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 811-23748
John Hancock Asset-Based Lending Fund
(Exact name of registrant as specified in charter)
200 Berkeley Street, Boston, Massachusetts 02116 (Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
200 Berkeley Street
Boston, Massachusetts 02116
(Name and address of agent for service) Registrant's telephone number, including area code: 617-543-9634
Date of fiscal year end: | October 31 |
Date of reporting period: | October 31, 2022 |
ITEM 1. REPORT TO STOCKHOLDERS
Manulife Investment Management
John Hancock Investment Management
Head of Wealth and Asset Management,
United States and Europe
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 1 |
COUNTRY COMPOSITION AS OF 10/31/2022 (% of net assets) | |
United States | 79.2 |
Cayman Islands | 19.8 |
Bermuda | 1.0 |
TOTAL | 100.0 |
2 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
Rate (%) | Maturity date | Par value^ | Value | ||
Term loans 6.0% | $5,958,698 | ||||
(Cost $5,963,834) | |||||
Transportation 6.0% | 5,958,698 | ||||
Aeronautics Fund, Secured Term Loan (A) | 13.000 | 09-23-25 | 6,000,000 | 5,958,698 | |
Collateralized mortgage obligations 14.4% | $14,321,702 | ||||
(Cost $14,903,172) | |||||
Commercial and residential 9.8% | 9,694,027 | ||||
Angel Oak Mortgage Trust | |||||
Series 2022-3, Class A3 (B)(C) | 4.163 | 01-25-67 | 2,601,441 | 2,285,494 | |
New Residential Mortgage Loan Trust | |||||
Series 2018-1A, Class A1A (B)(C) | 4.000 | 12-25-57 | 2,456,234 | 2,301,971 | |
Series 2018-5A, Class A1 (B)(C) | 4.750 | 12-25-57 | 2,872,011 | 2,749,126 | |
Ready Capital Mortgage Financing LLC | |||||
Series 2021-FL6, Class AS (1 month LIBOR + 1.200%) (B)(D) | 4.786 | 07-25-36 | 2,500,000 | 2,357,436 | |
U.S. Government Agency 4.6% | 4,627,675 | ||||
Federal Home Loan Mortgage Corp. | |||||
Series 2021-DNA7, Class M2 (1 month SOFR + 1.800%) (B)(D) | 4.797 | 11-25-41 | 1,500,000 | 1,375,787 | |
Series 2022-DNA1, Class M1B (1 month SOFR + 1.850%) (B)(D) | 4.847 | 01-25-42 | 1,016,750 | 912,532 | |
Series 2022-HQA3, Class M1B (1 month SOFR + 3.550%) (B)(D) | 6.547 | 08-25-42 | 2,500,000 | 2,339,356 | |
Asset backed securities 35.8% | $35,555,323 | ||||
(Cost $36,167,560) | |||||
Asset backed securities 35.8% | 35,555,323 | ||||
American Credit Acceptance Receivables Trust | |||||
Series 2022-1, Class D (B) | 2.460 | 03-13-28 | 1,765,000 | 1,565,137 | |
Apidos CLO XXV | |||||
Series 2016-25A, Class A1R (3 month LIBOR + 1.170%) (B)(D) | 5.413 | 10-20-31 | 2,750,000 | 2,672,656 | |
Arbor Realty Commercial Real Estate Notes, Ltd. | |||||
Series 2022-FL2, Class D (1 month CME Tem SOFR + 4.350%) (B)(D) | 7.726 | 05-15-37 | 2,500,000 | 2,402,913 | |
BDS, Ltd. | |||||
Series 2020-FL5, Class B (1 month CME Term SOFR + 1.914%) (B)(D) | 5.330 | 02-16-37 | 1,000,000 | 971,278 | |
BPCRE, Ltd. | |||||
Series 2022-FL2, Class AS (1 month CME Term SOFR + 3.100%) (B)(D) | 6.516 | 01-16-37 | 1,000,000 | 991,256 | |
Carbone CLO, Ltd. | |||||
Series 2017-1A, Class A1 (3 month LIBOR + 1.140%) (B)(D) | 5.383 | 01-20-31 | 2,500,000 | 2,442,678 | |
Carvana Auto Receivables Trust | |||||
Series 2021-P3, Class A3 | 0.700 | 11-10-26 | 2,000,000 | 1,855,210 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 3 |
Rate (%) | Maturity date | Par value^ | Value | ||
Asset backed securities (continued) | |||||
Cedar Funding VII CLO, Ltd. | |||||
Series 2018-7A, Class A2 (3 month LIBOR + 1.130%) (B)(D) | 5.373 | 01-20-31 | 2,000,000 | $1,934,466 | |
Elmwood CLO X, Ltd. | |||||
Series 2021-3A, Class B (3 month LIBOR + 1.600%) (B)(D) | 5.843 | 10-20-34 | 2,500,000 | 2,345,940 | |
Flagship Credit Auto Trust | |||||
Series 2019-2, Class D (B) | 3.530 | 05-15-25 | 1,757,000 | 1,698,418 | |
GPMT, Ltd. | |||||
Series 2021-FL4, Class D (1 month LIBOR + 2.850%) (B)(D) | 6.422 | 12-15-36 | 2,000,000 | 1,822,362 | |
Hertz Vehicle Financing LLC | |||||
Series 2021-1A, Class A (B) | 1.210 | 12-26-25 | 3,500,000 | 3,179,963 | |
KKR CLO 18, Ltd. | |||||
Series 2018, Class AR (3 month LIBOR + 0.940%) (B)(D) | 5.134 | 07-18-30 | 943,132 | 923,835 | |
Magnetite XXI, Ltd. | |||||
Series 2019-21A, Class BR (3 month LIBOR + 1.350%) (B)(D) | 5.593 | 04-20-34 | 2,500,000 | 2,309,000 | |
Marlette Funding Trust | |||||
Series 2022-1A, Class B (B) | 2.340 | 04-15-32 | 2,500,000 | 2,326,592 | |
MF1, Ltd. | |||||
Series 2022-FL8, Class AS (1 month SOFR + 1.750%) (B)(D) | 4.644 | 02-19-37 | 1,500,000 | 1,422,146 | |
Starwood Commercial Mortgage Trust | |||||
Series 2021-FL2, Class C (1 month LIBOR + 2.100%) (B)(D) | 5.543 | 04-18-38 | 1,000,000 | 938,122 | |
TPG Real Estate Finance Trust | |||||
Series 2019-FL3, Class B (1 month CME Term SOFR + 1.864%) (B)(D) | 5.240 | 10-15-34 | 2,000,000 | 1,929,910 | |
Westlake Automobile Receivable Trust | |||||
Series 2022-1A, Class D (B) | 3.490 | 03-15-27 | 2,000,000 | 1,823,441 | |
Yield (%) | Shares | Value | |||
Short-term investments 43.9% | $43,584,454 | ||||
(Cost $43,584,454) | |||||
Short-term funds 43.9% | 43,584,454 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 2.9329(E) | 43,584,454 | 43,584,454 |
Total investments (Cost $100,619,020) 100.1% | $99,420,177 | ||||
Other assets and liabilities, net (0.1%) | (124,908) | ||||
Total net assets 100.0% | $99,295,269 |
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. |
4 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Security Abbreviations and Legend | |
CME | Chicago Mercantile Exchange |
LIBOR | London Interbank Offered Rate |
SOFR | Secured Overnight Financing Rate |
(A) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. Refer to Note 2 to the financial statements. |
(B) | These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $48,021,815 or 48.4% of the fund’s net assets as of 10-31-22. |
(C) | Variable or floating rate security, the interest rate of which adjusts periodically based on a weighted average of interest rates and prepayments on the underlying pool of assets. The interest rate shown is the current rate as of period end. |
(D) | Variable rate obligation. The coupon rate shown represents the rate at period end. |
(E) | The rate shown is the annualized seven-day yield as of 10-31-22. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 5 |
Assets | |
Unaffiliated investments, at value (Cost $100,619,020) | $99,420,177 |
Dividends and interest receivable | 218,624 |
Receivable from affiliates | 81,880 |
Other assets | 556,807 |
Total assets | 100,277,488 |
Liabilities | |
Accrued organization expense | 395,518 |
Accrued offering expense | 285,772 |
Payable to affiliates | |
Accounting and legal services fees | 5,528 |
Distribution and service fees | 46 |
Other liabilities and accrued expenses | 295,355 |
Total liabilities | 982,219 |
Net assets | $99,295,269 |
Net assets consist of | |
Paid-in capital | $100,036,815 |
Total distributable earnings (loss) | (741,546) |
Net assets | $99,295,269 |
Net asset value per share | |
Class I ($99,196,240 ÷ 5,000,000 shares) | $19.84 |
Class D ($49,560 ÷ 2,500 shares) | $19.82 |
Class S ($49,469 ÷ 2,500 shares) | $19.79 |
6 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Investment income | |
Interest | $844,280 |
Dividends | 202,614 |
Total investment income | 1,046,894 |
Expenses | |
Investment management fees | 412,275 |
Distribution and service fees | 168 |
Accounting and legal services fees | 5,528 |
Transfer agent fees | 39,890 |
Trustees’ fees | 156,034 |
Custodian fees | 37,460 |
Printing and postage | 5,722 |
Professional fees | 161,667 |
Offering and organization costs | 793,264 |
Other | 54,188 |
Total expenses | 1,666,196 |
Less expense reductions | (1,072,683) |
Net expenses | 593,513 |
Net investment income | 453,381 |
Realized and unrealized gain (loss) | |
Net realized gain (loss) on | |
Unaffiliated investments | (59,269) |
(59,269) | |
Change in net unrealized appreciation (depreciation) of | |
Unaffiliated investments | (1,198,843) |
(1,198,843) | |
Net realized and unrealized loss | (1,258,112) |
Decrease in net assets from operations | $(804,731) |
1 Period from 7-11-22 (commencement of operations) to 10-31-22. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 7 |
Period ended 10-31-221 | |
Increase (decrease) in net assets | |
From operations | |
Net investment income | $453,381 |
Net realized loss | (59,269) |
Change in net unrealized appreciation (depreciation) | (1,198,843) |
Decrease in net assets resulting from operations | (804,731) |
From fund share transactions | 100,000,000 |
Total increase | 99,195,269 |
Net assets | |
Beginning of period | 100,000 |
End of period | $99,295,269 |
1 | Period from 7-11-22 (commencement of operations) to 10-31-22. |
8 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS I SHARES Period ended | 10-31-221 |
Per share operating performance | |
Net asset value, beginning of period | $20.00 |
Net investment income2 | 0.09 |
Net realized and unrealized gain (loss) on investments | (0.25) |
Total from investment operations | (0.16) |
Net asset value, end of period3 | $19.84 |
Total return (%)4 | (0.80)5 |
Ratios and supplemental data | |
Net assets, end of period (in millions) | $99 |
Ratios (as a percentage of average net assets): | |
Expenses before reductions | 3.906 |
Expenses including reductions | 1.946 |
Net investment income | 1.487 |
Portfolio turnover (%) | 17 |
1 | Period from 7-11-22 (commencement of operations) to 10-31-22. |
2 | Based on average monthly shares outstanding. |
3 | The fund is a continuously offered closed-end fund, the shares of which are offered at net asset value. No secondary market for the fund’s shares exists. |
4 | Total returns would have been lower had certain expenses not been reduced during the period. |
5 | Not annualized. |
6 | Annualized. Certain expenses are presented unannualized. |
7 | Annualized. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 9 |
CLASS D SHARES Period ended | 10-31-221 |
Per share operating performance | |
Net asset value, beginning of period | $20.00 |
Net investment income2 | 0.08 |
Net realized and unrealized gain (loss) on investments | (0.26) |
Total from investment operations | (0.18) |
Net asset value, end of period3 | $19.82 |
Total return (%)4,5 | (0.90)6 |
Ratios and supplemental data | |
Net assets, end of period (in millions) | $—7 |
Ratios (as a percentage of average net assets): | |
Expenses before reductions | 4.158 |
Expenses including reductions | 2.198 |
Net investment income | 1.249 |
Portfolio turnover (%) | 17 |
1 | Period from 7-11-22 (commencement of operations) to 10-31-22. |
2 | Based on average monthly shares outstanding. |
3 | The fund is a continuously offered closed-end fund, the shares of which are offered at net asset value. No secondary market for the fund’s shares exists. |
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 | Less than $500,000. |
8 | Annualized. Certain expenses are presented unannualized. |
9 | Annualized. |
10 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS S SHARES Period ended | 10-31-221 |
Per share operating performance | |
Net asset value, beginning of period | $20.00 |
Net investment income2 | 0.04 |
Net realized and unrealized gain (loss) on investments | (0.25) |
Total from investment operations | (0.21) |
Net asset value, end of period3 | $19.79 |
Total return (%)4,5 | (1.05)6 |
Ratios and supplemental data | |
Net assets, end of period (in millions) | $—7 |
Ratios (as a percentage of average net assets): | |
Expenses before reductions | 4.758 |
Expenses including reductions | 2.798 |
Net investment income | 0.649 |
Portfolio turnover (%) | 17 |
1 | Period from 7-11-22 (commencement of operations) to 10-31-22. |
2 | Based on average monthly shares outstanding. |
3 | The fund is a continuously offered closed-end fund, the shares of which are offered at net asset value. No secondary market for the fund’s shares exists. |
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 | Less than $500,000. |
8 | Annualized. Certain expenses are presented unannualized. |
9 | Annualized. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 11 |
12 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT |
Total value at 10-31-22 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |
Investments in securities: | ||||
Assets | ||||
Term loans | $5,958,698 | — | — | $5,958,698 |
Collateralized mortgage obligations | 14,321,702 | — | $14,321,702 | — |
Asset backed securities | 35,555,323 | — | 35,555,323 | — |
Short-term investments | 43,584,454 | $43,584,454 | — | — |
Total investments in securities | $99,420,177 | $43,584,454 | $49,877,025 | $5,958,698 |
Term loans | |
Balance as of 7-11-22 | — |
Purchases | $5,962,500 |
Sales | — |
Realized gain (loss) | — |
Net amortization of (premium) discount | 1,334 |
Change in unrealized appreciation (depreciation) | (5,136) |
Balance as of 10-31-22 | $5,958,698 |
Change in unrealized appreciation (depreciation) at period end1 | $(5,136) |
1 | Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at period end. This balance is included in change in unrealized appreciation (depreciation) on the Statement of operations. |
ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 13 |
Fair Value at 10-31-22 | Valuation technique | Significant unobservable inputs | Input | |
Term Loan | $5,958,698 | Recent transaction | Transaction price | $99.31 |
Significant Unobservable Input | Impact to Valuation if input had increased | Impact to Valuation if input had decreased |
Transaction price | Increase | Decrease |
14 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 15 |
Class | Expense reduction |
Class I | $1,071,612 |
Class D | 536 |
Class | Expense reduction |
Class S | $535 |
Total | $1,072,683 |
16 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT |
Class | Distribution and service fees |
Class D | $38 |
Class S | 130 |
Total | $168 |
ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 17 |
Period ended 10-31-221 | ||
Shares | Amount | |
Class I shares | ||
Sold | 4,995,000 | $99,900,000 |
Net increase | 4,995,000 | $99,900,000 |
Class D shares | ||
Sold | 2,500 | $50,000 |
Net increase | 2,500 | $50,000 |
Class S shares | ||
Sold | 2,500 | $50,000 |
Net increase | 2,500 | $50,000 |
Total net increase | 5,000,000 | $100,000,000 |
1 | Period from 7-11-22 (commencement of operations) to 10-31-22. |
18 | JOHN HANCOCK Asset-Based Lending Fund | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK Asset-Based Lending Fund | 19 |
December 22, 2022
20 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 21 |
22 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 23 |
24 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 25 |
26 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
State Street Bank and Trust Company
One Lincoln Street
Boston, Massachusetts 02111
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 27 |
(a) | the advisory agreement between the New Fund and John Hancock Investment Management LLC (the Advisor) (the Advisory Agreement); and |
(b) | the subadvisory agreement between the Advisor and Marathon Asset Management LP (the Subadvisor) with respect to the New Fund (the Subadvisory Agreement). |
28 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
(a) | the skills and competency with which the Advisor has in the past managed the affairs and subadvisory relationships for other funds in the John Hancock Fund Complex, the Advisor’s oversight and monitoring of the subadvisors’ investment performance and compliance programs, such as the subadvisors’ 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 and other 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 fund industry developments; |
(d) | the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the New Fund, as well as the Advisor’s oversight of any securities lending activity, its monitoring of class action litigation and collection of class action settlements on behalf of the New Fund, and bringing loss recovery actions on behalf of the New 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 New Fund; |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 29 |
(f) | the Advisor’s initiatives intended to improve various aspects of the New Fund’s operations and investor experience with the New Fund; and |
(g) | the Advisor’s reputation and experience in serving as an investment advisor to other funds in the John Hancock Fund Complex, and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments. |
(a) | reviewed financial information of the Advisor; |
(b) | noted that because the New Fund had not yet commenced operations, no actual revenue, cost or profitability data was available, although the Board received information from the Advisor on its projected profitability with respect to the New 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; |
30 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
(e) | considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the New Fund 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 New Fund 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 will also provide administrative services to the New Fund on a cost basis pursuant to an administrative services agreement; |
(g) | noted that affiliates of the Advisor will provide distribution services to the New Fund, and that the New Fund’s distributor also receives Rule 12b-1 payments to support distribution of the New Fund; |
(h) | noted that the Advisor will derive reputational and other indirect benefits from providing advisory services to the New Fund; |
(i) | noted that the subadvisory fee for the New Fund will be paid by the Advisor and is negotiated at arm’s length; and |
(j) | considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it will provide to the New Fund and the risks that it assumes as Advisor, including entrepreneurial, operational, reputational, litigation and regulatory risk. |
(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 New 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. This waiver is allocated proportionally among the participating portfolios; |
(b) | reviewed the proposed advisory fee structure for the New Fund and concluded that although economies of scale cannot be measured with precision, these arrangements will permit shareholders of the New Fund to benefit from economies of scale if the New Fund grows. The Board also took into account management’s discussion of the New Fund’s advisory fee structure, including incentive fee; and |
(c) | the Board also considered the potential effect of the New Fund’s future growth in size on its performance and fees. The Board also noted that if the New Fund’s assets increase over time, the New Fund may realize other economies of scale. |
(a) | information relating to the Subadvisor’s business; |
(b) | the performance of comparable funds, as applicable, managed by the New Fund’s Subadvisor; |
(c) | the proposed subadvisory fee for the New Fund; and |
(d) | Information relating to the nature and scope of any material relationships and their significance to the New Fund’s Advisor and Subadvisor. |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 31 |
32 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
(1) | the Subadvisor has extensive experience and demonstrated skills as a manager, and may reasonably be expected to provide a high quality of investment management services to the New Fund; |
(2) | the Subadvisor provided performance information for a composite of comparable accounts over various time periods; |
(3) | the proposed subadvisory fees are reasonable in relation to the level and quality of services to be provided under the Subadvisory Agreement; and |
(4) | that the subadvisory fees will be paid by the Advisor not the New Fund. |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 33 |
Independent Trustees | ||
Name, year of birth Position(s) held with Fund Principal occupation(s) and other directorships during past 5 years | Trustee of the Fund since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2022 | 183 |
Trustee and Chairperson of the Board | ||
Director/Trustee, Virtus Funds (2008-2020); Director, The Barnes Group (2010-2021); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2005) and Chairperson of the Board (since 2017) of various trusts within the John Hancock Fund Complex. | ||
William H. Cunningham,2 Born: 1944 | 2022 | 183 |
Trustee | ||
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000). Trustee of various trusts within the John Hancock Fund Complex (since 1986). | ||
Grace K. Fey, Born: 1946 | 2022 | 183 |
Trustee | ||
Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988–2007); Director, Fiduciary Trust (since 2009). Trustee of various trusts within the John Hancock Fund Complex (since 2008). |
Non-Independent Trustees3 | ||
Name, year of birth Position(s) held with Fund Principal occupation(s) during past 5 years | Trustee of the Fund since1 | Number of John Hancock funds overseen by Trustee |
Andrew G. Arnott, Born: 1971 | 2022 | 183 |
President and Non-Independent Trustee | ||
Global Head of Retail for Manulife (since 2022); Head of Wealth and Asset Management, United States and Europe, for John Hancock and Manulife (since 2018); Director and Executive Vice President, John Hancock Investment Management LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Variable Trust Advisers LLC (since 2006, including prior positions); President, John Hancock Investment Management Distributors LLC (since 2004, including prior positions); President of various trusts within the John Hancock Fund Complex (since 2007, including prior positions). Trustee of various trusts within the John Hancock Fund Complex (since 2017). |
34 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
Principal officers who are not Trustees | |
Name, year of birth Position(s) held with Fund Principal occupation(s) during past 5 years | Current Position(s) with the Fund since |
Charles A. Rizzo, Born: 1957 | 2022 |
Chief Financial Officer | |
Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2008); Chief Financial Officer of various trusts within the John Hancock Fund Complex (since 2007). | |
Salvatore Schiavone, Born: 1965 | 2022 |
Treasurer | |
Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2007); Treasurer of various trusts within the John Hancock Fund Complex (since 2007, including prior positions). | |
Christopher (Kit) Sechler, Born: 1973 | 2022 |
Secretary and Chief Legal Officer | |
Vice President and Deputy Chief Counsel, John Hancock Investment Management (since 2015); Assistant Vice President and Senior Counsel (2009–2015), John Hancock Investment Management; Assistant Secretary of John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2009); Chief Legal Officer and Secretary of various trusts within the John Hancock Fund Complex (since 2009, including prior positions). | |
Trevor Swanberg, Born: 1979 | 2022 |
Chief Compliance Officer | |
Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (since 2020); Deputy Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (2019–2020); Assistant Chief Compliance Officer, John Hancock Investment Management LLC and John Hancock Variable Trust Advisers LLC (2016–2019); Vice President, State Street Global Advisors (2015–2016); Chief Compliance Officer of various trusts within the John Hancock Fund Complex (since 2016, including prior positions). |
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal. |
2 | Member of the Audit Committee. |
3 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
ANNUAL REPORT | JOHN HANCOCK ASSET-BASED LENDING FUND | 35 |
Andrew G. Arnott†
William H. Cunningham*
Grace K. Fey*
President
Chief Financial Officer
Treasurer
Secretary and Chief Legal Officer
Chief Compliance Officer
Louis Hanover
Andrew Springer
You can also contact us: | ||
800-225-6020 | Regular mail: | Express mail: |
jhinvestments.com | State Street Bank and Trust Company One Lincoln Street Boston, Massachusetts 02111 | State Street Bank and Trust Company One Lincoln Street Boston, Massachusetts 02111 |
36 | JOHN HANCOCK ASSET-BASED LENDING FUND | ANNUAL REPORT |
GOVERNANCE FUNDS
with a heritage of financial stewardship dating back to 1862. Helping
our shareholders pursue their financial goals is at the core of everything
we do. It’s why we support the role of professional financial advice
and operate with the highest standards of conduct and integrity.
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising
standards and serve the best interests of our shareholders.
a diverse set of investments backed by some of the world’s best
managers, along with strong risk-adjusted returns across asset classes.
200 Berkeley Street, Boston, MA 02116-5010, 800-225-5291, jhinvestments.com
P16A 10/22 |
ITEM 2. CODE OF ETHICS.
As of the end of the period, October 31, 2022, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Principal Executive Officer, Principal Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the "Covered Officers"). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Grace K. Fey is the audit committee financial expert, and is "independent", pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees for John Hancock Asset-Based Lending Fund billed for professional services rendered by the principal accountant(s) for the audit of the registrant's annual financial statements or services that are normally provided by the accountant(s) in connection with statutory and regulatory filings or engagements amounted to $70,000 for the fiscal year ended October 31, 2022. John Hancock Asset-Based Lending Fund commenced operations on July 11, 2022. These fees were billed to the registrant and were approved by the registrant's audit committee.
(b) Audit-Related Services
The aggregate fees for John Hancock Asset-Based Lending Fund for audit-related fees amounted to $0 for the fiscal year ended October 31, 2022. These fees, if any, were billed to the registrant or to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant ("control affiliates").
(c) Tax Fees
The aggregate fees for John Hancock Asset-Based Lending Fund billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning ("tax fees") amounted to $15,750 for the fiscal year ended October 31, 2022. The nature of the services comprising the tax fees was the review of the registrant's tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrant's audit committee.
(d) All Other Fees
All other fees for John Hancock Asset-Based Lending Fund billed to the registrant or control affiliates for products and services provided by the principal accountant were $0 for the fiscal year ended October 31, 2022.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
John Hancock Asset-Based Lending Fund's (fund) Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the "Auditor") relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The fund's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service
provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance are subject to specific pre- approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f)According to the registrant's principal accountant, for the fiscal year ended October 31, 2022, the percentage of hours spent on the audit of the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%.
(g)The aggregate non-audit fees billed by the registrant's accountant(s) for services rendered to the registrant and rendered to the registrant's control affiliates were $3,037,604 for the fiscal year ended October 31, 2022.
(h)The audit committee of the registrant has considered the non-audit services provided by the registrant's principal accountant(s) to the control affiliates and has determined that the services that were not pre-approved are compatible with maintaining the principal accountant(s)' independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows:
Grace K. Fey - Chairperson
William H. Cunningham
Hassell H. McClellan
ITEM 6. SCHEDULE OF INVESTMENTS.
(a)Not applicable.
(b)Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED- END MANAGEMENT INVESTMENT COMPANIES.
See attached exhibit - Proxy Voting Policies and Procedures.
ITEM 8.
PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Information about the Marathon Asset Management LP ("Marathon") portfolio managers
Below is a list of the Marathon portfolio managers who share joint responsibility for the day-to-day investment management of the Fund. It provides a brief summary of their business careers over the past five years. The information provided is as of the filing date of this N-CSR.
Ed Cong
Portfolio Manager
Managed the Fund since inception in 2022
Joined Marathon in 2006
Louis Hanover
Co-Founder, Managing Partner and Chief Investment Officer
Managed the Fund since inception in 2022
Co-Founded Marathon in 1998
Andrew Springer
Senior Portfolio Manager
Managed the Fund since inception in 2022
Joined Marathon in 2003
Other Accounts the Portfolio Managers are Managing
The table below indicates, for each portfolio manager, information about the accounts over which the portfolio manager has day-to-day investment responsibility. All information on the number of accounts and total assets in the table is as of October 31, 2022. For purposes of the table, "Other Pooled Investment Vehicles" may include investment partnerships and group trusts, and "Other Accounts" may include separate accounts for institutions or individuals, insurance company general or separate accounts, pension funds and other similar institutional accounts.
| Registered Investment | Other Pooled |
|
| ||
| Companies | Investment Vehicles | Other Accounts | |||
| Number | Total | Number | Total | Number | Total |
| of | Assets | of | Assets | of | Assets |
| Accounts | $Million | Accounts | $Million | Accounts | $Million |
Ed Cong | 1 | $100 | 24 | $7,183 | 4 | $499 |
|
|
|
|
|
|
|
Louis | 7 | $811 | 96 | $19,886 | 24 | $2,924 |
Hanover |
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew | 1 | $100 | 34 | $8,559 | 4 | $499 |
|
|
|
|
|
| |
Springer |
|
|
|
|
|
|
Number and value of accounts within the total accounts that are subject to a performance-based advisory fee:
| Registered Investment |
| Other Pooled |
|
|
|
| ||||
| Companies |
| Investment Vehicles |
| Other Accounts | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
| Number of |
| Total |
| Number |
| Total |
| Number |
| Total |
|
| Assets |
| of |
| Assets |
| of |
| Assets | |
| Accounts |
| $Million |
| Accounts |
| $Million |
| Accounts |
| $Million |
Ed Cong | 1 |
| $100 |
| 21 |
| $5,183 |
| 4 |
| $499 |
|
|
|
|
|
|
|
|
|
|
|
|
Louis | 2 |
| $249 |
| 69 |
| $14,510 |
| 11 |
| $1,607 |
Hanover |
|
|
|
|
|
|
|
|
|
|
|
Andrew | 1 |
| $100 |
| 30 |
| $6,525 |
| 4 |
| $499 |
Springer |
|
|
|
|
|
|
|
|
|
|
|
Conflicts of Interest. Material conflicts of interest exist whenever a portfolio manager simultaneously manages multiple accounts. A conflict of interest may arise as a result of the portfolio manager being responsible for multiple accounts, including the Fund, which may have different investment guidelines and objectives. In addition to the Fund, these accounts may include accounts of other registered investment companies for which the Subadvisor serves as sub-advisor, private pooled investment vehicles and other accounts. The Subadvisor has adopted aggregation and allocation of investments procedures designed to ensure that all of its clients are treated fairly and equitably over time and to prevent this form of conflict from influencing the allocation of investment opportunities among its clients. As a general matter, the Subadvisor will offer clients the right to participate in all investment opportunities that it determines are appropriate for the client in view of relative amounts of capital available for new investments, each client's investment program, and the then current portfolios of its clients at the time an allocation decision is made. As a result, in certain situations priority or weighted allocations can be expected to occur in respect of certain accounts, including but not limited to situations where clients have differing: (A) portfolio concentrations with respect to geography, asset class, issuer, sector or rating, (B) investment restrictions, (C) tax or regulatory limitations, (D) leverage limitations or volatility targets, (E) ramp up or ramp down scenarios or (F) counterparty relationships. The Subadvisor maintains conflicts of interest policies and procedures containing provisions designed to prevent potential conflicts related to personal trading, allocation, and fees among other potential conflicts of interest. Such potential conflicts and others are disclosed in Subadvisor's Form ADV Part 2A filing.
Compensation of Portfolio Managers. The Subadvisor has adopted a system of compensation for portfolio managers and others involved in the investment process that is applied systematically among investment professionals. The Advisor pays the Subadvisor a fee consisting of two components – a base management fee based on the assets under management and an incentive fee based upon pre-incentive fee net investment income attributable to each Share Class, and shall be calculated and accrued on a monthly basis while being determined and payable in arrears as of the end of each fiscal quarter, and is subject to a hurdle rate, expressed as a rate of return based on a Class's average beginning monthly net assets for the applicable quarterly payment period, equal to 1.25% per quarter (or an annualized hurdle rate of 5%) subject to a "catch up" feature, as set forth in the Subadvisory Agreement between the Subadvisor and the Advisor. The Subadvisor pays its investment professionals out of its total revenues and other resources, including the sub-advisory fees earned with respect to the Fund. Such compensation consists of an annual salary and a discretionary year-end bonus for the Subadvisor's employees.
Share Ownership by Portfolio Managers. For purposes of these tables, "similarly managed accounts" include all accounts that are managed (i) by the same portfolio managers that are jointly and primarily responsible for the day-to-day management of the Fund; and (ii) with an investment style, objective, policies and strategies substantially similar to those that are used to manage the Fund.
| Range of Beneficial | Range of Beneficial | |
Portfolio | Ownership in the | Ownership in Similarly | |
Manager | Fund | Managed Accounts | |
|
|
| |
Ed Cong | None | None | |
| |||
|
|
| |
Louis Hanover | None | None | |
| |||
|
|
| |
Andrew | None | None | |
Springer | |||
|
|
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a)Not applicable.
(b)Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a)The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached "John Hancock Funds – Nominating and Governance Committee Charter".
ITEM 11. CONTROLS AND PROCEDURES.
(a)Based upon their evaluation of the registrant's disclosure controls and procedures as
conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b)There were no changes in the registrant's internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Asset-Based Lending Fund
By: | /s/ Andrew Arnott |
| ------------------------------ |
| Andrew Arnott |
| President |
Date: | December 22, 2022 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Andrew Arnott |
| ------------------------------- |
| Andrew Arnott |
| President |
Date: | December 22, 2022 |
By: | /s/ Charles A. Rizzo |
| -------------------------------- |
| Charles A. Rizzo |
| Chief Financial Officer |
Date: | December 22, 2022 |