| |
| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| Washington, D.C. 20549 |
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| FORM N-CSR |
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| CERTIFIED SHAREHOLDER REPORT OF REGISTERED |
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| MANAGEMENT INVESTMENT COMPANIES |
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| Investment Company Act file number 811-4630 |
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| John Hancock Investment Trust III |
| (Exact name of registrant as specified in charter) |
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| 601 Congress Street, Boston, Massachusetts 02210 |
| (Address of principal executive offices) (Zip code) |
| |
| Salvatore Schiavone |
| Treasurer |
| 601 Congress Street |
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| Boston, Massachusetts 02210 |
| (Name and address of agent for service) |
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| Registrant's telephone number, including area code: 617-663-4497 |
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| Date of fiscal year end: | October 31 |
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| Date of reporting period: | October 31, 2011 |
Item 1. Schedule of Investments.
A look at performance
Total returns for the period ended October 31, 2011
| | | | | | | | | |
| | Average annual total returns (%) | | | Cumulative total returns (%) | |
| | with maximum sales charge | | | with maximum sales charge | |
|
| | | | | Since | | | | | Since |
| | 1-year | 5-year | 10-year | inception | | 1-year | 5-year | 10-year | inception |
|
| Class A | –20.42 | 2.54 | — | 9.581 | | –20.42 | 13.34 | — | 79.591 |
|
| Class B | –21.06 | 2.48 | — | 9.661 | | –21.06 | 13.05 | — | 80.411 |
|
| Class C | –17.74 | 2.83 | — | 9.651 | | –17.74 | 14.98 | — | 80.311 |
|
| Class i2 | –16.12 | 3.66 | — | 10.631 | | –16.12 | 19.67 | — | 90.841 |
|
| Class NAV 2 | –15.82 | — | — | 0.843 | | –15.82 | — | — | 4.113 |
|
Performance figures assume all distributions are reinvested. Public offering price (POP) figures reflect maximum sales charge on Class A shares of 5%, and the applicable contingent deferred sales charge (CDSC) on Class B shares and Class C shares. The Class B shares’ CDSC declines annually between years 1 to 6 according to the following schedule: 5, 4, 3, 3, 2, 1%. No sales charge will be assessed after the sixth year. Class C shares held for less than one year are subject to a 1% CDSC. Sales charge is not applicable for Class I and Class NAV shares.
The expense ratios of the Fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the Fund and may differ from those disclosed in the Financial highlights tables in this report. The fee waivers and expense limitations are contractual at least until 2-29-12 for Class I shares. Had the fee waivers and expense limitations not been in place gross expenses would apply. For all other classes, the net expenses equal the gross expenses. The expense ratios are as follows:
| | | | | |
| | Class A | Class B | Class C | Class I | Class NAV |
| Net (%) | 1.67 | 2.44 | 2.43 | 1.53 | 1.11 |
| Gross (%) | 1.67 | 2.44 | 2.43 | 1.71 | 1.11 |
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, 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 1–800–225–5291 or visit the Fund’s Web site at www.jhfunds.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on 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.
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| 6 | Greater China Opportunities Fund | Annual report |
| | | | |
| | | Without | With maximum | |
| | Start date | sales charge | sales charge | Index |
|
| Class B 4 | 6-9-05 | $18,041 | $18,041 | $17,501 |
|
| Class C4 | 6-9-05 | 18,031 | 18,031 | 17,501 |
|
| Class I 2 | 6-9-05 | 19,084 | 19,084 | 17,501 |
|
| Class NAV 2 | 12-28-06 | 10,411 | 10,411 | 11,724 |
|
Performance of the classes will vary based on the difference in sales charges paid by shareholders investing in the different classes and the fee structure of those classes.
MSCI Golden Dragon Index (gross of foreign withholding taxes on dividends) is an unmanaged free float-adjusted market capitalization index that is designed to measure equity market performance in the China region. The MSCI Golden Dragon Index consists of the following Indexes: China, Hong Kong and Taiwan.
It is not possible to invest directly in an index. Index figures do not reflect sales charges or direct expenses, which would have resulted in lower values if they did.
1 From 6-9-05.
2 For certain types of investors, as described in the Fund’s prospectuses.
3 From 12-28-06.
4 No contingent deferred sales charge applicable.
| |
| Annual report | Greater China Opportunities Fund | 7 |
Management’s discussion of
Fund performance
By John Hancock Asset Management a division of Manulife Asset Management (North America) Limited
Stocks in the Greater China region declined during the 12 months ended October 31, 2011. Chinese stocks weighed particularly heavily on the index, which fell sharply in August and September. Investor concern about a potential hard landing in China was one negative factor. Falling markets in the United States and Europe also hampered share prices in the Greater China region, as worries intensified about the European sovereign debt crisis and slower growth in the U.S. Despite these challenges, the benchmark index trimmed its losses in October, as the Chinese central bank added liquidity to the banking system and interbank rates eased. During the year, John Hancock Greater China Opportunities Fund’s Class A shares returned –16.24% at net asset value. By comparison, the Fund’s benchmark, the MSCI Golden Dragon Index, finished with a return of –10.33%, while the average China region fund monitored by Morningstar, Inc. returned –18.33%. Fund performance was curbed versus the benchmark by unfavorable stock selection and an overweighting in industrials, as well as by an underweighting in utilities. The Fund’s largest individual detractor was Chinese shipbuilder China Rongsheng Heavy Industries Group Holdings Ltd., whose stock fell sharply as anticipated orders were postponed. Other notable detractors included Taiwan-based funeral service firm Lung Yen Life Service Co. Ltd., J Touch Corp., a Taiwanese manufacturer of touchscreens, GCL-Poly Energy Holdings Ltd., a Chinese maker of polysilicon for solar panels, and Ruentex Industries Ltd., a Taiwan-based textile company. None of the detractors we have mentioned was held by the Fund at the end of the period. On the other hand, stock selection in technology and materials provided a lift to performance. The Fund’s largest overall contributor was China’s Anhui Conch Cement Company Ltd., which was aided by firmer cement pricing and an improved supply/demand picture. Other notable contributors were a pair of Taiwanese technology holdings: Catcher Technology Company, Ltd. and TPK Holding Co. Ltd., and women’s shoemaker Daphne International Holdings Ltd. We sold TPK Holding to lock in profits. During the period, changes were made aimed at repositioning the Fund’s portfolio and reducing the number of holdings.
This commentary reflects the views of the portfolio managers through the end of the Fund’s period discussed in this report. The managers’ statements reflect their own opinions. As such, they are in no way guarantees of future events, and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.
Past performance is no guarantee of future results.
International investing involves special risks such as political, economic and currency risks and differences in accounting standards and financial reporting. Although they are larger and/or more established than many emerging markets, the markets of Greater China function in many ways as emerging markets, and carry the high levels of risk associated with emerging markets. The Fund is non-diversified, which allows it to make larger investments in individual companies. Non-diversified funds tend to be more volatile than diversified funds and the market as a whole.
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.
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| 8 | Greater China Opportunities Fund | Annual report |
Your expenses
These examples are intended to help you understand your ongoing operating expenses.
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 going to present only your ongoing operating expenses here.
Actual expenses/actual returns
This example is intended to provide information about the Fund’s actual ongoing operating expenses, and is based on the Fund’s actual return. It assumes an account value of $1,000.00 on May 1, 2011 with the same investment held until October 31, 2011.
| | | |
| | Account value | Ending value | Expenses paid during |
| | on 5-1-11 | on 10-31-11 | period ended 10-31-111 |
|
| Class A | $1,000.00 | $775.60 | $7.43 |
|
| Class B | 1,000.00 | 772.30 | 10.86 |
|
| Class C | 1,000.00 | 772.20 | 10.90 |
|
| Class I | 1,000.00 | 775.80 | 6.85 |
|
| Class NAV | 1,000.00 | 777.30 | 5.15 |
|
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 October 31, 2011, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
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| Annual report | Greater China Opportunities Fund | 9 |
Your expenses
Hypothetical example for comparison purposes
This table allows you to compare the Fund’s ongoing operating expenses with those of any other fund. It provides an example of the Fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the Fund’s actual return). It assumes an account value of $1,000.00 on May 1, 2011, with the same investment held until October 31, 2011. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses.
| | | |
| | Account value | Ending value | Expenses paid during |
| | on 5-1-11 | on 10-31-11 | period ended 10-31-111 |
|
| Class A | $1,000.00 | $1,016.80 | $8.44 |
|
| Class B | 1,000.00 | 1,013.00 | 12.33 |
|
| Class C | 1,000.00 | 1,012.90 | 12.38 |
|
| Class I | 1,000.00 | 1,017.50 | 7.78 |
|
| Class NAV | 1,000.00 | 1,019.40 | 5.85 |
|
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.
1 Expenses are equal to the Fund’s annualized expense ratio of 1.66%, 2.43%, 2.44%, 1.53% and 1.15% for Class A, Class B, Class C, Class I and Class NAV shares, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
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| 10 | Greater China Opportunities Fund | Annual report |
Portfolio summary
| | | | |
| Top 10 Holdings (32.8% of Net Assets on 10-31-11)1,2 | | | |
|
| China Mobile, Ltd. | 4.8% | | MediaTek, Inc. | 2.8% |
| |
|
| Industrial & Commercial Bank of China | 4.3% | | China Coal Energy Company, Ltd., | |
| | Series H | 2.7% |
| Taiwan Semiconductor Manufacturing | | |
|
| Company, Ltd. | 4.2% | | Tencent Holdings, Ltd. | 2.7% |
| |
|
| China Shenhua Energy Company, Ltd. | 3.1% | | PetroChina Company, Ltd., Class H | 2.6% |
| |
|
| China Construction Bank Corp. | 3.0% | | Taiwan Mobile Company, Ltd. | 2.6% |
| |
|
| | | | |
| Sector Composition1,3 | | | | |
|
| Financials | 27% | | Industrials | 6% |
| |
|
| Information Technology | 22% | | Utilities | 4% |
| |
|
| Energy | 12% | | Materials | 3% |
| |
|
| Telecommunication Services | 10% | | Health Care | 1% |
| |
|
| Consumer Staples | 7% | | Other | 1% |
| |
|
| Consumer Discretionary | 7% | | | |
| | |
1 As a percentage of net assets on 10-31-11.
2 Cash and cash equivalents not included.
3 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.
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| Annual report | Greater China Opportunities Fund | 11 |
Fund’s investments
As of 10-31-11
| | |
| | Shares | Value |
| Common Stocks 98.75% | | $77,503,727 |
|
| (Cost $75,771,547) | | |
| | | |
| China 38.08% | | 29,887,589 |
|
| AAC Acoustic Technologies Holdings, Inc. | 598,000 | 1,374,551 |
|
| Anhui Conch Cement Company, Ltd. | 233,000 | 838,174 |
|
| Changsha Zoomlion Heavy Industry Science And Technology | | |
| Development Company | 271,400 | 384,824 |
|
| China Coal Energy Company, Ltd., Series H | 1,744,000 | 2,135,594 |
|
| China Construction Bank Corp. | 3,262,000 | 2,371,089 |
|
| China Merchants Bank Company, Ltd. | 929,500 | 1,832,927 |
|
| China Petroleum & Chemical Corp. | 1,096,000 | 1,037,672 |
|
| China Shenhua Energy Company, Ltd., Class H | 529,000 | 2,421,784 |
|
| China Zhengtong Auto Services Holdings, Ltd. (I) | 803,500 | 850,724 |
|
| Country Garden Holdings Company | 4,516,000 | 1,751,378 |
|
| Daphne International Holdings, Ltd. | 1,476,000 | 1,545,251 |
|
| Evergrande Real Estate Group, Ltd. | 3,047,000 | 1,289,695 |
|
| Industrial & Commercial Bank of China | 5,511,500 | 3,377,036 |
|
| NVC Lighting Holdings, Ltd. | 2,421,000 | 1,044,380 |
|
| PetroChina Company, Ltd., Class H | 1,592,000 | 2,071,198 |
|
| PICC Property & Casualty Company, Ltd., Class H | 996,000 | 1,348,048 |
|
| Tencent Holdings, Ltd. | 91,300 | 2,080,946 |
|
| Tsingtao Brewery Company, Ltd., Series H | 112,000 | 568,743 |
|
| Yanzhou Coal Mining Company, Ltd., Class H | 166,000 | 411,426 |
|
| Zhongsheng Group Holdings Ltd. | 662,500 | 1,152,149 |
| | | |
| Hong Kong 29.04% | | 22,793,677 |
|
| AIA Group, Ltd. | 398,600 | 1,202,237 |
|
| Cheung Kong Holdings, Ltd. | 110,000 | 1,361,668 |
|
| Cheung Kong Infrastructure Holdings, Ltd. | 181,000 | 966,973 |
|
| China Foods, Ltd. | 1,140,000 | 896,316 |
|
| China Merchants Holdings International Company, Ltd. | 200,000 | 622,790 |
|
| China Metal Recycling Holdings, Ltd. | 699,000 | 749,226 |
|
| China Mobile, Ltd. | 393,500 | 3,749,919 |
|
| China Unicom Hong Kong, Ltd. | 772,000 | 1,554,331 |
|
| CLP Holdings, Ltd. | 80,000 | 710,640 |
|
| Comba Telecom Systems Holdings Ltd. | 960,050 | 808,750 |
|
| Guangdong Investment, Ltd. | 826,000 | 494,793 |
|
| Haier Electronics Group Company, Ltd. (I) | 761,000 | 706,273 |
|
| Hutchison Whampoa, Ltd. | 180,000 | 1,643,452 |
|
| Hysan Development Company, Ltd. | 172,000 | 598,257 |
| | |
| 12 | Greater China Opportunities Fund | Annual report | See notes to financial statements |
| | |
| | Shares | Value |
| Hong Kong (continued) | | |
|
| Kerry Properties, Ltd. | 155,000 | $570,398 |
|
| Kunlun Energy Company, Ltd. | 968,000 | 1,341,804 |
|
| Luk Fook Holdings International, Ltd. | 142,000 | 590,594 |
|
| Power Assets Holdings, Ltd. | 156,500 | 1,189,823 |
|
| Shanghai Industrial Holdings, Ltd. | 263,000 | 859,527 |
|
| Sino Biopharmaceutical | 1,260,000 | 381,897 |
|
| Swire Pacific, Ltd., Class A | 70,500 | 816,436 |
|
| Vinda International Holdings, Ltd. | 862,000 | 977,573 |
| | | |
| Macau 0.84% | | 655,539 |
|
| Sands China, Ltd. (I) | 222,800 | 655,539 |
| | | |
| Taiwan 30.79% | | 24,166,922 |
|
| Advanced Semiconductor Engineering, Inc. | 1,524,080 | 1,353,711 |
|
| Asustek Computer, Inc. | 137,320 | 954,646 |
|
| Catcher Technology Company, Ltd. | 165,000 | 922,456 |
|
| Chinatrust Financial Holding Company, Ltd. | 1,917,746 | 1,248,734 |
|
| Dynapack International Technology Corp. | 160,000 | 607,038 |
|
| Fubon Financial Holding Company, Ltd. | 1,180,138 | 1,386,478 |
|
| Hon Hai Precision Industry Company, Ltd. | 240,000 | 660,543 |
|
| Kinsus Interconnect Technology Corp. | 426,000 | 1,473,355 |
|
| MediaTek, Inc. | 208,000 | 2,184,582 |
|
| Prince Housing & Development Corp. | 1,491,100 | 1,089,387 |
|
| Shin Zu Shing Company, Ltd. | 432,000 | 841,674 |
|
| Standard Foods Corp. | 261,000 | 847,769 |
|
| Synnex Technology International Corp. | 534,000 | 1,310,935 |
|
| Taiwan Cement Corp. | 638,000 | 786,996 |
|
| Taiwan Mobile Company, Ltd. | 704,700 | 2,018,013 |
|
| Taiwan Semiconductor Manufacturing Company, Ltd. | 1,343,089 | 3,275,559 |
|
| Taiwan Surface Mounting Technology Company, Ltd. | 464,200 | 1,034,785 |
|
| Uni-President Enterprises Corp. | 957,860 | 1,322,478 |
|
| Yuanta Financial Holdings Company, Ltd. (I) | 1,486,000 | 847,783 |
| |
| Total investments (Cost $75,771,547)† 98.75% | | $77,503,727 |
|
| |
| Other assets and liabilities, net 1.25% | | $982,793 |
|
| |
| Total net assets 100.00% | | $78,486,520 |
|
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the Fund.
| | |
| See notes to financial statements | Annual report | Greater China Opportunities Fund | 13 |
Notes to Schedule of Investments
(I) Non-income producing security.
† At 10-31-11, the aggregate cost of investment securities for federal income tax purposes was $75,898,848. Net unrealized appreciation aggregated $1,604,879, of which $6,570,593 related to appreciated investment securities and $4,965,714 related to depreciated investment securities.
The Fund had the following sector composition as of 10-31-11 (as a percentage of total net assets).
| | | |
| Financials | 27% | | |
| Information Technology | 22% | | |
| Energy | 12% | | |
| Telecommunication Services | 10% | | |
| Consumer Staples | 7% | | |
| Consumer Discretionary | 7% | | |
| Industrials | 6% | | |
| Utilities | 4% | | |
| Materials | 3% | | |
| Health Care | 1% | | |
| Other | 1% | | |
| | |
| 14 | Greater China Opportunities Fund | Annual report | See notes to financial statements |
F I N A N C I A L S T A T E M E N T S
Financial statements
Statement of assets and liabilities 10-31-11
This Statement of assets and liabilities is the Fund’s balance sheet. It shows the value of what the Fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.
| |
| Assets | |
|
| Investments, at value (Cost $75,771,547) | $77,503,727 |
| Cash | 367,054 |
| Foreign currency, at value (Cost $1,009,243) | 1,008,831 |
| Receivable for fund shares sold | 141,994 |
| Other receivables and prepaid expenses | 26,150 |
| | |
| Total assets | 79,047,756 |
| |
| Liabilities | |
|
| Payable for investments purchased | 217,114 |
| Payable for fund shares repurchased | 171,577 |
| Payable to affiliates | |
| Accounting and legal services fees | 1,860 |
| Transfer agent fees | 12,792 |
| Distribution and service fees | 32,153 |
| Trustees’ fees | 5,663 |
| Management fees | 64,949 |
| Other liabilities and accrued expenses | 55,128 |
| | |
| Total liabilities | 561,236 |
| |
| Net assets | |
|
| Paid-in capital | $77,336,450 |
| Undistributed net investment income | 520,223 |
| Accumulated net realized loss on investments and foreign | |
| currency transactions | (1,102,064) |
| Net unrealized appreciation (depreciation) on investments and translation | |
| of assets and liabilities in foreign currencies | 1,731,911 |
| | |
| Net assets | $78,486,520 |
| |
| 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 ($52,783,839 ÷ 3,123,641 shares) | $16.90 |
| Class B ($11,190,811 ÷ 681,346 shares)1 | $16.42 |
| Class C ($12,201,085 ÷ 743,412 shares)1 | $16.41 |
| Class I ($1,509,590 ÷ 89,753 shares) | $16.82 |
| Class NAV ($801,195 ÷ 46,932 shares) | $17.07 |
| |
| Maximum offering price per share | |
|
| Class A (net asset value per share ÷ 95%)2 | $17.79 |
1 Redemption price 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.
| | |
| See notes to financial statements | Annual report | Greater China Opportunities Fund | 15 |
F I N A N C I A L S T A T E M E N T S
Statement of operations For the year ended 10-31-11
This Statement of operations summarizes the Fund’s investment income earned and expenses incurred in operating the Fund. It also shows net gains (losses) for the period stated.
| |
| Investment income | |
|
| Dividends | $2,896,104 |
| Less foreign taxes withheld | (379,454) |
| | |
| Total investment income | 2,516,650 |
| |
| Expenses | |
|
| Investment management fees (Note 4) | 1,074,011 |
| Distribution and service fees (Note 4) | 537,062 |
| Accounting and legal services fees (Note 4) | 18,177 |
| Transfer agent fees (Note 4) | 192,086 |
| Trustees’ fees (Note 4) | 10,003 |
| State registration fees (Note 4) | 71,368 |
| Printing and postage (Note 4) | 25,479 |
| Professional fees | 41,555 |
| Custodian fees | 16,249 |
| Registration and filing fees | 40,809 |
| Other | 18,566 |
| | |
| Total expenses | 2,045,365 |
| Less expense reductions (Note 4) | (10,889) |
| | |
| Net expenses | 2,034,476 |
| | |
| Net investment income | 482,174 |
| |
| Realized and unrealized gain (loss) | |
|
| Net realized gain on | |
| Investments | 21,577,042 |
| Foreign currency transactions | 41,205 |
| | |
| | 21,618,247 |
| Change in net unrealized appreciation (depreciation) of | |
| Investments | (37,906,394) |
| Translation of assets and liabilities in foreign currencies | (2,854) |
| | |
| | (37,909,248) |
| | |
| Net realized and unrealized loss | (16,291,001) |
| | |
| Decrease in net assets from operations | ($15,808,827) |
| | |
| 16 | Greater China Opportunities Fund | Annual report | See notes to financial statements |
F I N A N C I A L S T A T E M E N T S
Statements of changes in net assets
These Statements of changes in net assets show how the value of the Fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of Fund share transactions.
| | | | |
| | | | Year | Year |
| | | | ended | ended |
| | | | 10-31-11 | 10-31-10 |
| |
| Increase (decrease) in net assets | | | | |
|
| From operations | | | | |
| Net investment income | | | $482,174 | $284,634 |
| Net realized gain | | | 21,618,247 | 18,005,705 |
| Change in net unrealized appreciation (depreciation) | | | (37,909,248) | 536,058 |
| | | | | |
| Increase (decrease) in net assets resulting from operations | | | (15,808,827) | 18,826,397 |
| | | | | |
| Distributions to shareholders | | | | |
| From net investment income | | | | |
| Class A | | | (253,588) | (547,243) |
| Class B | | | — | (1,013) |
| Class C | | | — | (1,047) |
| Class I | | | (11,244) | (39,523) |
| Class NAV | | | (6,591) | (9,338) |
| | | | | |
| Total distributions | | | (271,423) | (598,164) |
| | | | | |
| From Fund share transactions (Note 5) | | | (25,387,357) | (33,526,221) |
| | | | | |
| Total decrease | | | (41,467,607) | (15,297,988) |
| |
| Net assets | | | | |
|
| Beginning of year | | | 119,954,127 | 135,252,115 |
| | | | | |
| End of year | | | $78,486,520 | $119,954,127 |
| | | | | |
| Undistributed net investment income | | | $520,223 | $268,267 |
| | |
| See notes to financial statements | Annual report | Greater China Opportunities Fund | 17 |
Financial highlights
The Financial highlights show how the Fund’s net asset value for a share has changed since the end of the previous period.
| | | | | |
| CLASS A SHARES Period ended | 10-31-11 | 10-31-10 | 10-31-09 | 10-31-08 | 10-31-07 |
| |
| Per share operating performance | | | | | |
|
| Net asset value, beginning of year | $20.24 | $17.33 | $11.61 | $32.54 | $15.78 |
| Net investment income1 | 0.14 | 0.08 | 0.12 | 0.04 | 0.07 |
| Net realized and unrealized gain (loss) | | | | | |
| on investments | (3.41) | 2.94 | 5.63 | (19.08) | 17.14 |
| Total from investment operations | (3.27) | 3.02 | 5.75 | (19.04) | 17.21 |
| Less distributions | | | | | |
| From net investment income | (0.07) | (0.11) | (0.03) | (0.06) | (0.08) |
| From net realized gain | — | — | — | (1.83) | (0.37) |
| Total distributions | (0.07) | (0.11) | (0.03) | (1.89) | (0.45) |
| Net asset value, end of year | $16.90 | $20.24 | $17.33 | $11.61 | $32.54 |
| Total return (%)2 | (16.24) | 17.463 | 49.623 | (61.75)3 | 111.87 |
| |
| Ratios and supplemental data | | | | | |
|
| Net assets, end of year (in millions) | $53 | $80 | $90 | $69 | $283 |
| Ratios (as a percentage of average net assets): | | | | | |
| Expenses before reductions | 1.67 | 1.73 | 1.95 | 1.77 | 1.68 |
| Expenses net of fee waivers | 1.67 | 1.70 | 1.95 | 1.77 | 1.68 |
| Expenses net of fee waivers and credits | 1.67 | 1.70 | 1.92 | 1.77 | 1.68 |
| Net investment income | 0.67 | 0.45 | 0.86 | 0.21 | 0.34 |
| Portfolio turnover (%) | 145 | 71 | 105 | 98 | 85 |
1 Based on the average daily shares outstanding.
2 Does not reflect the effect of sales charges, if any.
3 Total returns would have been lower had certain expenses not been reduced during the periods shown.
| | | | | |
| CLASS B SHARES Period ended | 10-31-11 | 10-31-10 | 10-31-09 | 10-31-08 | 10-31-07 |
| |
| Per share operating performance | | | | | |
|
| Net asset value, beginning of year | $19.76 | $16.95 | $11.41 | $32.16 | $15.63 |
| Net investment income (loss)1 | (0.02) | (0.06) | 0.01 | (0.09) | (0.07) |
| Net realized and unrealized gain (loss) | | | | | |
| on investments | (3.32) | 2.87 | 5.53 | (18.83) | 16.98 |
| Total from investment operations | (3.34) | 2.81 | 5.54 | (18.92) | 16.91 |
| Less distributions | | | | | |
| From net investment income | — | —2 | — | — | (0.01) |
| From net realized gain | — | — | — | (1.83) | (0.37) |
| Total distributions | — | —2 | — | (1.83) | (0.38) |
| Net asset value, end of year | $16.42 | $19.76 | $16.95 | $11.41 | $32.16 |
| Total return (%)3 | (16.90) | 16.584 | 48.554 | (62.02)4 | 110.50 |
| |
| Ratios and supplemental data | | | | | |
|
| Net assets, end of year (in millions) | $11 | $17 | $19 | $15 | $55 |
| Ratios (as a percentage of average net assets): | | | | | |
| Expenses before reductions | 2.46 | 2.49 | 2.70 | 2.49 | 2.38 |
| Expenses net of fee waivers | 2.46 | 2.45 | 2.70 | 2.49 | 2.38 |
| Expenses net of fee waivers and credits | 2.46 | 2.45 | 2.67 | 2.49 | 2.38 |
| Net investment income (loss) | (0.11) | (0.31) | 0.11 | (0.43) | (0.32) |
| Portfolio turnover (%) | 145 | 71 | 105 | 98 | 85 |
1 Based on the average daily shares outstanding.
2 Less than ($0.005) per share.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the periods shown.
| | |
| 18 | Greater China Opportunities Fund | Annual report | See notes to financial statements |
| | | | | |
| CLASS C SHARES Period ended | 10-31-11 | 10-31-10 | 10-31-09 | 10-31-08 | 10-31-07 |
| |
| Per share operating performance | | | | | |
|
| Net asset value, beginning of year | $19.75 | $16.94 | $11.40 | $32.16 | $15.63 |
| Net investment income (loss)1 | (0.02) | (0.05) | 0.01 | (0.09) | (0.05) |
| Net realized and unrealized gain (loss) | | | | | |
| on investments | (3.32) | 2.86 | 5.53 | (18.84) | 16.96 |
| Total from investment operations | (3.34) | 2.81 | 5.54 | (18.93) | 16.91 |
| Less distributions | | | | | |
| From net investment income | — | —2 | — | — | (0.01) |
| From net realized gain | — | — | — | (1.83) | (0.37) |
| Total distributions | — | —2 | — | (1.83) | (0.38) |
| Net asset value, end of year | $16.41 | $19.75 | $16.94 | $11.40 | $32.16 |
| Total return (%)3 | (16.91) | 16.594 | 48.604 | (62.06)4 | 110.51 |
| |
| Ratios and supplemental data | | | | | |
|
| Net assets, end of year (in millions) | $12 | $18 | $20 | $16 | $59 |
| Ratios (as a percentage of average net assets): | | | | | |
| Expenses before reductions | 2.45 | 2.48 | 2.71 | 2.49 | 2.38 |
| Expenses net of fee waivers | 2.45 | 2.44 | 2.71 | 2.49 | 2.38 |
| Expenses net of fee waivers and credits | 2.45 | 2.44 | 2.68 | 2.49 | 2.38 |
| Net investment income (loss) | (0.12) | (0.26) | 0.10 | (0.43) | (0.25) |
| Portfolio turnover (%) | 145 | 71 | 105 | 98 | 85 |
1 Based on the average daily shares outstanding.
2 Less than ($0.005) per share.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the periods shown.
| | | | | |
| CLASS I SHARES Period ended | 10-31-11 | 10-31-10 | 10-31-09 | 10-31-08 | 10-31-07 |
| |
| Per share operating performance | | | | | |
|
| Net asset value, beginning of year | $20.14 | $17.24 | $11.57 | $32.69 | $15.82 |
| Net investment income1 | 0.18 | 0.01 | 0.18 | 0.04 | 0.09 |
| Net realized and unrealized gain (loss) | | | | | |
| on investments | (3.41) | 3.02 | 5.53 | (19.14) | 17.28 |
| Total from investment operations | (3.23) | 3.03 | 5.71 | (19.10) | 17.37 |
| Less distributions | | | | | |
| From net investment income | (0.09) | (0.13) | (0.04) | (0.19) | (0.13) |
| From net realized gain | — | — | — | (1.83) | (0.37) |
| Total distributions | (0.09) | (0.13) | (0.04) | (2.02) | (0.50) |
| Net asset value, end of year | $16.82 | $20.14 | $17.24 | $11.57 | $32.69 |
| Total return (%) | (16.12)2 | 17.612 | 49.492 | (61.89)2 | 112.93 |
|
| Ratios and supplemental data | | | | | |
| Net assets, end of year (in millions) | $2 | $3 | $5 | $1 | $6 |
| Ratios (as a percentage of average net assets): | | | | | |
| Expenses before reductions | 2.02 | 1.83 | 1.81 | 1.64 | 1.22 |
| Expenses net of fee waivers | 1.53 | 1.57 | 1.65 | 1.64 | 1.22 |
| Expenses net of fee waivers and credits | 1.53 | 1.57 | 1.65 | 1.64 | 1.22 |
| Net investment income | 0.87 | 0.08 | 1.25 | 0.19 | 0.44 |
| Portfolio turnover (%) | 145 | 71 | 105 | 98 | 85 |
1 Based on the average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the periods shown.
| | |
| See notes to financial statements | Annual report | Greater China Opportunities Fund | 19 |
| | | | | |
| CLASS NAV SHARES Period ended | 10-31-11 | 10-31-10 | 10-31-09 | 10-31-08 | 10-31-071 |
| |
| Per share operating performance | | | | | |
|
| Net asset value, beginning of period | $20.42 | $17.47 | $11.66 | $32.72 | $18.15 |
| Net investment income2 | 0.26 | 0.20 | 0.24 | 0.24 | 0.35 |
| Net realized and unrealized gain (loss) | | | | | |
| on investments | (3.47) | 2.96 | 5.65 | (19.20) | 14.22 |
| Total from investment operations | (3.21) | 3.16 | 5.89 | (18.96) | 14.57 |
| Less distributions | | | | | |
| From net investment income | (0.14) | (0.21) | (0.08) | (0.27) | — |
| From net realized gain | — | — | — | (1.83) | — |
| Total distributions | (0.14) | (0.21) | (0.08) | (2.10) | — |
| Net asset value, end of period | $17.07 | $20.42 | $17.47 | $11.66 | $32.72 |
| Total return (%) | (15.82) | 18.17 | 50.843 | (61.51)3 | 80.284 |
| |
| Ratios and supplemental data | | | | | |
|
| Net assets, end of period (in millions) | $1 | $1 | $1 | —5 | $1 |
| Ratios (as a percentage of average net assets): | | | | | |
| Expenses before reductions | 1.14 | 1.11 | 1.12 | 1.17 | 1.126 |
| Expenses net of fee waivers | 1.14 | 1.11 | 1.12 | 1.17 | 1.126 |
| Expenses net of fee waivers and credits | 1.14 | 1.11 | 1.12 | 1.17 | 1.126 |
| Net investment income | 1.30 | 1.08 | 1.63 | 1.16 | 1.566 |
| Portfolio turnover (%) | 145 | 71 | 105 | 98 | 85 |
1 The inception date for Class NAV shares is 12-28-06.
2 Based on the average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the periods shown.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
| | |
| 20 | Greater China Opportunities Fund | Annual report | See notes to financial statements |
Notes to financial statements
Note 1 — Organization
John Hancock Greater China Opportunities Fund (the Fund) is a non-diversified series of John Hancock Investment Trust 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, Class B and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class NAV shares are sold to John Hancock affiliated funds of funds. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, printing and postage and state registration 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, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. 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 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, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
As of October 31, 2011, all investments are categorized as Level 2 under the hierarchy described above. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. During the year ended October 31, 2011, there were no significant transfers into or out of Level 1, Level 2 or Level 3 assets.
In order to value the securities, the Fund uses the following valuation techniques. Equity securities held by the Fund are valued at the last sale price or official closing price on the principal securities exchange on which they trade. In the event there were no sales during the day or closing prices are not available, then securities are valued using the last quoted bid or evaluated price. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing service. Certain securities traded only in the over-the-counter
| |
| Annual report | Greater China Opportunities Fund | 21 |
market are valued at the last bid price quoted by brokers making markets in the securities at the close of trading.
Other portfolio securities and assets, where 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. Generally, trading in non-U.S. securities is substantially completed each day at various times prior to the close of trading on the NYSE. Significant market events that affect the values of non-U.S. securities may occur between the time when the valuation of the securities is generally determined and the close of the NYSE. During significant market events, these securities will be valued at fair value, as determined in good faith, following procedures established by the Board of Trustees. The Fund may use a fair valuation model to value non-U.S. securities in order to adjust for events which may occur between the close of foreign exchanges and the close of the NYSE.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income is recorded when the Fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. Funds investing in a single country or in a limited geographic region tend to be riskier than funds that invest more broadly. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs) and accounting standards. 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 capital gains and repatriation taxes as imposed by certain countries in which it invests. Such taxes are generally based upon income and/or capital gains earned or repatriated. Taxes are accrued based upon net investment income, net realized gains and net unrealized appreciation.
Line of credit. The Fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the 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 has a lien, security interest or security entitlement in any Fund property that is not segregated, to the maximum extent permitted by law for any overdraft.
In addition, effective March 30, 2011, the Fund and other affiliated funds have entered into an agreement with Citibank N.A. which enables them to participate in a $100 million unsecured committed line of credit. Prior to March 30, 2011, the Fund had a similar agreement with State Street Bank and Trust Company. 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
| |
| 22 | Greater China Opportunities Fund | Annual report |
on a pro rata basis and is reflected in other expenses on the Statement of operations. For the year ended October 31, 2011, the Fund had no borrowings under the lines of credit.
Expenses. The majority of expenses are directly attributable to an individual fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, printing and postage and state registration fees, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The Fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, the Fund has a capital loss carryforward of $974,763 available to offset future net realized capital gains as of October 31, 2011, which expires on October 31, 2017.
Under the Regulated Investment Company Modernization Act of 2010, the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
As of October 31, 2011, the Fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The Fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The Fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended October 31, 2011 and October 31, 2010 was as follows:
| | | | | |
| | OCTOBER 31, 2011 | OCTOBER 31, 2010 | | | |
| | | |
| Ordinary Income | $271,423 | $598,164 | | | |
Distributions paid by the Fund with respect to each class of shares are calculated in the same manner, at the same time and in the same amount, except for the effect of class level expenses that may be applied differently to each class. As of October 31, 2011, the components of distributable earnings on a tax basis included $523,418 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Material distributions in excess of tax basis earnings and profits, if any, are reported in the Fund’s financial statements as a return of capital.
| |
| Annual report | Greater China Opportunities Fund | 23 |
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to foreign currency transactions and wash sale loss deferrals.
New accounting pronouncement. In May 2011, Accounting Standards Update 2011-04 (ASU 2011-04), Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, was issued and is effective during interim and annual periods beginning after December 15, 2011. ASU 2011-04 amends Financial Accounting Standards Board (FASB) Topic 820, Fair Value Measurement. The amendments are the result of the work by the FASB and the International Accounting Standards Board to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP. Management is currently evaluating the application of ASU 2011-04 and its impact, if any, on the Fund’s financial statements.
Note 3 — Guarantees and indemnifications
Under the Fund’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 4 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Adviser) serves as investment adviser for the Fund. John Hancock Funds, LLC (the Distributor), an affiliate of the Adviser, serves as principal underwriter of the Fund. The Adviser and the Distributor are indirect wholly owned subsidiaries of Manulife Financial Corporation (MFC).
Management fee. The Fund has an investment management agreement with the Adviser under which the Fund pays a monthly management fee to the Adviser equivalent, on an annual basis, to the sum of: (a) 1.00% of the first $1,000,000,000 of the Fund’s average daily net assets; (b) 0.95% of the next $1,000,000,000; (c) 0.90% of the Fund’s average daily net assets in excess of $2,000,000,000. The Adviser has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset Management (North America) Limited, an indirectly owned subsidiary of MFC and an affiliate of the Adviser. The Fund is not responsible for payment of the subadvisory fees.
The Adviser has contractually agreed to waive fees and/or reimburse certain expenses for Class I shares of the Fund. This agreement excludes taxes, brokerage commissions, interest, litigation and other extraordinary expenses not incurred in the ordinary course of the Fund’s business. The fee waivers and/or expense reimbursements are such that the total operating expenses for Class I shares will not exceed 1.53% of average daily net assets. The fee waivers and/or reimbursements will continue in effect until at least February 29, 2012. Accordingly, these expense reductions amounted to $10,889 for Class I shares for the year ended October 31, 2011.
The investment management fees, including the impact of the waivers and reimbursements described above, incurred for the year ended October 31, 2011 were equivalent to a net annual effective rate of 0.99% of the Fund’s average daily net assets.
Accounting and legal services. Pursuant to the Accounting and Legal Services Agreement, the Fund reimburses the Adviser for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services of 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
| |
| 24 | Greater China Opportunities Fund | Annual report |
was incurred. These accounting and legal services fees incurred for the year ended October 31, 2011 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 and Class C shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the Fund. The Fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the Fund’s shares.
| | | | | |
| CLASS | 12b–1 FEE | | | | |
| | | | |
| Class A | 0.30% | | | | |
| Class B | 1.00% | | | | |
| Class C | 1.00% | | | | |
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $77,745 for the year ended October 31, 2011. Of this amount, $12,426 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $60,696 was paid as sales commissions to broker-dealers and $4,623 was paid as sales commissions to sales personnel of Signator Investors, Inc. (Signator Investors), a broker-dealer affiliate of the Adviser.
Class B and Class C shares are subject to contingent deferred sales charges (CDSCs). Class B shares that are redeemed within six years of purchase are subject to CDSCs, at declining rates, beginning at 5.00% of the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC on the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended October 31, 2011, CDSCs received by the Distributor amounted to $41,232 and for $2,702 Class B and Class C shares, respectively.
Transfer agent fees. The Fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Adviser. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the Fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses that are comprised of 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 four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Classes and all other Retail Share Classes. Within each of these categories, the applicable costs are allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets.
Class level expenses. Class level expenses for the year ended October 31, 2011 were:
| | | | |
| | DISTRIBUTION | TRANSFER | STATE | PRINTING AND |
| CLASS | AND SERVICE FEES | AGENT FEES | REGISTRATION FEES | POSTAGE |
|
| Class A | $216,619 | $131,971 | $17,603 | $17,144 |
| Class B | 156,368 | 28,562 | 17,623 | 3,900 |
| Class C | 164,075 | 29,998 | 18,026 | 4,376 |
| Class I | — | 1,555 | 18,116 | 59 |
| Total | $537,062 | $192,086 | $71,368 | $25,479 |
| |
| Annual report | Greater China Opportunities Fund | 25 |
Trustee expenses. The Fund compensates each Trustee who is not an employee of the Adviser or its affiliates. These Trustees may, for tax purposes, elect to defer receipt of this compensation under the John Hancock Group of Funds Deferred Compensation Plan (the Plan). Deferred amounts are invested in various John Hancock funds and remain in the funds until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting liability are included within Other receivables and prepaid expenses and Payable to affiliates — Trustees’ fees, respectively, in the accompanying Statement of assets and liabilities.
Note 5 — Fund share transactions
Transactions in Fund shares for the years ended October 31, 2011 and October 31, 2010 were as follows:
| | | | |
| | Year ended 10-31-11 | Year ended 10-31-10 |
| | Shares | Amount | Shares | Amount |
| Class A shares | | | | |
|
| Sold | 418,179 | $8,534,161 | 804,693 | $14,928,900 |
| Distributions reinvested | 11,278 | 230,417 | 26,559 | 497,448 |
| Repurchased | (1,281,522) | (25,665,251) | (2,033,781) | (36,774,293) |
| | | | | |
| Net decrease | (852,065) | ($16,900,673) | (1,202,529) | ($21,347,945) |
| |
| Class B shares | | | | |
|
| Sold | 63,844 | $1,272,349 | 127,785 | $2,320,362 |
| Repurchased | (261,914) | (5,076,231) | (387,415) | (6,846,177) |
| | | | | |
| Net decrease | (198,070) | ($3,803,882) | (259,630) | ($4,525,815) |
| |
| Class C shares | | | | |
|
| Sold | 67,997 | $1,350,512 | 132,836 | $2,369,389 |
| Distributions reinvested | — | — | 43 | 787 |
| Repurchased | (260,718) | (5,126,299) | (395,391) | (7,003,064) |
| | | | | |
| Net decrease | (192,721) | ($3,775,787) | (262,512) | ($4,632,888) |
| |
| Class I shares | | | | |
|
| Sold | 128,810 | $2,661,060 | 98,901 | $1,828,148 |
| Distributions reinvested | 196 | 3,979 | 1,285 | 23,933 |
| Repurchased | (173,369) | (3,598,260) | (231,115) | (4,274,907) |
| | | | | |
| Net decrease | (44,363) | ($933,221) | (130,929) | ($2,422,826) |
| |
| Class NAV shares | | | | |
|
| Sold | 16,862 | $342,007 | 19,390 | $351,391 |
| Distributions reinvested | 321 | 6,591 | 497 | 9,338 |
| Repurchased | (15,379) | (322,392) | (52,272) | (957,476) |
| | | | | |
| Net increase (decrease) | 1,804 | $26,206 | (32,385) | ($596,747) |
| |
| Net decrease | (1,285,415) | ($25,387,357) | (1,887,985) | ($33,526,221) |
|
Note 6 — Purchase and sale of securities
Purchases and sales of securities, other than short-term securities, aggregated $153,626,596 and $178,842,826, respectively, for the year ended October 31, 2011.
| |
| 26 | Greater China Opportunities Fund | Annual report |
Auditor’s report
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of John Hancock Investment Trust III and
Shareholders of John Hancock Greater China Opportunities Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Greater China Opportunities Fund (the “Fund”) at October 31, 2011, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of October 31, 2011 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 20, 2011
| |
| Annual report | Greater China Opportunities Fund | 27 |
Tax information
Unaudited
For federal income tax purposes, the following information is furnished with respect to the distributions of the Fund, if any, paid during its taxable year ended October 31, 2011.
With respect to the ordinary dividends paid by the Fund for the fiscal year ended October 31, 2011, the Fund designates the maximum amount allowable for the corporate dividends-received deduction.
The Fund designates the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amount will be reflected on Form 1099-DIV for the calendar year 2011.
Income derived from foreign sources was $2,896,081. The Fund intends to pass through foreign tax credits of $315,797 for the fiscal year.
Eligible shareholders will be mailed a 2011 Form 1099-DIV in early 2012. This Form will reflect the tax character of all distributions for calendar year 2011.
| |
| 28 | Greater China Opportunities Fund | Annual report |
Board Consideration of and Continuation of Investment Advisory Agreement and Subadvisory Agreement
The Board of Trustees (the Board, the members of which are referred to as Trustees) of John Hancock Greater China Opportunities Fund (the Fund), a series of John Hancock Investment Trust III (the Trust), met in-person on May 1–3 and June 5–7, 2011 to consider the approval of the Fund’s investment advisory agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Adviser), the Fund’s investment adviser. The Board also considered the approval of the investment subadvisory agreement (the Subadvisory Agreement) among the Adviser, Manulife Asset Management (North America) Limited (the Subadviser) and the Trust on behalf of the Fund. The Advisory Agreement and the Subadvisory Agreement are referred to as the Agreements.
Activities and composition of the Board
The Board consists of eleven individuals, nine of whom are Independent Trustees. Independent Trustees are generally those individuals who are not employed by or have any significant business or professional relationship with the Adviser or the Subadviser. The Trustees are responsible for the oversight of operations of the Fund and perform various duties required of directors of investment companies by the Investment Company Act of 1940, as amended (the 1940 Act). The Independent Trustees have hired independent legal counsel to assist them in connection with their duties. The Board has appointed an Independent Trustee as Chairperson. The Board has established four standing committees that are composed entirely of Independent Trustees: the Audit Committee; the Compliance Committee; the Nominating, Governance and Administration Committee; and the Contracts/Operations Committee. Additionally, Investment Performance Committee B is a standing committee of the Board that is composed of Independent Trustees and one Trustee who is affiliated with the Adviser. Investment Performance Committee B oversees and monitors matters relating to the investment performance of the Fund. The Board has also designated an Independent Trustee as Vice Chairperson to serve in the absence of the Chairperson. The Board also designates working groups or ad hoc committees as it deems appropriate.
The approval process
Under the 1940 Act, the Board is required to consider the continuation of the Agreements each year. Throughout the year, the Board, acting directly and through its committees, regularly reviews and assesses the quality of the services that the Fund receives under these Agreements. The Board reviews reports of the Adviser at least quarterly, which include Fund performance reports and compliance reports. In addition, the Board meets with portfolio managers and senior investment officers at various times throughout the year. The Board considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by the Adviser and Subadviser to the Fund and its shareholders.
Prior to the May 1–3, 2011 meeting, the Board requested and received materials specifically relating to the Agreements. The materials provided in connection with the May meeting included information compiled and prepared by Morningstar, Inc. (Morningstar) on Fund fees and expenses, and the investment performance of the Fund. This Fund information is assembled in a format that permits comparison with similar information from a Category and a subset of the Category referred to as the Peer Group, each as determined by Morningstar, and with the Fund’s benchmark index. The Category includes all funds that invest similarly to the way the Fund invests. The Peer Group represents funds of similar size, excluding passively managed funds and funds-of-funds. The Fund’s benchmark index is an unmanaged index of securities that is provided as a basis for comparison with the Fund’s performance. Other material provided for the Fund review included (a) information on the profitability of the Agreements to the Adviser and a discussion of any additional benefits to the Adviser or Subadviser or their affiliates that result from being the Adviser or Subadviser to the Fund; (b) a general analysis provided by the Adviser and the Subadviser concerning investment advisory fees charged to other clients, such as institutional clients and other investment companies, having similar investment mandates, as well as the performance of those other clients and a
| |
| Annual report | Greater China Opportunities Fund | 29 |
comparison of the services provided to those other clients and the services provided to the Fund; (c) the impact of economies of scale; (d) a summary of aggregate amounts paid by the Fund to the Adviser; and (e) sales and redemption data regarding the Fund’s shares.
At an in-person meeting held on May 1–3, 2011, the Board reviewed materials relevant to its consideration of the Agreements. As a result of the discussions that occurred during the May 1–3, 2011 meeting, the Board asked the Adviser for additional information on certain matters. The Adviser provided the additional information and the Board also considered this information as part of its consideration of the Agreements.
At an in-person meeting held on June 5–7, 2011, the Board, including the Independent Trustees, formally considered the continuation of the Advisory Agreement between the Adviser and the Fund and the Subadvisory Agreement among the Fund, the Adviser and the Subadviser, each for an additional one-year term. The Board considered what it believed were key relevant factors that are described under separate headings presented below.
The Board also considered other matters important to the approval process, such as payments made to and by the Adviser or its affiliates relating to the distribution of Fund shares and other services. The Board reviewed services related to the valuation and pricing of Fund portfolio holdings. Other important matters considered by the Board were the direct and indirect benefits to the Adviser, the Subadviser and their affiliates from their relationship with the Fund and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review.
Nature, extent and quality of services
The Board reviewed the nature, extent and quality of services provided by the Adviser and the Subadviser, including the investment advisory services and the resulting performance of the Fund.
The Board considered the ability of the Adviser and the Subadviser, based on their resources, reputation and other attributes, to attract and retain qualified investment professionals, including research, advisory and supervisory personnel. It considered the background and experience of senior management and investment professionals responsible for managing the Fund. The Board considered the investment philosophy, research and investment decision-making processes of the Adviser and the Subadviser responsible for the daily investment activities of the Fund, including, among other things, portfolio trading capabilities, use of technology, commitment to compliance and approach to training and retaining portfolio managers and other research, advisory and management personnel.
The Board considered the Subadviser’s history and experience providing investment services to the Fund. The Board considered the Adviser’s execution of its oversight responsibilities. The Board further considered the culture of compliance, resources dedicated to compliance, compliance programs, record of compliance with applicable laws and regulation, with the Fund’s investment policies and restrictions and with the applicable Code of Ethics, and the responsibilities of the Adviser’s and Subadviser’s compliance departments.
In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to the Fund by the Adviser under separate agreements. The Board noted that the Adviser and its affiliates provide the Fund with certain administrative, transfer agency, shareholder and other services (in addition to any such services provided to the Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. The Board reviewed the structure and duties of the Adviser’s administration, accounting, legal and compliance departments and its affiliate’s transfer agency operations and considered the Adviser’s and its affiliate’s policies and procedures for assuring compliance with applicable laws and regulations.
| |
| 30 | Greater China Opportunities Fund | Annual report |
The Board also received information about the nature, extent and quality of services provided by and fee rates charged by the Adviser and Subadviser to their other clients, including other registered investment companies, institutional investors and separate accounts. The Board reviewed a general analysis provided by the Adviser and the Subadviser concerning investment advisory fees charged to other clients having similar investment mandates, the services provided to those other clients as compared to the services provided to the Fund, the performance of those other clients as compared to the performance by the Fund and other factors relating to those other clients. The Board considered the significant differences between the Adviser’s and Subadviser’s services to the Fund and the services they provide to other clients. For other clients that are not mutual funds, the differences in services relate to the greater share purchase and redemption activity in a mutual fund, the generally higher turnover of mutual fund portfolio holdings, the more burdensome regulatory and legal obligations of mutual funds, and the higher marketing costs for mutual funds. When compared to all clients including mutual funds, the Adviser has greater oversight and supervisory responsibility for the Fund and undertakes greater entrepreneurial risk as the sponsor of the Fund.
Fund performance
The Board was provided with reports, independently prepared by Morningstar, which included a comprehensive analysis of the Fund’s performance. The Board also examined materials provided by the Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook. The Board also reviewed a narrative and statistical analysis of the Morningstar data that was prepared by the Adviser, which analyzed various factors that may affect the Morningstar rankings. The Board reviewed information regarding the investment performance of the Fund as compared to its Morningstar Category as well as its benchmark index (see chart below). The Board was provided with a description of the methodology used by Morningstar to select the funds in the Category. The Board also considered updated performance information provided by the Adviser at its May and June 2011 meetings. The Board regularly reviews the performance of the Fund throughout the year and attaches more importance to performance over relatively longer periods of time, typically three to five years.
Set forth below is the performance of the Fund over certain time periods ended December 31, 2010 and that of its Category and benchmark index over the same periods:
| | | | |
| | 1 YEAR | 3 YEAR | 5 YEAR | 10 YEAR |
|
| Greater China Opportunities | 11.51% | –5.94% | 15.99% | — |
| Fund Class A | | | | |
| China Region Category Average | 15.05% | –3.88% | 18.54% | — |
| MSCI AC Golden Dragon NR Index | 13.24% | –1.62% | 12.75% | — |
The Board noted that the Fund had underperformed its Category’s average performance and its benchmark performance over a sustained period. The Board noted that the Fund underperformed its benchmark index except for the five-year period. The Board concluded that the steps the Adviser and Subadviser were taking, including the recent changes to the Fund’s management team, have resulted in recent performance improvement which the Board will continue to monitor.
Expenses and fees
The Board, including the Independent Trustees, reviewed the Fund’s contractual advisory fee rate payable by the Fund to the Adviser as compared with the other funds in its Peer Group. The Board also received information about the investment subadvisory fee rate payable by the Adviser to the Subadviser for investment subadvisory services. The Board considered the services provided and the fees charged by the Adviser and the Subadviser to other clients with similar investment mandates, including separately managed institutional accounts.
| |
| Annual report | Greater China Opportunities Fund | 31 |
In addition, the Board considered the cost of the services provided to the Fund by the Adviser. The Board received and considered expense information regarding the Fund’s various components, including advisory fees, distribution fees and fees other than advisory and distribution fees, including transfer agent fees, custodian fees, administration fees and other miscellaneous fees (e.g., fees for accounting and legal services). The Board considered comparisons of these expenses to the Peer Group median. The Board also considered expense information regarding the Fund’s total operating expense ratio (Gross Expense Ratio). The Board considered information comparing the Gross Expense Ratio and Net Expense Ratio of the Fund to that of the Peer Group median. As part of its analysis, the Board reviewed the Adviser’s methodology in allocating its costs to the management of the Fund and the Fund complex.
The Board noted that the Fund’s advisory fee ratio was nineteen basis points below the Peer Group median advisory fee ratio. The Board noted the following information about the Fund’s Gross and Net Expense Ratios for Class A shares contained in the Fund’s financial statements in relation with the Fund’s Peer Group median provided by Morningstar in April 2011:
| | |
| | FUND (CLASS A) | PEER GROUP MEDIAN |
|
| Advisory Fee Ratio | 1.00% | 1.19% |
| Gross Expense Ratio | 1.73% | 2.07% |
| Net Expense Ratio | 1.70% | 1.88% |
The Board also received and considered information relating to the Fund’s Gross Expense Ratio and Net Expense Ratio that reflected the new methodology for calculating transfer agent fees that was approved by the Trustees at the June 2010 meeting, which had the effect of lowering the expense ratio.
The Board received and reviewed statements relating to the Adviser’s financial condition and was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by the Adviser for services under the Advisory Agreement, as well as from other relationships between the Fund and the Adviser and its affiliates. The Board reviewed the Adviser’s profitability with respect to the Fund and other funds the Board currently oversees for the year ended December 31, 2010 compared to available aggregate profitability data provided for the year ended December 31, 2009. The Board reviewed the Adviser’s profitability with respect to other fund complexes managed by the Adviser and/or its affiliates. The Board reviewed the Adviser’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products.
The Board also considered a comparison of the Adviser’s profitability to that of other similar investment advisers whose profitability information is publicly available. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Adviser, the types of funds managed, expense allocations and business mix, and therefore comparability of profitability is somewhat limited.
The Board considered the profitability information with respect to the Subadviser, which is affiliated with the Adviser. In addition, as noted above, the Board considered the assumptions and methodology for allocating expenses in the Subadviser’s profitability analysis.
Economies of scale
The Board, including the Independent Trustees, considered the extent to which economies of scale might be realized as the assets of the Fund increase. Possible changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale (e.g., through the use of breakpoints in the advisory fee at higher asset levels) are periodically discussed. The Board also considered the Adviser’s overall operations and its ongoing investment in its business in order to expand the scale of, and improve the quality of, its operations that benefit the Fund.
| |
| 32 | Greater China Opportunities Fund | Annual report |
The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of the Adviser’s costs are not specific to individual funds, but rather are incurred across a variety of products and services. To ensure that any economies are reasonably shared with the Fund as its assets increase, the Adviser and the Board agreed to continue the existing breakpoints to the contractual advisory fee rate.
Other benefits to the Adviser and the Subadviser
The Board understands that the Adviser, the Subadviser or their affiliates may derive other ancillary benefits from their relationship with the Fund, both tangible and intangible, such as their ability to leverage investment professionals who manage other portfolios, an increase in their profile in the investment advisory community and the engagement of their affiliates and/or significant shareholders as service providers to the Fund, including for administrative, transfer agency and distribution services. The Board believes that certain of these benefits are difficult to quantify. The Board also was informed that the Subadviser may use third-party research obtained by soft dollars generated by certain mutual fund transactions to assist itself in managing all or a number of its other client accounts.
Board determination
The Board unanimously approved the continuation of the Advisory Agreement between the Adviser and the Fund for an additional one-year term. The Subadvisory Agreement among the Fund, the Adviser and the Subadviser was also approved for an additional one-year term. Based upon its evaluation of relevant factors in their totality, the Board was satisfied that the terms of the Agreements, including the advisory and subadvisory fee rates, were fair and reasonable and in the best interest of the Fund and its shareholders. In arriving at its decision to approve the Agreements, the Board did not identify any single factor or any group of factors as all-important or controlling, but considered all factors together. Different Trustees may have attributed different weights to the various factors considered. The Independent Trustees were also assisted by independent legal counsel in making this determination. The Trustees’ conclusions may be based in part on their consideration of these arrangements in prior years and on their ongoing regular review of Fund performance and operations throughout the year.
| |
| Annual report | Greater China Opportunities Fund | 33 |
Trustees and Officers
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees.
| | |
| Independent Trustees | | |
| | | |
| Name, Year of Birth | Trustee | Number of John |
| Position(s) held with Fund | of the | Hancock funds |
| Principal occupation(s) and other | Trust | overseen by |
| directorships during past 5 years | since1 | Trustee |
| |
| Steven R. Pruchansky, Born: 1944 | 2005 | 46 |
|
| Chairman (since January 2011); Chairman and Chief Executive Officer, Greenscapes of Southwest |
| Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); |
| Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real |
| estate) (since 2000); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty |
| Trust (until 1994); President, Maxwell Building Corp. (until 1991). | | |
| |
| James F. Carlin, Born: 1940 | 2005 | 46 |
|
| Chief Executive Officer, Director and Treasurer, Alpha Analytical Laboratories (environmental, chemical |
| and pharmaceutical analysis) (since 1985); Part Owner and Treasurer, Lawrence Carlin Insurance |
| Agency, Inc. (since 1995); Chairman and Chief Executive Officer, CIMCO, LLC (management/ |
| investments) (since 1987). | | |
| |
| William H. Cunningham, Born: 1944 | 2005 | 46 |
|
| 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 of the following: LIN Television |
| (since 2009); Lincoln National Corporation (insurance) (Chairman since 2009 and Director since 2006); |
| Resolute Energy Corporation (since 2009); Nanomedical Systems, Inc. (biotechnology company) |
| (Chairman since 2008); Yorktown Technologies, LP (tropical fish) (Chairman since 2007); Greater Austin |
| Crime Commission (since 2001); Southwest Airlines (since 2000); former Director of the following: |
| Introgen (manufacturer of biopharmaceuticals) (until 2008); Hicks Acquisition Company I, Inc. (until |
| 2007); Jefferson-Pilot Corporation (diversified life insurance company) (until 2006); and former Advisory |
| Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). | |
| |
| Deborah C. Jackson, Born: 1952 | 2008 | 46 |
|
| President, Cambridge College, Cambridge, Massachusetts (since May 2011); Chief Executive Officer, |
| American Red Cross of Massachusetts Bay (2002–May 2011); Board of Directors of Eastern Bank |
| Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); |
| Board of Directors of American Student Assistance Corp. (1996–2009); Board of Directors of Boston |
| Stock Exchange (2002–2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits |
| company) (2007–2011). | | |
| |
| Charles L. Ladner,2,3 Born: 1938 | 2005 | 46 |
|
| Vice Chairman (since March 2011); Chairman and Trustee, Dunwoody Village, Inc. (retirement services) |
| (since 2008); Director, Philadelphia Archdiocesan Educational Fund (since 2009); Senior Vice President |
| and Chief Financial Officer, UGI Corporation (public utility holding company) (retired 1998); Vice |
| President and Director for AmeriGas, Inc. (retired 1998); Director of AmeriGas Partners, L.P. (gas |
| distribution) (until 1997); Director, EnergyNorth, Inc. (until 1995); Director, Parks and History Association |
| (Cooperating Association, National Park Service) (until 2005). | | |
| |
| 34 | Greater China Opportunities Fund | Annual report |
| | |
| Independent Trustees (continued) | | |
| |
| Name, Year of Birth | Trustee | Number of John |
| Position(s) held with Fund | of the | Hancock funds |
| Principal occupation(s) and other | Trust | overseen by |
| directorships during past 5 years | since1 | Trustee |
| |
| Stanley Martin,2 Born: 1947 | 2008 | 46 |
|
| Senior Vice President/Audit Executive, Federal Home Loan Mortgage Corporation (2004–2006); |
| Executive Vice President/Consultant, HSBC Bank USA (2000–2003); Chief Financial Officer/Executive |
| Vice President, Republic New York Corporation & Republic National Bank of New York (1998–2000); |
| Partner, KPMG LLP (1971–1998). | | |
| |
| Dr. John A. Moore,2 Born: 1939 | 2005 | 46 |
|
| President and Chief Executive Officer, Institute for Evaluating Health Risks, (nonprofit institution) |
| (until 2001); Senior Scientist, Sciences International (health research) (until 2003); Former | |
| Assistant Administrator & Deputy Administrator, Environmental Protection Agency; Principal, |
| Hollyhouse (consulting) (since 2000); Director, CIIT Center for Health Science Research (nonprofit |
| research) (until 2007). | | |
| |
| Patti McGill Peterson,2 Born: 1943 | 2005 | 46 |
|
| Presidential Advisor for Global Initiatives, American Council on Education (since 2011); Chairperson |
| of the Board of the Trust (during 2009 and 2010); Principal, PMP Globalinc (consulting) (2007–2011); |
| Senior Associate, Institute for Higher Education Policy (2007–2011); Executive Director, CIES |
| (international education agency) (until 2007); Vice President, Institute of International Education (until |
| 2007); Former President Wells College, St. Lawrence University and the Association of Colleges and |
| Universities of the State of New York. Director of the following: Mutual Fund Directors Forum (since |
| 2011); Niagara Mohawk Power Corporation (until 2003); Security Mutual Life (insurance) (until 1997); |
| ONBANK (until 1993). Trustee of the following: Board of Visitors, The University of Wisconsin, Madison |
| (since 2007); Ford Foundation, International Fellowships Program (until 2007); UNCF, International |
| Development Partnerships (until 2005); Roth Endowment (since 2002); Council for International |
| Educational Exchange (since 2003). | | |
| |
| Gregory A. Russo, Born: 1949 | 2009 | 46 |
|
| Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002–2006); Vice Chairman, Industrial |
| Markets, KPMG (1998–2002). | | |
| |
| Non-Independent Trustees4 | | |
| | | |
| Name, Year of Birth | Trustee | Number of John |
| Position(s) held with Fund | of the | Hancock funds |
| Principal occupation(s) and other | Trust | overseen by |
| directorships during past 5 years | since1 | Trustee |
| |
| Hugh McHaffie, Born: 1959 | 2010 | 46 |
|
| Executive Vice President, John Hancock Financial Services (since 2006, including prior positions); |
| President of John Hancock Variable Insurance Trust and John Hancock Funds II (since 2009); Trustee, |
| John Hancock retail funds (since 2010); Chairman and Director, John Hancock Advisers, LLC, |
| John Hancock Investment Management Services, LLC and John Hancock Funds, LLC (since 2010); Senior |
| Vice President, Individual Business Product Management, MetLife, Inc. (1999–2006). | |
| |
| Annual report | Greater China Opportunities Fund | 35 |
| | |
| Non-Independent Trustees4 (continued) | | |
| |
| Name, Year of Birth | Trustee | Number of John |
| Position(s) held with Fund | of the | Hancock funds |
| Principal occupation(s) and other | Trust | overseen by |
| directorships during past 5 years | since1 | Trustee |
| |
| John G. Vrysen, Born: 1955 | 2009 | 46 |
|
| Senior Vice President, John Hancock Financial Services (since 2006); Director, Executive Vice President |
| and Chief Operating Officer, John Hancock Advisers, LLC, John Hancock Investment Management |
| Services, LLC and John Hancock Funds, LLC (since 2005); Chief Operating Officer, John Hancock |
| Funds II and John Hancock Variable Insurance Trust (since 2007); Chief Operating Officer, John Hancock |
| retail funds (until 2009); Trustee, John Hancock retail funds (since 2009). | | |
| |
| Principal officers who are not Trustees | | |
| | | |
| Name, Year of Birth | | Officer |
| Position(s) held with Fund | | of the |
| Principal occupation(s) and other | | Trust |
| directorships during past 5 years | | since |
| |
| Keith F. Hartstein, Born: 1956 | | 2005 |
|
| President and Chief Executive Officer | | |
| Senior Vice President, John Hancock Financial Services (since 2004); Director, President and Chief |
| Executive Officer, John Hancock Advisers, LLC and John Hancock Funds, LLC (since 2005); Director, |
| John Hancock Asset Management a division of Manulife Asset Management (US) LLC (since 2005); |
| Director, John Hancock Investment Management Services, LLC (since 2006); President and Chief |
| Executive Officer, John Hancock retail funds (since 2005); Member, Investment Company Institute Sales |
| Force Marketing Committee (since 2003). | | |
| |
| Andrew G. Arnott, Born: 1971 | | 2009 |
|
| Senior Vice President and Chief Operating Officer | | |
| Senior Vice President, John Hancock Financial Services (since 2009); Executive Vice President, |
| John Hancock Advisers, LLC (since 2005); Executive Vice President, John Hancock Investment |
| Management Services, LLC (since 2006); Executive Vice President, John Hancock Funds, LLC (since |
| 2004); Chief Operating Officer, John Hancock retail funds (since 2009); Senior Vice President, |
| John Hancock retail funds (since 2010); Vice President, John Hancock Funds II and John Hancock |
| Variable Insurance Trust (since 2006); Senior Vice President, Product Management and Development, |
| John Hancock Funds, LLC (until 2009). | | |
| |
| Thomas M. Kinzler, Born: 1955 | | 2006 |
|
| Secretary and Chief Legal Officer | | |
| Vice President, John Hancock Financial Services (since 2006); Secretary and Chief Legal Counsel, |
| John Hancock Advisers, LLC, John Hancock Investment Management Services, LLC and John Hancock |
| Funds, LLC (since 2007); Secretary and Chief Legal Officer, John Hancock retail funds, John Hancock |
| Funds II and John Hancock Variable Insurance Trust (since 2006); Vice President and Associate General |
| Counsel, Massachusetts Mutual Life Insurance Company (1999–2006); Secretary and Chief Legal |
| Counsel, MML Series Investment Fund (2000–2006); Secretary and Chief Legal Counsel, MassMutual |
| Select Funds and MassMutual Premier Funds (2004–2006). | | |
| |
| 36 | Greater China Opportunities Fund | Annual report |
| |
| Principal officers who are not Trustees (continued) | |
| |
| Name, Year of Birth | Officer |
| Position(s) held with Fund | of the |
| Principal occupation(s) and other | Trust |
| directorships during past 5 years | since |
| |
| Francis V. Knox, Jr., Born: 1947 | 2005 |
|
| Chief Compliance Officer | |
| Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock |
| retail funds, John Hancock Funds II, John Hancock Variable Insurance Trust, John Hancock Advisers, |
| LLC and John Hancock Investment Management Services, LLC (since 2005); Vice President and Chief |
| Compliance Officer, John Hancock Asset Management a division of Manulife Asset Management (US) |
| LLC (2005–2008). | |
| |
| Charles A. Rizzo, Born: 1957 | 2007 |
|
| Chief Financial Officer | |
| Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock | |
| Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial |
| Officer, John Hancock retail funds, John Hancock Funds II and John Hancock Variable Insurance Trust |
| (since 2007); Assistant Treasurer, Goldman Sachs Mutual Fund Complex (2005–2007); Vice President, |
| Goldman Sachs (2005–2007). | |
| |
| Salvatore Schiavone, Born: 1965 | 2010 |
|
| Treasurer | |
| Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock |
| Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, | |
| John Hancock retail funds (since 2010); Treasurer, John Hancock closed-end funds (since 2009); | |
| Assistant Treasurer, John Hancock Funds II and John Hancock Variable Insurance Trust (since | |
| October 2010) and (2007–2009); Assistant Treasurer, John Hancock retail funds (2007–2009); | |
| Assistant Treasurer, Fidelity Group of Funds (2005–2007); Vice President, Fidelity Management | |
| Research Company (2005–2007). | |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the Fund includes additional information about members of the Board of Trustees of the Fund and is available without charge, upon request, by calling 1-800-225-5291.
1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation or removal.
2 Member of Audit Committee.
3 Mr. Ladner’s term of office will end when he retires as a Trustee on 12-31-11.
4 Because Messrs. McHaffie and Vrysen are senior executives or directors with the Adviser and/or its affiliates, each of them is considered an “interested person,” as defined in the Investment Company Act of 1940, of the Fund.
| |
| Annual report | Greater China Opportunities Fund | 37 |
More information
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| Trustees | Investment adviser |
| Steven R. Pruchansky, Chairman | John Hancock Advisers, LLC |
| James F. Carlin | |
| William H. Cunningham | Subadviser |
| Deborah C. Jackson | John Hancock Asset Management |
| Charles L. Ladner,* Vice Chairman | a division of Manulife Asset Management |
| Stanley Martin* | (North America) Limited |
| Hugh McHaffie† | |
| Dr. John A. Moore* | Principal distributor |
| Patti McGill Peterson* | John Hancock Funds, LLC |
| Gregory A. Russo | |
| John G. Vrysen† | Custodian |
| | State Street Bank and Trust Company |
| Officers | |
| Keith F. Hartstein | Transfer agent |
| President and Chief Executive Officer | John Hancock Signature Services, Inc. |
| |
| Andrew G. Arnott | Legal counsel |
| Senior Vice President and Chief Operating Officer | K&L Gates LLP |
| |
| Thomas M. Kinzler | Independent registered |
| Secretary and Chief Legal Officer | public accounting firm |
| | PricewaterhouseCoopers LLP |
| Francis V. Knox, Jr. | |
| Chief Compliance Officer | |
| | |
| Charles A. Rizzo | |
| Chief Financial Officer | |
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| Salvatore Schiavone | |
| Treasurer | |
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| *Member of the Audit Committee | |
| †Non-Independent Trustee | |
The Fund’s proxy voting policies and procedures, as well as the Fund’s 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) Web site at www.sec.gov or on our Web site.
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 Web site and the SEC’s Web site, www.sec.gov, and can be reviewed and copied (for a fee) at the SEC’s Public Reference Room in Washington, DC. Call 1-800-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 Web site www.jhfunds.com or by calling 1-800-225-5291.
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| You can also contact us: | | |
| 1-800-225-5291 | Regular mail: | Express mail: |
| jhfunds.com | John Hancock Signature Services, Inc. | John Hancock Signature Services, Inc. |
| | P.O. Box 55913 | Mutual Fund Image Operations |
| | Boston, MA 02205-5913 | 30 Dan Road |
| | | Canton, MA 02021 |
| |
| 38 | Greater China Opportunities Fund | Annual report |
1-800-225-5291
1-800-554-6713 TDD
1-800-338-8080 EASI-Line
www.jhfunds.com
Now available: electronic delivery
www.jhfunds.com/edelivery
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| This report is for the information of the shareholders of John Hancock Greater China Opportunities Fund. | 0800A 10/11 |
| It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | 12/11 |
ITEM 2. CODE OF ETHICS.
As of the end of the period, October 31, 2011, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the “Senior Financial Officers”). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Stanley Martin is the audit committee financial expert and is “independent”, pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the principal accountant(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 $27,576 for the fiscal year ended October 31, 2011 for John Hancock Greater China Opportunities Fund and $26,024 for the fiscal year ended October 31, 2010 for John Hancock Greater China Opportunities Fund These fees were billed to the registrant and were approved by the registrant’s audit committee.
(b) Audit-Related Services
Audit-related service fees for the fiscal year ended October 31, 2011 amounted to $2,238 for John Hancock Greater China Opportunities Fund and $347 for the fiscal year ended October 31, 2010 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"). The nature of the services provided was affiliated service provider internal controls reviews.
(c) Tax Fees
The aggregate fees billed for professional services rendered by the principal accountant(s) for the tax compliance, tax advice and tax planning (“tax fees”) amounted to $3,360 for the fiscal year ended October 31, 2011 for John Hancock Greater China Opportunities Fund and $3,200 for the fiscal year ended October 31, 2010 for John Hancock Greater China Opportunities Fund. 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
Other fees for the fiscal year ended October 31, 2011 amounted to $1,316 for John Hancock Greater China Opportunities Fund and $1,320 for the fiscal year ended October 31, 2010 billed to the registrant or to the control affiliates.
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The trust’s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the “Auditor”) relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust’s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of audit-related and non-audit services by
the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f) According to the registrant’s principal accountant, for the fiscal year ended October 31, 2011, 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 for each of the last two fiscal years of the registrant were $1,676,454 for the fiscal year ended October 31, 2011 and $3,068,309 for the fiscal year ended October 31, 2010.
(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:
Stanley Martin - Chairman
Dr. John A. Moore
Charles L. Ladner
Patti McGill Peterson
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) Not applicable.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no material changes to previously disclosed John Hancock Funds – 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 registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics for Senior Financial Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b) 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 – Governance Committee Charter”.
(c)(2) Contact person at the registrant.
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.
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| John Hancock Investment Trust III |
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| By: | /s/ Keith F. Hartstein |
| | ------------------------------ |
| Keith F. Hartstein |
| | President and |
| | Chief Executive Officer |
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| Date: | December 13, 2011 |
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.
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| By: | /s/ Keith F. Hartstein |
| | ------------------------------- |
| Keith F. Hartstein |
| President and |
| | Chief Executive Officer |
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| |
| Date: | December 13, 2011 |
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| By: | /s/ Charles A. Rizzo |
| | -------------------------------- |
| Charles A. Rizzo |
| | Chief Financial Officer |
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| Date: | December 13, 2011 |
