-10 to 3-31-11. |
Class C Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.35 | $9.63 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.05 | 0.01 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss on investments | (0.76 | ) | (0.60 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.71 | ) | (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 | $7.64 | $8.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (8.50 | ) 6 | (5.72 | ) 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 4.32 | 8 | 13.81 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.31 | 8 | 2.35 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.27 | 8 | 0.11 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class C shares is 8-28-14. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class I Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 3-31-11 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.29 | $9.33 | $8.66 | $8.21 | $9.09 | $8.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.11 | 0.18 | 0.20 | 4 | 0.13 | 0.19 | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.78 | ) | (0.44 | ) | 0.97 | 0.57 | (0.95 | ) 5 | 0.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.67 | ) | (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 for adviser | — | — | — | — | 0.02 | 8 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $7.62 | $8.29 | $9.33 | $8.66 | $8.21 | $9.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | (8.08 | ) 7 | (2.20 | ) | 13.87 | 8.61 | (7.87 | ) 8 | 1.22 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $3 | $3 | $8 | $6 | $1 | — | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.43 | 10 | 1.41 | 1.46 | 2.08 | 7.59 | 12.90 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.19 | 10 | 1.29 | 1.29 | 1.28 | 1.18 | 1.18 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.53 | 10 | 1.93 | 2.20 | 4 | 1.52 | 2.36 | 1.89 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 38 | 27 | 21 | 12 | 11 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class I shares is 2-14-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11 | The portfolio turnover is shown for the period from 11-1-10 to 3-31-11. |
Class R2 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.31 | $9.35 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.09 | 0.11 | 0.19 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.77 | ) | (0.40 | ) | 1.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.68 | ) | (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 | $7.63 | $8.31 | $9.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (8.18 | ) 6 | (2.63 | ) | 15.38 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $2 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.82 | 7 | 2.76 | 5.96 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.58 | 7 | 1.68 | 1.68 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.17 | 7 | 1.20 | 2.84 | 4,7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 38 | 8 |
1 | Six months ended 9-30-15. Unaudited. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R2 shares is 7-2-13. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-13 to 3-31-14. |
�� | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class R4 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.30 | $9.34 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.10 | 0.15 | 0.10 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.78 | ) | (0.42 | ) | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.68 | ) | (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 | $7.62 | $8.30 | $9.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (8.19 | ) 6 | (2.36 | ) | 15.55 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 6.09 | 8 | 18.12 | 15.49 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.29 | 8 | 1.43 | 1.43 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.42 | 8 | 1.67 | 1.43 | 4,8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 38 | 9 |
1 | Six months ended 9-30-15. Unaudited. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R4 shares is 7-2-13. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-13 to 3-31-14. |
Class R6 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.28 | $9.33 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.14 | 0.10 | 0.12 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.80 | ) | (0.34 | ) | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.66 | ) | (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 | $7.62 | $8.28 | $9.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.97 | ) 6 | (2.04 | ) | 15.83 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | $4 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.18 | 8 | 2.32 | 16.37 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.97 | 8 | 1.04 | 1.10 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 3.19 | 8 | 1.15 | 1.76 | 4,8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 38 | 9 |
1 | Six months ended 9-30-15. Unaudited. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R6 shares is 7-2-13. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 4-1-13 to 3-31-14. |
Class NAV Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.29 | $9.34 | $8.66 | $8.22 | $7.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.11 | 0.18 | 0.21 | 4 | 0.15 | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.77 | ) | (0.42 | ) | 0.99 | 0.55 | 0.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (0.66 | ) | (0.24 | ) | 1.20 | 0.70 | 1.01 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.24 | ) | (0.14 | ) | (0.12 | ) | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.57 | ) | (0.38 | ) | (0.14 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.81 | ) | (0.52 | ) | (0.26 | ) | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $7.63 | $8.29 | $9.34 | $8.66 | $8.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | (7.96 | ) 7 | (2.03 | ) | 14.23 | 8.69 | 14.05 | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $483 | $417 | $433 | $307 | $114 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.99 | 8 | 1.04 | 1.03 | 1.08 | 1.08 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.98 | 8 | 1.03 | 1.03 | 1.08 | 1.08 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.73 | 8 | 2.05 | 2.37 | 4 | 1.78 | 2.21 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 11 | 25 | 38 | 27 | 21 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class NAV shares is 12-16-11. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | 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 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 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 and related inputs 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 September 30, 2015, by major security category or type:
Total value at 9-30-15 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Australia | $20,805,916 | — | $20,805,916 | — | |
Canada | 27,093,720 | $27,093,720 | — | — | |
Chile | 2,103,115 | — | 2,103,115 | — | |
China | 5,658,656 | — | 5,658,656 | — | |
Denmark | 8,482,619 | — | 8,482,619 | — | |
Finland | 4,299,800 | — | 4,299,800 | — | |
France | 46,490,273 | — | 46,490,273 | — | |
Germany | 47,542,983 | — | 47,542,983 | — | |
Hong Kong | 16,424,456 | — | 16,424,456 | — | |
Ireland | 3,618,492 | — | 3,618,492 | — | |
Israel | 5,254,174 | — | 5,254,174 | — | |
Japan | 97,158,577 | — | 97,158,577 | — | |
Netherlands | 26,049,156 | — | 26,049,156 | — | |
Singapore | 11,088,991 | — | 11,088,991 | — | |
South Africa | 3,197,730 | — | 3,197,730 | — | |
Spain | 11,200,909 | — | 11,200,909 | — | |
Sweden | 17,065,715 | — | 17,065,715 | — | |
Switzerland | 32,977,492 | — | 32,977,492 | — | |
United Kingdom | 88,261,909 | — | 88,261,909 | — | |
Securities lending collateral | 11,188,646 | 11,188,646 | — | — | |
Short-term investments | 38,226,983 | 26,916,983 | 11,310,000 | — | |
Total investments in securities | $524,190,312 | $65,199,349 | $458,990,963 | — |
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, assets and liabilities resulting from repurchase agreements are not offset 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
29
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.
The fund has the right to recall loaned securities on demand. 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, and secured by the loaned securities. As of September 30, 2015, the fund loaned common stocks valued at $10,639,401 and received $11,188,550 of cash collateral.
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 market. 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.
30
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as the administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled them to participate in a $300 million unsecured line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the effective 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 six months ended September 30, 2015 were $403. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees, 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. Through June 30, 2015, class specific expenses, such as state registration fees and printing and postage, for all-classes, were calculated faily at the class level based on the appropriate 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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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 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.
31
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) 0.900% 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 group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the six months ended September 30, 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 2.35% of average annual net assets for Class C shares. 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 atleast 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. Prior to July 1, 2015, the Advisor had 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%, 1.29%, 1.68%, 1.43% and 1.10% of average annual net assets for Class A, Class I, Class R2, Class R4 and Class R6 shares, respectively. This agreement excluded 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 Advisor has contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund 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, 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.
The expense reductions described above amounted to the following for the six months ended September 30, 2015:
Class | Expense reduction | Class | Expense reduction | |
Class A | $924 | Class R4 | $2,320 | |
Class C | 4,642 | Class R6 | 2,864 | |
Class I | 3,452 | Class NAV | 19,568 | |
Class R2 | 1,813 | Total | $35,583 |
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The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 2015 were equivalent to a net annual effective rate of 0.87% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the six months ended September 30, 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 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 R2 and Class R4 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 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 Rule 12b-1 fees for Class R4 shares. The current waiver agreement expires on 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. This contractual waiver amounted to $49 for Class R4 shares for the six months ended September 30, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $105,619 for the six months ended September 30, 2015. Of this amount, $18,199 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $87,386 was paid as sales commissions to broker-dealers and $34 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 six months ended September 30, 2015, CDSCs received by the Distributor amounted to $0 and $84 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. 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 six months ended September 30, 2015 were:
Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage | |
Class A | $29,931 | $15,033 | $3,917 | $1,332 |
Class C | 2,311 | 290 | 5,067 | 33 |
Class I | -- | 1,660 | 4,292 | 460 |
Class R2 | 3,738 | 118 | 2,367 | 140 |
Class R4 | 123 | 8 | 2,367 | 19 |
Class R6 | -- | 218 | 2,514 | 25 |
Total | $36,103 | $17,327 | $20,524 | $2,009 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $26,988 and $2,665, respectively.
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Interfund lending program Pursuant to an Exemptive Order issued by the 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. Any open loans at period end are presented under the caption Payable for interfund lending in the Statement of assets and liabilities. At period end, no interfund loans were outstanding. Interest expense is included in Other expenses on the Statement of operations. 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 (expense) |
Lender | $5,000,000 | 3 | 0.46% | $192 |
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and for the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 501,272 | $4,205,824 | 885,731 | $7,909,041 | ||||||||||||||||||||||
Distributions reinvested | — | — | 220,604 | 1,727,328 | ||||||||||||||||||||||
Repurchased | (174,608 | ) | (1,462,424 | ) | (317,567 | ) | (2,806,805 | ) | ||||||||||||||||||
Net increase | 326,664 | $2,743,400 | 788,768 | $6,829,564 | ||||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 43,344 | $369,315 | 33,264 | $292,650 | ||||||||||||||||||||||
Distributions reinvested | — | — | 391 | 3,095 | ||||||||||||||||||||||
Repurchased | (12,846 | ) | (104,774 | ) | (191 | ) | (1,506 | ) | ||||||||||||||||||
Net increase | 30,498 | $264,541 | 33,464 | $294,239 |
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Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 30,793 | $258,389 | 200,945 | $1,806,486 | ||||||||||||||||||||||
Distributions reinvested | — | — | 35,355 | 276,472 | ||||||||||||||||||||||
Repurchased | (30,332 | ) | (249,714 | ) | (728,720 | ) | (6,344,131 | ) | ||||||||||||||||||
Net increase (decrease) | 461 | $8,675 | (492,420 | ) | ($4,261,173 | ) | ||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 10,160 | $85,700 | 68,675 | $653,805 | ||||||||||||||||||||||
Distributions reinvested | — | — | 15,456 | 121,485 | ||||||||||||||||||||||
Repurchased | (27,491 | ) | (226,508 | ) | (20,446 | ) | (180,182 | ) | ||||||||||||||||||
Net increase (decrease) | (17,331 | ) | ($140,808 | ) | 63,685 | $595,108 | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 27,752 | $237,242 | 544,642 | $4,830,146 | ||||||||||||||||||||||
Distributions reinvested | — | — | 56,459 | 441,512 | ||||||||||||||||||||||
Repurchased | (496,703 | ) | (4,237,994 | ) | (96,510 | ) | (809,843 | ) | ||||||||||||||||||
Net increase (decrease) | (468,951 | ) | ($4,000,752 | ) | 504,591 | $4,461,815 | ||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 12,939,598 | $110,299,099 | 1,517,012 | $13,856,834 | ||||||||||||||||||||||
Distributions reinvested | — | — | 4,713,315 | 36,858,122 | ||||||||||||||||||||||
Repurchased | (1,746 | ) | (13,085 | ) | (2,295,671 | ) | (21,782,978 | ) | ||||||||||||||||||
Net increase | 12,937,852 | $110,286,014 | 3,934,656 | $28,931,978 | ||||||||||||||||||||||
Total net increase | 12,809,193 | $109,161,070 | 4,832,744 | $36,851,531 |
There were no fund share transactions during the six months ended September 30, 2015 and the year ended March 31, 2015 for Class R4 shares.
Affiliates of the Trust owned 100% of shares of beneficial interest of Class R4 and Class NAV shares on September 30, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $155,434,262 and $54,539,461, respectively, for the six months ended September 30, 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 September 30, 2015, funds within the John Hancock group of funds complex held 94.5% 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 Funds II Lifestyle Growth Fund | 38.8% |
John Hancock Funds II Lifestyle Balanced Fund | 29.7% |
John Hancock Funds II Lifestyle Aggressive Fund | 14.6% |
John Hancock Funds II Lifestyle Moderate Fund | 5.5% |
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Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with John Hancock Asset Management a division of Manulife Asset Management (US) LLC (the Subadvisor) for John Hancock International Value Equity Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
36
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund underperformed its benchmark index for the one- and three-year periods and outperformed its benchmark index for the five-year period ended December 31, 2014. The Board also noted that the fund outperformed its
37
peer group average for the one- and five-year periods and underperformed its peer group average for the three-year period ended December 31, 2014. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the benchmark index for the five-year period and to the peer group for the one- and five-year periods. The Board concluded that the fund's performance has generally outperformed the historical performance of comparable funds.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are higher than the peer group median.
The Board took into account management's discussion of the fund's expenses, including action taken that will further reduce certain fund expense. The Board also took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the fund's Subadvisor is an affiliate of the Advisor; |
38
(i) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; | |||||||
(j) | noted that the subadvisory fee for the fund is paid by the Advisor; and | |||||||
(k) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with
39
the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the Lipper peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |
(2) | the performance of the fund has generally outperformed the historical performance of comparable funds; | |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and | |
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
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 John Hancock Asset Management a division of Manulife Asset Management (US) LLC Principal distributor John Hancock Funds, LLC Custodian Citibank, N.A. Transfer agent John Hancock Signature Services, Inc. Legal counsel K&L Gates 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
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stewardship dating back to 1862. Helping our shareholders pursue
their financial goals is at the core of everything we do. It's why we
support the role of professional financial advice and operate with the
highest standards of conduct and integrity.
A better way to invest
We build funds based on investor needs, then search the world to find
proven portfolio teams with specialized expertise in those strategies.
As a manager of managers, we apply vigorous oversight to ensure that
they continue to meet our uncompromising standards and serve the
best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, 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 | 366SA 9/15 11/15 |
John Hancock
Strategic Growth Fund
Semiannual report 9/30/15
A message to shareholders
Dear shareholder,
Global financial markets were especially rocky in mid-2015. The pullback we had anticipated for some months took place in August, and U.S. equities experienced their first official correction—a decline of more than 10% in the stock market—in more than four years. There were several headwinds restraining stock prices from moving higher all year, but the trigger for this summer's correction was the news of slowing economic growth in China and the effect that might have on global growth. For the time being, global economic data continues to be a leading driver of markets worldwide.
The asset managers in our network believe, on balance, that investors should stay the course when it comes to U.S. equities. Our economy continues to grow at a healthy pace, driven by strong housing and jobs data, falling commodity prices, solid consumer spending, and low inflation. While the U.S. Federal Reserve (Fed) chose to leave the federal funds rate unchanged at its September meeting, Fed Chair Janet Yellen cited a number of positives in the U.S. economy and signaled that the Fed will likely raise interest rates soon in response to stronger growth.
Introducing John Hancock Multifactor Exchange-Traded Funds (ETFs)
We believe investors benefit from a combination of active and passive strategies in their portfolios. That's why, for years, we've offered actively managed funds to our shareholders, alongside asset allocation portfolios that employ a mix of active and passive strategies. That same thinking is what led us to team up with Dimensional Fund Advisors LP—a company regarded as one of the pioneers in strategic beta investing—for the launch of the passively managed John Hancock Multifactor ETFs.* Each ETF seeks to track a custom index built upon decades of academic research into the factors that drive higher expected returns: smaller capitalizations, lower valuations, and higher profitability. For nearly 30 years, it's just the kind of time-tested approach we have looked for as a manager of managers. For more information, visit our website at jhinvestments.com/etf.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and thank existing shareholders 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 September 30, 2015. They are subject to change at any time. For more up-to-date information, you can visit our website at jhinvestments.com.
* | Strategic beta investing ETFs seek to improve upon cap-weighted strategies by tracking a custom index that combines active management insight with the discipline of a rules-based approach. |
John Hancock
Strategic Growth Fund
1
INVESTMENT OBJECTIVE
The fund seeks long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/15 (%)
Russell 1000 Growth Index is an unmanaged index that measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index 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 result in lower returns.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower. Since inception returns for the Morningstar fund category average are not available.
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 SIX MONTHS
Relative underperformance
The fund lagged its benchmark, the Russell 1000 Growth Index, for the six-month reporting period.
Challenging results in healthcare and industrials
Stock selection was weak in the healthcare and industrials sectors, as well as in materials, but to a lesser extent.
Overweighting consumer discretionary added relative value
An overweighting in the relatively strong-performing consumer discretionary sector partially offset weakness in other sectors.
SECTOR COMPOSITION AS OF 9/30/15 (%)
A note about risks
Growth stocks may be more susceptible to earnings disappointments. The value of a company's equity securities is subject to changes 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. 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 in a wider variety of sectors. Illiquid securities may be difficult to sell at a price approximating their value. Hedging, derivatives, and other strategic transactions 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-CSRS/0001145443-15-001273/wshannonreid.jpg)
W. Shannon Reid, CFA
Portfolio Manager
John Hancock Asset Management
The fund trailed its benchmark, the Russell 1000 Growth Index. What factors influenced relative performance?
It was a tough environment for investors in U.S. large-cap growth companies. Various concerns drove the stock market downward, including worries about slowing economic growth in China; the prospect of future drug price regulation, which weighed on the widely owned healthcare sector; and continued weakness among energy, materials, and industrial names.
For the six months ended September 30, 2015, relative to the benchmark, the fund was hurt the most by disappointing security selection in the healthcare and industrials sectors, and to a lesser extent in materials. Stock picking was also subpar in the consumer discretionary category, although a large overweighting in the sector, the only one in the index to gain ground, was an offsetting positive.
Which stocks hampered the fund's relative results?
The fund's biggest individual detractor was Michael Kors Holdings, Ltd., a designer and retailer of personal accessories. Its stock lost close to one-quarter of its value on a single day in late May after the company announced a sharp drop in same-store sales, as well as a weak sales and earnings forecast. In September, we sold the fund's stake in this longtime holding, as we became concerned that the luxury handbag market, a key driver of Michael Kors' earnings, may generate less growth than in the past.
As mentioned, security selection in healthcare was especially challenging, most notably a position in Mylan NV, a maker of generic pharmaceuticals. Early in the period, Mylan received an acquisition offer from Teva Pharmaceutical Industries, Ltd. Teva eventually walked away from the deal, purchasing a rival company instead, and Mylan's shares fell in response. At period end, the fund continued to hold Mylan; we believed the company was attractively valued relative to its business fundamentals and in light of promising upcoming drug launches.
Other healthcare stocks to weigh on results included pharmaceuticals distributor McKesson Corp. and biotechnology company Biogen, Inc. Shares of McKesson dropped sharply in August, as
4
In the consumer discretionary group, Dollar Tree, Inc. was another notable detractor. Its shares were down for the period, as the company reported worse-than-expected earnings. We were somewhat surprised by this development, partly because we had expected lower gasoline prices to help lower-income consumers, the retailer's target market. At period end, we maintained the fund's position in Dollar Tree, as we saw the company's business challenges as temporary. We also anticipated that its acquisition of rival Family Dollar Stores, Inc. (which the fund did not hold) would boost the combined company's future earnings.
Which individual stocks contributed to performance?
The top contributor by far was a large overweighting in Internet retailer Amazon.com, Inc., whose stock was up for the six months. Amazon's shares gained after the company announced stronger-than-expected quarterly profits, driven by lower capital spending and its cloud computing operations, an increasingly important market for the company.
Facebook, Inc. was another strong stock for the fund; shares of the social media company gained for the six months. Facebook has positioned itself at the center of the new media advertising business,
TOP 10 HOLDINGS AS OF 9/30/15 (%)
Apple, Inc. | 7.0 |
Facebook, Inc., Class A | 4.1 |
Amazon.com, Inc. | 3.8 |
Google, Inc., Class C | 3.4 |
The Walt Disney Company | 2.9 |
Visa, Inc., Class A | 2.8 |
Gilead Sciences, Inc. | 2.8 |
The Home Depot, Inc. | 2.6 |
Comcast Corp., Class A | 2.6 |
CVS Health Corp. | 2.5 |
TOTAL | 34.5 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
5
Also contributing to results was a position in tobacco manufacturer Altria Group, Inc., which benefited both from investors' increasing preference for more defensive stocks in a volatile marketplace and the company's market share gains in the premium cigarette market segment.
What changes did you make to the fund during the period, and why?
In the summer months, we became more concerned about economic growth in emerging economies and how that would affect commodity prices and the earnings of energy, materials, and industrials companies. We responded by selling certain stocks we thought would disproportionately struggle in a more challenging global economic environment. At the end of the period, exposure to the energy and industrials sectors was lower compared to six months earlier, while the allocation to materials was slightly higher.
During the period, we also modestly reduced exposure to the healthcare sector, in which the fund had been significantly overweighted but which we believed had become less attractively valued after several years of strong gains. Early on, for example, we reduced the fund's overweighting in the biotechnology industry, while late in the period, we sold some stocks of companies exposed to generic pharmaceuticals. The fund finished the period only modestly overweighted in healthcare.
Meanwhile, we added to the fund's allocation to information technology, moving from a meaningful underweight at the start of the period to a meaningful overweight by its end. A number of stocks in this group met our investment criteria, providing favorable growth prospects at attractive valuations and appearing well positioned to capitalize on global trends favoring technology businesses.
How would you describe the fund's positioning at period end?
We took the market correction late in the period as an opportunity to add to stocks we liked at valuations we found even more attractive. A continuation in market volatility would provide us with additional opportunities to increase exposure to stocks that we believe are particularly compelling from a risk/reward perspective.
6
In light of our concerns about global economic growth, the fund was positioned with a greater focus on companies with U.S. operations, which we believed provided better prospects for the earnings growth we regularly seek. As we mentioned, we continued to de-emphasize globally oriented, economically sensitive stocks whose earnings struck us as more vulnerable. Across the portfolio, we continued to emphasize higher-quality, larger-cap stocks with superior cash flow and earnings characteristics, while we sold some of the fund's holdings that we considered more volatile.
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 SEPTEMBER 30, 2015
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||
1-year | Since inception1 | 6-month | Since inception1 | ||||
Class A | -3.19 | 13.71 | -11.88 | 62.78 | |||
Class C2 | 0.30 | 15.02 | -8.50 | 70.02 | |||
Class I3 | 2.27 | 15.68 | -7.08 | 73.73 | |||
Class R22,3 | 1.82 | 15.23 | -7.37 | 71.20 | |||
Class R42,3 | 1.95 | 15.27 | -7.25 | 71.43 | |||
Class R62,3 | 2.22 | 15.35 | -7.01 | 71.87 | |||
Class NAV3 | 2.54 | 15.90 | -7.01 | 74.97 | |||
Index† | 3.17 | 16.06 | -5.18 | 75.75 |
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 (%) | 1.15 | 1.85 | 0.86 | 1.24 | 1.09 | 0.74 | 0.72 |
Net (%) | 1.15 | 1.85 | 0.86 | 1.24 | 0.99 | 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.
* | Expenses have been estimated for the first year of operation for Class R2, Class R4 and Class R6 shares, respectively. |
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 | 17,002 | 17,002 | 17,575 |
Class I3 | 12-19-11 | 17,373 | 17,373 | 17,575 |
Class R22,3 | 12-19-11 | 17,120 | 17,120 | 17,575 |
Class R42,3 | 12-19-11 | 17,143 | 17,143 | 17,575 |
Class R62,3 | 12-19-11 | 17,187 | 17,187 | 17,575 |
Class NAV3 | 12-19-11 | 17,497 | 17,497 | 17,575 |
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 result in lower returns.
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 and may be higher or lower than if adjusted to reflect the expenses of any other share classes. |
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 April 1, 2015, with the same investment held until September 30, 2015.
Account value on 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $927.60 | $5.83 | 1.21% |
Class C | 1,000.00 | 924.30 | 9.72 | 2.02% |
Class I | 1,000.00 | 929.20 | 4.29 | 0.89% |
Class R2 | 1,000.00 | 926.30 | 6.74 | 1.40% |
Class R4 | 1,000.00 | 927.50 | 5.64 | 1.17% |
Class R6 | 1,000.00 | 929.90 | 3.47 | 0.72% |
Class NAV | 1,000.00 | 929.90 | 3.47 | 0.72% |
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 September 30, 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 April 1, 2015, with the same investment held until September 30, 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 4-1-2015 | Ending value on 9-30-2015 | Expenses paid during period ended 9-30-20151 | Annualized expense ratio | |
Class A | $1,000.00 | $1,019.00 | $6.11 | 1.21% |
Class C | 1,000.00 | 1,014.90 | 10.18 | 2.02% |
Class I | 1,000.00 | 1,020.60 | 4.50 | 0.89% |
Class R2 | 1,000.00 | 1,018.00 | 7.06 | 1.40% |
Class R4 | 1,000.00 | 1,019.20 | 5.91 | 1.17% |
Class R6 | 1,000.00 | 1,021.40 | 3.64 | 0.72% |
Class NAV | 1,000.00 | 1,021.40 | 3.64 | 0.72% |
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 183/366 (to reflect the one-half year period). |
11
Fund's investments
As of 9-30-15 (unaudited) | ||||||||||||||
Shares | Value | |||||||||||||
Common stocks 99.9% | $1,776,966,897 | |||||||||||||
(Cost $1,531,367,298) | ||||||||||||||
Consumer discretionary 27.5% | 489,998,477 | |||||||||||||
Auto components 2.9% | ||||||||||||||
Delphi Automotive PLC | 326,672 | 24,840,139 | ||||||||||||
Lear Corp. | 243,109 | 26,445,397 | ||||||||||||
Hotels, restaurants and leisure 2.6% | ||||||||||||||
McDonald's Corp. | 181,154 | 17,849,104 | ||||||||||||
Starbucks Corp. | 311,236 | 17,690,654 | ||||||||||||
Texas Roadhouse, Inc. | 308,061 | 11,459,869 | ||||||||||||
Internet and catalog retail 5.8% | ||||||||||||||
Amazon.com, Inc. (I) | 133,324 | 68,247,222 | ||||||||||||
The Priceline Group, Inc. (I) | 28,336 | 35,047,665 | ||||||||||||
Media 5.5% | ||||||||||||||
Comcast Corp., Class A | 802,856 | 45,666,449 | ||||||||||||
The Walt Disney Company | 513,496 | 52,479,291 | ||||||||||||
Multiline retail 2.9% | ||||||||||||||
Dollar Tree, Inc. (I) | 383,143 | 25,540,312 | ||||||||||||
Target Corp. | 341,120 | 26,832,499 | ||||||||||||
Specialty retail 7.8% | ||||||||||||||
Lowe's Companies, Inc. | 445,497 | 30,703,653 | ||||||||||||
O'Reilly Automotive, Inc. (I) | 31,604 | 7,901,000 | ||||||||||||
The Home Depot, Inc. | 401,101 | 46,323,154 | ||||||||||||
Tractor Supply Company | 336,474 | 28,371,488 | ||||||||||||
Williams-Sonoma, Inc. | 322,208 | 24,600,581 | ||||||||||||
Consumer staples 11.0% | 194,645,606 | |||||||||||||
Food and staples retailing 5.2% | ||||||||||||||
Costco Wholesale Corp. | 221,625 | 32,040,326 | ||||||||||||
CVS Health Corp. | 466,915 | 45,047,959 | ||||||||||||
The Kroger Company | 408,638 | 14,739,573 | ||||||||||||
Food products 1.2% | ||||||||||||||
Mondelez International, Inc., Class A | 516,455 | 21,623,971 | ||||||||||||
Tobacco 4.6% | ||||||||||||||
Altria Group, Inc. | 827,285 | 45,004,304 | ||||||||||||
Philip Morris International, Inc. | 456,189 | 36,189,473 | ||||||||||||
Energy 0.5% | 9,482,813 | |||||||||||||
Oil, gas and consumable fuels 0.5% | ||||||||||||||
Hess Corp. | 87,129 | 4,361,678 | ||||||||||||
Occidental Petroleum Corp. | 77,417 | 5,121,135 |
Shares | Value | |||||||||||||
Financials 4.1% | $71,842,026 | |||||||||||||
Banks 2.8% | ||||||||||||||
First Republic Bank | 324,847 | 20,390,646 | ||||||||||||
Signature Bank (I) | 204,532 | 28,135,422 | ||||||||||||
Capital markets 1.3% | ||||||||||||||
KKR & Company LP | 659,504 | 11,066,477 | ||||||||||||
The Blackstone Group LP | 386,785 | 12,249,481 | ||||||||||||
Health care 17.4% | 310,269,253 | |||||||||||||
Biotechnology 7.3% | ||||||||||||||
Alexion Pharmaceuticals, Inc. (I) | 151,237 | 23,651,954 | ||||||||||||
Amgen, Inc. | 213,629 | 29,549,163 | ||||||||||||
Biogen, Inc. (I) | 95,155 | 27,767,181 | ||||||||||||
Gilead Sciences, Inc. | 498,610 | 48,958,516 | ||||||||||||
Health care providers and services 6.1% | ||||||||||||||
Anthem, Inc. | 204,487 | 28,628,180 | ||||||||||||
Cardinal Health, Inc. | 358,284 | 27,523,377 | ||||||||||||
McKesson Corp. | 184,555 | 34,148,212 | ||||||||||||
UnitedHealth Group, Inc. | 163,732 | 18,994,549 | ||||||||||||
Pharmaceuticals 4.0% | ||||||||||||||
Endo International PLC (I) | 345,811 | 23,957,786 | ||||||||||||
Mylan NV (I) | 337,236 | 13,577,121 | ||||||||||||
Pfizer, Inc. | 1,066,960 | 33,513,214 | ||||||||||||
Industrials 5.2% | 91,990,400 | |||||||||||||
Aerospace and defense 1.5% | ||||||||||||||
The Boeing Company | 211,854 | 27,742,281 | ||||||||||||
Airlines 1.0% | ||||||||||||||
American Airlines Group, Inc. | 443,618 | 17,225,687 | ||||||||||||
Machinery 1.3% | ||||||||||||||
Wabtec Corp. | 257,665 | 22,687,403 | ||||||||||||
Road and rail 1.4% | ||||||||||||||
Union Pacific Corp. | 275,252 | 24,335,029 | ||||||||||||
Information technology 31.0% | 551,164,959 | |||||||||||||
Electronic equipment, instruments and components 0.6% | ||||||||||||||
CDW Corp. | 253,725 | 10,367,204 | ||||||||||||
Internet software and services 9.5% | ||||||||||||||
Facebook, Inc., Class A (I) | 819,572 | 73,679,523 | ||||||||||||
Google, Inc., Class A (I) | 53,166 | 33,939,579 | ||||||||||||
Google, Inc., Class C (I) | 100,563 | 61,184,540 | ||||||||||||
IT services 5.5% | ||||||||||||||
Cognizant Technology Solutions Corp., Class A (I) | 478,675 | 29,969,842 | ||||||||||||
MasterCard, Inc., Class A | 186,602 | 16,816,572 | ||||||||||||
Visa, Inc., Class A | 723,145 | 50,374,281 |
Shares | Value | |||||||||||||
Information technology (continued) | ||||||||||||||
Semiconductors and semiconductor equipment 2.7% | ||||||||||||||
NXP Semiconductors NV (I) | 351,983 | $30,647,160 | ||||||||||||
Texas Instruments, Inc. | 352,533 | 17,457,434 | ||||||||||||
Software 5.7% | ||||||||||||||
Electronic Arts, Inc. (I) | 408,970 | 27,707,718 | ||||||||||||
Microsoft Corp. | 783,451 | 34,675,541 | ||||||||||||
ServiceNow, Inc. (I) | 321,789 | 22,348,246 | ||||||||||||
Workday, Inc., Class A (I) | 252,179 | 17,365,046 | ||||||||||||
Technology hardware, storage and peripherals 7.0% | ||||||||||||||
Apple, Inc. | 1,129,939 | 124,632,273 | ||||||||||||
Materials 3.2% | 57,573,363 | |||||||||||||
Chemicals 3.2% | ||||||||||||||
PPG Industries, Inc. | 344,656 | 30,222,885 | ||||||||||||
The Sherwin-Williams Company | 122,769 | 27,350,478 | ||||||||||||
Par value | Value | |||||||||||||
Short-term investments 0.0% | $481,000 | |||||||||||||
(Cost $481,000) | ||||||||||||||
Repurchase agreement 0.0% | 481,000 | |||||||||||||
Repurchase Agreement with State Street Corp. dated 9-30-15 at 0.000% to be repurchased at $481,000 on 10-1-15, collateralized by $485,000 U.S. Treasury Notes, 1.625% due 12-31-19 (valued at $492,906, including interest) | 481,000 | 481,000 | ||||||||||||
Total investments (Cost $1,531,848,298)† 99.9% | $1,777,447,897 | |||||||||||||
Other assets and liabilities, net 0.1% | $2,195,100 | |||||||||||||
Total net assets 100.0% | $1,779,642,997 |
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 9-30-15, the aggregate cost of investment securities for federal income tax purposes was $1,534,513,824. Net unrealized appreciation aggregated $242,934,073, of which $296,464,084 related to appreciated investment securities and $53,530,011 related to depreciated investment securities. |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-15 (unaudited)
Assets | |||||||||||||||||||
Investments, at value (Cost $1,531,848,298) | $1,777,447,897 | ||||||||||||||||||
Cash | 1,908,861 | ||||||||||||||||||
Receivable for fund shares sold | 99,261 | ||||||||||||||||||
Dividends and interest receivable | 1,321,291 | ||||||||||||||||||
Receivable for securities lending income | 8,671 | ||||||||||||||||||
Other receivables and prepaid expenses | 74,611 | ||||||||||||||||||
Total assets | 1,780,860,592 | ||||||||||||||||||
Liabilities | |||||||||||||||||||
Payable for fund shares repurchased | 1,069,984 | ||||||||||||||||||
Payable to affiliates | |||||||||||||||||||
Accounting and legal services fees | 38,976 | ||||||||||||||||||
Transfer agent fees | 2,827 | ||||||||||||||||||
Trustees' fees | 5,657 | ||||||||||||||||||
Other liabilities and accrued expenses | 100,151 | ||||||||||||||||||
Total liabilities | 1,217,595 | ||||||||||||||||||
Net assets | $1,779,642,997 | ||||||||||||||||||
Net assets consist of | |||||||||||||||||||
Paid-in capital | $1,420,072,296 | ||||||||||||||||||
Undistributed net investment income | 11,328,467 | ||||||||||||||||||
Accumulated net realized gain (loss) on investments | 102,642,635 | ||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 245,599,599 | ||||||||||||||||||
Net assets | $1,779,642,997 | ||||||||||||||||||
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 ($15,997,690 ÷ 1,048,769 shares) 1 | $15.25 | ||||||||||||||||||
Class C ($904,551 ÷ 59,286 shares) 1 | $15.26 | ||||||||||||||||||
Class I ($11,300,004 ÷ 735,669 shares) | $15.36 | ||||||||||||||||||
Class R2 ($92,939 ÷ 6,061 shares) | $15.33 | ||||||||||||||||||
Class R4 ($93,050 ÷ 6,061 shares) | $15.35 | ||||||||||||||||||
Class R6 ($93,264 ÷ 6,061 shares) | $15.39 | ||||||||||||||||||
Class NAV ($1,751,161,499 ÷ 113,814,056 shares) | $15.39 | ||||||||||||||||||
Maximum offering price per share | |||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $16.05 |
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 six months ended 9-30-15 (unaudited)
Investment income | ||||||||||||||||||||||||||||||||||||||||
Dividends | $13,655,967 | |||||||||||||||||||||||||||||||||||||||
Securities lending | 47,316 | |||||||||||||||||||||||||||||||||||||||
Interest | 775 | |||||||||||||||||||||||||||||||||||||||
Less foreign taxes withheld | (19,183 | ) | ||||||||||||||||||||||||||||||||||||||
Total investment income | 13,684,875 | |||||||||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Investment management fees | 6,824,183 | |||||||||||||||||||||||||||||||||||||||
Distribution and service fees | 31,070 | |||||||||||||||||||||||||||||||||||||||
Accounting and legal services fees | 122,938 | |||||||||||||||||||||||||||||||||||||||
Transfer agent fees | 18,687 | |||||||||||||||||||||||||||||||||||||||
Trustees' fees | 14,721 | |||||||||||||||||||||||||||||||||||||||
State registration fees | 43,589 | |||||||||||||||||||||||||||||||||||||||
Printing and postage | 2,837 | |||||||||||||||||||||||||||||||||||||||
Professional fees | 52,135 | |||||||||||||||||||||||||||||||||||||||
Custodian fees | 111,932 | |||||||||||||||||||||||||||||||||||||||
Registration and filing fees | 58,286 | |||||||||||||||||||||||||||||||||||||||
Other | 18,574 | |||||||||||||||||||||||||||||||||||||||
Total expenses | 7,298,952 | |||||||||||||||||||||||||||||||||||||||
Less expense reductions | (93,225 | ) | ||||||||||||||||||||||||||||||||||||||
Net expenses | 7,205,727 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 6,479,148 | |||||||||||||||||||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||||||||||||||||||
Investments in unaffiliated issuers | 41,370,785 | |||||||||||||||||||||||||||||||||||||||
Investments in affiliated issuers | (127 | ) | ||||||||||||||||||||||||||||||||||||||
41,370,658 | ||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||||||||||||||||||
Investments | (180,918,834 | ) | ||||||||||||||||||||||||||||||||||||||
(180,918,834 | ) | |||||||||||||||||||||||||||||||||||||||
Net realized and unrealized loss | (139,548,176 | ) | ||||||||||||||||||||||||||||||||||||||
Decrease in net assets from operations | ($133,069,028 | ) |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-15 | Year ended 3-31-15 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $6,479,148 | $14,453,128 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 41,370,658 | 140,862,498 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (180,918,834 | ) | 145,254,820 | ||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets resulting from operations | (133,069,028 | ) | 300,570,446 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class I | — | (7,670 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (10,952,106 | ) | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (998,273 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (16,646 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (165,697 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (151,510,488 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (163,650,880 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (196,747,149 | ) | 508,654,024 | ||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (329,816,177 | ) | 645,573,590 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 2,109,459,174 | 1,463,885,584 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $1,779,642,997 | $2,109,459,174 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $11,328,467 | $4,849,319 |
Financial highlights
Class A Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.44 | $15.50 | $12.62 | $12.14 | $10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)3 | 0.01 | 0.03 | (0.04 | ) | 0.02 | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.20 | ) | 2.14 | �� | 3.46 | 0.49 | 2.15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.19 | ) | 2.17 | 3.42 | 0.51 | 2.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | — | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.25 | $16.44 | $15.50 | $12.62 | $12.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5,6 | (7.24 | ) 7 | 14.68 | 27.27 | 4.25 | 21.41 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $16 | $18 | $10 | $5 | $3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.21 | 8 | 1.33 | 1.51 | 2.01 | 2.05 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.21 | 8 | 1.30 | 1.30 | 1.30 | 1.30 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.17 | 8 | 0.16 | (0.29 | ) | 0.18 | (0.32 | ) 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 91 | 100 | 26 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Period from 12-19-11 (commencement of operations) to 3-31-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Less than $0.005 per share. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. |
Class C Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.51 | $16.49 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss3 | (0.05 | ) | (0.04 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.20 | ) | 1.29 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.25 | ) | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (1.23 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (1.23 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.26 | $16.51 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | (7.57 | ) 6 | 8.20 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 3.10 | 7 | 7.03 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.02 | 7 | 2.05 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.62 | ) 7 | (0.42 | ) 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 8 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class C shares is 8-28-14. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | Total returns would have been lower had certain expenses not been reduced during the period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class I Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.53 | $15.58 | $12.67 | $12.16 | $10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.04 | 0.10 | 0.01 | 0.06 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.21 | ) | 2.14 | 3.47 | 0.50 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.17 | ) | 2.24 | 3.48 | 0.56 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.06 | ) | (0.03 | ) | (0.02 | ) | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (1.29 | ) | (0.57 | ) | (0.05 | ) | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.36 | $16.53 | $15.58 | $12.67 | $12.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.08 | ) 6 | 15.07 | 27.68 | 4.62 | 21.63 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $11 | $12 | $2 | $1 | — | 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.91 | 8 | 1.50 | 2.62 | 5.88 | 11.44 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.89 | 8 | 0.94 | 0.94 | 0.94 | 0.94 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.50 | 8 | 0.62 | 0.09 | 0.51 | 0.14 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 91 | 100 | 26 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Period from 12-19-11 (commencement of operations) to 3-31-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R2 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.55 | $16.50 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | — | 4 | — | 4 | ||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.22 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.22 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.33 | $16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.37 | ) 6 | 0.30 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.23 | 8 | 15.09 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.40 | 8 | 1.43 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.02 | ) 8 | — | 8,9 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 10 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R2 shares is 3-27-15. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | Less than 0.005%. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class R4 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.55 | $16.50 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.02 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.22 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.20 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.35 | $16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.25 | ) 6 | 0.30 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.23 | 8 | 15.09 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.17 | 8 | 1.18 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.22 | 8 | 0.18 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R4 shares is 3-27-15. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class R6 Shares Period ended | 9-30-15 | 1 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.55 | $16.50 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.06 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.22 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.16 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.39 | $16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.01 | ) 6 | 0.30 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 8.50 | 8 | 15.91 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.72 | 8 | 0.81 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.67 | 8 | 0.63 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 9 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class R6 shares is 3-27-15. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class NAV Shares Period ended | 9-30-15 | 1 | 3-31-15 | 3-31-14 | 3-31-13 | 3-31-12 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.55 | $15.58 | $12.67 | $12.16 | $10.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.05 | 0.12 | 0.04 | 0.08 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (1.21 | ) | 2.17 | 3.47 | 0.50 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | (1.16 | ) | 2.29 | 3.51 | 0.58 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.09 | ) | (0.06 | ) | (0.04 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (1.23 | ) | (0.54 | ) | (0.03 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (1.32 | ) | (0.60 | ) | (0.07 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $15.39 | $16.55 | $15.58 | $12.67 | $12.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | (7.01 | ) 6 | 15.43 | 27.88 | 4.80 | 21.63 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,751 | $2,078 | $1,452 | $1,013 | $336 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.73 | 7 | 0.72 | 0.74 | 0.78 | 0.85 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.72 | 7 | 0.72 | 0.73 | 0.78 | 0.85 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.66 | 7 | 0.72 | 0.26 | 0.71 | 0.15 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 51 | 109 | 91 | 100 | 26 |
1 | Six months ended 9-30-15. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Period from 12-19-11 (commencement of operations) to 3-31-12. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 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. Foreign securities are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. 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 and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
As of September 30, 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.
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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, assets and liabilities resulting from repurchase agreements are not offset 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. 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.
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 portfolio, 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.
The fund has the right to recall loaned securities on demand. 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.
Effective June 30, 2015, the fund and other affiliated funds entered into a syndicated line of credit agreement, with Citibank, N.A. as the administrative agent, that enables them to participate in a $750 million unsecured committed line of credit. Prior to June 30, 2015, the fund and other affiliated funds had an agreement with Citibank that enabled 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 effective line of credit, is charged to each participating fund on a pro rata basis and is
26
reflected in other expenses on the Statement of operations. Commitment fees for the six months ended September 30, 2015 were $1,202. For the six months ended September 30, 2015, the fund had no borrowings under either 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, and transfer agent fees, are calculated daily for each class, based on the net asset value of the class and the applicable specific expense rates. Through June 30, 2015, class-specific expenses, such as state registration fees and printing and postage, for all classes, were calculated daily at the class level based on 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.
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.
Such distributions, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP.
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) 0.725% 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
27
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 six months ended September 30, 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/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 2.05%, 1.43%, and 1.18% for Class C, Class R2, and Class R4 shares, respectively, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, acquired fund fees and short dividend expense. These expense limitations shall remain in effect until June 30, 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. Prior to July 1, 2015, Class A and Class I shares had fee waivers and/or reimbursement such that the expenses would not exceed 1.30% and 0.94% for Class A and Class I shares, respectively.
Effective September 1, 2015, the Advisor voluntarily agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund's total operating expenses at 1.85%, 1.24%, and 1.09% for Class C, Class R2, and Class R4 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. These expense limitations shall remain in effect until terminated by the Advisor on notice to the fund.
The Advisor has contractually agreed to waive and/or reimburse all class specific expenses for Class R6 shares of the fund to the extent they exceed 0.00% of average annual net assets, on an annualized basis. The expense limitation 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 the time.
For the six months ended September 30, 2015, the expense reductions described above amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $680 | Class R4 | $3,475 | |
Class C | 4,834 | Class R6 | 3,893 | |
Class I | 1,401 | Class NAV | 75,484 | |
Class R2 | 3,408 | Total | $93,175 |
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 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 six months ended September 30, 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
28
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 fees | Class | Rule 12b-1 fee | Service fees | |
Class A | 0.30% | — | Class R2 | 0.25% | 0.25% | |
Class C | 1.00% | — | Class R4 | 0.25% | 0.10% |
The fund's Distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares. This current waiver agreement expires on 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. This contractual waiver amounted to $50 for Class R4 shares for the six months ended September 30, 2015.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $28,065 for the six months ended September 30, 2015. Of this amount, $4,401 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $23,433 was paid as sales commissions to broker-dealers and $231 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 six months ended September 30, 2015, CDSCs received by the Distributor amounted to $508 for 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. 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 six months ended September 30, 2015 were:
Class | Distribution and service fees | Transfer agent fees | State registration fees | Printing and postage |
Class A | $26,362 | $11,037 | $4,354 | $946 |
Class C | 4,458 | 560 | 5,484 | 65 |
Class I | — | 7,066 | 4,041 | 232 |
Class R2 | 125 | 8 | 3,607 | 7 |
Class R4 | 125 | 8 | 3,607 | 7 |
Class R6 | — | 8 | 3,874 | 7 |
Class NAV | — | — | — | — |
Total | $31,070 | $18,687 | $24,967 | $1,264 |
Effective July 1, 2015, state registration fees and printing and postage are treated as fund level expenses and are not included in the table above. For the period July 1, 2015 to September 30, 2015, state registration fees and printing and postage amounted to $18,622 and $1,573, respectively.
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Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Interfund lending program Pursuant to an Exemptive Order issued by the 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 | $60,000,000 | 1 | 0.47% | $775 |
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2015 and for the year ended March 31, 2015 were as follows:
Six months ended 9-30-15 | Year ended 3-31-15 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 300,294 | $4,901,936 | 545,810 | $8,919,693 | ||||||||||||||||||||||
Distributions reinvested | — | — | 50,333 | 764,053 | ||||||||||||||||||||||
Repurchased | (329,220 | ) | (5,343,113 | ) | (168,439 | ) | (2,718,915 | ) | ||||||||||||||||||
Net increase (decrease) | (28,926 | ) | ($441,177 | ) | 427,704 | $6,964,831 | ||||||||||||||||||||
Class C shares1 | ||||||||||||||||||||||||||
Sold | 21,025 | $349,219 | 51,000 | $837,082 | ||||||||||||||||||||||
Distributions reinvested | — | — | 600 | 9,170 | ||||||||||||||||||||||
Repurchased | (11,190 | ) | (182,947 | ) | (2,149 | ) | (34,571 | ) | ||||||||||||||||||
Net increase | 9,835 | $166,272 | 49,451 | $811,681 | ||||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 50,816 | $845,511 | 640,174 | $10,595,132 | ||||||||||||||||||||||
Distributions reinvested | — | — | 10,523 | 160,469 | ||||||||||||||||||||||
Repurchased | (57,798 | ) | (956,493 | ) | (39,542 | ) | (632,486 | ) | ||||||||||||||||||
Net increase (decrease) | (6,982 | ) | ($110,982 | ) | 611,155 | $10,123,115 | ||||||||||||||||||||
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 | 234,368 | $3,769,688 | 43,936,891 | $695,148,002 | ||||||||||||||||||||||
Distributions reinvested | — | — | 10,653,285 | 162,462,594 | ||||||||||||||||||||||
Repurchased | (12,032,922 | ) | (200,130,950 | ) | (22,138,313 | ) | (367,156,199 | ) | ||||||||||||||||||
Net increase (decrease) | (11,798,554 | ) | ($196,361,262 | ) | 32,451,863 | $490,454,397 | ||||||||||||||||||||
Total net increase (decrease) | (11,824,627 | ) | ($196,747,149 | ) | 33,558,356 | $508,654,024 |
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1 The inception date for Class C shares is 8-28-14
2 The inceptions date for Class R2, Class R4 and Class R6 shares is 3-27-15.
Affiliates of the fund owned 100% of shares of beneficial interest of Class R2, Class R4, Class R6, and Class NAV, on September 30, 2015.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $959,363,617 and $1,032,216,606, respectively, for the six months ended September 30, 2015.
Note 7 — Industry or sector risk
The fund may invest a large percentage of its assets in one or more particular industries or sectors of the economy. If a large percentage of the fund's assets are economically tied to a single or small number of industries or sectors of the economy, the fund will be less diversified than a more broadly diversified fund, and it may cause the fund to underperform if that industry or sector underperforms. In addition, focusing on a particular industry or sector may make the fund's net asset value more volatile. Further, a fund that invests in particular industries or sectors is particularly susceptible to the impact of market, economic, regulatory and other factors affecting those industries or sectors.
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 September 30, 2015, funds within the John Hancock group of funds complex held 98.4% 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 | 28.0% |
John Hancock Lifestyle Balanced Fund | 20.1% |
John Hancock Lifestyle Growth MVP | 16.0% |
John Hancock Lifestyle Aggressive Fund | 10.6% |
John Hancock Lifestyle Balanced MVP | 8.8% |
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Continuation of Investment Advisory and Subadvisory Agreements
Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees
This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds III (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with John Hancock Asset Management a division of Manulife Asset Management (US) LLC (the Subadvisor) for John Hancock Strategic Growth Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23-25, 2015 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 21-22, 2015.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 23-25, 2015, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.
In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of mutual fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor's revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor's affiliates, including distribution services.
Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.
Approval of Advisory Agreement
In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board's conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board's ongoing regular review of fund performance and operations throughout the year.
32
Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor's compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust's Chief Compliance Officer (CCO) regarding the fund's compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor's risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers.
In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor's management and the quality of the performance of the Advisor's duties, through Board meetings, discussions and reports during the preceding year and through each Trustee's experience as a Trustee of the Trust and of the other trusts in the John Hancock group of funds complex (the John Hancock Fund Complex).
In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:
(a) | the skills and competency with which the Advisor has in the past managed the Trust's affairs and its subadvisory relationship, the Advisor's oversight and monitoring of the Subadvisor's investment performance and compliance programs, such as the Subadvisor's compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor's timeliness in responding to performance issues; | |
(b) | the background, qualifications and skills of the Advisor's personnel; | |
(c) | the Advisor's compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments; | |
(d) | the Advisor's administrative capabilities, including its ability to supervise the other service providers for the fund; | |
(e) | the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and | |
(f) | the Advisor's reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.
Investment performance. In considering the fund's performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund's performance results. In connection with the consideration of the Advisory Agreement, the Board:
(a) | reviewed information prepared by management regarding the fund's performance; | |
(b) | considered the comparative performance of an applicable benchmark index; | |
(c) | considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and | |
(d) | took into account the Advisor's analysis of the fund's performance and its plans and recommendations regarding the Trust's subadvisory arrangements generally. |
The Board noted that the fund underperformed its benchmark index for the one- and three-year periods ended December 31, 2014. The Board also noted that the fund outperformed its peer group average for the one- and three-year periods ended
33
December 31, 2014. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the peer group for the one- and three-year periods. The Board concluded that the fund's performance has generally been in line with or outperformed the historical performance of comparable funds.
Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund's contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund's ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund's ranking within a broader group of funds. In comparing the fund's contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees are lower than the peer group median and total expenses for the fund are higher than the peer group median.
The Board took into account management's discussion of the fund's expenses. The Board also took into account management's discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund's operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund's distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the John Hancock Fund Complex) having similar investment mandates, if any. The Board considered any differences between the Advisor's and Subadvisor's services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.
Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor's relationship with the Trust, the Board:
(a) | reviewed financial information of the Advisor; | |||||||
(b) | reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund; | |||||||
(c) | received and reviewed profitability information with respect to the John Hancock Fund Complex as a whole; | |||||||
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data; | |||||||
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability information reviewed by the Board; | |||||||
(f) | considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement; | |||||||
(g) | noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund's distributor also receives Rule 12b-1 payments to support distribution of the fund; | |||||||
(h) | noted that the fund's Subadvisor is an affiliate of the Advisor; | |||||||
(i) | noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; |
34
(j) | noted that the subadvisory fee for the fund is paid by the Advisor; and | |||||||
(k) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor. |
Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.
Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:
(a) | considered that the Advisor has contractually agreed to waive a portion of its management fee for certain funds of the John Hancock Fund Complex, including the fund (the participating portfolios) or otherwise reimburse the expenses of the participating portfolios (the reimbursement). 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; | |
(b) | reviewed the fund's advisory fee structure and concluded that: (i) the fund's fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management's discussion of the fund's advisory fee structure; and | |
(c) | the Board also considered the effect of the fund's growth in size on its performance and fees. The Board also noted that if the fund's assets increase over time, the fund may realize other economies of scale. |
Approval of Subadvisory Agreement
In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:
(1) | information relating to the Subadvisor's business, including current subadvisory services to the Trust (and other funds in the John Hancock Fund Complex); | |
(2) | the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and | |
(3) | the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data. |
Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor's Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor's current level of staffing and its overall resources, as well as received information relating to the Subadvisor's compensation program. The Board reviewed the Subadvisor's history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor's investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor's compliance program and any disciplinary history. The Board also considered the Subadvisor's risk assessment and monitoring process. The Board reviewed the Subadvisor's regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust's CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the
35
regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.
The Board considered the Subadvisor's investment process and philosophy. The Board took into account that the Subadvisor's responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund's investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor's brokerage policies and practices, including with respect to best execution and soft dollars.
Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.
In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor's relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock Fund Complex and reputational benefits.
Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund's subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the subadvisory fees for this fund are lower than the peer group median. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund and compared them to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.
Subadvisor performance. As noted above, the Board considered the fund's performance as compared to the fund's peer group and the benchmark index and noted that the Board reviews information about the fund's performance results at its regularly scheduled meetings. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor's focus on the Subadvisor's performance. The Board also noted the Subadvisor's long-term performance record for similar accounts, as applicable.
The Board's decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager; | |
(2) | the performance of the fund has generally been in line with the historical performance of comparable funds; | |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided; and | |
(4) | noted that the subadvisory fees are paid by the Advisor not the fund and that the subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows. | |
* * * |
Based on the Board's evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.
36
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 |
*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. |
37
John Hancock family of funds
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A trusted brand
John Hancock Investments is a premier asset manager representing
one of America's most trusted brands, with a heritage of financial
stewardship dating back to 1862. Helping our shareholders pursue
their financial goals is at the core of everything we do. It's why we
support the role of professional financial advice and operate with the
highest standards of conduct and integrity.
A better way to invest
We build funds based on investor needs, then search the world to find
proven portfolio teams with specialized expertise in those strategies.
As a manager of managers, we apply vigorous oversight to ensure that
they continue to meet our uncompromising standards and serve the
best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide
a diverse set of investments backed by some of the world's best
managers, 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 | 393SA 9/15 11/15 |
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable at this time.
ITEM 6. SCHEDULE OF INVESTMENTS.
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.
(a) The registrant has adopted procedures by which shareholders may recommend nominees to the registrant’s Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached “John Hancock Funds – Nominating and Governance Committee Charter”.
ITEM 11. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in this Form N-CSR is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Such disclosure and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to the registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Within 90 days prior to the filing date of this Form N-CSR, the registrant had carried out an evaluation, under the supervision and with the participation of the registrant’s management, including the registrant’s principal executive officer and the registrant’s principal financial officer, of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures relating to information required to be disclosed on Form N-CSR. Based on such evaluation, the registrant’s principal executive officer and principal financial officer concluded that the registrant’s disclosure controls and procedures are operating effectively to ensure that:
(i) information required to be disclosed in this Form N-CSR is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission, and
(ii) information is accumulated and communicated to the registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
(b) CHANGE IN REGISTRANT’S INTERNAL CONTROL: Not applicable.
ITEM 12. EXHIBITS.
(a)(1)(i) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER.
(a)(1)(ii) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER.
(b) CERTIFICATION PURSUANT TO Rule 30a-2(b) OF THE INVESTMENT COMPANY ACT OF 1940.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Nominating and Governance 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: November 13, 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: November 13, 2015
By:
/s/ Charles A. Rizzo
____________________________
Charles A. Rizzo
Chief Financial Officer
Date: November 13, 2015