UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4651
John Hancock Strategic Series
(Exact name of registrant as specified in charter)
601 Congress Street, Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Treasurer
601 Congress Street
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-663-4497
Date of fiscal year end: | May 31 |
Date of reporting period: | May 31, 2018 |
ITEM 1. REPORTS TO STOCKHOLDERS.
John Hancock
Income Fund
Annual report 5/31/18
A message to shareholders
Dear shareholder,
It was a challenging 12 months for fixed-income investors, as both short- and long-term yields rose steadily higher. Inflation fears sparked a sell-off in credit segments of the markets in early 2018. The U.S. Federal Reserve (Fed) raised the benchmark lending rate by a quarter point three times during the period—and once more just after period end—bringing the federal funds rate to a range of 1.75% to 2.00%. The Fed appears to be moving in line with economic data, as its GDP estimate for 2018 rose from 2.00% to 3.00%. It has now hiked rates seven times since it began the current tightening cycle in December 2015, and indicated that more rate increases are likely this year.
While the U.S. economy has been fairly strong, this can lead to higher inflation, a stronger dollar, and tighter monetary policy, which isn't a favorable environment for many interest-rate-sensitive bonds. Those concerns have been reflected in recent market volatility, which is likely representative of the kinds of challenges income investors will continue to face in the back half of the year.
Your best resource in unpredictable markets is your financial advisor, who can help position your portfolio so that it's sufficiently diversified to meet your long-term objectives and to withstand the inevitable turbulence along the way.
On behalf of everyone at John Hancock Investments, I'd like to take this opportunity to welcome new shareholders and to thank existing shareholders for the continued trust you've placed in us.
Sincerely,
Andrew G. Arnott
President and CEO,
John Hancock Investments
Head of Wealth and Asset Management,
United States and Europe
This commentary reflects the CEO's views, which are subject to change at any time. Investing involves risks, including the potential loss of principal. Diversification does not guarantee a profit or eliminate the risk of a loss. It is not possible to invest directly into an index. For more up-to-date information, please visit our website at jhinvestments.com.
John Hancock
Income Fund
Table of contents
2 | Your fund at a glance | |
4 | Discussion of fund performance | |
8 | A look at performance | |
10 | Your expenses | |
12 | Fund's investments | |
33 | Financial statements | |
37 | Financial highlights | |
47 | Notes to financial statements | |
59 | Report of independent registered public accounting firm | |
60 | Tax information | |
61 | Trustees and Officers | |
65 | More information |
INVESTMENT OBJECTIVE
The fund seeks a high level of current income.
AVERAGE ANNUAL TOTAL RETURNS AS OF 5/31/18 (%)
The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Figures from Morningstar, Inc. include reinvested distributions and do not take into account sales charges. Actual load-adjusted performance is lower.
The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does not guarantee future results. Performance of the other share classes will vary based on the difference in the fees and expenses of those classes. Shares will fluctuate in value and, when redeemed, may be worth more or less than their original cost. Current month-end performance may be lower or higher than the performance cited, and can be found at jhinvestments.com or by calling 800-225-5291. For further information on the fund's objectives, risks, and strategy, see the fund's prospectus.
PERFORMANCE HIGHLIGHTS OVER THE LAST TWELVE MONTHS
Bonds yields rose on inflation concerns
Rising bond yields, driven by a strengthening economy and higher inflation expectations, put downward pressure on bond prices.
Risk assets were mixed
Credit-sensitive sectors, such as high-yield and investment-grade corporate bonds, outperformed, while emerging-market debt lagged.
The fund underperformed its benchmark
The fund underperformed the Bloomberg Barclays U.S. Aggregate Bond Index, as the positive impact of its high-yield bond position was offset by the negative effect of currency positioning and emerging-market debt exposure.
PORTFOLIO COMPOSITION AS OF 5/31/18 (%)
A note about risks
Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if a creditor, grantor, or counterparty is unable or unwilling to make principal, interest, or settlement payments. Investments in higher-yielding, lower-rated securities are subject to a higher risk of default. A fund concentrated in one sector or that holds a limited number of securities may fluctuate more than a fund that invests in a wider variety of sectors. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, and may be subject to early repayment and the market's perception of issuer creditworthiness. Liquidity—the extent to which a security may be sold or a derivative position closed without negatively affecting its market value—may be impaired by reduced trading volume, heightened volatility, rising interest rates, and other market conditions. Loan participations and assignments involve special types of risks, including credit risk, interest-rate risk, counterparty risk, liquidity risk, and extended settlement risk. Derivatives transactions, such as hedging and other strategic transactions, may increase a fund's volatility and could produce disproportionate losses, potentially more than the fund's principal investment. Fund distributions generally depend on income from underlying investments and may vary or cease altogether in the future. Please see the fund's prospectus for additional risks.
An interview with Portfolio Manager Daniel S. Janis III, John Hancock Asset Management a division of Manulife Asset Management (US) LLC
Daniel S. Janis III
Portfolio Manager
John Hancock Asset Management
Can you describe the bond market environment during the 12 months ended May 31, 2018?
It was a challenging period for bond investors as a strengthening U.S. economy pushed bond yields higher. Solid job gains sent the unemployment rate to an 18-year low, manufacturing activity picked up, and consumer spending remained robust. The positive economic data translated into increased inflationary concerns, particularly in early 2018 after passage of federal tax reform legislation in late 2017 lifted economic growth expectations.
In addition, the U.S. Federal Reserve (Fed) continued the process of normalizing monetary policy by raising short-term interest rates three times during the period, and then followed with another interest-rate hike in June, two weeks after the end of the reporting period. In October 2017, the Fed also began reducing the size of its balance sheet, which it had built up as a result of quantitative easing policies in place from 2008 to 2013.
Geopolitical developments during the period contributed to an increase in bond market volatility. Major geopolitical factors included trade tariff rhetoric between the United States and China, tensions on the Korean peninsula, and turbulence in the Middle East that culminated in the United States exiting the Iran nuclear accord.
A stronger economic backdrop and rising inflation expectations drove U.S. Treasury yields higher across the board. Short-term yields rose the most in response to the Fed rate hikes—the two-year U.S. Treasury yield nearly doubled from 1.28% to 2.40% during the period. Longer-term bond yields rose to a lesser degree, although the 10-year U.S. Treasury yield crested above 3% for the first time in four years before ending the period at 2.83%.
For the period, the fund's benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index (a broad measure of U.S. bond market performance), posted a loss of 0.37%. On a sector basis, high-yield corporate bonds were the leading performers, although much of the sector's outperformance occurred in the first half of the reporting period. Investment-grade corporate bonds also advanced, while U.S. Treasury bonds lagged given their greater interest-rate sensitivity.
Turning to the fund, what positions contributed negatively to performance?
The fund's allocation to emerging-market debt, which represented almost one-fifth of the fund at period end, detracted from performance. Most of the fund's holdings in emerging markets are denominated in U.S. dollars, and as a result, the fund didn't benefit from the overall decline in the U.S. dollar, especially in late 2017 and early 2018.
That said, we continue to hold a positive view of emerging-market debt in general, specifically with regard to the markets where the fund's exposure is concentrated—Mexico, Indonesia, Brazil, and the Philippines. We continued to emphasize higher-quality countries with compelling relative valuations and a degree of insulation from external capital flows; late in the period, our research led us to boost the fund's weightings in India and Colombia. While emerging markets may, over the short term, experience pockets of volatility as investors' risk appetites change, we continue to find the asset class one of the more compelling long-term opportunities in the fixed-income markets.
What contributed to the fund's performance?
The fund's positioning in high-yield corporate bonds was a positive contributor to performance, both on an absolute basis and versus the benchmark. High-yield bonds (generally those rated BB and lower) represented 28.7% of net assets at period end, whereas the index has no high-yield component. As the high-yield sector grew increasingly volatile during the last half of the period, we took advantage of opportunities to gradually increase the fund's exposure, with targeted allocations to higher-rated positions that are less sensitive to credit events. This kind of active tailoring of the portfolio as market conditions change is one of the core benefits of a fund like this.
COUNTRY COMPOSITION AS OF 5/31/18 (%)
United States | 61.7 |
Mexico | 5.7 |
Indonesia | 3.9 |
Canada | 3.2 |
Philippines | 2.8 |
Ireland | 2.2 |
Norway | 2.2 |
Netherlands | 2.1 |
Australia | 2.0 |
Other countries | 14.2 |
TOTAL | 100.0 |
As a percentage of net assets. |
Fund holdings in other sectors not represented in the index—particularly bank loans and convertible securities—also added value during the period. One of the fundamental features of bank loans is their floating yields, which rise as short-term interest rates increase. With the Fed continuing to normalize monetary policy, bank loans have attracted greater attention from investors. Convertible bonds allow the holder to exchange the bonds for equity shares after a specified period of time, so they often move in conjunction with the stock market, and the sharp stock market rally over the past 12 months helped boost convertible bonds. In recent months, we've scaled back the fund's position in convertibles but increased its holdings of bank loans.
A lack of exposure to the U.S. Treasury sector was a positive for performance. Treasury bonds underperformed during the period, while the fund's lower duration (a measure of interest-rate sensitivity) versus the benchmark meant that rising interest rates had less of an impact on the fund.
What effect did currency exposure have on fund performance?
The fund's currency positioning, frequently implemented using forward currency contracts, was a net detractor from performance versus the benchmark. The primary issue was positioning in the U.S. dollar versus the Brazilian real and the Mexican peso. However, this was partially offset by a position
QUALITY COMPOSITION AS OF 5/31/18 (%)
in the U.S. dollar versus the Chilean peso. We continue to seek opportunities in non-U.S. dollar assets on the belief that they may help augment returns if, as we expect, the U.S. dollar remains in a longer-term downtrend.
How was the portfolio positioned at the end of the reporting period?
We continue to seek a balance between a number of factors in the portfolio, including yield, risk, and quality. In the United States, a strengthening economy, low unemployment, and an uptick in inflation all point to higher interest rates. The federal funds rate is at its highest level in more than a decade, and the consensus is that the Fed is likely to hike rates once or twice more this year. Consequently, we have no intention of adding significantly to the fund's duration profile and will continue to emphasize credit risk over interest-rate risk. Internationally, we're continuing to find select opportunities in both credits and currencies, and we'll continue to manage those allocations independently.
Although the global macroeconomic environment is positive in our view, valuations remain stretched, particularly in risk assets, and a number of factors could trigger higher volatility in financial markets. We retain a relatively defensive posture from a credit and quality perspective while striving to maintain sufficient portfolio liquidity. We continue to add marginal risk to the portfolio in terms of country, credit, and currency exposures, but we are doing so on a very selective basis using our highly active, research-driven approach.
MANAGED BY
Daniel S. Janis III On the fund since 1999 Investing since 1984 | |
Thomas C. Goggins On the fund since 2009 Investing since 1989 | |
Kisoo Park On the fund since 2015 Investing since 1986 | |
Christopher M. Chapman, CFA On the fund since 2017 Investing since 1999 |
TOTAL RETURNS FOR THE PERIOD ENDED MAY 31, 2018
Average annual total returns (%) with maximum sales charge | Cumulative total returns (%) with maximum sales charge | SEC 30-day yield (%) subsidized | SEC 30-day yield (%) unsubsidized1 | ||||||||
1-year | 5-year | 10-year | 5-year | 10-year | as of 5-31-18 | as of 5-31-18 | |||||
Class A | -4.42 | 0.97 | 4.78 | 4.95 | 59.47 | 3.32 | 3.31 | ||||
Class B | -5.95 | 0.73 | 4.63 | 3.69 | 57.17 | 2.75 | 2.74 | ||||
Class C | -2.09 | 1.08 | 4.48 | 5.54 | 54.99 | 2.74 | 2.74 | ||||
Class I2 | -0.29 | 2.07 | 5.55 | 10.81 | 71.57 | 3.76 | 3.75 | ||||
Class R12 | -0.77 | 1.45 | 4.88 | 7.47 | 61.09 | 3.08 | 3.08 | ||||
Class R22,3 | -0.54 | 1.71 | 5.19 | 8.84 | 65.90 | 3.34 | 3.33 | ||||
Class R32,3 | -0.68 | 1.55 | 5.00 | 7.99 | 62.96 | 3.20 | 3.19 | ||||
Class R42,3 | -0.28 | 1.95 | 5.33 | 10.16 | 68.16 | 3.59 | 3.48 | ||||
Class R52,3 | -0.09 | 2.16 | 5.55 | 11.25 | 71.60 | 3.79 | 3.78 | ||||
Class R62,3 | -0.03 | 2.22 | 5.52 | 11.59 | 71.11 | 3.84 | 3.83 | ||||
Index† | -0.37 | 1.98 | 3.72 | 10.30 | 44.15 | — | — |
Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 4.0%, and the applicable contingent deferred sales charge (CDSC) on Class B and Class C shares. The returns for Class A shares have been adjusted to reflect the reduction in the maximum sales charge from 4.5% to 4.0%, effective 2-3-14. The Class B shares' CDSC declines annually between years 1 to 6 according to the following schedule: 5%, 4%, 3%, 3%, 2%, 1%. No sales charge will be assessed after the sixth year. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class R1, Class R2, Class R3, Class R4, Class R5, and Class R6 shares.
The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from those disclosed in the Financial highlights tables in this report. Net expenses reflect contractual expense limitations in effect until September 30, 2018 and are subject to change. Had the contractual fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:
Class A | Class B | Class C | Class I | Class R1 | Class R2 | Class R3 | Class R4 | Class R5 | Class R6 | |
Gross (%) | 0.81 | 1.51 | 1.51 | 0.50 | 1.16 | 0.91 | 1.06 | 0.76 | 0.46 | 0.41 |
Net (%) | 0.81 | 1.51 | 1.51 | 0.50 | 1.16 | 0.91 | 1.06 | 0.66 | 0.46 | 0.41 |
Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.
The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility and other factors, the fund's current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund's website at jhinvestments.com.
The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund's performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.
† | Index is the Bloomberg Barclays U.S. Aggregate Bond Index. |
See the following page for footnotes.
This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Income Fund for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we've shown the same investment in the Bloomberg Barclays U.S. Aggregate Bond Index.
Start date | With maximum sales charge ($) | Without sales charge ($) | Index ($) | |
Class B4 | 5-31-08 | 15,717 | 15,717 | 14,415 |
Class C4 | 5-31-08 | 15,499 | 15,499 | 14,415 |
Class I2 | 5-31-08 | 17,157 | 17,157 | 14,415 |
Class R12 | 5-31-08 | 16,109 | 16,109 | 14,415 |
Class R22,3 | 5-31-08 | 16,590 | 16,590 | 14,415 |
Class R32,3 | 5-31-08 | 16,296 | 16,296 | 14,415 |
Class R42,3 | 5-31-08 | 16,816 | 16,816 | 14,415 |
Class R52,3 | 5-31-08 | 17,160 | 17,160 | 14,415 |
Class R62,3 | 5-31-08 | 17,111 | 17,111 | 14,415 |
The values shown in the chart for Class A shares with maximum sales charge have been adjusted to reflect the reduction in the Class A shares' maximum sales charge from 4.5% to 4.0%, which became effective on 2-3-14.
The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would result in lower returns.
Footnotes related to performance pages
1 | Unsubsidized yield reflects what the yield would have been without the effects of reimbursements and waivers. |
2 | For certain types of investors, as described in the fund's prospectus. |
3 | Class R2 shares were first offered on 3-1-12; Class R3, Class R4, and Class R5 shares were first offered on 5-22-09; Class R6 shares were first offered 9-1-11. Returns prior to these dates are those of Class A (first offered on 8-18-86) that have not been adjusted for class-specific expenses; otherwise, returns would vary. |
4 | The contingent deferred sales charge is not applicable. |
These examples are intended to help you understand your ongoing operating expenses of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds.
Understanding fund expenses
As a shareholder of the fund, you incur two types of costs:
• | Transaction costs, which include sales charges (loads) on purchases or redemptions (varies by share class), minimum account fee charge, etc. |
• | Ongoing operating expenses, including management fees, distribution and service fees (if applicable), and other fund expenses. |
We are presenting only your ongoing operating expenses here.
Actual expenses/actual returns
The first line of each share class in the table on the following page is intended to provide information about the fund's actual ongoing operating expenses, and is based on the fund's actual return. It assumes an account value of $1,000.00 on December 1, 2017, with the same investment held until May 31, 2018.
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 May 31, 2018, by $1,000.00, then multiply it by the "expenses paid" for your share class from the table. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:
Hypothetical example for comparison purposes
The second line of each share class in the table on the following page allows you to compare the fund's ongoing operating expenses with those of any other fund. It provides an example of the fund's hypothetical account values and hypothetical expenses based on each class's actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund's actual return). It assumes an account value of $1,000.00 on December 1, 2017, with the same investment held until May 31, 2018. Look in any other fund shareholder report to find its hypothetical example and you will be able to compare these expenses. Please remember that these hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs.
Account value on 12-1-2017 | Ending value on 5-31-2018 | Expenses paid during period ended 5-31-20181 | Annualized expense ratio | ||
Class A | Actual expenses/actual returns | $1,000.00 | $ 980.80 | $3.90 | 0.79% |
Hypothetical example | 1,000.00 | 1,021.00 | 3.98 | 0.79% | |
Class B | Actual expenses/actual returns | 1,000.00 | 977.40 | 7.35 | 1.49% |
Hypothetical example | 1,000.00 | 1,017.50 | 7.49 | 1.49% | |
Class C | Actual expenses/actual returns | 1,000.00 | 977.40 | 7.35 | 1.49% |
Hypothetical example | 1,000.00 | 1,017.50 | 7.49 | 1.49% | |
Class I | Actual expenses/actual returns | 1,000.00 | 980.60 | 2.47 | 0.50% |
Hypothetical example | 1,000.00 | 1,022.40 | 2.52 | 0.50% | |
Class R1 | Actual expenses/actual returns | 1,000.00 | 979.20 | 5.67 | 1.15% |
Hypothetical example | 1,000.00 | 1,019.20 | 5.79 | 1.15% | |
Class R2 | Actual expenses/actual returns | 1,000.00 | 980.20 | 4.49 | 0.91% |
Hypothetical example | 1,000.00 | 1,020.40 | 4.58 | 0.91% | |
Class R3 | Actual expenses/actual returns | 1,000.00 | 979.60 | 5.13 | 1.04% |
Hypothetical example | 1,000.00 | 1,019.70 | 5.24 | 1.04% | |
Class R4 | Actual expenses/actual returns | 1,000.00 | 981.50 | 3.21 | 0.65% |
Hypothetical example | 1,000.00 | 1,021.70 | 3.28 | 0.65% | |
Class R5 | Actual expenses/actual returns | 1,000.00 | 982.40 | 2.22 | 0.45% |
Hypothetical example | 1,000.00 | 1,022.70 | 2.27 | 0.45% | |
Class R6 | Actual expenses/actual returns | 1,000.00 | 981.10 | 1.93 | 0.39% |
Hypothetical example | 1,000.00 | 1,023.00 | 1.97 | 0.39% |
1 | Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 11 |
Fund’s investments |
Rate (%) | Maturity date | Par value^ | Value | ||
Foreign government obligations 23.4% | $799,293,423 | ||||
(Cost $864,955,222) | |||||
Australia 1.7% | 58,084,155 | ||||
Commonwealth of Australia | 5.750 | 07-15-22 | AUD | 6,220,000 | 5,349,872 |
New South Wales Treasury Corp. | 4.000 | 04-08-21 | AUD | 7,875,000 | 6,242,695 |
New South Wales Treasury Corp. | 6.000 | 03-01-22 | AUD | 10,615,000 | 9,066,927 |
Queensland Treasury Corp. | 5.500 | 06-21-21 | AUD | 18,320,000 | 15,124,958 |
Queensland Treasury Corp. | 6.000 | 07-21-22 | AUD | 15,580,000 | 13,389,114 |
Western Australian Treasury Corp. | 2.500 | 07-23-24 | AUD | 12,000,000 | 8,910,589 |
Austria 0.3% | 11,482,492 | ||||
Republic of Austria (A) | 0.000 | 07-15-23 | EUR | 9,810,000 | 11,482,492 |
Brazil 1.8% | 60,491,375 | ||||
Federative Republic of Brazil | 10.000 | 01-01-21 | BRL | 92,660,000 | 25,507,859 |
Federative Republic of Brazil | 10.000 | 01-01-23 | BRL | 131,340,000 | 34,983,516 |
Canada 1.4% | 46,442,300 | ||||
Canada Housing Trust No. 1 (A) | 1.250 | 12-15-20 | CAD | 8,670,000 | 6,545,964 |
Export Development Canada | 2.400 | 06-07-21 | AUD | 3,560,000 | 2,687,076 |
Export Development Canada | 4.875 | 01-24-19 | NZD | 13,715,000 | 9,761,541 |
Government of Canada | 1.250 | 11-01-19 | CAD | 16,610,000 | 12,710,762 |
Government of Canada | 1.250 | 02-01-20 | CAD | 13,855,000 | 10,578,997 |
Province of Ontario | 4.400 | 06-02-19 | CAD | 5,257,000 | 4,157,960 |
Colombia 0.7% | 22,634,022 | ||||
Republic of Colombia | 4.500 | 01-28-26 | 11,740,000 | 11,892,620 | |
Republic of Colombia | 7.000 | 05-04-22 | COP | 29,722,000,000 | 10,741,402 |
Finland 0.3% | 11,281,223 | ||||
Republic of Finland (A) | 1.500 | 04-15-23 | EUR | 8,960,000 | 11,281,223 |
Hungary 0.9% | 31,612,014 | ||||
Republic of Hungary | 6.250 | 01-29-20 | 16,105,000 | 16,825,232 | |
Republic of Hungary | 6.375 | 03-29-21 | 13,812,000 | 14,786,782 | |
Indonesia 3.5% | 118,246,951 | ||||
Republic of Indonesia (A) | 2.150 | 07-18-24 | EUR | 5,440,000 | 6,554,787 |
Republic of Indonesia | 5.625 | 05-15-23 | IDR | 55,409,000,000 | 3,738,463 |
Republic of Indonesia | 6.125 | 05-15-28 | IDR | 255,085,000,000 | 17,311,634 |
Republic of Indonesia | 6.625 | 05-15-33 | IDR | 105,291,000,000 | 7,028,241 |
Republic of Indonesia | 7.000 | 05-15-22 | IDR | 170,281,000,000 | 12,334,496 |
Republic of Indonesia | 7.000 | 05-15-27 | IDR | 179,050,000,000 | 12,821,501 |
Republic of Indonesia | 7.500 | 08-15-32 | IDR | 52,218,000,000 | 3,729,857 |
Republic of Indonesia | 7.500 | 05-15-38 | IDR | 101,308,000,000 | 7,072,239 |
Republic of Indonesia | 8.250 | 07-15-21 | IDR | 145,828,000,000 | 10,913,119 |
Republic of Indonesia | 8.375 | 03-15-24 | IDR | 107,340,000,000 | 8,127,380 |
Republic of Indonesia | 8.375 | 09-15-26 | IDR | 151,916,000,000 | 11,740,466 |
12 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Indonesia (continued) | |||||
Republic of Indonesia | 8.750 | 05-15-31 | IDR | 143,811,000,000 | $11,366,047 |
Republic of Indonesia | 9.000 | 03-15-29 | IDR | 68,320,000,000 | 5,508,721 |
Ireland 2.2% | 76,420,455 | ||||
Republic of Ireland | 3.400 | 03-18-24 | EUR | 26,600,000 | 36,690,676 |
Republic of Ireland | 3.900 | 03-20-23 | EUR | 28,735,000 | 39,729,779 |
Malaysia 1.5% | 49,679,163 | ||||
Government of Malaysia | 3.620 | 11-30-21 | MYR | 8,840,000 | 2,213,243 |
Government of Malaysia | 3.733 | 06-15-28 | MYR | 11,880,000 | 2,872,680 |
Government of Malaysia | 3.844 | 04-15-33 | MYR | 42,861,000 | 9,792,285 |
Government of Malaysia | 3.882 | 03-14-25 | MYR | 17,635,000 | 4,402,631 |
Government of Malaysia | 3.899 | 11-16-27 | MYR | 21,209,000 | 5,173,973 |
Government of Malaysia | 4.059 | 09-30-24 | MYR | 77,830,000 | 19,501,460 |
Government of Malaysia | 4.160 | 07-15-21 | MYR | 22,538,000 | 5,722,891 |
Mexico 2.7% | 90,772,676 | ||||
Government of Mexico | 4.600 | 01-23-46 | 7,247,000 | 6,544,041 | |
Government of Mexico | 4.750 | 06-14-18 | MXN | 76,760,000 | 3,841,031 |
Government of Mexico | 6.500 | 06-10-21 | MXN | 334,600,000 | 16,214,251 |
Government of Mexico | 7.750 | 05-29-31 | MXN | 273,582,000 | 13,591,825 |
Government of Mexico | 8.000 | 06-11-20 | MXN | 147,800,000 | 7,459,937 |
Government of Mexico | 8.000 | 12-07-23 | MXN | 310,720,000 | 15,723,845 |
Government of Mexico | 8.500 | 12-13-18 | MXN | 99,239,000 | 4,989,802 |
Government of Mexico | 10.000 | 12-05-24 | MXN | 401,353,000 | 22,407,944 |
New Zealand 1.0% | 34,985,247 | ||||
Dominion of New Zealand | 3.000 | 04-15-20 | NZD | 4,705,000 | 3,352,140 |
Dominion of New Zealand | 5.500 | 04-15-23 | NZD | 8,400,000 | 6,744,824 |
Dominion of New Zealand | 6.000 | 05-15-21 | NZD | 23,040,000 | 17,809,137 |
New Zealand Local Government Funding Agency | 5.000 | 03-15-19 | NZD | 9,900,000 | 7,079,146 |
Norway 1.7% | 59,663,492 | ||||
Government of Norway (A) | 2.000 | 05-24-23 | NOK | 81,645,000 | 10,305,647 |
Government of Norway (A) | 3.750 | 05-25-21 | NOK | 181,810,000 | 23,949,874 |
Government of Norway (A) | 4.500 | 05-22-19 | NOK | 200,721,000 | 25,407,971 |
Philippines 1.6% | 54,271,259 | ||||
Republic of Philippines | 3.500 | 03-20-21 | PHP | 200,160,000 | 3,691,363 |
Republic of Philippines | 3.500 | 04-21-23 | PHP | 567,450,000 | 9,857,313 |
Republic of Philippines | 4.625 | 09-09-40 | PHP | 29,167,000 | 418,612 |
Republic of Philippines | 4.950 | 01-15-21 | PHP | 364,760,000 | 6,935,130 |
Republic of Philippines | 5.875 | 12-16-20 | PHP | 249,320,800 | 4,842,064 |
Republic of Philippines | 6.250 | 01-14-36 | PHP | 252,000,000 | 5,134,208 |
Republic of Philippines | 6.500 | 04-28-21 | PHP | 498,000,000 | 9,932,719 |
Republic of Philippines | 8.000 | 07-19-31 | PHP | 356,645,000 | 7,832,233 |
Republic of Philippines | 8.125 | 12-16-35 | PHP | 254,043,000 | 5,627,617 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 13 |
Rate (%) | Maturity date | Par value^ | Value | ||
Portugal 0.5% | $18,839,730 | ||||
Republic of Portugal (A) | 3.850 | 04-15-21 | EUR | 8,775,000 | 11,327,243 |
Republic of Portugal (A) | 5.125 | 10-15-24 | 7,310,000 | 7,512,487 | |
Singapore 1.0% | 34,261,928 | ||||
Republic of Singapore | 3.250 | 09-01-20 | SGD | 37,695,000 | 28,952,412 |
Republic of Singapore | 3.375 | 09-01-33 | SGD | 6,670,000 | 5,309,516 |
South Korea 0.0% | 1,113,431 | ||||
Korea Treasury Bond Coupon Strips | 3.286 | 09-10-18 | KRW | 1,205,430,000 | 1,113,431 |
Sweden 0.5% | 16,675,916 | ||||
Kingdom of Sweden (A) | 0.125 | 04-24-23 | EUR | 14,210,000 | 16,675,916 |
United Kingdom 0.1% | 2,335,594 | ||||
Government of United Kingdom | 3.750 | 09-07-20 | GBP | 1,640,000 | 2,335,594 |
Corporate bonds 42.6% | $1,453,016,977 | ||||
(Cost $1,516,559,748) | |||||
Consumer discretionary 4.0% | 135,131,483 | ||||
Automobiles 0.2% | |||||
Ford Motor Company | 6.625 | 10-01-28 | 6,304,000 | 7,084,651 | |
Hotels, restaurants and leisure 1.3% | |||||
Hilton Domestic Operating Company, Inc. (A) | 5.125 | 05-01-26 | 6,035,000 | 5,891,669 | |
KFC Holding Company/Pizza Hut Holdings LLC/Taco Bell of America LLC (A) | 5.000 | 06-01-24 | 9,110,000 | 9,041,675 | |
KFC Holding Company/Pizza Hut Holdings LLC/Taco Bell of America LLC (A) | 5.250 | 06-01-26 | 11,511,000 | 11,252,003 | |
New Red Finance, Inc. (A) | 4.625 | 01-15-22 | 14,680,000 | 14,660,916 | |
New Red Finance, Inc. (A) | 5.000 | 10-15-25 | 2,700,000 | 2,558,250 | |
Internet and direct marketing retail 1.1% | |||||
Expedia Group, Inc. | 5.000 | 02-15-26 | 13,880,000 | 14,190,447 | |
Netflix, Inc. | 3.625 | 05-15-27 | EUR | 7,855,000 | 9,095,655 |
Netflix, Inc. (A) | 4.875 | 04-15-28 | 9,980,000 | 9,481,998 | |
QVC, Inc. | 4.450 | 02-15-25 | 2,952,000 | 2,865,097 | |
Media 1.4% | |||||
CCO Holdings LLC (A) | 5.000 | 02-01-28 | 7,440,000 | 6,882,000 | |
CCO Holdings LLC (A) | 5.125 | 05-01-27 | 5,170,000 | 4,840,413 | |
CCO Holdings LLC | 5.750 | 01-15-24 | 14,485,000 | 14,521,213 | |
Comcast Corp. | 2.350 | 01-15-27 | 6,290,000 | 5,522,075 | |
Lamar Media Corp. | 5.000 | 05-01-23 | 1,491,000 | 1,511,501 | |
LIN Television Corp. | 5.875 | 11-15-22 | 4,760,000 | 4,884,950 | |
Sinclair Television Group, Inc. (A) | 5.625 | 08-01-24 | 7,515,000 | 7,484,564 | |
Tribune Media Company | 5.875 | 07-15-22 | 3,325,000 | 3,362,406 |
14 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Consumer staples 2.6% | $88,828,335 | ||||
Beverages 1.1% | |||||
Anheuser-Busch InBev Finance, Inc. | 3.650 | 02-01-26 | 9,125,000 | 8,960,228 | |
Constellation Brands, Inc. | 4.250 | 05-01-23 | 13,490,000 | 13,829,638 | |
Molson Coors Brewing Company | 1.250 | 07-15-24 | EUR | 5,375,000 | 6,252,794 |
Molson Coors Brewing Company | 3.000 | 07-15-26 | 10,130,000 | 9,218,234 | |
Food and staples retailing 0.4% | |||||
Aramark Services, Inc. (A) | 5.000 | 04-01-25 | 6,640,000 | 6,640,000 | |
Aramark Services, Inc. | 5.125 | 01-15-24 | 5,400,000 | 5,483,700 | |
Food products 1.1% | |||||
Darling Global Finance BV (A) | 3.625 | 05-15-26 | EUR | 4,685,000 | 5,496,812 |
Kraft Heinz Foods Company | 3.950 | 07-15-25 | 8,945,000 | 8,808,312 | |
Kraft Heinz Foods Company (A) | 4.875 | 02-15-25 | 12,287,000 | 12,752,017 | |
Post Holdings, Inc. (A) | 5.500 | 03-01-25 | 11,560,000 | 11,386,600 | |
Energy 5.5% | 187,213,173 | ||||
Oil, gas and consumable fuels 5.5% | |||||
Aker BP ASA (A) | 5.875 | 03-31-25 | 13,850,000 | 14,265,500 | |
Antero Resources Corp. | 5.625 | 06-01-23 | 7,890,000 | 8,008,350 | |
Canadian Natural Resources, Ltd. | 3.850 | 06-01-27 | 20,460,000 | 20,050,963 | |
Concho Resources, Inc. | 4.375 | 01-15-25 | 6,710,000 | 6,746,921 | |
ConocoPhillips Company | 4.950 | 03-15-26 | 11,440,000 | 12,326,061 | |
Enbridge, Inc. | 4.250 | 12-01-26 | 14,060,000 | 14,089,288 | |
EnLink Midstream Partners LP | 4.150 | 06-01-25 | 943,000 | 901,547 | |
EnLink Midstream Partners LP | 4.850 | 07-15-26 | 7,220,000 | 7,224,335 | |
Enterprise Products Operating LLC | 3.350 | 03-15-23 | 7,486,000 | 7,408,376 | |
MPLX LP | 5.500 | 02-15-23 | 9,822,000 | 10,043,093 | |
Newfield Exploration Company | 5.375 | 01-01-26 | 6,450,000 | 6,635,438 | |
Newfield Exploration Company | 5.625 | 07-01-24 | 6,320,000 | 6,675,500 | |
Parsley Energy LLC (A) | 5.625 | 10-15-27 | 13,820,000 | 13,647,250 | |
Pertamina Persero PT (A) | 4.300 | 05-20-23 | 9,480,000 | 9,459,798 | |
Petroleos Mexicanos | 6.000 | 03-05-20 | 3,685,000 | 3,810,290 | |
Petroleos Mexicanos (A) | 7.190 | 09-12-24 | MXN | 89,890,000 | 4,014,127 |
Petroleos Mexicanos (A) | 7.650 | 11-24-21 | MXN | 171,257,500 | 8,250,609 |
Pioneer Natural Resources Company | 4.450 | 01-15-26 | 6,680,000 | 6,887,449 | |
Plains All American Pipeline LP | 4.650 | 10-15-25 | 1,635,000 | 1,636,948 | |
Targa Resources Partners LP (A) | 5.875 | 04-15-26 | 1,045,000 | 1,049,901 | |
The Williams Companies, Inc. | 4.550 | 06-24-24 | 4,205,000 | 4,220,769 | |
Transcontinental Gas Pipe Line Company LLC | 7.850 | 02-01-26 | 9,100,000 | 11,123,296 | |
Williams Partners LP | 3.750 | 06-15-27 | 9,235,000 | 8,737,364 | |
Financials 13.9% | 474,974,976 | ||||
Banks 10.3% | |||||
Asian Development Bank | 4.625 | 03-06-19 | NZD | 17,745,000 | 12,644,464 |
Asian Development Bank | 5.000 | 03-09-22 | AUD | 7,040,000 | 5,780,842 |
Asian Development Bank | 5.900 | 12-20-22 | INR | 579,790,000 | 8,211,277 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 15 |
Rate (%) | Maturity date | Par value^ | Value | ||
Financials (continued) | |||||
Banks (continued) | |||||
Asian Development Bank | 6.450 | 08-08-21 | INR | 763,020,000 | $11,088,052 |
Asian Development Bank | 6.950 | 01-16-20 | INR | 216,970,000 | 3,206,243 |
Banco Nacional de Comercio Exterior SNC (A) | 4.375 | 10-14-25 | 8,130,000 | 7,886,100 | |
Bank Nederlandse Gemeenten NV | 0.250 | 02-22-23 | EUR | 5,465,000 | 6,442,285 |
Bank Nederlandse Gemeenten NV | 0.250 | 06-07-24 | EUR | 5,350,000 | 6,234,275 |
Bank of America Corp. (3 month LIBOR + 0.650%) (B) | 2.656 | 12-01-26 | 9,480,000 | 9,037,605 | |
BankUnited, Inc. | 4.875 | 11-17-25 | 10,190,000 | 10,388,610 | |
Fifth Third Bancorp (5.100% to 6-30-23, then 3 month LIBOR + 3.033%) (C) | 5.100 | 06-30-23 | 17,115,000 | 16,815,488 | |
Inter-American Development Bank | 6.500 | 08-20-19 | AUD | 12,860,000 | 10,226,534 |
International Bank for Reconstruction & Development | 2.800 | 01-13-21 | AUD | 9,395,000 | 7,171,564 |
International Bank for Reconstruction & Development | 3.500 | 01-22-21 | NZD | 23,085,000 | 16,540,028 |
International Bank for Reconstruction & Development | 3.625 | 06-22-20 | NOK | 41,910,000 | 5,368,610 |
International Bank for Reconstruction & Development | 4.625 | 02-26-19 | NZD | 14,938,000 | 10,637,897 |
International Bank for Reconstruction & Development | 4.625 | 10-06-21 | NZD | 19,415,000 | 14,411,648 |
International Bank for Reconstruction & Development | 5.750 | 10-28-19 | INR | 500,400,000 | 7,291,547 |
International Finance Corp. | 2.800 | 08-15-22 | AUD | 16,505,000 | 12,562,190 |
International Finance Corp. | 3.625 | 05-20-20 | NZD | 17,740,000 | 12,702,999 |
JPMorgan Chase & Co. | 2.750 | 08-24-22 | EUR | 3,695,000 | 4,708,820 |
JPMorgan Chase & Co. (3 month LIBOR + 1.000%) (B) | 3.342 | 05-15-77 | 12,055,000 | 10,849,500 | |
KFW | 0.000 | 09-15-23 | EUR | 2,675,000 | 3,113,316 |
KFW | 0.375 | 03-15-23 | EUR | 5,615,000 | 6,674,471 |
KFW | 2.125 | 08-15-23 | EUR | 10,770,000 | 13,927,993 |
KFW | 3.750 | 05-29-20 | NZD | 5,260,000 | 3,771,528 |
KFW | 6.000 | 08-20-20 | AUD | 18,210,000 | 14,849,400 |
Landeskreditbank Baden-Wuerttemberg Foerderbank | 3.875 | 05-29-19 | NZD | 11,025,000 | 7,825,607 |
Landwirtschaftliche Rentenbank | 3.000 | 02-13-23 | NZD | 7,225,000 | 5,047,767 |
MB Financial Bank NA (4.000% to 12-1-22, then 3 month LIBOR + 1.873%) | 4.000 | 12-01-27 | 7,910,000 | 7,901,100 | |
Nordic Investment Bank Bond | 1.375 | 07-15-20 | NOK | 42,390,000 | 5,201,526 |
Realkredit Danmark A/S | 2.000 | 04-01-19 | DKK | 128,735,000 | 20,616,486 |
SunTrust Banks, Inc. (5.050% to 6-15-22, then 3 month LIBOR + 3.102%) (C) | 5.050 | 06-15-22 | 9,945,000 | 9,783,394 |
16 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Financials (continued) | |||||
Banks (continued) | |||||
Synovus Financial Corp. (5.750% to 12-15-20, then 3 month LIBOR + 4.182%) | 5.750 | 12-15-25 | 6,000,000 | $6,225,180 | |
U.S. Bancorp | 0.850 | 06-07-24 | EUR | 3,935,000 | 4,565,119 |
Wells Fargo & Company | 3.250 | 04-27-22 | AUD | 8,840,000 | 6,683,626 |
Wells Fargo & Company (3 month BBSW + 1.320%) (B) | 3.365 | 07-27-21 | AUD | 7,815,000 | 5,970,489 |
Westpac Banking Corp. | 5.000 | 10-21-19 | GBP | 4,280,000 | 5,997,167 |
Westpac Banking Corp. | 7.250 | 02-11-20 | AUD | 5,000,000 | 4,071,450 |
Zions Bancorporation (5.800% to 6-15-23, then 3 month LIBOR + 3.800%) (C) | 5.800 | 06-15-23 | 7,675,000 | 7,751,750 | |
Capital markets 1.0% | |||||
E*TRADE Financial Corp. (5.875% to 9-15-26, then 3 month LIBOR + 4.435%) (C) | 5.875 | 09-15-26 | 8,515,000 | 8,632,081 | |
Temasek Financial I, Ltd. | 3.265 | 02-19-20 | SGD | 12,250,000 | 9,317,713 |
The Goldman Sachs Group, Inc. | 1.375 | 05-15-24 | EUR | 6,302,000 | 7,404,414 |
The Goldman Sachs Group, Inc. (3 month LIBOR + 0.750%) (B) | 3.080 | 02-23-23 | 8,730,000 | 8,696,869 | |
Consumer finance 0.1% | |||||
Discover Financial Services | 4.100 | 02-09-27 | 5,595,000 | 5,413,964 | |
Diversified financial services 1.6% | |||||
European Bank for Reconstruction & Development | 7.375 | 04-15-19 | IDR | 47,450,000,000 | 3,404,523 |
European Financial Stability Facility | 0.125 | 10-17-23 | EUR | 9,355,000 | 10,904,654 |
European Financial Stability Facility | 0.500 | 01-20-23 | EUR | 4,665,000 | 5,576,224 |
European Financial Stability Facility | 1.875 | 05-23-23 | EUR | 6,830,000 | 8,687,373 |
European Stability Mechanism | 0.125 | 04-22-24 | EUR | 8,010,000 | 9,300,148 |
Swiss Insured Brazil Power Finance Sarl (A) | 9.850 | 07-16-32 | BRL | 65,665,000 | 16,751,051 |
Insurance 0.6% | |||||
American International Group, Inc. (8.175% to 5-15-38, then 3 month LIBOR + 4.195%) | 8.175 | 05-15-68 | 12,365,000 | 15,610,813 | |
Chubb INA Holdings, Inc. | 3.350 | 05-03-26 | 3,665,000 | 3,575,402 | |
Thrifts and mortgage finance 0.3% | |||||
MGIC Investment Corp. | 5.750 | 08-15-23 | 11,290,000 | 11,515,800 | |
Health care 2.8% | 96,313,941 | ||||
Biotechnology 0.2% | |||||
AbbVie, Inc. | 1.375 | 05-17-24 | EUR | 6,133,000 | 7,256,470 |
Health care providers and services 1.9% | |||||
CVS Health Corp. | 4.100 | 03-25-25 | 10,650,000 | 10,654,777 | |
CVS Health Corp. | 4.300 | 03-25-28 | 18,125,000 | 17,987,971 | |
HCA, Inc. | 5.000 | 03-15-24 | 11,718,000 | 11,802,370 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 17 |
Rate (%) | Maturity date | Par value^ | Value | ||
Health care (continued) | |||||
Health care providers and services (continued) | |||||
HCA, Inc. | 5.250 | 04-15-25 | 5,040,000 | $5,065,200 | |
HCA, Inc. | 5.375 | 02-01-25 | 4,345,000 | 4,268,963 | |
HCA, Inc. | 7.500 | 02-15-22 | 13,650,000 | 14,878,500 | |
Life sciences tools and services 0.1% | |||||
Thermo Fisher Scientific, Inc. | 0.750 | 09-12-24 | EUR | 4,265,000 | 4,888,275 |
Pharmaceuticals 0.6% | |||||
Allergan Funding SCS | 1.250 | 06-01-24 | EUR | 3,570,000 | 4,070,725 |
Teva Pharmaceutical Finance Netherlands II BV | 4.500 | 03-01-25 | EUR | 5,145,000 | 6,115,663 |
Teva Pharmaceutical Finance Netherlands III BV | 6.000 | 04-15-24 | 9,420,000 | 9,325,027 | |
Industrials 4.3% | 145,823,936 | ||||
Aerospace and defense 0.2% | |||||
Lockheed Martin Corp. | 3.100 | 01-15-23 | 5,955,000 | 5,890,195 | |
Air freight and logistics 1.9% | |||||
Mexico City Airport Trust (A) | 3.875 | 04-30-28 | 21,330,000 | 18,823,725 | |
Mexico City Airport Trust (A) | 4.250 | 10-31-26 | 16,457,000 | 15,206,268 | |
Mexico City Airport Trust (A) | 5.500 | 10-31-46 | 5,705,000 | 4,977,613 | |
Mexico City Airport Trust (A) | 5.500 | 07-31-47 | 29,010,000 | 25,311,225 | |
Airlines 0.3% | |||||
Delta Air Lines, Inc. | 3.625 | 03-15-22 | 10,160,000 | 10,091,518 | |
Construction and engineering 0.4% | |||||
AECOM | 5.125 | 03-15-27 | 14,640,000 | 13,578,600 | |
Industrial conglomerates 0.5% | |||||
General Electric Company (5.000% to 1-21-21, then 3 month LIBOR + 3.330%) (C) | 5.000 | 01-21-21 | 16,182,000 | 15,987,816 | |
Trading companies and distributors 0.8% | |||||
United Rentals North America, Inc. | 4.625 | 07-15-23 | 9,400,000 | 9,458,750 | |
United Rentals North America, Inc. | 4.875 | 01-15-28 | 12,485,000 | 11,724,664 | |
United Rentals North America, Inc. | 5.500 | 05-15-27 | 6,455,000 | 6,390,450 | |
Transportation infrastructure 0.2% | |||||
Adani Ports & Special Economic Zone, Ltd. (A) | 4.000 | 07-30-27 | 9,145,000 | 8,383,112 | |
Information technology 2.7% | 93,181,857 | ||||
Communications equipment 0.1% | |||||
Motorola Solutions, Inc. | 4.600 | 02-23-28 | 4,025,000 | 4,008,593 | |
IT services 1.1% | |||||
First Data Corp. (A) | 5.375 | 08-15-23 | 7,130,000 | 7,230,533 | |
Gartner, Inc. (A) | 5.125 | 04-01-25 | 10,425,000 | 10,346,813 | |
IBM Corp. | 2.625 | 08-05-22 | GBP | 3,900,000 | 5,436,806 |
IBM Corp. | 2.750 | 12-21-20 | GBP | 4,025,000 | 5,563,142 |
18 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Information technology (continued) | |||||
IT services (continued) | |||||
Total System Services, Inc. | 4.450 | 06-01-28 | 7,995,000 | $7,998,863 | |
Semiconductors and semiconductor equipment 0.4% | |||||
Microchip Technology, Inc. (A) | 4.330 | 06-01-23 | 4,180,000 | 4,197,617 | |
NXP BV (A) | 4.625 | 06-01-23 | 10,820,000 | 11,034,236 | |
Software 0.8% | |||||
Activision Blizzard, Inc. (A) | 6.125 | 09-15-23 | 11,515,000 | 11,984,598 | |
Citrix Systems, Inc. | 4.500 | 12-01-27 | 6,855,000 | 6,677,556 | |
VMware, Inc. | 2.950 | 08-21-22 | 10,595,000 | 10,174,603 | |
Technology hardware, storage and peripherals 0.3% | |||||
Apple, Inc. (3 month LIBOR + 0.500%) (B) | 2.869 | 02-09-22 | 8,405,000 | 8,528,497 | |
Materials 3.5% | 117,373,830 | ||||
Chemicals 0.3% | |||||
Ecolab, Inc. | 1.000 | 01-15-24 | EUR | 2,135,000 | 2,533,027 |
Syngenta Finance NV (A) | 5.182 | 04-24-28 | 6,460,000 | 6,321,412 | |
Construction materials 0.3% | |||||
Cemex SAB de CV (A) | 6.125 | 05-05-25 | 10,450,000 | 10,566,413 | |
Containers and packaging 2.9% | |||||
Avery Dennison Corp. | 1.250 | 03-03-25 | EUR | 5,050,000 | 5,875,409 |
Ball Corp. | 4.000 | 11-15-23 | 18,070,000 | 17,708,600 | |
Ball Corp. | 4.875 | 03-15-26 | 7,095,000 | 7,024,050 | |
Ball Corp. | 5.250 | 07-01-25 | 12,820,000 | 13,060,375 | |
Crown Americas LLC | 4.500 | 01-15-23 | 13,700,000 | 13,341,745 | |
Crown Cork & Seal Company, Inc. | 7.375 | 12-15-26 | 6,138,000 | 6,659,730 | |
Sealed Air Corp. (A) | 4.875 | 12-01-22 | 9,085,000 | 9,266,700 | |
Sealed Air Corp. (A) | 5.125 | 12-01-24 | 9,275,000 | 9,402,531 | |
Sealed Air Corp. (A) | 6.500 | 12-01-20 | 14,835,000 | 15,613,838 | |
Real estate 0.7% | 24,201,280 | ||||
Equity real estate investment trusts 0.7% | |||||
Equinix, Inc. | 2.875 | 03-15-24 | EUR | 4,445,000 | 5,139,820 |
Equinix, Inc. | 5.375 | 05-15-27 | 7,240,000 | 7,269,322 | |
Iron Mountain, Inc. (A) | 4.875 | 09-15-27 | 7,265,000 | 6,756,450 | |
Iron Mountain, Inc. (A) | 5.250 | 03-15-28 | 5,350,000 | 5,035,688 | |
Telecommunication services 0.7% | 24,660,452 | ||||
Diversified telecommunication services 0.4% | |||||
CSC Holdings LLC (A) | 5.375 | 02-01-28 | 10,690,000 | 9,995,150 | |
CSC Holdings LLC (A) | 5.500 | 04-15-27 | 5,850,000 | 5,601,375 | |
Wireless telecommunication services 0.3% | |||||
America Movil SAB de CV | 7.125 | 12-09-24 | MXN | 133,000,000 | 6,090,767 |
SBA Tower Trust (A) | 3.448 | 03-15-23 | 2,985,000 | 2,973,160 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 19 |
Rate (%) | Maturity date | Par value^ | Value | ||
Utilities 1.9% | $65,313,714 | ||||
Electric utilities 1.0% | |||||
E.ON International Finance BV | 6.000 | 10-30-19 | GBP | 2,100,000 | 2,977,448 |
Emera US Finance LP | 3.550 | 06-15-26 | 12,610,000 | 11,958,649 | |
FirstEnergy Transmission LLC (A) | 4.350 | 01-15-25 | 12,860,000 | 13,058,197 | |
Perusahaan Listrik Negara PT (A) | 5.450 | 05-21-28 | 5,840,000 | 5,996,854 | |
Gas utilities 0.0% | |||||
Southern Gas Networks PLC | 4.875 | 12-21-20 | GBP | 600,000 | 867,958 |
Independent power and renewable electricity producers 0.9% | |||||
Greenko Dutch BV (A) | 5.250 | 07-24-24 | 6,785,000 | 6,306,658 | |
NextEra Energy Operating Partners LP (A) | 4.250 | 09-15-24 | 9,500,000 | 9,120,000 | |
NextEra Energy Operating Partners LP (A) | 4.500 | 09-15-27 | 5,315,000 | 4,942,950 | |
The AES Corp. | 4.500 | 03-15-23 | 10,085,000 | 10,085,000 | |
Convertible bonds 1.5% | $49,779,867 | ||||
(Cost $46,030,892) | |||||
Consumer discretionary 0.5% | 15,575,705 | ||||
Internet and direct marketing retail 0.2% | |||||
Liberty Expedia Holdings, Inc. (A) | 1.000 | 06-30-47 | 5,711,000 | 5,592,034 | |
Media 0.3% | |||||
DISH Network Corp. | 3.375 | 08-15-26 | 2,760,000 | 2,447,623 | |
Live Nation Entertainment, Inc. (A) | 2.500 | 03-15-23 | 7,520,000 | 7,536,048 | |
Health care 0.5% | 17,903,976 | ||||
Health care providers and services 0.2% | |||||
Anthem, Inc. | 2.750 | 10-15-42 | 2,505,000 | 7,641,027 | |
Pharmaceuticals 0.3% | |||||
Bayer Capital Corp. BV (A) | 5.625 | 11-22-19 | EUR | 7,900,000 | 10,262,949 |
Information technology 0.3% | 10,047,443 | ||||
Semiconductors and semiconductor equipment 0.3% | |||||
Novellus Systems, Inc. | 2.625 | 05-15-41 | 1,025,000 | 6,062,886 | |
ON Semiconductor Corp. | 1.625 | 10-15-23 | 2,840,000 | 3,984,557 | |
Utilities 0.2% | 6,252,743 | ||||
Independent power and renewable electricity producers 0.2% | |||||
NRG Energy, Inc. (A) | 2.750 | 06-01-48 | 6,125,000 | 6,252,743 | |
Capital preferred securities 1.9% | $63,938,772 | ||||
(Cost $58,681,855) | |||||
Financials 1.9% | 63,938,772 | ||||
Banks 1.9% | |||||
BAC Capital Trust XIV, Series G (Greater of 3 month LIBOR + 0.400% or 4.000%) (B)(C) | 4.000 | 06-18-18 | 16,650,000 | 14,818,500 |
20 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Financials (continued) | |||||
Banks (continued) | |||||
USB Capital IX (Greater of 3 month LIBOR + 1.020% or 3.500%) (B)(C) | 3.500 | 07-02-18 | 26,793,000 | $24,348,139 | |
Wachovia Capital Trust III (Greater of 3 month LIBOR + 0.930% or 5.570%) (B)(C) | 5.570 | 07-02-18 | 25,035,000 | 24,772,133 | |
Term loans (D) 9.5% | $322,231,907 | ||||
(Cost $323,008,248) | |||||
Consumer discretionary 2.7% | 91,043,319 | ||||
Diversified consumer services 0.5% | |||||
The ServiceMaster Company LLC (1 month LIBOR + 2.500%) | 4.476 | 11-08-23 | 15,651,875 | 15,725,282 | |
Hotels, restaurants and leisure 1.0% | |||||
Hilton Worldwide Finance LLC (1 month LIBOR + 1.750%) | 3.710 | 10-25-23 | 5,659,993 | 5,684,784 | |
KFC Holding Company (1 month LIBOR + 1.750%) | 3.685 | 04-03-25 | 8,679,657 | 8,707,866 | |
New Red Finance, Inc. (1 month LIBOR + 2.250%) | 4.230 | 02-16-24 | 11,958,175 | 11,946,206 | |
Wyndham Hotels & Resorts, Inc. (E) | TBD | 03-28-25 | 4,510,000 | 4,525,018 | |
Wyndham Worldwide Corp. (E) | TBD | 05-25-24 | 2,200,000 | 2,203,674 | |
Media 1.2% | |||||
Charter Communications Operating LLC (1 month LIBOR + 2.000%) | 3.990 | 04-30-25 | 14,812,875 | 14,831,391 | |
Cogeco Communications USA II LP (1 month LIBOR + 2.375%) | 4.355 | 01-03-25 | 5,030,000 | 5,015,564 | |
Meredith Corp.(1 month LIBOR + 3.000%) | 4.980 | 01-31-25 | 6,245,000 | 6,265,296 | |
Sinclair Television Group, Inc. (E) | TBD | 12-12-24 | 8,105,000 | 8,094,869 | |
Virgin Media Bristol LLC (1 month LIBOR + 2.500%) | 4.419 | 01-15-26 | 8,070,000 | 8,043,369 | |
Consumer staples 0.6% | 20,227,468 | ||||
Diversified financial services 0.2% | |||||
Pinnacle Foods Finance LLC (1 month LIBOR + 1.750%) | 3.659 | 02-02-24 | 7,935,548 | 7,970,782 | |
Food and staples retailing 0.4% | |||||
Aramark Services, Inc. (1 month LIBOR + 2.000%) | 3.980 | 03-11-25 | 2,932,650 | 2,935,407 | |
Aramark Services, Inc. (3 month LIBOR + 1.750%) | 3.715 | 03-28-24 | 9,298,034 | 9,321,279 | |
Energy 0.5% | 16,221,762 | ||||
Oil, gas and consumable fuels 0.5% | |||||
Energy Transfer Equity LP (1 month LIBOR + 2.000%) | 3.961 | 02-02-24 | 16,295,581 | 16,221,762 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 21 |
Rate (%) | Maturity date | Par value^ | Value | ||
Financials 0.6% | $20,337,601 | ||||
Capital markets 0.3% | |||||
Brookfield Retail Holdings VII Sub 3 LLC (E) | TBD | 05-04-25 | 11,175,000 | 11,021,344 | |
Insurance 0.3% | |||||
USI, Inc. (3 month LIBOR + 3.000%) | 5.302 | 05-16-24 | 9,335,675 | 9,316,257 | |
Health care 0.4% | 14,824,952 | ||||
Biotechnology 0.3% | |||||
Grifols Worldwide Operations USA, Inc. (1 week LIBOR + 2.250%) | 4.005 | 01-31-25 | 10,806,660 | 10,836,595 | |
Health care providers and services 0.1% | |||||
Catalent Pharma Solutions, Inc. (1 month LIBOR + 2.250%) | 4.230 | 05-20-24 | 869,756 | 872,713 | |
HCA, Inc. (1 month LIBOR + 2.000%) | 3.980 | 03-13-25 | 3,095,000 | 3,115,644 | |
Industrials 1.2% | 40,034,118 | ||||
Air freight and logistics 0.2% | |||||
XPO Logistics, Inc. (1 month LIBOR + 2.000%) | 3.961 | 02-24-25 | 5,605,000 | 5,611,334 | |
Airlines 0.3% | |||||
American Airlines, Inc. (1 month LIBOR + 2.000%) | 3.968 | 04-28-23 | 6,433,304 | 6,395,798 | |
United Airlines, Inc. (1 month LIBOR + 1.750%) | 3.730 | 04-01-24 | 3,638,250 | 3,647,346 | |
Building products 0.4% | |||||
Builders FirstSource, Inc. (3 month LIBOR + 3.000%) | 5.302 | 02-29-24 | 11,720,278 | 11,741,257 | |
Construction and engineering 0.2% | |||||
AECOM (1 month LIBOR + 1.750%) | 3.730 | 02-22-25 | 7,785,000 | 7,787,413 | |
Electrical equipment 0.1% | |||||
Generac Power Systems, Inc. (3 month LIBOR + 2.000%) | 4.308 | 05-31-23 | 4,855,000 | 4,850,970 | |
Information technology 2.1% | 72,880,102 | ||||
Communications equipment 0.2% | |||||
Avaya, Inc. (1 month LIBOR + 4.750%) | 6.684 | 12-15-24 | 7,531,125 | 7,570,889 | |
Electronic equipment, instruments and components0.1% | |||||
Zebra Technologies Corp. (3 month LIBOR + 2.000%) | 4.362 | 10-27-21 | 4,374,427 | 4,381,120 | |
IT services 0.9% | |||||
Altran Technologies SA (2 month EURIBOR + 3.250%) | 3.250 | 03-20-25 | EUR | 4,473,989 | 5,245,174 |
Altran Technologies SA (2 month LIBOR + 2.750%) | 4.796 | 03-20-25 | 4,740,000 | 4,755,405 | |
First Data Corp. (1 month LIBOR + 2.000%) | 3.965 | 07-08-22 | 12,842,110 | 12,836,717 |
22 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Information technology (continued) | |||||
IT services (continued) | |||||
Gartner, Inc. (1 month LIBOR + 2.000%) | 3.980 | 04-05-24 | 1,503,636 | $1,508,643 | |
Vantiv LLC (1 month LIBOR + 2.000%) | 3.919 | 08-09-24 | 6,530,000 | 6,539,207 | |
Semiconductors and semiconductor equipment0.2% | |||||
Microchip Technology, Inc. (E) | TBD | 05-15-25 | 2,750,000 | 2,764,438 | |
Micron Technology, Inc. (1 month LIBOR + 1.750%) | 3.740 | 04-26-22 | 2,370,298 | 2,383,643 | |
Software 0.4% | |||||
Almonde, Inc. (3 month LIBOR + 3.500%) | 5.807 | 06-13-24 | 8,910,082 | 8,763,065 | |
SS&C European Holdings Sarl (1 month LIBOR + 2.500%) | 4.480 | 04-16-25 | 1,759,547 | 1,768,345 | |
SS&C Technologies, Inc. (1 month LIBOR + 2.500%) | 4.480 | 04-16-25 | 4,689,696 | 4,713,145 | |
Technology hardware, storage and peripherals 0.3% | |||||
Dell International LLC (1 month LIBOR + 2.000%) | 3.990 | 09-07-23 | 9,662,389 | 9,650,311 | |
Materials 0.4% | 14,616,775 | ||||
Chemicals 0.1% | |||||
HB Fuller Company (1 month LIBOR + 2.000%) | 3.948 | 10-20-24 | 5,377,975 | 5,379,481 | |
Containers and packaging 0.3% | |||||
Berry Global, Inc. (1 month LIBOR + 2.000%) | 3.929 | 02-08-20 | 3,481,288 | 3,486,440 | |
Berry Global, Inc. (1 month LIBOR + 2.000%) | 3.960 | 10-01-22 | 3,809,111 | 3,819,509 | |
Crown European Holdings SA (3 month EURIBOR + 2.375%) | 2.375 | 01-18-25 | EUR | 1,650,000 | 1,931,345 |
Telecommunication services 1.0% | 32,045,810 | ||||
Diversified telecommunication services 0.5% | |||||
CenturyLink, Inc. (1 month LIBOR + 2.750%) | 4.730 | 01-31-25 | 6,663,300 | 6,576,677 | |
Sable International Finance, Ltd. (1 month LIBOR + 3.250%) | 5.230 | 01-31-25 | 9,075,000 | 9,121,373 | |
Wireless telecommunication services 0.5% | |||||
SBA Senior Finance II LLC (1 month LIBOR + 2.000%) | 3.990 | 04-11-25 | 9,340,355 | 9,324,756 | |
Sprint Communications, Inc. (1 month LIBOR + 2.500%) | 4.500 | 02-02-24 | 7,028,276 | 7,023,004 | |
Collateralized mortgage obligations 9.2% | $313,104,273 | ||||
(Cost $323,958,245) | |||||
Commercial and residential 8.8% | 299,355,589 | ||||
Adjustable Rate Mortgage Trust Series 2004-5, Class 2A1 (F) | 3.752 | 04-25-35 | 2,111,247 | 2,148,149 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 23 |
Rate (%) | Maturity date | Par value^ | Value | ||
Commercial and residential (continued) | |||||
Angel Oak Mortgage Trust I LLC Series 2018-1, Class A1 (A)(F) | 3.258 | 04-27-48 | 4,994,163 | $4,992,570 | |
AOA Mortgage Trust Series 2015-1177, Class C (A)(F) | 3.010 | 12-13-29 | 2,040,000 | 1,987,620 | |
Arroyo Mortgage Trust Series 2018-1, Class A1 (A)(F) | 3.763 | 04-25-48 | 7,966,000 | 7,985,921 | |
BAMLL Commercial Mortgage Securities Trust Series 2015-200P, Class F (A)(F) | 3.596 | 04-14-33 | 5,220,000 | 4,890,006 | |
BBCMS Mortgage Trust | |||||
Series 2015-STP, Class A (A) | 3.323 | 09-10-28 | 7,568,940 | 7,583,635 | |
Series 2017-DELC, Class B (1 month LIBOR + 1.030%) (A)(B) | 2.949 | 08-15-36 | 9,665,000 | 9,674,131 | |
Series 2018-TALL, Class C (1 month LIBOR + 1.121%) (A)(B) | 3.040 | 03-15-37 | 5,650,000 | 5,646,498 | |
Series 2018-TALL, Class E (1 month LIBOR + 2.437%) (A)(B) | 4.356 | 03-15-37 | 4,950,000 | 4,946,928 | |
Bear Stearns Adjustable Rate Mortgage Trust Series 2004-10, Class 12A3 (F) | 3.614 | 01-25-35 | 2,131,383 | 2,150,932 | |
Bear Stearns ALT-A Trust | |||||
Series 2004-8, Class 1A (1 month LIBOR + 0.700%) (B) | 2.660 | 09-25-34 | 634,129 | 634,212 | |
Series 2004-8, Class 2A (1 month LIBOR + 0.680%) (B) | 2.640 | 09-25-34 | 3,857,429 | 3,785,930 | |
BWAY Mortgage Trust Series 2013-1515, Class F (A)(F) | 3.927 | 03-10-33 | 4,767,000 | 4,564,214 | |
BX Commercial Mortgage Trust Series 2018-BIOA, Class D (1 month LIBOR + 1.321%) (A)(B) | 3.240 | 03-15-37 | 2,625,000 | 2,623,385 | |
BXP Trust Series 2017-GM, Class A (A) | 3.379 | 06-13-39 | 7,142,000 | 7,009,206 | |
CGDBB Commercial Mortgage Trust Series 2017-BIOC, Class B (1 month LIBOR + 0.970%) (A)(B) | 2.889 | 07-15-32 | 7,230,000 | 7,236,782 | |
CLNS Trust Series 2017-IKPR, Class B (1 month LIBOR + 1.000%) (A)(B) | 2.929 | 06-11-32 | 6,255,000 | 6,258,937 | |
Cold Storage Trust Series 2017-ICE3 (1 month LIBOR + 1.000%) (A)(B) | 2.919 | 04-15-36 | 8,950,000 | 8,981,046 | |
COLT Mortgage Loan Trust Series 2018-2, Class A1 (A)(F) | 3.470 | 07-27-48 | 5,970,000 | 5,969,928 | |
Commercial Mortgage Trust (Bank of America Merrill Lynch/ Deutsche Bank AG) Series 2013-WWP, Class D (A) | 3.898 | 03-10-31 | 8,550,000 | 8,823,652 | |
Credit Suisse Commercial Mortgage Trust Series 2015-GLPB, Class A (A) | 3.639 | 11-15-34 | 9,715,000 | 9,876,141 | |
DBCG Mortgage Trust Series 2017-BBG, Class A (1 month LIBOR + 0.700%) (A)(B) | 2.619 | 06-15-34 | 6,585,000 | 6,604,613 |
24 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
Commercial and residential (continued) | |||||
DSLA Mortgage Loan Trust | |||||
Series 2004-AR1 Class X2 IO | 0.771 | 09-19-44 | 13,969,507 | $425,588 | |
Series 2005-AR2, Class X2 IO | 1.219 | 03-19-45 | 24,339,835 | 696,591 | |
GAHR Commercial Mortgage Trust Series 2015-NRF, Class DFX (A)(F) | 3.382 | 12-15-34 | 6,035,000 | 6,004,605 | |
Greenwich Capital Commercial Funding Corp. Series 2006-GG7, Class AM (F) | 5.752 | 07-10-38 | 1,326,635 | 1,327,269 | |
GS Mortgage Securities Corp. Trust Series 2018-CHLL, Class A (1 month LIBOR + 0.750%) (A)(B) | 2.669 | 02-15-37 | 5,350,000 | 5,355,244 | |
GS Mortgage Securities Trust Series 2017-FARM, Class A (A)(F) | 3.541 | 01-10-43 | 7,550,000 | 7,462,446 | |
GSR Mortgage Loan Trust Series 2005-AR6, Class 4A5 (F) | 3.517 | 09-25-35 | 2,752,024 | 2,780,698 | |
HarborView Mortgage Loan Trust | |||||
Series 2005-2, Class X IO | 0.901 | 05-19-35 | 9,190,099 | 354,284 | |
Series 2007-3, Class ES IO (A) | 0.000 | 05-19-47 | 22,708,813 | 320,526 | |
Series 2007-4, Class ES IO | 0.000 | 07-19-47 | 23,663,852 | 400,707 | |
Series 2007-6, Class ES IO (A) | 0.000 | 08-19-37 | 19,574,144 | 304,168 | |
Hilton USA Trust | |||||
Series 2016-HHV, Class A (A) | 3.719 | 11-05-38 | 4,450,000 | 4,437,240 | |
Series 2016-HHV, Class B (A)(F) | 4.194 | 11-05-38 | 4,685,000 | 4,778,644 | |
Homestar Mortgage Acceptance Corp. Series 2004-6, Class M3 (1 month LIBOR + 1.100%) (B) | 3.060 | 01-25-35 | 5,265,000 | 5,263,394 | |
Hudson Yards Mortgage Trust Series 2016-10HY, Class A (A) | 2.835 | 08-10-38 | 10,990,000 | 10,393,119 | |
Hudsons Bay Simon JV Trust Series 2015-HB10, Class A10 (A) | 4.154 | 08-05-34 | 11,800,000 | 11,607,367 | |
IMT Trust Series 2017-APTS, Class DFL (1 month LIBOR + 1.550%) (A)(B) | 3.469 | 06-15-34 | 4,970,000 | 4,976,242 | |
IndyMac Index Mortgage Loan Trust | |||||
Series 2005-AR18, Class 1X IO | 1.317 | 10-25-36 | 30,805,976 | 1,404,602 | |
Series 2005-AR18, Class 2X IO | 1.001 | 10-25-36 | 31,134,505 | 267,704 | |
JPMorgan Chase Commercial Mortgage Securities Trust | |||||
Series 2015-SGP, Class A (1 month LIBOR + 1.700%) (A)(B) | 3.619 | 07-15-36 | 5,955,884 | 5,981,985 | |
Series 2015-UES, Class A (A) | 2.933 | 09-05-32 | 8,200,000 | 8,173,213 | |
Series 2016-NINE, Class A (A)(F) | 2.854 | 10-06-38 | 12,655,000 | 11,934,517 | |
JPMorgan Mortgage Trust Series 2007-A1, Class 1A1 (F) | 3.696 | 07-25-35 | 1,941,972 | 1,983,716 | |
Merrill Lynch Mortgage Investors Trust | |||||
Series 2004-1, Class 2A1 (F) | 3.446 | 12-25-34 | 830,377 | 834,308 | |
Series 2005-2, Class 1A (6 month LIBOR + 1.250%) (B) | 2.910 | 10-25-35 | 3,015,522 | 3,043,871 | |
Series 2005-A2, Class A2 (F) | 3.541 | 02-25-35 | 1,264,888 | 1,307,988 | |
Series 2006-3, Class 2A1 (F) | 3.648 | 10-25-36 | 1,207,618 | 1,199,216 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 25 |
Rate (%) | Maturity date | Par value^ | Value | ||
Commercial and residential (continued) | |||||
Morgan Stanley Capital Barclays Bank Trust Series 2016-MART, Class A (A) | 2.200 | 09-13-31 | 15,860,000 | $15,368,015 | |
Morgan Stanley Capital I Trust Series 2017-CLS, Class C (1 month LIBOR + 1.000%) (A)(B) | 2.919 | 11-15-34 | 4,655,000 | 4,662,188 | |
Morgan Stanley Mortgage Loan Trust | |||||
Series 2004-8AR, Class 4A1 (F) | 3.608 | 10-25-34 | 1,215,381 | 1,238,672 | |
Series 2004-9, Class 1A (F) | 5.388 | 11-25-34 | 1,441,995 | 1,508,600 | |
New Residential Mortgage Loan Trust Series 2017-5A, Class A1 (1 month LIBOR + 1.500%) (A)(B) | 3.460 | 06-25-57 | 5,455,258 | 5,597,695 | |
Olympic Tower Mortgage Trust Series 2017-OT, Class A (A) | 3.566 | 05-10-39 | 4,610,000 | 4,564,844 | |
One Market Plaza Trust Series 2017-1MKT, Class A (A) | 3.614 | 02-10-32 | 8,025,000 | 8,051,293 | |
Opteum Mortgage Acceptance Corp. Trust Series 2005-4, Class 1APT (1 month LIBOR + 0.310%) (B) | 2.270 | 11-25-35 | 1,181,372 | 1,171,190 | |
SFAVE Commercial Mortgage Securities Trust Series 2015-5AVE, Class D (A)(F) | 4.388 | 01-05-43 | 6,695,000 | 5,496,020 | |
Structured Adjustable Rate Mortgage Loan Trust Series 2004-10, Class 2A (F) | 3.615 | 08-25-34 | 4,512,266 | 4,528,204 | |
Structured Asset Securities Corp. Series 2003-7A, Class 3A6 (F) | 3.843 | 12-25-33 | 1,269,314 | 1,261,556 | |
WaMu Mortgage Pass Through Certificates | |||||
Series 2003-AR11, Class A6 (F) | 3.358 | 10-25-33 | 2,362,286 | 2,392,705 | |
Series 2005-AR6, Class 2A1A (1 month LIBOR + 0.460%) (B) | 2.420 | 04-25-45 | 2,342,098 | 2,333,329 | |
Wells Fargo Commercial Mortgage Trust Series 2017-SMP, Class A (1 month LIBOR + 0.750%) (A)(B) | 2.794 | 12-15-34 | 6,805,000 | 6,807,026 | |
Wells Fargo Mortgage Backed Securities Trust Series 2004-Z, Class 2A1 (F) | 3.738 | 12-25-34 | 1,080,329 | 1,100,120 | |
Worldwide Plaza Trust Series 2017-WWP, Class A (A) | 3.526 | 11-10-36 | 5,960,000 | 5,880,444 | |
U.S. Government Agency 0.4% | 13,748,684 | ||||
Federal National Mortgage Association | |||||
Series 2012-118, Class AI IO | 3.500 | 11-25-37 | 5,694,182 | 619,510 | |
Series 2014-C02, Class 1M1 (1 month LIBOR + 0.950%) (B) | 2.910 | 05-25-24 | 1,006,681 | 1,009,121 | |
Series 2016-C03, Class 1M1 (1 month LIBOR + 2.000%) (B) | 3.960 | 10-25-28 | 3,446,042 | 3,491,451 | |
Series 2016-C05, Class 2M1 (1 month LIBOR + 1.350%) (B) | 3.310 | 01-25-29 | 2,092,385 | 2,101,788 | |
Series 2016-C07, Class 2M1 (1 month LIBOR + 1.300%) (B) | 3.260 | 05-25-29 | 2,464,417 | 2,473,324 |
26 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Rate (%) | Maturity date | Par value^ | Value | ||
U.S. Government Agency (continued) | |||||
Series 402, Class 3 IO | 4.000 | 11-25-39 | 1,373,558 | $281,844 | |
Series 402, Class 7 IO | 4.500 | 11-25-39 | 2,593,542 | 575,352 | |
Series 406, Class 3 IO | 4.000 | 01-25-41 | 3,358,176 | 723,515 | |
Series 407, Class 4 IO | 4.500 | 03-25-41 | 4,946,151 | 1,136,760 | |
Series 407, Class 7 IO | 5.000 | 03-25-41 | 4,052,960 | 867,072 | |
Series 407, Class 8 IO | 5.000 | 03-25-41 | 2,118,381 | 468,947 | |
Asset backed securities 4.3% | $148,319,581 | ||||
(Cost $147,902,184) | |||||
Asset backed securities 4.3% | 148,319,581 | ||||
AccessLex Institute Series 2007-A, Class A3 (3 month LIBOR + 0.300%) (B) | 2.630 | 05-25-36 | 8,070,812 | 7,978,929 | |
Coinstar Funding LLC Series 2017-1A, Class A2 (A) | 5.216 | 04-25-47 | 10,989,000 | 11,240,471 | |
DB Master Finance LLC | |||||
Series 2015-1A, Class A2II (A) | 3.980 | 02-20-45 | 18,459,900 | 18,500,881 | |
Series 2017-1A, Class A2II (A) | 4.030 | 11-20-47 | 10,318,150 | 10,287,196 | |
Domino's Pizza Master Issuer LLC | |||||
Series 2015-1A, Class A2II (A) | 4.474 | 10-25-45 | 8,540,700 | 8,782,914 | |
Series 2017-1A, Class A2II (A) | 3.082 | 07-25-47 | 9,157,798 | 8,953,029 | |
EquiFirst Mortgage Loan Trust Series 2015-1, Class M2 (1 month LIBOR + 0.675%) (B) | 2.635 | 04-25-35 | 2,698,729 | 2,703,274 | |
FOCUS Brands Funding LLC Series 2017-1A, Class A2I (A) | 3.857 | 04-30-47 | 2,717,550 | 2,725,105 | |
GSAA Home Equity Trust Series 2005-MTR1, Class A4 (1 month LIBOR + 0.370%) (B) | 2.330 | 10-25-35 | 4,471,999 | 4,428,408 | |
Hardee's Funding LLC Series 2013-1A, Class A2 (A) | 4.474 | 03-20-43 | 8,352,149 | 8,372,081 | |
Home Equity Asset Trust Series 2003-1, Class M1 (1 month LIBOR + 1.500%) (B) | 3.460 | 06-25-33 | 1,115,486 | 1,141,231 | |
Home Partners of America Trust Series 2018-1, Class A (1 month LIBOR + 0.900%) (A)(B) | 2.834 | 07-17-37 | 5,525,000 | 5,530,734 | |
Taco Bell Funding LLC Series 2016-1A, Class A23 (A) | 4.970 | 05-25-46 | 12,903,500 | 13,327,509 | |
Towd Point Mortgage Trust | |||||
Series 2017-1, Class A1 (A)(F) | 2.750 | 10-25-56 | 5,405,001 | 5,311,872 | |
Series 2017-2, Class A1 (A)(F) | 2.750 | 04-25-57 | 4,427,257 | 4,364,422 | |
Series 2017-3, Class A1 (A)(F) | 2.750 | 07-25-57 | 2,818,222 | 2,775,390 | |
Series 2017-5, Class A1 (1 month LIBOR + 0.600%) (A)(B) | 2.560 | 02-25-57 | 9,422,836 | 9,448,120 | |
Verizon Owner Trust Series 2016-1A, Class A (A) | 1.420 | 01-20-21 | 6,391,000 | 6,345,321 | |
Wendy's Funding LLC | |||||
Series 2015-1A, Class A2II (A) | 4.080 | 06-15-45 | 12,299,625 | 12,414,749 | |
Series 2018-1A, Class A2I (A) | 3.573 | 03-15-48 | 3,775,538 | 3,687,945 | |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 27 |
Shares | Value | ||||
Common stocks 0.0% | $0 | ||||
(Cost $3,539,176) | |||||
Consumer discretionary 0.0% | 0 | ||||
Media 0.0% | |||||
Vertis Holdings, Inc. (G)(H) | 300,118 | 0 | |||
Preferred securities 5.7% | $195,675,023 | ||||
(Cost $191,444,246) | |||||
Energy 0.5% | 16,784,456 | ||||
Oil, gas and consumable fuels 0.5% | |||||
Hess Corp., 8.000% | 126,200 | 8,640,283 | |||
Kinder Morgan, Inc., 9.750% | 248,753 | 8,144,173 | |||
Financials 3.7% | 125,903,900 | ||||
Banks 3.0% | |||||
First Tennessee Bank NA (Greater of 3 month LIBOR + 0.850% or 3.750%), 3.750% (A)(B) | 18,420 | 14,367,600 | |||
M&T Bank Corp., Series A, 6.375% | 7,985 | 8,048,880 | |||
M&T Bank Corp., Series C, 6.375% | 962 | 971,620 | |||
Regions Financial Corp., 6.375% | 401,920 | 10,256,998 | |||
Synovus Financial Corp., Series C (7.875% to 8-1-18, then 3 month LIBOR + 6.390%) | 333,527 | 8,504,939 | |||
U.S. Bancorp (6.500% to 1-15-22, then 3 month LIBOR + 4.468%) | 385,125 | 10,768,095 | |||
U.S. Bancorp (Greater of 3 month LIBOR + 1.020% or 3.500%), 3.500% (B) | 21,257 | 19,589,601 | |||
Wells Fargo & Company (5.850% to 9-15-23, then 3 month LIBOR + 3.090%) | 440,630 | 11,381,473 | |||
Wells Fargo & Company (6.625% to 3-15-24, then 3 month LIBOR + 3.690%) | 156,415 | 4,296,720 | |||
Wells Fargo & Company, Series L, 7.500% | 8,335 | 10,477,095 | |||
Zions Bancorporation (6.950% to 9-15-23, then 3 month LIBOR + 3.890%) | 154,580 | 4,417,896 | |||
Diversified financial services 0.3% | |||||
AMG Capital Trust II, 5.150% | 141,355 | 8,535,015 | |||
Insurance 0.4% | |||||
The Hartford Financial Services Group, Inc. (7.875% to 4-15-22, then 3 month LIBOR + 5.596%) | 485,325 | 14,287,968 | |||
Health care 0.3% | 11,044,334 | ||||
Health care equipment and supplies 0.3% | |||||
Becton, Dickinson and Company, 6.125% | 189,700 | 11,044,334 | |||
Industrials 0.1% | 2,645,508 | ||||
Machinery 0.1% | |||||
Stanley Black & Decker, Inc., 5.375% | 24,880 | 2,645,508 |
28 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Shares | Value | ||||
Real estate 0.2% | $7,871,547 | ||||
Equity real estate investment trusts 0.2% | |||||
Crown Castle International Corp., Series A, 6.875% | 7,545 | 7,871,547 | |||
Utilities 0.9% | 31,425,278 | ||||
Electric utilities 0.6% | |||||
NextEra Energy, Inc., 6.123% | 242,675 | 13,735,405 | |||
NextEra Energy, Inc., 6.371% | 96,395 | 7,072,501 | |||
Multi-utilities 0.3% | |||||
Dominion Energy, Inc., 6.750% | 241,030 | 10,617,372 | |||
Yield* (%) | Maturity date | Par value^ | Value | ||
Short-term investments 1.0% | $32,168,000 | ||||
(Cost $32,168,000) | |||||
U.S. Government Agency 0.6% | 18,744,000 | ||||
Federal Agricultural Mortgage Corp. Discount Note | 1.550 | 06-01-18 | 2,390,000 | 2,390,000 | |
Federal Home Loan Bank Discount Note | 1.500 | 06-01-18 | 16,354,000 | 16,354,000 |
Par value^ | Value | ||||
Repurchase agreement 0.4% | 13,424,000 | ||||
Barclays Tri-Party Repurchase Agreement dated 5-31-18 at 1.750% to be repurchased at $10,289,500 on 6-1-18, collateralized by $11,180,100 U.S. Treasury Notes, 1.375% due 8-31-23 (valued at $10,495,324, including interest) | 10,289,000 | 10,289,000 | |||
Repurchase Agreement with State Street Corp. dated 5-31-18 at 0.740% to be repurchased at $3,135,064 on 6-1-18, collateralized by $3,290,000 U.S. Treasury Notes, 2.125% due 2-29-24 (valued at $3,201,154, including interest) | 3,135,000 | 3,135,000 |
Total investments (Cost $3,508,247,816) 99.1% | $3,377,527,823 | ||||
Other assets and liabilities, net 0.9% | 30,895,099 | ||||
Total net assets 100.0% | $3,408,422,922 |
The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund. | |
^All par values are denominated in U.S. dollars unless otherwise indicated. | |
Currency Abbreviations | |
AUD | Australian Dollar |
BRL | Brazilian Real |
CAD | Canadian Dollar |
COP | Colombian Peso |
DKK | Danish Krone |
EUR | Euro |
GBP | Pound Sterling |
IDR | Indonesian Rupiah |
INR | Indian Rupee |
KRW | Korean Won |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 29 |
MXN | Mexican Peso |
MYR | Malaysian Ringgit |
NOK | Norwegian Krone |
NZD | New Zealand Dollar |
PHP | Philippine Peso |
SGD | Singapore Dollar |
Security Abbreviations and Legend | |
BBSW | Bank Bill Swap Rate |
EURIBOR | Euro Interbank Offered Rate |
IO | Interest-Only Security - (Interest Tranche of Stripped Mortgage Pool). Rate shown is the annualized yield at the end of the period. |
LIBOR | London Interbank Offered Rate |
(A) | These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $983,081,140 or 28.8% of the fund's net assets as of 5-31-18. |
(B) | Variable rate obligation. The coupon rate shown represents the rate at period end. |
(C) | Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date. |
(D) | Term loans are variable rate obligations. The coupon rate shown represents the rate at period end. |
(E) | This position represents an unsettled loan commitment at period end. Certain details associated with this purchase are not known prior to the settlement date, including coupon rate, which is disclosed as TBD (To Be Determined). |
(F) | Variable or floating rate security, the interest rate of which adjusts periodically based on a weighted average of interest rates and prepayments on the underlying pool of assets. The interest rate shown is the current rate as of period end. |
(G) | Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy. |
(H) | Non-income producing security. |
* | Yield represents either the annualized yield at the date of purchase, the stated coupon rate or, for floating rate securities, the rate at period end. |
30 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Open contracts | Number of contracts | Position | Expiration date | Notional basis* | Notional value* | Unrealized appreciation (depreciation) |
10-Year U.S. Treasury Note Futures | 989 | Short | Sep 2018 | $(118,237,095) | $(119,112,688) | $(875,593) |
5-Year U.S. Treasury Note Futures | 2,028 | Short | Sep 2018 | (230,014,655) | (230,970,188) | (955,533) |
German Euro BUND Futures | 1,103 | Short | Jun 2018 | (203,882,756) | (209,073,492) | (5,190,736) |
U.S. Treasury Long Bond Futures | 560 | Short | Sep 2018 | (80,078,151) | (81,270,001) | (1,191,850) |
$(8,213,712) |
Contract to buy | Contract to sell | Counterparty (OTC) | Contractual settlement date | Unrealized appreciation | Unrealized depreciation | ||
AUD | 4,461,400 | USD | 3,379,256 | State Street Bank and Trust Company | 6/20/2018 | — | $(5,018) |
DKK | 22,224,867 | USD | 3,693,201 | HSBC Bank USA | 6/20/2018 | — | (198,070) |
MXN | 2,078,100,861 | USD | 109,545,174 | State Street Bank and Trust Company | 6/20/2018 | — | (5,644,515) |
NOK | 69,070,067 | USD | 8,562,317 | UBS AG | 6/20/2018 | — | (116,142) |
NZD | 50,770,184 | AUD | 47,397,500 | Citibank N.A. | 6/20/2018 | — | (319,114) |
NZD | 55,588,163 | AUD | 51,887,682 | HSBC Bank USA | 6/20/2018 | — | (343,547) |
NZD | 213,110,164 | USD | 153,247,403 | Australia and New Zealand Banking Group | 6/20/2018 | — | (4,114,981) |
NZD | 49,589,110 | USD | 35,828,876 | Citibank N.A. | 6/20/2018 | — | (1,126,898) |
NZD | 71,712,093 | USD | 51,753,060 | Goldman Sachs Bank USA | 6/20/2018 | — | (1,569,633) |
NZD | 90,055,763 | USD | 64,746,149 | HSBC Bank USA | 6/20/2018 | — | (1,725,999) |
NZD | 3,085,000 | USD | 2,224,223 | State Street Bank and Trust Company | 6/20/2018 | — | (65,370) |
SEK | 188,123,287 | USD | 22,475,229 | Citibank N.A. | 6/20/2018 | — | (1,117,597) |
SEK | 201,595,412 | USD | 24,149,488 | State Street Bank and Trust Company | 6/20/2018 | — | (1,262,365) |
SGD | 6,430,000 | USD | 4,886,165 | HSBC Bank USA | 6/20/2018 | — | (82,258) |
SGD | 13,056,629 | USD | 9,858,305 | State Street Bank and Trust Company | 6/20/2018 | — | (103,586) |
SGD | 595,000 | USD | 442,272 | UBS AG | 6/20/2018 | $2,257 | — |
USD | 21,268,142 | AUD | 28,251,373 | Goldman Sachs Bank USA | 6/20/2018 | — | (98,888) |
USD | 30,678,713 | AUD | 40,741,445 | HSBC Bank USA | 6/20/2018 | — | (134,787) |
USD | 25,929,921 | DKK | 154,444,259 | Citibank N.A. | 6/20/2018 | 1,641,678 | — |
USD | 24,661,578 | GBP | 17,665,000 | HSBC Bank USA | 6/20/2018 | 1,160,349 | — |
USD | 29,375,000 | MXN | 540,244,731 | Citibank N.A. | 6/20/2018 | 2,363,903 | — |
USD | 84,237,500 | MXN | 1,563,119,440 | State Street Bank and Trust Company | 6/20/2018 | 6,084,824 | — |
USD | 8,865,784 | NOK | 69,070,067 | UBS AG | 6/20/2018 | 419,610 | — |
USD | 64,224,137 | NZD | 91,925,000 | Australia and New Zealand Banking Group | 6/20/2018 | 2,353,125 | — |
USD | 52,964,167 | NZD | 71,950,354 | Barclays Bank PLC Wholesale | 6/20/2018 | 2,614,007 | — |
USD | 24,893,276 | NZD | 33,955,000 | Goldman Sachs Bank USA | 6/20/2018 | 1,131,897 | — |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 31 |
Contract to buy | Contract to sell | Counterparty (OTC) | Contractual settlement date | Unrealized appreciation | Unrealized depreciation | ||
USD | 232,857,566 | NZD | 320,202,368 | HSBC Bank USA | 6/20/2018 | $8,783,058 | — |
USD | 32,543,120 | NZD | 44,210,189 | JPMorgan Chase Bank N.A. | 6/20/2018 | 1,605,259 | — |
USD | 47,614,717 | NZD | 64,678,794 | Australia and New Zealand Banking Group | 9/19/2018 | — | $(114,863) |
USD | 47,586,089 | SEK | 389,718,699 | State Street Bank and Trust Company | 6/20/2018 | 3,341,334 | — |
USD | 21,039,576 | SGD | 27,626,499 | HSBC Bank USA | 6/20/2018 | 399,585 | — |
$31,900,886 | $(18,143,631) |
Derivatives Currency Abbreviations | |
AUD | Australian Dollar |
DKK | Danish Krone |
GBP | Pound Sterling |
MXN | Mexican Peso |
NOK | Norwegian Krone |
NZD | New Zealand Dollar |
SEK | Swedish Krona |
SGD | Singapore Dollar |
USD | U.S. Dollar |
32 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Financial statements |
Assets | |
Unaffiliated investments, at value (Cost $3,508,247,816) | $3,377,527,823 |
Unrealized appreciation on forward foreign currency contracts | 31,900,886 |
Cash | 164,225 |
Foreign currency, at value (Cost $875,960) | 861,949 |
Cash held at broker for futures contracts | 9,218,490 |
Cash segregated at custodian for OTC derivative contracts | 6,462,000 |
Dividends and interest receivable | 33,974,911 |
Receivable for fund shares sold | 1,927,048 |
Receivable for investments sold | 32,208,512 |
Other assets | 236,101 |
Total assets | 3,494,481,945 |
Liabilities | |
Unrealized depreciation on forward foreign currency contracts | 18,143,631 |
Payable for futures variation margin | 365,264 |
Distributions payable | 524,229 |
Payable for investments purchased | 58,490,865 |
Payable for fund shares repurchased | 7,272,541 |
Payable to affiliates | |
Accounting and legal services fees | 444,119 |
Transfer agent fees | 169,269 |
Distribution and service fees | 22,165 |
Trustees' fees | 4,785 |
Other liabilities and accrued expenses | 622,155 |
Total liabilities | 86,059,023 |
Net assets | $3,408,422,922 |
Net assets consist of | |
Paid-in capital | $3,587,353,857 |
Undistributed net investment income | 55,275,691 |
Accumulated net realized gain (loss) on investments, futures contracts and foreign currency transactions | (108,754,898) |
Net unrealized appreciation (depreciation) on investments, futures contracts and translation of assets and liabilities in foreign currencies | (125,451,728) |
Net assets | $3,408,422,922 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 33 |
Net asset value per share | |
Based on net asset value and shares outstanding - the fund has an unlimited number of shares authorized with no par value | |
Class A ($606,667,571 ÷ 97,121,395 shares) 1 | $6.25 |
Class B ($42,217,982 ÷ 6,758,372 shares) 1 | $6.25 |
Class C ($210,658,954 ÷ 33,722,332 shares) 1 | $6.25 |
Class I ($837,436,418 ÷ 134,320,928 shares) | $6.23 |
Class R1 ($9,636,918 ÷ 1,537,718 shares) | $6.27 |
Class R2 ($8,618,714 ÷ 1,381,570 shares) | $6.24 |
Class R3 ($7,645,822 ÷ 1,224,173 shares) | $6.25 |
Class R4 ($143,145,476 ÷ 22,908,356 shares) | $6.25 |
Class R5 ($17,035,684 ÷ 2,731,125 shares) | $6.24 |
Class R6 ($1,525,359,383 ÷ 244,426,788 shares) | $6.24 |
Maximum offering price per share | |
Class A (net asset value per share ÷ 96%)2 | $6.51 |
1 | Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. |
2 | On single retail sales of less than $100,000. On sales of $100,000 or more and on group sales the offering price is reduced. |
34 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Investment income | |
Interest | $147,217,099 |
Dividends | 13,635,095 |
Less foreign taxes withheld | (1,182,452) |
Total investment income | 159,669,742 |
Expenses | |
Investment management fees | 13,409,322 |
Distribution and service fees | 6,027,270 |
Accounting and legal services fees | 955,064 |
Transfer agent fees | 3,193,373 |
Trustees' fees | 69,078 |
Custodian fees | 861,232 |
State registration fees | 194,267 |
Printing and postage | 581,101 |
Professional fees | 132,164 |
Other | 119,424 |
Total expenses | 25,542,295 |
Less expense reductions | (547,028) |
Net expenses | 24,995,267 |
Net investment income | 134,674,475 |
Realized and unrealized gain (loss) | |
Net realized gain (loss) on | |
Unaffiliated investments and foreign currency transactions | 33,275,295 |
Futures contracts | 17,570,098 |
Forward foreign currency contracts | (63,465,682) |
(12,620,289) | |
Change in net unrealized appreciation (depreciation) of | |
Unaffiliated investments and translation of assets and liabilities in foreign currencies | (128,404,950) |
Futures contracts | (4,313,498) |
Forward foreign currency contracts | 17,980,510 |
(114,737,938) | |
Net realized and unrealized loss | (127,358,227) |
Increase in net assets from operations | $7,316,248 |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 35 |
Year ended 5-31-18 | Year ended 5-31-17 | |
Increase (decrease) in net assets | ||
From operations | ||
Net investment income | $134,674,475 | $140,770,541 |
Net realized gain (loss) | (12,620,289) | 23,620,690 |
Change in net unrealized appreciation (depreciation) | (114,737,938) | (17,039,815) |
Increase in net assets resulting from operations | 7,316,248 | 147,351,416 |
Distributions to shareholders | ||
From net investment income | ||
Class A | (19,133,651) | (23,532,069) |
Class B | (1,338,964) | (1,890,281) |
Class C | (6,610,221) | (8,346,672) |
Class I | (59,504,767) | (103,332,197) |
Class R1 | (320,819) | (377,782) |
Class R2 | (282,353) | (371,095) |
Class R3 | (197,560) | (129,341) |
Class R4 | (4,676,333) | (4,371,625) |
Class R5 | (682,911) | (492,793) |
Class R6 | (41,779,349) | (8,239,233) |
Total distributions | (134,526,928) | (151,083,088) |
From fund share transactions | (1,093,157,575) | (338,463,744) |
Total decrease | (1,220,368,255) | (342,195,416) |
Net assets | ||
Beginning of year | 4,628,791,177 | 4,970,986,593 |
End of year | $3,408,422,922 | $4,628,791,177 |
Undistributed net investment income | $55,275,691 | $70,387,799 |
36 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Financial highlights |
CLASS A SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.47 | $6.47 | $6.56 | $6.71 | $6.78 |
Net investment income1 | 0.20 | 0.17 | 0.17 | 0.24 | 0.29 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.02 | (0.05) | (0.15) | (0.07) |
Total from investment operations | (0.02) | 0.19 | 0.12 | 0.09 | 0.22 |
Less distributions | |||||
From net investment income | (0.20) | (0.19) | (0.19) | (0.24) | (0.29) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.20) | (0.19) | (0.21) | (0.24) | (0.29) |
Net asset value, end of period | $6.25 | $6.47 | $6.47 | $6.56 | $6.71 |
Total return (%)2,3 | (0.43) | 2.95 | 1.82 | 1.30 | 3.36 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $607 | $672 | $913 | $1,007 | $1,258 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 0.80 | 0.81 | 0.82 | 0.82 | 0.86 |
Expenses including reductions | 0.79 | 0.81 | 0.81 | 0.81 | 0.86 |
Net investment income | 3.03 | 2.69 | 2.67 | 3.67 | 4.43 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Does not reflect the effect of sales charges, if any. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 37 |
CLASS B SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.47 | $6.47 | $6.56 | $6.71 | $6.78 |
Net investment income1 | 0.15 | 0.13 | 0.13 | 0.20 | 0.25 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.01 | (0.06) | (0.16) | (0.08) |
Total from investment operations | (0.07) | 0.14 | 0.07 | 0.04 | 0.17 |
Less distributions | |||||
From net investment income | (0.15) | (0.14) | (0.14) | (0.19) | (0.24) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.15) | (0.14) | (0.16) | (0.19) | (0.24) |
Net asset value, end of period | $6.25 | $6.47 | $6.47 | $6.56 | $6.71 |
Total return (%)2,3 | (1.12) | 2.24 | 1.12 | 0.59 | 2.64 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $42 | $71 | $98 | $120 | $147 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 1.50 | 1.51 | 1.52 | 1.52 | 1.56 |
Expenses including reductions | 1.49 | 1.51 | 1.51 | 1.51 | 1.56 |
Net investment income | 2.32 | 1.99 | 1.98 | 2.98 | 3.73 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Does not reflect the effect of sales charges, if any. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
38 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS C SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.47 | $6.47 | $6.56 | $6.71 | $6.78 |
Net investment income1 | 0.15 | 0.13 | 0.13 | 0.20 | 0.25 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.01 | (0.06) | (0.16) | (0.08) |
Total from investment operations | (0.07) | 0.14 | 0.07 | 0.04 | 0.17 |
Less distributions | |||||
From net investment income | (0.15) | (0.14) | (0.14) | (0.19) | (0.24) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.15) | (0.14) | (0.16) | (0.19) | (0.24) |
Net asset value, end of period | $6.25 | $6.47 | $6.47 | $6.56 | $6.71 |
Total return (%)2,3 | (1.12) | 2.24 | 1.12 | 0.59 | 2.64 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $211 | $320 | $413 | $479 | $565 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 1.50 | 1.51 | 1.52 | 1.52 | 1.56 |
Expenses including reductions | 1.49 | 1.51 | 1.51 | 1.51 | 1.56 |
Net investment income | 2.32 | 2.00 | 1.98 | 2.97 | 3.73 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Does not reflect the effect of sales charges, if any. |
3 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 39 |
CLASS I SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.46 | $6.46 | $6.55 | $6.69 | $6.77 |
Net investment income1 | 0.21 | 0.19 | 0.19 | 0.26 | 0.31 |
Net realized and unrealized gain (loss) on investments | (0.23) | 0.02 | (0.06) | (0.14) | (0.08) |
Total from investment operations | (0.02) | 0.21 | 0.13 | 0.12 | 0.23 |
Less distributions | |||||
From net investment income | (0.21) | (0.21) | (0.20) | (0.26) | (0.31) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.21) | (0.21) | (0.22) | (0.26) | (0.31) |
Net asset value, end of period | $6.23 | $6.46 | $6.46 | $6.55 | $6.69 |
Total return (%)2 | (0.29) | 3.27 | 2.14 | 1.76 | 3.54 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $837 | $3,080 | $3,175 | $1,357 | $1,148 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 0.50 | 0.50 | 0.50 | 0.50 | 0.53 |
Expenses including reductions | 0.49 | 0.49 | 0.50 | 0.50 | 0.53 |
Net investment income | 3.31 | 3.02 | 2.96 | 3.97 | 4.75 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
40 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS R1 SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.49 | $6.49 | $6.59 | $6.73 | $6.80 |
Net investment income1 | 0.17 | 0.15 | 0.15 | 0.22 | 0.27 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.02 | (0.07) | (0.15) | (0.07) |
Total from investment operations | (0.05) | 0.17 | 0.08 | 0.07 | 0.20 |
Less distributions | |||||
From net investment income | (0.17) | (0.17) | (0.16) | (0.21) | (0.27) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.17) | (0.17) | (0.18) | (0.21) | (0.27) |
Net asset value, end of period | $6.27 | $6.49 | $6.49 | $6.59 | $6.73 |
Total return (%)2 | (0.77) | 2.60 | 1.33 | 1.11 | 3.02 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $10 | $13 | $15 | $15 | $17 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 1.15 | 1.16 | 1.16 | 1.16 | 1.19 |
Expenses including reductions | 1.14 | 1.15 | 1.15 | 1.15 | 1.19 |
Net investment income | 2.67 | 2.36 | 2.33 | 3.32 | 4.09 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 41 |
CLASS R2 SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.46 | $6.46 | $6.55 | $6.70 | $6.77 |
Net investment income1 | 0.19 | 0.17 | 0.17 | 0.23 | 0.29 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.01 | (0.06) | (0.15) | (0.07) |
Total from investment operations | (0.03) | 0.18 | 0.11 | 0.08 | 0.22 |
Less distributions | |||||
From net investment income | (0.19) | (0.18) | (0.18) | (0.23) | (0.29) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.19) | (0.18) | (0.20) | (0.23) | (0.29) |
Net asset value, end of period | $6.24 | $6.46 | $6.46 | $6.55 | $6.70 |
Total return (%)2 | (0.54) | 2.86 | 1.58 | 1.35 | 3.34 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $9 | $14 | $11 | $7 | $3 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 0.90 | 0.91 | 0.90 | 0.91 | 0.91 |
Expenses including reductions | 0.89 | 0.90 | 0.90 | 0.90 | 0.91 |
Net investment income | 2.92 | 2.62 | 2.59 | 3.52 | 4.38 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
42 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS R3 SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.47 | $6.47 | $6.56 | $6.70 | $6.78 |
Net investment income1 | 0.18 | 0.16 | 0.16 | 0.23 | 0.28 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.01 | (0.06) | (0.15) | (0.09) |
Total from investment operations | (0.04) | 0.17 | 0.10 | 0.08 | 0.19 |
Less distributions | |||||
From net investment income | (0.18) | (0.17) | (0.17) | (0.22) | (0.27) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.18) | (0.17) | (0.19) | (0.22) | (0.27) |
Net asset value, end of period | $6.25 | $6.47 | $6.47 | $6.56 | $6.70 |
Total return (%)2 | (0.68) | 2.71 | 1.60 | 1.20 | 2.97 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $8 | $7 | $3 | $2 | $4 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 1.05 | 1.06 | 1.04 | 1.06 | 1.09 |
Expenses including reductions | 1.04 | 1.05 | 1.03 | 1.05 | 1.09 |
Net investment income | 2.79 | 2.50 | 2.44 | 3.48 | 4.18 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 43 |
CLASS R4 SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.47 | $6.47 | $6.57 | $6.71 | $6.78 |
Net investment income1 | 0.20 | 0.19 | 0.18 | 0.25 | 0.30 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.01 | (0.06) | (0.14) | (0.07) |
Total from investment operations | (0.02) | 0.20 | 0.12 | 0.11 | 0.23 |
Less distributions | |||||
From net investment income | (0.20) | (0.20) | (0.20) | (0.25) | (0.30) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.20) | (0.20) | (0.22) | (0.25) | (0.30) |
Net asset value, end of period | $6.25 | $6.47 | $6.47 | $6.57 | $6.71 |
Total return (%)2 | (0.28) | 3.11 | 1.83 | 1.62 | 3.52 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $143 | $145 | $139 | $45 | $11 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 0.75 | 0.76 | 0.76 | 0.76 | 0.79 |
Expenses including reductions | 0.64 | 0.65 | 0.65 | 0.65 | 0.69 |
Net investment income | 3.18 | 2.86 | 2.82 | 3.74 | 4.58 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
44 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
CLASS R5 SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.46 | $6.46 | $6.55 | $6.70 | $6.77 |
Net investment income1 | 0.22 | 0.20 | 0.20 | 0.27 | 0.32 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.01 | (0.06) | (0.16) | (0.08) |
Total from investment operations | — | 0.21 | 0.14 | 0.11 | 0.24 |
Less distributions | |||||
From net investment income | (0.22) | (0.21) | (0.21) | (0.26) | (0.31) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.22) | (0.21) | (0.23) | (0.26) | (0.31) |
Net asset value, end of period | $6.24 | $6.46 | $6.46 | $6.55 | $6.70 |
Total return (%)2 | (0.09) | 3.32 | 2.19 | 1.66 | 3.74 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $17 | $20 | $13 | $11 | $12 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 0.45 | 0.46 | 0.46 | 0.46 | 0.48 |
Expenses including reductions | 0.44 | 0.45 | 0.45 | 0.45 | 0.48 |
Net investment income | 3.38 | 3.09 | 3.03 | 4.03 | 4.79 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
SEE NOTES TO FINANCIAL STATEMENTS | ANNUAL REPORT | JOHN HANCOCK INCOME FUND | 45 |
CLASS R6 SHARES Period ended | 5-31-18 | 5-31-17 | 5-31-16 | 5-31-15 | 5-31-14 |
Per share operating performance | |||||
Net asset value, beginning of period | $6.46 | $6.46 | $6.56 | $6.70 | $6.77 |
Net investment income1 | 0.22 | 0.20 | 0.20 | 0.26 | 0.32 |
Net realized and unrealized gain (loss) on investments | (0.22) | 0.02 | (0.07) | (0.14) | (0.07) |
Total from investment operations | — | 0.22 | 0.13 | 0.12 | 0.25 |
Less distributions | |||||
From net investment income | (0.22) | (0.22) | (0.21) | (0.26) | (0.32) |
From net realized gain | — | — | (0.02) | — | — |
Total distributions | (0.22) | (0.22) | (0.23) | (0.26) | (0.32) |
Net asset value, end of period | $6.24 | $6.46 | $6.46 | $6.56 | $6.70 |
Total return (%)2 | (0.03) | 3.39 | 2.10 | 1.87 | 3.81 |
Ratios and supplemental data | |||||
Net assets, end of period (in millions) | $1,525 | $288 | $191 | $175 | $9 |
Ratios (as a percentage of average net assets): | |||||
Expenses before reductions | 0.40 | 0.41 | 0.41 | 0.41 | 0.44 |
Expenses including reductions | 0.39 | 0.38 | 0.38 | 0.39 | 0.42 |
Net investment income | 3.45 | 3.15 | 3.10 | 3.88 | 4.83 |
Portfolio turnover (%) | 48 | 41 | 37 | 51 | 50 |
1 | Based on average daily shares outstanding. |
2 | Total returns would have been lower had certain expenses not been reduced during the applicable periods. |
46 | JOHN HANCOCK INCOME FUND | ANNUAL REPORT | SEE NOTES TO FINANCIAL STATEMENTS |
Note 1 — Organization
John Hancock Income Fund (the fund) is a series of John Hancock Strategic Series (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 a high level of current income.
The fund may offer multiple classes of shares. The shares currently offered by the fund are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class B shares are closed to new investors. Class I shares are offered to institutions and certain investors. Class R1, Class R2, Class R3, Class R4 and Class R5 shares are available only to certain retirement and 529 plans. Class R6 shares are only available to certain retirement plans, institutions and other investors. Class B shares convert to Class A shares eight years after purchase. Class C shares convert to Class A shares ten years after purchase (certain exclusions may apply). Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, and transfer agent fees for each class may differ.
Note 2 — Significant accounting policies
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund qualifies as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.
Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:
Security valuation. Investments are stated at value as of the scheduled close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In case of emergency or other disruption resulting in the NYSE not opening for trading or the NYSE closing at a time other than the regularly scheduled close, the net asset value (NAV) may be determined as of the regularly scheduled close of the NYSE pursuant to the fund's Valuation Policies and Procedures.
In order to value the securities, the fund uses the following valuation techniques: Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Equity securities held by the fund are typically valued at the last sale price or official closing price on the exchange or principal market where the security trades. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Futures contracts are typically valued at settlement prices, which are the official closing prices published by the exchange on which they trade. Foreign equity index futures that trade in the electronic trading market subsequent to the close of regular trading may be valued at the last traded price in the electronic trading market as of 4:00 P.M. ET, or may be fair valued based on fair value adjustment factors provided by an independent pricing vendor in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE. Foreign securities and currencies, including forward foreign currency contracts, are valued in U.S. dollars based on foreign currency exchange rates supplied by an independent pricing vendor.
In certain instances, the Pricing Committee may determine to value equity securities using prices obtained from another exchange or market if trading on the exchange or market on which prices are typically obtained did not open for trading as scheduled, or if trading closed earlier than scheduled, and trading occurred as normal on another exchange or market. Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund's Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.
The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund's own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques and related inputs may result in transfers into or out of an assigned level within the disclosure hierarchy.
The following is a summary of the values by input classification of the fund's investments as of May 31, 2018, by major security category or type:
Total value at 5-31-18 | Level 1 quoted price | Level 2 significant observable inputs | Level 3 significant unobservable inputs | |||||||||||
Investments in securities: | ||||||||||||||
Assets | ||||||||||||||
Foreign government obligations | $799,293,423 | — | $799,293,423 | — | ||||||||||
Corporate bonds | 1,453,016,977 | — | 1,453,016,977 | — | ||||||||||
Convertible bonds | 49,779,867 | — | 49,779,867 | — | ||||||||||
Capital preferred securities | 63,938,772 | — | 63,938,772 | — | ||||||||||
Term loans | 322,231,907 | — | 322,231,907 | — | ||||||||||
Collateralized mortgage obligations | 313,104,273 | — | 313,104,273 | — | ||||||||||
Asset backed securities | 148,319,581 | — | 148,319,581 | — | ||||||||||
Common stocks | — | — | — | — | ||||||||||
Preferred securities | 195,675,023 | $170,790,368 | 24,884,655 | — | ||||||||||
Short-term investments | 32,168,000 | — | 32,168,000 | — | ||||||||||
Total investments in securities | $3,377,527,823 | $170,790,368 | $3,206,737,455 | — | ||||||||||
Derivatives: | ||||||||||||||
Assets | ||||||||||||||
Forward foreign currency contracts | $31,900,886 | — | $31,900,886 | — | ||||||||||
Liabilities | ||||||||||||||
Futures | (8,213,712 | ) | $(3,022,976 | ) | (5,190,736 | ) | — | |||||||
Forward foreign currency contracts | (18,143,631 | ) | — | (18,143,631 | ) | — |
Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund's custodian, or for tri-party repurchase agreements, collateral is held at a third-party custodian bank in a segregated account for the benefit of the fund. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund's investments as part of the caption related to the repurchase agreement.
Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, assets and liabilities resulting from repurchase agreements are not offset in the Statement of assets and liabilities. In the event of a default by the
counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.
Term loans (Floating rate loans). The fund may invest in term loans, which are debt securities and are often rated below investment grade at the time of purchase. Term loans are generally subject to legal or contractual restrictions on resale and generally have longer settlement periods than conventional debt securities. Term loans involve special types of risk, including credit risk, interest-rate risk, counterparty risk and risk associated with extended settlement. The liquidity of term loans, including the volume and frequency of secondary market trading in such loans, varies significantly over time and among individual loans. During periods of infrequent trading, valuing a term loan can be more difficult and buying and selling a term loan at an acceptable price can be more difficult and delayed, which could result in a loss.
The fund's ability to receive payments of principal, interest and other amounts in connection with term loans will depend primarily on the financial condition of the borrower. The fund's failure to receive scheduled payments on a term loan due to a default, bankruptcy or other reason would adversely affect the fund's income and would likely reduce the value of its assets. Transactions in loan investments typically take a significant amount of time (i.e., seven days or longer) to settle. This could pose a liquidity risk to the fund and, if the fund's exposure to such investments is substantial, could impair the fund's ability to meet redemptions. Because term loans may not be rated by independent credit rating agencies, a decision to invest in a particular loan could depend exclusively on the subadvisor's credit analysis of the borrower and/or term loan agents. There is greater risk that the fund may have limited rights to enforce the terms of an underlying loan than for other types of debt instruments.
Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily NAV calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.
Foreign investing. 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. Foreign investments are 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.
Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors.
Foreign taxes. The fund may be subject to withholding tax on income, capital gains or repatriation taxes imposed by certain countries, a portion of which may be recoverable. Foreign taxes are accrued based upon the fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Taxes are accrued based on gains realized by the fund as a result of certain foreign security sales. Estimated taxes are accrued based on unrealized appreciation of such securities. Investment income is recorded net of foreign withholding taxes, less any amounts reclaimable.
Line of credit. The fund may have the ability to borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund's custodian
agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the extent of any overdraft, and to the maximum extent permitted by law.
Effective June 29, 2017, the fund and other affiliated funds have entered into a syndicated line of credit agreement with Citibank, N.A. as the administrative agent that enables them to participate in a $750 million unsecured committed line of credit. Excluding commitments designated for a certain fund and subject to the needs of all other affiliated funds, the fund can borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. A commitment fee payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund based on a combination of fixed and asset based allocations and is reflected in Other expenses on the Statement of operations. Prior to June 29, 2017, the fund had a similar agreement that enabled it to participate in a $1 billion unsecured committed line of credit. For the year ended May 31, 2018, the fund had no borrowings under either line of credit. Commitment fees for the year ended May 31, 2018 were $13,719.
Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund's relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, and transfer agent fees, for all classes, are charged daily at the class level based on the net assets of each class and the specific expense rates applicable to each class.
Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.
For federal income tax purposes, as of May 31, 2018, the fund has a short-term capital loss carryforward of $78,667,370 and a long-term capital loss carryforward of $31,536,688 available to offset future net realized capital gains. These carryforwards do not expire.
As of May 31, 2018, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund's federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.
Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares dividends daily and pays them monthly. Capital gain distributions, if any, are typically distributed annually. The tax character of distributions for the years ended May 31, 2018 and 2017 was as follows:
May 31, 2018 | May 31, 2017 | |
Ordinary Income | $134,526,928 | $151,083,088 |
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 May 31, 2018, the components of distributable earnings on a tax basis consisted of $3,713,893 of undistributed ordinary income.
Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ from US GAAP. Distributions in excess of tax basis earnings and profits, if any, are reported in the fund's financial statements as a return of capital.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to foreign currency transactions, derivative transactions, amortization and accretion on debt securities, and contingent payment debt instruments.
Note 3 — Derivative Instruments
The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the over-the-counter (OTC) market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the position. Some derivatives involve risks that are potentially greater than the risks associated with investing directly in the referenced securities or other referenced underlying instrument. Specifically, the fund is exposed to the risk that the counterparty to an OTC derivatives contract will be unable or unwilling to make timely settlement payments or otherwise honor its obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.
Forward foreign currency contracts and certain options are typically traded through the OTC market. Certain forwards, options and swaps are regulated by the Commodity Futures Trading Commission. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC counterparties. The ISDA gives each party to the agreement the right to terminate all transactions traded under the agreement if there is certain deterioration in the credit quality or contractual default of the other party, as defined in the ISDA. Upon an event of default or a termination of the ISDA, the non-defaulting party has the right to close out all transactions and to net amounts owed.
As defined by the ISDA, the fund may have collateral agreements with certain counterparties to mitigate counterparty risk on OTC derivatives. Subject to established minimum levels, collateral for OTC transactions is generally determined based on the net aggregate unrealized gain or loss on contracts with a particular counterparty. Collateral pledged to the fund is held in a segregated account by a third-party agent or held by the custodian bank for the benefit of the fund and can be in the form of cash or debt securities issued by the U.S. government or related agencies; collateral posted by the fund for OTC transactions is held in a segregated account at the fund's custodian and is noted in the accompanying fund's investments, or if cash is posted, on the Statement of assets and liabilities. The fund's risk of loss due to counterparty risk is equal to the asset value of outstanding contracts offset by collateral received.
Futures are traded or cleared on an exchange. Exchange-traded transactions generally present less counterparty risk to a fund than OTC transactions. The exchange stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange and the clearing member.
Collateral or margin requirements for exchange-traded derivatives are set by the broker or applicable clearinghouse. Margin for exchange-traded is detailed in the Statements of assets and liabilities as Cash held at broker for futures contracts.
Futures. A futures contract is a contractual agreement to buy or sell a particular currency or financial instrument at a pre-determined price in the future. Risks related to the use of futures contracts include possible illiquidity of the futures markets, contract prices that can be highly volatile and imperfectly correlated to movements in the underlying financial instrument and potential losses in excess of the amounts recognized on the Statement of assets and liabilities. Use of long futures
contracts subjects the fund to the risk of loss up to the notional value of the futures contracts. Use of short futures contracts subjects the fund to unlimited risk of loss.
Upon entering into a futures contract, the fund is required to deposit initial margin with the broker in the form of cash or securities. The amount of required margin is generally based on a percentage of the contract value; this amount is the initial margin for the trade. The margin deposit must then be maintained at the established level over the life of the contract. Futures margin receivable / payable is included on the Statement of assets and liabilities. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (variation margin) and unrealized gain or loss is recorded by the fund. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
During the year ended May 31, 2018, the fund used futures contracts to manage duration of the fund. The fund held futures contracts with notional values ranging from $604.0 million to $938.9 million, as measured at each quarter end.
Forward foreign currency contracts. A forward foreign currency contract is an agreement between two parties to buy and sell specific currencies at a price that is set on the date of the contract. The forward contract calls for delivery of the currencies on a future date that is specified in the contract. Risks related to the use of forwards include the possible failure of counterparties to meet the terms of the forward agreement, the failure of the counterparties to timely post collateral if applicable, the risk that currency movements will not favor the fund thereby reducing the fund's total return, and the potential for losses in excess of the amounts recognized on the Statement of assets and liabilities.
The market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked-to-market daily and the change in value is recorded by the fund as an unrealized gain or loss. Realized gains or losses, equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed, are recorded upon delivery or receipt of the currency or settlement with the counterparty.
During the year ended May 31, 2018, the fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates. The fund held forward foreign currency contracts with U.S. Dollar notional values ranging from $1.3 billion to $2.3 billion, as measured at each quarter end.
Options. There are two types of options, put options and call options. Options are traded either OTC or on an exchange. A call option gives the purchaser of the option the right to buy (and the seller the obligation to sell) the underlying instrument at the exercise price. A put option gives the purchaser of the option the right to sell (and the writer the obligation to buy) the underlying instrument at the exercise price. Writing puts and buying calls may increase the fund's exposure to changes in the value of the underlying instrument. Buying puts and writing calls may decrease the fund's exposure to such changes. Risks related to the use of options include the loss of premiums, possible illiquidity of the options markets, trading restrictions imposed by an exchange and movements in underlying security values, and for written options, potential losses in excess of the amounts recognized on the Statement of assets and liabilities. In addition, OTC options are subject to the risks of all OTC derivatives contracts.
When the fund purchases an option, the premium paid by the fund is included in the portfolio of investments and subsequently "marked-to-market" to reflect current market value. If the purchased option expires, the fund realizes a loss equal to the cost of the option. If the fund exercises a call option, the cost of the securities acquired by exercising the call is increased by the premium paid to buy the call. If the fund exercises a put option, it realizes a gain or loss from the sale of the underlying security and the proceeds from such sale are decreased by the premium paid. When the fund writes an option, the premium received is included as a liability and subsequently "marked-to-market" to reflect the current market value of the option written. Premiums received from writing options that expire unexercised are recorded as realized gains. Premiums received from writing options which are exercised or are closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium received reduces the cost basis of the securities purchased by the fund.
During the year ended May 31, 2018, the fund used purchased options contracts to manage against anticipated currency exchange rates. The fund held purchased options contracts with market values ranging up to approximately $175,000 as measured at each quarter end.
Fair value of derivative instruments by risk category
The table below summarizes the fair value of derivatives held by the fund at May 31, 2018 by risk category:
Risk | Statement of assets and liabilities location | Financial instruments location | Assets derivatives fair value | Liabilities derivatives fair value | |||||||||||||
Interest rate | Receivable/payable for futures variation margin | Futures† | — | ($8,213,712 | ) | ||||||||||||
Foreign currency | Unrealized appreciation / depreciation on forward foreign currency contracts | Forward foreign currency contracts | $31,900,886 | (18,143,631 | ) | ||||||||||||
Total | $31,900,886 | ($26,357,343 | ) | ||||||||||||||
† Reflects cumulative appreciation/depreciation on futures as disclosed in Fund's investments. Only the period end variation margin is separately disclosed on the Statement of assets and liabilities. |
For financial reporting purposes, the portfolio does not offset OTC derivative assets or liabilities that are subject to master netting arrangements, as defined by the ISDAs, in the Statement of assets and liabilities. In the event of default by the counterparty or a termination of the agreement, the ISDA allows an offset of amounts across the various transactions between the fund and the applicable counterparty.
Effect of derivative instruments on the Statement of operations
The table below summarizes the net realized gain (loss) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended May 31, 2018:
Statement of operations location - net realized gain (loss) on: | ||||||||||||||
Risk | Unaffiliated investments and foreign currency transactions 1 | Futures contracts | Forward foreign currency contracts | Total | ||||||||||
Foreign currency | ($1,206,208 | ) | — | ($63,465,682 | ) | ($64,671,890 | ) | |||||||
Interest rate | — | $17,570,098 | — | 17,570,098 | ||||||||||
Total | ($1,206,208 | ) | $17,570,098 | ($63,465,682 | ) | ($47,101,792 | ) | |||||||
1 Realized gain/loss associated with purchased options is included in this caption on the Statement of operations. |
The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended May 31, 2018:
Statement of operations location - change in net unrealized appreciation (depreciation) of: | ||||||||||||||
Risk | Unaffiliated investments and translation of assets and liabilities in foreign currencies 1 | Futures contracts | Forward foreign currency contracts | Total | ||||||||||
Foreign currency | $1,031,244 | — | $17,980,510 | $19,011,754 | ||||||||||
Interest rate | — | ($4,313,498 | ) | — | (4,313,498 | ) | ||||||||
Total | $1,031,244 | ($4,313,498 | ) | $17,980,510 | $14,698,256 | |||||||||
1 Change in unrealized appreciation/depreciation associated with purchased options is included in this caption on the Statement of operations. |
Note 4 — Guarantees and indemnifications
Under the Trust's organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.
Note 5 — Fees and transactions with affiliates
John Hancock Advisers, LLC (the Advisor) serves as investment advisor for the fund. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).
Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor equivalent on an annual basis to the sum of: (a) 0.60% of the first $100 million of the fund's average daily net assets; (b) 0.45% of the next $150 million of the fund's average daily net assets; (c) 0.40% of the next $250 million of the fund's average daily net assets; (d) 0.35% of the next $150 million of the fund's average daily net assets; and (e) 0.30% of the fund's average daily net assets in excess of $650 million. The Advisor has a subadvisory agreement with John Hancock Asset Management a division of Manulife Asset Management (US) LLC, an indirectly owned subsidiary of MFC and an affiliate of the Advisor. The fund is not responsible for payment of the subadvisory fees.
The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock group of funds complex, including the fund (the participating portfolios). This waiver is based upon aggregate net assets of all the participating portfolios. The amount of the reimbursement is calculated daily and allocated among all the participating portfolios in proportion to the daily net assets of each fund. During the year ended May 31, 2018, this waiver amounted to 0.01% of the fund's average net assets. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.
Prior to October 1, 2017, the Advisor contractually agreed to waive and/or reimburse all class-specific expenses for Class R6 shares of the fund, to the extent they exceeded 0.00% of average annual net assets attributable to Class R6 shares.
For the year ended May 31, 2018, the expense reductions amounted to the following:
Class | Expense reduction | Class | Expense reduction | |
Class A | $52,992 | Class R3 | $598 | |
Class B | 4,822 | Class R4 | 12,365 | |
Class C | 23,828 | Class R5 | 1,701 | |
Class I | 150,238 | Class R6 | 151,338 | |
Class R1 | 1,007 | Total | $399,698 | |
Class R2 | 809 |
Expenses waived or reimbursed in the current fiscal period are not subject to recapture in future fiscal periods.
The investment management fees incurred for the year ended May 31, 2018 were equivalent to a net annual effective rate of 0.31% of the fund's average daily net assets.
Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, compliance, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended May 31, 2018 amounted to an annual rate of 0.02% of the fund's average daily net assets.
Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B, Class C, Class R1, Class R2, Class R3 and Class R4 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. In addition, under a service plan for Class R1, Class R2, Class R3, Class R4 and Class R5, the fund pays for certain other services. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund's shares:
Class | Rule 12b-1 fee | Service fee | Class | Rule 12b-1 fee | Service fee | |
Class A | 0.30% | — | Class R2 | 0.25% | 0.25% | |
Class B | 1.00% | — | Class R3 | 0.50% | 0.15% | |
Class C | 1.00% | — | Class R4 | 0.25% | 0.10% | |
Class R1 | 0.50% | 0.25% | Class R5 | — | 0.05% |
The fund's Distributor has contractually agreed to waive 0.10% of Rule12b-1 fees for Class R4 shares. The current waiver agreement expires on September 30, 2018, unless renewed by mutual agreement of the fund and the Distributor based upon a determination that this is appropriate under the circumstances at the time. This contractual waiver amounted to $147,330 for Class R4 shares for the year ended May 31, 2018.
Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $383,212 for the year ended May 31, 2018. Of this amount, $52,333 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $299,220 was paid as sales commissions to broker-dealers and $31,659 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.
Class A, Class B and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class B shares that are redeemed within six years of purchase are subject to CDSCs, at declining rates, beginning at 5.00%. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended May 31, 2018, CDSCs received by the Distributor amounted to $3,739, $35,886 and $8,024 for Class A, Class B and Class C shares, respectively.
Transfer agent fees. The John Hancock Group of Funds has a complex-wide transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. It also includes out-of-pocket expenses, including payments made to third-parties for recordkeeping services provided to their clients who invest in one or more John Hancock funds. In addition, Signature Services Cost may be reduced by certain fees that Signature Services receives in connection with retirement and small accounts. Signature Services Cost is calculated monthly and allocated, as applicable, to five categories of share classes: Retail Share and Institutional Share Classes of Non-Municipal Bond Funds, Class R6 Shares, Retirement Share Classes and Municipal Bond Share Classes. Within each of these categories, the applicable costs are allocated to the affected John Hancock affiliated funds and/or classes, based on the relative average daily net assets.
Class level expenses. Class level expenses for the year ended May 31, 2018 were:
Distribution and service fees | Transfer agent fees | |||||||
Class A | $1,896,114 | $689,067 | ||||||
Class B | 576,506 | 62,983 | ||||||
Class C | 2,844,874 | 310,369 |
Distribution and service fees | Transfer agent fees | |||||||
Class I | — | $1,959,055 | ||||||
Class R1 | $90,171 | 1,449 | ||||||
Class R2 | 48,400 | 1,153 | ||||||
Class R3 | 46,061 | 857 | ||||||
Class R4 | 515,165 | 17,758 | ||||||
Class R5 | 9,979 | 2,452 | ||||||
Class R6 | — | 148,230 | ||||||
Total | $6,027,270 | $3,193,373 |
Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to the fund based on its net assets relative to other funds within the John Hancock group of funds complex.
Interfund lending program. Pursuant to an Exemptive Order issued by the SEC, the fund(s), along with certain other funds advised by the Advisor or its affiliates, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, no interfund loans were outstanding. The fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or lender | Weighted average loan balance | Days outstanding | Weighted average interest rate | Interest income |
Lender | $2,749,130 | 3 | 1.250% | $286 |
Note 6 — Fund share transactions
Transactions in fund shares for the years ended May 31, 2018 and 2017 were as follows:
Year ended 5-31-18 | Year ended 5-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class A Shares | ||||||||||||||||||||||||||
Sold | 17,201,850 | $110,012,055 | 13,486,507 | $87,245,033 | ||||||||||||||||||||||
Distributions reinvested | 2,629,196 | 16,904,829 | 3,300,025 | 21,366,420 | ||||||||||||||||||||||
Repurchased | (26,549,463 | ) | (170,884,535 | ) | (54,050,559 | ) | (348,569,343 | ) | ||||||||||||||||||
Net decrease | (6,718,417 | ) | $(43,967,651 | ) | (37,264,027 | ) | $(239,957,890 | ) | ||||||||||||||||||
Class B Shares | ||||||||||||||||||||||||||
Sold | 37,703 | $242,998 | 90,534 | $585,866 | ||||||||||||||||||||||
Distributions reinvested | 187,885 | 1,209,433 | 259,113 | 1,677,873 | ||||||||||||||||||||||
Repurchased | (4,446,193 | ) | (28,637,515 | ) | (4,546,324 | ) | (29,371,459 | ) | ||||||||||||||||||
Net decrease | (4,220,605 | ) | $(27,185,084 | ) | (4,196,677 | ) | $(27,107,720 | ) | ||||||||||||||||||
Class C Shares | ||||||||||||||||||||||||||
Sold | 1,205,231 | $7,775,484 | 2,295,543 | $14,894,380 | ||||||||||||||||||||||
Distributions reinvested | 927,671 | 5,967,773 | 1,094,768 | 7,086,580 | ||||||||||||||||||||||
Repurchased | (17,866,186 | ) | (114,202,394 | ) | (17,780,529 | ) | (114,839,142 | ) | ||||||||||||||||||
Net decrease | (15,733,284 | ) | $(100,459,137 | ) | (14,390,218 | ) | $(92,858,182 | ) |
Year ended 5-31-18 | Year ended 5-31-17 | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
Class I Shares | ||||||||||||||||||||||||||
Sold | 46,502,079 | $299,786,118 | 127,055,771 | $821,163,860 | ||||||||||||||||||||||
Distributions reinvested | 8,697,678 | 55,949,552 | 9,692,073 | 62,615,486 | ||||||||||||||||||||||
Repurchased | (398,000,139 | ) | (2,559,425,999 | ) | (151,407,305 | ) | (976,501,725 | ) | ||||||||||||||||||
Net decrease | (342,800,382 | ) | $(2,203,690,329 | ) | (14,659,461 | ) | $(92,722,379 | ) | ||||||||||||||||||
Class R1 Shares | ||||||||||||||||||||||||||
Sold | 416,209 | $2,694,261 | 564,978 | $3,672,915 | ||||||||||||||||||||||
Distributions reinvested | 40,303 | 260,016 | 46,790 | 303,834 | ||||||||||||||||||||||
Repurchased | (902,917 | ) | (5,814,004 | ) | (941,860 | ) | (6,106,309 | ) | ||||||||||||||||||
Net decrease | (446,405 | ) | $(2,859,727 | ) | (330,092 | ) | $(2,129,560 | ) | ||||||||||||||||||
Class R2 Shares | ||||||||||||||||||||||||||
Sold | 407,737 | $2,630,942 | 885,447 | $5,737,775 | ||||||||||||||||||||||
Distributions reinvested | 35,768 | 229,683 | 50,592 | 326,886 | ||||||||||||||||||||||
Repurchased | (1,226,709 | ) | (7,935,357 | ) | (423,200 | ) | (2,723,925 | ) | ||||||||||||||||||
Net increase (decrease) | (783,204 | ) | $(5,074,732 | ) | 512,839 | $3,340,736 | ||||||||||||||||||||
Class R3 Shares | ||||||||||||||||||||||||||
Sold | 429,477 | $2,766,886 | 768,251 | $4,955,653 | ||||||||||||||||||||||
Distributions reinvested | 30,742 | 197,467 | 19,939 | 128,806 | ||||||||||||||||||||||
Repurchased | (247,025 | ) | (1,592,627 | ) | (246,413 | ) | (1,587,400 | ) | ||||||||||||||||||
Net increase | 213,194 | $1,371,726 | 541,777 | $3,497,059 | ||||||||||||||||||||||
Class R4 Shares | ||||||||||||||||||||||||||
Sold | 3,650,757 | $23,537,956 | 3,760,286 | $24,345,798 | ||||||||||||||||||||||
Distributions reinvested | 727,062 | 4,674,107 | 674,838 | 4,369,156 | ||||||||||||||||||||||
Repurchased | (3,820,954 | ) | (24,604,830 | ) | (3,545,607 | ) | (22,922,025 | ) | ||||||||||||||||||
Net increase | 556,865 | $3,607,233 | 889,517 | $5,792,929 | ||||||||||||||||||||||
Class R5 Shares | ||||||||||||||||||||||||||
Sold | 1,334,055 | $8,575,898 | 2,051,090 | $13,229,501 | ||||||||||||||||||||||
Distributions reinvested | 104,593 | 671,824 | 75,557 | 487,829 | ||||||||||||||||||||||
Repurchased | (1,728,576 | ) | (11,100,164 | ) | (1,192,150 | ) | (7,680,023 | ) | ||||||||||||||||||
Net increase (decrease) | (289,928 | ) | $(1,852,442 | ) | 934,497 | $6,037,307 | ||||||||||||||||||||
Class R6 Shares | ||||||||||||||||||||||||||
Sold | 318,409,833 | $2,050,624,753 | 22,772,471 | $147,708,151 | ||||||||||||||||||||||
Distributions reinvested | 3,218,992 | 20,517,185 | 1,264,171 | 8,164,365 | ||||||||||||||||||||||
Repurchased | (121,805,225 | ) | (784,189,370 | ) | (8,988,783 | ) | (58,228,560 | ) | ||||||||||||||||||
Net increase | 199,823,600 | $1,286,952,568 | 15,047,859 | $97,643,956 | ||||||||||||||||||||||
Total net decrease | (170,398,566 | ) | $(1,093,157,575 | ) | (52,913,986 | ) | $(338,463,744 | ) |
Note 7 — Purchase and sale of securities
Purchases and sales of securities, other than short-term investments, amounted to $1,966,495,004 and $3,061,304,358, respectively, for the year ended May 31, 2018.
Note 8 — New accounting pronouncement
In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2017-08, Premium Amortization on Purchased Callable Debt Securities, which shortens the premium amortization period for purchased non-contingently callable debt securities. The standard is effective for annual periods beginning after December 15, 2018 and interim periods within those fiscal years. At this time, management is evaluating the impact of ASU 2017-08 to the fund.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of John Hancock Strategic Series and Shareholders of John Hancock Income Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the fund's investments, of John Hancock Income Fund (the "Fund") as of May 31, 2018, the related statement of operations for the year ended May 31, 2018, the statements of changes in net assets for each of the two years in the period ended May 31, 2018, including the related notes, and the financial highlights for each of the five years in the period ended May 31, 2018 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of May 31, 2018, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended May 31, 2018 and the financial highlights for each of the five years in the period ended May 31, 2018 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of May 31, 2018 by correspondence with the custodian, agent banks and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 16, 2018
We have served as the auditor of one or more investment companies in the John Hancock group of funds since 1988.
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 May 31, 2018.
The fund reports the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.
The fund reports the maximum amount allowable of its net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.
Eligible shareholders will be mailed a 2018 Form 1099-DIV in early 2019. This will reflect the tax character of all distributions paid in calendar year 2018.
Please consult a tax advisor regarding the tax consequences of your investment in the fund.
This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.
Independent Trustees
Name, year of birth Position(s) held with Trust Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Hassell H. McClellan, Born: 1945 | 2012 | 216 |
Trustee and Chairperson of the Board Director/Trustee, Virtus Funds (since 2008); Director, The Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013). Trustee (since 2014) and Chairperson of the Board (since 2017), John Hancock Collateral Trust; Trustee (since 2015) and Chairperson of the Board (since 2017), John Hancock Exchange-Traded Fund Trust; Trustee (since 2012) and Chairperson of the Board (since 2017), John Hancock retail funds3; Trustee (2005-2006 and since 2012) and Chairperson of the Board (since 2017), John Hancock Funds III; Trustee (since 2005) and Chairperson of the Board (since 2017), John Hancock Variable Insurance Trust and John Hancock Funds II. |
Charles L. Bardelis,2 Born: 1941 | 2012 | 216 |
Trustee Director, Island Commuter Corp. (marine transport). Trustee, John Hancock Collateral Trust (since 2014), Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust (since 1988); Trustee, John Hancock Funds II (since 2005). |
James R. Boyle, Born: 1959 | 2015 | 216 |
Trustee Chief Executive Officer, Foresters Financial (since 2018); Chairman and Chief Executive Officer, Zillion Group, Inc. (formerly HealthFleet, Inc.) (healthcare) (2014-2018); Executive Vice President and Chief Executive Officer, U.S. Life Insurance Division of Genworth Financial, Inc. (insurance) (January 2014-July 2014); Senior Executive Vice President, Manulife Financial Corporation, President and Chief Executive Officer, John Hancock (1999-2012); Chairman and Director, John Hancock Advisers, LLC, John Hancock Funds, LLC, and John Hancock Investment Management Services, LLC (2005-2010). Trustee, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (2005-2010; 2012-2014 and since 2015); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (2005-2014 and since 2015). |
Peter S. Burgess,2 Born: 1942 | 2012 | 216 |
Trustee Consultant (financial, accounting, and auditing matters) (since 1999); Certified Public Accountant; Partner, Arthur Andersen (independent public accounting firm) (prior to 1999); Director, Lincoln Educational Services Corporation (since 2004); Director, Symetra Financial Corporation (2010-2016); Director, PMA Capital Corporation (2004-2010). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Funds III (2005-2006 and since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2005). |
William H. Cunningham, Born: 1944 | 2005 | 216 |
Trustee Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the University of Texas, Austin, Texas; Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, Southwest Airlines (since 2000); former Director, LIN Television (2009-2014). Trustee, John Hancock retail funds3 (since 1986); Trustee, John Hancock Variable Insurance Trust (since 2012); Trustee, John Hancock Funds II (2005-2006 and since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with Trust Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Grace K. Fey, Born: 1946 | 2012 | 216 |
Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director and Executive Vice President, Frontier Capital Management Company (1988-2007); Director, Fiduciary Trust (since 2009). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Theron S. Hoffman,2 Born: 1947 | 2012 | 216 |
Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting firm) (since 2003); Director, The Todd Organization (consulting firm) (2003-2010); President, Westport Resources Management (investment management consulting firm) (2006-2008); Board Member, Senior Managing Director, Partner, and Operating Head, Putnam Investments (2000-2003); Executive Vice President, The Thomson Corp. (financial and legal information publishing) (1997-2000). Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015); Trustee, John Hancock retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). |
Deborah C. Jackson, Born: 1952 | 2008 | 216 |
Trustee President, Cambridge College, Cambridge, Massachusetts (since 2011); Board of Directors, National Association of Corporate Directors/New England (since 2015); Board of Directors, Association of Independent Colleges and Universities of Massachusetts (since 2014); Chief Executive Officer, American Red Cross of Massachusetts Bay (2002-2011); Board of Directors of Eastern Bank Corporation (since 2001); Board of Directors of Eastern Bank Charitable Foundation (since 2001); Board of Directors of American Student Assistance Corporation (1996-2009); Board of Directors of Boston Stock Exchange (2002-2008); Board of Directors of Harvard Pilgrim Healthcare (health benefits company) (2007-2011). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); and Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
James M. Oates, Born: 1946 | 2012 | 216 |
Trustee |
Steven R. Pruchansky, Born: 1944 | 2005 | 216 |
Trustee and Vice Chairperson of the Board Managing Director, Pru Realty (since 2017); Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Partner, Right Funding, LLC (2014-2017); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, Maxwell Building Corp. (until 1991). Trustee (since 1992) and Chairperson of the Board (2011-2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, John Hancock retail funds3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee and Vice Chairperson of the Board, John Hancock Collateral Trust (since 2014); Trustee and Vice Chairperson of the Board, John Hancock Exchange-Traded Fund Trust (since 2015). |
Independent Trustees (continued)
Name, year of birth Position(s) held with Trust Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Gregory A. Russo, Born: 1949 | 2009 | 216 |
Trustee Director and Audit Committee Chairman (since 2012), and Member, Audit Committee and Finance Committee (since 2011), NCH Healthcare System, Inc. (holding company for multi-entity healthcare system); Director and Member (since 2012) and Finance Committee Chairman (since 2014), The Moorings, Inc. (nonprofit continuing care community); Vice Chairman, Risk & Regulatory Matters, KPMG LLP (KPMG) (2002-2006); Vice Chairman, Industrial Markets, KPMG (1998-2002); Chairman and Treasurer, Westchester County, New York, Chamber of Commerce (1986-1992); Director, Treasurer, and Chairman of Audit and Finance Committees, Putnam Hospital Center (1989-1995); Director and Chairman of Fundraising Campaign, United Way of Westchester and Putnam Counties, New York (1990-1995). Trustee, John Hancock retail funds3 (since 2008); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Non-Independent Trustees4
Name, year of birth Position(s) held with Trust Principal occupation(s) and other directorships during past 5 years | Trustee of the Trust since1 | Number of John Hancock funds overseen by Trustee |
Andrew G. Arnott, Born: 1971 | 2017 | 216 |
President and Non-Independent Trustee Executive Vice President, John Hancock Financial Services (since 2009, including prior positions); Director and Executive Vice President, John Hancock Advisers, LLC (since 2005, including prior positions); Director and Executive Vice President, John Hancock Investment Management Services, LLC (since 2006, including prior positions); President, John Hancock Funds, LLC (since 2004, including prior positions); President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2007, including prior positions); President, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). Trustee, John Hancock Collateral Trust, John Hancock Exchange-Traded Fund Trust, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2017). |
Marianne Harrison, Born: 1963 | 216 | |
Non-Independent Trustee President and CEO, John Hancock (since 2017); President and CEO, Manulife Canadian Division (2013-2017); Member, Board of Directors, American Council of Life Insurers (ACLI) (since 2018); Member, Board of Directors, Coummunitech, an industry-led innovation center that fosters technology companies in Canada (since 2017); Member, Board of Directors, Manulife Assurance Canada (since 2015); Board Member, St. Mary's General Hospital Foundation (since 2014); Member, Board of Directors, Manulife Bank of Canada (since 2013); Member, Standing Committee of the Canadian Life & Health Assurance Association (since 2013); Member, Board of Directors, John Hancock USA, John Hancock Life & Health, John Hancock New York (2012-2013). Trustee, John Hancock Collateral Trust, John Hancock Exchange-Traded Fund Trust, John Hancock retail funds3, John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2018). |
Warren A. Thomson, Born: 1955 | 2012 | 216 |
Non-Independent Trustee Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance Company (since 2009); Chairman, Manulife Asset Management (since 2001, including prior positions); Director and Chairman, Manulife Asset Management Limited (since 2006); Director and Chairman, Hancock Natural Resources Group, Inc. (since 2013). Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012); Trustee, John Hancock Collateral Trust (since 2014); Trustee, John Hancock Exchange-Traded Fund Trust (since 2015). |
Principal officers who are not Trustees
Name, year of birth Position(s) held with Trust Principal occupation(s) during past 5 years | Officer of the Trust since |
John J. Danello, Born: 1955 | 2006 |
Senior Vice President, Secretary, and Chief Legal Officer Vice President and Chief Counsel, John Hancock Wealth Management (since 2005); Senior Vice President (since 2007) and Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and The Berkeley Financial Group, LLC; Senior Vice President (since 2006, including prior positions) and Chief Legal Officer and Secretary (since 2014), John Hancock retail funds,3 John Hancock Funds II and John Hancock Variable Insurance Trust; Senior Vice President, Secretary and Chief Legal Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014); Vice President, John Hancock Life & Health Insurance Company (since 2009); Vice President, John Hancock Life Insurance Company (USA) and John Hancock Life Insurance Company of New York (since 2010); and Senior Vice President, Secretary and Chief Legal Counsel (2007-2014, including prior positions) of John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC. |
Francis V. Knox, Jr., Born: 1947 | 2005 |
Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief Compliance Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust, John Hancock Funds II, John Hancock Advisers, LLC, and John Hancock Investment Management Services, LLC (since 2005); Chief Compliance Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Charles A. Rizzo, Born: 1957 | 2007 |
Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2008); Chief Financial Officer, John Hancock retail funds,3 John Hancock Variable Insurance Trust and John Hancock Funds II (since 2007); Chief Financial Officer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
Salvatore Schiavone, Born: 1965 | 2010 |
Treasurer Assistant Vice President, John Hancock Financial Services (since 2007); Vice President, John Hancock Advisers, LLC and John Hancock Investment Management Services, LLC (since 2007); Treasurer, John Hancock retail funds3 (since 2007, including prior positions); Treasurer, John Hancock Variable Insurance Trust and John Hancock Funds II (2007-2009 and since 2010, including prior positions); Treasurer, John Hancock Collateral Trust and John Hancock Exchange-Traded Fund Trust (since 2014). |
The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.
The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the Trust and is available without charge, upon request, by calling 800-225-5291.
1 | Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee's death, retirement, resignation, or removal. Mr. Boyle has served as Trustee at various times prior to the date listed in the table. |
2 | Member of the Audit Committee. |
3 | "John Hancock retail funds" comprises John Hancock Funds III and 40 other John Hancock funds consisting of 30 series of other John Hancock trusts and 10 closed-end funds. |
4 | The Trustee is a Non-Independent Trustee due to current or former positions with the Advisor and certain affiliates. |
Trustees Hassell H. McClellan, Chairperson Officers Andrew G. Arnott John J. Danello Francis V. Knox, Jr. Charles A. Rizzo Salvatore Schiavone | Investment advisor John Hancock Advisers, LLC Subadvisor John Hancock Asset Management a division of Manulife Asset Management (US) LLC Principal distributor John Hancock Funds, LLC Custodian State Street Bank and Trust Company Transfer agent John Hancock Signature Services, Inc. Legal counsel K&L Gates LLP Independent registered public accounting firm PricewaterhouseCoopers LLP |
*Member of the Audit Committee
†Non-Independent Trustee
#Effective 6-19-18
The fund's proxy voting policies and procedures, as well as the fund proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) website at sec.gov or on our website.
The fund's complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The fund's Form N-Q is available on our website and the SEC's website, sec.gov, and can be reviewed and copied (for a fee) at the SEC's Public Reference Room in Washington, DC. Call 800-SEC-0330 to receive information on the operation of the SEC's Public Reference Room.
We make this information on your fund, as well as monthly portfolio holdings, and other fund details available on our website at jhinvestments.com or by calling 800-225-5291.
You can also contact us: | |||
800-225-5291 jhinvestments.com | Regular mail: John Hancock Signature Services, Inc. | Express mail: John Hancock Signature Services, Inc. |
John Hancock family of funds
DOMESTIC EQUITY FUNDS Blue Chip Growth Classic Value Disciplined Value Disciplined Value Mid Cap Equity Income Financial Industries Fundamental All Cap Core Fundamental Large Cap Core Fundamental Large Cap Value Natural Resources New Opportunities Regional Bank Small Cap Core Small Cap Growth Small Cap Value Strategic Growth U.S. Global Leaders Growth U.S. Growth Value Equity GLOBAL AND INTERNATIONAL EQUITY FUNDS Disciplined Value International Emerging Markets Emerging Markets Equity Fundamental Global Franchise Global Equity Global Shareholder Yield Greater China Opportunities International Growth International Small Company International Value Equity | INCOME FUNDS Bond California Tax-Free Income Emerging Markets Debt Floating Rate Income Government Income High Yield High Yield Municipal Bond Income Investment Grade Bond Money Market Short Duration Credit Opportunities Spectrum Income Strategic Income Opportunities Tax-Free Bond ALTERNATIVE AND SPECIALTY FUNDS Absolute Return Currency Alternative Asset Allocation Enduring Assets Global Absolute Return Strategies Global Conservative Absolute Return Global Focused Strategies Redwood Seaport Long/Short Technical Opportunities |
A fund's investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at 800-225-5291, or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money.
ASSET ALLOCATION Balanced Income Allocation Multi-Index Lifetime Portfolios Multi-Index Preservation Portfolios Multimanager Lifestyle Portfolios Multimanager Lifetime Portfolios Retirement Income 2040 EXCHANGE-TRADED FUNDS John Hancock Multifactor Consumer Discretionary ETF John Hancock Multifactor Consumer Staples ETF John Hancock Multifactor Developed International ETF John Hancock Multifactor Energy ETF John Hancock Multifactor Financials ETF John Hancock Multifactor Healthcare ETF John Hancock Multifactor Industrials ETF John Hancock Multifactor Large Cap ETF John Hancock Multifactor Materials ETF John Hancock Multifactor Mid Cap ETF John Hancock Multifactor Small Cap ETF John Hancock Multifactor Technology ETF John Hancock Multifactor Utilities ETF | ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FUNDS ESG All Cap Core ESG Core Bond ESG International Equity ESG Large Cap Core CLOSED-END FUNDS Financial Opportunities Hedged Equity & Income Income Securities Trust Investors Trust Preferred Income Preferred Income II Preferred Income III Premium Dividend Tax-Advantaged Dividend Income Tax-Advantaged Global Shareholder Yield |
John Hancock Multifactor ETF shares are bought and sold at market price (not NAV), and are not individually redeemed
from the fund. Brokerage commissions will reduce returns.
John Hancock ETFs are distributed by Foreside Fund Services, LLC, and are subadvised by Dimensional Fund Advisors LP.
Foreside is not affiliated with John Hancock Funds, LLC or Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP receives compensation from John Hancock in connection with licensing rights to the
John Hancock Dimensional indexes. Dimensional Fund Advisors LP does not sponsor, endorse, or sell, and makes no
representation as to the advisability of investing in, John Hancock Multifactor ETFs.
John Hancock Investments
A trusted brand
John Hancock Investments is a premier asset manager representing one of
America's most trusted brands, with a heritage of financial stewardship dating
back to 1862. Helping our shareholders pursue their financial goals is at the
core of everything we do. It's why we support the role of professional financial
advice and operate with the highest standards of conduct and integrity.
A better way to invest
We serve investors globally through a unique multimanager approach:
We search the world to find proven portfolio teams with specialized
expertise for every strategy we offer, then we apply robust investment
oversight to ensure they continue to meet our uncompromising standards
and serve the best interests of our shareholders.
Results for investors
Our unique approach to asset management enables us to provide a diverse set
of investments backed by some of the world's best managers, along with strong
risk-adjusted returns across asset classes.
| John Hancock Funds, LLC n Member FINRA, SIPC 601 Congress Street n Boston, MA 02210-2805 800-225-5291 n jhinvestments.com | |
This report is for the information of the shareholders of John Hancock Income Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus. | ||
MF457347 | 91A 5/18 7/18 |
ITEM 2. CODE OF ETHICS.
As of the end of the year, May 31, 2018, the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Chief Executive Officer, Chief Financial Officer and Treasurer (respectively, the principal executive officer, the principal financial officer and the principal accounting officer, the “Covered Officers”). A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Peter S. Burgess is the audit committee financial expert and is “independent”, pursuant to general instructions on Form N-CSR Item 3.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees billed for professional services rendered by the principal accountant for the audits of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements amounted to the following for the fiscal years ended May 31, 2018 and 2017. These fees were billed to the registrant and were approved by the registrant’s audit committee.
Fund | May 31, 2018 | May 31, 2017 | ||
John Hancock Income Fund | $ | 71,398 | $ | 69,191 |
(b) Audit-Related Services
Audit-related fees for assurance and related services by the principal accountant are billed to the registrant or to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser ("control affiliates") that provides ongoing services to the registrant. The nature of the services provided was affiliated service provider internal controls reviews. Additionally, amounts billed to control affiliates were $110,200 and $106,517 for the fiscal years ended May 31, 2018 and 2017, respectively.
Fund | May 31, 2018 | May 31, 2017 | ||
John Hancock Income Fund | $ | 540 | $ | 510 |
(c) Tax Fees
The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning (“tax fees”) amounted to the following for the fiscal years ended May 31, 2018 and 2017. The nature of the services comprising the tax fees was the review of the registrant’s tax returns and tax distribution requirements. These fees were billed to the registrant and were approved by the registrant’s audit committee.
Fund | May 31, 2018 | May 31, 2017 | ||
John Hancock Income Fund | $ | 3,825 | $ | 3,647 |
(d) All Other Fees
Other fees billed for professional services rendered by the principal accountant to the registrant or to the control affiliates for the fiscal years ended May 31, 2018 and 2017 amounted to the following:
Fund | May 31, 2018 | May 31, 2017 | ||
John Hancock Income Fund | $ | 234 | $ | 832 |
(e)(1) Audit Committee Pre-Approval Policies and Procedures:
The trust’s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the “Auditor”) relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The trust’s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per year/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per year/per fund are subject to specific pre-approval by the Audit Committee.
All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.
(e)(2) Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
Audit-Related Fees, Tax Fees and All Other Fees:
There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception under Rule 2-01 of Regulation S-X.
(f) According to the registrant’s principal accountant for the fiscal year ended May 31, 2018, the percentage of hours spent on the audit of the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons who were not full-time, permanent employees of principal accountant was less than 50%.
(g) The aggregate non-audit fees billed by the registrant’s principal accountant for non- audit services rendered to the registrant and rendered to the registrant's control affiliates for the fiscal years ended May 31, 2018 and 2017 amounted to the following:
Trust | May 31, 2018 | May 31, 2017 | ||
John Hancock Strategic Series | $ | 6,720,178 | $ | 5,972,627 |
(h) The audit committee of the registrant has considered the non-audit services provided by the registrant’s principal accountant to the control affiliates and has determined that the services that were not pre-approved are compatible with maintaining the principal accountant’s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately-designated standing audit committee comprised of independent trustees. The members of the audit committee are as follows:
Peter S. Burgess - Chairman
Charles L. Bardelis
Theron S. Hoffman
ITEM 6. SCHEDULE OF INVESTMENTS.
(a) Not applicable.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached “John Hancock Funds – Nominating, Governance and Administration Committee Charter”.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this Form N-CSR, the registrant's principal executive officer and principal financial officer have concluded that those disclosure controls and procedures provide reasonable assurance that the material information required to be disclosed by the registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.: Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Code of Ethics for Covered Officers is attached.
(a)(2) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
(b)(1) Separate certifications for the registrant's principal executive officer and principal financial officer, as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.
(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached “John Hancock Funds – Nominating, Governance and Administration Committee Charter”.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
John Hancock Strategic Series
By: | /s/ Andrew Arnott | |
Andrew Arnott | ||
President | ||
Date: | July 16, 2018 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Andrew Arnott | |
Andrew Arnott | ||
President | ||
Date: | July 16, 2018 |
By: | /s/ Charles A. Rizzo | |
Charles A. Rizzo | ||
Chief Financial Officer | ||
Date: | July 16, 2018 |