UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21777
John Hancock Funds III
(Exact name of registrant as specified in charter)
601 Congress Street, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
601 Congress Street
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-663-4497
Date of fiscal year end: | March 31 | |
Date of reporting period: | September 30, 2017 |
ITEM 1. REPORTS TO STOCKHOLDERS.
John Hancock
Disciplined Value Fund
Semiannual report 9/30/17
A message to shareholders
Dear shareholder,
Wherever stock investors look today, the markets seem to exhibit undiminished strength. Three bellwether U.S. indexes—the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite Index—simultaneously hit all-time highs more than once in recent months. While stock markets are setting records, investors have reason to be vigilant. U.S. stocks haven't experienced a drop of even 5% in more than a year. This degree of calm in a rising market is rare, and as the bull market advances, many stocks are moving deeper into overvalued territory, suggesting that market leaders are vulnerable to any setbacks.
Advancing the interests of fund shareholders
One of our primary goals is to advance the interests of our fund shareholders wherever possible. To that end, we recently announced our third round of expense reductions this year, targeting six mutual funds and two closed-end funds that together represent more than $7 billion in assets under management. Details can be found at jhinvestments.com.
In addition, we are proud to report that in May fund researcher Morningstar, Inc. formally recognized our shareholder-friendly initiatives by upgrading our parent pillar rating—a key component of the Morningstar Analyst Rating system—to positive, the highest possible rating. Morningstar evaluates select funds and their parent firms based on intensive research, including on-site due diligence. They focused on such factors as whether our portfolio managers invest meaningfully in the funds they manage, the quality of our risk management, our corporate culture, and our commitment to recognizing shareholder interests—in other words, how effective we are as stewards of investor capital. We're proud to have been recognized by Morningstar for our efforts and we're committed to continue our work of furthering the interests of our shareholders.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to 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, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly into an index. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Disciplined Value Fund
INVESTMENT OBJECTIVE
The fund seeks to provide long-term growth of capital primarily through investment in equity securities. Current income is a secondary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/17 (%)
The Russell 1000 Value Index is an unmanaged index containing those securities in the Russell 1000 Index with a lower price-to-book ratio and less-than-average growth orientation.
It is not possible to invest directly in an index. 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. Returns shown prior to Class A shares' commencement date are those of the predecessor fund's Investor 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. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end 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 prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS
Stocks continued their broad-based advance
Equity markets rose across most market segments during the period, overcoming brief periods of flat performance.
The fund outperformed its benchmark
The fund's Class A share return, excluding sales charges, exceeded that of its benchmark, the Russell 1000 Value Index, by a sizeable margin.
Stock selection and sector allocation contributed positively to returns
Stock selection aided performance across a range of sectors, as did most allocation overweights and underweights.
SECTOR COMPOSITION AS OF 9/30/17 (%)
A note about risks
Value stocks may decline in price. 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. 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 prospectus for additional risks.
Mark E. Donovan, CFA
Portfolio Manager
Boston Partners
How would you describe the market and economic backdrop during the six-month period ended September 30, 2017?
Stocks generally made a strong advance during the period. Three bellwether U.S. indexes—the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite Index—simultaneously hit all-time highs on several occasions, and positive performance results were equally easy to find outside the United States.
Although there were lackluster stretches of market performance, they tended to be brief. After a flat August, for example, U.S. stocks moved higher in September, reflecting the market's perception of waning tensions with North Korea. Value stocks lagged growth stocks for most of the period, but in September that trend reversed and value outperformed growth, narrowing the gap for the full period.
Positive economic data helped the markets maintain their momentum. In the United States, economic growth for the second calendar quarter was revised upward to 3.1% in the final estimate of the Bureau of Economic Analysis. Corporate earnings have generally been solid, with a weaker dollar helping to boost results for U.S.-based multinationals, in particular.
The fund outperformed its benchmark, the Russell 1000 Value Index, for the period. What factors were most responsible for this result?
Strong stock selection across a range of sectors, including information technology, industrials, healthcare, and energy, all gave a boost to the fund's benchmark-relative return. In addition, the fund's overweights in financials and healthcare helped it to make gains versus the benchmark, as did underweights in consumer staples and energy stocks.
Which stocks or strategies were some of the largest contributors to relative results?
Koninklijke Philips NV (Royal Philips), an out-of-benchmark holding, was one of the top contributors for the period. Royal Philips is a Dutch conglomerate that includes lighting and electronic products manufacturing along with an expanding portfolio of health and homecare technologies. Investors bid up the company's share price during the period in light of the company's improving margins, plans for share buybacks, and strategic acquisitions. We sold the position by the end of the period, locking in profits for the fund.
In the healthcare sector, the fund held a sizeable position in Gilead Sciences, Inc., which performed well for the period overall. Gilead is a large biotechnology company that has had much success with three generations of its drug treatments for HIV. The stock rose on news of Gilead's acquisition of Kite Pharmaceuticals, a leading cell therapy biotech firm, and because of Gilead's compelling valuation and attractive dividend.
In the information technology sector, our investment in DXC Technology Company also was beneficial to the fund. DXC is a recent spin-off from Hewlett Packard Enterprises, and DXC reported a strong first quarter as an independent entity. The company's share price benefited during the period because of what appeared to be a major margin expansion that resulted from cost saving
TOP 10 HOLDINGS AS OF 9/30/17 (%)
JPMorgan Chase & Co. | 4.7 |
Bank of America Corp. | 4.5 |
Citigroup, Inc. | 3.8 |
Berkshire Hathaway, Inc., Class B | 3.7 |
Chevron Corp. | 3.3 |
Johnson & Johnson | 2.9 |
Wells Fargo & Company | 2.6 |
Pfizer, Inc. | 2.4 |
Oracle Corp. | 2.2 |
Merck & Company, Inc. | 2.2 |
TOTAL | 32.3 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
What were some stocks or strategies that detracted from returns?
In the materials sector, the fund's lack of exposure to metals and mining stocks hurt the fund's results. Gold, silver, copper, and nickel all gained in value on geopolitical uncertainty emanating primarily from North Korea, so the fund's avoidance of stocks related to these commodities was a drag on performance.
Stock selection in the consumer discretionary sector detracted from returns. In particular, the fund's exposure to Twenty-First Century Fox, Inc., hurt performance. Fox is a diversified media and entertainment company that operates in cable network programming, television, film, and satellite television. The stock suffered during the period due to a variety of legal dramas engulfing the company, including defamation suits and allegations directed at company executives by female employees. After period end, it was revealed that Fox had been in discussions with The Walt Disney Company to sell all or a portion of the company.
How was the fund positioned at the end of the period?
We did not make any substantial changes to positioning by period end. Financials continued to have the largest absolute sector weighting at about 30.6% of the fund's net assets. We consider U.S. banks to be attractively valued, although somewhat less than they were a year ago. As the economy improves, we think loan growth should continue to improve. Also, interest rates are still at historically low levels and thus have substantial room to rise. Given these factors, as well as the chance of looser industry regulation on the horizon, we expect bank stocks have a long runway for growth.
As of period end, information technology continued to be the fund's largest overweight relative to the benchmark. In our view, there are many attractive companies in the sector that are generating
strong free cash flow and maintain dominant market positions, and yet these remain attractively valued for the level of cash they possess.
We believe attractive investment opportunities can be found in a variety of market segments today, and we are diligently working to find them while staying connected to those companies that we already own in the fund. As we pursue new opportunities, we will continue to invest on a stock-by-stock basis, maintaining our focus on attractive valuations, sound fundamentals, and companies that we believe possess a catalyst for improvement.
MANAGED BY
Mark E. Donovan, CFA On the fund since 2008 and its predecessor since 1997 Investing since 1981 | |
David J. Pyle, CFA On the fund since 2008 and its predecessor since 1997 Investing since 1995 |
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2017
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 | 14.14 | 11.56 | 6.43 | — | 1.83 | 72.79 | 86.42 | — | |
Class B1 | 14.24 | 11.55 | 6.19 | — | 1.76 | 72.70 | 82.30 | — | |
Class C1 | 18.24 | 11.85 | 6.22 | — | 5.80 | 75.07 | 82.82 | — | |
Class I1,2 | 20.45 | 13.02 | 7.28 | — | 7.31 | 84.37 | 101.85 | — | |
Class I21,2 | 20.45 | 13.01 | 7.28 | — | 7.31 | 84.30 | 102.01 | — | |
Class R11,2 | 19.66 | 12.23 | 6.61 | — | 6.97 | 78.01 | 89.68 | — | |
Class R21,2 | 19.95 | 12.53 | 6.88 | — | 7.11 | 80.43 | 94.56 | — | |
Class R31,2 | 19.82 | 12.36 | 6.70 | — | 7.02 | 79.07 | 91.30 | — | |
Class R41,2 | 20.23 | 12.83 | 7.04 | — | 7.26 | 82.84 | 97.41 | — | |
Class R51,2 | 20.52 | 13.10 | 7.28 | — | 7.34 | 85.02 | 101.84 | — | |
Class R61,2 | 20.59 | 13.12 | 7.22 | — | 7.40 | 85.26 | 100.83 | — | |
Class NAV2,3 | 20.58 | 13.15 | — | 14.51 | 7.39 | 85.43 | — | 209.70 | |
Index 1† | 15.12 | 13.20 | 5.92 | — | 4.50 | 85.90 | 77.66 | — | |
Index 2† | 18.61 | 14.22 | 7.44 | — | 7.71 | 94.44 | 104.88 | — |
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 contractual 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 (%) | 1.07 | 1.82 | 1.82 | 0.81 | 0.81 | 1.47 | 1.22 | 1.37 | 1.07 | 0.77 | 0.72 | 0.70 |
Net (%) | 1.07 | 1.82 | 1.82 | 0.81 | 0.81 | 1.47 | 1.22 | 1.37 | 0.97 | 0.77 | 0.72 | 0.70 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index 1 is the Russell 1000 Value Index; Index 2 is the S&P 500 Index. |
See the following page for footnotes.
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 | 9-30-07 | 18,230 | 18,230 | 17,766 | 20,488 |
Class C1,4 | 9-30-07 | 18,282 | 18,282 | 17,766 | 20,488 |
Class I1,2 | 9-30-07 | 20,185 | 20,185 | 17,766 | 20,488 |
Class I21,2 | 9-30-07 | 20,201 | 20,201 | 17,766 | 20,488 |
Class R11,2 | 9-30-07 | 18,968 | 18,968 | 17,766 | 20,488 |
Class R21,2 | 9-30-07 | 19,456 | 19,456 | 17,766 | 20,488 |
Class R31,2 | 9-30-07 | 19,130 | 19,130 | 17,766 | 20,488 |
Class R41,2 | 9-30-07 | 19,741 | 19,741 | 17,766 | 20,488 |
Class R51,2 | 9-30-07 | 20,184 | 20,184 | 17,766 | 20,488 |
Class R61,2 | 9-30-07 | 20,083 | 20,083 | 17,766 | 20,488 |
Class NAV2 | 5-29-09 | 30,970 | 30,970 | 30,906 | 33,118 |
The Russell 1000 Value Index is an unmanaged index containing those securities in the Russell 1000 Index with a lower price-to-book ratio and less-than-average growth orientation.
The S&P 500 Index is an unmanaged index that includes 500 widely traded common stocks.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Footnotes related to performance pages
1 | Class A, Class B, Class C, Class I, and Class I2 shares commenced operations on 12-22-08; Class R3, Class R4, and Class R5 shares commenced operations on 5-22-09; Class R1, Class R6, and Class R2 shares commenced operations on 7-13-09, 9-1-11, and 3-1-12, respectively. Investor shares and Institutional shares of Robeco Boston Partners Large Cap Value Fund (the predecessor fund) commenced operations on January 16, 1997 and January 2, 1997, respectively. Returns shown prior to Class A, Class B, and Class C shares' commencement date are those of the predecessor fund's Investor shares. Returns shown prior to Class I and Class I2 shares' commencement date are those of the predecessor fund's Institutional shares. Returns shown prior to Class R1, Class R2, Class R3, Class R4, Class R5, and Class R6 shares' commencement dates are those of the predecessor fund's Investor shares (prior to 12-22-08) and the fund's Class A shares (from 12-22-08), except that they do not include the fund's Class A shares sales charges and would be lower if they did. Returns shown prior to the commencement date of a share class would differ from the new share class only to the extent that expenses of the classes are different. |
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. |
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
The first line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017.
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, 2017, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017. 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.
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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 4-1-2017 | Ending value on 9-30-2017 | Expenses paid during period ended 9-30-20171 | Annualized expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $1,071.90 | $5.45 | 1.05% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.80 | 5.32 | 1.05% | |
Class B | Actual expenses/actual returns | 1,000.00 | 1,067.60 | 9.33 | 1.80% |
Hypothetical example for comparison purposes | 1,000.00 | 1,016.00 | 9.10 | 1.80% | |
Class C | Actual expenses/actual returns | 1,000.00 | 1,068.00 | 9.33 | 1.80% |
Hypothetical example for comparison purposes | 1,000.00 | 1,016.00 | 9.10 | 1.80% | |
Class I | Actual expenses/actual returns | 1,000.00 | 1,073.10 | 4.11 | 0.79% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.10 | 4.00 | 0.79% | |
Class I2 | Actual expenses/actual returns | 1,000.00 | 1,073.10 | 4.11 | 0.79% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.10 | 4.00 | 0.79% | |
Class R1 | Actual expenses/actual returns | 1,000.00 | 1,069.70 | 7.52 | 1.45% |
Hypothetical example for comparison purposes | 1,000.00 | 1,017.80 | 7.33 | 1.45% | |
Class R2 | Actual expenses/actual returns | 1,000.00 | 1,071.10 | 6.23 | 1.20% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.10 | 6.07 | 1.20% | |
Class R3 | Actual expenses/actual returns | 1,000.00 | 1,070.20 | 7.06 | 1.36% |
Hypothetical example for comparison purposes | 1,000.00 | 1,018.20 | 6.88 | 1.36% | |
Class R4 | Actual expenses/actual returns | 1,000.00 | 1,072.60 | 4.94 | 0.95% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.30 | 4.81 | 0.95% | |
Class R5 | Actual expenses/actual returns | 1,000.00 | 1,073.40 | 3.95 | 0.76% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.30 | 3.85 | 0.76% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 1,074.00 | 3.64 | 0.70% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.60 | 3.55 | 0.70% | |
Class NAV | Actual expenses/actual returns | 1,000.00 | 1,073.90 | 3.59 | 0.69% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.60 | 3.50 | 0.69% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
Fund’s investments |
Shares | Value | ||||
Common stocks 97.8% | $14,246,809,749 | ||||
(Cost $11,217,822,573) | |||||
Consumer discretionary 7.3% | 1,064,055,337 | ||||
Auto components 1.2% | |||||
BorgWarner, Inc. | 3,269,232 | 167,482,755 | |||
Media 4.3% | |||||
CBS Corp., Class B | 1,212,466 | 70,323,028 | |||
Comcast Corp., Class A | 3,835,646 | 147,595,658 | |||
Liberty Global PLC LiLAC, Class C (A) | 1,906,558 | 44,422,803 | |||
Time Warner, Inc. | 2,077,404 | 212,830,040 | |||
Twenty-First Century Fox, Inc., Class A | 5,876,479 | 155,021,516 | |||
Specialty retail 1.8% | |||||
The Home Depot, Inc. | 1,111,902 | 181,862,691 | |||
The TJX Companies, Inc. | 1,146,302 | 84,516,846 | |||
Consumer staples 1.9% | 280,013,253 | ||||
Beverages 0.7% | |||||
Coca-Cola European Partners PLC | 2,422,733 | 100,834,147 | |||
Food and staples retailing 1.2% | |||||
CVS Health Corp. | 2,203,383 | 179,179,106 | |||
Energy 9.1% | 1,328,243,895 | ||||
Oil, gas and consumable fuels 9.1% | |||||
Andeavor | 1,428,585 | 147,358,543 | |||
Chevron Corp. | 4,143,750 | 486,890,625 | |||
ConocoPhillips | 2,734,505 | 136,861,975 | |||
Diamondback Energy, Inc. (A) | 1,467,540 | 143,760,218 | |||
Energen Corp. (A) | 1,212,614 | 66,305,734 | |||
Marathon Petroleum Corp. | 2,631,274 | 147,561,846 | |||
Phillips 66 | 968,981 | 88,768,349 | |||
Royal Dutch Shell PLC, ADR, Class A | 1,827,940 | 110,736,605 | |||
Financials 30.6% | 4,453,290,892 | ||||
Banks 18.6% | |||||
Bank of America Corp. | 25,798,592 | 653,736,321 | |||
Citigroup, Inc. | 7,645,075 | 556,102,756 | |||
Fifth Third Bancorp | 3,580,587 | 100,184,824 | |||
JPMorgan Chase & Co. | 7,124,231 | 680,435,303 | |||
KeyCorp | 5,427,164 | 102,139,226 | |||
Lloyds Banking Group PLC, ADR | 24,598,730 | 90,031,352 | |||
Regions Financial Corp. | 9,938,132 | 151,357,750 | |||
Wells Fargo & Company | 6,848,804 | 377,711,541 | |||
Capital markets 1.7% | |||||
The Goldman Sachs Group, Inc. | 1,046,241 | 248,157,903 |
12 | JOHN HANCOCK Disciplined Value Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Consumer finance 2.9% | |||||
Capital One Financial Corp. | 1,428,104 | $120,903,285 | |||
Discover Financial Services | 2,506,492 | 161,618,604 | |||
Navient Corp. | 4,142,514 | 62,220,560 | |||
Synchrony Financial | 2,690,672 | 83,545,366 | |||
Diversified financial services 3.8% | |||||
Berkshire Hathaway, Inc., Class B (A) | 2,980,245 | 546,338,513 | |||
Insurance 3.6% | |||||
American International Group, Inc. | 2,572,421 | 157,920,925 | |||
Chubb, Ltd. | 1,349,827 | 192,417,839 | |||
The Allstate Corp. | 1,832,976 | 168,468,824 | |||
Health care 17.6% | 2,556,112,707 | ||||
Biotechnology 2.4% | |||||
Gilead Sciences, Inc. | 3,642,248 | 295,094,933 | |||
Shire PLC, ADR | 385,944 | 59,103,464 | |||
Health care equipment and supplies 2.3% | |||||
Abbott Laboratories | 3,080,920 | 164,397,891 | |||
Koninklijke Philips NV - NY Shares | 3,979,856 | 163,970,067 | |||
Health care providers and services 4.3% | |||||
Anthem, Inc. | 940,802 | 178,639,484 | |||
Cigna Corp. | 830,842 | 155,317,603 | |||
DaVita, Inc. (A) | 1,027,218 | 61,006,477 | |||
Laboratory Corp. of America Holdings (A) | 462,215 | 69,780,599 | |||
UnitedHealth Group, Inc. | 793,783 | 155,462,401 | |||
Pharmaceuticals 8.6% | |||||
Johnson & Johnson | 3,277,128 | 426,059,411 | |||
Merck & Company, Inc. | 5,114,251 | 327,465,492 | |||
Pfizer, Inc. | 9,942,889 | 354,961,137 | |||
Sanofi, ADR | 2,909,294 | 144,853,748 | |||
Industrials 8.0% | 1,169,644,033 | ||||
Aerospace and defense 4.4% | |||||
General Dynamics Corp. | 520,767 | 107,059,280 | |||
L3 Technologies, Inc. | 740,001 | 139,438,388 | |||
Raytheon Company | 737,755 | 137,650,328 | |||
Spirit AeroSystems Holdings, Inc., Class A | 765,773 | 59,515,878 | |||
United Technologies Corp. | 1,692,516 | 196,467,257 | |||
Airlines 1.3% | |||||
Delta Air Lines, Inc. | 2,427,520 | 117,055,014 | |||
Southwest Airlines Company | 1,396,369 | 78,168,737 | |||
Building products 0.5% | |||||
Masco Corp. | 1,827,166 | 71,277,746 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Disciplined Value Fund | 13 |
Shares | Value | ||||
Industrials (continued) | |||||
Electrical equipment 1.2% | |||||
Eaton Corp. PLC | 2,267,008 | $174,083,544 | |||
Machinery 0.6% | |||||
Cummins, Inc. | 529,238 | 88,927,861 | |||
Information technology 16.2% | 2,364,052,978 | ||||
Communications equipment 2.2% | |||||
Cisco Systems, Inc. | 9,512,968 | 319,921,114 | |||
Electronic equipment, instruments and components 3.0% | |||||
Flex, Ltd. (A) | 9,058,798 | 150,104,283 | |||
TE Connectivity, Ltd. | 3,480,259 | 289,070,313 | |||
Internet software and services 2.0% | |||||
Alphabet, Inc., Class A (A) | 166,502 | 162,126,327 | |||
eBay, Inc. (A) | 3,255,639 | 125,211,876 | |||
IT services 1.3% | |||||
DXC Technology Company | 2,260,705 | 194,149,345 | |||
Semiconductors and semiconductor equipment 1.3% | |||||
KLA-Tencor Corp. | 844,417 | 89,508,202 | |||
Texas Instruments, Inc. | 1,104,505 | 99,007,828 | |||
Software 3.4% | |||||
Micro Focus International PLC, ADR (A) | 587,759 | 18,749,512 | |||
Microsoft Corp. | 2,016,688 | 150,223,089 | |||
Oracle Corp. | 6,774,160 | 327,530,636 | |||
Technology hardware, storage and peripherals 3.0% | |||||
Apple, Inc. | 1,448,953 | 223,312,636 | |||
HP, Inc. | 8,378,705 | 167,238,952 | |||
NetApp, Inc. | 1,094,581 | 47,898,865 | |||
Materials 6.5% | 950,843,551 | ||||
Chemicals 3.3% | |||||
Celanese Corp., Series A | 1,221,852 | 127,402,508 | |||
DowDuPont, Inc. | 2,745,861 | 190,095,957 | |||
FMC Corp. | 733,905 | 65,545,056 | |||
Methanex Corp. (B) | 1,827,824 | 91,939,547 | |||
Construction materials 0.6% | |||||
Cemex SAB de CV, ADR (A) | 10,473,747 | 95,101,623 | |||
Containers and packaging 0.9% | |||||
WestRock Company | 2,284,515 | 129,600,536 | |||
Metals and mining 1.7% | |||||
Barrick Gold Corp. | 5,069,811 | 81,573,259 | |||
Nucor Corp. | 884,171 | 49,548,943 | |||
Steel Dynamics, Inc. | 3,482,336 | 120,036,122 |
14 | JOHN HANCOCK Disciplined Value Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Utilities 0.6% | $80,553,103 | ||||
Independent power and renewable electricity producers 0.6% | |||||
AES Corp. | 7,309,719 | 80,553,103 | |||
Yield (%) | Shares | Value | |||
Securities lending collateral 0.0% | $663,078 | ||||
(Cost $663,057) | |||||
John Hancock Collateral Trust (C) | 1.2098(D) | 66,268 | 663,078 | ||
Short-term investments 0.4% | $59,183,066 | ||||
(Cost $59,183,066) | |||||
Money market funds 0.4% | 59,183,066 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.9244(D) | 59,183,066 | 59,183,066 |
Total investments (Cost $11,277,668,696) 98.2% | $14,306,655,893 | ||||
Other assets and liabilities, net 1.8% | 266,025,264 | ||||
Total net assets 100.0% | $14,572,681,157 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | |
Security Abbreviations and Legend | |
ADR | American Depositary Receipt |
(A) | Non-income producing security. |
(B) | A portion of this security is on loan as of 9-30-17. |
(C) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. |
(D) | The rate shown is the annualized seven-day yield as of 9-30-17. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Disciplined Value Fund | 15 |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-17 (unaudited)
Assets | ||||||||||||||||||||||||||||||
Unaffiliated investments, at value (Cost $11,277,005,639) including $656,000 of securities loaned | $14,305,992,815 | |||||||||||||||||||||||||||||
Affiliated investments, at value (Cost $663,057) | 663,078 | |||||||||||||||||||||||||||||
Receivable for investments sold | 356,288,132 | |||||||||||||||||||||||||||||
Receivable for fund shares sold | 16,816,295 | |||||||||||||||||||||||||||||
Dividends and interest receivable | 12,251,386 | |||||||||||||||||||||||||||||
Receivable for securities lending income | 18,235 | |||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 796,866 | |||||||||||||||||||||||||||||
Total assets | 14,692,826,807 | |||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||
Payable for investments purchased | 80,316,655 | |||||||||||||||||||||||||||||
Payable for fund shares repurchased | 36,448,482 | |||||||||||||||||||||||||||||
Payable upon return of securities loaned | 669,440 | |||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||
Accounting and legal services fees | 352,653 | |||||||||||||||||||||||||||||
Transfer agent fees | 833,012 | |||||||||||||||||||||||||||||
Distribution and service fees | 63,584 | |||||||||||||||||||||||||||||
Trustees' fees | 10,928 | |||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 1,450,896 | |||||||||||||||||||||||||||||
Total liabilities | 120,145,650 | |||||||||||||||||||||||||||||
Net assets | $14,572,681,157 | |||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||
Paid-in capital | $10,869,398,306 | |||||||||||||||||||||||||||||
Undistributed net investment income | 113,448,210 | |||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 560,847,444 | |||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 3,028,987,197 | |||||||||||||||||||||||||||||
Net assets | $14,572,681,157 | |||||||||||||||||||||||||||||
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 ($1,425,511,106 ÷ 64,221,439 shares)1 | $22.20 | |||||||||||||||||
Class B ($10,655,512 ÷ 511,244 shares)1 | $20.84 | |||||||||||||||||
Class C ($281,987,604 ÷ 13,493,145 shares)1 | $20.90 | |||||||||||||||||
Class I ($7,465,004,751 ÷ 345,720,342 shares) | $21.59 | |||||||||||||||||
Class I2 ($57,039,612 ÷ 2,641,688 shares) | $21.59 | |||||||||||||||||
Class R1 ($26,321,191 ÷ 1,224,718 shares) | $21.49 | |||||||||||||||||
Class R2 ($138,728,431 ÷ 6,443,632 shares) | $21.53 | |||||||||||||||||
Class R3 ($17,784,634 ÷ 827,374 shares) | $21.50 | |||||||||||||||||
Class R4 ($245,966,691 ÷ 11,398,094 shares) | $21.58 | |||||||||||||||||
Class R5 ($200,892,835 ÷ 9,289,439 shares) | $21.63 | |||||||||||||||||
Class R6 ($3,451,512,190 ÷ 159,581,818 shares) | $21.63 | |||||||||||||||||
Class NAV ($1,251,276,600 ÷ 57,834,628 shares) | $21.64 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $23.37 |
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 9-30-17 (unaudited)
Investment income | ||||||||||||||||||||||||
Dividends | $144,403,787 | |||||||||||||||||||||||
Interest | 1,204,787 | |||||||||||||||||||||||
Securities lending | 58,127 | |||||||||||||||||||||||
Less foreign taxes withheld | (978,548 | ) | ||||||||||||||||||||||
Total investment income | 144,688,153 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 47,264,574 | |||||||||||||||||||||||
Distribution and service fees | 4,269,119 | |||||||||||||||||||||||
Accounting and legal services fees | 1,159,610 | |||||||||||||||||||||||
Transfer agent fees | 5,071,718 | |||||||||||||||||||||||
Trustees' fees | 115,746 | |||||||||||||||||||||||
State registration fees | 179,545 | |||||||||||||||||||||||
Printing and postage | 364,273 | |||||||||||||||||||||||
Professional fees | 154,293 | |||||||||||||||||||||||
Custodian fees | 887,415 | |||||||||||||||||||||||
Other | 102,310 | |||||||||||||||||||||||
Total expenses | 59,568,603 | |||||||||||||||||||||||
Less expense reductions | (833,078 | ) | ||||||||||||||||||||||
Net expenses | 58,735,525 | |||||||||||||||||||||||
Net investment income | 85,952,628 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Unaffiliated investments | 490,575,660 | |||||||||||||||||||||||
Affiliated investments | (3,989 | ) | ||||||||||||||||||||||
490,571,671 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Unaffiliated investments | 440,721,614 | |||||||||||||||||||||||
Affiliated investments | 30 | |||||||||||||||||||||||
440,721,644 | ||||||||||||||||||||||||
Net realized and unrealized gain | 931,293,315 | |||||||||||||||||||||||
Increase in net assets from operations | $1,017,245,943 |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-17 | Year ended 3-31-17 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $85,952,628 | $157,539,153 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 490,571,671 | 360,396,775 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 440,721,644 | 1,846,118,027 | |||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 1,017,245,943 | 2,364,053,955 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (16,450,212 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class B | — | (39,753 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (887,691 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (92,487,888 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I2 | — | (621,376 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R1 | — | (164,299 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (1,181,963 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R3 | — | (180,430 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (3,068,524 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R5 | — | (3,917,043 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (35,963,782 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (13,573,944 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (168,536,905 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (784,894,281 | ) | (841,850,128 | ) | |||||||||||||||||||||||||||||||||||||||||
Total increase | 232,351,662 | 1,353,666,922 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 14,340,329,495 | 12,986,662,573 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $14,572,681,157 | $14,340,329,495 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $113,448,210 | $27,495,582 |
Financial highlights
Class A Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.71 | $17.64 | $19.44 | $18.94 | $15.94 | $14.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.10 | 0.18 | 0.16 | 0.20 | 0.12 | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.39 | 3.08 | (1.18 | ) | 1.19 | 3.85 | 2.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.49 | 3.26 | (1.02 | ) | 1.39 | 3.97 | 2.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.19 | ) | (0.19 | ) | (0.10 | ) | (0.09 | ) | (0.12 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.19 | ) | (0.78 | ) | (0.89 | ) | (0.97 | ) | (0.62 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $22.20 | $20.71 | $17.64 | $19.44 | $18.94 | $15.94 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 7.19 | 5 | 18.50 | (5.29 | ) | 7.53 | 25.30 | 16.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,426 | $1,449 | $2,375 | $2,705 | $2,702 | $1,481 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.06 | 6 | 1.07 | 1.08 | 1.08 | 1.12 | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.05 | 6 | 1.06 | 1.07 | 1.08 | 1.11 | 1.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.96 | 6 | 0.96 | 0.87 | 1.04 | 0.68 | 0.95 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $19.52 | $16.64 | $18.38 | $18.00 | $15.24 | $13.73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.03 | 0.02 | 0.04 | (0.03 | ) | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.30 | 2.91 | (1.12 | ) | 1.13 | 3.67 | 2.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.32 | 2.94 | (1.10 | ) | 1.17 | 3.64 | 2.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.06 | ) | (0.05 | ) | — | — | (0.01 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.06 | ) | (0.64 | ) | (0.79 | ) | (0.88 | ) | (0.51 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.84 | $19.52 | $16.64 | $18.38 | $18.00 | $15.24 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 6.76 | 5 | 17.66 | (6.02 | ) | 6.68 | 24.21 | 15.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $11 | $13 | $14 | $19 | $19 | $14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.81 | 6 | 1.82 | 1.85 | 1.91 | 1.96 | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.80 | 6 | 1.81 | 1.84 | 1.90 | 1.96 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.21 | 6 | 0.18 | 0.09 | 0.20 | (0.17 | ) | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $19.57 | $16.69 | $18.43 | $18.03 | $15.26 | $13.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.03 | 0.02 | 0.07 | (0.02 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.31 | 2.91 | (1.12 | ) | 1.12 | 3.67 | 2.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.33 | 2.94 | (1.10 | ) | 1.19 | 3.65 | 2.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.06 | ) | (0.05 | ) | — | — | (0.01 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.06 | ) | (0.64 | ) | (0.79 | ) | (0.88 | ) | (0.51 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $20.90 | $19.57 | $16.69 | $18.43 | $18.03 | $15.26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 6.80 | 5 | 17.61 | (6.00 | ) | 6.78 | 24.25 | 15.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $282 | $293 | $309 | $302 | $171 | $59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.81 | 6 | 1.82 | 1.83 | 1.84 | 1.88 | 1.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.80 | 6 | 1.81 | 1.82 | 1.83 | 1.88 | 1.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.21 | 6 | 0.18 | 0.12 | 0.35 | (0.09 | ) | 0.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.12 | $17.14 | $18.91 | $18.44 | $15.54 | $13.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.13 | 0.22 | 0.20 | 0.25 | 0.17 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.34 | 3.00 | (1.14 | ) | 1.16 | 3.75 | 2.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.47 | 3.22 | (0.94 | ) | 1.41 | 3.92 | 2.22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.24 | ) | (0.24 | ) | (0.15 | ) | (0.14 | ) | (0.17 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.24 | ) | (0.83 | ) | (0.94 | ) | (1.02 | ) | (0.67 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.59 | $20.12 | $17.14 | $18.91 | $18.44 | $15.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.31 | 4 | 18.80 | (5.02 | ) | 7.86 | 25.61 | 16.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $7,465 | $7,540 | $6,730 | $7,026 | $3,671 | $1,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.80 | 5 | 0.81 | 0.81 | 0.81 | 0.83 | 0.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.79 | 5 | 0.80 | 0.80 | 0.81 | 0.83 | 0.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.22 | 5 | 1.18 | 1.13 | 1.34 | 0.96 | 1.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.12 | $17.14 | $18.92 | $18.45 | $15.55 | $13.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.13 | 0.22 | 0.20 | 0.24 | 0.17 | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.34 | 3.00 | (1.15 | ) | 1.17 | 3.75 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.47 | 3.22 | (0.95 | ) | 1.41 | 3.92 | 2.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.24 | ) | (0.24 | ) | (0.15 | ) | (0.14 | ) | (0.17 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.24 | ) | (0.83 | ) | (0.94 | ) | (1.02 | ) | (0.67 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.59 | $20.12 | $17.14 | $18.92 | $18.45 | $15.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.31 | 4 | 18.80 | (5.07 | ) | 7.85 | 25.63 | 16.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $57 | $54 | $49 | $89 | $75 | $34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.80 | 5 | 0.81 | 0.82 | 0.84 | 0.87 | 0.92 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.79 | 5 | 0.80 | 0.81 | 0.83 | 0.85 | 0.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.22 | 5 | 1.18 | 1.11 | 1.28 | 0.96 | 1.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.09 | $17.13 | $18.90 | $18.43 | $15.54 | $13.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.06 | 0.10 | 0.09 | 0.12 | 0.04 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.34 | 2.98 | (1.15 | ) | 1.15 | 3.75 | 2.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.40 | 3.08 | (1.06 | ) | 1.27 | 3.79 | 2.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.12 | ) | (0.12 | ) | (0.01 | ) | (0.02 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.12 | ) | (0.71 | ) | (0.80 | ) | (0.90 | ) | (0.57 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.49 | $20.09 | $17.13 | $18.90 | $18.43 | $15.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.97 | 4 | 18.00 | (5.66 | ) | 7.09 | 24.69 | 15.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $26 | $27 | $26 | $22 | $13 | $6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.46 | 5 | 1.47 | 1.48 | 1.54 | 1.67 | 1.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.45 | 5 | 1.46 | 1.47 | 1.53 | 1.57 | 1.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.56 | 5 | 0.53 | 0.48 | 0.63 | 0.22 | 0.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 R2 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.10 | $17.13 | $18.90 | $18.44 | $15.55 | $14.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.08 | 0.14 | 0.13 | 0.19 | 0.08 | 0.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.35 | 2.99 | (1.14 | ) | 1.14 | 3.75 | 2.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.43 | 3.13 | (1.01 | ) | 1.33 | 3.83 | 2.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.16 | ) | (0.17 | ) | (0.08 | ) | (0.06 | ) | (0.11 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.16 | ) | (0.76 | ) | (0.87 | ) | (0.94 | ) | (0.61 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.53 | $20.10 | $17.13 | $18.90 | $18.44 | $15.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.11 | 4 | 18.32 | (5.42 | ) | 7.39 | 24.98 | 15.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $139 | $135 | $136 | $120 | $38 | $4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.21 | 5 | 1.21 | 1.22 | 1.25 | 1.33 | 3.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.20 | 5 | 1.21 | 1.21 | 1.24 | 1.32 | 1.32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.80 | 5 | 0.78 | 0.74 | 0.99 | 0.45 | 0.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 R3 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.09 | $17.12 | $18.89 | $18.43 | $15.54 | $13.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.07 | 0.12 | 0.10 | 0.14 | 0.06 | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.34 | 2.99 | (1.14 | ) | 1.15 | 3.74 | 2.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.41 | 3.11 | (1.04 | ) | 1.29 | 3.80 | 2.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.14 | ) | (0.14 | ) | (0.04 | ) | (0.03 | ) | (0.09 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.14 | ) | (0.73 | ) | (0.83 | ) | (0.91 | ) | (0.59 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.50 | $20.09 | $17.12 | $18.89 | $18.43 | $15.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.02 | 4 | 18.17 | (5.57 | ) | 7.20 | 24.81 | 15.75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $18 | $22 | $30 | $28 | $15 | $4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.37 | 5 | 1.36 | 1.37 | 1.43 | 1.57 | 2.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.36 | 5 | 1.35 | 1.37 | 1.42 | 1.47 | 1.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.65 | 5 | 0.66 | 0.57 | 0.73 | 0.35 | 0.67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 R4 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.12 | $17.14 | $18.92 | $18.45 | $15.54 | $13.99 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.11 | 0.19 | 0.18 | 0.25 | 0.13 | 0.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.35 | 3.00 | (1.16 | ) | 1.12 | 3.76 | 2.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.46 | 3.19 | (0.98 | ) | 1.37 | 3.89 | 2.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.21 | ) | (0.21 | ) | (0.11 | ) | (0.10 | ) | (0.14 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.21 | ) | (0.80 | ) | (0.90 | ) | (0.98 | ) | (0.64 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.58 | $20.12 | $17.14 | $18.92 | $18.45 | $15.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.26 | 4 | 18.63 | (5.22 | ) | 7.67 | 25.44 | 16.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $246 | $286 | $268 | $228 | $75 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.06 | 5 | 1.07 | 1.06 | 1.08 | 1.11 | 1.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.95 | 5 | 0.96 | 0.96 | 0.97 | 1.01 | 1.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.07 | 5 | 1.03 | 1.00 | 1.31 | 0.75 | 1.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.15 | $17.16 | $18.94 | $18.47 | $15.57 | $14.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.13 | 0.23 | 0.21 | 0.24 | 0.18 | 0.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.35 | 3.00 | (1.15 | ) | 1.19 | 3.76 | 2.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.48 | 3.23 | (0.94 | ) | 1.43 | 3.94 | 2.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.24 | ) | (0.25 | ) | (0.17 | ) | (0.16 | ) | (0.17 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.24 | ) | (0.84 | ) | (0.96 | ) | (1.04 | ) | (0.67 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.63 | $20.15 | $17.16 | $18.94 | $18.47 | $15.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.34 | 4 | 18.88 | (5.02 | ) | 7.98 | 25.71 | 16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $201 | $200 | $275 | $376 | $591 | $415 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.76 | 5 | 0.76 | 0.77 | 0.73 | 0.74 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.76 | 5 | 0.75 | 0.76 | 0.72 | 0.73 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.26 | 5 | 1.27 | 1.16 | 1.27 | 1.05 | 1.42 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.14 | $17.16 | $18.94 | $18.47 | $15.57 | $14.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.13 | 0.24 | 0.23 | 0.31 | 0.19 | 0.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.36 | 3.00 | (1.15 | ) | 1.12 | 3.75 | 2.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.49 | 3.24 | (0.92 | ) | 1.43 | 3.94 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.26 | ) | (0.27 | ) | (0.17 | ) | (0.16 | ) | (0.18 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.26 | ) | (0.86 | ) | (0.96 | ) | (1.04 | ) | (0.68 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.63 | $20.14 | $17.16 | $18.94 | $18.47 | $15.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.40 | 4 | 18.97 | (5.00 | ) | 7.99 | 25.72 | 16.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $3,452 | $3,077 | $2,024 | $1,444 | $356 | $118 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.71 | 5 | 0.72 | 0.72 | 0.72 | 0.74 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.70 | 5 | 0.69 | 0.69 | 0.69 | 0.73 | 0.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.30 | 5 | 1.27 | 1.26 | 1.63 | 1.06 | 1.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 NAV Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $20.15 | $17.16 | $18.94 | $18.47 | $15.57 | �� | $14.00 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.14 | 0.24 | 0.23 | 0.27 | 0.19 | 0.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.35 | 3.01 | (1.15 | ) | 1.16 | 3.75 | 2.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.49 | 3.25 | (0.92 | ) | 1.43 | 3.94 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.26 | ) | (0.27 | ) | (0.17 | ) | (0.16 | ) | (0.18 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.59 | ) | (0.79 | ) | (0.88 | ) | (0.50 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.26 | ) | (0.86 | ) | (0.96 | ) | (1.04 | ) | (0.68 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $21.64 | $20.15 | $17.16 | $18.94 | $18.47 | $15.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 7.39 | 4 | 18.95 | (4.95 | ) | 7.98 | 25.73 | 16.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,251 | $1,245 | $750 | $844 | $543 | $524 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.70 | 5 | 0.70 | 0.70 | 0.69 | 0.71 | 0.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.69 | 5 | 0.69 | 0.69 | 0.69 | 0.71 | 0.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.32 | 5 | 1.27 | 1.25 | 1.45 | 1.09 | 1.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 18 | 65 | 61 | 44 | 45 | 44 |
1 | Six months ended 9-30-17. 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 seek to provide long-term growth of capital primarily through investment 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 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 scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. 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 NAVs 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.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
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, 2017, 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 NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCT, an affiliate of the fund, which has a floating NAV 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 receives 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. Securities lending income received by the fund is net of fees retained by the securities lending agent. 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, 2017, the fund loaned common stocks valued at $656,000 and received $669,440 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.
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 have the ability to 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 29, 2017, the fund and other affiliated funds have 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. Excluding commitments designated for a certain fund and subject to the need of all other affiliated funds, the fund can borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. A commitment fee payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 29, 2017, the fund had a similar agreement that enabled it to participate in a $1 billion unsecured committed line of credit. For the six months ended September 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the six months ended September 30, 2017, were $21,026.
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 charged daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
As of March 31, 2017, 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 expiration of capital loss carryforwards and 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) 0.750% 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 Global Investors, Inc., an indirect, wholly owned subsidiary of Orix Corporation of Japan. 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 participating portfolios in proportion to the daily net assets of each fund. During the six months ended September 30, 2017, 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 expenses paid indirectly and short dividend expense. The expense limitation expires on June 30, 2018, 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, 2017, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $56,863 | Class R3 | $792 | |
Class B | 461 | Class R4 | 10,804 | |
Class C | 11,436 | Class R5 | 7,950 | |
Class I | 300,734 | Class R6 | 250,269 | |
Class I2 | 2,206 | Class NAV | 50,451 | |
Class R1 | 1,063 | Total | $698,498 | |
Class R2 | 5,469 |
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees incurred for the six months ended September 30, 2017 were equivalent to a net annual effective rate of 0.64% 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, 2017 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B,Class C, Class R1, Class R2, Class R3 and Class R4 pursuant to
Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. In addition, under a service plan for Class R1, Class R2, Class R3, Class R4 and Class R5, the fund pays for certain other services. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund's shares.
Class | Rule 12b-1 fee | Service fee | Class | Rule 12b-1 fee | Service fee | |
Class A | 0.30% | — | Class R2 | 0.25% | 0.25% | |
Class B | 1.00% | — | Class R3 | 0.50% | 0.15% | |
Class C | 1.00% | — | Class R4 | 0.25% | 0.10% | |
Class R1 | 0.50% | 0.25% | Class R5 | — | 0.05% |
Class A shares are currently charged 0.25% for Rule 12b-1 fees.
The fund's Distributor has contractually agreed to waive 0.10% of Rule12b-1 fees for Class R4 shares. The current waiver agreement expires on June 30, 2018, 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 $134,580 for Class R4 shares for the six months ended September 30, 2017.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $1,648,008 for the six months ended September 30, 2017. Of this amount, $269,448 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $1,369,109 was paid as sales commissions to broker-dealers and $9,451 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, 2017, CDSCs received by the Distributor amounted to $1,993, $4,295 and $12,603 for Class A, Class B and Class C shares, respectively.
Transfer agent fees. The John Hancock Group of Funds has a complex-wide 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, 2017 were:
Class | Distribution and service fees | Transfer agent fees | ||||||
Class A | $1,765,954 | $799,511 | ||||||
Class B | 57,322 | 6,491 | ||||||
Class C | 1,421,342 | 160,909 | ||||||
Class I | — | 3,816,517 | ||||||
Class I2 | — | 27,999 |
Class | Distribution and service fees | Transfer agent fees | ||||||
Class R1 | $99,014 | $1,763 | ||||||
Class R2 | 340,166 | 9,056 | ||||||
Class R3 | 64,750 | 1,323 | ||||||
Class R4 | 467,640 | 18,010 | ||||||
Class R5 | 52,931 | 13,185 | ||||||
Class R6 | — | 216,954 | ||||||
Total | $4,269,119 | $5,071,718 |
Trustee expenses. The Trust 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 or its affiliates, 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 | $33,275,320 | 1 | 1.250% | $1,155 |
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2017 and for the year ended March 31, 2017 were as follows:
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 5,451,096 | $115,229,510 | 20,539,114 | $388,446,807 | ||||||||||||||||||||||
Distributions reinvested | — | — | 802,052 | 16,169,365 | ||||||||||||||||||||||
Repurchased | (11,198,547 | ) | (236,006,260 | ) | (86,000,334 | ) | (1,631,815,250 | ) | ||||||||||||||||||
Net decrease | (5,747,451 | ) | ($120,776,750 | ) | (64,659,168 | ) | ($1,227,199,078 | ) | ||||||||||||||||||
Class B shares | ||||||||||||||||||||||||||
Sold | 3,778 | $74,931 | 53,502 | $983,572 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,954 | 37,205 | ||||||||||||||||||||||
Repurchased | (135,463 | ) | (2,700,326 | ) | (262,674 | ) | (4,703,935 | ) | ||||||||||||||||||
Net decrease | (131,685 | ) | ($2,625,395 | ) | (207,218 | ) | ($3,683,158 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 696,001 | $13,872,198 | 2,294,799 | $41,457,536 | ||||||||||||||||||||||
Distributions reinvested | — | — | 40,366 | 770,594 | ||||||||||||||||||||||
Repurchased | (2,154,397 | ) | (43,001,766 | ) | (5,884,477 | ) | (105,397,298 | ) | ||||||||||||||||||
Net decrease | (1,458,396 | ) | ($29,129,568 | ) | (3,549,312 | ) | ($63,169,168 | ) | ||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 43,548,669 | $896,269,736 | 144,377,699 | $2,676,144,389 | ||||||||||||||||||||||
Distributions reinvested | — | — | 3,746,922 | 73,327,256 | ||||||||||||||||||||||
Repurchased | (72,581,030 | ) | (1,496,653,538 | ) | (166,091,633 | ) | (3,115,519,988 | ) | ||||||||||||||||||
Net decrease | (29,032,361 | ) | ($600,383,802 | ) | (17,967,012 | ) | ($366,048,343 | ) |
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class I2 shares | ||||||||||||||||||||||||||
Sold | 42,393 | $870,574 | 132,018 | $2,457,900 | ||||||||||||||||||||||
Distributions reinvested | — | — | 31,696 | 620,294 | ||||||||||||||||||||||
Repurchased | (70,798 | ) | (1,456,238 | ) | (368,108 | ) | (6,547,472 | ) | ||||||||||||||||||
Net decrease | (28,405 | ) | ($585,664 | ) | (204,394 | ) | ($3,469,278 | ) | ||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 124,222 | $2,551,555 | 392,546 | $7,252,549 | ||||||||||||||||||||||
Distributions reinvested | — | — | 5,244 | 102,673 | ||||||||||||||||||||||
Repurchased | (251,525 | ) | (5,166,778 | ) | (581,190 | ) | (10,847,710 | ) | ||||||||||||||||||
Net decrease | (127,303 | ) | ($2,615,223 | ) | (183,400 | ) | ($3,492,488 | ) | ||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 510,980 | $10,490,192 | 1,364,536 | $25,299,713 | ||||||||||||||||||||||
Distributions reinvested | — | — | 46,808 | 916,021 | ||||||||||||||||||||||
Repurchased | (798,741 | ) | (16,427,745 | ) | (2,602,693 | ) | (48,478,299 | ) | ||||||||||||||||||
Net decrease | (287,761 | ) | ($5,937,553 | ) | (1,191,349 | ) | ($22,262,565 | ) | ||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 66,160 | $1,351,508 | 372,780 | $6,931,485 | ||||||||||||||||||||||
Distributions reinvested | — | — | 9,224 | 180,427 | ||||||||||||||||||||||
Repurchased | (347,178 | ) | (7,112,648 | ) | (1,024,533 | ) | (19,234,010 | ) | ||||||||||||||||||
Net decrease | (281,018 | ) | ($5,761,140 | ) | (642,529 | ) | ($12,122,098 | ) | ||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 889,284 | $18,166,860 | 2,587,790 | $47,469,756 | ||||||||||||||||||||||
Distributions reinvested | — | — | 156,717 | 3,068,524 | ||||||||||||||||||||||
Repurchased | (3,696,699 | ) | (76,410,364 | ) | (4,194,749 | ) | (77,959,405 | ) | ||||||||||||||||||
Net decrease | (2,807,415 | ) | ($58,243,504 | ) | (1,450,242 | ) | ($27,421,125 | ) | ||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 747,150 | $15,394,024 | 3,586,479 | $65,382,957 | ||||||||||||||||||||||
Distributions reinvested | — | — | 199,923 | 3,916,493 | ||||||||||||||||||||||
Repurchased | (1,396,094 | ) | (28,671,867 | ) | (9,858,738 | ) | (189,143,056 | ) | ||||||||||||||||||
Net decrease | (648,944 | ) | ($13,277,843 | ) | (6,072,336 | ) | ($119,843,606 | ) | ||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 21,562,947 | $441,811,241 | 59,716,606 | $1,122,362,824 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,819,568 | 35,627,141 | ||||||||||||||||||||||
Repurchased | (14,737,932 | ) | (304,360,022 | ) | (26,759,489 | ) | (498,284,467 | ) | ||||||||||||||||||
Net increase | 6,825,015 | $137,451,219 | 34,776,685 | $659,705,498 | ||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 490,640 | $10,053,223 | 22,946,485 | $438,822,065 | ||||||||||||||||||||||
Distributions reinvested | — | — | 692,902 | 13,573,944 | ||||||||||||||||||||||
Repurchased | (4,449,807 | ) | (93,062,281 | ) | (5,578,239 | ) | (105,240,728 | ) | ||||||||||||||||||
Net increase (decrease) | (3,959,167 | ) | ($83,009,058 | ) | 18,061,148 | $347,155,281 | ||||||||||||||||||||
Total net decrease | (37,684,891 | ) | ($784,894,281 | ) | (43,289,127 | ) | ($841,850,128 | ) |
Affiliates of the fund owned 100% of shares of Class NAV on September 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $2,587,722,106 and $3,425,033,059, respectively, for the six months ended September 30, 2017.
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 NAV 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, 2017, funds within the John Hancock group of funds complex held 7.5% of the fund's net assets.
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 Boston Partners Global Investors, 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 19-22, 2017 in-person 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 22-24, 2017.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 19-22, 2017, the Board, including the Trustees who are not parties to any Agreement or 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 (including its various committees) 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 information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. 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. The Board considered the Advisory Agreement and Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
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 did not treat any single factor as determinative, and each Trustee may have attributed 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.
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 observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the fund's compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. 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. The Board also considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risks with respect to all funds.
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; |
(f) | the Advisor's initiatives intended to improve various aspects of the Trust's operations and investor experience with the fund; and |
(g) | 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 while it found the data provided by the independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance comparisons may vary depending on the selection of the peer group. The Board noted that the fund underperformed its benchmark index for the one-, three- and five-year periods and outperformed its benchmark index for the ten-year period ended December 31, 2016. The Board also noted that the fund underperformed its peer group average for the one- and three-year periods and outperformed its peer group average for the five- and ten-year periods ended December 31, 2016. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the benchmark index for the ten-year period and to the peer group for the five- and ten-year periods. The Board also took into account management's discussion of the impact of market conditions on the fund's one- and three-year performance. The Board also noted management's discussion of the fund's more recent improved performance. 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 over the longer-term.
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 in light of the nature, extent and quality of the management and advisory and subadvisory services provided by the Advisor to the Subadvisor. 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 net 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 overall management fee, the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor. 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 in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out 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 and with respect to the fund; |
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data and considered that the Advisor hired an independent third-party consultant to provide an analysis of the Advisor's allocation methodologies; |
(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; |
(j) | considered the Advisor's ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the mutual fund industry; 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 risks that it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
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:
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 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 over the longer-term; |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; 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.
Trustees Hassell H. McClellan, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Boston Partners Global Investors, 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 6-20-17
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.
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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 serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
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. | ||
MF403050 | 340SA 9/17 11/17 |
John Hancock
Small Company Fund
Semiannual report 9/30/17
A message to shareholders
Dear shareholder,
Wherever stock investors look today, the markets seem to exhibit undiminished strength. Three bellwether U.S. indexes—the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite Index—simultaneously hit all-time highs more than once in recent months. While stock markets are setting records, investors have reason to be vigilant. U.S. stocks haven't experienced a drop of even 5% in more than a year. This degree of calm in a rising market is rare, and as the bull market advances, many stocks are moving deeper into overvalued territory, suggesting that market leaders are vulnerable to any setbacks.
Advancing the interests of fund shareholders
One of our primary goals is to advance the interests of our fund shareholders wherever possible. To that end, we recently announced our third round of expense reductions this year, targeting six mutual funds and two closed-end funds that together represent more than $7 billion in assets under management. Details can be found at jhinvestments.com.
In addition, we are proud to report that in May fund researcher Morningstar, Inc. formally recognized our shareholder-friendly initiatives by upgrading our parent pillar rating—a key component of the Morningstar Analyst Rating system—to positive, the highest possible rating. Morningstar evaluates select funds and their parent firms based on intensive research, including on-site due diligence. They focused on such factors as whether our portfolio managers invest meaningfully in the funds they manage, the quality of our risk management, our corporate culture, and our commitment to recognizing shareholder interests—in other words, how effective we are as stewards of investor capital. We're proud to have been recognized by Morningstar for our efforts and we're committed to continue our work of furthering the interests of our shareholders.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to 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, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly into an index. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Small Company Fund
INVESTMENT OBJECTIVE
The fund seeks maximum long-term total return.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/17 (%)
The Russell 2000 Index is an index that measures performance of the 2,000 smallest companies in the Russell 3000 Index.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would 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 prior to this date are those of the predecessor fund's Investor 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. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end 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 prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS
Growth outpaced value
Value-oriented companies lagged their growth-oriented counterparts for the period, posing a headwind for the fund's valuation-conscious approach.
The fund's underweight in healthcare detracted
The fund's more limited exposure to the healthcare sector detracted, especially biotechnology stocks, which did not tend to meet our valuation and quality criteria.
Finding cyclical opportunities
Toward period end, as data began to suggest a synchronized global expansion, we began to move the portfolio in a somewhat more economically sensitive direction by adding to cyclical stocks.
SECTOR COMPOSITION AS OF 9/30/17 (%)
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. Please see the fund's prospectus for additional risks.
An interview with Portfolio Manager Kathryn A. Vorisek, Mesirow Financial Investment Management, Inc.
Kathryn A. Vorisek
Portfolio Manager
Mesirow Financial
How did the fund perform during the six months ended September 30, 2017?
The fund generated solid results on an absolute basis, but lagged its benchmark, the Russell 2000 Index, for the reporting period. Relative to the benchmark, we primarily attribute this performance shortfall to a few big-picture market trends that were poorly suited to our investment approach. We have confidence in this approach over longer stretches of time, but during the past six months, challenging conditions made it difficult for the fund to keep pace with the broader small-cap stock market.
What made these conditions difficult to navigate for your management strategy?
As a reminder to shareholders, we typically favor attractively valued, higher-quality small-cap companies. During the six-month period, however, value-oriented companies tended to lag their growth-oriented counterparts. This left the fund poorly positioned in a couple of ways.
For example, we kept the fund significantly underweighted in the healthcare sector by avoiding the biotechnology industry. Most biotech companies tend to have very high valuations and low or no profits, making the stocks ill-suited to our approach. Many of these benchmark components that the fund did not own were good performers this period. In other words, even though stock selection in healthcare was positive, the fund's substantial underexposure to a key industry in an outperforming sector hampered relative results to an even greater extent.
Our valuation-conscious management approach also led us to a modest overweighting in the energy sector, where a number of stocks struck us as unfairly penalized in an environment of persistently low energy prices. These investments remained weak throughout the reporting period, and the fund's slight overweighting in the group weighed on performance relative to the benchmark.
A secondary challenge for the fund was that stocks with lower-quality characteristics, such as increased volatility or reduced profitability, tended to outperform this period. These are not the
Which individual stocks were notable detractors?
The fund's biggest individual detractor was Diebold Nixdorf, Inc., a manufacturer of automatic teller machines. This company formed as the result of a 2016 merger between Diebold, the leading ATM provider in the U.S., and Nixdorf, the European leader. Ongoing challenges integrating the two firms appear to have weighed on the stock, as Diebold Nixdorf lowered its 2017 revenue and earnings forecasts. At period end, the fund continued to hold the stock, as we liked Diebold Nixdorf's discounted valuation and the potential to generate long-term shareholder value, once it is able to move past its near-term difficulties.
Telecommunication-focused manufacturer Inphi, Inc. also detracted. Inphi, a maker of semiconductor components for telecom equipment customers, experienced a decline in revenue growth associated with the company's business in China. We saw increased risk with the stock and sold it from the fund during the period.
Other relative detractors were Nexstar Media Group, Inc. and ProAssurance Corp. Nexstar, a television broadcasting company, was hurt by industrywide challenges surrounding subscriber payments for large content providers. Meanwhile, ProAssurance, a provider of professional liability
TOP 10 HOLDINGS AS OF 9/30/17 (%)
IDACORP, Inc. | 1.9 |
Chemical Financial Corp. | 1.6 |
ALLETE, Inc. | 1.6 |
ITT, Inc. | 1.6 |
Capitol Federal Financial, Inc. | 1.5 |
IBERIABANK Corp. | 1.5 |
Itron, Inc. | 1.5 |
MasTec, Inc. | 1.5 |
Simmons First National Corp., Class A | 1.5 |
Albany International Corp., Class A | 1.5 |
TOTAL | 15.7 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Which stocks contributed to relative performance?
The fund's top relative contributor for the period was MiMedx Group, Inc., a medical technology company with a focus on wound care treatment. MiMedx shares rose in response to two positive trends. First, the firm started to see revenue growth tied to an earlier move to boost its sales force. Second, MiMedx's margins began to improve in line with better expense management. During the period, we sold the fund's stake in MiMedx because the stock reached our target price.
Another positive was Bottomline Technologies, Inc., a maker of specialized software that enables business-to-business payments. As the firm's customers have increasingly adopted the company's new products, Bottomline has seen better financial results.
Also adding value was Trade Desk, Inc., a maker of software for clients to create and manage their digital advertising campaigns. We originally found several things attractive about this stock. First, the company has significantly increased its market share relative to its competitors. Second, it has benefited from being part of a growing industry. Trade Desk's shares rose sharply early during the six-month period, as the firm announced very strong first-quarter financial results. As with MiMedx, this stock reached our target price, and we ultimately sold it from the fund in search of other opportunities offering what we saw as a better risk/reward trade-off.
What changes did you make to the fund?
Over the course of the period, we've seen steady improvement in economic data on a global basis. As more and more reports seemed to suggest a synchronized global expansion, we became more confident about increasing the fund's exposure to cyclical stocks. We saw these economically sensitive businesses as well positioned to benefit if global economic conditions continued their improvement trend.
As a result, we increased the fund's allocation to industrials and banks, while selling some holdings
in more defensive categories, such as consumer staples, a sector that tends to be less influenced by economic cycles.
Also, to take advantage of what we saw as more favorable economic conditions globally, we have more recently pursued selected investment opportunities in companies that have revenue exposure outside the U.S. to broaden the fund's geographic exposure. At period end, roughly 40% of the fund was invested in companies with non-U.S. revenue sources.
Can you tell us about an upcoming change to the fund?
Pending shareholder approval, effective as of the close of business on or about February 16, 2018, the fund will be merged into John Hancock Small Cap Core Fund and Mesirow Financial will no longer manage the fund.
MANAGED BY
Kathryn A. Vorisek On the fund and its predecessor since 1998 Investing since 1984 | |
Leo Harmon, CFA On the fund and its predecessor since 2006 Investing since 1993 |
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2017
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 | 14.51 | 10.91 | 5.88 | 1.20 | 67.83 | 77.06 | |
Class I1,2 | 20.92 | 12.40 | 6.68 | 6.69 | 79.43 | 90.98 | |
Class R11,2 | 20.14 | 11.66 | 6.14 | 6.36 | 73.57 | 81.45 | |
Class R21,2 | 20.42 | 11.95 | 6.37 | 6.50 | 75.84 | 85.50 | |
Class R31,2 | 20.19 | 11.76 | 6.21 | 6.38 | 74.38 | 82.74 | |
Class R41,2 | 20.74 | 12.24 | 6.52 | 6.61 | 78.10 | 87.99 | |
Class R51,2 | 20.93 | 12.45 | 6.69 | 6.71 | 79.78 | 91.09 | |
Class R61,2 | 20.94 | 12.53 | 6.70 | 6.68 | 80.42 | 91.31 | |
Class ADV1,2 | 20.62 | 12.16 | 6.50 | 6.56 | 77.53 | 87.66 | |
Index† | 20.74 | 13.79 | 7.85 | 8.27 | 90.80 | 112.87 |
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 prospectus for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the contractual 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 (%) | 1.47 | 1.16 | 1.82 | 1.57 | 1.72 | 1.42 | 1.12 | 1.07 | 1.42 |
Net (%) | 1.44 | 1.14 | 1.81 | 1.56 | 1.71 | 1.31 | 1.11 | 1.07 | 1.35 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index is the Russell 2000 Index. |
See the following page for footnotes.
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 | 9-30-07 | 19,098 | 19,098 | 21,287 |
Class R11,2 | 9-30-07 | 18,145 | 18,145 | 21,287 |
Class R21,2 | 9-30-07 | 18,550 | 18,550 | 21,287 |
Class R31,2 | 9-30-07 | 18,274 | 18,274 | 21,287 |
Class R41,2 | 9-30-07 | 18,799 | 18,799 | 21,287 |
Class R51,2 | 9-30-07 | 19,109 | 19,109 | 21,287 |
Class R61,2 | 9-30-07 | 19,131 | 19,131 | 21,287 |
Class ADV1,2 | 9-30-07 | 18,766 | 18,766 | 21,287 |
The Russell 2000 Index is an index that measures performance of the 2,000 smallest companies in the Russell 3000 Index.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Footnotes related to performance pages
1 | Class A and Class ADV shares of the fund commenced operations on 12-14-09. Class R1, Class R3, Class R4, and Class R5 shares of the fund commenced operations on 4-30-10. Class R2 and Class R6 shares of the fund commenced operations on 3-1-12 and 9-1-11, respectively. Returns shown prior to 12-14-09 are those of FMA Small Company Portfolio's (predecessor fund) Investor shares. Returns shown prior to Class R1, Class R2, Class R3, Class R4, Class R5, and Class R6 shares' commencement dates are those of the fund's Class A shares, except that they do not include the fund's Class A shares sales charges and would be lower if they did. Returns shown prior to the commencement date of a share class would differ from the new share class only to the extent that expenses of the classes are different. |
2 | For certain types of investors, as described in the fund's prospectus. |
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
The first line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017.
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, 2017, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017. 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.
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 prospectus for details regarding transaction costs.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 4-1-2017 | Ending value on 9-30-2017 | Expenses paid during period ended 9-30-20171 | Annualized expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $1,065.40 | $7.40 | 1.43% |
Hypothetical example for comparison purposes | 1,000.00 | 1,017.90 | 7.23 | 1.43% | |
Class I | Actual expenses/actual returns | 1,000.00 | 1,066.90 | 5.85 | 1.13% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.40 | 5.72 | 1.13% | |
Class R1 | Actual expenses/actual returns | 1,000.00 | 1,063.60 | 9.31 | 1.80% |
Hypothetical example for comparison purposes | 1,000.00 | 1,016.00 | 9.10 | 1.80% | |
Class R2 | Actual expenses/actual returns | 1,000.00 | 1,065.00 | 8.02 | 1.55% |
Hypothetical example for comparison purposes | 1,000.00 | 1,017.30 | 7.84 | 1.55% | |
Class R3 | Actual expenses/actual returns | 1,000.00 | 1,063.80 | 8.80 | 1.70% |
Hypothetical example for comparison purposes | 1,000.00 | 1,016.50 | 8.59 | 1.70% | |
Class R4 | Actual expenses/actual returns | 1,000.00 | 1,066.10 | 6.68 | 1.29% |
Hypothetical example for comparison purposes | 1,000.00 | 1,018.60 | 6.53 | 1.29% | |
Class R5 | Actual expenses/actual returns | 1,000.00 | 1,067.10 | 5.70 | 1.10% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.60 | 5.57 | 1.10% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 1,066.80 | 5.70 | 1.10% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.60 | 5.57 | 1.10% | |
Class ADV | Actual expenses/actual returns | 1,000.00 | 1,065.60 | 6.94 | 1.34% |
Hypothetical example for comparison purposes | 1,000.00 | 1,018.40 | 6.78 | 1.34% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
Fund’s investments |
Shares | Value | ||||
Common stocks 97.7% | $348,810,353 | ||||
(Cost $298,989,733) | |||||
Consumer discretionary 10.2% | 36,318,701 | ||||
Auto components 1.2% | |||||
Visteon Corp. (A) | 34,540 | 4,275,016 | |||
Diversified consumer services 1.2% | |||||
Adtalem Global Education, Inc. | 115,620 | 4,144,977 | |||
Hotels, restaurants and leisure 2.2% | |||||
Boyd Gaming Corp. | 154,105 | 4,014,435 | |||
Extended Stay America, Inc. | 197,880 | 3,957,600 | |||
Media 1.7% | |||||
Nexstar Media Group, Inc., Class A | 69,075 | 4,303,373 | |||
WideOpenWest, Inc. (A) | 118,810 | 1,791,655 | |||
Specialty retail 2.5% | |||||
DSW, Inc., Class A | 35,915 | 770,801 | |||
Lithia Motors, Inc., Class A | 39,310 | 4,729,386 | |||
Party City Holdco, Inc. (A) | 248,345 | 3,365,075 | |||
Textiles, apparel and luxury goods 1.4% | |||||
Wolverine World Wide, Inc. | 172,145 | 4,966,383 | |||
Consumer staples 2.5% | 8,802,738 | ||||
Food and staples retailing 1.2% | |||||
Performance Food Group Company (A) | 143,180 | 4,044,835 | |||
Household products 1.3% | |||||
Central Garden & Pet Company, Class A (A) | 127,935 | 4,757,903 | |||
Energy 3.8% | 13,763,855 | ||||
Energy equipment and services 2.6% | |||||
Forum Energy Technologies, Inc. (A) | 264,215 | 4,201,019 | |||
Patterson-UTI Energy, Inc. | 243,695 | 5,102,973 | |||
Oil, gas and consumable fuels 1.2% | |||||
Callon Petroleum Company (A) | 396,785 | 4,459,863 | |||
Financials 21.4% | 76,460,511 | ||||
Banks 13.4% | |||||
Ameris Bancorp | 92,300 | 4,430,400 | |||
Chemical Financial Corp. | 112,540 | 5,881,340 | |||
FNB Corp. | 332,200 | 4,660,766 | |||
IBERIABANK Corp. | 66,460 | 5,459,689 | |||
Independent Bank Group, Inc. | 66,585 | 4,015,076 | |||
Old National Bancorp | 261,290 | 4,781,607 | |||
Simmons First National Corp., Class A | 92,190 | 5,337,801 | |||
Sterling Bancorp | 214,010 | 5,275,347 | |||
Western Alliance Bancorp (A) | 73,760 | 3,915,181 |
12 | JOHN HANCOCK Small Company Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Wintrust Financial Corp. | 52,085 | $4,078,776 | |||
Capital markets 1.2% | |||||
Legg Mason, Inc. | 111,465 | 4,381,689 | |||
Insurance 5.3% | |||||
American Equity Investment Life Holding Company | 172,440 | 5,014,555 | |||
Argo Group International Holdings, Ltd. | 66,105 | 4,065,452 | |||
Kemper Corp. | 68,935 | 3,653,555 | |||
ProAssurance Corp. | 31,015 | 1,694,970 | |||
The Hanover Insurance Group, Inc. | 44,925 | 4,354,580 | |||
Thrifts and mortgage finance 1.5% | |||||
Capitol Federal Financial, Inc. | 371,410 | 5,459,727 | |||
Health care 9.4% | 33,469,827 | ||||
Biotechnology 1.2% | |||||
Ligand Pharmaceuticals, Inc. (A) | 32,495 | 4,424,194 | |||
Health care providers and services 1.3% | |||||
Acadia Healthcare Company, Inc. (A) | 94,535 | 4,514,992 | |||
Health care technology 2.7% | |||||
Allscripts Healthcare Solutions, Inc. (A) | 353,130 | 5,025,040 | |||
Omnicell, Inc. (A) | 88,910 | 4,538,856 | |||
Life sciences tools and services 1.2% | |||||
PRA Health Sciences, Inc. (A) | 54,115 | 4,121,940 | |||
Pharmaceuticals 3.0% | |||||
Pacira Pharmaceuticals, Inc. (A) | 92,365 | 3,468,306 | |||
Prestige Brands Holdings, Inc. (A) | 82,210 | 4,117,899 | |||
Supernus Pharmaceuticals, Inc. (A) | 81,465 | 3,258,600 | |||
Industrials 18.1% | 64,675,545 | ||||
Aerospace and defense 2.5% | |||||
Aerojet Rocketdyne Holdings, Inc. (A) | 117,390 | 4,109,824 | |||
Curtiss-Wright Corp. | 45,875 | 4,795,773 | |||
Building products 2.0% | |||||
American Woodmark Corp. (A) | 38,955 | 3,749,419 | |||
JELD-WEN Holding, Inc. (A) | 99,560 | 3,536,371 | |||
Commercial services and supplies 1.0% | |||||
The Brink's Company | 42,845 | 3,609,691 | |||
Construction and engineering 1.5% | |||||
MasTec, Inc. (A) | 115,215 | 5,345,976 | |||
Machinery 5.9% | |||||
Albany International Corp., Class A | 92,700 | 5,320,980 | |||
Barnes Group, Inc. | 72,265 | 5,090,347 | |||
Crane Company | 63,535 | 5,082,165 | |||
ITT, Inc. | 128,570 | 5,691,794 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Small Company Fund | 13 |
Shares | Value | ||||
Industrials (continued) | |||||
Road and rail 1.5% | |||||
Saia, Inc. (A) | 83,110 | $5,206,842 | |||
Trading companies and distributors 3.7% | |||||
BMC Stock Holdings, Inc. (A) | 201,960 | 4,311,846 | |||
MRC Global, Inc. (A) | 263,430 | 4,607,391 | |||
Univar, Inc. (A) | 145,770 | 4,217,126 | |||
Information technology 15.4% | 55,077,961 | ||||
Electronic equipment, instruments and components 6.9% | |||||
II-VI, Inc. (A) | 120,070 | 4,940,881 | |||
Itron, Inc. (A) | 69,090 | 5,351,021 | |||
Littelfuse, Inc. | 18,290 | 3,582,645 | |||
Sanmina Corp. (A) | 95,660 | 3,553,769 | |||
Tech Data Corp. (A) | 43,985 | 3,908,067 | |||
VeriFone Systems, Inc. (A) | 170,280 | 3,453,278 | |||
IT services 3.6% | |||||
Blackhawk Network Holdings, Inc. (A) | 114,965 | 5,035,467 | |||
DST Systems, Inc. | 69,705 | 3,825,410 | |||
Virtusa Corp. (A) | 105,635 | 3,990,890 | |||
Semiconductors and semiconductor equipment 2.4% | |||||
Brooks Automation, Inc. | 130,330 | 3,956,819 | |||
Power Integrations, Inc. | 64,675 | 4,734,210 | |||
Software 1.5% | |||||
Bottomline Technologies, Inc. (A) | 166,745 | 5,307,493 | |||
Technology hardware, storage and peripherals 1.0% | |||||
Diebold Nixdorf, Inc. | 150,460 | 3,438,011 | |||
Materials 4.6% | 16,446,388 | ||||
Chemicals 2.4% | |||||
Ferro Corp. (A) | 167,600 | 3,737,480 | |||
Ingevity Corp. (A) | 75,355 | 4,707,427 | |||
Metals and mining 2.2% | |||||
Allegheny Technologies, Inc. (A) | 150,410 | 3,594,799 | |||
Commercial Metals Company | 231,565 | 4,406,682 | |||
Real estate 6.6% | 23,528,673 | ||||
Equity real estate investment trusts 6.6% | |||||
Brandywine Realty Trust | 178,289 | 3,118,275 | |||
Chesapeake Lodging Trust | 196,950 | 5,311,742 | |||
Columbia Property Trust, Inc. | 29,830 | 647,821 | |||
DiamondRock Hospitality Company | 336,755 | 3,687,467 | |||
Education Realty Trust, Inc. | 58,040 | 2,092,417 | |||
Physicians Realty Trust | 225,255 | 3,993,771 | |||
STAG Industrial, Inc. | 170,265 | 4,677,180 |
14 | JOHN HANCOCK Small Company Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Utilities 5.7% | $20,266,154 | ||||
Electric utilities 4.3% | |||||
ALLETE, Inc. | 74,455 | 5,754,627 | |||
IDACORP, Inc. | 77,535 | 6,817,653 | |||
PNM Resources, Inc. | 69,530 | 2,802,059 | |||
Gas utilities 1.4% | |||||
Spire, Inc. | 65,530 | 4,891,815 | |||
Yield (%) | Shares | Value | |||
Short-term investments 2.3% | $8,049,272 | ||||
(Cost $8,049,272) | |||||
Money market funds 2.3% | 8,049,272 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.9244(B) | 8,049,272 | 8,049,272 |
Total investments (Cost $307,039,005) 100.0% | $356,859,625 | ||||
Other assets and liabilities, net 0.0% | 108,086 | ||||
Total net assets 100.0% | $356,967,711 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | |
Security Abbreviations and Legend | |
(A) | Non-income producing security. |
(B) | The rate shown is the annualized seven-day yield as of 9-30-17. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Small Company Fund | 15 |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-17 (unaudited)
Assets | ||||||||||||||||||||||||||||||
Investments, at value (Cost $307,039,005) | $356,859,625 | |||||||||||||||||||||||||||||
Receivable for investments sold | 7,388,143 | |||||||||||||||||||||||||||||
Receivable for fund shares sold | 410,211 | |||||||||||||||||||||||||||||
Dividends and interest receivable | 302,378 | |||||||||||||||||||||||||||||
Receivable due from advisor | 218,048 | |||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 74,420 | |||||||||||||||||||||||||||||
Total assets | 365,252,825 | |||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||
Payable for investments purchased | 7,677,277 | |||||||||||||||||||||||||||||
Payable for fund shares repurchased | 276,321 | |||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||
Accounting and legal services fees | 8,631 | |||||||||||||||||||||||||||||
Transfer agent fees | 30,124 | |||||||||||||||||||||||||||||
Distribution and service fees | 319 | |||||||||||||||||||||||||||||
Trustees' fees | 84 | |||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 292,358 | |||||||||||||||||||||||||||||
Total liabilities | 8,285,114 | |||||||||||||||||||||||||||||
Net assets | $356,967,711 | |||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||
Paid-in capital | $275,077,373 | |||||||||||||||||||||||||||||
Accumulated net investment loss | (368,733 | ) | ||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 32,438,451 | |||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 49,820,620 | |||||||||||||||||||||||||||||
Net assets | $356,967,711 | |||||||||||||||||||||||||||||
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 ($252,136,196 ÷ 8,275,973 shares)1 | $30.47 | |||||||||||||||||||||||||||||
Class I ($96,994,428 ÷ 3,102,759 shares) | $31.26 | |||||||||||||||||||||||||||||
Class R1 ($472,680 ÷ 15,981 shares) | $29.58 | |||||||||||||||||||||||||||||
Class R2 ($927,554 ÷ 30,434 shares) | $30.48 | |||||||||||||||||||||||||||||
Class R3 ($250,887 ÷ 8,412 shares) | $29.82 | |||||||||||||||||||||||||||||
Class R4 ($78,113 ÷ 2,536 shares) | $30.80 | |||||||||||||||||||||||||||||
Class R5 ($100,110 ÷ 3,197 shares) | $31.31 | |||||||||||||||||||||||||||||
Class R6 ($5,952,433 ÷ 189,092 shares) | $31.48 | |||||||||||||||||||||||||||||
Class ADV ($55,310 ÷ 1,801 shares) | $30.71 | |||||||||||||||||||||||||||||
Maximum offering price per share | ||||||||||||||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $32.07 |
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 9-30-17 (unaudited)
Investment income | ||||||||||||||||||||||||
Dividends | $2,113,484 | |||||||||||||||||||||||
Interest | 43,634 | |||||||||||||||||||||||
Total investment income | 2,157,118 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 1,550,934 | |||||||||||||||||||||||
Distribution and service fees | 372,544 | |||||||||||||||||||||||
Accounting and legal services fees | 27,843 | |||||||||||||||||||||||
Transfer agent fees | 186,323 | |||||||||||||||||||||||
Trustees' fees | 2,952 | |||||||||||||||||||||||
State registration fees | 79,655 | |||||||||||||||||||||||
Printing and postage | 187,584 | |||||||||||||||||||||||
Professional fees | 114,871 | |||||||||||||||||||||||
Custodian fees | 21,959 | |||||||||||||||||||||||
Other | 5,694 | |||||||||||||||||||||||
Total expenses | 2,550,359 | |||||||||||||||||||||||
Less expense reductions | (232,181 | ) | ||||||||||||||||||||||
Net expenses | 2,318,178 | |||||||||||||||||||||||
Net investment loss | (161,060 | ) | ||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Investments | 15,176,538 | |||||||||||||||||||||||
15,176,538 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Investments | 7,056,892 | |||||||||||||||||||||||
7,056,892 | ||||||||||||||||||||||||
Net realized and unrealized gain | 22,233,430 | |||||||||||||||||||||||
Increase in net assets from operations | $22,072,370 |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | ||||||||||||||||||||||||||||||||||||||||||||
From operations | ||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | ($161,060 | ) | ($207,673 | ) | ||||||||||||||||||||||||||||||||||||||||
Net realized gain | 15,176,538 | 29,850,179 | ||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 7,056,892 | 22,185,956 | ||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 22,072,370 | 51,828,462 | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (5,607,038 | ) | 27,815,145 | |||||||||||||||||||||||||||||||||||||||||
Total increase | 16,465,332 | 79,643,607 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | ||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 340,502,379 | 260,858,772 | ||||||||||||||||||||||||||||||||||||||||||
End of period | $356,967,711 | $340,502,379 | ||||||||||||||||||||||||||||||||||||||||||
Accumulated net investment loss | ($368,733 | ) | ($207,673 | ) |
Financial highlights
Class A Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.60 | $24.13 | $27.75 | $28.67 | $24.10 | $20.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.03 | ) | (0.04 | ) | (0.04 | ) | (0.05 | ) | (0.13 | ) | (0.07 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.90 | 4.51 | (1.77 | ) | 1.87 | 5.23 | 3.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.87 | 4.47 | (1.81 | ) | 1.82 | 5.10 | 3.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.47 | $28.60 | $24.13 | $27.75 | $28.67 | $24.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 6.54 | 5 | 18.52 | (6.69 | ) | 7.28 | 21.26 | 15.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $252 | $243 | $214 | $180 | $162 | $120 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.50 | 6 | 1.45 | 1.46 | 1.43 | 1.47 | 1.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.43 | 6 | 1.43 | 1.43 | 1.43 | 1.47 | 1.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.18 | ) 6 | (0.14 | ) | (0.14 | ) | (0.17 | ) | (0.47 | ) | (0.36 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $29.31 | $24.65 | $28.22 | $29.02 | $24.32 | $20.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.05 | 0.04 | 0.03 | (0.04 | ) | — | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.93 | 4.61 | (1.80 | ) | 1.91 | 5.27 | 3.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.95 | 4.66 | (1.76 | ) | 1.94 | 5.23 | 3.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $31.26 | $29.31 | $24.65 | $28.22 | $29.02 | $24.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 6.69 | 5 | 18.90 | (6.40 | ) | 7.61 | 21.61 | 16.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $97 | $90 | $39 | $43 | $50 | $49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.19 | 6 | 1.15 | 1.15 | 1.14 | 1.15 | 1.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.13 | 6 | 1.13 | 1.13 | 1.13 | 1.14 | 1.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.12 | 6 | 0.20 | 0.13 | 0.12 | (0.15 | ) | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 R1 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $27.82 | $23.56 | $27.23 | $28.29 | $23.87 | $20.71 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.08 | ) | (0.13 | ) | (0.15 | ) | (0.15 | ) | (0.21 | ) | (0.13 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.84 | 4.39 | (1.71 | ) | 1.83 | 5.16 | 3.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.76 | 4.26 | (1.86 | ) | 1.68 | 4.95 | 3.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $29.58 | $27.82 | $23.56 | $27.23 | $28.29 | $23.87 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.36 | 4 | 18.08 | (7.01 | ) | 6.86 | 20.84 | 15.26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 5 | $1 | $1 | $1 | $1 | $1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.86 | 6 | 1.80 | 1.95 | 2.84 | 2.94 | 4.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.80 | 6 | 1.79 | 1.80 | 1.80 | 1.80 | 1.80 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.58 | ) 6 | (0.52 | ) | (0.56 | ) | (0.55 | ) | (0.82 | ) | (0.60 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.63 | $24.17 | $27.83 | $28.77 | $24.21 | $20.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.04 | ) | (0.06 | ) | (0.05 | ) | (0.08 | ) | (0.14 | ) | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.89 | 4.52 | (1.80 | ) | 1.88 | 5.23 | 3.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.85 | 4.46 | (1.85 | ) | 1.80 | 5.09 | 3.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.48 | $28.63 | $24.17 | $27.83 | $28.77 | $24.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.50 | 4 | 18.45 | (6.82 | ) | 7.18 | 21.12 | 15.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | $1 | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.60 | 6 | 1.51 | 2.21 | 4.66 | 7.99 | 20.22 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.55 | 6 | 1.50 | 1.55 | 1.55 | 1.55 | 1.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.30 | ) 6 | (0.22 | ) | (0.20 | ) | (0.29 | ) | (0.54 | ) | (0.39 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 R3 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.04 | $23.72 | $27.38 | $28.39 | $23.94 | $20.76 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.06 | ) | (0.10 | ) | (0.11 | ) | (0.12 | ) | (0.19 | ) | (0.12 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.84 | 4.42 | (1.74 | ) | 1.85 | 5.17 | 3.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.78 | 4.32 | (1.85 | ) | 1.73 | 4.98 | 3.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $29.82 | $28.04 | $23.72 | $27.38 | $28.39 | $23.94 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.38 | 4 | 18.21 | (6.93 | ) | 7.02 | 20.90 | 15.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1.75 | 6 | 1.69 | 2.54 | 9.06 | 10.89 | 5.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.70 | 6 | 1.68 | 1.70 | 1.70 | 1.70 | 1.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.44 | ) 6 | (0.41 | ) | (0.42 | ) | (0.43 | ) | (0.75 | ) | (0.56 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.89 | $24.32 | $27.92 | $28.79 | $24.17 | $20.87 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | (0.01 | ) | 0.02 | — | 3 | (0.01 | ) | (0.08 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.92 | 4.55 | (1.79 | ) | 1.88 | 5.23 | 3.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.91 | 4.57 | (1.79 | ) | 1.87 | 5.15 | 3.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.80 | $28.89 | $24.32 | $27.92 | $28.79 | $24.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 6.61 | 5 | 18.79 | (6.58 | ) | 7.42 | 21.41 | 15.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1.39 | 7 | 1.32 | 4.26 | 19.97 | 18.99 | 18.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.30 | 7 | 1.21 | 1.30 | 1.30 | 1.30 | 1.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.04 | ) 7 | 0.07 | (0.01 | ) | (0.05 | ) | (0.31 | ) | (0.17 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $29.35 | $24.68 | $28.24 | $29.03 | $24.32 | $20.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.05 | 0.03 | 0.04 | (0.03 | ) | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.94 | 4.62 | (1.78 | ) | 1.91 | 5.27 | 3.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.96 | 4.67 | (1.75 | ) | 1.95 | 5.24 | 3.36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $31.31 | $29.35 | $24.68 | $28.24 | $29.03 | $24.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.71 | 4 | 18.92 | (6.36 | ) | 7.64 | 21.65 | 16.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | 1.15 | 6 | 1.10 | 2.53 | 5.61 | 6.05 | 7.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.10 | 6 | 1.09 | 1.10 | 1.10 | 1.10 | 1.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.15 | 6 | 0.20 | 0.11 | 0.16 | (0.11 | ) | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $29.51 | $24.79 | $28.34 | $29.08 | $24.34 | $20.97 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.07 | 0.09 | 0.09 | (0.02 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.95 | 4.65 | (1.83 | ) | 1.91 | 5.29 | 3.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.97 | 4.72 | (1.74 | ) | 2.00 | 5.27 | 3.37 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $31.48 | $29.51 | $24.79 | $28.34 | $29.08 | $24.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.68 | 4 | 19.04 | (6.30 | ) | 7.80 | 21.75 | 16.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $6 | $5 | $5 | $1 | $1 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.10 | 6 | 1.05 | 1.17 | 4.54 | 7.66 | 18.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.10 | 6 | 1.02 | 1.04 | 0.97 | 1.04 | 1.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.15 | 6 | 0.26 | 0.34 | 0.32 | (0.06 | ) | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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 ADV Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $28.82 | $24.29 | $27.90 | $28.78 | $24.17 | $20.88 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.02 | ) | (0.08 | ) | (0.02 | ) | (0.03 | ) | (0.09 | ) | (0.04 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.91 | 4.61 | (1.78 | ) | 1.89 | 5.23 | 3.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.89 | 4.53 | (1.80 | ) | 1.86 | 5.14 | 3.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | — | (1.81 | ) | (2.74 | ) | (0.53 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $30.71 | $28.82 | $24.29 | $27.90 | $28.78 | $24.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 6.56 | 4 | 18.65 | (6.62 | ) | 7.39 | 21.37 | 15.76 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 5 | — | 5 | $1 | $1 | $1 | — | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.44 | 6 | 1.38 | 2.05 | 4.17 | 4.51 | 4.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses net of fee waivers | 1.34 | 6 | 1.34 | 1.34 | 1.34 | 1.34 | 1.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.13 | ) 6 | (0.32 | ) | (0.07 | ) | (0.09 | ) | (0.35 | ) | (0.20 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 45 | 123 | 108 | 79 | 85 | 97 |
1 | Six months ended 9-30-17. 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. |
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, 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 scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. 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 NAVs each business day.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
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, 2017, 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 NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
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 29, 2017, the fund and other affiliated funds have 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. Excluding commitments designated for a certain fund and subject to the need of other affiliated funds, the fund can borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. A commitment fee payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 29, 2017, the fund had a similar agreement that enabled it to participate in a $1 billion unsecured committed line of credit. For the six months ended September 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the six months ended September 30, 2017, were $1,817.
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 charged daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
As of March 31, 2017 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 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) 0.90% 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 Mesirow Financial 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 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, 2017, 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 applicable class to maintain the 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, 2018, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.
The advisor voluntarily agrees to reduce its management fee for the fund, or if necessary make payment to the fund, in an amount equal to the amount by which the expenses of the fund exceed 0.20% of the average net assets of the fund. For purposes of this agreement, "expenses of the fund" means all the expenses of the fund, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund's business, (e) advisory fees, (f) class-specific expenses, (g) borrowing costs, (h) prime
brokerage fees, (i) acquired fund fees and expenses paid indirectly, and (j) short dividend expense. This agreement will continue in effect until terminated at any time by the advisor on notice to the fund.
For the six months ended September 30, 2017, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $168,981 | Class R4 | $24 | |
Class I | 60,053 | Class R5 | 57 | |
Class R1 | 264 | Class R6 | 2,041 | |
Class R2 | 530 | Class ADV | 46 | |
Class R3 | 148 | Total | $232,144 |
The investment management fees incurred for the six months ended September 30, 2017 were equivalent to a net annual effective rate of 0.77% 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, 2017 amounted to an annual rate of 0.02% 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 Rule12b-1 fees for Class R4 shares. The current waiver agreement expires on June 30, 2018, 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, 2017.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $456,336 for the six months ended September 30, 2017. Of this amount, $78,496 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $375,800 was paid as sales commissions to broker-dealers and $2,040 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, 2017, CDSCs received by the Distributor amounted to $3,190 for Class A shares.
Transfer agent fees. The John Hancock Group of Funds has a complex-wide 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 month ended September 30, 2017 were:
Class | Distribution and service fees | Transfer agent fees |
Class A | $367,442 | $138,661 |
Class I | — | 47,135 |
Class R1 | 1,928 | 35 |
Class R2 | 2,272 | 61 |
Class R3 | 718 | 15 |
Class R4 | 106 | 5 |
Class R5 | 24 | 6 |
Class R6 | — | 380 |
Class ADV | 54 | 25 |
Total | $372,544 | $186,323 |
Trustee expenses. The Trust 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, 2017 and for the year ended March 31, 2017 were as follows:
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 669,373 | $19,323,063 | 2,372,316 | $61,488,996 | ||||||||||||||||||||||
Repurchased | (901,107 | ) | (26,080,072 | ) | (2,742,785 | ) | (71,806,566 | ) | ||||||||||||||||||
Net decrease | (231,734 | ) | ($6,757,009 | ) | (370,469 | ) | ($10,317,570 | ) | ||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 478,337 | $14,209,911 | 2,293,124 | $61,229,488 | ||||||||||||||||||||||
Repurchased | (433,811 | ) | (12,877,816 | ) | (827,753 | ) | (22,051,241 | ) | ||||||||||||||||||
Net increase | 44,526 | $1,332,095 | 1,465,371 | $39,178,247 | ||||||||||||||||||||||
Class R1 shares | ||||||||||||||||||||||||||
Sold | 891 | $24,893 | 6,347 | $160,129 | ||||||||||||||||||||||
Repurchased | (9,219 | ) | (255,824 | ) | (14,543 | ) | (364,899 | ) | ||||||||||||||||||
Net decrease | (8,328 | ) | ($230,931 | ) | (8,196 | ) | ($204,770 | ) |
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 1,826 | $52,563 | 9,527 | $257,486 | ||||||||||||||||||||||
Repurchased | (3,723 | ) | (106,910 | ) | (11,877 | ) | (302,577 | ) | ||||||||||||||||||
Net decrease | (1,897 | ) | ($54,347 | ) | (2,350 | ) | ($45,091 | ) | ||||||||||||||||||
Class R3 shares | ||||||||||||||||||||||||||
Sold | 1,047 | $29,210 | 1,129 | $28,446 | ||||||||||||||||||||||
Repurchased | (169 | ) | (4,739 | ) | (4,527 | ) | (115,287 | ) | ||||||||||||||||||
Net increase (decrease) | 878 | $24,471 | (3,398 | ) | ($86,841 | ) | ||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 188 | $5,510 | 2,235 | $56,134 | ||||||||||||||||||||||
Repurchased | (1,264 | ) | (36,090 | ) | (2,646 | ) | (72,390 | ) | ||||||||||||||||||
Net decrease | (1,076 | ) | ($30,580 | ) | (411 | ) | ($16,256 | ) | ||||||||||||||||||
Class R5 shares | ||||||||||||||||||||||||||
Sold | 34 | $1,002 | 157 | $4,307 | ||||||||||||||||||||||
Repurchased | (20 | ) | (589 | ) | (79 | ) | (2,194 | ) | ||||||||||||||||||
Net increase | 14 | $413 | 78 | $2,113 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 17,606 | $519,909 | 33,935 | $897,813 | ||||||||||||||||||||||
Repurchased | (13,278 | ) | (397,341 | ) | (40,744 | ) | (1,078,519 | ) | ||||||||||||||||||
Net increase (decrease) | 4,328 | $122,568 | (6,809 | ) | ($180,706 | ) | ||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | 464 | $13,857 | 1,654 | $43,025 | ||||||||||||||||||||||
Repurchased | (964 | ) | (27,575 | ) | (22,846 | ) | (557,006 | ) | ||||||||||||||||||
Net decrease | (500 | ) | ($13,718 | ) | (21,192 | ) | ($513,981 | ) | ||||||||||||||||||
Total net increase (decrease) | (193,789 | ) | ($5,607,038 | ) | 1,052,624 | $27,815,145 |
Affiliates of the fund owned 51% of shares of the fund of Class R4 on September 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $149,553,958 and $151,203,026, respectively, for the six months ended September 30, 2017.
Note 7 — Reorganization
On September 28, 2017, the Board of Trustees of the Trust voted to recommend that shareholders of the fund approve a reorganization, expected to be tax-free, of the fund into John Hancock Small Cap Core Fund (Small Cap Core), a series of John Hancock Investment Trust. Effective October 31, 2017, the fund is closed to new investors. Shareholders of record as of November 1, 2017, will be entitled to vote on the reorganization. Under the terms of the reorganization, subject to shareholder approval at a shareholder meeting scheduled to be held on or about January 26, 2018, the fund would transfer all of its assets to Small Cap Core in exchange for shares of Small Cap Core. Small Cap Core would also assume substantially all of the fund's liabilities. The shares of Small Cap Core would then be distributed to the fund's shareholders, and the fund would be terminated. If approved by the fund's shareholders, the reorganization is expected to occur as of the close of business on or about February 16, 2018 and Mesirow Financial Investment Management, Inc. will no longer manage the fund.
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 Mesirow Financial Investment Management, Inc. (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 19-22, 2017 in-person 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 22-24, 2017.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 19-22, 2017, the Board, including the Trustees who are not parties to any Agreement or 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 (including its various committees) 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 information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. 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. The Board considered the Advisory Agreement and Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
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 did not treat any single factor as determinative, and each Trustee may have attributed 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.
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 observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the fund's compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. 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. The Board also considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risks with respect to all funds.
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; |
(f) | the Advisor's initiatives intended to improve various aspects of the Trust's operations and investor experience with the fund; and |
(g) | 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 while it found the data provided by the independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance comparisons may vary depending on the selection of the peer group. The Board noted that the fund underperformed its benchmark index and its peer group average for the one-, three-, five- and ten-year periods ended December 31, 2016. The Board took into account management's discussion of the fund's performance. The Board concluded that the fund's performance is being monitored and reasonably addressed, where appropriate.
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 in light of the nature, extent and quality of the management and advisory and subadvisory services provided by the Advisor and the Subadvisor. 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 equal to the peer group median and that net 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 overall management fee, the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor.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 in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out 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 and with respect to the fund; |
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data and considered that the Advisor hired an independent third-party consultant to provide an analysis of the Advisor's allocation methodologies; |
(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; |
(j) | considered the Advisor's ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the mutual fund industry; 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 risks that it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
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 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, where appropriate; |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; 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.
Trustees Hassell H. McClellan, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Mesirow Financial 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 6-20-17
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.
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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. | ||
MF403054 | 348SA 9/17 11/17 |
John Hancock
Disciplined Value Mid Cap Fund
Semiannual report 9/30/17
A message to shareholders
Dear shareholder,
Wherever stock investors look today, the markets seem to exhibit undiminished strength. Three bellwether U.S. indexes—the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite Index—simultaneously hit all-time highs more than once in recent months. While stock markets are setting records, investors have reason to be vigilant. U.S. stocks haven't experienced a drop of even 5% in more than a year. This degree of calm in a rising market is rare, and as the bull market advances, many stocks are moving deeper into overvalued territory, suggesting that market leaders are vulnerable to any setbacks.
Advancing the interests of fund shareholders
One of our primary goals is to advance the interests of our fund shareholders wherever possible. To that end, we recently announced our third round of expense reductions this year, targeting six mutual funds and two closed-end funds that together represent more than $7 billion in assets under management. Details can be found at jhinvestments.com.
In addition, we are proud to report that in May fund researcher Morningstar, Inc. formally recognized our shareholder-friendly initiatives by upgrading our parent pillar rating—a key component of the Morningstar Analyst Rating system—to positive, the highest possible rating. Morningstar evaluates select funds and their parent firms based on intensive research, including on-site due diligence. They focused on such factors as whether our portfolio managers invest meaningfully in the funds they manage, the quality of our risk management, our corporate culture, and our commitment to recognizing shareholder interests—in other words, how effective we are as stewards of investor capital. We're proud to have been recognized by Morningstar for our efforts and we're committed to continue our work of furthering the interests of our shareholders.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to 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, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly into an index. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Disciplined Value Mid Cap Fund
INVESTMENT OBJECTIVE
The fund seeks long-term growth of capital with current income as a secondary objective.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/17 (%)
The 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. Returns shown prior to Class A shares' commencement dates are those of the predecessor fund's Investor 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. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end 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 prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS
Stocks continued their broad-based advance
Equity markets broadly advanced, overcoming brief periods of flat performance.
The fund outperformed its benchmark
The fund's Class A share performance, excluding sales charges, exceeded that of its benchmark, the Russell Midcap Value Index.
Stock selection and sector allocation contributed positively to returns
Stock selection decisions aided performance across a range of sectors, as did most allocation overweights and underweights.
SECTOR COMPOSITION AS OF 9/30/17 (%)
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. 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. Please see the fund's prospectus for additional risks.
Steven L. Pollack, CFA
Portfolio Manager
Boston Partners
How would you describe the market and economic backdrop during the six months ended September 30, 2017?
Stocks generally made a strong advance during the period. Three bellwether U.S. indexes—the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite Index—simultaneously hit all-time highs more than once, and positive performance results were equally easy to find outside the United States.
Although there were lackluster stretches for market performance, they tended to be brief. After a flat August, for example, U.S. markets moved higher in September, reflecting the market's perception of waning tensions with North Korea. Value stocks lagged growth stocks for most of the period, but in September that trend reversed and value outperformed growth, narrowing the gap for the full period.
Positive economic data helped the markets maintain their momentum. In the United States, economic growth for the second calendar quarter was revised upward to 3.1% in the final estimate of the Bureau of Economic Analysis. Corporate earnings have generally been solid, with a weaker dollar helping to boost results for U.S.-based multinationals, in particular.
The fund outperformed its benchmark, the Russell Midcap Value Index, for the period. What factors were most responsible for this result?
Strong stock selection in information technology and, to a lesser degree, in financials were a key driver of the fund's outperformance. In addition, allocations across most sectors—including
How did mid-cap stocks fare versus other parts of the market-cap spectrum during the period?
Large-cap U.S. stocks have meaningfully led mid- and small-cap stocks so far in 2017. That said, the fund was slightly larger than the index in terms of its weighted average market cap, which is a function of the opportunity set that we focus on in the fund. On the whole, we continued to find better valuations in stocks that are on the slightly larger end of the spectrum of mid-cap value opportunities, and this positioning benefited relative performance.
Which stocks or strategies were some of the largest contributors to relative results?
Our exposures to a variety of technology companies were among the top contributors to results. PC and online game maker Activision Blizzard, Inc. was particularly beneficial. In August, the company beat estimates for earnings and revenue for the sixth consecutive quarter, which led to strong share price appreciation.
TOP 10 HOLDINGS AS OF 9/30/17 (%)
Harris Corp. | 2.0 |
Activision Blizzard, Inc. | 1.6 |
Amdocs, Ltd. | 1.6 |
Raymond James Financial, Inc. | 1.6 |
ManpowerGroup, Inc. | 1.5 |
Discover Financial Services | 1.5 |
Huntington Bancshares, Inc. | 1.5 |
Arrow Electronics, Inc. | 1.5 |
Boston Properties, Inc. | 1.4 |
SunTrust Banks, Inc. | 1.4 |
TOTAL | 15.6 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
Harris Corp., a technology company and defense contractor, was also a strong contributor. In the third calendar quarter, the stock, which is the fund's largest exposure, gained 21% after exceeding expectations for earnings and revenue. In addition, investors were heartened by the company's announcement that it would return capital to shareholders by increasing the quarterly dividend.
The fund's investment in DXC Technology Company also aided the fund's results. DXC is an information technology firm that was recently spun-off from Hewlett Packard Enterprises, and the company reported a strong first quarter as an independent entity. Its share price benefited during the period because of what appeared to be a major margin expansion that resulted from cost saving measures implemented by the company's management. In addition, the company was trading at attractive valuation while returning cash to shareholders, which helped the stock advance.
What were some stocks or strategies that detracted from returns?
In materials, the fund's lack of exposure to metals and mining stocks hurt the fund's results. Gold, silver, copper, and nickel all gained in value on geopolitical uncertainty emanating primarily from North Korea, so the fund's avoidance of stocks related to these commodities was a drag on performance.
Within the consumer discretionary sector, the fund's lack of exposure to hotels, restaurants, and leisure companies hurt performance as stocks in these areas generally performed well.
What was the fund's positioning at the end of the period?
From a sector perspective, the fund's positioning has not changed much during the course of the period. The fund maintained an underweight in high-yielding defensive sectors, such as utilities, real estate, and consumer staples, due to what we consider their expensive valuations. Should interest rates rise—which we think is likely—these sectors would be vulnerable, and the fund would benefit
from its lower-than-benchmark exposure. In contrast, the fund has an overweight in the financials sector, with the largest emphasis falling on insurance, capital markets, consumer finance, and banks, which should all benefit from rising rates.
As of period end, information technology continued to be the fund's largest overweight relative to the benchmark. In our view, there are many attractive companies in the sector that are generating strong free cash flow and maintain dominant market positions, and yet these remain attractively valued for the level of cash they possess.
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 |
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2017
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 | 9.93 | 14.89 | 9.80 | 0.09 | 100.20 | 154.75 | |
Class C1 | 13.85 | 15.20 | 9.85 | 4.01 | 102.90 | 155.86 | |
Class I1,2 | 15.95 | 16.38 | 10.66 | 5.49 | 113.51 | 175.41 | |
Class R21,2 | 15.50 | 15.91 | 10.28 | 5.29 | 109.26 | 166.08 | |
Class R41,2 | 15.81 | 16.15 | 10.40 | 5.41 | 111.42 | 169.05 | |
Class R61,2 | 16.09 | 16.49 | 10.60 | 5.59 | 114.54 | 173.96 | |
Class ADV1,2 | 15.68 | 16.02 | 10.33 | 5.38 | 110.22 | 167.33 | |
Index† | 13.37 | 14.33 | 7.85 | 3.54 | 95.37 | 112.91 |
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 contractual 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 (%) | 1.12 | 1.87 | 0.86 | 1.27 | 1.12 | 0.77 | 1.12 |
Net (%) | 1.12 | 1.87 | 0.86 | 1.27 | 1.02 | 0.77 | 1.12 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index is the Russell Midcap Value Index. |
See the following page for footnotes.
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 | 9-30-07 | 25,586 | 25,586 | 21,291 |
Class I1,2 | 9-30-07 | 27,541 | 27,541 | 21,291 |
Class R21,2 | 9-30-07 | 26,608 | 26,608 | 21,291 |
Class R41,2 | 9-30-07 | 26,905 | 26,905 | 21,291 |
Class R61,2 | 9-30-07 | 27,396 | 27,396 | 21,291 |
Class ADV1,2 | 9-30-07 | 26,733 | 26,733 | 21,291 |
The Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Footnotes related to performance pages
1 | Class A, Class C, Class R2, Class R4, and Class R6 shares of the fund commenced operations on 7-12-10, 8-15-11, 3-1-12, 7-2-13, and 9-1-11, respectively; Class I and Class ADV shares commenced operations on 7-12-10. Investor shares and Institutional shares of Robeco Boston Partners Mid Cap Value Fund (the predecessor fund) commenced operations on 6-2-97. Returns shown prior to Class A and Class ADV shares' commencement dates are those of the predecessor fund's Investor shares. Returns shown prior to Class I shares' commencement date are those of the predecessor fund's Institutional shares. Returns shown prior to Class C, Class R2, Class R4, and Class R6 shares' commencement dates are those of the predecessor fund's Investor shares (prior to 7-12-10) and the fund's Class A shares (from 7-12-10), except that they do not include the fund's Class A shares sales charges and would be lower if they did. Returns shown prior to the commencement date of a share class would differ from the new share class only to the extent that expenses of the classes are different. |
2 | For certain types of investors, as described in the fund's prospectuses. |
3 | The contingent deferred sales charge is not applicable. |
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
The first line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017.
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, 2017, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017. 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.
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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 4-1-2017 | Ending value on 9-30-2017 | Expenses paid during period ended 9-30-20171 | Annualized expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $1,053.70 | $5.71 | 1.11% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.50 | 5.62 | 1.11% | |
Class C | Actual expenses/actual returns | 1,000.00 | 1,050.10 | 9.56 | 1.86% |
Hypothetical example for comparison purposes | 1,000.00 | 1,015.70 | 9.40 | 1.86% | |
Class I | Actual expenses/actual returns | 1,000.00 | 1,054.90 | 4.38 | 0.85% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.80 | 4.31 | 0.85% | |
Class R2 | Actual expenses/actual returns | 1,000.00 | 1,052.90 | 6.43 | 1.25% |
Hypothetical example for comparison purposes | 1,000.00 | 1,018.80 | 6.33 | 1.25% | |
Class R4 | Actual expenses/actual returns | 1,000.00 | 1,054.10 | 5.20 | 1.01% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.00 | 5.11 | 1.01% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 1,055.90 | 3.92 | 0.76% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.30 | 3.85 | 0.76% | |
Class ADV | Actual expenses/actual returns | 1,000.00 | 1,053.80 | 5.71 | 1.11% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.50 | 5.62 | 1.11% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
Fund’s investments |
Shares | Value | ||||
Common stocks 97.7% | $14,036,263,053 | ||||
(Cost $10,326,572,067) | |||||
Consumer discretionary 4.6% | 662,621,112 | ||||
Auto components 1.7% | |||||
BorgWarner, Inc. | 2,528,437 | 129,531,828 | |||
Lear Corp. | 362,023 | 62,658,941 | |||
Tenneco, Inc. | 779,926 | 47,318,110 | |||
Internet and direct marketing retail 0.5% | |||||
Expedia, Inc. | 555,091 | 79,899,799 | |||
Leisure products 1.0% | |||||
Brunswick Corp. | 1,536,586 | 86,002,718 | |||
Hasbro, Inc. | 568,752 | 55,550,008 | |||
Media 1.1% | |||||
CBS Corp., Class B | 1,071,533 | 62,148,914 | |||
Omnicom Group, Inc. | 369,614 | 27,377,309 | |||
The Interpublic Group of Companies, Inc. | 3,088,030 | 64,200,144 | |||
Specialty retail 0.3% | |||||
Advance Auto Parts, Inc. | 483,199 | 47,933,341 | |||
Consumer staples 0.6% | 86,014,597 | ||||
Beverages 0.6% | |||||
Coca-Cola European Partners PLC | 2,066,665 | 86,014,597 | |||
Energy 8.0% | 1,150,125,960 | ||||
Oil, gas and consumable fuels 8.0% | |||||
Anadarko Petroleum Corp. | 1,457,795 | 71,213,286 | |||
Andeavor | 1,352,024 | 139,461,276 | |||
Cimarex Energy Company | 368,769 | 41,917,972 | |||
Diamondback Energy, Inc. (A) | 1,848,735 | 181,102,081 | |||
Energen Corp. (A) | 2,790,623 | 152,591,266 | |||
EQT Corp. (B) | 1,861,977 | 121,475,379 | |||
Marathon Petroleum Corp. | 1,895,238 | 106,284,947 | |||
Newfield Exploration Company (A) | 2,385,581 | 70,780,188 | |||
Parsley Energy, Inc., Class A (A) | 4,512,661 | 118,863,491 | |||
Pioneer Natural Resources Company | 445,838 | 65,778,939 | |||
RSP Permian, Inc. (A) | 2,331,805 | 80,657,135 | |||
Financials 24.2% | 3,475,952,045 | ||||
Banks 7.1% | |||||
BB&T Corp. | 1,489,998 | 69,940,506 | |||
East West Bancorp, Inc. | 3,346,041 | 200,026,331 | |||
Fifth Third Bancorp | 5,640,616 | 157,824,436 | |||
Huntington Bancshares, Inc. | 15,189,413 | 212,044,205 | |||
KeyCorp | 3,894,889 | 73,301,811 |
12 | JOHN HANCOCK Disciplined Value Mid Cap Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Financials (continued) | |||||
Banks (continued) | |||||
Regions Financial Corp. | 7,174,370 | $109,265,655 | |||
SunTrust Banks, Inc. | 3,456,750 | 206,609,948 | |||
Capital markets 3.8% | |||||
E*TRADE Financial Corp. (A) | 1,844,170 | 80,424,254 | |||
Moody's Corp. | 434,842 | 60,534,355 | |||
Raymond James Financial, Inc. | 2,650,030 | 223,477,030 | |||
State Street Corp. | 1,085,438 | 103,702,747 | |||
TD Ameritrade Holding Corp. | 1,591,646 | 77,672,325 | |||
Consumer finance 3.6% | |||||
Discover Financial Services | 3,319,573 | 214,046,067 | |||
Navient Corp. | 4,733,119 | 71,091,447 | |||
SLM Corp. (A) | 11,291,718 | 129,516,005 | |||
Synchrony Financial | 3,159,232 | 98,094,154 | |||
Insurance 9.7% | |||||
Alleghany Corp. (A) | 310,127 | 171,813,459 | |||
Aon PLC | 1,266,645 | 185,056,835 | |||
Loews Corp. | 2,605,524 | 124,700,379 | |||
Marsh & McLennan Companies, Inc. | 1,630,070 | 136,616,167 | |||
Reinsurance Group of America, Inc. | 1,423,522 | 198,624,025 | |||
The Allstate Corp. | 1,606,933 | 147,693,212 | |||
Torchmark Corp. | 752,807 | 60,292,313 | |||
Unum Group | 3,930,908 | 200,987,326 | |||
W.R. Berkley Corp. | 1,575,196 | 105,128,581 | |||
XL Group, Ltd. | 1,456,742 | 57,468,472 | |||
Health care 4.8% | 694,555,243 | ||||
Health care equipment and supplies 1.4% | |||||
Boston Scientific Corp. (A) | 4,737,884 | 138,204,076 | |||
Zimmer Biomet Holdings, Inc. | 527,343 | 61,746,592 | |||
Health care providers and services 2.8% | |||||
Cardinal Health, Inc. | 1,113,745 | 74,531,815 | |||
DaVita, Inc. (A) | 1,072,990 | 63,724,876 | |||
Laboratory Corp. of America Holdings (A) | 1,095,797 | 165,432,473 | |||
Universal Health Services, Inc., Class B | 860,398 | 95,452,554 | |||
Life sciences tools and services 0.6% | |||||
Bruker Corp. | 1,418,860 | 42,211,085 | |||
ICON PLC (A) | 467,613 | 53,251,772 | |||
Industrials 16.7% | 2,392,621,381 | ||||
Aerospace and defense 2.8% | |||||
Curtiss-Wright Corp. | 765,413 | 80,016,275 | |||
Huntington Ingalls Industries, Inc. | 350,674 | 79,406,621 | |||
L3 Technologies, Inc. | 307,499 | 57,942,037 | |||
Spirit AeroSystems Holdings, Inc., Class A | 1,066,856 | 82,916,048 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Disciplined Value Mid Cap Fund | 13 |
Shares | Value | ||||
Industrials (continued) | |||||
Aerospace and defense (continued) | |||||
Textron, Inc. | 1,729,969 | $93,210,730 | |||
Airlines 1.9% | |||||
American Airlines Group, Inc. | 1,574,485 | 74,772,293 | |||
Delta Air Lines, Inc. | 1,280,636 | 61,752,268 | |||
Southwest Airlines Company | 1,326,793 | 74,273,872 | |||
United Continental Holdings, Inc. (A) | 1,104,513 | 67,242,751 | |||
Building products 1.2% | |||||
Masco Corp. | 4,512,453 | 176,030,792 | |||
Construction and engineering 0.3% | |||||
Fluor Corp. | 1,126,153 | 47,411,041 | |||
Electrical equipment 2.5% | |||||
AMETEK, Inc. | 2,323,819 | 153,465,007 | |||
Eaton Corp. PLC | 1,448,399 | 111,222,559 | |||
EnerSys | 730,023 | 50,495,691 | |||
Hubbell, Inc. | 370,972 | 43,040,171 | |||
Machinery 4.0% | |||||
Cummins, Inc. | 554,451 | 93,164,402 | |||
Ingersoll-Rand PLC | 1,282,095 | 114,324,411 | |||
PACCAR, Inc. | 712,713 | 51,557,658 | |||
Stanley Black & Decker, Inc. | 944,890 | 142,650,043 | |||
The Timken Company | 1,524,624 | 74,020,495 | |||
WABCO Holdings, Inc. (A) | 611,108 | 90,443,984 | |||
Professional services 3.1% | |||||
ManpowerGroup, Inc. | 1,856,883 | 218,777,955 | |||
Nielsen Holdings PLC | 1,384,365 | 57,381,929 | |||
Robert Half International, Inc. | 3,276,497 | 164,938,859 | |||
Trading companies and distributors 0.9% | |||||
Air Lease Corp. | 1,612,142 | 68,709,492 | |||
WESCO International, Inc. (A) | 1,089,339 | 63,453,997 | |||
Information technology 19.9% | 2,863,637,472 | ||||
Communications equipment 2.0% | |||||
Harris Corp. | 2,178,086 | 286,810,364 | |||
Electronic equipment, instruments and components 4.2% | |||||
Arrow Electronics, Inc. (A) | 2,592,397 | 208,454,642 | |||
Belden, Inc. | 587,608 | 47,320,072 | |||
Flex, Ltd. (A) | 9,735,437 | 161,316,191 | |||
Jabil, Inc. | 1,419,304 | 40,521,129 | |||
TE Connectivity, Ltd. | 1,704,900 | 141,608,994 | |||
Internet software and services 2.7% | |||||
eBay, Inc. (A) | 3,322,103 | 127,768,081 | |||
InterActiveCorp (A) | 1,386,931 | 163,075,347 | |||
NetEase, Inc., ADR | 348,480 | 91,932,509 |
14 | JOHN HANCOCK Disciplined Value Mid Cap Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Information technology (continued) | |||||
IT services 5.2% | |||||
Amdocs, Ltd. | 3,556,092 | $228,727,837 | |||
Cognizant Technology Solutions Corp., Class A | 727,365 | 52,763,057 | |||
DXC Technology Company | 2,207,906 | 189,614,967 | |||
Fidelity National Information Services, Inc. | 2,173,624 | 202,994,745 | |||
Leidos Holdings, Inc. | 1,355,161 | 80,252,634 | |||
Semiconductors and semiconductor equipment 2.1% | |||||
Marvell Technology Group, Ltd. | 4,339,265 | 77,672,844 | |||
Microsemi Corp. (A) | 1,387,036 | 71,404,613 | |||
ON Semiconductor Corp. (A) | 4,936,411 | 91,175,511 | |||
Skyworks Solutions, Inc. | 580,906 | 59,194,321 | |||
Software 1.6% | |||||
Activision Blizzard, Inc. | 3,677,969 | 237,265,780 | |||
Technology hardware, storage and peripherals 2.1% | |||||
Hewlett Packard Enterprise Company | 4,106,387 | 60,404,953 | |||
HP, Inc. | 5,837,405 | 116,514,604 | |||
NetApp, Inc. | 1,541,168 | 67,441,512 | |||
Western Digital Corp. | 687,532 | 59,402,765 | |||
Materials 5.8% | 827,640,834 | ||||
Chemicals 1.2% | |||||
FMC Corp. | 671,704 | 59,989,884 | |||
PPG Industries, Inc. | 330,945 | 35,960,484 | |||
Valvoline, Inc. | 3,373,154 | 79,100,461 | |||
Construction materials 0.5% | |||||
Cemex SAB de CV, ADR (A) | 6,833,793 | 62,050,840 | |||
Containers and packaging 3.1% | |||||
Berry Global Group, Inc. (A) | 2,150,228 | 121,810,416 | |||
Crown Holdings, Inc. (A) | 2,623,547 | 156,678,227 | |||
Graphic Packaging Holding Company | 7,066,071 | 98,571,690 | |||
WestRock Company | 1,270,733 | 72,088,683 | |||
Metals and mining 1.0% | |||||
Steel Dynamics, Inc. | 4,101,832 | 141,390,149 | |||
Real estate 7.1% | 1,024,053,471 | ||||
Equity real estate investment trusts 7.1% | |||||
American Assets Trust, Inc. | 1,486,980 | 59,137,195 | |||
American Homes 4 Rent, Class A | 2,211,392 | 48,009,320 | |||
Boston Properties, Inc. | 1,692,475 | 207,971,328 | |||
Douglas Emmett, Inc. | 2,683,526 | 105,784,595 | |||
Duke Realty Corp. | 2,124,909 | 61,239,877 | |||
Equity Residential | 1,251,670 | 82,522,603 | |||
Essex Property Trust, Inc. | 239,043 | 60,724,093 | |||
Kilroy Realty Corp. | 623,987 | 44,377,955 | |||
Kimco Realty Corp. | 2,538,328 | 49,624,312 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Disciplined Value Mid Cap Fund | 15 |
Shares | Value | ||||
Real estate (continued) | |||||
Equity real estate investment trusts (continued) | |||||
Regency Centers Corp. | 1,712,410 | $106,237,916 | |||
SL Green Realty Corp. | 1,958,392 | 198,424,277 | |||
Utilities 6.0% | 859,040,938 | ||||
Electric utilities 6.0% | |||||
Alliant Energy Corp. | 3,617,571 | 150,382,426 | |||
Edison International | 1,910,470 | 147,430,970 | |||
Great Plains Energy, Inc. | 1,546,717 | 46,865,525 | |||
PG&E Corp. | 2,395,361 | 163,100,130 | |||
Pinnacle West Capital Corp. | 1,856,181 | 156,958,665 | |||
Portland General Electric Company | 1,829,473 | 83,497,148 | |||
Xcel Energy, Inc. | 2,341,633 | 110,806,074 | |||
Yield (%) | Shares | Value | |||
Securities lending collateral 0.0% | $7,534,298 | ||||
(Cost $7,534,449) | |||||
John Hancock Collateral Trust (C) | 1.2098(D) | 752,978 | 7,534,298 | ||
Short-term investments 2.0% | $284,535,981 | ||||
(Cost $284,535,981) | |||||
Money market funds 2.0% | 284,535,981 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 0.9244(D) | 284,535,981 | 284,535,981 |
Total investments (Cost $10,618,642,497) 99.7% | $14,328,333,332 | ||||
Other assets and liabilities, net 0.3% | 43,358,968 | ||||
Total net assets 100.0% | $14,371,692,300 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | |
Security Abbreviations and Legend | |
ADR | American Depositary Receipt |
(A) | Non-income producing security. |
(B) | A portion of this security is on loan as of 9-30-17. |
(C) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. |
(D) | The rate shown is the annualized seven-day yield as of 9-30-17. |
16 | JOHN HANCOCK Disciplined Value Mid Cap Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-17 (unaudited)
Assets | ||||||||||||||||||||||||||||||
Unaffiliated investments, at value (Cost $10,611,108,048) including $7,371,298 of securities loaned | $14,320,799,034 | |||||||||||||||||||||||||||||
Affiliated investments, at value (Cost $7,534,449) | 7,534,298 | |||||||||||||||||||||||||||||
Receivable for investments sold | 25,684,225 | |||||||||||||||||||||||||||||
Receivable for fund shares sold | 25,800,081 | |||||||||||||||||||||||||||||
Dividends and interest receivable | 18,539,952 | |||||||||||||||||||||||||||||
Receivable for securities lending income | 2,250 | |||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 804,430 | |||||||||||||||||||||||||||||
Total assets | 14,399,164,270 | |||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 17,100,001 | |||||||||||||||||||||||||||||
Payable upon return of securities loaned | 7,534,450 | |||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||
Accounting and legal services fees | 343,813 | |||||||||||||||||||||||||||||
Transfer agent fees | 1,034,118 | |||||||||||||||||||||||||||||
Distribution and service fees | 51,004 | |||||||||||||||||||||||||||||
Trustees' fees | 7,810 | |||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 1,400,774 | |||||||||||||||||||||||||||||
Total liabilities | 27,471,970 | |||||||||||||||||||||||||||||
Net assets | $14,371,692,300 | |||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||
Paid-in capital | $9,865,798,278 | |||||||||||||||||||||||||||||
Undistributed net investment income | 50,904,318 | |||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 745,298,869 | |||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 3,709,690,835 | |||||||||||||||||||||||||||||
Net assets | $14,371,692,300 | |||||||||||||||||||||||||||||
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 ($1,699,656,818 ÷ 74,650,736 shares)1 | $22.77 | |||||||||||||||||
Class C ($293,366,262 ÷ 12,835,563 shares)1 | $22.86 | |||||||||||||||||
Class I ($10,085,650,819 ÷ 426,907,362 shares) | $23.62 | |||||||||||||||||
Class R2 ($210,471,956 ÷ 8,954,499 shares) | $23.50 | |||||||||||||||||
Class R4 ($100,793,110 ÷ 4,273,028 shares) | $23.59 | |||||||||||||||||
Class R6 ($1,979,642,892 ÷ 83,789,217 shares) | $23.63 | |||||||||||||||||
Class ADV ($2,110,443 ÷ 92,892 shares) | $22.72 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $23.97 |
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 9-30-17 (unaudited)
Investment income | ||||||||||||||||||||||||
Dividends | $100,734,336 | |||||||||||||||||||||||
Interest | 1,103,890 | |||||||||||||||||||||||
Securities lending | 513,876 | |||||||||||||||||||||||
Total investment income | 102,352,102 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 49,803,710 | |||||||||||||||||||||||
Distribution and service fees | 4,649,301 | |||||||||||||||||||||||
Accounting and legal services fees | 1,121,056 | |||||||||||||||||||||||
Transfer agent fees | 6,330,702 | |||||||||||||||||||||||
Trustees' fees | 110,667 | |||||||||||||||||||||||
State registration fees | 178,484 | |||||||||||||||||||||||
Printing and postage | 384,178 | |||||||||||||||||||||||
Professional fees | 146,716 | |||||||||||||||||||||||
Custodian fees | 860,164 | |||||||||||||||||||||||
Other | 96,353 | |||||||||||||||||||||||
Total expenses | 63,681,331 | |||||||||||||||||||||||
Less expense reductions | (614,282 | ) | ||||||||||||||||||||||
Net expenses | 63,067,049 | |||||||||||||||||||||||
Net investment income | 39,285,053 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Unaffiliated investments | 427,275,876 | |||||||||||||||||||||||
Affiliated investments | 509 | |||||||||||||||||||||||
427,276,385 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Unaffiliated investments | 283,735,812 | |||||||||||||||||||||||
Affiliated investments | (102 | ) | ||||||||||||||||||||||
283,735,710 | ||||||||||||||||||||||||
Net realized and unrealized gain | 711,012,095 | |||||||||||||||||||||||
Increase in net assets from operations | $750,297,148 |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-17 | Year ended 3-31-17 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $39,285,053 | $86,381,089 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 427,276,385 | 620,489,354 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 283,735,710 | 1,617,195,574 | |||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 750,297,148 | 2,324,066,017 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (15,701,779 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (77,837,376 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (1,161,617 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (658,127 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (15,527,072 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class ADV | — | (13,997 | ) | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (45,260,409 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (6,373,935 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (163,576,275 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (4,147,662 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (1,647,589 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (29,927,014 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class ADV | — | (40,346 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (361,873,198 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (385,302,145 | ) | 550,891,365 | ||||||||||||||||||||||||||||||||||||||||||
Total increase | 364,995,003 | 2,513,084,184 | |||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 14,006,697,297 | 11,493,613,113 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $14,371,692,300 | $14,006,697,297 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $50,904,318 | $11,619,265 |
Financial highlights
Class A Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $21.61 | $18.49 | $20.19 | $18.23 | $14.51 | $12.41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.04 | 0.10 | 0.13 | 0.05 | 0.05 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.12 | 3.57 | (0.63 | ) | 2.42 | 4.03 | 2.09 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.16 | 3.67 | (0.50 | ) | 2.47 | 4.08 | 2.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.14 | ) | (0.07 | ) | (0.06 | ) | (0.04 | ) | (0.04 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.55 | ) | (1.20 | ) | (0.51 | ) | (0.36 | ) | (0.04 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $22.77 | $21.61 | $18.49 | $20.19 | $18.23 | $14.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 5.37 | 5 | 19.96 | (2.59 | ) | 13.78 | 28.30 | 17.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,700 | $2,088 | $1,971 | $2,148 | $3,086 | $1,169 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.11 | 6 | 1.12 | 1.13 | 1.13 | 1.18 | 1.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.11 | 6 | 1.12 | 1.12 | 1.13 | 1.17 | 1.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.33 | 6 | 0.48 | 0.70 | 0.28 | 0.32 | 0.38 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 55 |
1 | Six months ended 9-30-17. 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 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Annualized. |
Class C Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $21.77 | $18.65 | $20.43 | $18.53 | $14.82 | $12.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss2 | (0.05 | ) | (0.05 | ) | (0.01 | ) | (0.08 | ) | (0.07 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.14 | 3.58 | (0.64 | ) | 2.43 | 4.10 | 2.13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.09 | 3.53 | (0.65 | ) | 2.35 | 4.03 | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $22.86 | $21.77 | $18.65 | $20.43 | $18.53 | $14.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 5.01 | 5 | 18.99 | (3.27 | ) | 12.90 | 27.32 | 16.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $293 | $319 | $329 | $366 | $329 | $90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.86 | 6 | 1.87 | 1.88 | 1.89 | 1.94 | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.86 | 6 | 1.87 | 1.87 | 1.88 | 1.93 | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.41 | ) 6 | (0.27 | ) | (0.06 | ) | (0.42 | ) | (0.43 | ) | (0.39 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 55 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $22.39 | $19.14 | $20.86 | $18.81 | $14.95 | $12.79 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.07 | 0.16 | 0.20 | 0.12 | 0.10 | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.16 | 3.69 | (0.67 | ) | 2.49 | 4.16 | 2.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.23 | 3.85 | (0.47 | ) | 2.61 | 4.26 | 2.24 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.19 | ) | (0.12 | ) | (0.11 | ) | (0.08 | ) | (0.08 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.60 | ) | (1.25 | ) | (0.56 | ) | (0.40 | ) | (0.08 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $23.62 | $22.39 | $19.14 | $20.86 | $18.81 | $14.95 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 5.49 | 4 | 20.25 | (2.35 | ) | 14.13 | 28.67 | 17.64 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $10,086 | $9,512 | $7,802 | $7,116 | $4,168 | $1,762 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.85 | 5 | 0.86 | 0.87 | 0.87 | 0.89 | 0.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.85 | 5 | 0.86 | 0.86 | 0.86 | 0.89 | 0.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.62 | 5 | 0.75 | 0.99 | 0.63 | 0.59 | 0.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 55 |
1 | Six months ended 9-30-17. 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 R2 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $22.32 | $19.09 | $20.81 | $18.77 | $14.94 | $12.78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.02 | 0.07 | 0.11 | 0.04 | 0.04 | 0.05 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.16 | 3.68 | (0.66 | ) | 2.48 | 4.14 | 2.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.18 | 3.75 | (0.55 | ) | 2.52 | 4.18 | 2.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | �� | — | (0.11 | ) | (0.04 | ) | (0.03 | ) | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.52 | ) | (1.17 | ) | (0.48 | ) | (0.35 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $23.50 | $22.32 | $19.09 | $20.81 | $18.77 | $14.94 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 5.29 | 4 | 19.76 | (2.74 | ) | 13.66 | 28.15 | 17.15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $210 | $216 | $234 | $250 | $205 | $15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.26 | 5 | 1.27 | 1.27 | 1.29 | 1.28 | 2.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.25 | 5 | 1.26 | 1.27 | 1.28 | 1.27 | 1.40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.20 | 5 | 0.35 | 0.56 | 0.19 | 0.25 | 0.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 55 |
1 | Six months ended 9-30-17. 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 R4 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $22.38 | $19.13 | $20.85 | $18.81 | $15.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.05 | 0.12 | 0.16 | 0.10 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.16 | 3.70 | (0.66 | ) | 2.47 | 3.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.21 | 3.82 | (0.50 | ) | 2.57 | 3.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.16 | ) | (0.09 | ) | (0.08 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.57 | ) | (1.22 | ) | (0.53 | ) | (0.37 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $23.59 | $22.38 | $19.13 | $20.85 | $18.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4 | 5.41 | 5 | 20.09 | (2.50 | ) | 13.93 | 22.85 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $101 | $95 | $104 | $118 | $44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.12 | 6 | 1.11 | 1.12 | 1.15 | 1.30 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.01 | 6 | 1.00 | 1.02 | 1.04 | 1.14 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.45 | 6 | 0.60 | 0.81 | 0.49 | 0.44 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 7 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $22.38 | $19.13 | $20.85 | $18.81 | $14.95 | $12.79 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.08 | 0.18 | 0.22 | 0.14 | 0.12 | 0.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.17 | 3.69 | (0.67 | ) | 2.48 | 4.16 | 2.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.25 | 3.87 | (0.45 | ) | 2.62 | 4.28 | 2.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.21 | ) | (0.14 | ) | (0.13 | ) | (0.10 | ) | (0.09 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.62 | ) | (1.27 | ) | (0.58 | ) | (0.42 | ) | (0.09 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $23.63 | $22.38 | $19.13 | $20.85 | $18.81 | $14.95 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 5.59 | 4 | 20.35 | (2.25 | ) | 14.21 | 28.81 | 17.68 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,980 | $1,774 | $1,053 | $807 | $444 | $100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.76 | 5 | 0.77 | 0.77 | 0.78 | 0.81 | 0.89 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.76 | 5 | 0.76 | 0.76 | 0.77 | 0.80 | 0.89 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.71 | 5 | 0.86 | 1.13 | 0.73 | 0.71 | 0.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 55 |
1 | Six months ended 9-30-17. 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 ADV Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $21.56 | $18.46 | $20.15 | $18.20 | $14.49 | $12.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.04 | 0.11 | 0.12 | 0.04 | 0.03 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.12 | 3.54 | (0.63 | ) | 2.40 | 4.03 | 2.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.16 | 3.65 | �� | (0.51 | ) | 2.44 | 4.06 | 2.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.14 | ) | (0.05 | ) | (0.04 | ) | (0.03 | ) | (0.05 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.41 | ) | (1.13 | ) | (0.45 | ) | (0.32 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.55 | ) | (1.18 | ) | (0.49 | ) | (0.35 | ) | (0.05 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $22.72 | $21.56 | $18.46 | $20.15 | $18.20 | $14.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 5.38 | 4 | 19.88 | (2.59 | ) | 13.67 | 28.19 | 17.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $2 | $2 | $1 | $1 | $1 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.11 | 5 | 1.13 | 1.42 | 3.12 | 3.46 | 3.74 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.11 | 5 | 1.12 | 1.16 | 1.25 | 1.25 | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.35 | 5 | 0.55 | 0.63 | 0.21 | 0.19 | 0.35 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 24 | 50 | 47 | 35 | 39 | 55 |
1 | Six months ended 9-30-17. 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 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 into the fund. 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.
The fund is closed to new investors, subject to certain exceptions described in the fund's prospectus.
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 scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. 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 NAVs each business day.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
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, 2017, 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 NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Real estate investment trusts. The fund may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the fund will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.
Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCT, an affiliate of the fund, which has a floating NAV 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 receives 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. Securities lending income received by the fund is net of fees retained by the securities lending agent. 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, 2017, the fund loaned common stocks valued at $7,371,298 and received $7,534,450 of cash collateral.
Line of credit. The fund may have the ability to 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 29, 2017, the fund and other affiliated funds have 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. Excluding commitments designated for a certain fund and subject to the need of all other affiliated funds, the fund can
borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. A commitment fee payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 29, 2017, the fund had a similar agreement that enabled it to participate in a $1 billion unsecured committed line of credit. For the six months ended September 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the six months ended September 30, 2017, were $20,474.
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 charged daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
As of March 31, 2017, 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 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 Global Investors, Inc., an indirect, wholly owned subsidiary of Orix Corporation of Japan. 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, 2017, 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 fund and with the approval of the Board of Trustees.
For the six months ended September 30, 2017, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $77,753 | Class R4 | $3,965 | |
Class C | 12,272 | Class R6 | 75,310 | |
Class I | 387,174 | Class ADV | 85 | |
Class R2 | 8,507 | Total | $565,066 |
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 2017, 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, 2017 amounted to an annual rate of 0.02% 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 Rule12b-1 fees for Class R4 shares. The current waiver agreement expires on June 30, 2018, 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 $49,216 for Class R4 shares for the six months ended September 30, 2017.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $483,065 for the six months ended September 30, 2017. Of this amount, $65,978 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $415,795 was paid as sales commissions to broker-dealers and $1,292 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, 2017, CDSCs received by the Distributor amounted to $853 and $2,887 for Class A and Class C shares, respectively.
Transfer agent fees. The John Hancock Group of Funds has a complex-wide 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, 2017 were:
Class | Distribution and service fees | Transfer agent fees |
Class A | $2,419,590 | $1,096,941 |
Class C | 1,526,083 | 172,806 |
Class I | — | 4,914,914 |
Class R2 | 525,940 | 14,116 |
Class R4 | 175,043 | 6,548 |
Class R6 | — | 124,179 |
Class ADV | 2,645 | 1,198 |
Total | $4,649,301 | $6,330,702 |
Trustee expenses. The Trust 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 or its affiliates, 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. 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 expense |
Borrower | $33,275,320 | 1 | 1.250% | $1,155 |
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2017 and for the year ended March 31, 2017 were as follows:
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 6,170,682 | $135,159,744 | 32,092,415 | $642,654,563 | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,643,041 | 55,239,558 | ||||||||||||||||||||||
Repurchased | (28,167,478 | ) | (624,082,828 | ) | (44,668,560 | ) | (918,731,589 | ) | ||||||||||||||||||
Net decrease | (21,996,796 | ) | ($488,923,084 | ) | (9,933,104 | ) | ($220,837,468 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 217,030 | $4,761,742 | 809,373 | $16,578,524 | ||||||||||||||||||||||
Distributions reinvested | — | — | 242,188 | 5,112,582 | ||||||||||||||||||||||
Repurchased | (2,017,479 | ) | (44,514,742 | ) | (4,064,785 | ) | (83,233,975 | ) | ||||||||||||||||||
Net decrease | (1,800,449 | ) | ($39,753,000 | ) | (3,013,224 | ) | ($61,542,869 | ) | ||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 57,016,280 | $1,300,871,041 | 122,616,811 | $2,588,164,269 | ||||||||||||||||||||||
Distributions reinvested | — | — | 9,584,442 | 207,407,334 | ||||||||||||||||||||||
Repurchased | (54,887,291 | ) | (1,244,126,635 | ) | (115,023,509 | ) | (2,392,671,881 | ) | ||||||||||||||||||
Net increase | 2,128,989 | $56,744,406 | 17,177,744 | $402,899,722 | ||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 837,281 | $18,950,316 | 2,485,001 | $51,904,984 | ||||||||||||||||||||||
Distributions reinvested | — | — | 198,101 | 4,278,977 | ||||||||||||||||||||||
Repurchased | (1,551,842 | ) | (35,178,091 | ) | (5,254,489 | ) | (109,019,917 | ) | ||||||||||||||||||
Net decrease | (714,561 | ) | ($16,227,775 | ) | (2,571,387 | ) | ($52,835,956 | ) | ||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 553,700 | $12,497,214 | 1,673,787 | $35,547,065 | ||||||||||||||||||||||
Distributions reinvested | — | — | 106,549 | 2,305,715 | ||||||||||||||||||||||
Repurchased | (545,188 | ) | (12,364,398 | ) | (2,955,894 | ) | (59,446,028 | ) | ||||||||||||||||||
Net increase (decrease) | 8,512 | $132,816 | (1,175,558 | ) | ($21,593,248 | ) | ||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 13,496,462 | $306,718,106 | 36,871,080 | $769,060,764 | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,031,233 | 43,935,568 | ||||||||||||||||||||||
Repurchased | (8,955,615 | ) | (203,850,919 | ) | (14,692,543 | ) | (309,311,150 | ) | ||||||||||||||||||
Net increase | 4,540,847 | $102,867,187 | 24,209,770 | $503,685,182 | ||||||||||||||||||||||
Class ADV shares | ||||||||||||||||||||||||||
Sold | 1,072 | $23,563 | 71,637 | $1,404,952 | ||||||||||||||||||||||
Distributions reinvested | — | — | 2,605 | 54,343 | ||||||||||||||||||||||
Repurchased | (7,569 | ) | (166,258 | ) | (16,961 | ) | (343,293 | ) | ||||||||||||||||||
Net increase (decrease) | (6,497 | ) | ($142,695 | ) | 57,281 | $1,116,002 | ||||||||||||||||||||
Total net increase (decrease) | (17,839,955 | ) | ($385,302,145 | ) | 24,751,522 | $550,891,365 |
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $3,290,775,119 and $3,597,520,094, respectively, for the six months ended September 30, 2017.
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 Boston Partners Global Investors, 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 19-22, 2017 in-person 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 22-24, 2017.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 19-22, 2017, the Board, including the Trustees who are not parties to any Agreement or 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 (including its various committees) 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 information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. 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. The Board considered the Advisory Agreement and the Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
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 did not treat any single factor as determinative, and each Trustee may have attributed 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.
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 observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the fund's compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. 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. The Board considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risks with respect to all funds.
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; |
(f) | the Advisor's initiatives intended to improve various aspects of the Trust's operations and investor experience with the fund; and |
(g) | 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 while it found the data provided by the independent third-party generally useful it recognized its limitations, including in particular that data may vary depending on the end date selected and the results of the performance comparisons may vary depending on the selection of the peer group. The Board noted that the fund outperformed its benchmark index for the three-, five- and ten-year periods and underperformed its benchmark index for the one-year period ended December 31, 2016. The Board also noted that the fund outperformed its peer group average for the one-, three-, five- and ten-year periods ended December 31, 2016. 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-, five- and ten-year periods and to the peer group for the one-, three-, five- and ten-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 in light of the nature, extent and quality of the management and advisory and subadvisory services provided by the Advisor and the Subadvisor. 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 net total expenses for the fund are lower than the peer group median.
The Board took into account management's discussion with respect to the overall management fee, the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor. 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 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 in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out 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 and with respect to the fund; |
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data and considered that the Advisor hired an independent third-party consultant to provide an analysis of the Advisor's allocation methodologies; |
(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; |
(j) | considered the Advisor's ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the mutual fund industry; 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 risks that it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
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 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; |
(3) | subadvisory fee is reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; 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.
Trustees Hassell H. McClellan, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor Boston Partners Global Investors, 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 6-20-17
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: | |||
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ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Small Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core 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 |
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John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
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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.
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We serve investors globally through a unique multimanager approach:
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expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
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Our unique approach to asset management enables us to provide a diverse set
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risk-adjusted returns across asset classes.
| John Hancock Funds, LLC n Member FINRA, SIPC 601 Congress Street n Boston, MA 02210-2805 800-225-5291 n jhinvestments.com | |
This report is for the information of the shareholders of John Hancock Disciplined Value Mid Cap Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
MF403051 | 363SA 9/17 11/17 |
John Hancock
International Value Equity Fund
Semiannual report 9/30/17
A message to shareholders
Dear shareholder,
Global equity markets generally delivered solid gains, supported by rising economic activity, stronger corporate earnings, and low levels of inflation. Monetary policy remains accommodative in many developed markets as central banks strive to help nurture the economic growth that has begun to materialize. Emerging markets have been even stronger, driven by increased global demand, improving economies, and strengthening commodity prices.
Advancing the interests of fund shareholders
One of our primary goals is to advance the interests of our fund shareholders wherever possible. To that end, we recently announced our third round of expense reductions this year, targeting six mutual funds and two closed-end funds that together represent more than $7 billion in assets under management. Details can be found at jhinvestments.com.
In addition, we are proud to report that in May fund researcher Morningstar, Inc. formally recognized our shareholder-friendly initiatives by upgrading our parent pillar rating—a key component of the Morningstar Analyst Rating system—to positive, the highest possible rating. Morningstar evaluates select funds and their parent firms based on intensive research, including on-site due diligence. They focused on such factors as whether our portfolio managers invest meaningfully in the funds they manage, the quality of our risk management, our corporate culture, and our commitment to recognizing shareholder interests—in other words, how effective we are as stewards of investor capital. We're proud to have been recognized by Morningstar for our efforts and we're committed to continue our work of furthering the interests of our shareholders.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to 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, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly into an index. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
International Value Equity Fund
INVESTMENT OBJECTIVE
The fund seeks long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/17 (%)
The MSCI World ex-USA Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States.
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. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end 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 prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS
Most international stocks rose amid an improving economic environment
Most developed-market stocks outside the United States posted positive returns as economic growth and corporate earnings improved across key markets.
Despite its positive result, the fund trailed its benchmark
The fund and its benchmark, the MSCI World ex-USA Index, both posted positive returns, although the fund underperformed the benchmark.
Stock picking in information technology had a negative impact
Security selection in the information technology sector weighed on performance relative to the benchmark, and the fund's emphasis on value-oriented stocks had a negative impact across the broad market.
SECTOR COMPOSITION AS OF 9/30/17 (%)
A note about risks
Foreign investing has additional risks, such as currency and market volatility and political and social instability. Value stocks may not increase in price as anticipated or may decline further in value. 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. Derivatives transactions, such as hedging and other strategic transactions, may increase a fund's volatility and could produce disproportionate losses, potentially more than the fund's principal investment. Please see the fund's prospectus for additional risks.
An interview with Portfolio Manager Wendell L. Perkins, CFA, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
Wendell L. Perkins, CFA
Portfolio Manager
John Hancock Asset Management
Can you describe the factors behind the positive returns that most non-U.S. developed-market equities posted during the six months ended September 30, 2017?
Most stocks outside the United States posted solid double-digit gains, in percentage terms. Economic fundamentals were strong across all regions globally, and indicators across Europe, Japan, and other key markets generally improved. The emerging markets also benefited from the cyclical recoveries in the developed markets, and monetary policies remained generally accommodative, despite incremental increases in U.S. interest rates. The positive economic environment was reflected in corporate earnings, as earnings growth accelerated in key markets. Concern over certain political risks generally diminished, as there appeared to be a pause in the rise of populist political forces in certain western European countries, and Chinese policymakers achieved a measure of success in managing a slowdown in the nation's economic growth rate.
Given the favorable economic backdrop, investor sentiment favored cyclical stocks—those most sensitive to changes in economic trends—and growth-oriented stocks. From a sector perspective, information technology, industrials, and materials posted the strongest returns within the benchmark, while telecommunication services, real estate, and healthcare were the weakest performers.
How did this environment affect your team's management of the fund?
We continued to evaluate stocks on a value-oriented, bottom-up basis, aligned with our assessment of the risks and opportunities specific to each stock.
We supplemented this bottom-up approach by positioning the fund fairly defensively, as we remained somewhat skeptical about long-term economic prospects and the sustainability of equity market valuations, which climbed significantly during the period. Key developed markets are likely
TOP 10 HOLDINGS AS OF 9/30/17 (%)
Nestle SA | 1.2 |
Unilever PLC | 1.2 |
HSBC Holdings PLC | 1.2 |
Novartis AG | 1.1 |
SAP SE | 1.1 |
Akzo Nobel NV | 1.1 |
BASF SE | 1.1 |
Banco Santander SA | 1.0 |
Sanofi | 1.0 |
Toyota Motor Corp. | 1.0 |
TOTAL | 11.0 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
The fund underperformed its benchmark, the MSCI World ex-USA Index, for the period. At the sector and regional levels, what factors had the most significant impact on this result?
Broadly speaking, the fund's emphasis on value-oriented stocks relative to the benchmark was a negative factor, as value stocks generally underperformed their growth counterparts. The outperformance by cyclical stocks also weighed on relative results, as the fund was positioned in a generally defensive manner.
From a sector perspective, our stock picking in information technology weighed significantly on relative results; selection in consumer discretionary also had a negative impact. Conversely, security selection in financials and industrials had a positive impact.
TOP 10 COUNTRIES AS OF 9/30/17 (%)
Japan | 20.8 |
United Kingdom | 12.8 |
France | 11.5 |
Germany | 11.0 |
Switzerland | 7.4 |
Canada | 7.0 |
Netherlands | 4.6 |
Hong Kong | 4.0 |
Australia | 3.9 |
Sweden | 2.4 |
TOTAL | 85.4 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
At the regional level, our stock picking in continental Europe and the Pacific Rim (excluding Japan) detracted from relative performance; that negative result was partially offset by a positive impact from security selection in Japan and the United Kingdom.
Which positions had the biggest negative impact on performance relative to the benchmark?
The largest detractor was a position in Coca-Cola Amatil, Ltd., an Australian-based soft drink bottler. Coca-Cola Amatil's fiscal second-quarter earnings and revenue were slightly below analysts' expectations, and the company lowered its financial guidance for the full fiscal year. Investors reacted negatively, sending shares of Coca-Cola Amatil lower. We did not view the results in an overly negative light, given the well-known headwinds that the company and the soft drink industry face generally. We maintained the position in Coca-Cola Amatil, as we considered the stock to be attractively valued and trading at a significant discount to it peers.
Another significant detractor was Barrick Gold Corp., a Canadian gold mining company whose shares declined primarily as a result of a decline in gold prices for the period. We sold the fund's position in Barrick during the period.
Other positions that had a significantly negative impact on relative results were Hang Lung Group, Ltd., a Hong Kong-based real estate development company, Israel-based Teva Pharmaceutical
Industries, Ltd., and Swedish telecommunications equipment maker Telefonaktiebolaget LM Ericsson. We sold the fund's position in Teva during the period.
Which positions had the biggest positive impact on relative performance?
A position in ICON PLC, an Ireland-based contract research organization serving the pharmaceutical industry, was the most significant contributor. A recovery in research spending by pharmaceutical companies helped fuel a comeback for ICON's shares, which had underperformed in recent years. We sold the fund's position in ICON during the period.
A position in E.ON SE also had a significant positive impact. Shares of the German energy utility rallied, as E.ON's recent restructuring initiatives helped to reduce the company's costs, resulting in an improved balance sheet and earnings outlook.
Another strong contributor was U.K.-based easyJet PLC, a low-cost airline with routes in the United Kingdom and Continental Europe. After declining in the wake of the June 2016 Brexit vote, shares of easyJet recovered during the period as the airline's solid financial performance sent its shares higher. We sold the fund's position in easyJet during the period.
How was the fund positioned at the end of the period?
At the sector level, the fund's most significant overweights were in materials and consumer discretionary; its most significant underweights were in industrials and financials.
At the regional level, the fund was modestly underweight in the United Kingdom, the Pacific Rim (excluding Japan), and Canada. The fund held a modest weighting in emerging-market equities, which are not part of the benchmark.
MANAGED BY
Wendell L. 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 |
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2017
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 | 11.86 | 5.11 | 0.55 | 4.13 | 28.33 | 5.60 | ||
Class C1,2 | 15.92 | 5.69 | 0.82 | 8.27 | 31.88 | 8.51 | ||
Class I1,2,3 | 18.16 | 6.50 | 1.27 | 9.73 | 36.99 | 13.40 | ||
Class R21,2,3 | 17.73 | 6.11 | 1.02 | 9.58 | 34.51 | 10.67 | ||
Class R41,2,3 | 18.07 | 6.36 | 1.14 | 9.71 | 36.14 | 12.00 | ||
Class R61,2,3 | 18.31 | 6.59 | 1.25 | 9.88 | 37.57 | 13.19 | ||
Class NAV1,2,3 | 18.29 | 6.69 | 1.33 | 9.73 | 38.23 | 14.16 | ||
Index 1† | 19.31 | 8.32 | 1.79 | 11.90 | 49.11 | 19.36 | ||
Index 2† | 23.17 | 7.97 | 1.26 | 11.17 | 46.74 | 13.31 |
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 contractual 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 (%) | 1.33 | 2.08 | 1.07 | 1.47 | 1.32 | 0.97 | 0.95 |
Net (%) | 1.33 | 2.08 | 1.07 | 1.47 | 1.22 | 0.97 | 0.95 |
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 MSCI World ex-USA Index; Index 2 is the MSCI World ex-USA Value Index. |
See the following page for footnotes.
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 | 9-30-07 | 10,851 | 10,851 | 11,936 | 11,331 |
Class I1,2,3 | 9-30-07 | 11,340 | 11,340 | 11,936 | 11,331 |
Class R21,2,3 | 9-30-07 | 11,067 | 11,067 | 11,936 | 11,331 |
Class R41,2,3 | 9-30-07 | 11,200 | 11,200 | 11,936 | 11,331 |
Class R61,2,3 | 9-30-07 | 11,319 | 11,319 | 11,936 | 11,331 |
Class NAV1,2,3 | 9-30-07 | 11,416 | 11,416 | 11,936 | 11,331 |
The MSCI World ex-USA Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States of America.
The MSCI World ex-USA Value Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets, excluding the United States of America, that have higher than average value characteristics.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Footnotes related to performance pages
1 | Class A and Class I shares commenced operations on 2-14-11; Class C shares commenced operations on 8-28-14; Class R2, Class R4, and Class R6 shares commenced operations on 7-2-13; Class NAV shares commenced operations on 12-16-11. Returns shown prior to Class A and Class I shares' commencement date are those of Optique International Value Fund (the predecessor fund). Returns shown prior to Class C, Class R2, Class R4, Class R6, and Class NAV shares' commencement dates are those of the predecessor fund (prior to 2-14-11) and the fund's Class A shares (from 2-14-11), except that they do not include the fund's Class A shares sales charges and would be lower if they did. Returns shown prior to the commencement date of a share class would differ from the new share class only to the extent that expenses of the classes are different. |
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. |
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
The first line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017.
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, 2017, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017. 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.
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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 4-1-2017 | Ending value on 9-30-2017 | Expenses paid during period ended 9-30-20171 | Annualized expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $1,096.10 | $6.88 | 1.31% |
Hypothetical example for comparison purposes | 1,000.00 | 1,018.50 | 6.63 | 1.31% | |
Class C | Actual expenses/actual returns | 1,000.00 | 1,092.70 | 10.81 | 2.06% |
Hypothetical example for comparison purposes | 1,000.00 | 1,014.70 | 10.40 | 2.06% | |
Class I | Actual expenses/actual returns | 1,000.00 | 1,097.30 | 5.52 | 1.05% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.80 | 5.32 | 1.05% | |
Class R2 | Actual expenses/actual returns | 1,000.00 | 1,095.80 | 7.62 | 1.45% |
Hypothetical example for comparison purposes | 1,000.00 | 1,017.80 | 7.33 | 1.45% | |
Class R4 | Actual expenses/actual returns | 1,000.00 | 1,097.10 | 5.84 | 1.11% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.50 | 5.62 | 1.11% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 1,098.80 | 5.00 | 0.95% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.30 | 4.81 | 0.95% | |
Class NAV | Actual expenses/actual returns | 1,000.00 | 1,097.30 | 4.94 | 0.94% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.40 | 4.76 | 0.94% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
Fund’s investments |
Shares | Value | ||||
Common stocks 97.2% | $642,833,008 | ||||
(Cost $588,840,179) | |||||
Australia 3.9% | 25,749,997 | ||||
Australia & New Zealand Banking Group, Ltd. | 249,353 | 5,808,327 | |||
BHP Billiton, Ltd. | 307,488 | 6,235,793 | |||
Coca-Cola Amatil, Ltd. | 575,717 | 3,494,636 | |||
National Australia Bank, Ltd. | 239,979 | 5,949,777 | |||
Santos, Ltd. (A) | 1,343,839 | 4,261,464 | |||
Belgium 1.5% | 9,943,560 | ||||
bpost SA | 201,626 | 5,996,507 | |||
Ontex Group NV | 115,863 | 3,947,053 | |||
Canada 7.0% | 45,990,708 | ||||
Bank of Montreal | 76,470 | 5,787,267 | |||
Fairfax Financial Holdings, Ltd. | 12,209 | 6,353,572 | |||
Goldcorp, Inc. | 394,695 | 5,124,471 | |||
Husky Energy, Inc. (A) | 392,310 | 4,911,146 | |||
IGM Financial, Inc. (B) | 168,053 | 5,648,682 | |||
Magna International, Inc. | 117,182 | 6,253,776 | |||
Suncor Energy, Inc. | 161,188 | 5,649,170 | |||
The Toronto-Dominion Bank | 111,234 | 6,262,624 | |||
Chile 0.8% | 5,222,018 | ||||
Antofagasta PLC | 409,956 | 5,222,018 | |||
China 1.8% | 12,185,288 | ||||
China Petroleum & Chemical Corp., H Shares | 3,878,279 | 2,922,988 | |||
CNOOC, Ltd. | 3,866,000 | 5,004,738 | |||
Lenovo Group, Ltd. | 7,692,572 | 4,257,562 | |||
Denmark 0.9% | 5,650,091 | ||||
Carlsberg A/S, Class B | 51,489 | 5,650,091 | |||
France 11.5% | 75,812,065 | ||||
AXA SA | 199,426 | 6,029,040 | |||
BNP Paribas SA | 77,047 | 6,215,792 | |||
Engie SA | 336,524 | 5,714,615 | |||
ICADE | 63,865 | 5,697,745 | |||
Ingenico Group SA | 55,399 | 5,251,992 | |||
Lagardere SCA | 175,332 | 5,873,659 | |||
Orange SA | 375,122 | 6,142,192 | |||
Pernod Ricard SA | 40,443 | 5,594,624 | |||
Publicis Groupe SA | 79,794 | 5,582,127 | |||
Sanofi | 66,739 | 6,643,609 | |||
Schneider Electric SE (A) | 69,724 | 6,071,606 | |||
TOTAL SA | 101,436 | 5,446,519 |
12 | JOHN HANCOCK International Value Equity Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
France (continued) | |||||
Vinci SA | 58,398 | $5,548,545 | |||
Germany 11.0% | 72,782,736 | ||||
Allianz SE | 25,814 | 5,797,452 | |||
BASF SE | 65,681 | 6,997,368 | |||
Bayer AG | 45,524 | 6,218,696 | |||
Bayerische Motoren Werke AG | 56,789 | 5,763,723 | |||
CECONOMY AG | 161,558 | 1,902,451 | |||
E.ON SE | 487,968 | 5,531,788 | |||
Fresenius Medical Care AG & Company KGaA | 66,361 | 6,487,836 | |||
Gerresheimer AG | 65,448 | 5,071,170 | |||
Merck KGaA | 54,017 | 6,016,015 | |||
METRO AG (A) | 161,558 | 3,415,039 | |||
Muenchener Rueckversicherungs-Gesellschaft AG | 28,524 | 6,104,844 | |||
SAP SE | 67,772 | 7,430,837 | |||
Siemens AG | 42,843 | 6,045,517 | |||
Hong Kong 4.0% | 26,232,830 | ||||
China Mobile, Ltd. | 532,582 | 5,406,749 | |||
CLP Holdings, Ltd. | 495,227 | 5,084,307 | |||
Guangdong Investment, Ltd. | 3,946,098 | 5,634,686 | |||
Hang Lung Group, Ltd. | 1,439,113 | 5,182,389 | |||
Yue Yuen Industrial Holdings, Ltd. | 1,290,702 | 4,924,699 | |||
Ireland 1.8% | 12,008,108 | ||||
Shire PLC | 108,748 | 5,538,940 | |||
Smurfit Kappa Group PLC | 206,315 | 6,469,168 | |||
Italy 0.5% | 3,645,526 | ||||
Eni SpA | 220,119 | 3,645,526 | |||
Japan 20.8% | 137,366,850 | ||||
Bandai Namco Holdings, Inc. | 165,331 | 5,679,918 | |||
Bridgestone Corp. | 140,586 | 6,383,129 | |||
East Japan Railway Company | 58,263 | 5,378,162 | |||
Fujitsu, Ltd. | 742,197 | 5,523,835 | |||
Hirose Electric Company, Ltd. | 36,046 | 5,075,574 | |||
Hitachi, Ltd. | 899,629 | 6,343,152 | |||
Honda Motor Company, Ltd. | 214,142 | 6,325,868 | |||
Isuzu Motors, Ltd. | 425,207 | 5,637,768 | |||
Japan Tobacco, Inc. | 157,398 | 5,158,084 | |||
Keisei Electric Railway Company, Ltd. | 203,378 | 5,626,929 | |||
Matsumotokiyoshi Holdings Company, Ltd. | 86,057 | 5,764,234 | |||
Mitsubishi Chemical Holdings Corp. | 602,840 | 5,747,462 | |||
Mitsubishi Corp. | 244,309 | 5,684,052 | |||
Mitsubishi Electric Corp. | 361,480 | 5,654,761 | |||
Mitsubishi UFJ Financial Group, Inc. | 920,310 | 5,983,705 | |||
Mitsui Fudosan Company, Ltd. | 249,085 | 5,400,915 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK International Value Equity Fund | 13 |
Shares | Value | ||||
Japan (continued) | |||||
Mizuho Financial Group, Inc. | 3,242,084 | $5,683,501 | |||
Nippon Telegraph & Telephone Corp. | 126,225 | 5,783,721 | |||
Nippon Television Holdings, Inc. | 309,268 | 5,432,795 | |||
Seven & i Holdings Company, Ltd. | 137,248 | 5,302,504 | |||
Sumitomo Chemical Company, Ltd. | 956,395 | 5,983,267 | |||
Taiheiyo Cement Corp. | 149,447 | 5,773,751 | |||
Toyo Suisan Kaisha, Ltd. | 148,921 | 5,471,155 | |||
Toyota Motor Corp. | 110,159 | 6,568,608 | |||
Netherlands 4.6% | 30,631,458 | ||||
Aegon NV | 932,588 | 5,436,046 | |||
Akzo Nobel NV | 77,654 | 7,161,946 | |||
Heineken Holding NV | 59,468 | 5,587,030 | |||
ING Groep NV | 323,407 | 5,961,119 | |||
Royal Dutch Shell PLC, A Shares | 214,126 | 6,485,317 | |||
Norway 0.8% | 5,187,860 | ||||
DNB ASA | 256,951 | 5,187,860 | |||
Singapore 1.8% | 11,724,109 | ||||
DBS Group Holdings, Ltd. | 401,321 | 6,177,963 | |||
Sembcorp Industries, Ltd. | 2,533,316 | 5,546,146 | |||
Spain 1.9% | 12,712,270 | ||||
Banco Santander SA | 989,784 | 6,923,351 | |||
Telefonica SA | 532,706 | 5,788,919 | |||
Sweden 2.4% | 16,141,441 | ||||
Modern Times Group MTG AB, B Shares | 152,131 | 5,517,085 | |||
Telefonaktiebolaget LM Ericsson, B Shares | 785,702 | 4,529,642 | |||
Trelleborg AB, B Shares | 243,157 | 6,094,714 | |||
Switzerland 7.4% | 48,845,610 | ||||
Adecco Group AG | 77,718 | 6,054,584 | |||
Credit Suisse Group AG (A) | 294,699 | 4,669,387 | |||
Julius Baer Group, Ltd. (A) | 94,753 | 5,622,656 | |||
LafargeHolcim, Ltd. (A) | 104,121 | 6,095,756 | |||
Nestle SA | 96,111 | 8,067,678 | |||
Novartis AG | 87,800 | 7,531,040 | |||
Roche Holding AG | 22,494 | 5,749,919 | |||
Zurich Insurance Group AG | 16,541 | 5,054,590 | |||
United Kingdom 12.8% | 85,000,483 | ||||
AstraZeneca PLC | 95,725 | 6,365,842 | |||
Aviva PLC | 727,475 | 5,020,979 | |||
Barclays PLC | 1,993,252 | 5,168,461 | |||
BP PLC | 832,076 | 5,330,271 | |||
Debenhams PLC | 4,129,169 | 2,740,240 | |||
GlaxoSmithKline PLC | 285,231 | 5,701,935 |
14 | JOHN HANCOCK International Value Equity Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
United Kingdom (continued) | |||||
HSBC Holdings PLC | 782,548 | $7,736,128 | |||
Imperial Brands PLC | 132,114 | 5,638,722 | |||
Informa PLC | 626,931 | 5,649,644 | |||
Kingfisher PLC | 1,244,253 | 4,981,587 | |||
Meggitt PLC | 827,508 | 5,779,901 | |||
RPC Group PLC | 457,417 | 6,074,348 | |||
Standard Chartered PLC (A) | 513,786 | 5,108,616 | |||
Unilever PLC | 134,741 | 7,798,712 | |||
Vodafone Group PLC | 2,108,824 | 5,905,097 | |||
Yield (%) | Shares | Value | |||
Securities lending collateral 0.8% | $5,692,146 | ||||
(Cost $5,692,314) | |||||
John Hancock Collateral Trust (C) | 1.2098(D) | 568,873 | 5,692,146 | ||
Yield* (%) | Maturity date | Par value^ | Value | ||
Short-term investments 2.7% | $17,845,000 | ||||
(Cost $17,844,711) | |||||
U.S. Government Agency 2.4% | 15,816,000 | ||||
Federal Agricultural Mortgage Corp. Discount Note | 0.700 | 10-02-17 | 1,569,000 | 1,569,000 | |
Federal Farm Credit Bank Discount Note | 0.700 | 10-02-17 | 269,000 | 269,000 | |
Federal Home Loan Bank Discount Note | 0.600 | 10-02-17 | 13,978,000 | 13,978,000 |
Par value^ | Value | ||||
Repurchase agreement 0.3% | 2,029,000 | ||||
Barclays Capital Tri-Party Repurchase Agreement dated 9-29-17 at 1.020% to be repurchased at $2,029,172 on 10-2-17, collateralized by $2,048,500 U.S. Treasury Notes, 1.875% due 3-31-22 (valued at $2,069,833, including interest) | 2,029,000 | 2,029,000 | |||
Total investments (Cost $612,377,204) 100.7% | $666,370,154 | ||||
Other assets and liabilities, net (0.7%) | (4,845,914) | ||||
Total net assets 100.0% | $661,524,240 |
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. | |
Security Abbreviations and Legend | |
(A) | Non-income producing security. |
(B) | A portion of this security is on loan as of 9-30-17. |
(C) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. |
(D) | The rate shown is the annualized seven-day yield as of 9-30-17. |
* | Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK International Value Equity Fund | 15 |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-17 (unaudited)
Assets | |||||||||||||||||||||||||||||||||
Unaffiliated investments, at value (Cost $606,684,890) including $5,349,533 of securities loaned | $660,678,008 | ||||||||||||||||||||||||||||||||
Affiliated investments, at value (Cost $5,692,314) | 5,692,146 | ||||||||||||||||||||||||||||||||
Cash | 198,389 | ||||||||||||||||||||||||||||||||
Foreign currency, at value (Cost $357,221) | 355,799 | ||||||||||||||||||||||||||||||||
Receivable for fund shares sold | 92,989 | ||||||||||||||||||||||||||||||||
Dividends and interest receivable | 2,822,530 | ||||||||||||||||||||||||||||||||
Receivable for securities lending income | 8,952 | ||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 94,775 | ||||||||||||||||||||||||||||||||
Total assets | 669,943,588 | ||||||||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||
Payable for fund shares repurchased | 2,582,478 | ||||||||||||||||||||||||||||||||
Payable upon return of securities loaned | 5,692,200 | ||||||||||||||||||||||||||||||||
Payable to affiliates | |||||||||||||||||||||||||||||||||
Accounting and legal services fees | 16,268 | ||||||||||||||||||||||||||||||||
Transfer agent fees | 2,297 | ||||||||||||||||||||||||||||||||
Distribution and service fees | 164 | ||||||||||||||||||||||||||||||||
Trustees' fees | 335 | ||||||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 125,606 | ||||||||||||||||||||||||||||||||
Total liabilities | 8,419,348 | ||||||||||||||||||||||||||||||||
Net assets | $661,524,240 | ||||||||||||||||||||||||||||||||
Net assets consist of | |||||||||||||||||||||||||||||||||
Paid-in capital | $580,868,055 | ||||||||||||||||||||||||||||||||
Undistributed net investment income | 15,700,964 | ||||||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments and foreign currency transactions | 10,934,186 | ||||||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 54,021,035 | ||||||||||||||||||||||||||||||||
Net assets | $661,524,240 | ||||||||||||||||||||||||||||||||
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 ($18,300,672 ÷ 2,083,531 shares)1 | $8.78 | ||||||||||||||||||||
Class C ($826,903 ÷ 93,549 shares)1 | $8.84 | ||||||||||||||||||||
Class I ($6,247,210 ÷ 709,784 shares) | $8.80 | ||||||||||||||||||||
Class R2 ($863,070 ÷ 98,006 shares) | $8.81 | ||||||||||||||||||||
Class R4 ($103,268 ÷ 11,723 shares) | $8.81 | ||||||||||||||||||||
Class R6 ($955,737 ÷ 108,712 shares) | $8.79 | ||||||||||||||||||||
Class NAV ($634,227,380 ÷ 72,045,206 shares) | $8.80 | ||||||||||||||||||||
Maximum offering price per share | |||||||||||||||||||||
Class A (net assets value per share ÷ 95%)2 | $9.24 |
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 9-30-17 (unaudited)
Investment income | ||||||||||||||||||||||||
Dividends | $13,675,087 | |||||||||||||||||||||||
Non-cash dividends | 3,799,532 | |||||||||||||||||||||||
Securities lending | 215,101 | |||||||||||||||||||||||
Interest | 90,229 | |||||||||||||||||||||||
Less foreign taxes withheld | (1,194,512 | ) | ||||||||||||||||||||||
Total investment income | 16,585,437 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 2,858,599 | |||||||||||||||||||||||
Distribution and service fees | 29,647 | |||||||||||||||||||||||
Accounting and legal services fees | 53,540 | |||||||||||||||||||||||
Transfer agent fees | 13,923 | |||||||||||||||||||||||
Trustees' fees | 5,870 | |||||||||||||||||||||||
State registration fees | 42,550 | |||||||||||||||||||||||
Printing and postage | 11,616 | |||||||||||||||||||||||
Professional fees | 37,188 | |||||||||||||||||||||||
Custodian fees | 125,836 | |||||||||||||||||||||||
Other | 9,891 | |||||||||||||||||||||||
Total expenses | 3,188,660 | |||||||||||||||||||||||
Less expense reductions | (26,686 | ) | ||||||||||||||||||||||
Net expenses | 3,161,974 | |||||||||||||||||||||||
Net investment income | 13,423,463 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Unaffiliated investments and foreign currency transactions | 16,739,850 | |||||||||||||||||||||||
Affiliated investments | (2,074 | ) | ||||||||||||||||||||||
16,737,776 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Unaffiliated investments and translation of assets and liabilities in foreign currencies | 31,861,055 | |||||||||||||||||||||||
Affiliated investments | (168 | ) | ||||||||||||||||||||||
31,860,887 | ||||||||||||||||||||||||
Net realized and unrealized gain | 48,598,663 | |||||||||||||||||||||||
Increase in net assets from operations | $62,022,126 |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | ||||||||||||||||||||||||||||||||||||||||||||||||
From operations | ||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $13,423,463 | $11,945,223 | ||||||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 16,737,776 | 3,847,805 | ||||||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 31,860,887 | 60,307,496 | ||||||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 62,022,126 | 76,100,524 | ||||||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | ||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | ||||||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (296,601 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class C | — | (5,101 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class I | — | (52,380 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (11,361 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (1,634 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (10,496 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (11,935,754 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (12,313,327 | ) | |||||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (30,422,935 | ) | 61,738,752 | |||||||||||||||||||||||||||||||||||||||||||||
Total increase | 31,599,191 | 125,525,949 | ||||||||||||||||||||||||||||||||||||||||||||||
Net assets | ||||||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 629,925,049 | 504,399,100 | ||||||||||||||||||||||||||||||||||||||||||||||
End of period | $661,524,240 | $629,925,049 | ||||||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $15,700,964 | $2,277,501 |
Financial highlights
Class A Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.01 | $7.20 | $8.29 | $9.33 | $8.66 | $8.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.16 | 3 | 0.14 | 0.12 | 0.13 | 0.17 | 4 | 0.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.61 | 0.79 | (0.89 | ) | (0.41 | ) | �� | 0.97 | 0.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.77 | 0.93 | (0.77 | ) | (0.28 | ) | 1.14 | 0.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.12 | ) | (0.11 | ) | (0.19 | ) | (0.09 | ) | (0.08 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | (0.38 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.12 | ) | (0.32 | ) | (0.76 | ) | (0.47 | ) | (0.22 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.78 | $8.01 | $7.20 | $8.29 | $9.33 | $8.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5,6 | 9.61 | 7 | 13.09 | (9.46 | ) | (2.45 | ) | 13.51 | 8.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $18 | $18 | $25 | $22 | $18 | $7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.32 | 8 | 1.35 | 1.39 | 1.53 | 1.63 | 1.99 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.31 | 8 | 1.34 | 1.38 | 1.52 | 1.60 | 1.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.85 | 3,7 | 1.89 | 1.57 | 1.50 | 1.85 | 4 | 1.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 38 | 27 |
1 | Six months ended 9-30-17. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Annualized. |
Class C Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.09 | $7.27 | $8.35 | $9.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.13 | 4 | 0.08 | 0.06 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.62 | 0.81 | (0.90 | ) | (0.60 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.75 | 0.89 | (0.84 | ) | (0.59 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.07 | ) | (0.03 | ) | (0.12 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.07 | ) | (0.24 | ) | (0.69 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.84 | $8.09 | $7.27 | $8.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5,6 | 9.27 | 7 | 12.30 | (10.19 | ) | (5.72 | ) 7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 8 | — | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 2.07 | 9 | 2.10 | 3.23 | 13.81 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 2.06 | 9 | 2.09 | 2.21 | 2.35 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.48 | 4,7 | 1.03 | 0.70 | 0.11 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 10 |
1 | Six months ended 9-30-17. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | The inception date for Class C shares is 8-28-14. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | Does not reflect the effect of sales charges, if any. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | Not annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | Less than $500,000. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | Annualized. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10 | The portfolio turnover is shown for the period from 4-1-14 to 3-31-15. |
Class I Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.02 | $7.20 | $8.29 | $9.33 | $8.66 | $8.21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.17 | 3 | 0.16 | 0.15 | 0.18 | 0.20 | 4 | 0.13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.61 | 0.80 | (0.91 | ) | (0.44 | ) | 0.97 | 0.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.78 | 0.96 | (0.76 | ) | (0.26 | ) | 1.17 | 0.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.14 | ) | (0.12 | ) | (0.21 | ) | (0.12 | ) | (0.11 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | (0.38 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.14 | ) | (0.33 | ) | (0.78 | ) | (0.50 | ) | (0.25 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.80 | $8.02 | $7.20 | $8.29 | $9.33 | $8.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 9.73 | 6 | 13.52 | (9.29 | ) | (2.20 | ) | 13.87 | 8.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $6 | $5 | $2 | $3 | $8 | $6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.06 | 7 | 1.09 | 1.28 | 1.41 | 1.46 | 2.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.05 | 7 | 1.08 | 1.14 | 1.29 | 1.29 | 1.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.98 | 3,6 | 2.16 | 1.87 | 1.93 | 2.20 | 4 | 1.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 38 | 27 |
1 | Six months ended 9-30-17. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
Class R2 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.04 | $7.23 | $8.31 | $9.35 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.15 | 4 | 0.13 | 0.11 | 0.11 | 0.19 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.62 | 0.80 | (0.89 | ) | (0.40 | ) | 1.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.77 | 0.93 | (0.78 | ) | (0.29 | ) | 1.28 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.12 | ) | (0.09 | ) | (0.18 | ) | (0.08 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | (0.38 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.12 | ) | (0.30 | ) | (0.75 | ) | (0.46 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.81 | $8.04 | $7.23 | $8.31 | $9.35 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | 9.58 | 7 | 12.94 | (9.53 | ) | (2.63 | ) | 15.38 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | $1 | $2 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.46 | 8 | 1.46 | 1.68 | 2.76 | 5.96 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.45 | 8 | 1.46 | 1.55 | 1.68 | 1.68 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.78 | 4,7 | 1.73 | 1.41 | 1.20 | 2.84 | 5,8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 38 | 9 |
1 | Six months ended 9-30-17. 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 non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect a special dividend received by the fund which amounted to $0.04 and 0.41%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 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 4-1-13 to 3-31-14. |
Class R4 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.03 | $7.21 | $8.30 | $9.34 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.16 | 4 | 0.15 | 0.14 | 0.15 | 0.10 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.62 | 0.81 | (0.90 | ) | (0.42 | ) | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.78 | 0.96 | (0.76 | ) | (0.27 | ) | 1.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.14 | ) | (0.12 | ) | (0.20 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | (0.38 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.14 | ) | (0.33 | ) | (0.77 | ) | (0.49 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.81 | $8.03 | $7.21 | $8.30 | $9.34 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | 9.71 | 7 | 13.44 | (9.34 | ) | (2.36 | ) | 15.55 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 8 | — | 8 | — | 8 | — | 8 | — | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.22 | 9 | 1.24 | 3.82 | 18.12 | 15.49 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.11 | 9 | 1.13 | 1.22 | 1.43 | 1.43 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 1.96 | 4,7 | 2.03 | 1.78 | 1.67 | 1.43 | 5,9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 38 | 10 |
1 | Six months ended 9-30-17. 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 non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect a special dividend received by the fund which amounted to $0.04 and 0.41%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 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 4-1-13 to 3-31-14. |
Class R6 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.00 | $7.20 | $8.28 | $9.33 | $8.53 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.17 | 4 | 0.15 | 0.25 | 0.10 | 0.12 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.62 | 0.80 | (0.98 | ) | (0.34 | ) | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.79 | 0.95 | (0.73 | ) | (0.24 | ) | 1.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.15 | ) | (0.14 | ) | (0.24 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | (0.38 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.15 | ) | (0.35 | ) | (0.81 | ) | (0.52 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.79 | $8.00 | $7.20 | $8.28 | $9.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)6 | 9.88 | 7 | 13.36 | (8.97 | ) | (2.04 | ) | 15.83 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 8 | $4 | — | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.97 | 9 | 0.99 | 1.16 | 2.32 | 16.37 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.95 | 9 | 0.97 | 0.97 | 1.04 | 1.10 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.03 | 4,7 | 2.02 | 2.95 | 1.15 | 1.76 | 5,9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 38 | 10 |
1 | Six months ended 9-30-17. 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 non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect a special dividend received by the fund which amounted to $0.04 and 0.41%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 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 4-1-13 to 3-31-14. |
Class NAV Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $8.01 | $7.20 | $8.29 | $9.34 | $8.66 | $8.22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.17 | 3 | 0.16 | 0.16 | 0.18 | 0.21 | 4 | 0.15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.62 | 0.80 | (0.90 | ) | (0.42 | ) | 0.99 | 0.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.79 | 0.96 | (0.74 | ) | (0.24 | ) | 1.20 | 0.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.15 | ) | (0.14 | ) | (0.24 | ) | (0.14 | ) | (0.12 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | — | (0.21 | ) | (0.57 | ) | (0.38 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.15 | ) | (0.35 | ) | (0.81 | ) | (0.52 | ) | (0.26 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $8.80 | $8.01 | $7.20 | $8.29 | $9.34 | $8.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 9.73 | 6 | 13.64 | (9.09 | ) | (2.03 | ) | 14.23 | 8.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | �� | $634 | $605 | $476 | $417 | $433 | $307 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.95 | 7 | 0.98 | 0.99 | 1.04 | 1.03 | 1.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.94 | 7 | 0.97 | 0.98 | 1.03 | 1.03 | 1.08 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 2.05 | 3,6 | 2.12 | 2.00 | 2.05 | 2.37 | 4 | 1.78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 14 | 27 | 18 | 25 | 38 | 27 |
1 | Six months ended 9-30-17. Unaudited. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | Based on average daily shares outstanding. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Net investment income (loss) per share and ratio of net investment income (loss) to average net assets reflect non-recurring income received by the fund which amounted to $0.05 and 0.58%, respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. |
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 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 scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. 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 NAVs each business day. 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, are valued in U.S. dollars based on foreign currency exchange rates supplied by an independent pricing vendor.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
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 scheduled daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund's Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing 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, 2017, by major security category or type:
Total value at 9-30-17 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Australia | $25,749,997 | — | $25,749,997 | — | |
Belgium | 9,943,560 | — | 9,943,560 | — | |
Canada | 45,990,708 | $45,990,708 | — | — | |
Chile | 5,222,018 | — | 5,222,018 | — | |
China | 12,185,288 | — | 12,185,288 | — | |
Denmark | 5,650,091 | — | 5,650,091 | — | |
France | 75,812,065 | — | 75,812,065 | — | |
Germany | 72,782,736 | — | 72,782,736 | — | |
Hong Kong | 26,232,830 | — | 26,232,830 | — | |
Ireland | 12,008,108 | — | 12,008,108 | — | |
Italy | 3,645,526 | — | 3,645,526 | — | |
Japan | 137,366,850 | — | 137,366,850 | — | |
Netherlands | 30,631,458 | — | 30,631,458 | — | |
Norway | 5,187,860 | — | 5,187,860 | — | |
Singapore | 11,724,109 | — | 11,724,109 | — | |
Spain | 12,712,270 | — | 12,712,270 | — | |
Sweden | 16,141,441 | — | 16,141,441 | — | |
Switzerland | 48,845,610 | — | 48,845,610 | — | |
United Kingdom | 85,000,483 | — | 85,000,483 | — | |
Securities lending collateral | 5,692,146 | 5,692,146 | — | — | |
Short-term investments | 17,845,000 | — | 17,845,000 | — | |
Total investments in securities | $666,370,154 | $51,682,854 | $614,687,300 | — |
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 NAV 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. Non-cash dividends, if any, are recorded at the fair market value of the securities received. 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 NAV and is registered with the Securities and Exchange Commission (SEC) 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 receives 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. Securities lending income received by the fund is net of fees retained by the securities lending agent. 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, 2017, the fund loaned common stocks valued at $5,349,533 and received $5,692,200 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 markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.
Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.
Line of credit. The fund may have the ability to 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 29, 2017, the fund and other affiliated funds have 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. Excluding commitments designated for a certain fund and subject to the need of all other affiliated funds, the fund can borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. A commitment fee payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 29, 2017, the fund had a similar agreement that enabled it to participate in a $1 billion unsecured committed line of credit. For the six months ended September 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the six months ended September 30, 2017, were $2,323.
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 charged daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of March 31, 2017, the fund has a long-term capital loss carryforward of $5,382,665 available to offset future net realized capital gains. This carryforward does not expire.
As of March 31, 2017, 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 investments in passive foreign investment companies and 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 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 Distributors, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.900% of the first $100 million of the fund's average daily net assets; (b) 0.850% of the next $500 million of the fund's average daily net assets; (c) 0.800% of the next $400 million of the fund's average daily net assets; and (d) 0.750% of the fund's average daily net assets in excess of $1 billion. Prior to July 1, 2017, the management fee structure was (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, 2017, 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.
Prior to July 1, 2017, the Advisor contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares to the extent they exceeded 0.00% of average annual net assets (on an annualized basis) attributable to the class.
The expense reductions described above amounted to the following for the six months ended September 30, 2017:
Class | Expense reduction | Class | Expense reduction | |
Class A | $745 | Class R4 | $3 | |
Class C | 35 | Class R6 | 70 | |
Class I | 223 | Class NAV | 25,526 | |
Class R2 | 34 | Total | $26,636 |
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the six months ended September 30, 2017, 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, 2017 amounted to an annual rate of 0.02% 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% | — | Classs 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 its Rule 12b-1 fees for Class R4 shares to the extent necessary to achieve aggregate fees paid to the Distributor of 0.15%. This agreement expires on June 30, 2018, 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 $50 for Class R4 shares for the six months ended September 30, 2017.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $20,440 for the six months ended September 30, 2017. Of this amount, $3,618 was retained and used for printing prospectuses, advertising, sales literature and other purposes and $16,822 was paid as sales commissions to broker-dealers.
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, 2017, CDSCs received by the Distributor amounted to $14 and $45 for Class A and Class C shares, respectively.
Transfer agent fees. The John Hancock Group of Funds has a complex-wide 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, 2017 were:
Class | Distribution and service fees | Transfer agent fees |
Class A | $23,127 | $10,470 |
Class C | 4,316 | 489 |
Class I | — | 2,841 |
Class R2 | 2,080 | 56 |
Class R4 | 124 | 7 |
Class R6 | — | 60 |
Total | $29,647 | $13,923 |
Trustee expenses. The Trust 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 or its affiliates, 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. For the six months ended September 30, 2017, 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 | $8,749,400 | 1 | 1.020% | $248 |
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2017 and for the year ended March 31, 2017 were as follows:
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 223,123 | $1,886,137 | 500,739 | $3,759,558 | ||||||||||||||||||||||
Distributions reinvested | — | — | 39,485 | 296,922 | ||||||||||||||||||||||
Repurchased | (398,689 | ) | (3,385,676 | ) | (1,708,637 | ) | (12,642,491 | ) | ||||||||||||||||||
Net decrease | (175,566 | ) | ($1,499,539 | ) | (1,168,413 | ) | ($8,586,011 | ) | ||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 18,807 | $159,202 | 66,211 | $500,683 | ||||||||||||||||||||||
Distributions reinvested | — | — | 670 | 5,101 | ||||||||||||||||||||||
Repurchased | (21,947 | ) | (189,518 | ) | (31,331 | ) | (233,589 | ) | ||||||||||||||||||
Net increase (decrease) | (3,140 | ) | ($30,316 | ) | 35,550 | $272,195 | ||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 203,219 | $1,701,624 | 589,714 | $4,514,221 | ||||||||||||||||||||||
Distributions reinvested | — | — | 6,965 | 52,380 | ||||||||||||||||||||||
Repurchased | (73,888 | ) | (619,841 | ) | (304,224 | ) | (2,287,859 | ) | ||||||||||||||||||
Net increase | 129,331 | $1,081,783 | 292,455 | $2,278,742 |
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 5,873 | $49,316 | 11,417 | $85,795 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,507 | 11,361 | ||||||||||||||||||||||
Repurchased | (7,034 | ) | (59,889 | ) | (20,153 | ) | (150,412 | ) | ||||||||||||||||||
Net decrease | (1,161 | ) | ($10,573 | ) | (7,229 | ) | ($53,256 | ) | ||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 2,135 | $18,112 | 115,910 | $867,371 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,399 | 10,496 | ||||||||||||||||||||||
Repurchased | (253 | ) | (2,121 | ) | (34,521 | ) | (258,715 | ) | ||||||||||||||||||
Net increase | 1,882 | $15,991 | 82,788 | $619,152 | ||||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 3,329,259 | $26,996,874 | 19,105,581 | $142,061,646 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,589,315 | 11,935,754 | ||||||||||||||||||||||
Repurchased | (6,723,880 | ) | (56,977,155 | ) | (11,371,273 | ) | (86,789,470 | ) | ||||||||||||||||||
Net increase (decrease) | (3,394,621 | ) | ($29,980,281 | ) | 9,323,623 | $67,207,930 | ||||||||||||||||||||
Total net increase (decrease) | (3,443,275 | ) | ($30,422,935 | ) | 8,558,774 | $61,738,752 |
There were no fund share transactions during the six months ended September 30, 2017 and year ended March 31, 2017 for Class R4 shares.
Affiliates of the fund owned 10%, 100%, 83% and 100% of shares of Class I, Class R4, Class R6 and Class NAV, respectively, on September 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $90,789,608 and $105,443,936, respectively, for the six months ended September 30, 2017.
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, 2017, funds within the John Hancock group of funds complex held 95.8% 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 Funds II Multimanager Lifestyle Growth Portfolio | 34.4% |
John Hancock Funds II Multimanager Lifestyle Balanced Portfolio | 22.0% |
John Hancock Funds II Multimanager Lifestyle Aggressive Portfolio | 11.9% |
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 19-22, 2017 in-person 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 22-24, 2017.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 19-22, 2017, the Board, including the Trustees who are not parties to any Agreement or 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 (including its various committees) 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 information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. 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. The Board considered the Advisory Agreement and the Subadvisory Agreement separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
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 did not treat any single factor as
determinative, and each Trustee may have attributed 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.
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 observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the fund's compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. 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. The Board considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risks with respect to all funds.
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; |
(f) | the Advisor's initiatives intended to improve various aspects of the Trust's operations and investor experience with the fund; and |
(g) | 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 while it found the data provided by the independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance comparisons may vary depending on the selection of the peer group. The Board noted that the fund outperformed its benchmark index for the one-year period and underperformed its benchmark index for the three-, five- and ten-year periods ended December 31, 2016. The Board also noted that the fund outperformed its peer group average for the one-, three- and ten-year periods and underperformed its peer group average for the five-year period ended December 31, 2016. The Board took into account management's discussion of the fund's performance, including the favorable performance relative to the benchmark index for the one-year period and to the peer group for the one-, three- and ten-year periods. The Board conluded that the fund's performance has genearally 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 in light of the nature, extent and quality of the management advisory and subadvisory services provided by the Advisor and the Subadvisor. 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 net 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 the fact that the fund's net total expenses had decreased from the previous year. The Board took into account management's discussion with respect to the overall management fee, the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor. 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 also noted that the fund has a voluntary fee waiver and/or expense reimbursement, which reduces certain expenses 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 in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out 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 and with respect to the fund; |
(d) | received information with respect to the Advisor's allocation methodologies used in preparing the profitability data and considered that the Advisor hired an independent third-party consultant to provide an analysis of the Advisor's allocation methodologies; |
(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) | 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; |
(j) | noted that the subadvisory fee for the fund is paid by the Advisor; |
(k) | considered the Advisor's ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the mutual fund industry; and |
(l) | 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 risks it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
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 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 been in line with or outperformed the historical performance of comparable funds; |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; 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.
Trustees Hassell H. McClellan, 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 6-20-17
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. |
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 New Opportunities Small Cap Core Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
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ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Small Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core 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 |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed
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John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
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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 serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
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. | ||
MF403052 | 366SA 9/17 11/17 |
John Hancock
Strategic Growth Fund
Semiannual report 9/30/17
A message to shareholders
Dear shareholder,
Wherever stock investors look today, the markets seem to exhibit undiminished strength. Three bellwether U.S. indexes—the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite Index—simultaneously hit all-time highs more than once in recent months. While stock markets are setting records, investors have reason to be vigilant. U.S. stocks haven't experienced a drop of even 5% in more than a year. This degree of calm in a rising market is rare, and as the bull market advances, many stocks are moving deeper into overvalued territory, suggesting that market leaders are vulnerable to any setbacks.
Advancing the interests of fund shareholders
One of our primary goals is to advance the interests of our fund shareholders wherever possible. To that end, we recently announced our third round of expense reductions this year, targeting six mutual funds and two closed-end funds that together represent more than $7 billion in assets under management. Details can be found at jhinvestments.com.
In addition, we are proud to report that in May fund researcher Morningstar, Inc. formally recognized our shareholder-friendly initiatives by upgrading our parent pillar rating—a key component of the Morningstar Analyst Rating system—to positive, the highest possible rating. Morningstar evaluates select funds and their parent firms based on intensive research, including on-site due diligence. They focused on such factors as whether our portfolio managers invest meaningfully in the funds they manage, the quality of our risk management, our corporate culture, and our commitment to recognizing shareholder interests—in other words, how effective we are as stewards of investor capital. We're proud to have been recognized by Morningstar for our efforts and we're committed to continue our work of furthering the interests of our shareholders.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to 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, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly into an index. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Strategic Growth Fund
INVESTMENT OBJECTIVE
The fund seeks long-term capital appreciation.
AVERAGE ANNUAL TOTAL RETURNS AS OF 9/30/17 (%)
The 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. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end 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 prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST SIX MONTHS
A strong market backdrop
Stock prices trended upward during the period, creating a favorable backdrop for equity investors and the fund.
Relative outperformance
The fund's Class A shares (excluding sales charges) outperformed the benchmark, the Russell 1000 Growth Index, due primarily to strong security selection in industrials, consumer staples, and information technology.
Energy sector allocation detracted
One source of difficulty was the fund's modest overweighting in the weak-performing energy sector.
SECTOR COMPOSITION AS OF 9/30/17 (%)
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. Derivatives transactions, such as hedging and other strategic transactions, may increase a fund's volatility and could produce disproportionate losses, potentially more than the fund's principal investment. Please see the fund's prospectus for additional risks.
An interview with Portfolio Manager W. Shannon Reid, CFA, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
W. Shannon Reid, CFA
Portfolio Manager
John Hancock Asset Management
How did the fund perform during the six months ended September 30, 2017?
It was a favorable environment for stock investors, as the market trended upward for nearly the entire six-month span. Equity markets rose on U.S. companies' better-than-expected quarterly profits and revenue growth, along with rising future earnings estimates. Investors also saw increasingly favorable economic data, especially in Europe, which seemed to suggest a synchronized global expansion.
Against this backdrop, the fund outpaced its benchmark, the Russell 1000 Growth Index. Strong security selection contributed the most to the fund's outperformance, especially in the industrials, information technology, and consumer staples sectors.
One source of difficulty was the fund's modest overweighting in the weak-performing energy sector. Another was a small cash allocation, which limited the fund's upside in a rising market.
Which stocks meaningfully contributed to the fund's relative performance?
In the information technology sector, video game publisher Electronic Arts, Inc. (EA) added value. EA continued to report strong earnings stemming from healthy sales. As of period end, we continued to see good opportunity with this company, which has benefited from the long-term trend of more people playing more games, especially EA titles, which include some of the industry's top-tier franchises.
ServiceNow, Inc., a provider of enterprise cloud computing services, also performed well, benefiting from the tailwind of more companies shifting IT infrastructure to the cloud. Other information technology contributors included Shopify, Inc. and Facebook, Inc. Shopify, which provides e-commerce solutions to small- to medium-sized retailers, has benefited from the long-term global trend toward online purchasing and away from brick-and-mortar retailing. This shift has allowed the company to continue to sign up new customers and generate impressive financial results.
Elsewhere, in industrials, Rockwell Collins, Inc. was a particularly big contributor this period. Shares of this aircraft parts manufacturer rose sharply in August, when it agreed to be acquired by United Technologies Corporation (not held). Shortly afterward, we sold the fund's Rockwell Collins stake in recognition of its strong gain. It is our belief that more favorable opportunities now lay elsewhere.
Which stocks detracted on a relative basis?
The fund was hurt by a position in O'Reilly Automotive, Inc., a provider of after-market auto parts. O'Reilly struggled this period as the company issued its second consecutive disappointing financial report, citing mild weather and weak new car sales as negative business factors. As of period end, however, we see these issues as transitory, and we took advantage of price weakness to increase the fund's O'Reilly investment.
Also detracting was industrial supplier HD Supply Holdings, Inc., whose shares tumbled in early June, after the company reported earnings well below analysts' expectations. We came to believe that competitive pressures in the hardware supply business were greater than we previously thought. Shortly after the earnings announcement, we sold the fund's position in favor of other opportunities we believed provided a better risk/reward trade-off.
Allergan PLC also hampered results. The drug manufacturer's weakness period partly reflected the market's concern about patent protection for Restasis, a treatment for dry eyes and one of Allergan's most important products. In our view, however, the market was overreacting to the potential loss of the Restasis patent, and that Allergan's attractive valuation and strong organic growth rate continued to make it an attractive investment. We subsequently increased the fund's holdings in Allergan during the period.
What changes did you make to the fund's portfolio?
Although the fund was overweight in the consumer discretionary sector throughout the period, we did reduce the size of that overweight, largely due to our decision to sell two stocks. We eliminated
In industrials, we sold Rockwell Collins and HD Supply (as noted earlier), which resulted in an increased underweight in the sector at period end. The fund was still overweight in information technology because of the sector's strong overall performance and our decision to increase exposure to several names that we continued to find attractive—including software companies Microsoft Corp., Oracle Corp., and Alphabet, Inc.—as well as several other technology companies that we believed offered good long-term potential.
As of period end, how was the fund positioned?
We still see a healthy backdrop for equity investors, and the fund's positioning at period end reflected our expectation for continued economic growth. For example, the fund's largest sector overweight as of period end was information technology, an economically sensitive group.
That said, we are also mindful of several risks, including elevated equity valuations, geopolitical
TOP 10 HOLDINGS AS OF 9/30/17 (%)
Microsoft Corp. | 6.6 |
Apple, Inc. | 5.9 |
Facebook, Inc., Class A | 5.5 |
Amazon.com, Inc. | 5.0 |
Alphabet, Inc., Class C | 4.5 |
UnitedHealth Group, Inc. | 3.7 |
Celgene Corp. | 3.0 |
Comcast Corp., Class A | 2.8 |
Alphabet, Inc., Class A | 2.6 |
Electronic Arts, Inc. | 2.2 |
TOTAL | 41.8 |
As a percentage of net assets. | |
Cash and cash equivalents are not included. |
concerns and the potential for tighter monetary policy from the U.S. Federal Reserve. This last point has been a factor in our decision to overweight the financials sector, with an emphasis on companies that would likely benefit from an environment of higher interest rates.
Despite our overall optimism, we continue to monitor the risk/reward prospects of the fund's holdings. We have been actively trimming stocks whose prices have approached our price targets, shifting the proceeds into other names offering what we saw as better future return prospects.
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 |
TOTAL RETURNS FOR THE PERIOD ENDED SEPTEMBER 30, 2017
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | ||||||
1-year | 5-year | Since inception1 | 6-month | 5-year | Since inception1 | ||
Class A | 16.23 | 12.85 | 14.72 | 6.42 | 83.05 | 121.51 | |
Class C2 | 20.34 | 13.48 | 15.27 | 10.55 | 88.20 | 127.74 | |
Class I3 | 22.58 | 14.38 | 16.11 | 12.07 | 95.76 | 137.52 | |
Class R22,3 | 22.25 | 13.96 | 15.69 | 11.93 | 92.22 | 132.61 | |
Class R42,3 | 22.46 | 14.08 | 15.80 | 12.06 | 93.26 | 133.86 | |
Class R62,3 | 22.81 | 14.25 | 15.94 | 12.18 | 94.66 | 135.56 | |
Class NAV3 | 22.74 | 14.55 | 16.29 | 12.18 | 97.23 | 139.69 | |
Index† | 21.94 | 15.26 | 16.63 | 10.84 | 103.40 | 143.80 |
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. Had the contractual 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 (%) | 1.11 | 1.86 | 0.85 | 1.25 | 1.10 | 0.75 | 0.73 |
Net (%) | 1.11 | 1.86 | 0.85 | 1.25 | 1.00 | 0.75 | 0.73 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index is the Russell 1000 Growth Index. |
See the following page for footnotes.
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 | 22,774 | 22,774 | 24,380 |
Class I3 | 12-19-11 | 23,752 | 23,752 | 24,380 |
Class R22,3 | 12-19-11 | 23,261 | 23,261 | 24,380 |
Class R42,3 | 12-19-11 | 23,386 | 23,386 | 24,380 |
Class R62,3 | 12-19-11 | 23,556 | 23,556 | 24,380 |
Class NAV3 | 12-19-11 | 23,969 | 23,969 | 24,380 |
The 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 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 commenced operations on 8-28-14; Class R2, Class R4, and Class R6 shares commenced operations on 3-27-15. Returns shown prior to Class C, Class R2, Class R4, and Class R6 shares' commencement dates are those of Class A shares, except that they do not include sales charges and would be lower if they did. Returns shown prior to the commencement date of a share class would differ from the new share class only to the extent that expenses of the classes are different. |
3 | For certain types of investors, as described in the fund's prospectuses. |
4 | The contingent deferred sales charge is not applicable. |
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
The first line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017.
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, 2017, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line of each share class in the table on the following page 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, 2017, with the same investment held until September 30, 2017. 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.
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.
SHAREHOLDER EXPENSE EXAMPLE CHART
Account value on 4-1-2017 | Ending value on 9-30-2017 | Expenses paid during period ended 9-30-20171 | Annualized expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $1,120.30 | $5.79 | 1.09% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.60 | 5.52 | 1.09% | |
Class C | Actual expenses/actual returns | 1,000.00 | 1,115.50 | 9.76 | 1.84% |
Hypothetical example for comparison purposes | 1,000.00 | 1,015.80 | 9.30 | 1.84% | |
Class I | Actual expenses/actual returns | 1,000.00 | 1,120.70 | 4.41 | 0.83% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.90 | 4.20 | 0.83% | |
Class R2 | Actual expenses/actual returns | 1,000.00 | 1,119.30 | 6.32 | 1.19% |
Hypothetical example for comparison purposes | 1,000.00 | 1,019.10 | 6.02 | 1.19% | |
Class R4 | Actual expenses/actual returns | 1,000.00 | 1,120.60 | 4.89 | 0.92% |
Hypothetical example for comparison purposes | 1,000.00 | 1,020.50 | 4.66 | 0.92% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 1,121.80 | 3.88 | 0.73% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.40 | 3.70 | 0.73% | |
Class NAV | Actual expenses/actual returns | 1,000.00 | 1,121.80 | 3.83 | 0.72% |
Hypothetical example for comparison purposes | 1,000.00 | 1,021.50 | 3.65 | 0.72% |
1 | Expenses are equal to the fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/365 (to reflect the one-half year period). |
Fund’s investments |
Shares | Value | ||||
Common stocks 95.6% | $1,861,227,324 | ||||
(Cost $1,243,886,271) | |||||
Consumer discretionary 19.1% | 371,407,011 | ||||
Auto components 1.4% | |||||
Tenneco, Inc. | 439,215 | 26,647,174 | |||
Hotels, restaurants and leisure 0.9% | |||||
Las Vegas Sands Corp. | 272,302 | 17,470,896 | |||
Internet and direct marketing retail 9.4% | |||||
Amazon.com, Inc. (A) | 101,009 | 97,105,002 | |||
Expedia, Inc. | 223,193 | 32,126,400 | |||
Netflix, Inc. (A) | 72,368 | 13,123,937 | |||
The Priceline Group, Inc. (A) | 21,971 | 40,224,946 | |||
Media 2.8% | |||||
Comcast Corp., Class A | 1,430,454 | 55,043,870 | |||
Specialty retail 4.5% | |||||
Lowe's Companies, Inc. | 447,193 | 35,748,608 | |||
O'Reilly Automotive, Inc. (A) | 129,498 | 27,889,984 | |||
The Home Depot, Inc. | 147,670 | 24,152,905 | |||
Textiles, apparel and luxury goods 0.1% | |||||
NIKE, Inc., Class B | 36,129 | 1,873,289 | |||
Consumer staples 4.1% | 80,173,513 | ||||
Beverages 2.6% | |||||
Monster Beverage Corp. (A) | 592,786 | 32,751,427 | |||
PepsiCo, Inc. | 170,904 | 19,043,833 | |||
Household products 0.5% | |||||
Colgate-Palmolive Company | 132,559 | 9,656,923 | |||
Tobacco 1.0% | |||||
Altria Group, Inc. | 295,196 | 18,721,330 | |||
Energy 1.2% | 22,490,205 | ||||
Oil, gas and consumable fuels 1.2% | |||||
Chevron Corp. | 191,406 | 22,490,205 | |||
Financials 5.6% | 109,528,830 | ||||
Banks 3.2% | |||||
Bank of America Corp. | 540,602 | 13,698,855 | |||
Citigroup, Inc. | 496,798 | 36,137,087 | |||
First Republic Bank | 120,855 | 12,624,513 | |||
Capital markets 2.4% | |||||
Morgan Stanley | 767,190 | 36,955,542 | |||
The Goldman Sachs Group, Inc. | 42,636 | 10,112,833 |
12 | JOHN HANCOCK Strategic Growth Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Health care 14.8% | $288,613,472 | ||||
Biotechnology 5.8% | |||||
AbbVie, Inc. | 261,580 | 23,243,999 | |||
Amgen, Inc. | 169,448 | 31,593,580 | |||
Celgene Corp. (A) | 400,727 | 58,434,011 | |||
Health care equipment and supplies 0.9% | |||||
Boston Scientific Corp. (A) | 577,393 | 16,842,554 | |||
Health care providers and services 5.0% | |||||
Anthem, Inc. | 140,647 | 26,706,052 | |||
UnitedHealth Group, Inc. | 364,176 | 71,323,870 | |||
Life sciences tools and services 1.0% | |||||
Quintiles IMS Holdings, Inc. (A) | 214,480 | 20,390,614 | |||
Pharmaceuticals 2.1% | |||||
Allergan PLC | 195,554 | 40,078,792 | |||
Industrials 7.6% | 148,028,151 | ||||
Aerospace and defense 1.9% | |||||
Northrop Grumman Corp. | 42,175 | 12,134,591 | |||
TransDigm Group, Inc. | 95,340 | 24,373,671 | |||
Air freight and logistics 2.1% | |||||
FedEx Corp. | 178,889 | 40,353,781 | |||
Machinery 1.8% | |||||
Caterpillar, Inc. | 284,701 | 35,505,062 | |||
Professional services 0.4% | |||||
TransUnion (A) | 158,256 | 7,479,179 | |||
Road and rail 0.7% | |||||
CSX Corp. | 248,229 | 13,468,906 | |||
Trading companies and distributors 0.7% | |||||
United Rentals, Inc. (A) | 106,047 | 14,712,961 | |||
Information technology 41.4% | 805,248,223 | ||||
Internet software and services 13.8% | |||||
Alphabet, Inc., Class A (A) | 51,860 | 50,497,119 | |||
Alphabet, Inc., Class C (A) | 91,934 | 88,174,819 | |||
Facebook, Inc., Class A (A) | 623,928 | 106,610,577 | |||
New Relic, Inc. (A) | 225,036 | 11,206,793 | |||
Shopify, Inc., Class A (A) | 106,457 | 12,401,176 | |||
IT services 3.3% | |||||
SourceHOV LLC (A) | 510 | 1,335,597 | |||
Vantiv, Inc., Class A (A) | 272,554 | 19,206,880 | |||
Visa, Inc., Class A | 412,986 | 43,462,647 | |||
Semiconductors and semiconductor equipment 1.0% | |||||
Broadcom, Ltd. | 79,493 | 19,280,231 | |||
Software 17.4% | |||||
Activision Blizzard, Inc. | 482,736 | 31,141,299 |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Strategic Growth Fund | 13 |
Shares | Value | ||||
Information technology (continued) | |||||
Software (continued) | |||||
Adobe Systems, Inc. (A) | 42,946 | $6,406,684 | |||
Autodesk, Inc. (A) | 141,386 | 15,871,992 | |||
Electronic Arts, Inc. (A) | 370,484 | 43,739,341 | |||
Microsoft Corp. | 1,720,629 | 128,169,654 | |||
Oracle Corp. | 793,691 | 38,374,960 | |||
RingCentral, Inc., Class A (A) | 494,674 | 20,652,640 | |||
ServiceNow, Inc. (A) | 366,275 | 43,048,301 | |||
VMware, Inc., Class A (A)(B) | 102,744 | 11,218,617 | |||
Technology hardware, storage and peripherals 5.9% | |||||
Apple, Inc. | 742,596 | 114,448,896 | |||
Real estate 1.8% | 35,737,919 | ||||
Equity real estate investment trusts 1.8% | |||||
Equinix, Inc. | 80,076 | 35,737,919 | |||
Yield (%) | Shares | Value | |||
Securities lending collateral 0.5% | $10,299,263 | ||||
(Cost $10,298,819) | |||||
John Hancock Collateral Trust (C) | 1.2098(D) | 1,029,309 | 10,299,263 | ||
Yield* (%) | Maturity date | Par value^ | Value | ||
Short-term investments 4.5% | $87,082,427 | ||||
(Cost $87,082,427) | |||||
U.S. Government Agency 4.4% | 85,953,427 | ||||
Federal Agricultural Mortgage Corp. Discount Note | 0.700 | 10-02-17 | 8,525,000 | 8,524,834 | |
Federal Farm Credit Bank Discount Note | 0.700 | 10-02-17 | 1,461,000 | 1,460,972 | |
Federal Home Loan Bank Discount Note | 0.700 | 10-02-17 | 75,969,000 | 75,967,621 |
Par value^ | Value | ||||
Repurchase agreement 0.1% | 1,129,000 | ||||
Repurchase Agreement with State Street Corp. dated 9-29-17 at 0.340% to be repurchased at $1,129,032 on 10-2-17, collateralized by $1,155,000 Federal Home Loan Mortgage Corp., 1.700% due 9-29-20 (valued at $1,152,113, including interest) | 1,129,000 | 1,129,000 |
Total investments (Cost $1,341,267,517) 100.6% | $1,958,609,014 | ||||
Other assets and liabilities, net (0.6%) | (11,976,458) | ||||
Total net assets 100.0% | $1,946,632,556 |
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. | |
Security Abbreviations and Legend | |
(A) | Non-income producing security. |
(B) | A portion of this security is on loan as of 9-30-17. |
14 | JOHN HANCOCK Strategic Growth Fund | SEMIANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
(C) | Investment is an affiliate of the fund, the advisor and/or subadvisor. This security represents the investment of cash collateral received for securities lending. |
(D) | The rate shown is the annualized seven-day yield as of 9-30-17. |
* | Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end. |
SEE NOTES TO FINANCIAL STATEMENTS | SEMIANNUAL REPORT | JOHN HANCOCK Strategic Growth Fund | 15 |
Financial statements
STATEMENT OF ASSETS AND LIABILITIES 9-30-17 (unaudited)
Assets | ||||||||||||||||||||||||||||||
Unaffiliated investments, at value (Cost $1,330,968,698) including $10,085,821 of securities loaned | $1,948,309,751 | |||||||||||||||||||||||||||||
Affiliated investments, at value (Cost $10,298,819) | 10,299,263 | |||||||||||||||||||||||||||||
Cash | 109 | |||||||||||||||||||||||||||||
Receivable for fund shares sold | 105,677 | |||||||||||||||||||||||||||||
Dividends and interest receivable | 211,020 | |||||||||||||||||||||||||||||
Receivable for securities lending income | 7,700 | |||||||||||||||||||||||||||||
Other receivables and prepaid expenses | 132,781 | |||||||||||||||||||||||||||||
Total assets | 1,959,066,301 | |||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||
Payable for investments purchased | 1,093,715 | |||||||||||||||||||||||||||||
Payable for fund shares repurchased | 735,331 | |||||||||||||||||||||||||||||
Payable upon return of securities loaned | 10,301,752 | |||||||||||||||||||||||||||||
Payable to affiliates | ||||||||||||||||||||||||||||||
Accounting and legal services fees | 50,367 | |||||||||||||||||||||||||||||
Transfer agent fees | 36,466 | |||||||||||||||||||||||||||||
Distribution and service fees | 132 | |||||||||||||||||||||||||||||
Trustees' fees | 1,558 | |||||||||||||||||||||||||||||
Other liabilities and accrued expenses | 214,424 | |||||||||||||||||||||||||||||
Total liabilities | 12,433,745 | |||||||||||||||||||||||||||||
Net assets | $1,946,632,556 | |||||||||||||||||||||||||||||
Net assets consist of | ||||||||||||||||||||||||||||||
Paid-in capital | $1,148,733,599 | |||||||||||||||||||||||||||||
Undistributed net investment income | 6,347,781 | |||||||||||||||||||||||||||||
Accumulated net realized gain (loss) on investments | 174,209,679 | |||||||||||||||||||||||||||||
Net unrealized appreciation (depreciation) on investments | 617,341,497 | |||||||||||||||||||||||||||||
Net assets | $1,946,632,556 | |||||||||||||||||||||||||||||
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 ($366,342,771 ÷ 19,377,892 shares) 1 | $18.91 | |||||||||||||||||
Class C ($17,608,205 ÷ 939,867 shares) 1 | $18.73 | |||||||||||||||||
Class I ($21,012,084 ÷ 1,103,869 shares) | $19.03 | |||||||||||||||||
Class R2 ($723,711 ÷ 38,018 shares) | $19.04 | |||||||||||||||||
Class R4 ($471,203 ÷ 24,729 shares) | $19.05 | |||||||||||||||||
Class R6 ($977,214 ÷ 51,246 shares) | $19.07 | |||||||||||||||||
Class NAV ($1,539,497,368 ÷ 80,759,679 shares) | $19.06 | |||||||||||||||||
Maximum offering price per share | ||||||||||||||||||
Class A (net asset value per share ÷ 95%)2 | $19.91 |
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 9-30-17 (unaudited)
Investment income | ||||||||||||||||||||||||
Dividends | $12,537,285 | |||||||||||||||||||||||
Securities lending | 263,584 | |||||||||||||||||||||||
Interest | 207,729 | |||||||||||||||||||||||
Total investment income | 13,008,598 | |||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Investment management fees | 6,815,883 | |||||||||||||||||||||||
Distribution and service fees | 534,351 | |||||||||||||||||||||||
Accounting and legal services fees | 161,465 | |||||||||||||||||||||||
Transfer agent fees | 221,417 | |||||||||||||||||||||||
Trustees' fees | 17,418 | |||||||||||||||||||||||
State registration fees | 41,950 | |||||||||||||||||||||||
Printing and postage | 39,273 | |||||||||||||||||||||||
Professional fees | 45,849 | |||||||||||||||||||||||
Custodian fees | 125,145 | |||||||||||||||||||||||
Other | 15,504 | |||||||||||||||||||||||
Total expenses | 8,018,255 | |||||||||||||||||||||||
Less expense reductions | (79,981 | ) | ||||||||||||||||||||||
Net expenses | 7,938,274 | |||||||||||||||||||||||
Net investment income | 5,070,324 | |||||||||||||||||||||||
Realized and unrealized gain (loss) | ||||||||||||||||||||||||
Net realized gain (loss) on | ||||||||||||||||||||||||
Unaffiliated investments | 110,506,085 | |||||||||||||||||||||||
Affiliated investments | (3,152 | ) | ||||||||||||||||||||||
110,502,933 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of | ||||||||||||||||||||||||
Unaffiliated investments | 110,949,723 | |||||||||||||||||||||||
Affiliated investments | 693 | |||||||||||||||||||||||
110,950,416 | ||||||||||||||||||||||||
Net realized and unrealized gain | 221,453,349 | |||||||||||||||||||||||
Increase in net assets from operations | $226,523,673 |
STATEMENTS OF CHANGES IN NET ASSETS
Six months ended 9-30-17 | Year ended 3-31-17 | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||||||||||
Increase (decrease) in net assets | |||||||||||||||||||||||||||||||||||||||||||||
From operations | |||||||||||||||||||||||||||||||||||||||||||||
Net investment income | $5,070,324 | $10,838,848 | |||||||||||||||||||||||||||||||||||||||||||
Net realized gain | 110,502,933 | 119,734,708 | |||||||||||||||||||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 110,950,416 | 140,636,838 | |||||||||||||||||||||||||||||||||||||||||||
Increase in net assets resulting from operations | 226,523,673 | 271,210,394 | |||||||||||||||||||||||||||||||||||||||||||
Distributions to shareholders | |||||||||||||||||||||||||||||||||||||||||||||
From net investment income | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (855,968 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (56,175 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (2,001 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (1,064 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (3,723 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (9,806,198 | ) | ||||||||||||||||||||||||||||||||||||||||||
From net realized gain | |||||||||||||||||||||||||||||||||||||||||||||
Class A | — | (11,508,730 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class C | — | (556,546 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class I | — | (377,009 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R2 | — | (34,722 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R4 | — | (8,259 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class R6 | — | (20,753 | ) | ||||||||||||||||||||||||||||||||||||||||||
Class NAV | — | (54,659,622 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (77,890,770 | ) | ||||||||||||||||||||||||||||||||||||||||||
From fund share transactions | (251,083,925 | ) | 82,979,324 | ||||||||||||||||||||||||||||||||||||||||||
Total increase (decrease) | (24,560,252 | ) | 276,298,948 | ||||||||||||||||||||||||||||||||||||||||||
Net assets | |||||||||||||||||||||||||||||||||||||||||||||
Beginning of period | 1,971,192,808 | 1,694,893,860 | |||||||||||||||||||||||||||||||||||||||||||
End of period | $1,946,632,556 | $1,971,192,808 | |||||||||||||||||||||||||||||||||||||||||||
Undistributed net investment income | $6,347,781 | $1,277,457 |
Financial highlights
Class A Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.89 | $15.33 | $16.44 | $15.50 | $12.62 | $12.14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss)2 | 0.02 | 0.04 | 0.03 | 0.03 | (0.04 | ) | 0.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.00 | 2.12 | (0.24 | ) | 2.14 | 3.46 | 0.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.02 | 2.16 | (0.21 | ) | 2.17 | 3.42 | 0.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.04 | ) | (0.05 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | (1.23 | ) | (0.54 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.60 | ) | (0.90 | ) | (1.23 | ) | (0.54 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.91 | $16.89 | $15.33 | $16.44 | $15.50 | $12.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3,4 | 12.03 | 5 | 14.34 | (1.45 | ) | 14.68 | 27.27 | 4.25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $366 | $343 | $18 | $18 | $10 | $5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.10 | 6 | 1.11 | 1.19 | 1.33 | 1.51 | 2.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.09 | 6 | 1.10 | 1.18 | 1.30 | 1.30 | 1.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.24 | 6 | 0.27 | 0.20 | 0.16 | (0.29 | ) | 0.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 | 91 | 100 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.80 | $15.32 | $16.51 | $16.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss3 | (0.05 | ) | (0.08 | ) | (0.09 | ) | (0.04 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.98 | 2.12 | (0.25 | ) | 1.29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 1.93 | 2.04 | (0.34 | ) | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | (1.23 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $18.73 | $16.80 | $15.32 | $16.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)4,5 | 11.55 | 6 | 13.53 | (2.24 | ) | 8.20 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $18 | $17 | $1 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.85 | 7 | 1.86 | 2.50 | 7.03 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.84 | 7 | 1.85 | 1.94 | 2.05 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.51 | ) 7 | (0.48 | ) | (0.54 | ) | (0.42 | ) 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 | 8 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $16.98 | $15.41 | $16.53 | $15.58 | $12.67 | $12.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.05 | 0.08 | 0.08 | 0.10 | 0.01 | 0.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.00 | 2.13 | (0.24 | ) | 2.14 | 3.47 | 0.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.05 | 2.21 | (0.16 | ) | 2.24 | 3.48 | 0.56 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.08 | ) | (0.11 | ) | (0.06 | ) | (0.03 | ) | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | (1.23 | ) | (0.54 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.64 | ) | (0.96 | ) | (1.29 | ) | (0.57 | ) | (0.05 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.03 | $16.98 | $15.41 | $16.53 | $15.58 | $12.67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 12.07 | 4 | 14.70 | (1.17 | ) | 15.07 | 27.68 | 4.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $21 | $17 | $10 | $12 | $2 | $1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.84 | 5 | 0.85 | 0.90 | 1.50 | 2.62 | 5.88 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.83 | 5 | 0.84 | 0.88 | 0.94 | 0.94 | 0.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.51 | 5 | 0.47 | 0.50 | 0.62 | 0.09 | 0.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 | 91 | 100 |
1 | Six months ended 9-30-17. 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 R2 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $17.02 | $15.44 | $16.55 | $16.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.01 | 0.03 | 0.01 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.01 | 2.14 | (0.25 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.02 | 2.17 | (0.24 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.03 | ) | (0.02 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.59 | ) | (0.87 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.04 | $17.02 | $15.44 | $16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 11.93 | 6 | 14.30 | (1.63 | ) | 0.30 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.19 | 8 | 1.18 | 4.73 | 15.09 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 1.19 | 8 | 1.17 | 1.32 | 13.96 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.08 | 8 | 0.19 | 0.06 | — | 8,9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 | 10 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $17.01 | $15.43 | $16.55 | $16.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.05 | 0.07 | 0.04 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.99 | 2.14 | (0.25 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.04 | 2.21 | (0.21 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.07 | ) | (0.06 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.63 | ) | (0.91 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.05 | $17.01 | $15.43 | $16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 12.06 | 6 | 14.60 | (1.47 | ) | 0.30 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | — | 7 | — | 7 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 1.03 | 8 | 1.02 | 4.73 | 15.09 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.92 | 8 | 0.91 | 1.13 | 1.18 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.53 | 8 | 0.44 | 0.25 | 0.18 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 |
1 | Six months ended 9-30-17. 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. |
Class R6 Shares Period ended | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $17.01 | $15.42 | $16.55 | $16.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income3 | 0.05 | 0.09 | 0.10 | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.01 | 2.16 | (0.25 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.06 | 2.25 | (0.15 | ) | 0.05 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.10 | ) | (0.13 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.66 | ) | (0.98 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.07 | $17.01 | $15.42 | $16.55 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)5 | 12.18 | 6 | 14.87 | (1.09 | ) | 0.30 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1 | $1 | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.75 | 8 | 0.75 | 4.75 | 15.91 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.73 | 8 | 0.73 | 0.73 | 0.81 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.58 | 8 | 0.50 | 0.65 | 0.63 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 | 9 |
1 | Six months ended 9-30-17. 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 | 9-30-17 | 1 | 3-31-17 | 3-31-16 | 3-31-15 | 3-31-14 | 3-31-13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per share operating performance | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $17.00 | $15.42 | $16.55 | $15.58 | $12.67 | $12.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income2 | 0.05 | 0.10 | 0.10 | 0.12 | 0.04 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.01 | 2.14 | (0.25 | ) | 2.17 | 3.47 | 0.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.06 | 2.24 | (0.15 | ) | 2.29 | 3.51 | 0.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net investment income | — | (0.10 | ) | (0.13 | ) | (0.09 | ) | (0.06 | ) | (0.04 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
From net realized gain | — | (0.56 | ) | (0.85 | ) | (1.23 | ) | (0.54 | ) | (0.03 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total distributions | — | (0.66 | ) | (0.98 | ) | (1.32 | ) | (0.60 | ) | (0.07 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, end of period | $19.06 | $17.00 | $15.42 | $16.55 | $15.58 | $12.67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total return (%)3 | 12.18 | 4 | 14.81 | (1.09 | ) | 15.43 | 27.88 | 4.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and supplemental data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $1,539 | $1,592 | $1,666 | $2,078 | $1,452 | $1,013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios (as a percentage of average net assets): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses before reductions | 0.73 | 5 | 0.73 | 0.74 | 0.72 | 0.74 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses including reductions | 0.72 | 5 | 0.73 | 0.74 | 0.72 | 0.73 | 0.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.59 | 5 | 0.61 | 0.64 | 0.72 | 0.26 | 0.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover (%) | 37 | 94 | 90 | 109 | 91 | 100 |
1 | Six months ended 9-30-17. 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 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 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 scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. 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, including John Hancock Collateral Trust (JHCT), are valued at their respective NAVs each business day. 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.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market.
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.
The following is a summary of the values by input classification of the fund's investments as of September 30, 2017, by major security category or type:
Total value at 9-30-17 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | ||
Common stocks | |||||
Consumer discretionary | $371,407,011 | $371,407,011 | — | — | |
Consumer staples | 80,173,513 | 80,173,513 | — | — | |
Energy | 22,490,205 | 22,490,205 | — | — | |
Financials | 109,528,830 | 109,528,830 | — | — | |
Health care | 288,613,472 | 288,613,472 | — | — | |
Industrials | 148,028,151 | 148,028,151 | — | — | |
Information technology | 805,248,223 | 803,912,626 | $1,335,597 | — | |
Real estate | 35,737,919 | 35,737,919 | — | — | |
Securities lending collateral | 10,299,263 | 10,299,263 | — | — | |
Short-term investments | 87,082,427 | — | 87,082,427 | — | |
Total investments in securities | $1,958,609,014 | $1,870,190,990 | $88,418,024 | — |
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, 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 NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCT, an affiliate of the fund, which has a floating NAV 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 receives 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. Securities lending income received by the fund is net of fees retained by the securities lending agent. 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, 2017, the fund loaned common stocks valued at $10,085,821 and received $10,301,752 of cash collateral.
Line of credit. The fund may have the ability to 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 29, 2017, the fund and other affiliated funds have 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. Excluding commitments designated for a certain fund and subject to the need of all other affiliated funds, the fund can borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. A commitment fee payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 29, 2017, the fund had a similar agreement that enabled it to participate in a $1 billion unsecured committed line of credit. For the six months ended September 30, 2017, the fund had no borrowings under either line of credit. Commitment fees for the six months ended September 30, 2017, were $3,826.
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 charged daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
As of March 31, 2017, 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 typically 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, expiration of capital loss carryforwards and merger related transactions.
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 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 Sepember 30, 2017, 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.
For the six months ended Sepember 30, 2017, these expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $14,366 | Class R4 | $13 | |
Class C | 693 | Class R6 | 77 | |
Class I | 759 | Class NAV | 63,874 | |
Class R2 | 35 | Total | $79,817 |
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees incurred for the six months ended September 30, 2017 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, 2017 amounted to an annual rate of 0.02% 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 | 0.25% | — | 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 Rule12b-1 fees for Class R4 shares. The current waiver agreement expires on June 30, 2018, 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 $164 for Class R4 shares for the six months ended September 30, 2017.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $127,646 for the six months ended September 30, 2017. Of this amount, $20,554 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $85,870 was paid as sales commissions to broker-dealers and $21,222 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, 2017, CDSCs received by the Distributor amounted to $657 and $273 for Class A and Class C shares, respectively.
Transfer agent fees. The John Hancock Group of Funds has a complex-wide 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, 2017 were:
Class | Distribution and service fees | Transfer agent fees |
Class A | $445,914 | $201,870 |
Class C | 86,012 | 9,734 |
Class I | — | 9,667 |
Class R2 | 1,966 | 59 |
Class R4 | 459 | 22 |
Class R6 | — | 65 |
Total | $534,351 | $221,417 |
Trustee expenses. The Trust 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 or its affiliates, 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 | $10,618,546 | 1 | 1.250% | $369 |
Note 5 — Fund share transactions
Transactions in fund shares for the six months ended September 30, 2017 and for the year ended March 31, 2017 were as follows:
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A shares | ||||||||||||||||||||||||||
Sold | 485,244 | $8,686,758 | 749,612 | $11,943,328 | ||||||||||||||||||||||
Issued in reorganization (Note 9) | — | — | 21,468,382 | 331,978,464 | ||||||||||||||||||||||
Distributions reinvested | — | — | 761,147 | 11,919,564 | ||||||||||||||||||||||
Repurchased | (1,432,820 | ) | (25,652,064 | ) | (3,839,049 | ) | (61,321,302 | ) | ||||||||||||||||||
Net increase (decrease) | (947,576 | ) | ($16,965,306 | ) | 19,140,092 | $294,520,054 | ||||||||||||||||||||
Class C shares | ||||||||||||||||||||||||||
Sold | 28,745 | $512,165 | 62,516 | $988,888 | ||||||||||||||||||||||
Issued in reorganization (Note 9) | — | — | 1,055,831 | 16,315,435 | ||||||||||||||||||||||
Distributions reinvested | — | — | 31,916 | 498,210 | ||||||||||||||||||||||
Repurchased | (82,783 | ) | (1,468,961 | ) | (212,680 | ) | (3,370,383 | ) | ||||||||||||||||||
Net increase (decrease) | (54,038 | ) | ($956,796 | ) | 937,583 | $14,432,150 | ||||||||||||||||||||
Class I shares | ||||||||||||||||||||||||||
Sold | 235,817 | $4,261,874 | 943,754 | $15,295,486 | ||||||||||||||||||||||
Issued in reorganization (Note 9) | — | — | 281,166 | 4,371,431 | ||||||||||||||||||||||
Distributions reinvested | — | — | 26,643 | 419,092 | ||||||||||||||||||||||
Repurchased | (129,282 | ) | (2,318,187 | ) | (893,470 | ) | (14,057,354 | ) | ||||||||||||||||||
Net increase | 106,535 | $1,943,687 | 358,093 | $6,028,655 |
Six months ended 9-30-17 | Year ended 3-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class R2 shares | ||||||||||||||||||||||||||
Sold | 1,087 | $19,355 | 10,833 | $173,528 | ||||||||||||||||||||||
Issued in reorganization (Note 9) | — | — | 58,403 | 909,678 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,620 | 25,559 | ||||||||||||||||||||||
Repurchased | (22,415 | ) | (401,435 | ) | (17,571 | ) | (285,072 | ) | ||||||||||||||||||
Net increase (decrease) | (21,328 | ) | ($382,080 | ) | 53,285 | $823,693 | ||||||||||||||||||||
Class R4 shares | ||||||||||||||||||||||||||
Sold | 10,177 | $188,523 | 224 | $3,588 | ||||||||||||||||||||||
Issued in reorganization (Note 9) | — | — | 8,608 | 134,034 | ||||||||||||||||||||||
Distributions reinvested | — | — | 123 | 1,938 | ||||||||||||||||||||||
Repurchased | (376 | ) | (6,836 | ) | (88 | ) | (1,395 | ) | ||||||||||||||||||
Net increase | 9,801 | $181,687 | 8,867 | $138,165 | ||||||||||||||||||||||
Class R6 shares | ||||||||||||||||||||||||||
Sold | 276 | $4,925 | 47,217 | $771,958 | ||||||||||||||||||||||
Issued in reorganization (Note 9) | — | — | 362,123 | 5,636,589 | ||||||||||||||||||||||
Distributions reinvested | — | — | 1,300 | 20,472 | ||||||||||||||||||||||
Repurchased | (6,074 | ) | (108,712 | ) | (359,657 | ) | (5,600,153 | ) | ||||||||||||||||||
Net increase (decrease) | (5,798 | ) | ($103,787 | ) | 50,983 | $828,866 | ||||||||||||||||||||
Class NAV shares | ||||||||||||||||||||||||||
Sold | 948,685 | $16,563,400 | 1,762,330 | $28,246,290 | ||||||||||||||||||||||
Distributions reinvested | — | — | 4,095,668 | 64,465,820 | ||||||||||||||||||||||
Repurchased | (13,832,612 | ) | (251,364,730 | ) | (20,225,859 | ) | (326,504,369 | ) | ||||||||||||||||||
Net decrease | (12,883,927 | ) | ($234,801,330 | ) | (14,367,861 | ) | ($233,792,259 | ) | ||||||||||||||||||
Total net increase (decrease) | (13,796,331 | ) | ($251,083,925 | ) | 6,181,042 | $82,979,324 |
Affiliates of the fund owned 3%, 47%, 92% and 100% of shares of Class I, Class R4, Class R6 and Class NAV, respectively, on September 30, 2017. Such concentration of shareholders' capital could have a material effect on the fund if such shareholders redeem from the fund.
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $715,735,412 and $960,348,941, respectively, for the six months ended September 30, 2017.
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 NAV 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, 2017, funds within the John Hancock group of funds complex held 79.1% 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 Multimanager Lifestyle Growth Portfolio | 19.4% |
John Hancock Variable Insurance Trust Lifestyle Growth MVP | 14.6% |
John Hancock Funds II Multimanager Lifestyle Balanced Portfolio | 13.9% |
John Hancock Variable Insurance Trust Lifestyle Balanced MVP | 9.8% |
John Hancock Funds II Multimanager Lifestyle Aggressive Portfolio | 7.9% |
Note 9 — Reorganization
On March 30, 2016, the shareholders of John Hancock Select Growth Fund (the Acquired Portfolio) voted to approve an Agreement and Plan of Reorganization (the Agreement) which provided for an exchange of shares of the fund (the Acquiring Portfolio) with a value equal to the net assets transferred.
The Agreement provided for (a) the acquisition of all the assets, subject to all of the liabilities, of the Acquired Portfolio in exchange for shares of the Acquiring Portfolio with a value equal to the net assets transferred; (b) the liquidation of the Acquired Portfolio; and (c) the distribution to Acquired Portfolio's shareholders of the Acquiring Portfolio's shares. The reorganization was intended to consolidate the Acquired Portfolio with a portfolio with similar investment objectives and achieve economies of scale. As a result of the reorganization, the Acquiring Portfolio is the legal and accounting survivor.
Based on the opinion of tax counsel, the reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized by the Acquired Portfolio or its shareholders. Thus, the investments were transferred to the Acquiring Portfolio at the Acquired Portfolio's identified cost. All distributable amounts of net income and realized gains from the Acquired Portfolio were distributed prior to the reorganization. In addition, the expenses of the reorganization were borne by the Acquired Portfolio. The effective time of the reorganization occurred immediately after the close of regularly scheduled trading on the New York Stock Exchange (NYSE) on April 22, 2016. The following outlines the reorganization:
Acquiring Portfolio | Acquired Portfolio | Net asset value of the Acquired Portfolio | Appreciation of the Acquired Portfolio investment | Shares redeemed by the Acquired Portfolio | Shares issued by the Acquiring Portfolio | Acquiring Portfolio net assets prior to combination | Acquiring Portfolio total net assets after combination |
Strategic Growth Fund | Select Growth Fund | $359,345,631 | $15,546,164 | 18,553,593 | 23,234,513 | $1,692,096,430 | $2,051,442,061 |
See Note 5 for capital shares issued in connection with the above referenced reorganization.
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 19-22, 2017 in-person 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 22-24, 2017.
Approval of Advisory and Subadvisory Agreements
At in-person meetings held on June 19-22, 2017, the Board, including the Trustees who are not parties to any Agreement or 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 (including its various committees) 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 information received and considered by the Board in connection with the May and June meetings and throughout the year was both written and oral. 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. The Board considered the Advisory Agreement and the Subadvisory Agreements separately in the course of its review. In doing so, the Board noted the respective roles of the Advisor and Subadvisor in providing services to the fund.
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 did not treat any single factor as
determinative, and each Trustee may have attributed 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.
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 observed that the scope of services provided by the Advisor, and of the undertakings required of the Advisor in connection with those services, including maintaining and monitoring its own and the fund's compliance programs, risk management programs, liquidity management programs and cybersecurity programs, had expanded over time as a result of regulatory, market and other developments. 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. The Board also considered the significant risks assumed by the Advisor in connection with the services provided to the fund including entrepreneurial risk in sponsoring new funds and ongoing risks including investment, operational, enterprise, litigation, regulatory and compliance risk with respect to all funds.
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; |
(f) | the Advisor's initiatives intended to improve various aspects of the Trust's operations and investor experience with the fund; and |
(g) | 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 while it found the data provided by independent third-party generally useful it recognized its limitations, including in particular that the data may vary depending on the end date selected and the results of the performance comparisions may vary depending on the selection of the peer group. The Board noted that the fund underperformed its benchmark index for the one-, three- and five-year periods ended December 31, 2016. The Board also noted that the fund outperformed its peer group average for the one-, three- and five-year periods ended December 31, 2016. 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-, 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.
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 in light of the nature, extent and quality of the management and advisory and subadvisory services provided by the Advisor and the Subadvisor. 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 lower than the peer group median and that net 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 the fact that the fund's net total expenses had decreased from the previous year. The Board also took into account management's discussion with respect to the overall management fee, the fees of the Subadvisor, including the amount of the advisory fee retained by the Advisor after payment of the the subadvisory fee, in each case in light of the services rendered for those amounts and the risks undertaken by the Advisor. 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 noted that the fund has a voluntary fee waiver and/or expense reimbursement, which reduces certain expenses 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 in light of the nature, extent and quality of the services provided to the fund under the Advisory Agreement.
Profitability/Fall out 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 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; |
(j) | noted that the subadvisory fee for the fund is paid by the Advisor; |
(k) | considered the Advisor's ongoing costs and expenditures necessary to improve services, meet new regulatory and compliance requirements, and adapt to other challenges impacting the mutual fund industry; and |
(l) | 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 risks it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
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; 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 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 been in line with or outperformed the historical performance of comparable funds; |
(3) | the subadvisory fee is reasonable in relation to the level and quality of services being provided under the Subadvisory Agreement; 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.
Trustees Hassell H. McClellan, 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 6-20-17
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. |
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 New Opportunities Small Cap Core Small Cap Value Small Company Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Global Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Financial Industries Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Natural Resources Redwood Regional Bank Seaport Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Income Allocation Fund Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Small Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core 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 |
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 serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
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. | ||
MF403055 | 393SA 9/17 11/17 |
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 NCSR. 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. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Nominating and Governance Committee Charter”.
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 17, 2017 |
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 17, 2017 |
By: | /s/ Charles A. Rizzo | ||
Charles A. Rizzo | |||
Chief Financial Officer | |||
Date: | November 17, 2017 |