N-CSR 1 a_jhfundsii.htm JOHN HANCOCK FUNDS II a_jhfundsii.htm
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 811-21779 
 
JOHN HANCOCK FUNDS II 
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(Exact name of registrant as specified in charter) 
 
601 CONGRESS STREET, BOSTON, MA 02210-2805 
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(Address of principal executive offices) (Zip code) 
 
SALVATORE SCHIAVONE, 601 CONGRESS STREET, BOSTON, MA 02210-2805 
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(Name and address of agent for service) 
 
Registrant's telephone number, including area code: (617) 663-4497 
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Date of fiscal year end: 8/31 
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Date of reporting period: 8/31/14 
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ITEM 1. REPORTS TO STOCKHOLDERS.

The Registrant prepared fourteen annual reports to shareholders for the year ended August 31, 2014 for series of John Hancock Funds II with August 31 fiscal year end. The first report applies to the Floating Rate Income Fund, the second report applies to the Strategic Income Opportunities Fund, the third report applies to the Natural Resources Fund, the fourth report applies to the Alternative Asset Allocation Fund, the fifth report applies to the Emerging Markets Fund, the sixth applies to the Emerging Markets Debt Fund, the seventh report applies to the U.S. Equity Fund, the eighth report applies to the International Small Company Fund, the ninth report applies to the Small Cap Value Fund, the tenth report applies to the Redwood Fund, the eleventh report applies to 10 Retirement Living Portfolios, the twelfth report applies to 10 Retirement Choices Portfolios, the thirteenth report applies to the 10 Retirement Living Through II Portfolios and the fourteenth report applies to 41 of the Registrant’s Funds.




A look at performance

Total returns for the period ended August 31, 2014

                  SEC 30-day  SEC 30-day 
  Average annual total returns (%)  Cumulative total returns (%)  yield (%)  yield (%) 
  with maximum sales charge    with maximum sales charge  subsidized  unsubsidized1 
  1-year  5-year  10-year  Since inception2  1-year  5-year  10-year  Since inception2  as of 8-31-14  as of 8-31-14 
Class A  1.64  6.00  —  4.65  1.64  33.85  —  35.41  3.87  3.86 
Class B  –1.55  5.42  —  4.27  –1.55  30.20  —  32.13  3.19  3.19 
Class C  2.66  5.80  —  4.34  2.66  32.59  —  32.74  3.27  3.26 
Class I3  4.72  6.96  —  5.45  4.72  40.01  —  42.50  4.28  4.27 
Class R63,4  4.63  6.97  —  5.46  4.63  40.03  —  42.59  4.33  4.33 
Class 13  4.81  7.01  —  5.51  4.81  40.33  —  42.99  4.39  4.38 
Class NAV3  4.75  7.09  —  5.56  4.75  40.82  —  43.50  4.44  4.43 
Index†  4.73  7.18  —  5.56  4.73  41.44  —  43.44  —  — 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charges on Class A shares of 2.5%, 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 3.0% to 2.5%, 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 R6, Class 1, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A  Class B  Class C  Class I  Class R6  Class 1  Class NAV 
Gross (%)  1.18*  1.94*  1.88  0.87  1.17  0.77  0.71 
Net (%)  1.20  1.95  1.88  0.87  0.71  0.77  0.71 

 

* Net expenses exceed gross expenses due to recapture program.

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the fund’s current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund’s website at jhinvestments.com.

The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index 1 is the S&P/LSTA Performing Loan Index.

See the following page for footnotes.

6  Floating Rate Income Fund | Annual report 

 


    With maximum  Without   
  Start date  sales charge  sales charge  Index 
Class B5  1-2-08  $13,213  $13,213  $14,344 
Class C5  1-2-08  13,274  13,274  14,344 
Class I3  1-2-08  14,250  14,250  14,344 
Class R63,4  1-2-08  14,259  14,259  14,344 
Class 13  1-2-08  14,299  14,299  14,344 
Class NAV3  1-2-08  14,350  14,350  14,344 

 

The values shown in the chart for “Class A with maximum sales charge” have been adjusted to reflect the reduction in the Class A maximum sales charge from 3.0% to 2.5%, which became effective on 2-3-14.

S&P/LSTA Performing Loan Index is a subset of the S&P/LSTA Leveraged Loan Index tracking returns in the leveraged loan market and capturing a broad cross-section of the U.S. leveraged loan market, including dollar-denominated, U.S.-syndicated loans to overseas issuers and excluding those in default.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Footnotes related to performance pages

1 Unsubsidized yield reflects what the yield would have been without the effect of reimbursements and waivers.

2 From 1-2-08.

3 For certain types of investors, as described in the fund’s prospectuses.

4 Class R6 shares were first offered on 9-1-11. The returns prior to this date are those of Class A shares that have been recalculated to reflect the gross fees and expenses of Class R6 shares.

5 The contingent deferred sales charge is not applicable.

Annual report | Floating Rate Income Fund  7 

 


Management’s discussion of

Fund performance

Western Asset Management Company

Bank loans advanced for the 12 months ended August 31, 2014. The economic environment provided a favorable backdrop for the bank loan market as the unemployment rate ended the period at its lowest level in six years and reports on consumer spending, manufacturing activity, and the housing market showed signs of strength. The bank loan market also continued to benefit from healthy investor demand, particularly from collateralized loan obligations, which are securitized pools of bank loans. Nonetheless, new supply kept pace with demand as banks issued more than $400 billion in new loans. Lower-rated credits fared best—bank loans rated CCC, the most speculative grade, posted double-digit gains for the period. Lower-quality bank loans benefited from a default rate that remained near historically low levels.

For the 12 months ended August 31, 2014, John Hancock Floating Rate Income Fund’s Class A shares produced a total return of 4.24%, excluding sales charges, trailing the 4.73% return of its benchmark, the S&P/LSTA Performing Loan Index.

The fund’s credit positioning contributed positively to performance versus the benchmark. A modest overweight position in loans rated CCC added value as this segment of the bank loan market outperformed by a wide margin. An underweight position in loans rated BB, which generated the lowest returns, also aided performance. For the most part, the fund’s emphasis remained on loans rated B, the middle tier of the credit quality spectrum.

From a sector perspective, the fund benefited from an underweight position in the consumer discretionary sector and overweight positions in the energy and utilities sectors. On the downside, an underweight position in the telecommunication services sector and an overweight position in the transportation segment of the industrials sector detracted from performance.

This commentary reflects the views of the portfolio manager through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Floating Rate Income Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,012.40  $5.88  1.16% 
Class B  1,000.00  1,008.30  9.87  1.95% 
Class C  1,000.00  1,008.90  9.37  1.85% 
Class I  1,000.00  1,015.10  4.27  0.84% 
Class R6  1,000.00  1,014.30  4.11  0.81% 
Class 1  1,000.00  1,014.50  3.81  0.75% 
Class NAV  1,000.00  1,014.70  3.55  0.70% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 


 
Annual report | Floating Rate Income Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,019.40  $5.90  1.16% 
Class B  1,000.00  1,015.40  9.91  1.95% 
Class C  1,000.00  1,015.90  9.40  1.85% 
Class I  1,000.00  1,021.00  4.28  0.84% 
Class R6  1,000.00  1,021.10  4.13  0.81% 
Class 1  1,000.00  1,021.40  3.82  0.75% 
Class NAV  1,000.00  1,021.70  3.57  0.70% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  Floating Rate Income Fund | Annual report 

 


Portfolio summary

Top 10 Issuers (11.7% of Net Assets on 8-31-14)1,2     
Caesars Entertainment Operating    Kronos, Inc.  1.0% 
Company, Inc.  1.9% 
BWAY Holding Company  1.0% 
Univision Communications, Inc.  1.5% 
First Data Corp.  1.0% 
Radnet Management, Inc.  1.1% 
Hilton Worldwide Finance LLC  1.0% 
American Airlines, Inc.  1.1% 
Energy Future Intermediate Holding   
Mill US Acquisition LLC  1.1%  Company LLC  1.0% 
 
Sector Composition1,3       
Consumer Discretionary  30.8%  Consumer Staples  6.8% 
Industrials  13.7%  Financials  6.5% 
Energy  9.6%  Information Technology  4.0% 
Health Care  8.8%  Telecommunication Services  3.9% 
Materials  8.1%  Short-Term Investments & Other  0.9% 
Utilities  6.9%     
 
Quality Composition1,4       
BBB  2.0%  Equity  0.7% 
BB  27.5%  Not Rated  8.3% 
B  52.2%  Short-Term Investments and Other  0.9% 
CCC & Below  8.4%     
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if a creditor is unable or unwilling to make principal or interest payments. Investments in higher-yielding, lower-rated securities include a higher risk of default. Illiquid securities may be difficult to sell at a price approximating their value. Events in the financial markets have resulted, and may continue to result, in an unusually high degree of volatility in the financial markets, both domestic and foreign. In addition, reduced liquidity in credit and fixed-income markets may adversely affect issuers worldwide. Foreign investing has additional risks, such as currency and market volatility and political and social instability. A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more than a diversified portfolio. Please see the fund’s prospectuses for additional risks.

4 Ratings are from Moody’s Investors Service, Inc. If not available, we have used Standard & Poor’s Ratings Services. In the absence of ratings from these agencies, we have used Fitch Ratings, Inc. “Not Rated” securities are those with no ratings available from these agencies. All ratings are as of 8-31-14 and do not reflect subsequent downgrades or upgrades, if any.

Annual report | Floating Rate Income Fund  11 

 


Fund’s investments

As of 8-31-14

    Maturity     
  Rate (%)  date  Par value  Value 
Term Loans (M) 89.2%      $3,413,630,709 
(Cost $3,429,036,740)         
 
Consumer Discretionary 29.8%      1,139,746,431 
 
Auto Components 1.7%         
Allison Transmission, Inc.  3.750  08-23-19  $1,204,267  1,198,995 
August LuxUK Holding Company  5.000  04-27-18  8,765,341  8,765,341 
August US Holding Company, Inc.  5.000  04-27-18  5,740,209  5,740,209 
CBS Outdoor Americas Capital LLC  3.000  01-31-21  5,000,000  4,953,570 
CS Intermediate Holdco 2 LLC  4.000  04-04-21  12,560,000  12,493,281 
INA Beteiligungsgesellschaft mbH  3.750  05-15-20  32,875,000  32,804,549 
 
Automobiles 0.5%         
Chrysler Group LLC  3.250  12-31-18  9,635,850  9,541,900 
Chrysler Group LLC  3.500  05-24-17  10,580,673  10,559,892 
 
Diversified Consumer Services 2.7%         
BakerCorp International, Inc.  4.250  02-14-20  19,619,042  19,226,662 
Laureate Education, Inc.  5.000  06-15-18  34,144,591  33,162,934 
Monitronics International, Inc.  4.250  03-23-18  15,983,372  15,973,382 
SRS Distribution, Inc.  4.750  09-02-19  8,196,250  8,191,127 
The ServiceMaster Company LLC  4.250  07-01-21  24,370,000  24,171,994 
 
Hotels, Restaurants & Leisure 10.3%         
24 Hour Fitness Worldwide, Inc.  4.750  05-28-21  7,700,000  7,707,700 
Belmond Interfin, Ltd.  4.000  03-21-21  1,596,000  1,581,038 
Boyd Gaming Corp.  4.000  08-14-20  6,216,389  6,175,982 
Caesars Entertainment Operating         
Company, Inc.  6.948  03-01-17  14,326,077  13,406,816 
Caesars Entertainment Operating         
Company, Inc.  9.750  03-01-17  11,970,000  11,551,050 
Caesars Entertainment Operating         
Company, Inc.  10.500  10-31-16  8,087,467  7,932,454 
Caesars Entertainment Resort Properties LLC  7.000  10-12-20  17,949,800  17,610,028 
Caesars Growth Properties Holdings LLC  6.250  05-08-21  14,460,000  14,116,575 
CCM Merger, Inc.  4.500  07-18-21  24,050,000  23,999,904 
CityCenter Holdings LLC  4.250  10-16-20  22,351,248  22,312,134 
El Pollo Loco, Inc.  5.250  10-11-18  15,694,367  15,733,603 
Equinox Holdings, Inc.  4.250  01-31-20  23,968,324  23,878,443 
Equinox Holdings, Inc.  9.750  07-31-20  8,520,000  8,605,200 
Fitness International LLC  5.500  07-01-20  22,030,000  21,919,850 
Four Seasons Holdings, Inc.  3.500  06-27-20  9,066,827  8,983,711 

 

12  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Hotels, Restaurants & Leisure (continued)         
Hilton Worldwide Finance LLC  3.500  10-26-20  $37,513,202  $37,237,067 
Landry’s, Inc.  4.000  04-24-18  27,285,073  27,216,861 
MGM Resorts International  2.907  12-20-17  2,955,000  2,947,613 
MGM Resorts International  3.500  12-20-19  17,075,009  16,961,170 
Mohegan Tribal Gaming Authority  5.500  11-19-19  20,785,922  20,740,463 
Oceania Cruises, Inc.  5.250  07-02-20  25,246,235  25,351,436 
QCE LLC, PIK (15.00% until 12-31-15, then         
10% cash thereafter)  15.000  07-01-19  6,167,527  4,114,003 
Seven Seas Cruises S de RL LLC  3.750  12-21-18  13,887,315  13,713,723 
Station Casinos LLC  4.250  03-02-20  15,542,171  15,479,039 
Stockbridge  13.000  05-02-17  5,000,000  5,462,500 
Wendy’s International, Inc.  3.250  05-15-19  8,947,463  8,909,114 
World Endurance Holdings  5.250  06-26-21  10,920,000  10,892,700 
 
Household Durables 0.6%         
Jarden Corp.  2.907  09-30-20  5,151,625  5,143,037 
Libbey Glass, Inc.  3.750  04-09-21  5,760,000  5,731,200 
Polarpak, Inc.  4.500  06-05-20  5,578,563  5,550,670 
WNA Holdings, Inc.  4.500  06-07-20  2,275,023  2,263,648 
WNA Holdings, Inc.  8.500  12-07-20  5,490,000  5,462,550 
 
Leisure Products 0.8%         
Eastman Kodak Company  7.250  09-03-19  18,121,726  18,234,986 
Eastman Kodak Company  10.750  09-03-20  8,690,000  8,798,625 
SRAM LLC  4.017  04-10-20  3,095,520  3,049,087 
 
Media 8.3%         
Acosta, Inc. (T)  TBD  07-31-21  8,470,000  8,473,532 
Advantage Sales & Marketing, Inc. (T)  TBD  07-23-21  15,058,065  14,907,484 
Advantage Sales & Marketing, Inc.  7.500  07-25-22  4,180,000  4,182,090 
AP NMT Acquisition BV  10.000  07-31-22  11,800,000  10,856,000 
Charter Communications Operating LLC (T)  TBD  07-24-21  10,590,000  10,651,221 
Charter Communications Operating LLC  3.000  07-01-20  1,907,864  1,874,477 
Checkout Holding Corp.  4.500  04-09-21  8,990,000  8,832,675 
Crossmark Holdings, Inc.  4.500  12-20-19  8,638,393  8,530,413 
CSC Holdings LLC  2.657  04-17-20  12,529,690  12,275,187 
Cumulus Media Holdings, Inc.  4.250  12-23-20  3,796,443  3,778,649 
Getty Images, Inc.  4.750  10-18-19  5,780,986  5,452,591 
IMG Worldwide Holdings LLC  5.250  05-06-21  11,230,000  11,113,017 
Interactive Data Corp.  4.750  05-02-21  18,680,000  18,712,690 
McGraw-Hill Global Education Holdings LLC  5.750  03-22-19  14,632,672  14,705,835 
NEP Broadcasting LLC  4.250  01-22-20  27,491,699  27,285,511 
Nielsen Finance LLC  3.157  04-15-21  10,826,182  10,831,595 
Numericable US LLC  4.500  05-21-20  28,330,010  28,410,949 
TWCC Holding Corp.  3.500  02-13-17  12,204,225  12,049,768 
Univision Communications, Inc.  4.000  03-01-20  35,848,452  35,601,994 
Univision Communications, Inc.  4.000  03-02-20  7,149,500  7,099,711 
UPC Financing Partnership  3.250  06-30-21  13,591,186  13,344,846 
Virgin Media Investment Holdings, Ltd.  3.500  06-07-20  25,015,000  24,671,044 
Visant Corp. (T)  TBD  07-25-21  9,280,000  9,256,800 
Visant Corp.  5.250  12-22-16  15,437,794  15,352,330 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  13 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Specialty Retail 4.7%         
Allflex Holdings III, Inc.  4.250  07-17-20  $9,398,975  $9,369,603 
Allflex Holdings III, Inc.  8.000  07-19-21  14,480,000  14,484,532 
Bass Pro Group LLC  3.750  11-20-19  5,483,335  5,449,065 
CWGS Group LLC  5.750  02-20-20  28,095,190  28,182,987 
J Crew Group, Inc.  4.000  03-05-21  18,267,696  17,913,760 
Michaels Stores, Inc.  3.750  01-28-20  16,567,613  16,356,376 
Michaels Stores, Inc.  4.000  01-28-20  5,286,000  5,248,559 
Party City Holdings, Inc.  4.000  07-27-19  29,821,450  29,463,593 
Petco Animal Supplies, Inc.  4.000  11-24-17  15,551,626  15,493,307 
The Container Store, Inc.  4.250  04-06-19  17,147,173  17,029,287 
The Gymboree Corp.  5.000  02-23-18  24,714,771  19,679,137 
 
Textiles, Apparel & Luxury Goods 0.2%         
Kate Spade & Company  4.000  04-09-21  7,360,000  7,268,000 
 
Consumer Staples 6.2%        238,703,263 
 
Beverages 0.1%         
DS Waters of America, Inc.  5.250  08-30-20  4,913,661  4,932,087 
 
Food & Staples Retailing 2.5%         
AdvancePierre Foods, Inc.  5.750  07-10-17  9,922,071  9,946,876 
AdvancePierre Foods, Inc.  9.500  10-10-17  18,180,000  17,695,194 
Aramark Services, Inc.  1.828  07-26-16  267,979  266,639 
Aramark Services, Inc.  1.867  07-26-16  72,135  71,909 
Aramark Services, Inc.  3.250  02-24-21  14,300,253  14,121,499 
Hearthside Group Holdings LLC  4.500  06-02-21  9,020,000  9,042,550 
HJ Heinz Company  3.250  06-07-19  1,554,300  1,549,443 
Mill US Acquisition LLC  5.000  07-03-20  23,482,000  23,384,151 
Mill US Acquisition LLC  8.500  07-03-21  17,670,000  17,360,775 
SUPERVALU, Inc.  4.500  03-21-19  3,854,238  3,821,204 
 
Food Products 2.5%         
Big Heart Pet Brands  3.500  03-08-20  29,698,323  29,160,041 
Candy Intermediate Holdings, Inc.  7.500  06-18-18  23,469,794  22,824,375 
Dole Food Company, Inc.  4.500  11-01-18  11,619,200  11,558,687 
HJ Heinz Company  3.500  06-05-20  7,962,620  7,951,672 
Hostess Brands, Inc.  6.750  04-09-20  11,527,203  11,844,201 
Shearer’s Foods LLC  4.500  06-30-21  4,410,000  4,401,731 
Shearer’s Foods LLC  7.750  06-30-22  6,860,000  6,808,550 
 
Household Products 1.1%         
EveryWare Global, Inc.  9.500  05-21-20  17,330,062  13,604,098 
The Sun Products Corp.  5.500  03-23-20  29,590,530  28,357,581 
 
Energy 8.4%        320,862,492 
 
Energy Equipment & Services 2.5%         
Expro Holdings UK 3, Ltd. (T)  TBD  08-12-21  27,560,000  27,537,043 
KCA DEUTAG Alpha, Ltd.  6.250  05-13-20  19,390,000  19,341,525 
Pacific Drilling SA  4.500  06-04-18  20,381,681  20,349,845 
Paragon Offshore Finance Company  3.750  07-18-21  8,440,000  8,334,500 
Regent Purchaser Investments, Inc.  6.000  08-14-21  10,760,000  10,665,850 

 

14  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Energy Equipment & Services (continued)         
Seventy Seven Operating LLC  3.750  06-25-21  $4,760,000  $4,760,000 
Terraform Power Operating LLC  4.750  07-23-19  4,760,000  4,765,950 
 
Oil, Gas & Consumable Fuels 5.9%         
Alpha Natural Resources, Inc.  3.500  05-22-20  33,181,602  31,418,830 
Bowie Resource Holdings LLC  6.750  08-14-20  19,861,188  19,861,188 
Bowie Resource Holdings LLC  11.750  02-16-21  5,250,000  5,315,625 
EP Energy LLC  3.500  05-24-18  11,666,667  11,561,667 
Foresight Energy LLC  5.500  08-19-20  7,148,350  7,197,316 
FTS International, Inc.  5.750  04-16-21  6,309,818  6,340,383 
HFOTCO LLC  4.250  07-17-21  17,320,000  17,218,972 
Murray Energy Corp.  5.250  12-05-19  22,644,850  22,774,084 
Oxbow Carbon & Minerals LLC  4.250  07-19-19  1,151,429  1,150,469 
Oxbow Carbon & Minerals LLC  8.000  01-17-20  9,010,000  9,128,256 
Panda Temple Power II LLC  7.250  04-03-19  5,930,000  6,093,075 
Peabody Energy Corp.  4.250  09-24-20  11,104,046  11,029,094 
Quicksilver Resources, Inc.  7.000  06-21-19  28,607,929  27,356,332 
Samson Investment Company  5.000  09-25-18  23,550,000  23,289,278 
Southcross Energy Partners LP (T)  TBD  08-04-21  3,740,000  3,768,050 
Teine Energy, Ltd.  7.500  05-17-19  21,551,281  21,605,160 
 
Financials 5.0%        191,688,245 
 
Banks 0.5%         
Flying Fortress, Inc.  3.500  06-30-17  17,729,166  17,707,005 
 
Capital Markets 1.8%         
AP NMT Acquisition BV  6.750  07-31-21  13,050,000  12,715,594 
BATS Global Markets Holdings, Inc.  5.000  01-31-20  4,766,639  4,689,181 
CEC Entertainment, Inc.  4.250  02-14-21  15,945,530  15,802,020 
Gardner Denver, Inc.  4.250  07-30-20  5,655,267  5,636,418 
Gimv NV  4.250  05-08-20  10,134,534  10,156,708 
La Quinta Intermediate Holdings LLC  4.000  04-14-21  20,104,407  20,054,146 
 
Consumer Finance 0.4%         
The Brickman Group, Ltd. LLC  4.000  12-18-20  16,300,559  16,005,112 
 
Diversified Financial Services 1.1%         
Delos Finance Sarl  3.500  03-06-21  22,570,000  22,457,150 
TPF II LC LLC  6.500  08-21-19  15,814,892  15,973,041 
Vantiv LLC  3.750  05-12-21  5,500,000  5,482,813 
 
Real Estate Investment Trusts 0.4%         
Lineage Logistics LLC  4.500  04-07-21  16,567,889  16,319,371 
 
Real Estate Management & Development 0.8%       
Realogy Group LLC  2.335  10-10-16  1,020,850  1,010,641 
Realogy Group LLC  3.750  03-05-20  27,876,494  27,679,045 
 
Health Care 8.5%        322,919,999 
 
Biotechnology 0.9%         
Alvogen Pharma US, Inc.  7.000  05-23-18  17,995,231  18,220,172 
Catalent Pharma Solutions, Inc.  4.500  05-20-21  14,266,435  14,261,342 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  15 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Health Care Equipment & Supplies 1.0%         
Alere, Inc. (T)  TBD  06-30-17  $1,500,000  $1,493,250 
Biomet, Inc.  3.663  07-25-17  11,512,608  11,492,818 
ConvaTec, Inc.  4.000  12-22-16  14,002,273  13,967,267 
DJO Finance LLC  4.250  09-15-17  1,000,000  999,000 
Immucor, Inc.  5.000  08-17-18  9,204,857  9,197,189 
 
Health Care Providers & Services 4.0%         
Amsurg Corp.  3.750  07-16-21  14,120,000  14,098,820 
CRC Health Corp.  5.250  03-29-21  16,360,250  16,396,046 
CRC Health Corp.  9.000  09-28-21  9,560,000  9,591,863 
DaVita HealthCare Partners, Inc.  3.500  06-24-21  13,260,000  13,219,743 
Envision Healthcare Corp.  4.000  05-25-18  24,174,542  24,088,916 
MPH Acquisition Holdings LLC  4.000  03-31-21  20,844,545  20,722,959 
Physiotherapy Associates Holdings, Inc.  11.000  10-10-16  11,823,774  11,646,417 
Radnet Management, Inc.  4.266  10-10-18  22,903,421  22,827,084 
Radnet Management, Inc.  8.000  03-25-21  20,030,000  20,130,150 
 
Pharmaceuticals 2.6%         
Akorn, Inc. (T)  TBD  04-16-21  5,760,000  5,748,002 
Akorn, Inc.  4.500  04-16-21  12,190,000  12,164,608 
Ikaria, Inc.  5.000  02-12-21  5,313,708  5,313,708 
JLL/Delta Dutch Newco BV  4.250  03-11-21  27,729,319  27,457,794 
Par Pharmaceutical Companies, Inc.  4.000  09-30-19  21,653,792  21,642,965 
Pharmaceutical Product Development, Inc.  4.000  12-05-18  18,906,624  18,897,171 
Salix Pharmaceuticals, Ltd.  4.250  01-02-20  9,338,820  9,342,715 
 
Industrials 12.5%        478,677,468 
 
Aerospace & Defense 1.3%         
Accudyne Industries Borrower SCA  4.000  12-13-19  18,611,839  18,526,541 
WP CPP Holdings LLC  4.750  12-27-19  19,863,153  19,880,891 
WP CPP Holdings LLC  8.750  04-30-21  10,630,000  10,669,863 
 
Aerospace & Defense 0.3%         
DAE Aviation Holdings, Inc.  7.750  08-05-19  9,660,000  9,780,750 
 
Air Freight & Logistics 0.7%         
Syncreon Group BV  5.250  10-28-20  26,884,200  26,682,569 
 
Airlines 2.2%         
American Airlines, Inc.  3.750  06-27-19  34,292,312  34,013,687 
Delta Air Lines, Inc.  3.250  04-20-17  23,411,698  23,294,640 
United Airlines, Inc.  3.500  04-01-19  6,241,149  6,174,057 
US Airways, Inc.  3.500  05-23-19  19,324,800  19,126,721 
 
Building Products 0.8%         
GYP Holdings III Corp.  4.750  04-01-21  16,468,725  16,262,866 
Ply Gem Industries, Inc.  4.000  02-01-21  3,311,700  3,250,642 
Wilsonart International Holding LLC  4.000  10-31-19  12,984,613  12,879,957 
 
Commercial Services & Supplies 1.9%         
ADS Waste Holdings, Inc.  3.750  10-09-19  25,030,437  24,639,337 
Allied Security Holdings LLC  4.250  02-12-21  1,472,679  1,461,174 
Allied Security Holdings LLC  8.000  08-13-21  464,658  460,786 
ARC Document Solutions, Inc.  6.250  12-20-18  10,870,022  11,005,898 

 

16  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Commercial Services & Supplies (continued)       
Language Line LLC  6.250  06-20-16  $16,635,760  $16,614,965 
Waste Industries USA, Inc.  4.000  03-17-17  18,911,209  18,824,539 
 
Electrical Equipment 0.8%         
Generac Power Systems, Inc.  3.250  05-31-20  25,282,474  25,029,649 
Southwire Company  3.250  02-10-21  7,112,175  7,064,758 
 
Machinery 2.0%         
CPM Holdings, Inc.  6.250  08-29-17  7,214,004  7,232,039 
CPM Holdings, Inc.  10.250  03-01-18  250,000  252,969 
Filtration Group, Inc.  8.250  11-21-21  1,800,000  1,812,375 
Gates Global LLC  4.250  07-05-21  11,090,000  10,995,269 
Intelligrated, Inc.  4.500  07-30-18  15,938,526  15,809,025 
Mirror BidCo Corp.  4.250  12-28-19  24,658,090  24,565,622 
Phibro Animal Health Corp.  4.000  04-16-21  14,780,866  14,734,676 
Xerium Technologies, Inc.  5.750  05-17-19  2,922,500  2,927,980 
 
Professional Services 0.2%         
TransUnion LLC  4.000  04-09-21  7,940,100  7,906,355 
 
Road & Rail 0.6%         
The Hertz Corp.  3.000  03-11-18  17,437,005  17,135,484 
The Hertz Corp.  3.750  03-12-18  7,031,883  6,993,791 
 
Trading Companies & Distributors 0.5%         
American Builders & Contractors Supply         
Company, Inc.  3.500  04-16-20  18,437,232  18,245,171 
 
Transportation Infrastructure 1.2%         
Atlantic Aviation FBO, Inc.  3.250  06-01-20  8,315,357  8,282,096 
Commercial Barge Line Company  7.500  09-23-19  23,346,975  23,434,526 
Commercial Barge Line Company  10.750  03-22-20  12,580,000  12,705,800 
 
Information Technology 3.7%        142,772,920 
 
Electronic Equipment, Instruments & Components 0.2%       
Ellucian, Inc.  4.000  07-19-18  7,922,852  7,871,687 
 
Internet Software & Services 0.1%         
Ipreo Holdings LLC  4.250  07-16-21  4,640,000  4,599,400 
 
Software 2.7%         
Activision Blizzard, Inc.  3.250  10-12-20  14,829,027  14,822,843 
First Data Corp.  3.655  03-23-18  16,455,507  16,263,520 
First Data Corp.  3.655  09-24-18  8,500,000  8,393,750 
First Data Corp.  4.155  03-24-21  2,840,000  2,831,125 
Infor US, Inc.  3.750  06-03-20  8,038,371  7,959,723 
Kronos, Inc.  4.500  10-30-19  17,797,966  17,809,090 
Kronos, Inc.  9.750  04-30-20  21,134,000  21,662,350 
SunGard Data Systems, Inc.  4.000  03-08-20  13,259,237  13,234,376 
 
Technology Hardware, Storage & Peripherals 0.7%       
CompuCom Systems, Inc.  4.250  05-11-20  28,025,698  27,325,056 
 
Materials 6.3%        239,083,734 
 
Chemicals 0.5%         
Eagle Spinco, Inc.  3.500  01-27-17  3,064,505  3,056,843 
Minerals Technologies, Inc.  4.000  05-09-21  14,820,000  14,796,851 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  17 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Construction Materials 0.0%         
Roofing Supply Group LLC  5.000  05-31-19  $8,003  $7,943 
 
Containers & Packaging 1.9%         
Anchor Glass Container Corp.  4.250  06-30-21  8,580,000  8,544,247 
Ardagh Holdings USA, Inc.  4.000  12-17-19  5,725,650  5,687,477 
BWAY Holding Company (T)  TBD  08-14-20  30,390,000  30,636,919 
Clondalkin Acquisition BV  4.500  05-31-20  3,482,600  3,452,127 
Consolidated Container Company LLC  5.000  07-03-19  9,579,375  9,573,388 
Consolidated Container Company LLC  7.750  01-03-20  7,400,000  7,289,000 
Printpack Holdings, Inc.  6.000  05-28-20  7,610,000  7,590,975 
 
Metals & Mining 2.6%         
Atlas Iron, Ltd.  8.750  12-10-17  19,462,412  19,316,444 
Essar Steel Algoma, Inc. (H)  10.250  09-20-14  19,913,018  19,913,018 
Fairmount Minerals, Ltd.  4.500  09-05-19  11,673,930  11,691,441 
FMG Resources August 2006 Pty, Ltd.  3.750  06-30-19  34,858,526  34,708,426 
Hi-Crush Partners LP  4.750  04-28-21  5,121,165  5,133,968 
Walter Energy, Inc.  7.250  04-02-18  10,670,236  10,123,386 
 
Paper & Forest Products 1.3%         
Exopack Holdings SA  5.250  05-08-19  9,790,800  9,864,231 
NewPage Corp.  9.500  02-11-21  30,590,000  30,742,950 
Wausau Paper Corp.  6.500  07-09-20  7,060,000  6,954,100 
 
Telecommunication Services 1.9%        74,110,921 
 
Diversified Telecommunication Services 1.5%       
Intelsat Jackson Holdings SA  3.750  06-30-19  23,967,705  23,795,449 
Level 3 Financing, Inc.  4.000  08-01-19  1,000,000  996,667 
Level 3 Financing, Inc.  4.000  01-15-20  8,050,000  8,017,800 
Syniverse Holdings, Inc.  4.000  04-23-19  7,009,415  6,930,559 
Telesat Canada  3.500  03-28-19  12,699,113  12,603,869 
Windstream Corp.  3.500  01-23-20  5,672,508  5,644,145 
 
Wireless Telecommunication Services 0.4%         
Ziggo Bond Company BV (T)  TBD  01-15-22  16,468,266  16,122,432 
 
Utilities 6.9%        265,065,236 
 
Electric Utilities 4.1%         
Astoria Generating Company Acquisitions LLC  8.500  10-26-17  25,518,702  25,901,483 
Bayonne Energy Center LLC  4.500  06-30-21  6,290,000  6,305,725 
Energy Future Intermediate Holding         
Company LLC  4.250  06-19-16  36,400,000  36,506,179 
La Frontera Generation LLC  4.500  09-30-20  10,063,118  10,088,275 
Northeast Wind Capital II LLC  5.000  11-11-20  27,667,179  28,082,186 
Star West Generation LLC  4.250  03-13-20  22,727,881  22,746,813 
Texas Competitive Electric Holdings         
Company LLC  3.750  05-05-16  2,296,040  2,309,673 
Texas Competitive Electric Holdings         
Company LLC  4.652  10-10-17  32,644,306  25,176,921 
 
Independent Power and Renewable Electricity Producers 2.6%     
Atlantic Power LP  4.750  02-24-21  10,018,439  10,056,009 
Calpine Corp.  4.000  10-30-20  6,467,500  6,442,348 
EFS Cogen Holdings I LLC  3.750  12-17-20  8,012,831  8,006,156 

 

18  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Independent Power and Renewable Electricity Producers 2.6%     
Empire Generating Company LLC  5.250  03-12-21  $19,658,853  $19,706,394 
Equipower Resources Holdings LLC  4.250  12-21-18  25,937,333  25,929,241 
Equipower Resources Holdings LLC  4.250  12-31-19  2,801,401  2,799,650 
NRG Energy, Inc.  2.750  07-02-18  7,717,867  7,647,580 
STS Operating, Inc.  4.750  02-19-21  7,900,200  7,905,138 
Windsor Financing LLC  6.250  12-05-17  9,868,771  10,115,490 
 
Multi-Utilities 0.2%         
Panda Power Funds  6.750  12-19-20  9,090,000  9,339,975 
 
Corporate Bonds 9.1%        $346,889,100 
(Cost $344,728,016)         
 
Consumer Discretionary 1.0%        38,299,873 
 
Hotels, Restaurants & Leisure 0.2%         
Caesars Entertainment Operating         
Company, Inc.  9.000  02-15-20  1,620,000  1,296,000 
Caesars Entertainment Resort         
Properties LLC (S)  8.000  10-01-20  1,980,000  1,965,150 
Caesars Entertainment Resort         
Properties LLC (S)  11.000  10-01-21  3,600,000  3,649,500 
 
Media 0.8%         
CSC Holdings LLC  6.750  11-15-21  6,350,000  6,985,000 
DISH DBS Corp.  5.000  03-15-23  11,080,000  11,024,600 
Univision Communications, Inc. (S)  6.750  09-15-22  12,191,000  13,379,623 
 
Consumer Staples 0.6%        21,404,050 
 
Household Products 0.1%         
Reynolds Group Issuer, Inc.  5.750  10-15-20  4,090,000  4,274,050 
 
Tobacco 0.5%         
Alliance One International, Inc.  9.875  07-15-21  17,130,000  17,130,000 
 
Energy 1.2%        45,080,175 
 
Energy Equipment & Services 0.5%         
Atwood Oceanics, Inc.  6.500  02-01-20  5,460,000  5,787,600 
Hercules Offshore, Inc. (S)  6.750  04-01-22  8,630,000  7,810,150 
Hercules Offshore, Inc. (S)  7.500  10-01-21  3,400,000  3,213,000 
 
Oil, Gas & Consumable Fuels 0.7%         
Antero Resources Finance Corp.  5.375  11-01-21  3,255,000  3,352,650 
Gulfport Energy Corp. (S)  7.750  11-01-20  3,140,000  3,375,500 
Murray Energy Corp. (S)  9.500  12-05-20  5,380,000  5,918,000 
Rice Energy, Inc. (S)  6.250  05-01-22  9,090,000  9,294,525 
Samson Investment Company  9.750  02-15-20  1,570,000  1,601,400 
Sanchez Energy Corp.  7.750  06-15-21  2,110,000  2,342,100 
Swift Energy Company  7.125  06-01-17  2,350,000  2,385,250 
 
Financials 1.0%        37,085,175 
 
Banks 0.1%         
CIT Group, Inc.  5.000  08-15-22  1,960,000  2,067,800 
 
Consumer Finance 0.3%         
Navient Corp.  8.000  03-25-20  8,180,000  9,447,900 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  19 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Diversified Financial Services 0.3%         
Globe Luxembourg SCA (S)  9.625  05-01-18  $11,740,000  $12,914,000 
 
Real Estate Management & Development 0.3%       
CTR Partnership LP (S)  5.875  06-01-21  2,100,000  2,131,500 
The Howard Hughes Corp. (S)  6.875  10-01-21  9,940,000  10,523,975 
 
Health Care 0.3%        10,986,400 
 
Health Care Equipment & Supplies 0.2%         
Universal Hospital Services, Inc.  7.625  08-15-20  8,209,000  8,209,000 
 
Health Care Providers & Services 0.1%         
Fresenius Medical Care US Finance, Inc. (S)  5.750  02-15-21  1,080,000  1,171,800 
Fresenius Medical Care US Finance, Inc. (S)  6.500  09-15-18  1,440,000  1,605,600 
 
Industrials 1.2%        47,623,319 
 
Airlines 0.2%         
American Airlines 2013-2 Class B Pass         
Through Trust  5.600  07-15-20  6,643,071  6,892,186 
 
Building Products 0.0%         
Griffon Corp.  5.250  03-01-22  1,410,000  1,395,900 
 
Marine 0.7%         
Horizon Lines LLC  11.000  10-15-16  16,916,000  16,937,145 
Navios Maritime Acquisition Corp. (S)  8.125  11-15-21  9,550,000  9,932,000 
 
Trading Companies & Distributors 0.1%         
WESCO Distribution, Inc.  5.375  12-15-21  4,935,000  4,996,688 
 
Transportation Infrastructure 0.2%         
Florida East Coast Holdings Corp. (S)  6.750  05-01-19  7,080,000  7,469,400 
 
Information Technology 0.3%        10,581,208 
 
Software 0.3%         
First Data Corp. (S)  6.750  11-01-20  5,591,000  6,052,258 
First Data Corp. (S)  8.250  01-15-21  4,155,000  4,528,950 
 
Materials 1.5%        58,238,700 
 
Chemicals 0.1%         
Eagle Spinco, Inc.  4.625  02-15-21  5,040,000  5,052,600 
 
Containers & Packaging 0.9%         
Ardagh Packaging Finance PLC (P)(S)  3.232  12-15-19  23,120,000  23,004,400 
Ardagh Packaging Finance PLC (S)  6.000  06-30-21  2,360,000  2,336,400 
Ardagh Packaging Finance PLC (S)  6.750  01-31-21  2,100,000  2,142,000 
BWAY Holding Company (S)  9.125  08-15-21  8,100,000  8,302,500 
 
Metals & Mining 0.5%         
Midwest Vanadium Pty, Ltd. (H)(S)  11.500  02-15-18  6,080,000  1,155,200 
Molycorp, Inc. (L)  10.000  06-01-20  4,660,000  3,879,450 
Ryerson, Inc.  9.000  10-15-17  6,800,000  7,242,000 
St. Barbara, Ltd. (S)  8.875  04-15-18  6,210,000  5,061,150 
 
Paper & Forest Products 0.0%         
Verso Paper Holdings LLC  11.750  01-15-19  60,000  63,000 

 

20  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value  Value 
Telecommunication Services 2.0%        $75,707,825 
 
Diversified Telecommunication Services 1.5%       
CenturyLink, Inc.  5.625  04-01-20  $3,030,000  3,204,225 
Inmarsat Finance PLC (S)  4.875  05-15-22  2,380,000  2,385,950 
Level 3 Escrow II, Inc. (S)  5.375  08-15-22  5,950,000  5,979,750 
T-Mobile USA, Inc.  6.542  04-28-20  2,430,000  2,551,500 
tw telecom holdings, Inc.  6.375  09-01-23  9,140,000  10,328,200 
Wind Acquisition Finance SA (S)  4.750  07-15-20  31,360,000  31,438,400 
 
Wireless Telecommunication Services 0.5%         
Sprint Corp. (S)  7.875  09-15-23  18,480,000  19,819,800 
 
Utilities 0.0%        1,882,375 
 
Independent Power and Renewable Electricity Producers 0.0%     
AES Corp.  5.500  03-15-24  1,850,000  1,882,375 
 
      Shares  Value 
Common Stocks 0.2%        $8,396,832 
(Cost $2,547,875)         
 
Consumer Discretionary 0.0%        1,070,602 
 
Hotels, Restaurants & Leisure 0.0%         
Tropicana Entertainment, Inc. (I)      72,338  1,070,602 
 
Materials 0.2%        7,326,230 
 
Chemicals 0.2%         
LyondellBasell Industries NV, Class A      61,709  7,056,424 
 
Metals & Mining 0.0%         
Mirabela Nickel, Ltd. (I)      3,194,905  269,806 
 
Preferred Securities 0.5%        $20,049,765 
(Cost $19,205,940)         
 
Financials 0.5%        20,049,765 
 
Diversified Financial Services 0.5%         
GMAC Capital Trust I (8.125% to 2-15-16, then 3 month LIBOR + 5.785%)  745,899  20,049,765 
 
    Maturity     
  Rate (%)  date  Par value  Value 
Convertible Bonds 0.1%        $3,254,000 
(Cost $3,254,000)         
 
Materials 0.1%        3,254,000 
 
Mirabela Nickel, Ltd.  9.500  06-20-19  $3,254,000  3,254,000 
 
    Yield (%)  Shares  Value 
Securities Lending Collateral 0.1%        $3,660,036 
(Cost $3,659,889)         
 
Securities Lending Collateral 0.1%        3,660,036 
 
John Hancock Collateral Investment Trust (W)    0.0970 (Y)  365,744  3,660,036 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  21 

 


  Yield (%)  Shares  Value 
Short-Term Investments 2.7%      $103,142,794 
(Cost $103,142,794)       
 
Money Market Funds 2.5%      94,050,268 
 
State Street Institutional Liquid Reserves Fund  0.0747 (Y)  94,050,268  94,050,268 
 
    Par value  Value 
Repurchase Agreement 0.2%      9,092,526 
Repurchase Agreement with State Street Corp. dated 8-29-14 at     
0.000% to be repurchased at $9,092,526 on 9-2-14, collateralized     
by $9,620,000 Federal National Mortgage Association, 2.080% due     
11-2-22 (valued at $9,214,151, including interest)    $9,092,526  9,092,526 
 
Total investments (Cost $3,905,575,254)† 101.9%  $3,899,023,236 
Other assets and liabilities, net (1.9%)      ($72,124,593) 
Total net assets 100.0%    $3,826,898,643 
 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the fund.

LIBOR London Interbank Offered Rate

PIK Paid-in-kind

TBD To Be Determined

(H) Non-income producing— Issuer is in default.

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(M) Term loans are variable rate obligations. The coupon rate shown represents the rate at period end.

(P) Variable rate obligation. The coupon rate shown represents the rate at period end.

(S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration.

(T) 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.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $3,908,419,077. Net unrealized depreciation aggregated $9,395,841, of which $37,215,570 related to appreciated investment securities and $46,611,411 related to depreciated investment securities.

The fund had the following country concentration as a percentage of net assets on 8-31-14:

United States  86.1% 
Luxembourg  3.6% 
Netherlands  2.5% 
Canada  2.2% 
United Kingdom  1.9% 
Australia  1.2% 
Germany  0.9% 
Ireland  0.7% 
Panama  0.4% 
Greece  0.3% 
Other Countries  0.2% 
 
Total  100.0% 

 

22  Floating Rate Income Fund | Annual report  See notes to financial statements 

 

F I N A N C I A L   S T A T E M E N T S

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $3,901,915,365)   
including $3,484,013 of securities loaned  $3,895,363,200 
Investments in affiliated issuers, at value (Cost $3,659,889)  3,660,036 
 
Total investments, at value (Cost $3,905,575,254)  3,899,023,236 
Receivable for investments sold  74,728,895 
Receivable for fund shares sold  2,629,527 
Dividends and interest receivable  29,707,315 
Receivable for securities lending income  3,248 
Receivable due from advisor  1,152 
Other receivables and prepaid expenses  68,667 
 
Total assets  4,006,162,040 
 
Liabilities   
Due to custodian  8,148,489 
Payable for investments purchased  162,142,864 
Payable for fund shares repurchased  4,118,040 
Payable upon return of securities loaned  3,661,875 
Distributions payable  427,788 
Payable to affiliates   
Accounting and legal services fees  79,614 
Transfer agent fees  267,429 
Trustees’ fees  512 
Other liabilities and accrued expenses  416,786 
 
Total liabilities  179,263,397 
 
Net assets  $3,826,898,643 
 
Net assets consist of   
Paid-in capital  $3,819,421,245 
Undistributed net investment income  7,353,281 
Accumulated net realized gain (loss) on investments and investments  6,676,135 
Net unrealized appreciation (depreciation) on investments  (6,552,018) 
 
Net assets  $3,826,898,643 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  23 

 


F I N A N C I A L   S T A T E M E N T S

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($466,931,824 ÷ 49,886,750 shares)1  $9.36 
Class B ($31,203,617 ÷ 3,332,557 shares)1  $9.36 
Class C ($270,325,743 ÷ 28,761,110 shares)1  $9.40 
Class I ($494,201,939 ÷ 52,818,476 shares)  $9.36 
Class R6 ($22,694,513 ÷ 2,424,551 shares)  $9.36 
Class 1 ($28,479,388 ÷ 3,046,226 shares)  $9.35 
Class NAV ($2,513,061,619 ÷ 268,484,421 shares)  $9.36 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 97.5%)2  $9.60 

 

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.

24  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L   S T A T E M E N T S

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Interest  $197,917,690 
Dividends  1,578,083 
Securities lending  84,114 
 
Total investment income  199,579,887 
 
Expenses   
Investment management fees  25,088,101 
Distribution and service fees  4,777,260 
Accounting and legal services fees  466,087 
Transfer agent fees  1,719,087 
Trustees’ fees  50,465 
State registration fees  194,417 
Printing and postage  106,878 
Professional fees  123,108 
Custodian fees  471,853 
Registration and filing fees  41,993 
Expense recapture  204,002 
Other  49,761 
 
Total expenses  33,293,012 
Less expense reductions  (257,616) 
 
Net expenses  33,035,396 
 
Net investment income  166,544,491 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers  15,749,844 
Investments in affiliated issuers  (1,408) 
 
  15,748,436 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers  (15,579,290) 
Investments in affiliated issuers  519 
 
  (15,578,771) 
 
Net realized and unrealized gain  169,665 
 
Increase in net assets from operations  $166,714,156 

 

See notes to financial statements  Annual report | Floating Rate Income Fund  25 

 


F I N A N C I A L   S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $166,544,491  $146,101,543 
Net realized gain  15,748,436  13,888,717 
Change in net unrealized appreciation (depreciation)  (15,578,771)  (10,917,332) 
 
Increase in net assets resulting from operations  166,714,156  149,072,928 
 
Distributions to shareholders     
From net investment income     
Class A  (22,150,984)  (18,170,744) 
Class B  (1,087,151)  (1,080,836) 
Class C  (9,221,911)  (7,537,771) 
Class I  (19,814,733)  (13,062,436) 
Class R6  (982,418)  (183,123) 
Class 1  (1,034,439)  (241,584) 
Class NAV  (106,844,689)  (103,955,386) 
From net realized gain     
Class A  (1,485,668)  (3,126,045) 
Class B  (89,739)  (222,472) 
Class C  (721,119)  (1,498,509) 
Class I  (1,213,528)  (1,859,126) 
Class R6  (58,794)  (1,028) 
Class 1  (55,249)  (16,552) 
Class NAV  (5,968,746)  (16,696,809) 
 
Total distributions  (170,729,168)  (167,652,421) 
 
From fund share transactions  376,763,645  782,523,693 
 
Total increase  372,748,633  763,944,200 
 
Net assets     
Beginning of year  3,454,150,010  2,690,205,810 
 
End of year  $3,826,898,643  $3,454,150,010 
 
Undistributed net investment income  $7,353,281  $388,193 

 

26  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.37  $9.41  $9.05  $9.43  $9.13 
Net investment income1  0.39  0.43  0.45  0.44  0.52 
Net realized and unrealized gain (loss) on investments  —  0.03  0.48  (0.08)  0.33 
Total from investment operations  0.39  0.46  0.93  0.36  0.85 
Less distributions           
From net investment income  (0.38)  (0.42)  (0.45)  (0.48)  (0.55) 
From net realized gain  (0.02)  (0.08)  (0.12)  (0.26)  — 
Total distributions  (0.40)  (0.50)  (0.57)  (0.74)  (0.55) 
Net asset value, end of period  $9.36  $9.37  $9.41  $9.05  $9.43 
Total return (%)2,3  4.24  5.02  10.52  3.66  9.47 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $467  $518  $354  $414  $267 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.19  1.214  1.25  1.214  1.214 
Expenses including reductions  1.18  1.20  1.20  1.20  1.20 
Net investment income  4.14  4.54  4.86  4.64  5.58 
Portfolio turnover (%)  52  65  59  80  57 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
3 Does not reflect the effect of sales charges, if any.
4 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.

 

CLASS B SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.37  $9.41  $9.05  $9.42  $9.13 
Net investment income1  0.32  0.36  0.38  0.37  0.45 
Net realized and unrealized gain (loss) on investments  —  0.03  0.48  (0.07)  0.32 
Total from investment operations  0.32  0.39  0.86  0.30  0.77 
Less distributions           
From net investment income  (0.31)  (0.35)  (0.38)  (0.41)  (0.48) 
From net realized gain  (0.02)  (0.08)  (0.12)  (0.26)  — 
Total distributions  (0.33)  (0.43)  (0.50)  (0.67)  (0.48) 
Net asset value, end of period  $9.36  $9.37  $9.41  $9.05  $9.42 
Total return (%)2,3  3.44  4.23  9.70  2.99  8.52 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $31  $34  $25  $21  $9 
Ratios (as a percentage of average net assets):           
Expense before reductions  1.96  1.974  2.03  2.024  2.084 
Expenses including reductions  1.95  1.95  1.95  1.95  1.95 
Net investment income  3.39  3.80  4.10  3.85  4.77 
Portfolio turnover (%)  52  65  59  80  57 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
3 Does not reflect the effect of sales charges, if any.
4 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.

 

See notes to financial statements  Annual report | Floating Rate Income Fund  27 

 


CLASS C SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.40  $9.45  $9.08  $9.46  $9.16 
Net investment income1  0.33  0.36  0.38  0.37  0.45 
Net realized and unrealized gain (loss) on investments  0.01  0.03  0.49  (0.08)  0.33 
Total from investment operations  0.34  0.39  0.87  0.29  0.78 
Less distributions           
From net investment income  (0.32)  (0.36)  (0.38)  (0.41)  (0.48) 
From net realized gain  (0.02)  (0.08)  (0.12)  (0.26)  — 
Total distributions  (0.34)  (0.44)  (0.50)  (0.67)  (0.48) 
Net asset value, end of period  $9.40  $9.40  $9.45  $9.08  $9.46 
Total return (%)2,3  3.66  4.18  9.80  2.92  8.65 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $270  $251  $178  $186  $95 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.86  1.89  1.95  1.92  1.934 
Expenses including reductions  1.85  1.89  1.95  1.92  1.93 
Net investment income  3.47  3.85  4.11  3.90  4.77 
Portfolio turnover (%)  52  65  59  80  57 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
3 Does not reflect the effect of sales charges, if any.
4 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.

 

CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.36  $9.40  $9.04  $9.42  $9.12 
Net investment income1  0.42  0.46  0.48  0.47  0.56 
Net realized and unrealized gain (loss) on investments  0.01  0.04  0.48  (0.07)  0.32 
Total from investment operations  0.43  0.50  0.96  0.40  0.88 
Less distributions           
From net investment income  (0.41)  (0.46)  (0.48)  (0.52)  (0.58) 
From net realized gain  (0.02)  (0.08)  (0.12)  (0.26)  — 
Total distributions  (0.43)  (0.54)  (0.60)  (0.78)  (0.58) 
Net asset value, end of period  $9.36  $9.36  $9.40  $9.04  $9.42 
Total return (%)2  4.72  5.41  10.91  4.08  9.88 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $494  $376  $203  $191  $86 
Ratios (as a percentage of average net assets):           
Expenses before reductions  0.84  0.83  0.86  0.80  0.823 
Expenses including reductions  0.83  0.82  0.85  0.80  0.82 
Net investment income  4.49  4.90  5.21  4.93  5.94 
Portfolio turnover (%)  52  65  59  80  57 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
3 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.

 

28  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


CLASS R6 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $9.37  $9.41  $9.05 
Net investment income2  0.43  0.43  0.51 
Net realized and unrealized gain on investments  —  0.07  0.45 
Total from investment operations  0.43  0.50  0.96 
Less distributions       
From net investment income  (0.42)  (0.46)  (0.48) 
From net realized gain  (0.02)  (0.08)  (0.12) 
Total distributions  (0.44)  (0.54)  (0.60) 
Net asset value, end of period  $9.36  $9.37  $9.41 
Total return (%)3  4.63  5.45  10.95 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $23  $18  —4 
Ratios (as a percentage of average net assets):       
Expenses before reductions  0.90  1.175  1.58 
Expenses including reductions  0.81  0.81  0.81 
Net investment income  4.52  4.82  5.50 
Portfolio turnover (%)  52  65  59 

 

1 The inception date for Class R6 shares is 9-1-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Less than $500,000.
5 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.

 

CLASS 1 SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.35  $9.40  $9.04  $9.41  $9.12 
Net investment income1  0.43  0.46  0.48  0.51  0.57 
Net realized and unrealized gain (loss) on investments  0.01  0.04  0.49  (0.10)  0.31 
Total from investment operations  0.44  0.50  0.97  0.41  0.88 
Less distributions           
From net investment income  (0.42)  (0.47)  (0.49)  (0.52)  (0.59) 
From net realized gain  (0.02)  (0.08)  (0.12)  (0.26)  — 
Total distributions  (0.44)  (0.55)  (0.61)  (0.78)  (0.59) 
Net asset value, end of period  $9.35  $9.35  $9.40  $9.04  $9.41 
Total return (%)2  4.81  5.38  11.01  4.22  9.82 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $28  $13  $1  —3  —3 
Ratios (as a percentage of average net assets):           
Expenses before reductions  0.75  0.76  0.77  0.77  0.78 
Expenses including reductions  0.75  0.75  0.77  0.77  0.78 
Net investment income  4.58  4.93  5.25  5.31  6.11 
Portfolio turnover (%)  52  65  59  80  57 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
3 Less than $500,000.

 

See notes to financial statements  Annual report | Floating Rate Income Fund  29 

 


CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.37  $9.41  $9.05  $9.42  $9.12 
Net investment income1  0.44  0.48  0.49  0.51  0.58 
Net realized and unrealized gain (loss) on investments  —  0.03  0.48  (0.10)  0.31 
Total from investment operations  0.44  0.51  0.97  0.41  0.89 
Less distributions           
From net investment income  (0.43)  (0.47)  (0.49)  (0.52)  (0.59) 
From net realized gain  (0.02)  (0.08)  (0.12)  (0.26)  — 
Total distributions  (0.45)  (0.55)  (0.61)  (0.78)  (0.59) 
Net asset value, end of period  $9.36  $9.37  $9.41  $9.05  $9.42 
Total return (%)2  4.75  5.54  11.06  4.27  9.99 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $2,513  $2,244  $1,929  $1,512  $1,119 
Ratios (as a percentage of average net assets):           
Expenses before reductions  0.70  0.71  0.71  0.72  0.73 
Expenses including reductions  0.70  0.70  0.71  0.72  0.73 
Net investment income  4.64  5.06  5.34  5.33  6.16 
Portfolio turnover (%)  52  65  59  80  57 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

30  Floating Rate Income Fund | Annual report  See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock Floating Rate Income Fund (the fund) is a series of John Hancock Funds II (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 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 R6 shares are available only to certain retirement plans, institutions and other investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ. Class B shares convert to Class A shares eight years after purchase.

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 intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Securities that trade only in the over-the counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost. Other fund securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot

Annual report | Floating Rate Income Fund  31 

 


be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

The following is a summary of the values by input classification of the fund’s investments as of August 31, 2014, by major security category or type:

        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Term Loans  $3,413,630,709  —  $3,413,630,709  — 
Corporate Bonds  346,889,100  —  346,889,100  — 
Common Stocks  8,396,832  $7,056,424  1,340,408   
Preferred Securities  20,049,765  20,049,765  —  — 
Convertible Bonds  3,254,000  —  —  $3,254,000 
Securities Lending         
Collateral  3,660,036  3,660,036  —  — 
Short-Term Investments  103,142,794  94,050,268  9,092,526  — 
 
Total Investments in         
Securities  $3,899,023,236  $124,816,493  $3,770,952,743  $3,254,000 

 

Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund’s custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund’s investments as part of the caption related to the repurchase agreement.

Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.

Term loans (Floating rate loans). The fund may invest in term loans, which often include debt securities that are rated below investment grade at the time of purchase. Term loans are generally subject to legal or contractual restrictions on resale. The liquidity of term loans, including the volume and frequency of secondary market trading in such loans, varies significantly over time

32  Floating Rate Income Fund | Annual report 

 


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. Because many term loans are not rated by independent credit rating agencies, a decision to invest in a particular loan could depend exclusively on the subadvisor’s credit analysis of the borrower and/or term loan agents. The fund may have limited rights to enforce the terms of an underlying loan.

At August 31, 2014, the fund had $11,176,612 in unfunded loan commitments outstanding.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain if amounts are estimable. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Obligations to repay collateral received by the fund is shown on the Statement of assets and liabilities as Payable upon return of securities loaned.

Annual report | Floating Rate Income Fund  33 

 


Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund’s custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $1,969. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, 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 August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $165,054,087  $147,233,751 
Long-Term Capital Gain  $5,675,081  $20,418,670 
Total  $170,729,168  $167,652,421 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $8,708,939 of undistributed ordinary income and $8,592,088 long-term capital gains.

 

34  Floating Rate Income Fund | Annual report 

 


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 wash sale loss deferrals.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. 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 MFC.

Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, on an annual basis, to the sum of: (a) 0.700% of the first $1.10 billion of the fund’s average daily net assets, (b) 0.675% of the next $0.90 billion of the fund’s average daily net assets, (c) 0.650% of the next $1.50 billion of the fund’s average daily net assets, and (d) 0.600% of the fund’s average daily net assets in excess of $3.50 billion. Prior to July 1, 2014, the fund had an investment management investment management agreement with the Advisor under which the fund paid a daily management fee to the Advisor, on an annual basis, to the sum of: (a) 0.700% of the first $1.10 billion of the fund’s average daily net assets, (b) 0.675% of the next $0.90 billion of the fund’s average daily net assets, and (c) 0.650% of the fund’s average daily net assets in excess of $2.0 billion. The Advisor has a subadvisory agreement with Western Asset Management Company. 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 complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. 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.

Annual report | Floating Rate Income Fund  35 

 


The Advisor has contractually agreed to limit the fund’s total expenses, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, acquired fund fees, and short dividend expense, to 1.20%,1.95%,1.95% and 0.81% for Class A, Class B, Class C and Class R6 shares, respectively, of the fund’s average daily net asset value, on an annual basis. The expense reimbursement will expire on December 31, 2014, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.

Effective February 1, 2014, the Advisor has contractually agreed to waive and/or reimburse all class specific expenses for Class R6 shares of the fund, including transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. The fee waiver and/or reimbursement will continue in effect until December 31, 2015, unless renewed by mutual agreement of the fund and Advisor based upon a determination that this is appropriate under the circumstances at the time. This waiver was in effect on a voluntary basis as of January 1, 2014.

The Advisor has voluntarily agreed to reduce a portion of its management fee or make payments to the fund if certain expenses of the fund exceed 0.15% of average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent fees and service fees, blue sky fees, printing and postage fees, short dividend expense and acquired fund fees. This expense reduction will continue in effect until terminated at any time by the Advisor on notice to the fund.

Accordingly, these expense reductions amounted to $35,177, $2,135, $17,680, $29,208, $19,431, $152,468 and $1,517 for Class A, Class B, Class C, Class I, Class R6, Class 1 and Class NAV shares, respectively, for the year ended August 31, 2014

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 0.66% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

      AMOUNT RECOVERED 
AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  DURING THE 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  PERIOD ENDED 
AUGUST 1, 2015  AUGUST 1, 2016  FEBRUARY 1, 2017  AUGUST 31, 2014 
$6,973  $15,780  $39  $204,002 

 

Amounts recovered by class

 

CLASS A  CLASS B  CLASS R6  TOTAL 
$169,136  $17,322  $17,544  $204,002 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each

36  Floating Rate Income Fund | Annual report 

 


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 August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class B, Class C and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund’s shares.

CLASS  RULE 12b-1 FEE 
Class A  0.30% 
Class B  1.00% 
Class C  1.00% 
Class 1  0.05% 

 

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $595,171 for the year ended August 31, 2014. Of this amount, $114,367 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $471,612 was paid as sales commissions to broker-dealers and $9,192 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor. The up-front sales charge for Class A shares is 2.50%. Prior to February 3, 2014, the up-front sales charge for Class A shares was 3.00%.

Class A, Class B and Class C shares may be subject to contingent deferred sales charges (CDSCs). Effective February 3, 2014, certain Class A shares that are acquired on or after that date through purchases of $250,000 or more and are redeemed within 18 months of purchase are subject to a 0.50% sales charge. Prior to February 3, 2014, certain Class A shares that were acquired through purchases of $1 million or more before that date 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 August 31, 2014, CDSCs received by the Distributor amounted to $27, $72,838 and $55,993 for Class A, Class B and Class C shares, respectively.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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.

Annual report | Floating Rate Income Fund  37 

 


Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER AGENT  STATE REGISTRATION  PRINTING AND 
CLASS  AND SERVICE FEES  FEES  FEES  POSTAGE 
Class A  $1,661,695  $748,241  $69,180  $47,436 
Class B  335,284  45,275  18,562  4,025 
Class C  2,768,610  372,968  34,723  23,237 
Class I  —  548,055  51,380  31,340 
Class R6  —  4,548  20,572  840 
Class 1  11,671  —  —  — 
Total  $4,777,260  $1,719,087  $194,417  $106,878 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Note 5 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  23,153,978  $217,767,370  30,769,811  $290,452,778 
Distributions reinvested  2,447,169  23,012,530  2,162,664  20,398,882 
Repurchased  (31,039,490)  (291,790,854)  (15,207,785)  (143,637,565) 
 
Net increase (decrease)  (5,438,343)  ($51,010,954)  17,724,690  $167,214,095 
 
Class B shares         
Sold  313,620  $2,949,019  1,436,727  $13,567,821 
Distributions reinvested  104,659  984,537  113,135  1,067,235 
Repurchased  (760,575)  (7,158,942)  (485,702)  (4,587,908) 
 
Net increase (decrease)  (342,296)  ($3,225,386)  1,064,160  $10,047,148 
 
Class C shares         
Sold  8,458,414  $79,876,760  11,083,937  $105,050,758 
Distributions reinvested  912,939  8,619,545  802,649  7,601,321 
Repurchased  (7,257,354)  (68,519,189)  (4,081,165)  (38,714,310) 
 
Net increase  2,113,999  $19,977,116  7,805,421  $73,937,769 
 
Class I shares         
Sold  33,720,426  $316,914,150  27,973,942  $264,070,704 
Distributions reinvested  1,859,495  17,476,757  1,296,946  12,226,740 
Repurchased  (22,964,476)  (215,893,774)  (10,698,533)  (100,892,923) 
 
Net increase  12,615,445  $118,497,133  18,572,355  $175,404,521 

 

38  Floating Rate Income Fund | Annual report 

 


    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R6 shares         
Sold  480,670  $4,504,466  1,927,698  $18,193,148 
Distributions reinvested  109,905  1,033,420  18,978  178,363 
Repurchased  (125,512)  (1,178,585)  (295)  (2,783) 
 
Net increase  465,063  $4,359,301  1,946,381  $18,368,728 
 
Class 1 shares         
Sold  2,043,610  $19,207,451  1,272,628  $12,008,377 
Distributions reinvested  116,043  1,089,688  27,428  258,136 
Repurchased  (472,327)  (4,435,317)  (68,855)  (649,365) 
 
Net increase  1,687,326  $15,861,822  1,231,201  $11,617,148 
 
Class NAV shares         
Sold  20,930,760  $197,042,610  29,016,418  $274,005,238 
Distributions reinvested  11,998,549  112,813,435  12,789,161  120,652,195 
Repurchased  (3,989,648)  (37,551,432)  (7,305,830)  (68,723,149) 
 
Net increase  28,939,661  $272,304,613  34,499,749  $325,934,284 
 
Total net increase  40,040,855  $376,763,645  82,843,957  $782,523,693 

 

Affiliates of the fund owned 100% of shares of beneficial interest of Class 1 and Class NAV on August 31, 2014.

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments and U.S. Treasury obligations, amounted to $2,319,072,980 and $1,885,928,491, respectively, for the year ended August 31, 2014.

Note 7 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 65.7% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATED 
FUND  CONCENTRATION 
John Hancock Lifestyle Balanced Portfolio  24.5% 
John Hancock Lifestyle Growth Portfolio  12.2% 
John Hancock Lifestyle Moderate Portfolio  11.5% 
John Hancock Lifestyle Conservative Portfolio  10.7% 

 

Annual report | Floating Rate Income Fund  39 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Floating Rate Income Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Floating Rate Income Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers, agent banks and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 22, 2014

40  Floating Rate Income Fund | Annual report 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $5,675,081 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | Floating Rate Income Fund  41 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Western Asset Management Company (the Subadvisor), for John Hancock Floating Rate Income Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

42  Floating Rate Income Fund | Annual report 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

Annual report | Floating Rate Income Fund  43 

 


The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index for the one-, three- and five-year periods ended December 31, 2013. The Board also noted that the fund underperformed its peer group average for the one- and three-year periods ended December 31, 2013 and equaled the performance of its peer group average for the five-year period ended December 31, 2013.

The Board took into account management’s discussion of the fund’s performance. The Board noted the fund equaled the performance of the peer group for the five-year period and since inception has outperformed the peer group average. The Board concluded that the fund’s performance has generally been in line with the historical performance of comparable funds over the longer-term. The Board also concluded that the fund’s performance is being monitored and reasonably addressed.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees and total expenses for the fund are higher than the peer group median. The Board took into account management’s discussion of the fund’s expenses, noting that the fund is subject to an expense cap until December 31, 2014, which reduces expenses of the fund.

The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board noted the addition of breakpoints to the advisory and subadvisory fee schedules effective July 1, 2014, which will reduce fees when the

44  Floating Rate Income Fund | Annual report 

 


fund’s assets exceed a certain amount. The Board also noted that the fund is subject to an expense cap until December 31, 2014. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex

Annual report | Floating Rate Income Fund  45 

 


(except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including

46  Floating Rate Income Fund | Annual report 

 


regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the

Annual report | Floating Rate Income Fund  47 

 


Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund has generally been in-line with the historical performance of comparable funds over the longer-term and is being monitored and reasonably addressed;

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

48  Floating Rate Income Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Floating Rate Income Fund  49 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

50  Floating Rate Income Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Floating Rate Income Fund  51 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

52  Floating Rate Income Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  Western Asset Management Company 
Peter S. Burgess* 
William H. Cunningham  Principal distributor 
Grace K. Fey  John Hancock Funds, LLC 
Theron S. Hoffman* 
Deborah C. Jackson  Custodian 
Hassell H. McClellan  State Street Bank and Trust Company 
Gregory A. Russo 
Warren A. Thomson†  Transfer agent 
  John Hancock Signature Services, Inc. 
Officers 
Andrew G. Arnott  Legal counsel 
President  K&L Gates LLP 
 
John J. Danello  Independent registered 
Senior Vice President, Secretary,  public accounting firm 
and Chief Legal Officer  PricewaterhouseCoopers LLP 
 
Francis V. Knox, Jr.   
Chief Compliance Officer   
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Floating Rate Income Fund  53 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


 
This report is for the information of the shareholders of John Hancock Floating Rate Income Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  328A 8/14 
MF198766  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
  1-year  5-year  10-year  Since inception1,2  1-year  5-year  10-year  Since inception1,2 
Class A  1.54  6.14  —  10.13  1.54  34.74  —  72.74 
Class C3  5.13  6.36  —  10.26  5.13  36.11  —  73.90 
Class I3,4  7.21  7.34  —  11.22  7.21  42.51  —  82.64 
Class R23,4  6.67  5.79  —  9.54  6.67  32.50  —  67.59 
Class R43,4  6.92  6.25  —  10.14  6.92  35.44  —  72.82 
Class R63,4  7.29  5.34  —  8.82  7.29  29.69  —  61.43 
Index 1†  21.74  12.97  —  15.13  21.74  83.98  —  122.05 
Index 2†  5.66  4.48  —  4.78  5.66  24.50  —  30.25 
Index 3†  14.35  9.38  —  10.73  14.35  56.55  —  78.13 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charges on Class A shares of 5% and the applicable contingent deferred sales charge (CDSC) on Class C shares. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class R2, Class R4, 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 prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. The expense ratios are as follows:

  Class A  Class C  Class I  Class R2  Class R4  Class R6 
Gross (%)  1.80  2.52  1.47  9.13  16.93  2.47 
Net (%)  1.69  2.41  1.36  1.87  1.62  1.40 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the fund’s current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund’s website at jhinvestments.com.

The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index 1 is the MSCI World Index; Index 2 is the Barclays U.S. Aggregate Bond Index; Index 3 is a 55%/45% blend of Index 1 and Index 2.

See the following page for footnotes.

6  Alternative Asset Allocation Fund | Annual report 

 



    With maximum  Without       
  Start date  sales charge  sales charge  Index 1  Index 2  Index 3 
Class C2,3,5  1-2-09  $17,390  $17,390  $22,205  $13,025  $17,813 
Class I2,3,4  1-2-09  18,264  18,264  22,205  13,025  17,813 
Class R22,3,4  1-2-09  16,759  16,759  22,205  13,025  17,813 
Class R42,3,4  1-2-09  17,282  17,282  22,205  13,025  17,813 
Class R62,3,4  1-2-09  16,143  16,143  22,205  13,025  17,813 

MSCI World Index (gross of foreign withholding tax on dividends) — Index 1 — is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.

Barclays U.S. Aggregate Bond Index — Index 2 — is an unmanaged index of dollar-denominated and non-convertible investment-grade debt issue.

Combined Index — Index 3 — comprises 55% MSCI World Index and 45% Barclays U.S. Aggregate Bond Index.

It is not possible to invest directly in an index. Index figures do not reflect expenses, sales charges, or foreign currency impact, which would have resulted in lower values.

Footnotes related to performance pages

1 From 1-2-09.

2 Performance information prior to 12-20-10 reflects an allocation to a different mix of underlying funds, and would have been different if the fund’s investments had been allocated to its current mix of underlying funds.

3 Class I, Class C, Class R6, Class R2, and Class R4 shares were first offered on 12-31-10, 6-14-11, 9-1-11, 3-1-12, and 6-27-13, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class I, Class C, Class R6, Class R2, and Class R4 shares, as applicable.

4 For certain types of investors, as described in the fund’s prospectuses.

5 The contingent deferred sales charge is not applicable.

Annual report | Alternative Asset Allocation Fund  7 

 


Management’s discussion of
Fund performance

John Hancock Asset Management

Capital market returns were strong across most regions and asset classes during the fiscal year ended August 31, 2014. While there were moments when investors seemed to wrestle with uncertainty about the strength of the global economic recovery, they ultimately took comfort in accommodative measures from key central banks.

In this environment, John Hancock Alternative Asset Allocation Fund’s Class A shares posted a total return of 6.88%, excluding sales charges. The Barclays U.S. Aggregate Bond Index posted a 5.66% gain. The MSCI World Index returned 21.74%, and a blended benchmark consisting of 55% MSCI World Index and 45% Barclays U.S. Aggregate Bond Index gained 14.35%.

Technical Opportunities Fund (Wellington), a strategy based upon technical analysis, was the top contributor to absolute performance. It benefited from strong stock selection in pharmaceuticals and underweight exposure to sectors that lagged the market (utilities, consumer staples, and telecommunication services).

Global Absolute Return Strategies Fund (Standard Life), which seeks positive returns independent of markets through maximum investment flexibility, was also a strong performer for the fiscal year. Its allocations to global equity, high-yield, and real estate strategies contributed to results, as did its short exposure to the Japanese yen. A relative value strategy with long exposure to information technology stocks and short exposure to small-capitalization stocks also fared well during the period.

On the other hand, commodity exposure, which the fund gains through exchange-traded funds, weighed on performance, particularly the softness within the oil and precious metals markets. Brent crude oil prices dropped late in the period amid weakening global demand and fading supply concerns. Gold and silver prices also grew weaker during the period; the prospect of a rising-rate environment pushed up the opportunity cost for holding these precious metals, and their prices declined accordingly.

This commentary reflects the views of the portfolio managers through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Alternative Asset Allocation Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,017.20  $3.05  0.60% 
Class C  1,000.00  1,013.90  6.60  1.30% 
Class I  1,000.00  1,019.20  1.37  0.27% 
Class R2  1,000.00  1,016.60  4.12  0.81% 
Class R4  1,000.00  1,017.20  2.85  0.56% 
Class R6  1,000.00  1,019.90  0.66  0.13% 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:


Annual report | Alternative Asset Allocation Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,022.20  $3.06  0.60% 
Class C  1,000.00  981.60  6.49  1.30% 
Class I  1,000.00  1,023.80  1.38  0.27% 
Class R2  1,000.00  1,021.10  4.13  0.81% 
Class R4  1,000.00  1,022.40  2.85  0.56% 
Class R6  1,000.00  1,024.60  0.66  0.13% 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  Alternative Asset Allocation Fund | Annual report 

 


Portfolio summary

Asset Allocation1       
Affiliated John Hancock Funds  84.9%  Other Investment Companies  15.1% 
Alternative  32.0%  Equity  9.2% 
Equity  26.5%  Commodities ETF  2.2% 
Fixed Income  26.4%  Energy ETF  2.0% 
    Gold ETF  1.4% 
 
    Silver ETF  0.3% 
 

1 As a percentage of total investments on 8-31-14.

Annual report | Alternative Asset Allocation Fund  11 

 


Fund’s investments

As of 8-31-14

  Shares  Value 
Affiliated John Hancock Funds (G) 84.8%  $1,060,169,027 
(Cost $1,033,471,343)     
 
Equity 26.5%    331,066,290 
Emerging Markets, Class NAV (DFA)  1,262,045  14,311,590 
Enduring Equity, Class NAV (Wellington)  3,667,287  40,890,255 
Global Real Estate, Class NAV (Deutsche)  2,685,374  25,215,657 
Natural Resources, Class NAV (RS Investments/Wellington)  1,686,037  31,663,777 
Redwood, Class NAV (Allianz)  13,535,759  156,473,376 
Technical Opportunities, Class NAV (Wellington)  4,181,380  62,511,635 
 
Fixed Income 26.4%    330,025,923 
Global Income, Class NAV (Stone Harbor)  8,167,609  83,472,964 
Real Return Bond, Class NAV (PIMCO)  1,661,086  19,634,035 
Short Duration Credit Opportunities Fund, Class NAV (Stone Harbor)  15,471,809  158,586,039 
Strategic Income Opportunities, Class NAV (John Hancock1) (A)  6,229,069  68,332,885 
 
Alternative 31.9%    399,076,814 
Absolute Return Currency, Class NAV (First Quadrant)  17,996,286  181,042,640 
Global Absolute Return Strategies, Class NAV (Standard Life)  14,064,479  159,913,129 
Seaport Fund, Class NAV (Wellington) (I)  5,743,186  58,121,045 
 
Other Investment Companies 15.0%    $188,103,471 
(Cost $189,484,748)     
 
Equity 9.1%    113,996,707 
The Arbitrage Fund, Class I  3,449,460  44,842,979 
Touchstone Merger Arbitrage Fund, Institutional, Class I (V)  4,547,632  48,386,802 
Turner Spectrum Fund, Institutional, Class I (I)(V)  1,724,828  20,766,926 
 
Exchange-Traded Funds 5.9%    74,106,764 
Market Vectors Gold Miners ETF  141,934  3,788,218 
PowerShares DB Commodity Index Tracking Fund (I)  1,104,564  27,647,237 
PowerShares DB Energy Fund (I)  878,880  25,215,067 
PowerShares DB Gold Fund (I)  324,318  13,919,729 
PowerShares DB Silver Fund (I)  110,447  3,536,513 
 
Total investments (Cost $1,222,956,091)† 99.8%  $1,248,272,498 
 
Other assets and liabilities, net 0.2%    $2,301,846 
 
Total net assets 100.0%  $1,250,574,344 

 

12  Alternative Asset Allocation Fund | Annual report  See notes to financial statements 

 


Notes to Schedule of Investments

Percentages are based upon net assets

(A) The subadvisor is an affiliate of the advisor.

(G) The underlying fund’s subadvisor is shown parenthetically.

(I) Non-income producing security.

(V) The fund owns 5% or more of the outstanding voting shares of the issuer and the security is considered an affiliate of the fund. For more information on this security refer to the notes to the financial statements.

1 Manulife Asset Management (US) LLC is doing business as John Hancock Asset Management.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $1,225,883,272. Net unrealized appreciation aggregated $22,389,226, of which $27,585,032 related to appreciated investment securities and $5,195,806 related to depreciated investment securities.

Investment companies

Affiliated John Hancock Underlying Funds’ Subadvisors   
 
Allianz Global Investors U.S. LLC  (Allianz) 
Deutsche Investment Management Americas, Inc.  (Deutsche) 
Dimensional Fund Advisors  (DFA) 
First Quadrant, LP  (First Quadrant) 
John Hancock Asset Management  (John Hancock) 
Pacific Investment Management Company LLC  (PIMCO) 
RS Investments Management Company LLC  (RS Investments/Wellington) 
Standard Life Investments (Corporate Funds) Limited  (Standard Life) 
Stone Harbor Investment Partners LP  (Stone Harbor) 
Wellington Management Company, LLP  (Wellington) 

 

See notes to financial statements  Annual report | Alternative Asset Allocation Fund  13 

 


F I N A N C I A L  S T A T E M E N T S

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $120,323,734)  $118,949,743 
Investments in affiliated funds, at value (Cost $1,102,632,357)  1,129,322,755 
 
Total investments, at value (Cost $1,222,956,091)  1,248,272,498 
Cash  236,737 
Receivable for fund shares sold  5,175,129 
Dividends receivable  938,136 
Other receivables and prepaid expenses  77,577 
 
Total assets  1,254,700,077 
 
Liabilities   
Payable for investments purchased  2,404,104 
Payable for fund shares repurchased  1,318,069 
Payable to affiliates   
Accounting and legal services fees  25,693 
Transfer agent fees  245,908 
Distribution and service fees  1,079 
Trustees’ fees  115 
Investment management fees  15,847 
Other liabilities and accrued expenses  114,918 
 
Total liabilities  4,125,733 
 
Net assets  $1,250,574,344 
 
Net assets consist of   
Paid-in capital  $1,197,505,887 
Undistributed net investment income  3,722,520 
Accumulated net realized gain (loss) on investments  24,029,530 
Net unrealized appreciation (depreciation) on investments  25,316,407 
 
Net assets  $1,250,574,344 

 

14  Alternative Asset Allocation Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($484,242,365 ÷ 31,543,099 shares)1  $15.35 
Class C ($161,841,955 ÷ 10,541,861 shares)1  $15.35 
Class I ($592,167,130 ÷ 38,517,885 shares)  $15.37 
Class R2 ($1,752,602 ÷ 114,358 shares)  $15.33 
Class R4 ($227,802 ÷ 14,827 shares)  $15.36 
Class R6 ($10,342,490 ÷ 672,006 shares)  $15.39 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $16.16 

1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | Alternative Asset Allocation Fund  15 

 


F I N A N C I A L  S T A T E M E N T S

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Income distributions received from affiliated underlying funds  $15,035,994 
Dividends  69,201 
 
Total investment income  15,105,195 
 
Expenses   
Investment management fees  2,200,927 
Distribution and service fees  2,702,583 
Accounting and legal services fees  121,648 
Transfer agent fees  1,246,906 
Trustees’ fees  12,428 
State registration fees  179,398 
Printing and postage  80,975 
Professional fees  68,757 
Custodian fees  12,243 
Registration and filing fees  78,592 
Expense recapture  100,972 
Other  10,361 
 
Total expenses  6,815,790 
Less expense reductions  (1,214,917) 
 
Net expenses  5,600,873 
 
Net investment income  9,504,322 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers  (185,457) 
Investments in affiliated issuers  16,511,644 
Capital gain distributions received from unaffiliated underlying funds  77,950 
Capital gain distributions received from affiliated underlying funds  19,416,866 
  35,821,003 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers  (2,240,873) 
Investments in affiliated issuers  20,136,986 
  17,896,113 
Net realized and unrealized gain  53,717,116 
 
Increase in net assets from operations  $63,221,438 

 

16  Alternative Asset Allocation Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $9,504,322  $5,243,545 
Net realized gain  35,821,003  3,228,914 
Change in net unrealized appreciation (depreciation)  17,896,113  4,436,529 
 
Increase in net assets resulting from operations  63,221,438  12,908,988 
 
Distributions to shareholders     
From net investment income     
Class A  (3,755,819)  (1,707,753) 
Class C  (229,591)  (184,747) 
Class I  (3,925,223)  (1,899,683) 
Class R2  (6,836)  (953) 
Class R4  (960)  — 
Class R6  (27,466)  (22,960) 
From net realized gain     
Class A  (5,496,720)  (899,654) 
Class C  (1,629,544)  (310,194) 
Class I  (4,232,075)  (734,534) 
Class R2  (13,081)  (595) 
Class R4  (1,339)  — 
Class R6  (31,144)  (9,278) 
 
Total distributions  (19,349,798)  (5,770,351) 
 
From fund share transactions  475,911,528  495,911,783 
 
Total increase  519,783,168  503,050,420 
 
Net assets     
Beginning of year  730,791,176  227,740,756 
 
End of year  $1,250,574,344  $730,791,176 
 
Undistributed net investment income  $3,722,520  $2,380,601 

 

See notes to financial statements  Annual report | Alternative Asset Allocation Fund  17 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $14.68  $14.32  $14.02  $13.72  $12.82 
Net investment income1,2  0.14  0.16  0.22  0.21  0.44 
Net realized and unrealized gain on investments  0.86  0.42  0.47  0.92  1.10 
Total from investment operations  1.00  0.58  0.69  1.13  1.54 
Less distributions           
From net investment income  (0.14)  (0.14)  (0.15)  (0.20)  (0.47) 
From net realized gain  (0.19)  (0.08)  (0.24)  (0.63)  (0.17) 
Total distributions  (0.33)  (0.22)  (0.39)  (0.83)  (0.64) 
Net asset value, end of period  $15.35  $14.68  $14.32  $14.02  $13.72 
Total return (%)3,4  6.88  4.10  5.12  8.16  12.12 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $484  $329  $111  $31  $1 
Ratios (as a percentage of average net assets):           
Expenses before reductions5  0.72  0.76  0.97  1.68  5.03 
Expenses including reductions5  0.60  0.65  0.73  0.63  0.71 
Net investment income2  0.96  1.09  1.62  1.44  3.25 
Portfolio turnover (%)  26  22  34  90  9 
 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the fund is affected by the timing and frequency of the declaration of
dividends by the underlying funds in which the fund invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of
underlying funds held by the fund. The range of expense ratios of the underlying funds held by the fund was as
follows: 0.68%–2.70%, 0.71%–1.29%, 0.73%–1.43%, 0.74%–1.37% and 0.70%–1.17% for the years ended
8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.

18  Alternative Asset Allocation Fund | Annual report  See notes to financial statements 

 


CLASS C SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-111 
 
Per share operating performance         
Net asset value, beginning of period  $14.68  $14.32  $14.03  $14.50 
Net investment income2,3  0.04  0.05  0.11  0.02 
Net realized and unrealized gain (loss) on investments  0.85  0.43  0.48  (0.49) 
Total from investment operations  0.89  0.48  0.59  (0.47) 
Less distributions         
From net investment income  (0.03)  (0.04)  (0.06)  — 
From net realized gain  (0.19)  (0.08)  (0.24)  — 
Total distributions  (0.22)  (0.12)  (0.30)  — 
Net asset value, end of period  $15.35  $14.68  $14.32  $14.03 
Total return (%)4,5  6.13  3.38  4.32  (3.24)6 
 
Ratios and supplemental data         
Net assets, end of period (in millions)  $162  $109  $34  $2 
Ratios (as a percentage of average net assets):         
Expenses before reductions7  1.43  1.48  1.66  3.038 
Expenses including reductions7  1.31  1.37  1.42  1.278 
Net investment income3  0.25  0.36  0.83  0.588 
Portfolio turnover (%)  26  22  34  909 
   

1 The inception date for Class C shares is 6-14-11.
2 Based on average daily shares outstanding.
3 Recognition of net investment income by the fund is affected by the timing and frequency of the declaration of
dividends by the underlying funds in which the fund invests.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Does not reflect the effect of sales charges, if any.
6 Not annualized.
7 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of
underlying funds held by the fund. The range of expense ratios of the underlying funds held by the fund was as
follows: 0.68%–2.70%, 0.71%–1.29%, 0.73%–1.43% and 0.74%–1.37% for the years ended 8-31-14, 8-31-13,
8-31-12 and 8-31-11, respectively.
8 Annualized.
9 The portfolio turnover is shown for the period from 9-1-10 to 8-31-11.

CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-111 
 
Per share operating performance         
Net asset value, beginning of period  $14.70  $14.34  $14.06  $14.21 
Net investment income2,3  0.19  0.21  0.26  0.16 
Net realized and unrealized gain (loss) on investments  0.85  0.43  0.48  (0.31) 
Total from investment operations  1.04  0.64  0.74  (0.15) 
Less distributions         
From net investment income  (0.18)  (0.20)  (0.22)  — 
From net realized gain  (0.19)  (0.08)  (0.24)  — 
Total distributions  (0.37)  (0.28)  (0.46)  — 
Net asset value, end of period  $15.37  $14.70  $14.34  $14.06 
Total return (%)4  7.21  4.47  5.48  (1.06)5 
 
Ratios and supplemental data         
Net assets, end of period (in millions)  $592  $290  $83  $3 
Ratios (as a percentage of average net assets):         
Expenses before reductions6  0.40  0.39  0.57  1.427 
Expenses including reductions6  0.28  0.28  0.33  0.307 
Net investment income3  1.24  1.42  1.90  1.747 
Portfolio turnover (%)  26  22  34  908 
 

1 The inception date for Class I shares is 12-31-10.
2 Based on average daily shares outstanding.
3 Recognition of net investment income by the fund is affected by the timing and frequency of the declaration of
dividends by the underlying funds in which the fund invests.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of
underlying funds held by the fund. The range of expense ratios of the underlying funds held by the fund was as
follows: 0.68%–2.70%, 0.71%–1.29%, 0.73%–1.43% and 0.74%–1.37% for the years ended 8-31-14, 8-31-13,
8-31-12 and 8-31-11, respectively.
7 Annualized.
8 The portfolio turnover is shown for the period from 9-1-10 to 8-31-11.

See notes to financial statements  Annual report | Alternative Asset Allocation Fund  19 

 


CLASS R2 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $14.66  $14.30  $14.21 
Net investment income2,3  0.10  0.11  0.09 
Net realized and unrealized gain on investments  0.87  0.45  —4 
Total from investment operations  0.97  0.56  0.09 
Less distributions       
From net investment income  (0.11)  (0.12)  — 
From net realized gain  (0.19)  (0.08)  — 
Total distributions  (0.30)  (0.20)  — 
Net asset value, end of period  $15.33  $14.66  $14.30 
Total return (%)5  6.67  3.94  0.636 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $2  $1  —7 
Ratios (as a percentage of average net assets):       
Expenses before reductions8  2.20  7.89  16.919 
Expenses including reductions8  0.82  0.82  0.819 
Net investment income3  0.65  0.74  1.299 
Portfolio turnover (%)  26  22  3410 
 

1 The inception date for Class R2 shares is 3-1-12.
2 Based on average daily shares outstanding.
3 Recognition of net investment income by the fund is affected by the timing and frequency of the declaration of
dividends by the underlying funds in which the fund invests.
4 Less than $0.005 per share.
5 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
6 Not annualized.
7 Less than $500,000.
8 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of
underlying funds held by the fund. The range of expense ratios of the underlying funds held by the portfolio
was as follows: 0.68%–2.70%, 0.71%–1.29% and 0.73%–1.43% for the years ended 8-31-14, 8-31-13 and
8-31-12, respectively.
9 Annualized.
10 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.

20  Alternative Asset Allocation Fund | Annual report  See notes to financial statements 

 


CLASS R4 SHARES Period ended  8-31-14  8-31-131 
 
Per share operating performance     
Net asset value, beginning of period  $14.69  $14.50 
Net investment income2,3  0.13  0.02 
Net realized and unrealized gain on investments  0.87  0.17 
Total from investment operations  1.00  0.19 
Less distributions     
From net investment income  (0.14)  — 
From net realized gain  (0.19)  — 
Total distributions  (0.33)  — 
Net asset value, end of period  $15.36  $14.69 
Total return (%)4  6.92  1.315 
 
Ratios and supplemental data     
Net assets, end of period (in millions)  —6  —6 
Ratios (as a percentage of average net assets):     
Expenses before reductions7  13.79  15.628 
Expenses including reductions7  0.57  0.578 
Net investment income3  0.89  0.708 
Portfolio turnover (%)  26  229 
 

1 The inception date for Class R4 shares is 6-27-13.
2 Based on average daily shares outstanding.
3 Recognition of net investment income by the fund is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the fund invests.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Less than $500,000.
7 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the fund. The range of expense ratios of the underlying funds held by the fund was as follows: 0.68%–2.70% and 0.71%–1.29%, for the years ended 8-31-14 and 8-31-13, respectively.
8 Annualized.
9 The portfolio turnover is shown for the period from 9-1-12 to 8-31-13.

CLASS R6 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $14.70  $14.34  $14.06 
Net investment income2,3  0.18  0.22  0.30 
Net realized and unrealized gain on investments  0.88  0.41  0.44 
Total from investment operations  1.06  0.63  0.74 
Less distributions       
From net investment income  (0.18)  (0.19)  (0.22) 
From net realized gain  (0.19)  (0.08)  (0.24) 
Total distributions  (0.37)  (0.27)  (0.46) 
Net asset value, end of period  $15.39  $14.70  $14.34 
Total return (%)4  7.29  4.41  5.48 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $10  $2  —5 
Ratios (as a percentage of average net assets):       
Expenses before reductions6  0.83  1.42  18.25 
Expenses including reductions6  0.19  0.35  0.34 
Net investment income3  1.22  1.50  2.12 
Portfolio turnover (%)  26  22  34 
 

1 The inception date for Class R2 shares is 9-1-11.
2 Based on average daily shares outstanding.
3 Recognition of net investment income by the fund is affected by the timing and frequency of the declaration of
dividends by the underlying funds in which the fund invests.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Less than $500,000.
6 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of
underlying funds held by the fund. The range of expense ratios of the underlying funds held by the fund was
as follows: 0.68%–2.70%, 0.71%–1.29% and 0.73%–1.43% for the years ended 8-31-14, 8-31-13 and
8-31-12, respectively.

See notes to financial statements  Annual report | Alternative Asset Allocation Fund  21 

 


Notes to financial statements

Note 1 — Organization

John Hancock Alternative Asset Allocation Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek long-term growth of capital.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class R2 and Class R4 shares are available only to certain retirement plans. Class R6 shares are available only to certain retirement plans, institutions and other investors. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees, and printing and postage for each class may differ.

The accounting policies of the John Hancock underlying funds in which the fund invests are outlined in the underlying funds’ shareholder reports, which include the underlying funds’ financial statements, available without charge by calling 800-344-1029 or visiting jhinvestments.com, on the Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s public reference room in Washington, D.C. The underlying funds are not covered by this report.

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 intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities, including exchange-traded funds, held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the funds in underlying affiliated funds and/or other open-end management investment companies are valued at their respective net asset values each business day. Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted

22  Alternative Asset Allocation Fund | Annual report 

 


prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

As of August 31, 2014, all investments are categorized as Level 1 under the hierarchy described above.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Income and capital gain distributions from underlying funds are recorded on ex-date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund’s custodian agreement, the custodian may loan money to 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $702. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees, and printing and postage for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Annual report | Alternative Asset Allocation Fund  23 

 


As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund typically declares and pays dividends and capital gain distributions, if any, at least annually.

The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $15,238,324  $5,364,765 
Long-Term Capital Gain  $4,111,474  $405,586 
Total  $19,349,798  $5,770,351 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $5,865,009 of undistributed ordinary income and $24,814,222 of long-term capital gains.

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. Short-term gains from underlying funds are treated as ordinary income for tax purposes.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals and partnerships.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. 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 the Advisor a daily management fee for its services to the fund. The fund

24  Alternative Asset Allocation Fund | Annual report 

 


pays a daily management fee equivalent, on an annual basis, to: (a) a 0.150% fee on assets invested in Affiliated Fund Assets on the first $500 million, (b) a 0.125% fee on assets invested in Affiliated Fund Assets on the next $500 million and (c) a 0.100% fee on assets invested in Affiliated Fund Assets over $1 billion and (a) a 0.600% fee on assets invested in Other Assets on the first $500 million, (b) a 0.575% fee on assets invested in Other Assets on the next $500 million and (c) a 0.550% fee on assets invested in Other Assets over $1 billion. Affiliated Fund Assets are funds of the Trust, John Hancock Variable Insurance Trust or John Hancock Funds III. The Advisor has subadvisory agreements with John Hancock Asset Management a division of Manulife Asset Management (US) LLC and John Hancock Asset Management a division of Manulife Asset Management (North America) Limited, both indirectly owned subsidiaries of MFC and affiliates of the Advisor. The fund is not responsible for payment of the subadvisory fees.

The Advisor has contractually agreed to reimburse the fund for certain fund expenses that exceed 0.04% of the fund’s average net assets. Expenses excluded from this waiver include taxes, advisory fees, transfer agent fees and service fees, Rule 12b-1 fees, brokerage commissions, interest expense, acquired fund fees and expenses, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. In addition, the Advisor has contractually agreed to waive the fund’s management fees by 0.10% of the fund’s average net assets. Both current expense limitation agreements expire on December 31, 2014 unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

The Advisor voluntarily agreed to waive its advisory fee or reimburse the fund so the aggregate advisory fee retained by the Advisor with respect to the fund and its underlying investments (after payment of subadvisory fees) does not exceed 0.60% of the fund’s average daily net assets. This voluntary waiver may terminate at any time upon notice to the fund.

The Advisor has contractually agreed to waive fees and/or reimburse certain class specific expenses, excluding fund level expenses such as advisory fees, acquired fund fees, taxes, brokerage commissions, interest expense, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business for Class R2 and Class R4 shares, to the extent that the above expenses for each class exceed 0.67% and 0.42%, respectively, of the average net assets attributable to each respective class. This expense fee waiver and/or reimbursement will continue in effect until December 31, 2014, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

Effective February 1, 2014, for Class R6 shares, the Advisor has contractually agreed to waive and/ or reimburse all class specific expenses of the fund, including transfer agency fees and service fees, blue sky fees, printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. The fee waiver and/or reimbursements will continue in effect until June 30, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time. This waiver was in effect on a voluntary basis as of January 1, 2014.

Accordingly, the expense reductions amounted to $530,107, $159,866, $463,468, $18,441, $20,189, and $22,693 for Class A, Class C, Class I, Class R2, Class R4 and Class R6 shares, respectively, for the year ended August 31, 2014.

The investment management fees, including the impact of the waiver, reimbursements and the amounts recaptured, incurred for the year ended August 31, 2014 were equivalent to a net effective rate of 0.11% of the fund’s average daily net assets.

Annual report | Alternative Asset Allocation Fund  25 

 


Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery in future periods and the respective expiration dates.

AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNT RECOVERED 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  DURING THE PERIOD 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  ENDED 8-31-14 
$118,493  $88,102  $55,907  $100,972 

 

Amounts recovered by class         
 
CLASS A  CLASS C  CLASS I  CLASS R2  CLASS R4  CLASS R6 
$44,173  $13,662  $42,479  $142  $17  $499 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class C, Class R2, and Class R4 pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. In addition, under a service plan for Class R2, 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 A  0.30%  — 
Class C  1.00%  — 
Class R2  0.25%  0.25% 
Class R4  0.25%  0.10% 

The fund’s Distributor has contractually agreed to waive 0.10% of 12b-1 fees for Class R4 shares to limit the 12b-1 fees on Class R4 to 0.15% of the average daily net assets of Class R4 shares, until at least December 31, 2014, 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. Reimbursements related to this contractual waiver amounted to $153 for Class R4 shares for the year ended August 31, 2014.

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $1,647,778 for the year ended August 31, 2014. Of this amount, $269,870 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $1,365,902 was paid as sales commissions to broker-dealers and $12,006 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.

26  Alternative Asset Allocation Fund | Annual report 

 


Class A and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, CDSCs received by the Distributor amounted to $793 and $31,665 for Class A and Class C shares, respectively.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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 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.

Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  $1,344,530  $601,167  $54,992  $41,332 
Class C  1,351,359  181,215  28,727  12,986 
Class I  —  463,557  37,938  25,688 
Class R2  6,286  262  18,845  369 
Class R4  408  30  20,271  92 
Class R6  —  675  18,625  508 
Total  $2,702,583  $1,246,906  $179,398  $80,975 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Annual report | Alternative Asset Allocation Fund  27 

 


Note 5 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  19,731,449  $295,985,103  18,133,078  $265,683,877 
Distributions reinvested  621,040  9,154,128  174,010  2,516,178 
Repurchased  (11,253,664)  (170,068,876)  (3,596,892)  (52,674,118) 
 
Net increase  9,098,825  $135,070,355  14,710,196  $215,525,937 
 
Class C shares         
Sold  4,664,643  $70,177,255  5,544,996  $81,288,730 
Distributions reinvested  112,793  1,671,586  29,667  431,058 
Repurchased  (1,630,632)  (24,507,471)  (521,148)  (7,664,429) 
 
Net increase  3,146,804  $47,341,370  5,053,515  $74,055,359 
 
Class I shares         
Sold  24,400,237  $368,508,227  17,088,503  $250,341,493 
Distributions reinvested  412,067  6,069,754  145,878  2,106,473 
Repurchased  (6,024,430)  (90,476,164)  (3,309,999)  (48,599,243) 
 
Net increase  18,787,874  $284,101,817  13,924,382  $203,848,723 
 
Class R2 shares         
Sold  102,458  $1,530,361  34,681  $510,508 
Distributions reinvested  923  13,609  —  — 
Repurchased  (30,670)  (463,925)  (71)  (1,052) 
 
Net increase  72,711  $1,080,045  34,610  $509,456 
 
Class R4 shares         
Sold  8,674  $129,373  6,897  $100,000 
Repurchased  (744)  (11,159)  —  — 
 
Net increase  7,930  $118,214  6,897  $100,000 
 
Class R6 shares         
Sold  548,691  $8,376,666  134,410  $1,971,066 
Distributions reinvested  3,802  56,011  2,101  30,333 
Repurchased  (15,348)  (232,950)  (8,779)  (129,091) 
 
Net increase  537,145  $8,199,727  127,732  $1,872,308 
 
Total net increase  31,651,289  $475,911,528  33,857,332  $495,911,783 

Affiliates of the fund owned 1% of shares of beneficial interest of Class R6 on August 31, 2014.

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to $735,479,628 and $248,959,811, respectively, for the year ended August 31, 2014.

Note 7 — Investment in affiliated underlying funds

The fund invests primarily in affiliated underlying funds that are managed by the Advisor and its affiliates. The fund does not invest in the affiliated underlying funds for the purpose of exercising management or control; however, the fund’s investment may represent a significant portion of each underlying fund’s net assets. At August 31, 2014, the fund held 5% or more of the net assets of the underlying funds shown below:

28  Alternative Asset Allocation Fund | Annual report 

 


  UNDERLYING FUND’S 
FUND  NET ASSETS 
John Hancock Funds II Redwood Fund  28.6% 
John Hancock Funds Seaport Fund  27.8% 
John Hancock Funds Enduring Equity Fund  24.9% 
John Hancock Funds II Global Income Fund  14.0% 
John Hancock Funds II Short Duration Credit Opportunities Fund  10.7% 
John Hancock Funds II Absolute Return Currency Fund  9.4% 
John Hancock Funds II Global Real Estate Fund  7.4% 
John Hancock Funds II Technical Opportunities Fund  6.8% 

 

Information regarding the fund’s fiscal year purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the fund’s from its investments in the affiliated underlying funds are as follows:

          DIVIDENDS AND     
          DISTRIBUTIONS     
 
 
  BEGIN-        INCOME  CAPITAL     
  NING      ENDING  DISTRIBU-  GAINS DIS-  REALIZED   
  SHARE  SHARES  SHARES  SHARE  TIONS  TRIBUTIONS  GAIN  ENDING 
PORTFOLIO  AMOUNT   PURCHASED  SOLD  AMOUNT  RECEIVED  RECEIVED  (LOSS)  VALUE 
Absolute Return  9,899,573  11,621,658  (3,524,945)  17,996,286  —  $7,806,924  $1,052,454  $181,042,640 
Currency                 
Emerging Markets  1,384,774  713,840  (836,569)  1,262,045  $313,084  —  (420,177)  14,311,590 
Enduring Equity  —  3,669,385  (2,098)  3,667,287  100,091  —  210  40,890,255 
Global Absolute  9,323,247  5,522,758  (781,526)  14,064,479  1,787,684  —  372,227  159,913,129 
Return Strategies                 
Global Income  7,076,128  2,935,863  (1,844,382)  8,167,609  4,193,291  463,277  (1,058,300)  83,472,964 
Global Real Estate  1,618,170  1,150,262  (83,058)  2,685,374  641,577  —  111,393  25,215,657 
Natural Resources  555,265  1,174,234  (43,462)  1,686,037  147,518  —  64,855  31,663,777 
Real Return Bond  1,282,147  401,189  (22,250)  1,661,086  424,004  —  (36,501)  19,634,035 
Redwood  7,979,703  7,018,148  (1,462,092)  13,535,759  —  1,719,934  1,041,392  156,473,376 
Seaport  —  6,819,807  (1,076,621)  5,743,186  —  —  (85,296)  58,121,045 
Short Duration  8,264,178  10,162,878  (2,955,247)  15,471,809  4,335,806  1,214,984  4,985  158,586,039 
Credit Opportunities                 
Strategic Income  6,008,328  615,262  (394,521)  6,229,069  2,943,658  696,877  41,935  68,332,885 
Opportunities                 
Technical  4,239,883  3,541,502  (3,600,005)  4,181,380  —  6,940,556  11,436,898  62,511,635 
Opportunities                 
 
          $14,886,713   $18,842,552  $12,526,075  $1,060,169,027 

Note 8 – Transactions in securities of affiliated issuers

Affiliated issuers, as defined by the 1940 Act, are those in which the fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of the fund’s transactions in the securities of these issuers during the year ended August 31, 2014, is set forth below:

  BEGINNING  ENDING  INCOME  CAPITAL GAINS  REALIZED   
  SHARE  SHARE  DISTRIBUTIONS  DISTRIBUTIONS  GAIN  ENDING 
AFFILIATE  AMOUNT  AMOUNT  RECEIVED  RECEIVED  (LOSS)  VALUE 
Touchstone Merger Arbirtrage             
Fund             
Purchased: 3,099,073             
Sold: 27,674  1,476,233  4,547,632  $149,281  $574,314  $6,453  $48,386,802 
Turner Spectrum Fund             
Purchased: 1,522,371             
Sold: 4,426,078  4,628,535  1,724,828  —  —  3,979,116  20,766,926 
      $149,281  $574,314  $3,985,569  $69,153,728 

 

Annual report | Alternative Asset Allocation Fund  29 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Alternative Asset Allocation Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Alternative Asset Allocation Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

30  Alternative Asset Allocation Fund | Annual report 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $4,111,474 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | Alternative Asset Allocation Fund  31 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreements (the Subadvisory Agreements) with John Hancock Asset Management a division of Manulife Asset Management (North America) Limited and John Hancock Asset Management a division of Manulife Asset Management (US) LLC (the Subadvisors), for John Hancock Alternative Asset Allocation Fund (the fund). The Advisory Agreement and Subadvisory Agreements are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreements between the Advisor and the Subadvisors with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreements, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisors, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisors, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisors regarding the nature, extent and quality of services provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreements are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisors is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisors to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisors with respect to the fund. The Board noted the affiliation of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

32  Alternative Asset Allocation Fund | Annual report 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisors, and is also responsible for monitoring and reviewing the activities of the Subadvisors and third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Annual report | Alternative Asset Allocation Fund  33 

 


Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index for the one- and three-year periods ended December 31, 2013. The Board also noted that the fund had underperformed its peer group average for the one-year period ended December 31, 2013 and outperformed its peer group average for the three-year period ended December 31, 2013.

The Board took into account management’s discussion of the fund’s performance, including the favorable performance relative to the peer group over the three-year period and that the fund’s performance for the one-year period was at the 50th percentile for its Lipper peer group. The Board concluded that the fund’s performance has generally been in line with or outperformed the historical performance of comparable funds over the longer-term.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees for the fund are higher than the peer group median and total expenses for the fund are equal to the peer group median. The Board took into account management’s discussion of the fund’s expenses, including the fee and expense waivers applicable to the fund. The Board also took into account management’s discussion with respect to the advisory/ subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fees. The Board also noted that the Advisor pays the subadvisory fees. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board also noted that the fund’s distributor, an affiliate of the Advisor, has agreed to waive a portion of its Rule 12b-1 fee for a share class of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisors’ services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

34  Alternative Asset Allocation Fund | Annual report 

 


In addition, the Trustees reviewed the advisory fee to be paid to the Advisor for the fund, and concluded that the advisory fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the fund and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the fund and those of its underlying portfolios.

Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisors) from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the fund’s Subadvisors are affiliates of the Advisor;

(i) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisors) from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that with respect to the John Hancock underlying portfolios in which the fund invests, the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such underlying portfolios and each of the other John Hancock funds in the complex

Annual report | Alternative Asset Allocation Fund  35 

 


(except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the advisory fee level; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(1) information relating to the Subadvisors’ business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and

(3) the subadvisory fees for the fund and to the extent available, comparable fee information prepared by an independent third party provider of fund data.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisors, the Board received information provided to the Board by the Subadvisors, including the Subadvisors’ respective Form ADV, as well as took into account information presented throughout the past year. The Board considered each Subadvisor’s current level of staffing and its overall resources, as well as received information relating to each Subadvisor’s compensation program. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of each Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, each Subadvisor’s compliance program and any disciplinary history. The Board also considered each Subadvisor’s risk assessment and monitoring process. The Board reviewed each Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisors and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with each Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of each Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of each Subadvisor.

36  Alternative Asset Allocation Fund | Annual report 

 


The Board considered each Subadvisor’s investment process and philosophy. The Board took into account that each Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by each Subadvisor and the profitability to each Subadvisor of its relationship with the fund, the Board noted that the fees under each Subadvisory Agreement are paid by the Advisor and not the fund. The Board also considered any potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreements.

In addition, the Board considered other potential indirect benefits that the Subadvisors and its affiliates may receive from the Subadvisors’ relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays subadvisory fees to the Subadvisors. As noted above, the Board also considered the fund’s subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisors with respect to the fund to fees charged by the Subadvisors to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisors. The Board was mindful of the Advisor’s focus on the Subadvisors’ performance. The Board also noted the Subadvisors’ long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreements was based on a number of determinations, including the following:

(1) each Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund has generally been in line with or outperformed the historical performance of comparable funds over the longer-term;

(3) the subadvisory fees are reasonable in relation to the level and quality of services being provided; and

(4) the subadvisory fees are paid by the Advisor, and that the fund’s fee structure contains breakpoints at the advisory fee level.

Annual report | Alternative Asset Allocation Fund  37 

 


* * * 

In addition, the Trustees reviewed the subadvisory fee to be paid to the Subadvisors for the fund and concluded that the subadvisory fee to be paid to the Subadvisors with respect to the fund is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the fund and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the Fund and those of its underlying portfolios.

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreements would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreements for an additional one-year period.

38  Alternative Asset Allocation Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees

Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
  
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
  
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Alternative Asset Allocation Fund  39 

 


Independent Trustees (continued)

Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
  
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
  
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
  
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
  
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

40  Alternative Asset Allocation Fund | Annual report 

 


Independent Trustees (continued)

Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     

Non-Independent Trustees4

Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
  
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     

Principal officers who are not Trustees

Name, year of birth  Officer 
Position(s) held with fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
Andrew G. Arnott, Born: 1971  2009 
President   
Senior Vice President, John Hancock Financial Services (since 2009); 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   
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Alternative Asset Allocation Fund  41 

 


Principal officers who are not Trustees (continued)

Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
  
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).   
  
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

42  Alternative Asset Allocation Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisors 
Craig Bromley†  John Hancock Asset Management a division of 
Peter S. Burgess*  Manulife Asset Management (US) LLC 
William H. Cunningham 
Grace K. Fey  John Hancock Asset Management a division of
Theron S. Hoffman*  Manulife Asset Management (North
Deborah C. Jackson  America) Limited 
Hassell H. McClellan 
Gregory A. Russo  Principal distributor
Warren A. Thomson†  John Hancock Funds, LLC
 
Officers  Custodian
Andrew G. Arnott  State Street Bank and Trust Company
President 
  Transfer agent 
John J. Danello  John Hancock Signature Services, Inc.
Senior Vice President, Secretary, 
and Chief Legal Officer  Legal counsel
K&L Gates LLP
Francis V. Knox, Jr. 
Chief Compliance Officer  Independent registered
  public accounting firm
Charles A. Rizzo  PricewaterhouseCoopers LLP 
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   

*Member of the Audit Committee
†Non-Independent Trustee

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Alternative Asset Allocation Fund  43 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


This report is for the information of the shareholders of John Hancock Alternative Asset Allocation Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  345A 8/14 
MF198762  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
  1-year  5-year  10-year  Since 
inception 1 		 1-year  5-year  10-year  Since 
inception 1 
Class A2  9.12  2.83  —  3.49  9.12  14.96  —  35.60 
Class I2,3  15.08  4.17  —  4.61  15.08  22.67  —  49.16 
Class R62,3  15.15  4.15  —  4.48  15.15  22.57  —  47.61 
Class 13  15.44  4.41  —  4.76  15.44  24.10  —  51.14 
Class NAV3  15.49  4.46  —  4.81  15.49  24.39  —  51.79 
Index 1†  22.94  11.55  —  7.80  22.94  72.71  —  94.85 
 
Index 2†  12.90  0.30  —  5.07  12.90  1.51  —  55.14 
Index 3†  17.83  6.32  —  6.20  17.83  35.86  —  70.64 


Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%. Sales charges are not applicable to Class I, Class R6, Class 1, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A  Class I  Class R6  Class 1  Class NAV 
Gross (%)  1.74  1.42  16.16  1.13  1.06 
Net (%)  1.58  1.33  0.99  1.11  0.97 

 

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, the fund’s current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund’s website at jhinvestments.com.

The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index 1 is the MSCI World Energy Index; Index 2 is the MSCI World Metals & Mining Index; Index 3 is a 60%/40% blend of Index 1 and Index 2.

See the following page for footnotes.

6  Natural Resources Fund | Annual report 

 


 

 
    With maximum  Without       
  Start date  sales charge  sales charge  Index 1  Index 2  Index 3 
Class I2,3  10-15-05  $14,916  $14,916  $19,485  $15,514  $17,064 
Class R62,3  10-15-05  14,761  14,761  19,485  15,514  17,064 
Class 13  10-15-05  15,114  15,114  19,485  15,514  17,064 
Class NAV3  10-15-05  15,179  15,179  19,485  15,514  17,064 


MSCI World Energy Index (gross of foreign withholding tax on dividends) — Index 1 — consists of all the companies in the Energy sector of the MSCI World Index.

MSCI World Metals & Mining Index (gross of foreign withholding tax on dividends) — Index 2 — consists of all the companies in the Metals & Mining industry of the MSCI World Index.

Combined Index (gross of foreign withholding tax on dividends) — Index 3 — comprises 60% MSCI World Energy Index and 40% MSCI World Metals & Mining Index.

It is not possible to invest directly in an index. Index figures do not reflect expenses, sales charges, or foreign currency impact, which would have resulted in different values.

Footnotes related to performance pages

1 From 10-15-05.
2 Class A and Class I shares were first offered on 1-4-10; Class R6 shares were first offered on 11-1-11. The returns prior to these dates are those of Class NAV shares that have been recalculated to apply the gross fees and expenses of Class A, Class I, and Class R6 shares, as applicable.
3 For certain types of investors, as described in the fund’s prospectuses.

Annual report | Natural Resources Fund  7 

 


Management’s discussion of

Fund performance

Stocks of natural resource-related companies generally produced solid gains in dollar terms during the 12 months ended August 31, 2014. Stimulative monetary policies, continued historically low interest rates, and strong investor appetite for risk combined to drive stock market gains. On a sector basis, the largest gains came from energy stocks. In the materials sector, metals and mining stocks also posted double-digit returns, while chemicals and construction materials companies underperformed.

For the 12 months ended August 31, 2014, John Hancock Natural Resources Fund’s Class A shares returned 14.87%, excluding sales charges. By comparison, the fund’s benchmark, the 60% MSCI World Energy/40% MSCI World Metals & Mining Combined Index, had a return of 17.83%.

The fund benefited from positive contributions to performance from a broad range of holdings. Positioning among oil producers was a key source of strength. Top contributors among the production companies included EOG Resources, Inc., CONSOL Energy, Inc., and Pioneer Natural Resources Company. Holdings in the metals and mining segment also positively contributed to absolute returns during the period. Stakes in Allegheny Technologies Inc., Rio Tinto PLC, and First Quantum Minerals, Ltd. were top contributors. At the other end of the spectrum, shares of metals and mining company Mongolian Mining Corp. remained weak. Shares of U.S.-based, oil-focused exploration and production company Cobalt International Energy, Inc. also declined. Allegheny and Mongolian were sold prior to period-end.

Late in the period, a stronger dollar and worries about the health of the global economy led to oil price declines, generally weighing on performance of oil and gas exploration and production and equipment and services stocks. However, lower oil prices ben-efited positions in oil refiners, led by Marathon Petroleum Corp. and Western Refining, Inc., among others.

This commentary reflects the views of the portfolio management team through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Natural Resources Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,067.30  $8.23  1.58% 
Class I  1,000.00  1,069.00  7.20  1.38% 
Class R6  1,000.00  1,068.80  6.67  1.28% 
Class 1  1,000.00  1,070.70  5.48  1.05% 
Class NAV  1,000.00  1,070.70  5.22  1.00% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:


 
Annual report | Natural Resources Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’ 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 March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,017.20  $8.03  1.58% 
Class I  1,000.00  1,018.20  7.02  1.38% 
Class R6  1,000.00  1,018.80  6.51  1.28% 
Class 1  1,000.00  1,019.90  5.35  1.05% 
Class NAV  1,000.00  1,020.20  5.09  1.00% 


Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  Natural Resources Fund | Annual report 

 


Portfolio summary

Top 10 Holdings (31.5% of Net Assets on 8-31-14)1,2     
Schlumberger, Ltd.  3.9%  Cameron International Corp.  3.1% 
Noble Energy, Inc.  3.7%  EOG Resources, Inc.  2.8% 
Halliburton Company  3.6%  Suncor Energy, Inc.  2.7% 
Anadarko Petroleum Corp.  3.6%  Dril-Quip, Inc.  2.6% 
Concho Resources, Inc.  3.4%  Marathon Oil Corp.  2.1% 
 
 
Industry Composition1,3       
Oil, Gas & Consumable Fuels  57.2%  Chemicals  1.6% 
Energy Equipment & Services  23.3%  Food Products  0.2% 
Metals & Mining  15.3%  Short-Term Investments & Other  2.4% 
 
Country Composition1,3       
United States  77.9%  Jersey, Channel Islands  1.3% 
Canada  12.8%  Netherlands  1.2% 
United Kingdom  2.8%  South Africa  0.5% 
Australia  1.7%  Bermuda  0.4% 
Switzerland  1.4%     
  

 

 

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 The natural resources industry can be significantly affected by global, political and environmental developments and by commodity prices. A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more than a diversified portfolio. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Hedging and other strategic transactions may increase volatility and result in losses if not successful. Currency transactions are affected by fluctuations in exchange rates. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors, and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

Annual report | Natural Resources Fund  11 

 


Fund’s investments

As of 8-31-14

  Shares  Value 
Common Stocks 97.6%    $922,510,390 
(Cost $917,355,268)     
 
Consumer Staples 0.2%    1,942,589 
 
Food Products 0.2%     
Adecoagro SA (I)  205,565  1,942,589 
 
Energy 80.5%    760,488,254 
 
Energy Equipment & Services 23.3%     
Cameron International Corp. (I)  394,900  29,352,917 
Core Laboratories NV  73,300  11,580,667 
Dresser-Rand Group, Inc. (I)  69,669  4,828,062 
Dril-Quip, Inc. (I)  243,588  24,716,874 
FMC Technologies, Inc. (I)  117,400  7,260,016 
Halliburton Company  503,616  34,049,478 
Helmerich & Payne, Inc.  149,700  15,725,985 
Independence Contract Drilling, Inc. (I)  308,254  3,544,921 
National Oilwell Varco, Inc.  223,320  19,301,548 
Patterson-UTI Energy, Inc.  402,800  13,912,712 
Rowan Companies PLC, Class A  156,952  4,758,785 
Schlumberger, Ltd.  336,200  36,860,968 
Superior Energy Services, Inc.  397,189  14,235,254 
 
Oil, Gas & Consumable Fuels 57.2%     
Africa Oil Corp. (I)(L)  274,700  1,715,454 
Anadarko Petroleum Corp.  298,031  33,585,110 
Antero Resources Corp. (I)  158,523  9,170,556 
Bankers Petroleum, Ltd. (I)  794,764  4,824,283 
Bonanza Creek Energy, Inc. (I)  125,600  7,713,096 
Canadian Natural Resources, Ltd.  162,900  7,094,295 
Cheniere Energy, Inc. (I)  104,783  8,409,884 
Cimarex Energy Company  129,300  18,769,188 
Cobalt International Energy, Inc. (I)  400,343  6,145,265 
Concho Resources, Inc. (I)  225,400  32,015,816 
CONSOL Energy, Inc.  353,512  14,239,463 
Denbury Resources, Inc.  889,400  15,315,468 
Devon Energy Corp.  253,784  19,140,389 
EOG Resources, Inc.  242,645  26,661,833 
Gulfport Energy Corp. (I)  164,695  9,634,658 
Hess Corp.  140,000  14,154,000 
Kodiak Oil & Gas Corp. (I)  305,474  4,970,062 

 

12  Natural Resources Fund | Annual report  See notes to financial statements 

 


  Shares  Value 
Oil, Gas & Consumable Fuels (continued)     
Kosmos Energy, Ltd. (I)  390,700  $3,914,814 
Laredo Petroleum, Inc. (I)(L)  523,398  12,373,129 
Lekoil, Ltd. (I)  4,006,351  4,040,485 
Marathon Oil Corp.  477,500  19,906,975 
Marathon Petroleum Corp.  210,824  19,187,092 
MEG Energy Corp. (I)  365,300  13,012,112 
Newfield Exploration Company (I)  197,100  8,834,022 
Noble Energy, Inc.  478,300  34,504,561 
Oasis Petroleum, Inc. (I)  172,673  8,493,785 
Occidental Petroleum Corp.  145,600  15,103,088 
Oil Search, Ltd.  742,711  6,727,432 
PDC Energy, Inc. (I)  210,116  12,625,870 
Phillips 66  195,400  17,003,708 
Pioneer Natural Resources Company  50,200  10,474,230 
Range Resources Corp.  200,900  15,788,731 
Rice Energy, Inc. (I)  306,089  8,962,286 
Rosetta Resources, Inc. (I)  254,440  12,722,000 
Sanchez Energy Corp. (I)(L)  138,400  4,593,496 
SM Energy Company  62,800  5,591,712 
Southwestern Energy Company (I)  240,005  9,883,406 
Suncor Energy, Inc.  613,100  25,192,279 
The Williams Companies, Inc.  86,600  5,147,504 
Tullow Oil PLC  372,392  4,516,724 
Vallares PLC (I)  361,331  5,214,293 
Western Refining, Inc.  140,166  6,521,924 
Whiting Petroleum Corp. (I)  177,699  16,465,589 
 
Materials 16.9%    160,079,547 
 
Chemicals 1.6%     
Flotek Industries, Inc. (I)  297,062  8,258,324 
Potash Corp. of Saskatchewan, Inc.  191,600  6,736,656 
 
Metals & Mining 15.3%     
African Rainbow Minerals, Ltd.  284,454  4,856,216 
Agnico Eagle Mines, Ltd.  140,000  5,359,200 
B2Gold Corp. (I)(L)  2,512,000  6,468,868 
Barrick Gold Corp.  290,121  5,335,325 
BHP Billiton, Ltd., ADR (L)  141,200  9,690,556 
Constellium NV (I)  333,511  9,498,393 
Eldorado Gold Corp.  1,570,900  12,988,495 
First Quantum Minerals, Ltd. (L)  603,800  13,555,374 
Freeport-McMoRan Copper & Gold, Inc.  180,900  6,579,333 
Glencore Xstrata PLC (I)  2,190,805  13,191,839 
Guyana Goldfields, Inc. (I)(L)  960,594  2,862,434 
Ivanhoe Mines, Ltd. (I)  913,500  1,218,224 
Kinross Gold Corp. (I)  938,900  3,699,266 
Platinum Group Metals, Ltd. (I)  485,581  519,572 
Randgold Resources, Ltd.  151,500  12,748,725 
Reliance Steel & Aluminum Company  138,800  9,704,896 

 

See notes to financial statements  Annual report | Natural Resources Fund  13 

 


    Shares  Value 
Metals & Mining (continued)       
Rio Tinto PLC, ADR (L)    227,700  $12,236,598 
Silver Wheaton Corp. (L)    226,600  5,667,266 
Southern Copper Corp.    108,200  3,550,042 
Tahoe Resources, Inc. (I)    209,100  5,353,945 
 
  Yield (%)  Shares  Value 
Securities Lending Collateral 6.2%      $58,161,691 
(Cost $58,161,478)       
John Hancock Collateral Investment Trust (W)  0.0970 (Y)  5,812,043  58,161,691 
 
    Par value  Value 
Short-Term Investments 2.3%      $21,723,000 
(Cost $21,723,000)       
 
Repurchase Agreement 2.3%      21,723,000 
 
Repurchase Agreement with State Street Corp. dated 8-29-14 at     
0.000% to be repurchased at $21,723,000 on 9-2-14, collateralized     
by $22,475,000 U.S. Treasury Notes, 0.625% due 11-30-17 (valued     
at $22,160,125, including interest)    $21,723,000  21,723,000 
 
Total investments (Cost $997,239,746)† 106.1%  $1,002,395,081 
 
Other assets and liabilities, net (6.1%)      ($57,218,595) 
 
Total net assets 100.0%      $945,176,486 


The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund.

ADR American Depositary Receipts

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $999,505,634. Net unrealized appreciation aggregated $2,889,447, of which $32,229,593 related to appreciated investment securities and $29,340,146 related to depreciated investment securities.

The fund had the following country composition as a percentage of net assets on 8-31-14:

United States  77.9% 
Canada  12.8% 
United Kingdom  2.8% 
Australia  1.7% 
Switzerland  1.4% 
Jersey, Channel Islands  1.3% 
Netherlands  1.2% 
South Africa  0.5% 
Bermuda  0.4% 
Total  100.0% 

 

14  Natural Resources Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

 

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $939,078,268) including   
($56,430,083) of securities loaned  $944,233,390 
Investments in affiliated issuers, at value (Cost $58,161,478)  58,161,691 
 
Total investments, at value (Cost $997,239,746)  1,002,395,081 
Cash  798 
Foreign currency, at value (Cost $12,160)  12,281 
Receivable for fund shares sold  85,679 
Dividends and interest receivable  1,152,268 
Receivable for securities lending income  6,717 
Other receivables and prepaid expenses  29,658 
 
Total assets  1,003,682,482 
 
Liabilities   
Payable for investments purchased  30,015 
Payable for fund shares repurchased  126,084 
Payable upon return of securities loaned  58,161,380 
Payable to affiliates   
Accounting and legal services fees  19,664 
Transfer agent fees  2,715 
Trustees’ fees  120 
Investment management fees  420 
Other liabilities and accrued expenses  165,598 
 
Total liabilities  58,505,996 
 
Net assets  $945,176,486 
 
Net assets consist of   
Paid-in capital  $993,910,354 
Undistributed net investment income  3,411,658 
Accumulated net realized gain (loss) on investments and foreign   
currency transactions  (57,296,553) 
Net unrealized appreciation (depreciation) on investments and translation   
of assets and liabilities in foreign currencies  5,151,027 
 
Net assets  $945,176,486 

 

See notes to financial statements  Annual report | Natural Resources Fund  15 

 


F I N A N C I A L  S T A T E M E N T S

 

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($11,528,541 ÷ 615,763 shares)1  $18.72 
Class I ($584,319 ÷ 31,181 shares)  $18.74 
Class R6 ($148,861 ÷ 7,920.4 shares)  $18.79 
Class 1 ($134,625,363 ÷ 7,116,495 shares)  $18.92 
Class NAV ($798,289,402 ÷ 42,508,399 shares)  $18.78 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $19.71 


1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

 

 

 

16  Natural Resources Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

 

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Dividends  $15,495,472 
Securities lending  148,027 
Interest  5,835 
Less foreign taxes withheld  (870,403) 
 
Total investment income  14,778,931 
 
Expenses   
Investment management fees  8,753,868 
Distribution and service fees  94,788 
Accounting and legal services fees  109,253 
Transfer agent fees  15,907 
Trustees’ fees  11,483 
State registration fees  61,046 
Printing and postage  9,117 
Professional fees  73,338 
Custodian fees  385,494 
Registration and filing fees  38,128 
Expense recapture  214 
Other  18,733 
 
Total expenses  9,571,369 
Less expense reductions  (535,285) 
 
Net expenses  9,036,084 
 
Net investment income  5,742,847 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers and foreign currency transactions  106,845,9191 
Investments in affiliated issuers  5,692 
  106,851,611 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers and translation of assets and liabilities in   
foreign currencies  13,637,3372 
Investments in affiliated issuers  (262) 
  13,637,075 
Net realized and unrealized gain  120,488,686 
 
Increase in net assets from operations  $126,231,533 


1 Net of India foreign taxes of $7,123.
2 Net of $2,325 increase in accrued India foreign taxes.

 

 

See notes to financial statements  Annual report | Natural Resources Fund  17 

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
From operations     
Net investment income  $5,742,847  $4,355,511 
Net realized gain (loss)  106,851,611  (18,025,778) 
Change in net unrealized appreciation (depreciation)  13,637,075  34,802,570 
 
Increase in net assets resulting from operations  126,231,533  21,132,303 
 
Distributions to shareholders     
From net investment income     
Class A  (17,381)  (10,340) 
Class I  (8,688)  (30,027) 
Class R6  (481)  (327) 
Class 1  (821,221)  (860,547) 
Class NAV  (5,061,626)  (3,833,049) 
 
Total distributions  (5,909,397)  (4,734,290) 
 
From fund share transactions  23,731,426  16,625,961 
 
Total increase  144,053,562  33,023,974 
 
Net assets     
Beginning of year  801,122,924  768,098,950 
 
End of year  $945,176,486  $801,122,924 
 
Undistributed net investment income  $3,411,658  $3,501,978 

 

18  Natural Resources Fund | Annual report  See notes to financial statements 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $16.33  $16.04  $21.13  $18.34  $20.70 
Net investment income2  0.01  0.01  0.06  0.03  0.05 
Net realized and unrealized gain (loss) on investments  2.41  0.30  (3.04)  2.80  (2.41) 
Total from investment operations  2.42  0.31  (2.98)  2.83  (2.36) 
Less distributions           
From net investment income  (0.03)  (0.02)  (0.04)  —  — 
From net realized gain  —  —  (2.07)  (0.04)  — 
Total distributions  (0.03)  (0.02)  (2.11)  (0.04)  — 
Net asset value, end of period  $18.72  $16.33  $16.04  $21.13  $18.34 
Total return (%)3,4  14.87  1.92  (14.60)  15.41  (11.40)5 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $12  $9  $11  $11  $3 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.77  1.77  1.82  1.77  1.816 
Expenses including reductions  1.58  1.58  1.60  1.60  1.606 
Net investment income  0.07  0.03  0.37  0.13  0.416 
Portfolio turnover (%)  193  66  176  85  707 


1 The inception date for Class A shares is 1-4-10.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-09 to 8-31-10.

 

 

See notes to financial statements  Annual report | Natural Resources Fund  19 

 


CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $16.35  $16.06  $21.18  $18.37  $20.70 
Net investment income2  0.07  0.04  0.11  0.12  0.10 
Net realized and unrealized gain (loss) on investments  2.39  0.30  (3.06)  2.79  (2.43) 
Total from investment operations  2.46  0.34  (2.95)  2.91  (2.33) 
Less distributions           
From net investment income  (0.07)  (0.05)  (0.10)  (0.06)  — 
From net realized gain  —  —  (2.07)  (0.04)  — 
Total distributions  (0.07)  (0.05)  (2.17)  (0.10)  — 
Net asset value, end of period  $18.74  $16.35  $16.06  $21.18  $18.37 
Total return (%)3  15.08  2.12  (14.39)  15.79  (11.26)4 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $1  $7  $8  $7  $1 
Ratios (as a percentage of average net assets):           
Expenses before reductions  2.21  1.40  1.43  1.53  1.545 
Expenses including reductions  1.38  1.38  1.37  1.30  1.305 
Net investment income  0.39  0.24  0.65  0.54  0.825 
Portfolio turnover (%)  193  66  176  85  706 


1 The inception date for Class I shares is 1-4-10.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.
6 The portfolio turnover is shown for the period from 9-1-09 to 8-31-10.

 

 

 

CLASS R6 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $16.40  $16.10  $20.40 
Net investment income2  0.06  0.06  0.11 
Net realized and unrealized gain (loss) on investments  2.41  0.31  (2.24) 
Total from investment operations  2.47  0.37  (2.13) 
Less distributions       
From net investment income  (0.08)  (0.07)  (0.10) 
From net realized gain  —  —  (2.07) 
Total distributions  (0.08)  (0.07)  (2.17) 
Net asset value, end of period  $18.79  $16.40  $16.10 
Total return (%)3  15.15  2.27  (10.92)4 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  —5  —5  —5 
Ratios (as a percentage of average net assets):       
Expenses before reductions  21.93  16.18  24.486 
Expenses including reductions  1.28  1.28  1.306 
Net investment income  0.35  0.34  0.786 
Portfolio turnover (%)  193  66  1767 


1 The inception date for Class R6 shares is 11-1-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.

 

 

 

20  Natural Resources Fund | Annual report  See notes to financial statements 

 


CLASS 1 SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $16.50  $16.20  $21.35  $18.51  $17.66 
Net investment income1  0.11  0.08  0.15  0.12  0.10 
Net realized and unrealized gain (loss) on investments  2.42  0.32  (3.09)  2.86  0.87 
Total from investment operations  2.53  0.40  (2.94)  2.98  0.97 
Less distributions           
From net investment income  (0.11)  (0.10)  (0.14)  (0.10)  (0.12) 
From net realized gain  —  —  (2.07)  (0.04)  — 
Total distributions  (0.11)  (0.10)  (2.21)  (0.14)  (0.12) 
Net asset value, end of period  $18.92  $16.50  $16.20  $21.35  $18.51 
Total return (%)2  15.44  2.44  (14.21)  16.02  5.43 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $135  $128  $152  $194  $154 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.12  1.13  1.12  1.12  1.11 
Expenses including reductions  1.06  1.11  1.11  1.12  1.11 
Net investment income  0.61  0.50  0.84  0.54  0.52 
Portfolio turnover (%)  193  66  176  85  70 


1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

 

 

 

CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $16.38  $16.09  $21.21  $18.39  $17.55 
Net investment income1  0.12  0.09  0.17  0.14  0.11 
Net realized and unrealized gain (loss) on investments  2.40  0.31  (3.06)  2.83  0.86 
Total from investment operations  2.52  0.40  (2.89)  2.97  0.97 
Less distributions           
From net investment income  (0.12)  (0.11)  (0.16)  (0.11)  (0.13) 
From net realized gain  —  —  (2.07)  (0.04)  — 
Total distributions  (0.12)  (0.11)  (2.23)  (0.15)  (0.13) 
Net asset value, end of period  $18.78  $16.38  $16.09  $21.21  $18.39 
Total return (%)2  15.49  2.45  (14.11)  16.07  5.45 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $798  $657  $597  $754  $548 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.07  1.08  1.07  1.07  1.06 
Expenses including reductions  1.01  1.06  1.06  1.07  1.06 
Net investment income  0.67  0.57  0.91  0.59  0.58 
Portfolio turnover (%)  193  66  176  85  70 


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 | Natural Resources Fund  21 

 


Notes to financial statements

Note 1 — Organization

John Hancock Natural Resources Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek long-term capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, and transfer agent fees, state registration fees and printing and postage for each class may differ. Effective September 1, 2014, Class A, Class I and Class R6 shares are closed to all new and existing investors, including automatic purchase plans.

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 intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Foreign securities are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost. 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

22  Natural Resources Fund | Annual report 

 


observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

The following is a summary of the values by input classification of the fund’s investments as of August 31, 2014, by major security category or type:

        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Common Stocks         
Consumer Staples  $1,942,589  $1,942,589  —  — 
Energy  760,488,254  739,989,320  $20,498,934  — 
Materials  160,079,547  142,031,492  18,048,055  — 
Securities Lending         
Collateral  58,161,691  58,161,691  —  — 
Short-Term Investments  21,723,000  —  21,723,000  — 
 
Total Investments in         
Securities  $1,002,395,081  $942,125,092  $60,269,989  — 

 

Repurchase agreements. The fund may enter into repurchase agreements. When the fund enters into a repurchase agreement, it receives collateral that is held in a segregated account by the fund’s custodian. The collateral amount is marked-to-market and monitored on a daily basis to ensure that the collateral held is in an amount not less than the principal amount of the repurchase agreement plus any accrued interest. Collateral received by the fund for repurchase agreements is disclosed in the Fund’s investments as part of the caption related to the repurchase agreement.

Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Annual report | Natural Resources Fund  23 

 


Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Obligations to repay collateral received by the fund is shown on the Statement of assets and liabilities as Payable upon return of securities loaned.

Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.

Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.

Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.

Line of credit. The fund may 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit.

24  Natural Resources Fund | Annual report 

 


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 on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $767. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, as of August 31, 2014, the fund has a long-term capital loss carryforward of $55,211,724 available to offset future net realized capital gains. This carryforward, available as of August 31, 2014, does not expire.

As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $5,909,397  $4,734,290 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $3,592,717 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.

Annual report | Natural Resources Fund  25 

 


Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. 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 MFC.

Management fee. Effective July 18, 2014, 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) 1.000% of the first $500 million of the fund’s average net assets; (b) 0.950% of the fund’s next $500 million; (c) 0.900% of the fund’s next $1 billion; and (d) 0.850% of the fund’s average net assets in excess of $2 billion. Prior to July 18, 2014, the investment management agreement was (a) 1.000% of the first $1 billion of the fund’s aggregate net assets; (b) 0.975% of the fund’s next $1 billion; and (c) 0.950% of the fund’s aggregate net assets in excess of $2 billion. Aggregate net assets include the net assets of the fund and Natural Resources Trust, a series of John Hancock Variable Insurance Trust (JHVIT). The Advisor has a subadvisory agreement, effective July 18, 2014, with Jennison Associates LLC. Prior to July 18, 2014, the subadvisory agreement was with Wellington Management Company, LLP. Effective on March 20, 2014, RS Investment Management Co. LLC. was no longer a subadvisor to this fund. 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 complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. 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.

26  Natural Resources Fund | Annual report 

 


The Advisor has voluntarily agreed to reduce its management fee or other expenses of the fund if certain expenses of the fund exceed 0.20% of average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent fees and service fees, blue sky fees, printing and postage, acquired fund fees and short dividend expense. This expense reduction will continue in effect until terminated by the Advisor, on notice to the fund.

The Advisor has contractually agreed to waive its advisory fees so that the amount retained by the Advisor after payment of subadvisory fees for the fund does not exceed 0.45% of the fund’s average net assets. The current expense limitation agreement expires on December 31, 2014 unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

The Advisor has contractually agreed to waive fees and/or reimburse certain expenses for Class A, Class I and Class R6 shares of the fund. This agreement excludes expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent fees and service fees, blue sky fees, printing and postage, acquired fund fees and short dividend expense. The fee waivers and/or reimbursements were such that these expenses would not exceed 1.58%, 1.38% and 1.28% for Class A, Class I and Class R6 shares, respectively. The fee waivers and/or reimbursements will continue in effect until at least December 31, 2014, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

Effective February 1, 2014, the Advisor has contractually agreed to waive and/or reimburse all class specific expense for Class R6 shares of the fund, including transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. The fee waiver and/or reimbursement will continue in effect until December 31, 2015, unless renewed by mutual agreement of the fund and Advisor based upon a determination of that this is appropriate under the circumstances at the time. This waiver was in effect on a voluntary basis as of January 1, 2014.

Effective March 20, 2014, the Advisor has voluntarily agreed to waiver fund’s management fees by 0.03% of the fund’s average daily net assets. In addition, effective March 20, 2014, the Advisor also voluntarily agreed to limit its advisory fee to 0.99% of the fund’s average daily net assets. Effective July 18, 2014 these voluntarily waivers were terminated.

The expense reductions described above amounted to $19,166, $17,065, $22,106, $71,418 and $405,530 for Class A, Class I, Class R6, Class 1 and Class NAV shares, respectively for the year ended August 31, 2014.

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 0.94% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

Annual report | Natural Resources Fund  27 

 


AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNT RECOVERED 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  DURING THE PERIOD END 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  AUGUST 31, 2014 
$37,916  $31,153  $35,253  $214 

 

  AMOUNT RECOVERED 
CLASS  BY CLASS 
Class R6  $214 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund’s shares.

CLASS  RULE 12b-1 FEE 
Class A  0.30% 
Class 1  0.05% 

 

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $29,505 for the year ended August 31, 2014. Of this amount, $4,910 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $24,004 was paid as sales commissions to broker-dealers and $591 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.

Class A shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, there were no CDSCs received by the Distributor for Class A shares.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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 Classes

28  Natural Resources Fund | Annual report 

 


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.

Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE REGISTRATION  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  FEES  POSTAGE 
Class A  $29,898  $13,371  $20,251  $6,799 
Class I  —  2,515  19,011  1,993 
Class R6  —  21  21,784  325 
Class 1  64,890  —  —  — 
Total  $94,788  $15,907  $61,046  $9,117 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Note 5 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

  Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  315,792  $5,742,818  231,547  $3,886,844 
Distributions reinvested  1,041  17,381  616  10,215 
Repurchased  (251,131)  (4,485,726)  (355,430)  (5,973,483) 
 
Net increase (decrease)  65,702  $1,274,473  (123,267)  ($2,076,424) 
 
Class I shares         
Sold  65,748  $1,195,977  80,878  $1,337,324 
Distributions reinvested  520  8,667  1,812  30,012 
Repurchased  (451,751)  (7,848,914)  (186,559)  (3,127,914) 
 
Net decrease  (385,483)  ($6,644,270)  (103,869)  ($1,760,578) 
 
Class R6 shares         
Sold  2,280  $43,202  742  $12,443 
Distributions reinvested  4  65  —  — 
Repurchased  (6)  (99)  (2)  (40) 
 
Net increase  2,278  $43,168  740  $12,403 
 
Class 1 shares         
Sold  710,316  $13,028,862  289,762  $4,901,059 
Distributions reinvested  48,882  821,221  51,592  860,547 
Repurchased  (1,428,749)  (25,244,026)  (1,916,133)  (32,189,678) 
 
Net increase  (669,551)  ($11,393,943)  (1,574,779)  ($26,428,072) 

 

Annual report | Natural Resources Fund  29 

 


  Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class NAV shares         
Sold  3,897,020  $66,267,957  6,329,366  $103,151,745 
Distributions reinvested  303,637  5,061,626  231,604  3,833,049 
Repurchased  (1,793,592)  (30,877,585)  (3,585,742)  (60,106,162) 
Net increase  2,407,065  $40,451,998  2,975,228  $46,878,632 
 
Total net increase  1,420,011  $23,731,426  1,174,053  $16,625,961 


Affiliates of the fund owned 62% and 100% of shares of beneficial interest of Class R6 and Class NAV, respectively, on August 31, 2014.

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to $1,663,696,151 and $1,640,420,379, respectively, for the years ended August 31, 2014.

Note 7 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 84.5% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATED 
FUND  CONCENTRATION 
John Hancock Lifestyle Balanced Portfolio  24.5% 
John Hancock Lifestyle Growth Portfolio  24.2% 
John Hancock Lifestyle Aggressive Portfolio  10.8% 
John Hancock Lifestyle Moderate Portfolio  5.4% 

 

30  Natural Resources Fund | Annual report 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Natural Resources Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Natural Resources Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

Annual report | Natural Resources Fund  31 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

 

 

 

 

 

 

 

32  Natural Resources Fund | Annual report 

 


Evaluation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Wellington Management Company, LLP (the Subadvisor), for John Hancock Natural Resources Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014. As described in a later section of this report, the Subadvisory Agreement with Wellington Management Company LLP was terminated on July 17, 2014 by the Board simultaneously with the hiring of Jennison Associates LLC as a subadvisor to the fund.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Annual report | Natural Resources Fund  33 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

34  Natural Resources Fund | Annual report 

 


Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index and peer group average for the one-, three- and five-year periods ended December 31, 2013. The Board took into account management’s discussion of the fund’s performance and potential options with respect to the Fund’s investment strategy. The Board concluded that the fund’s performance is being monitored and reasonably addressed.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees for the fund are higher than the peer group median and total expenses for the fund are lower than the peer group median. The Board took into account management’s discussion of the fund’s expenses, noting that the fund is subject to a voluntary fee waiver, which reduces certain expenses of the fund. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fees. The Board also noted that the Advisor pays the subadvisory fees, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/ or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

Annual report | Natural Resources Fund  35 

 


(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fees for the fund are paid by the Advisor and are negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot

36  Natural Resources Fund | Annual report 

 


be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fees for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s respective Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

Annual report | Natural Resources Fund  37 

 


The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement. The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays subadvisory fees to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fees as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the subadvisory fees paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund is being monitored and reasonably addressed;

(3) subadvisory fees are reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

38  Natural Resources Fund | Annual report 

 


Evaluation of Subadvisory Agreement by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the subadvisory agreement with between John Hancock Advisers, LLC (the Advisor) and Jennison Associates LLC (Jennison or the Subadvisor) (Subadvisory Agreement) for John Hancock Natural Resources Fund (the fund). At the June 23–25, 2014 meeting, the Board approved the Subadvisory Agreement and the termination of a subadvisory agreement, dated January 1, 2014, between John Hancock Advisers, LLC and Wellington Management Company, LLP (Wellington) for the fund (Wellington Agreement). Jennison succeeded Wellington as sub-advisor to the fund, effective at the close of business on July 17, 2014. The Subadvisor replaced Wellington as the fund’s subadvisor effective at the close of business on July 17, 2014. The Advisor continue to respectively serve as the fund’s investment advisor.

Approval of Subadvisory Agreement

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), approved the new Subadvisory Agreement between the Advisor and Jennison with respect to the fund.

In considering the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for relevant indices, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services to be provided by the Subadvisor under the Subadvisory Agreement. The Board also took into account discussions with management and information provided to the Board with respect to the services to be provided by the Subadvisor to the fund, including an in-person presentation from the Subadvisor with respect to the fund at the meeting, during which representatives from the Subadvisor responded to questions from the Independent Trustees. The Board took into account its knowledge of the Subadvisor from services that it provides as subadvisor to other funds in the John Hancock Group of Funds.

Throughout the process, the Board asked questions of and requested additional information from management. The Board was assisted by counsel for the Trust and the Independent Trustees were also separately assisted by independent legal counsel throughout the process. The Independent Trustees discussed the Subadvisory Agreement in private sessions with their independent legal counsel at which no representatives of management were present.

In approving the Subadvisory Agreement, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities market and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Jennison Agreement, the Board considered:

(1) information relating to Jennison’s business, including current subadvisory services to other funds in the John Hancock Group of Funds;

(2) the historical performance of the fund under the management of Wellington, which included comparative performance information relating to the fund’s benchmark and comparable funds, and the performance of a comparable mutual fund managed by Jennison;

Annual report | Natural Resources Fund  39 

 


(3) the subadvisory fee for the fund, including any breakpoints and comparative fee information, to the extent applicable; and

(4) information relating to the nature and scope of any material relationships and their significance to Jennison, as applicable.

Nature, extent, and quality of services. With respect to the services to be provided to the fund by Jennison, the Board considered information provided to the Board by Jennison. The Board also took into account information presented during the past year with respect to two other funds within the John Hancock Group of Funds managed by Jennison, including information provided in connection with the Board’s annual evaluation of the advisory and subadvisory agreements with respect to such funds that were considered at the June 23–25, 2014 Board meeting, as well as at an in-person meeting held on May 27–29, 2014. The Board considered Jennison’s current level of staffing and its overall resources. The Board reviewed Jennison’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of Jennison’s investment and compliance personnel who would provide services to the fund. The Board also considered, among other things, Jennison’s compliance program and any disciplinary history. The Board also considered the Jennison’s risk assessment and monitoring process. The Board considered Jennison’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of Jennison and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s Chief Compliance Officer and his staff conduct regular, periodic compliance reviews with Jennison and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of Jennison and procedures reasonably designed by it to assure compliance with the federal securities laws. The Board also took into account the financial condition of Jennison.

The Board considered Jennison’s investment process and philosophy. The Board took into account that Jennison’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also considered Jennison’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by Jennison and the profitability to Jennison of its relationship with the fund, the Board noted that the fees under the Jennison Agreement are paid by the Advisor and not the fund. The Board also noted that, based on current assets of the fund, there will be no increase in the advisory fees paid by the fund as a consequence of the execution of the Jennison Agreement. The Board also noted that the subadvisory fees rates would be lower under the Jennison Agreement at higher asset levels and that the Advisor agreed to waive its advisory fees, until December 31, 2014, to the extent necessary to prevent any increase in the amount of the advisory fee that it retains after paying subadvisory fees to Jennison, resulting in a lower effective advisory fee rate.

The Board also relied on the ability of the Advisor to negotiate the Jennison Agreement with Jennison, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by Jennison from its relationship with the Trust were not a material factor in the Board’s consideration of the Jennison Agreement.

40  Natural Resources Fund | Annual report 

 


The Board also considered information regarding the nature and scope (including their significance to the Advisor and its affiliates and to Jennison) of any material relationships with respect to Jennison, which includes arrangements, if any, in which Jennison or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate account, and exempt group annuity contracts sold to qualified plans, if any. The Board also considered information and took into account any other potential conflicts of interest the Advisor might have in connection with the Jennison Agreement.

In addition, the Board considered other potential indirect benefits that Jennison and its affiliates may receive from Jennison’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fees. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to Jennison. The Board considered that the sub-advisory fee rates under the Jennison Agreement are the same at certain lower assets levels and lower at higher asset levels. The Board also considered that the effective subadvisory fee to be paid to Jennison for managing the fund at the fund’s current level of assets would be lower than the fee previously paid to Wellington. The Board also considered information regarding the fee Jennison receives for providing comparable services to comparable clients, if applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and benchmark under the management of Wellington and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style, and risk-adjusted performance of Jennison. The Board also noted Jennison’s long-term performance for a similar mutual fund and other accounts.

The Board’s decision to approve the Jennison Agreement was based on a number of determinations, including the following:

(1) Jennison has extensive experience and demonstrated skills as a manager and may be expected to provide a high quality of investment management services to the fund;

(2) A comparable mutual fund managed by Jennison outperformed the fund for the 1-, 3-, and 5-year periods ended March 31, 2014, outperformed the fund’s Morningstar peer group over the 1-, 5-, and 10-year periods ended March 31, 2014, and outperformed the fund’s benchmark index for the 1-, 5-, and 10-year periods ended March 31, 2014;

(3) Jennison has a long and proven track record with respect to managing a mutual fund with an investment objective and strategies similar to those of the fund;

(4) The subadvisory fees for the fund are: (i) competitive and within industry norms; and (ii) paid by the Advisor not the fund, and are a product of arms-length negotiation between the Advisor and Jennison. In addition, approval of the Jennison Agreement will not result in any increase in the advisory fees for the fund;

(5) The subadvisory fees rates under the Jennison Agreement are: (i) competitive and within industry norms; and (ii) lower than the rates under the Wellington Subadvisory Agreement at higher asset levels;

(6) The Advisor agrees to waive its advisory fees, until December 31, 2014, to the extent necessary to prevent the any increase in the amount of the advisory fee that it retains after paying subadvisory fees to Jennison, which could result in a lower effective advisory fee rate;

Annual report | Natural Resources Fund  41 

 


(7) The subadvisory fees are reasonable in relation to the level and quality of services being provided; and

(8) The subadvisory fee rates under the Jennison Agreement contain breakpoints, and in turn the advisory fee for the fund also has breakpoints, in order to permit shareholders of the fund to benefit from economies of scale.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that approval of the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Subadvisory Agreement.

42  Natural Resources Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees

Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Natural Resources Fund  43 

 


Independent Trustees (continued)

Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

44  Natural Resources Fund | Annual report 

 


Independent Trustees (continued)

Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     

 

Non-Independent Trustees4

Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     

 

Principal officers who are not Trustees

Name, year of birth  Officer 
Position(s) held with fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
Andrew G. Arnott, Born: 1971  2009 
President   
Senior Vice President, John Hancock Financial Services (since 2009); 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   
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Natural Resources Fund  45 

 


Principal officers who are not Trustees (continued)

Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
 
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).   
 
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   


The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

46  Natural Resources Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  Jennison Associates LLC 
Peter S. Burgess*  
William H. Cunningham Principal distributor 
Grace K. Fey John Hancock Funds, LLC 
Theron S. Hoffman*  
Deborah C. Jackson Custodian 
Hassell H. McClellan State Street Bank and Trust Company 
Gregory A. Russo  
Warren A. Thomson† Transfer agent 
  John Hancock Signature Services, Inc. 
Officers  
Andrew G. Arnott Legal counsel 
President K&L Gates LLP 
   
John J. Danello Independent registered 
Senior Vice President, Secretary, public accounting firm 
and Chief Legal Officer PricewaterhouseCoopers LLP 
   
Francis V. Knox, Jr.   
Chief Compliance Officer   
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Natural Resources Fund  47 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com

 

 
 

 
This report is for the information of the shareholders of John Hancock Natural Resources Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  354A 8/14 
MF198771  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

                  SEC 30-day  SEC 30-day 
  Average annual total returns (%)  Cumulative total returns (%)  yield (%)  yield (%) 
  with maximum sales charge    with maximum sales charge  subsidized  unsubsidized1 
  1-year  5-year  10-year  Since inception2  1-year  5-year  10-year  Since inception2  as of 8-31-14  as of 8-31-14 
Class A3  2.75  7.55  —  6.51  2.75  43.92  —  69.28  2.85  2.85 
Class C3  5.28  7.63  —  5.96  5.28  44.41  —  62.09  2.27  2.27 
Class I3,4  7.40  8.83  —  7.61  7.40  52.69  —  84.32  3.37  3.34 
Class R23,4  6.97  8.60  —  7.41  6.97  51.06  —  81.50  2.94  2.94 
Class R63,4  7.39  8.88  —  7.65  7.39  53.00  —  85.01  3.29  0.87 
Class NAV4  7.44  8.95  —  7.70  7.44  53.48  —  85.65  3.51  3.49 
Index†  5.66  4.48  —  5.34  5.66  24.50  —  54.25  —  — 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charges on Class A shares of 4.0%, and the applicable contingent deferred sales charge (CDSC) on Class C shares. The returns for Class A shares have been adjusted to reflect the reduction in the maximum sales charge from 4.5% to 4.0%, effective 2-3-14. Class C shares sold within one year of purchase are subject to a 1% CDSC. Sales charges are not applicable to Class I, Class R2, Class R6, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A  Class C  Class I  Class R2  Class R6  Class NAV 
Gross (%)  1.19  1.90  0.88  2.56  6.46  0.72 
Net (%)  1.16  1.86  0.86  1.21  0.70  0.70 

 

Please refer to the most recent prospectus and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, 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 Barclays U.S. Aggregate Bond Index.

See the following page for footnotes.

6  Strategic Income Opportunities Fund | Annual report 

 



    With maximum  Without   
  Start date  sales charge  sales charge  Index 
Class C3,5  4-28-06  $16,209  $16,209  $15,425 
Class I3,4  4-28-06  18,432  18,432  15,425 
Class R23,4  4-28-06  18,150  18,150  15,425 
Class R63,4  4-28-06  18,501  18,501  15,425 
Class NAV4  4-28-06  18,565  18,565  15,425 

 

The values shown in the chart for Class A with maximum sales charge have been adjusted to reflect the reduction in the Class A maximum sales charge from 4.5% to 4.0%, which became effective on 2-3-14.

Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and non-convertible investment-grade debt issue.

It is not possible to invest directly in an index. Index figures do not reflect expenses, sales charges, or foreign currency impact, which would have resulted in different values if they did.

Footnotes related to performance pages

1 Unsubsidized yield reflects what the yield would have been without the effect of reimbursements and waivers.

2 From 4-28-06.

3 Class A, Class C, and Class I shares were first offered on 1-4-10; Class R6 shares were first offered on 9-1-11; Class R2 shares were first offered on 3-1-12. The returns prior to these dates are those of Class NAV shares that have been recalculated to apply the gross fees and expenses of Class A, Class C, Class I, Class R6, and Class R2 shares, as applicable.

4 For certain types of investors, as described in the fund’s prospectuses.

5 The contingent deferred sales charge is not applicable.

Annual report | Strategic Income Opportunities Fund  7 

 


Management’s discussion of

Fund performance

John Hancock Asset Management a division of Manulife Asset Management (US) LLC

The past 12 months marked a period of uneven economic growth on the global stage, although a wide range of asset classes notched solid gains. In the United States, the U.S. Federal Reserve finally began the much-anticipated tapering of its bond-buying program (known as quantitative easing) in January, and is slated to end the program altogether in October.

Economic growth was disappointing in the first quarter of 2014 amid a bitterly cold winter, but growth snapped back in the second quarter. Against this backdrop, interest rates (as measured by the yield on 10-year U.S. Treasuries) steadily declined, dropping from more than 3.0% in December 2013 to dip below the 2.4% mark in August 2014.

John Hancock Strategic Income Opportunities Fund’s Class A shares generated a total return of 7.03%, excluding sales charges. By comparison, the fund’s benchmark, the Barclays U.S. Aggregate Bond Index, returned 5.66%.

The biggest contributor to the fund’s performance versus the benchmark index was its allocation to high-yield corporate debt. The story in this segment of the bond market has been the same for some time: Corporations continue to hold very strong balance sheets, and the fundamentals in the asset class are as strong as they’ve been in years. Defaults continue to be well below their long-term historical averages.

On the other hand, the biggest detractor during the period was the fund’s underweight in duration, a measure of interest-rate sensitivity. The fund’s duration has been shorter than that of the benchmark throughout the fiscal year, and as rates generally fell, it benefited the index more than the fund.

This commentary reflects the views of the portfolio managers through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Strategic Income Opportunities Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,017.00  $5.90  1.16% 
Class C  1,000.00  1,013.40  9.44  1.86% 
Class I  1,000.00  1,018.80  4.07  0.80% 
Class R2  1,000.00  1,015.70  6.15  1.21% 
Class R6  1,000.00  1,018.70  4.22  0.83% 
Class NAV  1,000.00  1,018.50  3.41  0.67% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 


 
Annual report | Strategic Income Opportunities Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,019.40  $5.90  1.16% 
Class C  1,000.00  1,015.80  9.45  1.86% 
Class I  1,000.00  1,021.20  4.08  0.80% 
Class R2  1,000.00  1,019.10  6.16  1.21% 
Class R6  1,000.00  1,021.00  4.23  0.83% 
Class NAV  1,000.00  1,021.80  3.41  0.67% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  Strategic Income Opportunities Fund | Annual report 

 


Portfolio summary

Portfolio Composition1,2       
Corporate Bonds  39.9%  Capital Preferred Securities  1.6% 
Foreign Government Obligations  22.6%  Convertible Bonds  1.3% 
Term Loans  13.1%  Asset Backed Securities  1.0% 
Preferred Securities  8.2%  U.S. Government Agency Collateralized   
 Mortgage Obligations  0.5% 
Collateralized Mortgage Obligations  4.6% 
Purchased Options  0.1% 
Common Stocks  2.7% 
Short-Term Investments & Other  4.4% 
   
Quality Composition1,2,3       
U.S. Government Agency Collateralized    BB  18.4% 
Mortgage Obligations  0.5% 
B  20.9% 
AAA  13.8% 
CCC & Below  1.7% 
AA  5.8% 
Not Rated  1.5% 
A  6.6% 
Equities  11.0% 
BBB  15.4% 
Short-Term Investments & Other  4.4% 
 
Top 10 Countries1,2,4       
United States  67.3%  Philippines  2.1% 
Australia  4.3%  Malaysia  2.0% 
New Zealand  3.1%  Thailand  2.0% 
Singapore  2.5%  Canada  1.9% 
South Korea  2.2%  Luxembourg  1.6% 

 

See the following page for footnotes.

 

Annual report | Strategic Income Opportunities Fund  11 

 


Net Currency Exposure1,5       
United States Dollar  105.5%  Brazilian Real  1.7% 
New Zealand Dollar  5.0%  Mexican Peso  1.3% 
Pound Sterling  4.6%  Other Currencies  0.3% 
Korean Won  2.2%  Euro  –1.1% 
Malaysian Ringgit  2.0%  Singapore Dollar  –3.1% 
Thailand Baht  2.0%  Australian Dollar  –5.5% 
Philippine Peso  1.9%  Canadian Dollar  –16.8% 

 

1 As a percentage of net assets on 8-31-14.

2 Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if a creditor is unable or unwilling to make principal or interest payments. Illiquid securities may be difficult to sell at a price approximating their value. Investments in higher-yielding, lower-rated securities include a higher risk of default. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Currency transactions are affected by fluctuations in exchange rates. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

3 Ratings are from Moody’s Investors Service, Inc. If not available, we have used Standard & Poor’s Ratings Services. In the absence of ratings from these agencies, we have used Fitch Ratings, Inc. “Not Rated” securities are those with no ratings available from these agencies. All ratings are as of 8-31-14 and do not reflect subsequent downgrades or upgrades, if any.

4 Cash and cash equivalents are not included.

5 Net currency exposure, after taking into account the effects of forward contracts.

12  Strategic Income Opportunities Fund | Annual report 

 


Fund’s investments

As of 8-31-14

    Maturity     
  Rate (%)  date  Par value^  Value 
Corporate Bonds 39.9%      $1,840,492,679 
(Cost $1,765,967,185)         
 
Consumer Discretionary 7.2%      332,590,693 
 
Auto Components 0.8%         
American Axle & Manufacturing, Inc.  6.625  10-15-22  11,250,000  12,093,727 
The Goodyear Tire & Rubber Company  7.000  05-15-22  18,125,000  19,756,250 
The Goodyear Tire & Rubber Company  8.750  08-15-20  1,905,000  2,266,950 
 
Automobiles 0.6%         
Chrysler Group LLC  8.250  06-15-21  1,805,000  2,017,088 
Ford Motor Company  4.750  01-15-43  10,520,000  11,021,920 
Ford Motor Company  6.625  10-01-28  6,849,000  8,514,738 
General Motors Financial Company, Inc.  3.250  05-15-18  4,915,000  4,951,863 
 
Distributors 0.2%         
Ferrellgas LP  6.750  01-15-22  9,913,000  10,259,955 
 
Hotels, Restaurants & Leisure 0.2%         
Arcos Dorados Holdings, Inc. (S)  10.250  07-13-16  BRL 15,553,000  6,541,501 
MGM Resorts International  8.625  02-01-19  3,310,000  3,897,525 
 
Household Durables 0.1%         
Standard Pacific Corp.  8.375  05-15-18  2,020,000  2,343,200 
Standard Pacific Corp.  8.375  01-15-21  1,385,000  1,627,375 
 
Internet & Catalog Retail 0.5%         
QVC, Inc. (S)  4.450  02-15-25  14,075,000  14,088,779 
QVC, Inc.  5.950  03-15-43  9,460,000  10,181,013 
 
Media 3.9%         
Cablevision Systems Corp.  8.000  04-15-20  9,565,000  10,904,100 
Cablevision Systems Corp.  8.625  09-15-17  3,325,000  3,790,500 
CBS Corp.  3.700  08-15-24  14,025,000  14,158,616 
CBS Outdoor Americas Capital LLC (S)  5.625  02-15-24  10,270,000  10,578,100 
CCO Holdings LLC  5.750  01-15-24  14,027,000  14,342,608 
CCO Holdings LLC  7.000  01-15-19  12,715,000  13,334,221 
Cinemark USA, Inc.  4.875  06-01-23  11,565,000  11,478,263 
Cinemark USA, Inc.  5.125  12-15-22  6,470,000  6,575,138 
Cinemark USA, Inc.  7.375  06-15-21  3,234,000  3,516,975 
DISH DBS Corp.  5.000  03-15-23  9,330,000  9,283,350 
DISH DBS Corp.  7.875  09-01-19  19,105,000  22,161,800 
Lamar Media Corp.  5.000  05-01-23  5,335,000  5,321,663 
Numericable Group SA (S)  6.250  05-15-24  10,360,000  10,683,750 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  13 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Media (continued)         
Sirius XM Radio, Inc. (S)  4.625  05-15-23  8,870,000  $8,559,550 
Sirius XM Radio, Inc. (S)  5.250  08-15-22  11,470,000  12,215,550 
Sirius XM Radio, Inc. (S)  5.875  10-01-20  10,945,000  11,437,525 
Univision Communications, Inc. (S)  6.750  09-15-22  9,112,000  10,000,420 
Videotron, Ltd.  7.125  01-15-20  CAD 290,000  282,052 
Virgin Media Secured Finance PLC  5.250  01-15-21  1,260,000  1,313,550 
 
Multiline Retail 0.1%         
Macy’s Retail Holdings, Inc.  7.875  08-15-36  4,529,000  5,017,530 
 
Specialty Retail 0.8%         
L Brands, Inc.  5.625  10-15-23  13,940,000  15,020,350 
New Look Bondco I PLC (S)  8.750  05-14-18  GBP 4,430,000  7,795,735 
The Men’s Wearhouse, Inc. (S)  7.000  07-01-22  14,035,000  14,701,663 
 
Textiles, Apparel & Luxury Goods 0.0%         
PVH Corp.  4.500  12-15-22  560,000  555,800 
 
Consumer Staples 2.8%      130,912,444 
 
Beverages 0.4%         
Anheuser-Busch InBev Worldwide, Inc.  9.750  11-17-15  BRL 7,468,000  3,337,831 
Constellation Brands, Inc.  3.750  05-01-21  300,000  300,375 
Cott Beverages, Inc. (S)  5.375  07-01-22  13,915,000  13,845,425 
 
Food & Staples Retailing 0.1%         
Aramark Services, Inc.  5.750  03-15-20  2,355,000  2,466,863 
Smithfield Foods, Inc. (S)  5.875  08-01-21  4,215,000  4,510,050 
 
Food Products 1.5%         
B&G Foods, Inc.  4.625  06-01-21  15,485,000  15,252,725 
HJ Heinz Company  4.250  10-15-20  14,475,000  14,674,031 
JBS Investments GmbH (S)  7.750  10-28-20  3,520,000  3,801,600 
Post Holdings, Inc. (S)  6.000  12-15-22  5,825,000  5,737,625 
Post Holdings, Inc. (S)  6.750  12-01-21  14,755,000  15,031,656 
TreeHouse Foods, Inc.  4.875  03-15-22  12,830,000  13,070,563 
 
Household Products 0.4%         
Harbinger Group, Inc.  7.875  07-15-19  17,220,000  18,683,700 
 
Tobacco 0.4%         
Alliance One International, Inc.  9.875  07-15-21  20,200,000  20,200,000 
 
Energy 4.4%      204,757,289 
 
Energy Equipment & Services 0.2%         
Calfrac Holdings LP (S)  7.500  12-01-20  3,830,000  4,069,375 
Inkia Energy, Ltd. (S)  8.375  04-04-21  6,790,000  7,401,100 
 
Gas Utilities 0.2%         
DCP Midstream LLC (5.850% to 5-21-23, then         
3 month LIBOR + 3.850%) (S)  5.850  05-21-43  8,870,000  8,603,900 
 
Oil, Gas & Consumable Fuels 4.0%         
Arch Coal, Inc.  7.000  06-15-19  2,640,000  1,881,000 
Arch Coal, Inc.  7.250  06-15-21  9,120,000  6,042,000 
Baytex Energy Corp. (S)  5.625  06-01-24  11,085,000  11,085,000 
Bill Barrett Corp.  7.000  10-15-22  7,555,000  7,781,650 
Ecopetrol SA  4.250  09-18-18  1,535,000  1,646,288 

 

14  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Oil, Gas & Consumable Fuels (continued)         
Ecopetrol SA  5.875  09-18-23  4,480,000  $5,129,600 
EP Energy LLC  7.750  09-01-22  6,040,000  6,779,900 
EP Energy LLC  9.375  05-01-20  31,228,000  35,209,570 
MarkWest Energy Partners LP  6.500  08-15-21  2,165,000  2,305,725 
MEG Energy Corp. (S)  6.375  01-30-23  10,235,000  10,849,100 
Petrobras Global Finance BV  4.375  05-20-23  16,465,000  16,245,686 
Petrobras International Finance Company  5.375  01-27-21  3,940,000  4,153,942 
Petroleos Mexicanos  6.000  03-05-20  2,120,000  2,432,700 
Petroleos Mexicanos (S)  7.650  11-24-21  MXN 132,977,000  11,004,029 
Sabine Pass Liquefaction LLC  5.625  02-01-21  2,405,000  2,537,275 
Sabine Pass Liquefaction LLC  5.625  04-15-23  11,600,000  12,064,000 
Samson Investment Company  9.750  02-15-20  7,700,000  7,854,000 
Sanchez Energy Corp. (S)  6.125  01-15-23  10,385,000  10,748,475 
SandRidge Energy, Inc.  7.500  02-15-23  7,115,000  7,399,600 
SM Energy Company  5.000  01-15-24  8,890,000  8,978,900 
The Williams Companies, Inc.  4.550  06-24-24  12,465,000  12,554,474 
 
Financials 12.8%      592,846,063 
 
Banks 4.8%         
ANZ National International, Ltd.  2.950  07-27-15  SGD 2,750,000  2,240,845 
Asian Development Bank  3.250  07-20-17  NZD 11,400,000  9,255,975 
Bancolombia SA  5.950  06-03-21  4,695,000  5,232,578 
Bank of America Corp. (P)  0.991  09-15-26  26,395,000  23,235,360 
Bank of America Corp. (8.000% to 1-30-18,         
then 3 month LIBOR + 3.630%) (Q)  8.000  01-30-18  6,620,000  7,315,100 
Citigroup, Inc.  6.250  06-29-17  NZD 8,565,000  7,405,898 
Citigroup, Inc. (5.900% to 2-15-23, then         
3 month LIBOR + 4.230%) (Q)  5.900  02-15-23  12,670,000  12,709,657 
Citigroup, Inc. (5.950% to 1-30-23, then         
3 month LIBOR + 4.069%) (Q)  5.950  01-30-23  12,410,000  12,518,588 
Eagle Bancorp, Inc.  5.750  09-01-24  4,460,000  4,538,050 
Fifth Third Bancorp (5.100% to 6-30-23, then         
3 month LIBOR + 3.033%) (Q)  5.100  06-30-23  14,730,000  14,030,325 
First Niagara Financial Group, Inc.  7.250  12-15-21  14,175,000  16,368,142 
Independent Bank Group, Inc.  5.875  08-01-24  6,165,000  6,257,475 
International Finance Corp.  3.875  02-26-18  NZD 12,705,000  10,438,857 
International Finance Corp.  10.000  06-12-17  BRL 15,285,000  6,832,330 
JPMorgan Chase & Company  4.250  11-02-18  NZD 13,905,000  11,274,431 
National Australia Bank, Ltd.  6.000  02-15-17  AUD 14,740,000  14,655,213 
Oversea-Chinese Banking Corp., Ltd. (4.000%         
to 10-15-19, then 5 year U.S. Swap Rate +         
2.203%) (S)  4.000  10-15-24  9,920,000  10,111,317 
Regions Bank  6.450  06-26-37  1,250,000  1,490,264 
Regions Financial Corp.  7.375  12-10-37  3,970,000  5,100,394 
Synovus Financial Corp.  5.125  06-15-17  10,985,000  11,259,625 
Synovus Financial Corp.  7.875  02-15-19  5,005,000  5,655,650 
The PNC Financial Services Group, Inc. (P)(Q)  4.454  10-14-14  4,140,000  4,143,105 
Westpac Banking Corp.  5.000  10-21-19  GBP 3,115,000  5,801,656 
Westpac Banking Corp.  7.250  02-11-20  AUD 5,300,000  5,739,421 
Zions Bancorporation (5.800% to 6-15-23,         
then 3 month LIBOR + 3.800%) (Q)  5.800  06-15-23  8,290,000  7,952,597 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  15 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Capital Markets 0.6%         
Hongkong Land Treasury Services (Singapore)         
Pte, Ltd.  3.860  12-29-17  SGD 2,500,000  $2,088,990 
Stifel Financial Corp.  4.250  07-18-24  22,280,000  22,669,477 
Temasek Financial I, Ltd.  3.265  02-19-20  SGD 5,250,000  4,440,999 
 
Consumer Finance 0.4%         
Credit Acceptance Corp. (S)  6.125  02-15-21  7,165,000  7,379,950 
Trust F/1401 (S)  5.250  12-15-24  10,470,000  11,098,200 
 
Diversified Financial Services 4.6%         
European Investment Bank  4.250  02-04-15  NOK 70,100,000  11,427,998 
European Investment Bank (S)  6.000  01-25-16  BRL 12,000,000  5,100,737 
European Investment Bank  6.500  09-10-14  NZD 3,920,000  3,280,464 
General Electric Capital Australia Funding         
Pty, Ltd.  5.750  02-17-17  AUD 1,235,000  1,219,509 
General Electric Capital Australia Funding         
Pty, Ltd.  7.000  10-08-15  AUD 5,660,000  5,511,020 
General Electric Capital Corp.  4.250  01-17-18  NZD 5,515,000  4,551,626 
General Electric Capital Corp.  4.875  04-05-16  SEK 41,000,000  6,236,611 
General Electric Capital Corp.  6.250  09-29-20  GBP 2,300,000  4,560,312 
General Electric Capital Corp. (7.125% until         
6-15-22, then 3 month LIBOR + 5.296%) (Q)  7.125  06-15-22  12,650,000  14,911,188 
General Electric Capital Corp., Series A  7.625  12-10-14  NZD 14,055,000  11,866,682 
Inter-American Development Bank  3.750  10-09-18  AUD 8,825,000  8,409,746 
Inter-American Development Bank  6.500  08-20-19  AUD 12,200,000  13,018,593 
International Bank for Reconstruction         
& Development  1.375  06-23-19  SEK 75,040,000  10,978,059 
International Bank for Reconstruction         
& Development  2.125  05-29-17  NOK 31,200,000  5,076,348 
International Bank for Reconstruction         
& Development  3.375  08-13-17  NZD 5,170,000  4,207,452 
International Bank for Reconstruction         
& Development  3.750  01-23-19  AUD 8,355,000  7,955,986 
International Bank for Reconstruction         
& Development  4.500  08-16-16  NZD 16,555,000  13,938,736 
International Bank for Reconstruction         
& Development  4.625  02-26-19  NZD 12,465,000  10,461,963 
International Bank for Reconstruction         
& Development  5.375  12-15-14  NZD 7,930,000  6,660,189 
KFW  4.000  12-15-14  NOK 39,250,000  6,372,686 
KFW  5.750  05-13-15  AUD 15,350,000  14,638,684 
KFW  6.000  01-19-16  AUD 10,200,000  9,942,828 
KFW  6.000  08-20-20  AUD 18,700,000  19,768,343 
Nationstar Mortgage LLC  7.875  10-01-20  1,920,000  1,977,600 
Nationstar Mortgage LLC  9.625  05-01-19  8,127,000  9,000,653 
 
Insurance 1.1%         
American International Group, Inc. (8.175% to         
5-15-38, then 3 month LIBOR + 4.195%)  8.175  05-15-58  29,455,000  40,574,263 
MetLife, Inc.  6.400  12-15-36  5,295,000  5,970,113 
Prudential Financial, Inc. (5.875% to 9-1-22,         
then 3 month LIBOR + 4.175%)  5.875  09-15-42  5,630,000  6,034,797 

 

16  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Real Estate Investment Trusts 0.6%         
American Tower Corp.  4.700  03-15-22  3,195,000  $3,426,494 
American Tower Corp.  7.000  10-15-17  5,072,000  5,843,862 
Corrections Corp. of America  4.125  04-01-20  7,610,000  7,543,413 
Crown Castle Towers LLC (S)  4.883  08-15-20  5,791,000  6,446,188 
Host Hotels & Resorts LP  5.250  03-15-22  4,975,000  5,532,787 
 
Real Estate Management & Development 0.7%       
CapitaMalls Asia Treasury, Ltd.  3.950  08-24-17  SGD 7,750,000  6,533,739 
Realogy Group LLC (S)  7.875  02-15-19  20,240,000  21,454,400 
Yanlord Land Group, Ltd. (S)  10.625  03-29-18  2,940,000  3,171,525 
 
Health Care 4.4%      201,534,779 
 
Health Care Providers & Services 2.8%         
Community Health Systems, Inc. (S)  6.875  02-01-22  12,880,000  13,685,000 
Community Health Systems, Inc.  7.125  07-15-20  2,170,000  2,349,025 
Community Health Systems, Inc.  8.000  11-15-19  7,040,000  7,656,000 
HCA Holdings, Inc.  6.250  02-15-21  15,513,000  16,870,388 
HCA, Inc.  5.000  03-15-24  14,450,000  14,720,938 
HCA, Inc.  7.500  02-15-22  13,685,000  15,943,025 
HCA, Inc.  8.000  10-01-18  1,600,000  1,872,000 
LifePoint Hospitals, Inc. (S)  5.500  12-01-21  32,455,000  33,915,475 
Tenet Healthcare Corp.  4.375  10-01-21  17,886,000  17,751,855 
WellCare Health Plans, Inc.  5.750  11-15-20  5,171,000  5,358,449 
 
Pharmaceuticals 1.6%         
Endo Finance LLC (S)  5.750  01-15-22  6,925,000  7,046,188 
Endo Finance LLC (S)  7.250  01-15-22  6,715,000  7,277,381 
Forest Laboratories, Inc. (S)  4.875  02-15-21  15,790,000  17,364,974 
Forest Laboratories, Inc. (S)  5.000  12-15-21  16,600,000  18,307,393 
Grifols Worldwide Operations, Ltd. (S)  5.250  04-01-22  13,265,000  13,629,788 
Valeant Pharmaceuticals International, Inc. (S)  7.000  10-01-20  240,000  255,000 
Valeant Pharmaceuticals International, Inc. (S)  7.500  07-15-21  6,910,000  7,531,900 
 
Industrials 1.6%      72,337,025 
 
Airlines 0.5%         
Air Canada (S)  6.750  10-01-19  2,830,000  3,049,325 
Delta Air Lines 2002-1 Class G-1 Pass         
Through Trust  6.718  01-02-23  1,295,992  1,522,791 
Delta Air Lines 2007-1 Class A Pass         
Through Trust  6.821  08-10-22  1,965,753  2,307,401 
TAM Capital 3, Inc. (S)  8.375  06-03-21  5,875,000  6,400,989 
TAM Capital, Inc.  7.375  04-25-17  1,690,000  1,817,595 
US Airways 2012-1 Class A Pass Through Trust  5.900  10-01-24  1,891,282  2,137,148 
US Airways 2012-1 Class B Pass Through Trust  8.000  10-01-19  6,013,800  6,825,663 
 
Commercial Services & Supplies 0.3%         
Iron Mountain, Inc.  5.750  08-15-24  11,400,000  11,713,500 
 
Industrial Conglomerates 0.3%         
Odebrecht Finance, Ltd. (S)  7.125  06-26-42  4,480,000  4,939,200 
Odebrecht Finance, Ltd. (Q)(S)  7.500  09-14-15  8,405,000  8,636,138 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  17 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Marine 0.5%         
Navios Maritime Holdings, Inc. (S)  7.375  01-15-22  19,460,000  $20,141,100 
Navios Maritime Holdings, Inc.  8.125  02-15-19  2,740,000  2,846,175 
 
Information Technology 0.6%      24,884,346 
 
IT Services 0.2%         
IBM Corp.  2.750  12-21-20  GBP 5,515,000  9,309,821 
 
Semiconductors & Semiconductor Equipment 0.3%       
Micron Technology, Inc. (S)  5.875  02-15-22  11,420,000  12,233,675 
 
Software 0.1%         
First Data Corp. (S)  8.875  08-15-20  3,065,000  3,340,850 
 
Materials 2.4%      109,171,657 
 
Construction Materials 0.4%         
Cemex Finance LLC (S)  9.375  10-12-22  9,510,000  11,221,800 
Votorantim Cimentos SA (S)  7.250  04-05-41  7,010,000  7,539,956 
 
Containers & Packaging 1.3%         
Ball Corp.  4.000  11-15-23  14,085,000  13,486,388 
Ball Corp.  6.750  09-15-20  12,765,000  13,435,163 
Crown Americas LLC  4.500  01-15-23  11,250,000  11,039,063 
Owens-Brockway Glass Container, Inc.  7.375  05-15-16  4,700,000  5,099,500 
Sealed Air Corp. (S)  6.500  12-01-20  13,250,000  14,575,000 
 
Metals & Mining 0.7%         
ArcelorMittal  7.250  03-01-41  9,390,000  9,941,663 
FMG Resources August 2006 Pty, Ltd. (S)  6.875  04-01-22  13,165,000  14,341,622 
Rio Tinto Finance USA, Ltd.  7.125  07-15-28  2,595,000  3,443,827 
Rio Tinto Finance USA, Ltd.  9.000  05-01-19  1,540,000  2,004,093 
Vale Overseas, Ltd.  4.625  09-15-20  2,805,000  3,043,582 
 
Telecommunication Services 1.5%      68,932,084 
 
Diversified Telecommunication Services 1.2%       
Frontier Communications Corp.  7.125  03-15-19  1,045,000  1,159,950 
Frontier Communications Corp.  7.125  01-15-23  10,420,000  10,993,100 
Frontier Communications Corp.  9.250  07-01-21  1,815,000  2,150,775 
GTP Acquisition Partners I LLC (S)  7.628  06-15-16  3,215,000  3,402,399 
T-Mobile USA, Inc.  6.125  01-15-22  16,135,000  16,719,894 
T-Mobile USA, Inc.  6.250  04-01-21  5,882,000  6,102,575 
T-Mobile USA, Inc.  6.625  04-01-23  3,450,000  3,631,125 
T-Mobile USA, Inc.  6.836  04-28-23  3,940,000  4,181,325 
Verizon Communications, Inc. (P)  1.981  09-14-18  4,995,000  5,257,053 
 
Wireless Telecommunication Services 0.3%         
SBA Telecommunications, Inc.  5.750  07-15-20  3,495,000  3,687,225 
SBA Tower Trust (S)  5.101  04-17-17  4,191,000  4,452,938 
SoftBank Corp. (S)  4.500  04-15-20  7,070,000  7,193,725 
 
Utilities 2.2%      102,526,299 
 
Electric Utilities 0.6%         
Abengoa Transmision Sur SA (S)  6.875  04-30-43  5,330,000  5,863,000 
NRG Yield Operating LLC (S)  5.375  08-15-24  6,000,000  6,210,000 
RJS Power Holdings LLC (S)  5.125  07-15-19  15,600,000  15,795,000 

 

18  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Gas Utilities 0.0%         
Southern Gas Networks PLC  4.875  12-21-20  GBP 805,000  $1,481,712 
 
Independent Power and Renewable Electricity Producers 1.3%     
Calpine Corp.  5.750  01-15-25  16,730,000  16,897,300 
Calpine Corp. (S)  5.875  01-15-24  1,541,000  1,648,870 
Calpine Corp. (S)  6.000  01-15-22  12,281,000  13,232,778 
Dynegy, Inc.  5.875  06-01-23  10,100,000  9,822,250 
NRG Energy, Inc. (S)  6.250  05-01-24  7,690,000  7,939,925 
NRG Energy, Inc.  6.625  03-15-23  10,250,000  10,865,000 
 
Multi-Utilities 0.3%         
NiSource Finance Corp.  4.800  02-15-44  3,930,000  4,019,938 
NiSource Finance Corp.  5.650  02-01-45  7,565,000  8,750,526 
 
Foreign Government Obligations 22.6%    $1,043,020,688 
(Cost $1,049,606,990)         
 
Australia 3.1%      141,580,050 
 
New South Wales Treasury Corp.  6.000  05-01-20  AUD 37,015,000  39,510,171 
Queensland Treasury Corp. (S)  4.000  06-21-19  AUD 21,695,000  21,013,729 
Queensland Treasury Corp.  5.500  06-21-21  AUD 10,410,000  10,924,491 
Queensland Treasury Corp.  6.000  10-21-15  AUD 27,105,000  26,265,361 
Queensland Treasury Corp.  6.000  04-21-16  AUD 44,608,000  43,866,298 
 
Bermuda 0.3%      14,553,300 
 
Government of Bermuda (S)  4.854  02-06-24  13,960,000  14,553,300 
 
Brazil 1.1%      49,157,652 
 
Federative Republic of Brazil  10.000  01-01-21  BRL 38,265,000  16,480,326 
Federative Republic of Brazil  10.000  01-01-23  BRL 28,750,000  12,269,629 
Federative Republic of Brazil  10.250  01-10-28  BRL 24,952,000  11,731,954 
Federative Republic of Brazil  12.500  01-05-16  BRL 18,540,000  8,675,743 
 
Canada 0.7%      30,050,345 
 
Export Development Canada  3.250  08-08-17  AUD 6,135,000  5,774,081 
Government of Canada  1.250  03-01-18  CAD 2,905,000  2,669,645 
Province of Ontario  6.250  06-16-15  NZD 12,870,000  10,945,306 
Province of Ontario  6.250  09-29-20  AUD 5,965,000  6,307,762 
Province of Quebec  6.750  11-09-15  NZD 5,060,000  4,353,551 
 
Malaysia 2.0%      92,425,464 
 
Government of Malaysia  3.314  10-31-17  MYR 14,350,000  4,521,884 
Government of Malaysia  3.741  02-27-15  MYR 105,000,000  33,415,384 
Government of Malaysia  3.835  08-12-15  MYR 69,750,000  22,243,766 
Government of Malaysia  4.262  09-15-16  MYR 99,672,000  32,244,430 
 
Mexico 1.0%      48,509,175 
 
Government of Mexico  5.000  06-15-17  MXN 233,003,100  18,357,795 
Government of Mexico  6.000  06-18-15  MXN 160,075,000  12,522,812 
Government of Mexico  8.000  12-07-23  MXN 198,247,500  17,628,568 
 
New Zealand 3.1%      144,796,565 
 
Dominion of New Zealand  5.000  03-15-19  NZD 39,885,000  34,805,699 
Dominion of New Zealand  6.000  04-15-15  NZD 25,105,000  21,310,279 
Dominion of New Zealand  6.000  12-15-17  NZD 59,260,000  52,809,268 
Dominion of New Zealand  6.000  05-15-21  NZD 38,470,000  35,871,319 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  19 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Norway 1.4%      $66,421,119 
 
Government of Norway  4.500  05-22-19  NOK 191,128,000  34,698,122 
Government of Norway  5.000  05-15-15  NOK 191,822,000  31,722,997 
 
Peru 0.2%      10,941,575 
 
Republic of Peru  7.350  07-21-25  8,135,000  10,941,575 
 
Philippines 1.9%      89,034,415 
 
Republic of Philippines  4.950  01-15-21  PHP 659,000,000  16,059,346 
Republic of Philippines  5.875  12-16-20  PHP 321,278,240  8,175,912 
Republic of Philippines  6.250  01-14-36  PHP 895,000,000  22,067,087 
Republic of Philippines  6.500  04-28-21  PHP 792,600,000  20,982,358 
Republic of Philippines  7.375  03-03-21  PHP 313,800,000  8,623,915 
Republic of Philippines  8.125  12-16-35  PHP 419,020,160  13,125,797 
 
Singapore 2.0%      90,424,930 
 
Republic of Singapore  2.375  04-01-17  SGD 36,300,000  30,449,773 
Republic of Singapore  2.500  06-01-19  SGD 10,700,000  9,040,401 
Republic of Singapore  2.875  07-01-15  SGD 27,350,000  22,357,128 
Republic of Singapore  3.250  09-01-20  SGD 32,710,000  28,577,628 
 
South Korea 2.2%      101,457,384 
 
Korea Treasury Bond Coupon Strips  3.100  09-10-14  KRW 654,810,000  645,515 
Korea Treasury Bond Coupon Strips  3.436  09-10-18  KRW 654,810,000  580,040 
Korea Treasury Bond Coupon Strips  3.437  03-10-18  KRW 654,810,000  589,368 
Korea Treasury Bond Coupon Strips  3.445  03-10-17  KRW 654,810,000  606,432 
Korea Treasury Bond Coupon Strips  3.445  09-10-17  KRW 654,810,000  598,170 
Korea Treasury Bond Coupon Strips  3.454  09-10-16  KRW 654,810,000  614,783 
Korea Treasury Bond Coupon Strips  3.462  03-10-16  KRW 654,810,000  622,786 
Korea Treasury Bond Coupon Strips  3.469  09-10-15  KRW 654,810,000  630,549 
Korea Treasury Bond Coupon Strips  3.482  03-10-15  KRW 654,810,000  638,083 
Korea Treasury Bond Principal Strips  3.436  09-10-18  KRW 22,776,000,000  20,175,297 
Republic of Korea  3.250  06-10-15  KRW 19,800,000,000  19,661,979 
Republic of Korea  3.500  03-10-17  KRW 36,660,000,000  37,018,085 
Republic of Korea  4.000  03-10-16  KRW 18,900,000,000  19,076,297 
 
Sweden 1.6%      72,373,891 
 
Kingdom of Sweden  3.000  07-12-16  SEK 151,150,000  22,750,235 
Kingdom of Sweden  3.750  08-12-17  SEK 162,735,000  25,598,145 
Kingdom of Sweden  5.000  12-01-20  SEK 134,390,000  24,025,511 
 
Thailand 2.0%      91,294,823 
 
Bank of Thailand  3.200  10-22-14  THB 1,036,250,000  32,491,661 
Kingdom of Thailand  3.250  06-16-17  THB 1,844,000,000  58,803,162 
 
Capital Preferred Securities 1.6%      $74,321,971 
(Cost $73,156,342)         
 
Financials 1.6%      74,321,971 
 
Banks 1.1%         
M&T Capital Trust III  9.250  02-01-27  480,000  486,189 
SunTrust Preferred Capital I (P)(Q)  4.000  10-14-14  9,340,000  7,565,400 
USB Capital IX (P)(Q)  3.500  10-14-14  18,244,000  15,416,180 
Wachovia Capital Trust III (P)(Q)  5.570  10-14-14  27,585,000  27,033,300 

 

20  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Diversified Financial Services 0.5%         
BAC Capital Trust XIV, Series G (P)(Q)  4.000  09-29-14  19,065,000  $15,537,975 
JPMorgan Chase Capital XXIII (P)  1.234  05-15-47  10,046,000  8,282,927 
 
Convertible Bonds 1.3%      $61,904,542 
(Cost $50,445,024)         
 
Consumer Discretionary 0.2%        9,483,001 
 
Household Durables 0.1%         
Lennar Corp. (S)  2.750  12-15-20  2,500,000  4,467,188 
 
Internet & Catalog Retail 0.1%         
Liberty Interactive LLC  0.750  03-30-43  3,700,000  5,015,813 
 
Consumer Staples 0.1%        6,367,031 
 
Tobacco 0.1%         
Vector Group, Ltd. (P)  2.500  01-15-19  4,380,000  6,367,031 
 
Financials 0.3%      12,637,706 
 
Thrifts & Mortgage Finance 0.3%         
MGIC Investment Corp.  2.000  04-01-20  9,035,000  12,637,706 
 
Health Care 0.3%      15,120,176 
 
Health Care Providers & Services 0.3%         
WellPoint, Inc.  2.750  10-15-42  9,294,000  15,120,176 
 
Industrials 0.2%      10,632,478 
 
Trading Companies & Distributors 0.2%         
Air Lease Corp.  3.875  12-01-18  7,115,000  10,632,478 
 
Information Technology 0.2%        7,664,150 
 
Semiconductors & Semiconductor Equipment 0.2%       
Intel Corp.  3.250  08-01-39  4,535,000  7,664,150 
 
Term Loans (M) 13.1%      $602,596,174 
(Cost $603,546,404)         
 
Consumer Discretionary 3.0%      136,972,054 
 
Automobiles 0.4%         
Chrysler Group LLC  3.250  12-31-18  16,916,388  16,751,453 
 
Hotels, Restaurants & Leisure 0.7%         
Four Seasons Holdings, Inc.  3.500  06-27-20  14,882,538  14,746,109 
Hilton Worldwide Finance LLC  3.500  10-26-20  16,651,216  16,528,647 
 
Media 1.0%         
Clear Channel Communications, Inc.  6.907  01-30-19  11,630,802  11,409,096 
Clear Channel Communications, Inc.  7.657  07-30-19  3,618,449  3,601,004 
RentPath, Inc.  6.250  05-29-20  11,781,000  11,854,631 
Univision Communications, Inc.  4.000  03-01-20  8,586,378  8,527,347 
Virgin Media Investment Holdings, Ltd.  3.500  06-07-20  8,910,000  8,787,488 
 
Multiline Retail 0.6%         
Hudson’s Bay Company  4.750  11-04-20  15,609,375  15,694,743 
Lands’ End, Inc.  4.250  04-04-21  13,351,538  13,212,455 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  21 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Specialty Retail 0.3%         
The Men’s Wearhouse, Inc.  4.500  06-18-21  15,790,000  $15,859,081 
 
Consumer Staples 1.7%      78,398,309 
 
Food & Staples Retailing 1.0%         
Aramark Services, Inc.  3.250  02-24-21  22,920,913  22,634,401 
Rite Aid Corp.  3.500  02-21-20  10,882,725  10,814,708 
Rite Aid Corp.  5.750  08-21-20  1,035,000  1,046,644 
SUPERVALU, Inc.  4.500  03-21-19  11,561,816  11,462,719 
 
Food Products 0.7%         
Big Heart Pet Brands  3.500  03-08-20  6,917,033  6,791,661 
HJ Heinz Company  3.500  06-05-20  25,683,491  25,648,176 
 
Financials 1.9%      88,498,150 
 
Capital Markets 0.2%         
La Quinta Intermediate Holdings LLC  4.000  04-14-21  8,623,476  8,601,918 
 
Diversified Financial Services 0.8%         
Carestream Health, Inc.  5.000  06-07-19  25,561,774  25,561,774 
Carestream Health, Inc.  9.500  12-07-19  14,434,023  14,614,448 
 
Insurance 0.4%         
HUB International, Ltd.  4.250  10-02-20  17,461,063  17,303,913 
 
Real Estate Investment Trusts 0.5%         
Crown Castle Operating Company  3.000  01-31-21  22,557,079  22,416,097 
 
Health Care 3.4%      158,250,869 
 
Health Care Equipment & Supplies 0.5%         
Biomet, Inc.  3.663  07-25-17  22,048,292  22,010,391 
 
Health Care Providers & Services 1.2%         
Catalent Pharma Solutions, Inc.  4.500  05-20-21  6,532,356  6,530,024 
Community Health Systems, Inc.  4.250  01-27-21  19,674,098  19,720,214 
Kindred Healthcare, Inc.  4.000  04-09-21  6,315,000  6,271,584 
National Mentor Holdings, Inc.  4.750  01-31-21  6,592,611  6,584,370 
Opal Acquisition, Inc.  5.000  11-27-20  10,258,450  10,256,316 
Ortho-Clinical Diagnostics, Inc.  4.750  06-30-21  8,700,000  8,690,334 
 
Pharmaceuticals 1.7%         
Endo Luxembourg Finance I Company Sarl  3.250  02-28-21  12,708,150  12,622,764 
Grifols Worldwide Operations USA, Inc.  3.157  02-27-21  16,450,400  16,322,449 
Mallinckrodt International Finance SA  3.500  03-19-21  29,186,163  29,052,402 
Salix Pharmaceuticals, Ltd.  4.250  01-02-20  13,488,446  13,494,071 
Valeant Pharmaceuticals International, Inc.  3.750  08-05-20  6,719,043  6,695,950 
 
Industrials 0.9%      41,123,780 
 
Airlines 0.4%         
Delta Air Lines, Inc.  3.250  04-20-17  13,948,729  13,878,986 
US Airways, Inc.  3.500  05-23-19  6,920,100  6,849,169 
 
Professional Services 0.2%         
Capital Safety North America Holdings, Inc.  3.750  03-29-21  8,309,175  8,236,470 
 
Trading Companies & Distributors 0.3%         
American Builders & Contractors Supply         
Company, Inc.  3.500  04-16-20  12,287,150  12,159,155 

 

22  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Information Technology 0.7%      $32,102,580 
 
Electronic Equipment, Instruments & Components 0.4%     
Dell International LLC  4.500  04-29-20  16,655,721  16,690,415 
 
Software 0.3%         
First Data Corp.  3.655  03-23-18  5,188,092  5,127,563 
First Data Corp.  3.655  09-24-18  1,245,000  1,229,438 
First Data Corp.  4.155  03-24-21  1,892,705  1,886,790 
IMS Health, Inc.  3.500  03-17-21  7,256,813  7,168,374 
 
Materials 0.5%      23,388,677 
 
Containers & Packaging 0.3%         
Berry Plastics Group, Inc.  3.500  02-08-20  12,075,136  11,833,633 
 
Metals & Mining 0.2%         
FMG Resources August 2006 Pty, Ltd.  3.750  06-30-19  6,336,567  6,309,281 
Signode Industrial Group US, Inc.  4.000  05-01-21  5,295,407  5,245,763 
 
Telecommunication Services 0.1%        5,353,644 
 
Wireless Telecommunication Services 0.1%         
SBA Senior Finance II LLC  3.250  03-24-21  5,410,000  5,353,644 
 
Utilities 0.9%      38,508,111 
 
Electric Utilities 0.5%         
La Frontera Generation LLC  4.500  09-30-20  17,788,440  17,832,911 
Texas Competitive Electric Holdings         
Company LLC  3.750  05-05-16  4,871,793  4,900,722 
 
Independent Power and Renewable Electricity Producers 0.4%     
Dynegy, Inc.  4.000  04-23-20  15,810,051  15,774,478 
 
Collateralized Mortgage Obligations 5.1%    $237,482,257 
(Cost $233,238,114)         
 
Commercial & Residential 4.6%      215,461,248 
 
Adjustable Rate Mortgage Trust         
Series 2004-5, Class 2A1 (P)  2.647  04-25-35  3,122,611  3,114,343 
American Home Mortgage Assets Trust         
Series 2006-6, Class XP IO  2.754  12-25-46  28,025,269  2,128,217 
Americold 2010 LLC Trust         
Series 2010-ARTA, Class D (S)  7.443  01-14-29  5,435,000  6,196,482 
Banc of America Commercial Mortgage Trust, Inc.         
Series 2006-2, Class AM (P)  5.955  05-10-45  3,540,000  3,819,267 
Series 2006-4, Class AM  5.675  07-10-46  6,875,000  7,439,362 
Banc of America Funding Corp.         
Series 2005-B, Class 3A1B (P)  0.466  04-20-35  10,828,770  10,323,446 
Bear Stearns Adjustable Rate Mortgage Trust         
Series 2004-10, Class 12A3 (P)  2.734  01-25-35  3,365,636  3,371,640 
Series 2005-2, Class A1 (P)  2.580  03-25-35  2,111,865  2,141,869 
Bear Stearns Alt-A Trust         
Series 2004-12, Class 1A1 (P)  0.855  01-25-35  2,891,380  2,805,955 
Series 2004-13, Class A1 (P)  0.895  11-25-34  5,100,773  5,096,325 
Series 2004-8, Class 1A (P)  0.855  09-25-34  1,029,263  1,002,347 
Series 2005-7, Class 11A1 (P)  0.695  08-25-35  2,365,989  2,226,275 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  23 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Commercial & Residential (continued)         
 
Chase Mortgage Finance Corp.         
Series 2007-A1, Class 2A1 (P)  2.473  02-25-37  3,172,627  $3,184,585 
Commercial Mortgage Pass Through Certificates         
Series 2007-C9, Class A4 (P)  5.989  12-10-49  3,930,000  4,352,609 
Series 2014-TWC, Class D (P)(S)  2.406  02-13-32  8,060,000  8,030,581 
DSLA Mortgage Loan Trust         
Series 2004-AR1 Class X2 IO  2.016  09-19-44  20,822,135  1,143,150 
Series 2005-AR2, Class X2 IO  2.739  03-19-45  46,250,332  3,803,479 
Greenwich Capital Commercial Funding Corp.         
Series 2006-GG7, Class AM (P)  6.014  07-10-38  5,674,000  6,094,517 
GSR Mortgage Loan Trust         
Series 2004-5, Class 2A1 (P)  2.594  05-25-34  6,184,744  6,224,184 
HarborView Mortgage Loan Trust         
Series 2004-5, Class 2A–6 (P)  2.163  06-19-34  4,229,086  4,236,943 
Series 2004-7, Class 4A (P)  2.673  11-19-34  5,538,678  5,562,583 
Series 2005-2, Class IX IO  2.197  05-19-35  12,575,145  790,090 
Series 2005-9, Class 2A1A (P)  0.496  06-20-35  3,675,940  3,549,576 
Series 2005-9, Class 2A1C (P)  0.606  06-20-35  2,574,337  2,389,708 
Series 2005-8, Class 1X IO  2.112  09-19-35  4,778,347  249,234 
Series 2007-3, Class ES IO (S)  0.349  05-19-47  11,571,686  122,949 
Series 2007-4, Class ES IO  0.349  07-19-47  12,396,327  123,963 
Series 2007-6, Class ES IO (S)  0.342  08-19-37  9,702,933  103,094 
Hilton USA Trust         
Series 2013-HLF, Class EFL (P)(S)  3.906  11-05-30  5,735,000  5,753,117 
IndyMac Index Mortgage Loan Trust         
Series 2005-AR18, Class 2X IO  1.690  10-25-36  17,311,960  599,617 
Series 2005-AR18, Class 1X IO  2.046  10-25-36  17,473,432  1,381,280 
JPMorgan Chase Commercial Mortgage         
Securities Corp.         
Series 2005-LDP5, Class AM (P)  5.446  12-15-44  4,175,000  4,389,879 
JPMorgan Chase Commercial Mortgage Securities Trust       
Series 2006-LDP7, Class AM (P)  6.060  04-15-45  8,081,000  8,700,797 
Series 2007-CB18, Class A4  5.440  06-12-47  4,090,306  4,423,576 
Series 2014-INN, Class F (P)(S)  4.155  06-15-29  3,395,000  3,386,917 
LB–UBS Commercial Mortgage Trust         
Series 2006-C6, Class AM  5.413  09-15-39  5,120,000  5,516,815 
Merrill Lynch Mortgage Investors Trust         
Series 2004-1, Class 2A1 (P)  2.147  12-25-34  2,131,519  2,089,880 
Series 2005-A2, Class A2 (P)  2.469  02-25-35  3,189,190  3,215,759 
Series 2006-3, Class 2A1 (P)  2.291  10-25-36  2,050,657  2,030,003 
Series 2007-1, Class 2A1 (P)  2.552  01-25-37  10,239,750  10,119,546 
Merrill Lynch Mortgage Trust         
Series 2005-LC1, Class AM (P)  5.489  01-12-44  5,425,000  5,697,308 
Merrill Lynch/Countrywide Commercial         
Mortgage Trust         
Series 2006-3, Class A4 (P)  5.414  07-12-46  2,801,964  2,988,177 
Morgan Stanley Capital I Trust         
Series 2007-IQ13, Class A4  5.364  03-15-44  3,940,000  4,266,019 
Morgan Stanley Mortgage Loan Trust         
Series 2004-8AR, Class 4A1 (P)  2.430  10-25-34  1,669,347  1,653,771 
Series 2004-9, Class 1A (P)  5.656  11-25-34  2,128,948  2,111,309 
Opteum Mortgage Acceptance Corp.         
Series 2005-4, Class 1APT (P)  0.465  11-25-35  3,342,794  3,169,086 
Structured Asset Securities Corp.         
Series 2003-7A, Class 3A6 (P)  2.492  12-25-33  3,485,115  3,495,612 

 

24  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Commercial & Residential (continued)         
 
WaMu Mortgage Pass Through Certificates         
Series 2005-AR19, Class A1A2 (P)  0.445  12-25-45  4,967,402  $4,682,611 
Series 2005-AR2, Class 2A1B (P)  0.525  01-25-45  5,949,609  5,519,512 
Series 2005-AR2, Class 2A2B (P)  0.535  01-25-45  4,133,809  3,839,056 
Series 2005-AR6, Class 2A1A (P)  0.385  04-25-45  9,207,308  8,779,288 
Series 2005-AR8, Class 2AB2 (P)  0.575  07-25-45  4,598,537  4,368,730 
Series 2005-AR8, Class 2AB3 (P)  0.515  07-25-45  3,322,814  3,139,541 
Wells Fargo Commercial Mortgage Trust         
Series 2013-BTC, Class E (P) (S)  3.668  04-16-35  7,406,403  6,672,095 
Wells Fargo Mortgage Backed Securities Trust         
Series 2004-Z, Class 2A1 (P)  2.615  12-25-34  3,777,103  3,845,174 
 
U.S. Government Agency 0.5%      22,021,009 
Federal Home Loan Mortgage Corp.         
Series 2014-DN2, Class M2 (P)  1.805  04-25-24  3,490,000  3,420,888 
Series 291, Class IO  3.500  11-15-32  13,465,655  2,409,132 
Series 292, Class IO  3.500  11-15-27  9,483,741  1,479,873 
Series 296, Class IO  3.000  12-15-27  7,177,539  987,595 
Series 304, Class C42 IO  4.000  12-15-27  15,063,830  1,845,230 
Series 4077, Class IK IO  5.000  07-15-42  10,720,064  2,289,930 
Federal National Mortgage Association         
Series 2012-118, Class AI IO  3.500  11-25-37  12,697,114  1,809,440 
Series 2013-39, Class KI IO  4.000  05-25-28  20,497,573  2,634,569 
Series 402, Class 3 IO  4.000  11-25-39  1,027,956  200,975 
Series 402, Class 4 IO  4.000  10-25-39  1,584,521  288,092 
Series 402, Class 7 IO  4.500  11-25-39  2,275,838  455,664 
Series 406, Class 3 IO  4.000  01-25-41  5,455,131  861,246 
Series 407, Class 4 IO  4.500  03-25-41  8,529,290  1,390,796 
Series 407, Class 7 IO  5.000  03-25-41  5,995,238  1,309,346 
Series 407, Class 8 IO  5.000  03-25-41  2,988,110  638,233 
 
Asset Backed Securities 1.0%      $48,204,354 
(Cost $47,276,141)         
 
Applebee’s/IHOP Funding LLC         
Series 2014-1, Class A2 (S)  4.277  09-05-44  11,240,000  11,246,766 
CKE Restaurant Holdings, Inc.         
Series 2013-1A, Class A2 (S)  4.474  03-20-43  21,921,125  22,397,164 
Dominos Pizza Master Issuer LLC         
Series 2012-1A, Class A2 (S)  5.216  01-25-42  4,610,945  4,893,863 
Home Equity Asset Trust         
Series 2003-1, Class M1 (P)  1.655  06-25-33  1,933,111  1,858,882 
Sonic Capital LLC         
Series 2011-1A, Class A2 (S)  5.438  05-20-41  3,288,067  3,481,941 
Specialty Underwriting & Residential         
Finance Trust         
Series 2006-BC1, Class A2D (P)  0.455  12-25-36  4,492,523  4,325,738 
 
      Shares  Value 
Common Stocks 2.7%      $122,106,211 
(Cost $105,263,061)         
 
Consumer Discretionary 0.0%        0 
 
Media 0.0%         
Vertis Holdings, Inc. (I)      110,794  0 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  25 

 


  Shares  Value 
Consumer Staples 0.3%    $10,405,446 
 
Food Products 0.3%     
Tyson Foods, Inc. (I)  207,156  10,405,446 
 
Financials 2.4%    111,700,765 
 
Banks 1.9%     
City National Corp.  59,867  4,542,708 
Commerce Bancshares, Inc.  187,687  8,658,001 
Investors Bancorp, Inc.  634,693  6,734,093 
Park National Corp.  61,349  4,775,406 
PNC Financial Services Group, Inc.  144,725  12,265,444 
SunTrust Banks, Inc.  328,570  12,511,946 
Synovus Financial Corp.  331,578  8,007,609 
Talmer Bancorp, Inc., Class A  831,216  12,185,627 
TCF Financial Corp.  267,500  4,226,500 
U.S. Bancorp  301,525  12,748,477 
 
Consumer Finance 0.3%     
Capital One Financial Corp.  168,445  13,822,597 
 
Insurance 0.2%     
MetLife, Inc.  205,012  11,222,357 
 
Preferred Securities 8.2%    $377,972,147 
(Cost $362,177,285)     
 
Consumer Staples 0.3%    14,959,150 
 
Food Products 0.3%     
Post Holdings, Inc., 5.250%  175,990  14,959,150 
 
Financials 5.0%    228,745,877 
 
Banks 2.6%     
First Niagara Financial Group, Inc. (8.6250% to     
12-15-17, then 3 month LIBOR + 7.3270%)  173,250  4,920,300 
First Tennessee Bank NA, 3.750% (S)  17,017  12,436,769 
HSBC USA, Inc., 3.500%  354,999  7,778,028 
Huntington Bancshares, Inc., 8.500%  10,050  13,567,500 
M&T Bank Corp., Series A, 6.375%  11,955  11,727,855 
Regions Financial Corp., 6.375%  366,170  9,113,971 
SunTrust Banks, Inc., 4.000%  309,575  6,732,947 
U.S. Bancorp, 3.500%  18,202  15,053,600 
U.S. Bancorp (6.500% to 1-15-22, then     
3 month LIBOR + 4.468%)  425,675  12,412,683 
Wells Fargo & Company (5.850% to 9-15-23,     
then 3 month LIBOR + 3.090%)  227,445  5,929,491 
Wells Fargo & Company (6.625% to 3-15-24,     
then 3 month LIBOR + 3.690%)  296,899  8,354,738 
Zions Bancorporation, 6.950%  185,190  5,001,982 
Zions Bancorporation, 7.900%  295,750  8,281,000 

 

26  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


      Shares  Value 
Capital Markets 0.0%         
Hercules Technology Growth Capital, Inc.,         
6.250%      47,261  $1,181,525 
 
Diversified Financial Services 0.3%         
GMAC Capital Trust I (8.125% to 2-15-16,         
then 3 month LIBOR + 5.785%)      400,450  10,764,096 
 
Insurance 0.5%         
Hartford Financial Services Group, Inc., 7.875%      333,100  10,046,296 
MetLife, Inc., 5.000%      361,574  11,342,576 
 
Real Estate Investment Trusts 1.4%         
American Tower Corp., 5.250%      116,265  13,165,849 
Crown Castle International Corp., 4.500%      201,152  20,968,084 
Weyerhaeuser Company, 6.375%      518,550  29,951,448 
 
Thrifts & Mortgage Finance 0.2%         
Flagstar Bancorp, Inc.      8,933  10,015,139 
 
Industrials 0.6%      29,960,507 
 
Aerospace & Defense 0.3%         
United Technologies Corp., 7.500%      228,706  13,736,082 
 
Machinery 0.3%         
Stanley Black & Decker, Inc., 6.250%      139,625  16,224,425 
 
Materials 0.1%        3,715,530 
 
Metals & Mining 0.1%         
ArcelorMittal, 6.000%      165,650  3,715,530 
 
Utilities 2.2%      100,591,083 
 
Electric Utilities 1.0%         
Exelon Corp., 6.500%      495,563  25,025,932 
NextEra Energy, Inc., 5.799%      61,330  3,379,283 
NextEra Energy, Inc., 5.889%      216,910  13,530,846 
SCE Trust I, 5.625%      190,505  4,642,607 
 
Gas Utilities 0.3%         
The Laclede Group, Inc., 6.750%      262,392  14,628,354 
 
Multi-Utilities 0.9%         
Dominion Resources, Inc., 6.000%      318,450  18,314,060 
Dominion Resources, Inc., 6.375%      414,519  21,070,001 
 
    Maturity     
  Rate (%)  date  Par value^  Value 
Escrow Certificates 0.0%        $8,225 
(Cost $50)         
 
Consumer Discretionary 0.0%        8,225 
 
Lear Corp., Series B  8.750  12-01-16  940,000  8,225 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  27 

 


  Notional par  Value 
Purchased Options 0.1%    $5,243,076 
(Cost $10,798,554)     
 
Call Options 0.1%    3,774,333 
 
Over the Counter on the USD vs. CAD     
(Expiration Date: 1-30-15; Strike Price:     
USD $1.12; Counterparty: Morgan Stanley Company, Inc.) (I)  118,905,000  952,667 
Over the Counter on the USD vs. CAD     
(Expiration Date: 5-6-15; Strike Price:     
USD $1.15; Counterparty: Morgan Stanley Company, Inc.) (I)  128,740,000  869,124 
Over the Counter on the USD vs. CAD     
(Expiration Date: 9-18-14; Strike Price:     
$1.16; Counterparty: Morgan Stanley Company, Inc.) (I)  203,125,000  203 
Over the Counter on the USD vs. CAD     
(Expiration Date: 9-26-14; Strike Price:     
$1.15; Counterparty: Morgan Stanley Company, Inc.) (I)  132,615,000  1,989 
Over the Counter on the USD vs. CAD     
(Expiration Date: 9-3-15; Strike Price:     
$1.30; Counterparty: Goldman Sachs & Company) (I)  89,190,000  137,977 
Over the Counter on the USD vs. CHF     
(Expiration Date: 12-16-14; Strike Price:     
USD $0.93; Counterparty: Morgan Stanley Company, Inc.) (I)  133,285,000  1,207,029 
Over the Counter on the USD vs. JPY     
(Expiration Date: 3-3-15; Strike Price:     
$110.50; Counterparty: Morgan Stanley Company, Inc.) (I)  176,485,000  605,344 
 
Put Options 0.0%    1,468,743 
 
Over the Counter on the EUR vs. USD     
(Expiration Date: 12-12-2014; Strike Price:     
EUR 1.30; Counterparty: Morgan Stanley Company, Inc.) (I)  133,215,000  1,468,743 
 
  Par value  Value 
Short-Term Investments 2.5%    $113,716,204 
(Cost $113,716,204)     
 
Repurchase Agreement 2.5%    113,716,204 
 
Barclays Tri-Party Repurchase Agreement dated 8-29-14 at 0.030%     
to be repurchased at $95,143,317 on 9-2-14, collateralized by     
$92,142,900 U.S. Treasury Inflation Index Notes, 0.125% due     
4-15-18 (valued at $97,046,187, including interest)  95,143,000  95,143,000 
Repurchase Agreement with State Street Corp. dated 8-29-14 at     
0.000% to be repurchased at $172,204 on 9-2-14, collateralized     
by $173,700 U.S. Treasury Notes, 1.500% due 8-31-18 (valued at     
$174,446, including interest)  172,204  172,204 
Repurchase Agreement with State Street Corp. dated 8-29-14 at     
0.000% to be repurchased at $18,401,000 on 9-2-14, collateralized     
by $19,040,000 U.S. Treasury Notes, 0.625% due 11-30-17 (valued     
at $18,773,250, including interest)  18,401,000  18,401,000 
 
Total investments (Cost $4,415,191,354)† 98.1%  $4,527,068,528 
 
Other assets and liabilities, net 1.9%    $90,528,162 
 
Total net assets 100.0%  $4,617,596,690 
 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the fund.

 

28  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


Notes to Schedule of Investments

^ All par values are denominated in U.S. dollars unless otherwise indicated.

Currency abbreviations     
AUD  Australian Dollar  MXN  Mexican Peso 
BRL  Brazilian Real  MYR  Malaysian Ringgit 
CAD  Canadian Dollar  NOK  Norwegian Krone 
CHF  Swiss Franc  NZD  New Zealand Dollar 
EUR  Euro  PHP  Philippines Peso 
GBP  Pound Sterling  SEK  Swedish Krona 
JPY  Japanese Yen  SGD  Singapore Dollar 
KRW  Korean Won  THB  Thai Baht 

 

IO Interest-Only Security— (Interest Tranche of Stripped Mortgage Pool). The coupon rate shown represents the rate at period end.

LIBOR London Interbank Offered Rate

(I) Non-income producing security.

(M) Term loans are variable rate obligations. The coupon rate shown represents the rate at period end.

(P) Variable rate obligation. The coupon rate shown represents the rate at period end.

(Q) Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date.

(S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $693,979,569 or 15.0% of the fund’s net assets as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $4,439,069,638. Net unrealized appreciation aggregated $87,998,890, of which $173,724,432 related to appreciated investment securities and $85,725,542 related to depreciated investment securities.

The fund had the following country concentration as a percentage of net assets on 8-31-14:

United States  67.3% 
Australia  4.3% 
New Zealand  3.1% 
Singapore  2.5% 
South Korea  2.2% 
Philippines  2.1% 
Malaysia  2.0% 
Thailand  2.0% 
Canada  1.9% 
Luxembourg  1.6% 
Other Countries  11.0% 
 
Total  100.0% 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  29 

 


F I N A N C I A L   S T A T E M E N T S

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments, at value (Cost $4,415,191,354)  $4,527,068,528 
Foreign currency, at value (Cost $19,858,730)  19,778,556 
Cash held at broker for futures contracts  20,360,551 
Receivable for investments sold  571,362 
Receivable for fund shares sold  10,742,291 
Receivable for forward foreign currency exchange contracts  46,178,893 
Dividends and interest receivable  44,017,813 
Receivable for futures variation margin  577,268 
Other receivables and prepaid expenses  368,034 
 
Total assets  4,669,663,296 
 
Liabilities   
Due to custodian  75,161 
Payable for investments purchased  19,652,537 
Payable for forward foreign currency exchange contracts  22,063,330 
Payable for fund shares repurchased  7,949,918 
Distributions payable  805,023 
Payable to affiliates   
Accounting and legal services fees  95,714 
Transfer agent fees  630,417 
Distribution and service fees  2,105 
Trustees’ fees  599 
Investment management fees  87,797 
Other liabilities and accrued expenses  704,005 
 
Total liabilities  52,066,606 
 
Net assets  $4,617,596,690 
 
Net assets consist of   
Paid-in capital  $4,566,651,732 
Undistributed net investment income  16,439,042 
Accumulated net realized gain (loss) on investments, futures contracts,   
written options and foreign currency transactions  (97,190,276) 
Net unrealized appreciation (depreciation) on investments, futures   
contracts, written options and translation of assets and liabilities in   
foreign currencies  131,696,192 
 
Net assets  $4,617,596,690 

 

30  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L   S T A T E M E N T S

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($1,111,488,864 ÷ 101,247,230 shares)1  $10.98 
Class C ($457,691,236 ÷ 41,692,554 shares)1  $10.98 
Class I ($1,506,384,083 ÷ 137,202,412 shares)  $10.98 
Class R2 ($7,800,229 ÷ 710,064 shares)  $10.99 
Class R6 ($792,552 ÷ 72,194 shares)  $10.98 
Class NAV ($1,533,439,726 ÷ 139,739,863 shares)  $10.97 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 96%)2  $11.44 

 

1 Redemption price is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $100,000. On sale of $100,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  31 

 


F I N A N C I A L   S T A T E M E N T S

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Interest  $187,858,107 
Dividends  17,257,480 
Less foreign taxes withheld  (859,455) 
 
Total investment income  204,256,132 
 
Expenses   
Investment management fees  27,618,989 
Distribution and service fees  8,099,848 
Accounting and legal services fees  536,876 
Transfer agent fees  3,695,708 
Trustees’ fees  57,307 
State registration fees  249,942 
Printing and postage  223,986 
Professional fees  162,314 
Custodian fees  1,342,094 
Registration and filing fees  53,650 
Expense recapture  548,175 
Other  60,832 
 
Total expenses  42,649,721 
Less expense reductions  (479,227) 
 
Net expenses  42,170,494 
 
Net investment income  162,085,638 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers and foreign currency transactions  (20,385,382) 
Futures contracts  (50,324,940) 
Written options  1,786,936 
 
  (68,923,386) 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers and translation of assets and liabilities in   
foreign currencies  203,714,772 
Futures contracts  (3,797,225) 
Written options  (779,407) 
 
  199,138,140 
 
Net realized and unrealized gain  130,214,754 
 
Increase in net assets from operations  $292,300,392 

 

32  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L   S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $162,085,638  $158,683,193 
Net realized gain (loss)  (68,923,386)  109,165,170 
Change in net unrealized appreciation (depreciation)  199,138,140  (168,017,438) 
 
Increase in net assets resulting from operations  292,300,392  99,830,925 
 
Distributions to shareholders     
From net investment income     
Class A  (48,264,398)  (48,827,687) 
Class C  (14,724,374)  (14,211,876) 
Class I  (52,527,144)  (44,677,615) 
Class R2  (238,142)  (55,469) 
Class R6  (29,227)  (12,997) 
Class NAV  (63,643,727)  (66,875,691) 
From net realized gain     
Class A  (13,385,823)  — 
Class C  (4,904,503)  — 
Class I  (12,560,004)  — 
Class R2  (65,897)  — 
Class R6  (7,124)  — 
Class NAV  (15,406,025)  — 
 
Total distributions  (225,756,388)  (174,661,335) 
 
From fund share transactions  502,837,512  921,195,824 
 
Total increase  569,381,516  846,365,414 
 
Net assets     
Beginning of year  4,048,215,174  3,201,849,760 
 
End of year  $4,617,596,690  $4,048,215,174 
 
Undistributed net investment income  $16,439,042  $13,827,792 

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  33 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $10.80  $10.94  $10.75  $10.53  $10.25 
Net investment income2  0.39  0.45  0.51  0.58  0.43 
Net realized and unrealized gain (loss) on investments  0.35  (0.09)  0.28  0.34  0.33 
Total from investment operations  0.74  0.36  0.79  0.92  0.76 
Less distributions           
From net investment income  (0.44)  (0.50)  (0.60)  (0.70)  (0.48) 
From net realized gain  (0.12)  —  —  —  — 
Total distributions  (0.56)  (0.50)  (0.60)  (0.70)  (0.48) 
Net asset value, end of period  $10.98  $10.80  $10.94  $10.75  $10.53 
Total return (%)3,4  7.03  3.29  7.61  8.80  7.535 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $1,111  $1,213  $891  $636  $120 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.18  1.19  1.26  1.23  1.266 
Expenses including reductions  1.17  1.17  1.17  1.17  1.176 
Net investment income  3.58  4.05  4.82  5.28  6.336 
Portfolio turnover (%)  48  41  29  40  497 

 

1 The inception date for Class A shares is 1-4-10.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-09 to 8-31-10.

 

34  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


CLASS C SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $10.80  $10.94  $10.74  $10.53  $10.25 
Net investment income2  0.32  0.37  0.44  0.50  0.38 
Net realized and unrealized gain (loss) on investments  0.34  (0.08)  0.28  0.33  0.33 
Total from investment operations  0.66  0.29  0.72  0.83  0.71 
Less distributions           
From net investment income  (0.36)  (0.43)  (0.52)  (0.62)  (0.43) 
From net realized gain  (0.12)  —  —  —  — 
Total distributions  (0.48)  (0.43)  (0.52)  (0.62)  (0.43) 
Net asset value, end of period  $10.98  $10.80  $10.94  $10.74  $10.53 
Total return (%)3,4  6.28  2.56  6.96  7.93  6.995 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $458  $434  $291  $168  $38 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.88  1.90  1.96  1.95  1.996 
Expenses including reductions  1.87  1.87  1.87  1.87  1.876 
Net investment income  2.88  3.33  4.10  4.57  5.636 
Portfolio turnover (%)  48  41  29  40  497 

 

1 The inception date for Class C shares is 1-4-10.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Not annualized.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-09 to 8-31-10.

 

CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $10.80  $10.94  $10.75  $10.54  $10.25 
Net investment income2  0.43  0.49  0.55  0.61  0.46 
Net realized and unrealized gain (loss) on investments  0.35  (0.09)  0.27  0.34  0.33 
Total from investment operations  0.78  0.40  0.82  0.95  0.79 
Less distributions           
From net investment income  (0.48)  (0.54)  (0.63)  (0.74)  (0.50) 
From net realized gain  (0.12)  —  —  —  — 
Total distributions  (0.60)  (0.54)  (0.63)  (0.74)  (0.50) 
Net asset value, end of period  $10.98  $10.80  $10.94  $10.75  $10.54 
Total return (%)3  7.40  3.65  7.94  9.09  7.834 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $1,506  $1,055  $723  $442  $40 
Ratios (as a percentage of average net assets):           
Expenses before reductions  0.83  0.83  0.86  0.82  0.855 
Expenses including reductions  0.82  0.82  0.86  0.82  0.855 
Net investment income  3.92  4.38  5.11  5.57  6.695 
Portfolio turnover (%)  48  41  29  40  496 

 

1 The inception date for Class I shares is 1-4-10.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.
6 The portfolio turnover is shown for the period from 9-1-09 to 8-31-10.

 

See notes to financial statements  Annual report | Strategic Income Opportunities Fund  35 

 


CLASS R2 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $10.81  $10.94  $10.88 
Net investment income2  0.39  0.41  0.23 
Net realized and unrealized gain (loss) on investments  0.34  (0.04)  0.07 
Total from investment operations  0.73  0.37  0.30 
Less distributions       
From net investment income  (0.43)  (0.50)  (0.24) 
From net realized gain  (0.12)  —  — 
Total distributions  (0.55)  (0.50)  (0.24) 
Net asset value, end of period  $10.99  $10.81  $10.94 
Total return (%)3  6.97  3.34  2.834 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $8  $5  —5 
Ratios (as a percentage of average net assets):       
Expenses before reductions  1.69  2.33  17.196 
Expenses including reductions  1.22  1.22  1.226 
Net investment income  3.52  3.85  4.276 
Portfolio turnover (%)  48  41  297 

 

1 The inception date for Class R2 shares is 3-1-12.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.

 

CLASS R6 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $10.80  $10.94  $10.74 
Net investment income2  0.43  0.48  0.55 
Net realized and unrealized gain (loss) on investments  0.35  (0.08)  0.28 
Total from investment operations  0.78  0.40  0.83 
Less distributions       
From net investment income  (0.48)  (0.54)  (0.63) 
From net realized gain  (0.12)  —  — 
Total distributions  (0.60)  (0.54)  (0.63) 
Net asset value, end of period  $10.98  $10.80  $10.94 
Total return (%)3  7.39  3.65  8.08 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $1  $1  —4 
Ratios (as a percentage of average net assets):       
Expenses before reductions  3.72  6.45  18.33 
Expenses including reductions  0.83  0.83  0.83 
Net investment income  3.91  4.38  5.19 
Portfolio turnover (%)  48  41  29 

 

1 The inception date for Class R6 shares is 9-1-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Less than $500,000.

 

36  Strategic Income Opportunities Fund | Annual report  See notes to financial statements 

 


CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $10.80  $10.94  $10.74  $10.53  $9.76 
Net investment income1  0.45  0.51  0.56  0.64  0.80 
Net realized and unrealized gain (loss) on investments  0.33  (0.09)  0.28  0.32  0.77 
Total from investment operations  0.78  0.42  0.84  0.96  1.57 
Less distributions           
From net investment income  (0.49)  (0.56)  (0.64)  (0.75)  (0.80) 
From net realized gain  (0.12)  —  —  —  — 
Total distributions  (0.61)  (0.56)  (0.64)  (0.75)  (0.80) 
Net asset value, end of period  $10.97  $10.80  $10.94  $10.74  $10.53 
Total return (%)2  7.44  3.77  8.19  9.17  16.55 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $1,533  $1,341  $1,297  $1,174  $633 
Ratios (as a percentage of average net assets):           
Expenses before reductions  0.69  0.71  0.73  0.74  0.79 
Expenses including reductions  0.68  0.71  0.73  0.74  0.79 
Net investment income  4.07  4.54  5.29  5.84  7.75 
Portfolio turnover (%)  48  41  29  40  49 

 

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 | Strategic Income Opportunities Fund  37 

 


Notes to financial statements

Note 1 — Organization

John Hancock Strategic Income Opportunities Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek to maximize total return consisting of current income and capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class R2 shares are available only to certain retirement plans. Class R6 shares are available only to certain retirement plans, institutions and other investors. Class NAV shares are offered to affiliated John Hancock funds including John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “fund of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ.

Note 2 — Significant accounting policies

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Options listed on an exchange are valued at the mean of the most recent bid and ask prices from the exchange where the option was acquired or most likely will be sold. Futures contracts are valued at settlement prices, which are the official closing prices published by the exchange on which they trade. Foreign securities and currencies, including forward foreign currency contracts, are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.

38  Strategic Income Opportunities Fund | Annual report 

 


Other fund securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund’s Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

The following is a summary of the values by input classification of the Fund’s investments as of August 31, 2014, by major security category or type:

        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Corporate Bonds  $1,840,492,679  —  $1,840,492,679  — 
Foreign Government         
Obligations  1,043,020,688  —  1,043,020,688  — 
Capital Preferred Securities  74,321,971  —  74,321,971  — 
Convertible Bonds  61,904,542  —  61,904,542  — 
Term Loans  602,596,174  —  602,596,174  — 
Collateralized Mortgage         
Obligations  237,482,257  —  237,132,251  $350,006 
Asset Backed Securities  48,204,354  —  48,204,354  — 
Common Stocks  122,106,211  $122,106,211  —  — 
Preferred Securities  377,972,147  355,520,239  22,451,908  — 
Escrow Certificates  8,225  —  —  8,225 
Purchased Options  5,243,076  —  5,243,076  — 
Short-Term Investments  113,716,204  —  113,716,204  — 
 
Total Investments in         
Securities  $4,527,068,528  $477,626,450  $4,049,083,847  $358,231 
Other Financial Instruments         
Futures  ($4,094,802)  ($4,094,802)  —  — 
Forward Foreign Currency         
Contracts  $24,115,563  —  $24,115,563  — 

 

Annual report | Strategic Income Opportunities Fund  39 

 


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, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.

Term loans (Floating rate loans). The fund may invest in term loans, which often include debt securities that are rated below investment grade at the time of purchase. Term loans are generally subject to legal or contractual restrictions on resale. 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. Because many term loans are not rated by independent credit rating agencies, a decision to invest in a particular loan could depend exclusively on the subadvisor’s credit analysis of the borrower and/or term loan agents. The fund may have limited rights to enforce the terms of an underlying loan.

At August 31, 2014, the fund had $39,544,819 in unfunded loan commitments outstanding.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange

40  Strategic Income Opportunities Fund | Annual report 

 


rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.

Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.

Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.

Line of credit. The fund may 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $2,216. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, as of August 31, 2014, the fund has a short-term capital loss carryforward of $37,130,298 and a long-term capital loss carryforward of $16,880,859 available to offset future net realized capital gains. These carryforwards as of August 31, 2014, do not expire.

Annual report | Strategic Income Opportunities Fund  41 

 


As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares dividends daily and pays them monthly. Capital gain distributions, if any, are distributed annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $179,428,011  $174,661,335 
Long-Term Capital Gain  46,328,377  — 
Total  $225,756,388  $174,661,335 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $17,642,307 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, characterization of distributions, derivative transactions, amortization and accretion on debt securities and deemed distribution on convertible bonds.

Note 3 — Derivative instruments

The fund may invest in derivatives in order to meet its investment objective. Derivatives include a variety of different instruments that may be traded in the OTC market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the 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 and options are regulated by the Commodity Futures Trading Commission (the CFTC) as swaps. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, 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.

42  Strategic Income Opportunities Fund | Annual report 

 


Futures are traded on an exchange. Exchange-traded transactions generally present less counterparty risk to the 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.

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.

The fund used futures contracts to manage duration of the portfolio. During the year ended August 31, 2014 the fund held futures contracts with total notional values ranging from approximately $430.7 million to $1.3 billion, as measured at each quarter end. The following table summarizes the contracts held at August 31, 2014.

            UNREALIZED 
  NUMBER OF    EXPIRATION  NOTIONAL  NOTIONAL  APPRECIATION 
OPEN CONTRACTS  CONTRACTS  POSITION  DATE  BASIS  VALUE  (DEPRECIATION) 
5-Year U.S.  2,211  Short  Dec 2014  ($262,136,448)  ($262,746,259)  ($609,811) 
Treasury Note             
Futures             
10-Year U.S.  6,851  Short  Dec 2014  (859,355,986)  (861,727,344)  (2,371,358) 
Treasury Note             
Futures             
U.S. Treasury  1,111  Short  Dec 2014  (154,530,523)  (155,644,156)  (1,113,633) 
Long Bond             
Futures             
            ($4,094,802) 

 

Notional basis refers to the contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract.

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 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

Annual report | Strategic Income Opportunities Fund  43 

 


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.

The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates and to gain exposure to foreign currencies. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from approximately $3.5 billion to $11.3 billion, as measured at each quarter end. The following table summarizes the contracts held at August 31, 2014.

          CONTRACTUAL      NET UNREALIZED 
CONTRACT  CONTRACT    SETTLEMENT  UNREALIZED  UNREALIZED  APPRECIATION/ 
TO BUY  TO SELL  COUNTERPARTY  DATE  APPRECIATION  DEPRECIATION  (DEPRECIATION) 
AUD  76,914,206  GBP  42,090,000  Citibank N.A.  10-1-14  $1,832,893  —  $1,832,893 
AUD  81,714,902  GBP  44,520,000  JPMorgan Chase  10-1-14  2,274,439  —  2,274,439 
        Bank N.A.         
AUD  22,250,000  NZD  23,773,012  Australia and New  10-1-14  908,677  —  908,677 
        Zealand Banking         
        Group         
AUD  38,715,000  NZD  42,193,156  Canadian Imperial  10-1-14  890,302  —  890,302 
        Bank of Commerce         
AUD  39,290,000  NZD  42,828,064  JPMorgan Chase  10-1-14  896,642  —  896,642 
        Bank N.A.         
AUD  125,868,793  NZD  138,714,081  State Street Bank  10-1-14  1,612,182  —  1,612,182 
        and Trust Company         
AUD  22,250,000  NZD  23,733,408  UBS AG  10-1-14  941,715  —  941,715 
AUD  117,485,000  USD  110,489,943  Citibank N.A.  10-1-14  —  ($979,763)  (979,763) 
AUD  117,485,000  USD  110,477,607  Deutsche Bank AG  10-1-14  —  (967,427)  (967,427) 
        London         
CAD  21,377,664  GBP  11,550,000  Bank of Nova Scotia  10-1-14  477,776  —  477,776 
CAD  143,812,022  GBP  77,800,000  Royal Bank of  10-1-14  3,046,909  —  3,046,909 
        Canada         
CAD  21,100,000  MXN  255,510,450  Bank of Nova Scotia  10-1-14  —  (110,409)  (110,409) 
CAD  40,545,000  MXN  490,067,415  Toronto Dominion  10-1-14  —  (142,523)  (142,523) 
        Bank         
CAD  20,425,000  SGD  23,298,185  Australia and New  10-1-14  120,129  —  120,129 
        Zealand Banking         
        Group         
CAD  45,820,000  SGD  52,350,266  Bank of Nova Scotia  10-1-14  201,624  —  201,624 
CAD  35,575,000  SGD  40,760,602  Barclays Bank PLC  10-1-14  64,110  —  64,110 
        Wholesale         
CAD  31,295,000  SGD  36,096,248  Deutsche Bank AG  10-1-14  —  (135,364)  (135,364) 
        London         
CAD  47,685,000  SGD  54,868,654  HSBC Bank USA  10-1-14  —  (100,472)  (100,472) 
CAD  43,815,000  SGD  50,221,629  Royal Bank of  10-1-14  63,011  —  63,011 
        Canada         
CAD  16,500,000  SGD  19,027,800  Standard Chartered  10-1-14  —  (68,476)  (68,476) 
        Bank         
CAD  33,823,033  USD  31,047,977  Bank of Nova Scotia  10-1-14  38,931  —  38,931 
CAD  21,793,622  USD  19,825,000  Deutsche Bank AG  10-1-14  205,621  —  205,621 
        London         
CAD  20,393,408  USD  18,580,000  State Street Bank and  10-1-14  163,677  —  163,677 
        Trust Company         

 

44  Strategic Income Opportunities Fund | Annual report 

 


          CONTRACTUAL      NET UNREALIZED 
CONTRACT  CONTRACT    SETTLEMENT  UNREALIZED  UNREALIZED  APPRECIATION/ 
TO BUY  TO SELL  COUNTERPARTY  DATE  APPRECIATION  DEPRECIATION  (DEPRECIATION) 
CAD  24,224,050  USD  22,170,000  Toronto Dominion  10-1-14  $94,439  —  $94,439 
        Bank         
CNH  242,363,999  USD  38,905,851  HSBC Bank USA  9-30-14  424,237  —  424,237 
EUR  44,580,000  GBP  35,368,435  JPMorgan Chase  10-1-14  —  ($119,427)  (119,427) 
        Bank N.A.         
EUR  4,900,000  USD  6,599,810  Bank of Montreal  10-1-14  —  (160,495)  (160,495) 
EUR  39,635,000  USD  52,979,312  J. Aron & Company  10-1-14  —  (893,137)  (893,137) 
EUR  39,635,000  USD  52,988,032  JPMorgan Chase  10-1-14  —  (901,857)  (901,857) 
        Bank N.A.         
GBP  19,830,000  AUD  35,960,714  Citibank N.A.  10-1-14  —  (606,152)  (606,152) 
GBP  79,270,000  AUD  142,781,467  JPMorgan Chase  10-1-14  —  (1,518,255)  (1,518,255) 
        Bank N.A.         
GBP  31,453,154  EUR  39,645,000  J. Aron & Company  10-1-14  106,206  —  106,206 
GBP  35,574,840  EUR  44,580,000  JPMorgan Chase  10-1-14  462,016  —  462,016 
        Bank N.A.         
GBP  157,377,809  USD  269,147,529  JPMorgan Chase  10-1-14  —  (7,933,955)  (7,933,955) 
        Bank N.A.         
MXN  493,412,378  CAD  40,545,000  Toronto Dominion  10-1-14  397,849  —  397,849 
        Bank         
MXN  255,515,338  USD  19,575,219  Bank of Nova Scotia  10-1-14  —  (71,328)  (71,328) 
NZD  20,410,000  AUD  18,381,600  Australia and New  10-1-14  —  (108,225)  (108,225) 
        Zealand Banking         
        Group         
NZD  42,264,253  AUD  39,290,000  JPMorgan Chase  10-1-14  —  (1,366,963)  (1,366,963) 
        Bank N.A.         
NZD  86,882,098  AUD  79,023,902  State Street Bank  10-1-14  —  (1,184,374)  (1,184,374) 
        and Trust Company         
NZD  85,834,941  USD  75,068,664  Bank of Nova Scotia  10-1-14  —  (3,466,756)  (3,466,756) 
USD  794,985,515  AUD  849,003,353  Barclays Bank PLC  10-1-14  3,612,064  —  3,612,064 
        Wholesale         
USD  19,763,358  AUD  21,250,922  State Street Bank  10-1-14  —  (45,063)  (45,063) 
        and Trust Company         
USD  5,392,550  AUD  5,800,000  Toronto Dominion  10-1-14  —  (13,749)  (13,749) 
        Bank         
USD  39,665,000  CAD  43,381,122  Bank of Montreal  10-1-14  —  (206,793)  (206,793) 
USD  39,655,000  CAD  43,462,871  Deutsche Bank AG  10-1-14  —  (291,929)  (291,929) 
        London         
USD  39,645,000  CAD  43,566,644  J. Aron & Company  10-1-14  —  (397,307)  (397,307) 
USD  1,169,946,347  CAD  1,248,996,188  Toronto Dominion  10-1-14  21,988,088  —  21,988,088 
        Bank         
USD  38,735,000  CNH  240,380,002  HSBC Bank USA  9-30-14  —  (273,131)  (273,131) 
USD  53,032,819  EUR  39,635,000  J. Aron & Company  10-1-14  946,645  —  946,645 
USD  53,155,688  EUR  39,635,000  JPMorgan Chase  10-1-14  1,069,513  —  1,069,513 
        Bank N.A.         
USD  6,676,740  EUR  4,900,000  UBS AG  10-1-14  237,425  —  237,425 
USD  81,480,742  NOK  502,964,324  Standard Chartered  10-1-14  408,644  —  408,644 
        Bank         

 

Annual report | Strategic Income Opportunities Fund  45 

 


          CONTRACTUAL      NET UNREALIZED 
CONTRACT  CONTRACT    SETTLEMENT  UNREALIZED  UNREALIZED  APPRECIATION/ 
TO BUY  TO SELL  COUNTERPARTY  DATE  APPRECIATION  DEPRECIATION  (DEPRECIATION) 
USD  8,916,644  NOK  55,127,152  Toronto Dominion  10-1-14  $30,778  —  $30,778 
        Bank         
USD  91,757,965  SEK  623,995,453  Citibank N.A.  10-1-14  2,485,207  —  2,485,207 
USD  2,004,554  SGD  2,489,626  Bank of Montreal  10-1-14  11,353  —  11,353 
USD  25,380,000  SGD  31,494,042  HSBC Bank USA  10-1-14  165,791  —  165,791 
            $46,178,893  ($22,063,330)  $24,115,563 

 

Currency Abbreviations         
AUD  Australian Dollar  GBP  Pound Sterling  SEK  Swedish Krona 
CAD  Canadian Dollar  MXN  Mexican Peso  SGD  Singapore Dollar 
CNH  Chinese Yuan  NOK  Norwegian Krone  USD  United States Dollar 
EUR  Euro  NZD  New Zealand Dollar     

 

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 over-the-counter derivatives contracts.

When the fund purchases an option, the premium paid by the fund is included in the Fund’s 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. If the fund enters into a closing sale transaction, the fund realizes a gain or loss, depending on whether proceeds from the closing sale are greater or less than the original cost. 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 August 31, 2014, the fund used purchased options to manage against anticipated currency exchange rate changes. During the year ended August 31, 2014, the fund held purchased options with market values ranging from $2.0 million to $11.1 million, as measured at each quarter end.

During the year ended August 31, 2014, the fund wrote option contracts to manage against anticipated currency exchange rate changes and gain exposure to foreign currencies. The following table summarizes the fund’s written options activities during the year ended August 31, 2014. There were no contracts held as of August 31, 2014.

46  Strategic Income Opportunities Fund | Annual report 

 


  NUMBER OF   
  CONTRACTS  PREMIUMS 
  (EQUITY)  RECEIVED 
Outstanding, beginning of year  122,780,000  $827,732.00 
Options written  472,535,000  2,386,656 
Options closed  —  — 
Options exercised  (293,025,000)  (1,427,452) 
Options expired  (302,290,000)  (1,786,936) 
Outstanding, end of year  —  — 

 

Fair value of derivative instruments by risk category

The table below summarizes the fair value of derivatives held by the fund at August 31, 2014 by risk category:

    FINANCIAL  ASSET  LIABILITY 
  STATEMENT OF ASSETS AND  INSTRUMENTS  DERIVATIVES  DERIVATIVES 
RISK  LIABILITIES LOCATION  LOCATION  FAIR VALUE  FAIR VALUE 
Interest rate contracts  Receivable/payable  Futures†  —  ($4,094,802) 
  for futures       
 
Foreign exchange  Receivable/payable for  Forward foreign  $46,178,893  (22,063,330) 
contracts  forward foreign currency  currency contracts     
  exchange contracts       
Foreign exchange  Investments in unaffiliated  Purchased options  5,243,076  — 
contracts  issuers, at value*       
 
      $51,421,969  ($26,158,132) 

 

† Reflects cumulative appreciation/depreciation on futures as disclosed in Note 3. Only the period end variation margin is separately disclosed on the Statement of assets and liabilities.

* Purchased options are included in the Fund’s investments.

For financial reporting purposes, the fund does not offset OTC derivative assets or liabilities that are subject to master netting arrangements, as defined by the ISDAs, in the Statement of assets and liabilities. In the event of default by the counterparty or a termination of the agreement, the ISDA allows an offset of amounts across the various transactions between the fund and the applicable counterparty. The table below reflects the fund’s exposure to counterparties subject to an ISDA for OTC derivative transactions:

  ASSET  LIABILITY 
Foreign forward currency contracts  $46,178,893  ($22,063,330) 
Purchased options  5,243,076  — 
Totals  $51,421,969  ($22,063,330) 

 

  TOTAL MARKET       
  VALUE OF OTC  COLLATERAL RECEIVED  COLLATERAL PLEDGED   
COUNTERPARTY  DERIVATIVES  BY FUND  BY FUND  NET EXPOSURE 
Australia and New  $920,581  —  —  $920,581 
Zealand Banking         
Group         
Bank of Montreal  (355,935)  —  —  (355,935) 
Bank of Nova Scotia  (2,930,162)  —  —  (2,930,162) 
Barclays Bank PLC  3,676,174  —  —  3,676,174 
Wholesale         
Canadian Imperial Bank  890,302  —  —  890,302 
of Commerce         
Citibank N.A.  2,732,185  —  —  2,732,185 

 

Annual report | Strategic Income Opportunities Fund  47 

 


  TOTAL MARKET       
  VALUE OF OTC  COLLATERAL RECEIVED  COLLATERAL PLEDGED   
COUNTERPARTY  DERIVATIVES  BY FUND  BY FUND  NET EXPOSURE 
Deutsche Bank AG  ($1,189,099)  —  —  ($1,189,099) 
London         
Goldman Sachs  137,977  —  —  137,977 
HSBC Bank USA  216,425  —  —  216,425 
J. Aron & Company  (237,593)  —  —  (237,593) 
JPMorgan Chase  (7,137,847)  —  —  (7,137,847) 
Bank N.A.         
Morgan Stanley &  5,105,098  —  —  5,105,098 
Company, Inc.         
Royal Bank of Canada  3,109,920  —  —  3,109,920 
Standard Chartered  340,168  —  —  340,168 
Bank         
State Street Bank and  546,422  —  —  546,422 
Trust Company         
Toronto Dominion Bank  22,354,882  —  —  22,354,882 
UBS AG  1,179,140  —  —  1,179,140 
Totals  $29,358,638  —  —  $29,358,638 

 

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 August 31, 2014:

  STATEMENT OF OPERATIONS LOCATION — NET REALIZED GAIN (LOSS) ON: 
 
    INVESTMENTS       
    IN UNAFFILIATED       
    ISSUERS AND       
    FOREIGN  INVESTMENTS     
  FUTURES  CURRENCY  (PURCHASED  WRITTEN   
RISK  CONTRACTS  TRANSACTIONS*  OPTIONS)  OPTIONS  TOTAL 
Interest rate contracts  ($50,324,940)  —  —  —  ($50,324,940) 
Foreign exchange  —  ($29,702,395)  ($8,171,997)  $1,786,936  (36,087,456) 
contracts           
Total  ($50,324,940)  ($29,702,395)  ($8,171,997)  $1,786,936  ($86,412,396) 

 

*Realized gain/loss associated with forward foreign currency contracts is included in this caption on the Statement of operations.

The table below summarizes the net change in unrealized appreciation (depreciation) included in the net increase (decrease) in net assets from operations, classified by derivative instrument and risk category, for the year ended August 31, 2014:

  STATEMENT OF OPERATIONS LOCATION — CHANGE IN NET UNREALIZED GAIN (LOSS) ON: 
 
    INVESTMENTS       
    IN UNAFFILIATED       
    ISSUERS AND       
    TRANSLATION       
OF ASSETS       
    AND LIABILITIES  INVESTMENTS     
  FUTURES  IN FOREIGN  (PURCHASED  WRITTEN   
RISK  CONTRACTS  CURRENCIES*  OPTIONS)  OPTIONS  TOTAL 
Interest rate contracts  ($3,797,225)  —  —  —  ($3,797,225) 
Foreign exchange  —  $14,967,296  $790,512  ($779,407)  14,978,401 
contracts           
Total  ($3,797,225)  $14,967,296  $790,512  ($779,407)  $11,181,176 

 

*Change in unrealized appreciation/depreciation associated with forward foreign currency contracts is included in this caption of the Statement of operations.

 

48  Strategic Income Opportunities Fund | Annual report 

 


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 or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).

Management fee. The fund has an investment management contract with the Advisor under which the fund pays a daily management fee to the Advisor equivalent, on an annual basis, to the sum of: (a) 0.700% of the first $500 million of the fund’s aggregate daily net assets; (b) 0.650% of the next $3 billion of the fund’s aggregate daily net assets; and (c) 0.600% of the fund’s aggregate daily net assets in excess of $3.5 billion. Aggregate net assets include the net assets of the fund and Strategic Income Opportunities Trust, a series of John Hancock Variable Insurance Trust (JHVIT). 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 complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. 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.

Effective July 1, 2014, the Advisor has contractually agreed to waive its management fee by 0.02% as a percentage of the fund’s average annual net assets. The current expense limitation agreement expires on December 31, 2015, unless renewed by mutual agreement of the fund and the advisor based upon a determination that this is appropriate under the circumstances at that time.

The Advisor has voluntarily agreed to reduce a portion of its management fee or make payments to the fund if certain expenses of the fund exceed 0.15% of average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, service fees, transfer agent fees, blue sky fees, printing and postage, acquired fund fees and short dividend expense. This expense reduction will continue in effect until terminated at any time by the Advisor on notice to the fund.

Annual report | Strategic Income Opportunities Fund  49 

 


Effective July 1, 2014, the Advisor has contractually agreed to limit the fund’s total expenses, excluding certain expenses such as taxes, brokerage commissions, interest expense, acquired fund fees, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, acquired fund fees and short dividend expense, to 1.15%, 1.85%, 1.20% and 0.83% for Class A, Class C, Class R2 and Class R6 shares, respectively, of the fund’s average daily net asset value, on an annual basis. The expense reimbursements and limits will continue in effect until at least December 31, 2015 (except Class R6 which expires December 31, 2014), unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time. Prior to July 1, 2014, the Advisor had contractually agreed to limit the fund’s total expenses, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, acquired fund fees and short dividend expense to 1.17%, 1.87%, 1.22% and 0.83% for Class A, Class C, Class R2 and Class R6 shares, respectively, of the fund’s average daily net asset value on an annual basis.

Effective February 1, 2014, for Class R6 shares, the Advisor has contractually agreed to waive and/or reimburse all class-specific expenses of the fund, including transfer agency fees and service fees, blue sky fees, and printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. This waiver expires on December 31, 2015, unless renewed by mutual agreement of the fund and the advisor based upon a determination that this is appropriate under the circumstances at that time. This waiver was in effect on a voluntary basis as of January 1, 2014.

The expense reductions described above amounted to the following for the year ended August 31, 2014.

CLASS  EXPENSE REDUCTION 
Class A  $115,316 
Class C  44,002 
Class I  128,536 
Class R2  28,616 
Class R6  19,632 
Class NAV  143,125 
Total  $479,227 

 

The investment management fees incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 0.64% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

AMOUNTS ELIGIBLE  AMOUNTS ELIGIBLE  AMOUNTS ELIGIBLE  AMOUNT RECOVERED DURING 
FOR RECOVERY THROUGH  FOR RECOVERY THROUGH  FOR RECOVERY THROUGH  THE PERIOD ENDED 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  AUGUST 31, 2014 
$542,632  $414,175  $33,554  $548,175 

 

50  Strategic Income Opportunities Fund | Annual report 

 


  AMOUNT RECOVERED 
CLASS  BY CLASS 
Class A  $404,533 
Class C  137,110 
Class R2  5,800 
Class R6  732 
Total  $548,175 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class C and Class R2 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. In addition, under a service plan for Class R2 shares, the fund pays for certain other services. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund’s shares.

CLASS  12b–1 FEE  SERVICE FEE 
Class A  0.30%  — 
Class C  1.00%  — 
Class R2  0.25%  0.25% 

 

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $1,871,793 for the year ended August 31, 2014. Of this amount, $248,354 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $1,582,664 was paid as sales commissions to broker-dealers and $40,775 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor. The upfront sales charge for Class A shares is 4.00%. Prior to February 3, 2014, the upfront sales charge for Class A shares was 4.50%.

Class A and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, CDSCs received by the Distributor amounted to $27,011 and $88,639 for Class A and Class C shares, respectively.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other

Annual report | Strategic Income Opportunities Fund  51 

 


John Hancock affiliated funds. 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.

Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  $3,613,411  $1,624,513  $90,404  $91,462 
Class C  4,462,747  601,040  46,034  34,754 
Class I  —  1,468,796  65,106  96,830 
Class R2  23,690  1,222  29,095  542 
Class R6  —  137  19,303  398 
Total  $8,099,848  $3,695,708  $249,942  $223,986 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Note 6 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  40,156,852  $439,510,846  61,080,422  $681,318,215 
Distributions reinvested  5,543,585  60,400,538  4,301,583  47,824,678 
Repurchased  (56,710,218)  (621,527,692)  (34,540,541)  (383,607,418) 
 
Net increase (decrease)  (11,009,781)  ($121,616,308)  30,841,464  $345,535,475 
 
Class C shares         
Sold  11,114,210  $121,738,854  19,679,011  $219,964,173 
Distributions reinvested  1,631,930  17,767,209  1,178,892  13,107,403 
Repurchased  (11,258,976)  (123,258,391)  (7,214,785)  (80,048,605) 
 
Net increase  1,487,164  $16,247,672  13,643,118  $153,022,971 
 
Class I shares         
Sold  77,628,948  $851,130,146  60,350,055  $674,315,722 
Distributions reinvested  5,100,464  55,621,956  3,662,002  40,724,166 
Repurchased  (43,147,355)  (471,699,882)  (32,469,015)  (359,790,207) 
 
Net increase  39,582,057  $435,052,220  31,543,042  $355,249,681 

 

52  Strategic Income Opportunities Fund | Annual report 

 


    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R2 shares         
Sold  463,301  $5,086,439  511,480  $5,698,710 
Distributions reinvested  13,069  142,123  642  7,046 
Repurchased  (231,748)  (2,538,324)  (55,871)  (613,540) 
 
Net increase  244,622  $2,690,238  456,251  $5,092,216 
 
Class R6 shares         
Sold  35,715  $391,327  46,934  $518,512 
Distributions reinvested  2,934  31,995  703  7,775 
Repurchased  (18,291)  (200,970)  (8,245)  (91,894) 
 
Net increase  20,358  $222,352  39,392  $434,393 
 
Class NAV shares         
Sold  13,189,390  $144,842,305  11,437,877  $127,135,666 
Distributions reinvested  7,255,203  79,049,752  6,015,860  66,875,691 
Repurchased  (4,906,093)  (53,650,719)  (11,793,577)  (132,150,269) 
 
Net increase  15,538,500  $170,241,338  5,660,160  $61,861,088 
 
Total net increase  45,862,920  $502,837,512  82,183,427  $921,195,824 

 

Affiliates of the fund owned 100% of shares of beneficial interest of Class NAV for the year ended August 31, 2014.

Note 7 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to $2,336,500,328 and $1,984,548,097, respectively, for the year ended August 31, 2014.

Note 8 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 33.2% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATED 
FUND  CONCENTRATION 
John Hancock Funds II Balanced Fund  13.3% 
John Hancock Funds II Moderate Fund  5.3% 
John Hancock Funds II Growth Fund  5.1% 

 

Annual report | Strategic Income Opportunities Fund  53 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Strategic Income Opportunities Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Strategic Income Opportunities Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and agent banks, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

54  Strategic Income Opportunities Fund | Annual report 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $46,328,377 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | Strategic Income Opportunities Fund  55 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with John Hancock Asset Management a division of Manulife Asset Management (US) LLC (the Subadvisor), for John Hancock Strategic Income Opportunities Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

56  Strategic Income Opportunities Fund | Annual report 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

Annual report | Strategic Income Opportunities Fund  57 

 


The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund outperformed its benchmark index and peer group average for the one- and three-year periods ended December 31, 2013. The Board noted the fund’s favorable performance relative to the benchmark index and peer group for the one- and three-year periods. The Board concluded that the fund’s performance has generally outperformed the historical performance of comparable funds and the fund’s benchmark.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are higher than the peer group median. The Board took into account management’s discussion of the fund’s expenses.

The Board also noted that the Fund is subject to an expense cap until December 2014, which reduces certain expenses of the fund and that the Advisor has proposed to waive a portion of the advisory fee. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

58  Strategic Income Opportunities Fund | Annual report 

 


Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the fund’s Subadvisor is an affiliate of the Advisor;

(i) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(j) noted that the subadvisory fee for the fund is paid by the Advisor; and

(k) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion

Annual report | Strategic Income Opportunities Fund  59 

 


and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such

60  Strategic Income Opportunities Fund | Annual report 

 


securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also considered any potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund has generally outperformed the historical performance of comparable funds and the fund’s benchmark;

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

Annual report | Strategic Income Opportunities Fund  61 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

62  Strategic Income Opportunities Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

Annual report | Strategic Income Opportunities Fund  63 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

64  Strategic Income Opportunities Fund | Annual report 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

Annual report | Strategic Income Opportunities Fund  65 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  John Hancock Asset Management a division of 
Peter S. Burgess*  Manulife Asset Management (US) LLC 
William H. Cunningham 
Grace K. Fey  Principal distributor 
Theron S. Hoffman*  John Hancock Funds, LLC 
Deborah C. Jackson 
Hassell H. McClellan  Custodian 
Gregory A. Russo  State Street Bank and Trust Company 
Warren A. Thomson† 
  Transfer agent 
Officers  John Hancock Signature Services, Inc. 
Andrew G. Arnott 
President  Legal counsel 
K&L Gates LLP 
John J. Danello 
Senior Vice President, Secretary,  Independent registered 
and Chief Legal Officer  public accounting firm 
  PricewaterhouseCoopers LLP 
Francis V. Knox, Jr.   
Chief Compliance Officer   
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

66  Strategic Income Opportunities Fund | Annual report 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


 
This report is for the information of the shareholders of John Hancock Strategic Income Opportunities Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  356A 8/14 
MF198775  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

                  SEC 30-day  SEC 30-day 
  Average annual total returns (%)  Cumulative total returns (%)  yield (%)  yield (%) 
  with maximum sales charge    with maximum sales charge  subsidized  unsubsidized1 
  1-year  5-year  10-year  Since inception2  1-year  5-year  10-year  Since inception2  as of 8-31-14  as of 8-31-14 
Class A  9.61  —  —  6.27  9.61  —  —  32.79  4.20  4.20 
Class I3  14.61  —  —  7.63  14.61  —  —  40.93  4.69  4.53 
Class NAV3,4  14.83  —  —  7.20  14.83  —  —  38.34  4.88  4.88 
Index†  13.91  —  —  8.77  13.91  —  —  47.95  —  — 

 

Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 4.0%. 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. Sales charges are not applicable to Class I and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A  Class I  Class NAV 
Gross (%)  1.54  1.27  1.04 
Net (%)  1.35  1.04  1.04 

 

Please refer to the most recent prospectuses and annual or semi-annual 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, 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 may pay on fund distributions or on the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index is the J.P. Morgan EMBI Global Index.

See the following page for footnotes.

6  Emerging Markets Debt Fund | Annual report 

 



    With maximum  Without   
  Start date  sales charge  sales charge  Index 
Class I3  1-4-10  $14,093  $14,093  $14,795 
Class NAV3,4  1-4-10  13,834  13,834  14,795 

 

The values shown in the chart for “Class A with maximum sales charge” have been adjusted to reflect the reduction in the Class A maximum sales charge from 4.5% to 4.0%, which became effective on 2-3-14.

J.P. Morgan EMBI Global Index tracks the total return for traded foreign currency denominated debt instruments in emerging markets.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Footnotes related to performance pages

1 Unsubsidized yield reflects what the yield would have been without the effect of reimbursements and waivers.

2 From 1-4-10.

3 For certain types of investors as described in the fund’s prospectuses.

4 Class NAV shares were first offered on 6-20-13. The returns prior to this date are those of Class A shares that have been recalculated to reflect the gross fees and expenses of Class NAV shares.

Annual report | Emerging Markets Debt Fund  7 

 


Management’s discussion of

Fund performance

John Hancock Asset Management a division of Manulife Asset Management (US) LLC

The past 12 months marked a volatile period for emerging-market debt, but it was ultimately one that saw strong gains for the asset class. In the final months of 2013, investors pulled money out of emerging markets after the U.S. Federal Reserve indicated it would begin paring back its bond-buying program throughout 2014, ending it completely before the year’s end. The fundamentals in emerging markets were another area of some concern as investors worried about slowing growth in China’s economy, the world’s second largest. While these challenges represent real issues worth monitoring, beginning in February 2014, investors regained their appetite for emerging-market debt, helping the category to erase the declines from late 2013 and go on to post solid gains during the period.

For the 12 months ended August 31, 2014, John Hancock Emerging Markets Debt Fund’s Class A shares gained 14.19%, excluding sales charges. For the same period, the fund’s benchmark, the J.P. Morgan EMBI Global Index returned 13.91%. Within the fund’s sovereign debt positions, its underweight stance in European government debt, coupled with solid security selection, contributed positively to relative returns. The fund’s positions in locally denominated sovereign debt, while small, produced more mixed results. The vast majority of these holdings were invested in Mexican and Brazilian government bonds—two areas where the fund holds significant overweights. Debt from both countries posted solid gains, and the fund’s exposure benefited performance relative to its benchmark index. The fund’s overweight position in emerging-market corporate debt across a number of regions, including Latin America, Eastern Europe, and Asia, produced more mixed results. Many passive strategies have little to no exposure to corporate debt in emerging markets, and while the fund’s exposure to corporate bonds generally posted absolute gains, they tended to lag sovereign debt in those markets, which benefited from greater investor demand. It’s worth mentioning that the fund did hold a small position in Argentine sovereign debt, a position we established during the year based on our belief that the current impasse surrounding the country’s technical default on restructured debt will be resolved favorably in the coming months.

This commentary reflects the views of the portfolio managers through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Emerging Markets Debt Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141,2  expense ratio 
Class A  $1,000.00  $1,078.50  $7.07  1.35% 
Class C  1,000.00  998.30  0.19  2.30% 
Class I  1,000.00  1,080.00  5.45  1.04% 
Class NAV  1,000.00  1,081.10  4.56  0.87% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 


 
Annual report | Emerging Markets Debt Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,018.40  $6.87  1.35% 
Class C  1,000.00  1,013.61  11.67  2.30% 
Class I  1,000.00  1,020.00  5.30  1.04% 
Class NAV  1,000.00  1,020.80  4.43  0.87% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

2 Expenses are equal to the fund’s annualized expense ratio for Class C shares, multiplied by the average account value over the period, multiplied by 3/365 (to reflect the period).

10  Emerging Markets Debt Fund | Annual report 

 


Portfolio summary

Top 10 Issuers (36.2% of Net Assets on 8-31-14)1,2     
Petroleos de Venezuela SA  7.8%  Federative Republic of Brazil  2.8% 
Government of Mexico  5.4%  Republic of Argentina  2.6% 
Republic of Turkey  4.4%  Republic of Indonesia  2.1% 
Pertamina Persero PT  3.8%  Petrobras  2.0% 
Petroleos Mexicanos  3.5%  Ecopetrol SA  1.8% 
 
Portfolio Composition1,3       
Foreign Government Obligations  27.8%  Telecommunication Services  4.1% 
Energy  24.5%  Consumer Staples  2.1% 
Financials  11.8%  Information Technology  0.7% 
Materials  9.7%  Consumer Discretionary  0.6% 
Industrials  4.8%  Short-Term Investments & Other  9.3% 
Utilities  4.6%     
 
Top 10 Countries1,2,3       
Mexico  17.5%  Colombia  4.9% 
Brazil  10.8%  Peru  3.9% 
Venezuela  8.3%  Russia  3.8% 
Indonesia  7.3%  Ireland  3.0% 
Turkey  6.7%  Argentina  2.6% 
 
Quality Composition1,4       
AA  1.4%  B  11.7% 
A  11.9%  CCC & Below  5.2% 
BBB  46.8%  Short-Term Investments & Other  9.3% 
BB  13.7%     
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if a creditor is unable or unwilling to make principal or interest payments. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. The issuer or grantor of a security, or counterparty to a transaction, may be unable or unwilling to make principal, interest, or settlement payments. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

4 Ratings are from Moody’s Investors Service, Inc. If not available, we have used Standard & Poor’s Ratings Services. In the absence of ratings from these agencies, we have used Fitch Ratings, Inc. “Not Rated” securities are those with no ratings available from these agencies. All ratings are as of 8-31-14 and do not reflect subsequent downgrades or upgrades, if any.

Annual report | Emerging Markets Debt Fund  11 

 


Fund’s investments

As of 8-31-14

    Maturity     
  Rate (%)  date  Par value^  Value 
Corporate Bonds 62.9%      $307,526,278 
(Cost $302,275,628)         
 
Austria 0.8%        3,834,000 
JBS Investments GmbH (S)  7.750  10-28-20  3,550,000  3,834,000 
 
Brazil 7.3%        35,650,703 
Banco BTG Pactual SA (S)  4.000  01-16-20  1,200,000  1,170,000 
Banco BTG Pactual SA  5.750  09-28-22  3,000,000  2,955,000 
Banco do Brasil SA (S)  5.875  01-19-23  400,000  425,000 
Banco do Brasil SA (6.250% to 4-15-24, then         
10 Year CMT + 4.398%) (Q)  6.250  04-15-24  3,340,000  2,680,350 
Braskem Finance, Ltd. (Q)(S)  7.375  10-04-15  1,200,000  1,225,200 
Cia Brasileira de Aluminio (S)  4.750  06-17-24  4,650,000  4,557,000 
GTL Trade Finance, Inc. (S)  7.250  04-16-44  4,650,000  4,911,563 
Odebrecht Finance, Ltd. (Q)(S)  7.500  09-14-15  1,665,000  1,710,788 
Odebrecht Offshore Drilling Finance, Ltd. (S)  6.625  10-01-22  2,447,528  2,621,914 
Petrobras Global Finance BV  4.375  05-20-23  1,750,000  1,726,690 
Petrobras International Finance Company  5.375  01-27-21  1,430,000  1,507,645 
Petrobras International Finance Company  6.750  01-27-41  6,000,000  6,696,822 
Vale Overseas, Ltd.  6.875  11-21-36  1,660,000  1,956,891 
Votorantim Cimentos SA  7.250  04-05-41  1,400,000  1,505,840 
 
Chile 1.2%        6,013,987 
Corporacion Nacional del Cobre de Chile  5.625  09-21-35  2,500,000  2,840,720 
Empresa de Transporte de Pasajeros Metro         
SA (S)  4.750  02-04-24  2,300,000  2,415,324 
Empresa Nacional del Petroleo  5.250  08-10-20  700,000  757,943 
 
China 0.3%        1,689,244 
CNOOC Finance 2012, Ltd. (S)  3.875  05-02-22  1,050,000  1,076,162 
Sinopec Group Overseas Development         
2012, Ltd.  3.900  05-17-22  600,000  613,082 
 
Colombia 4.3%        21,087,047 
Comcel Trust (S)  6.875  02-06-24  2,000,000  2,200,000 
Ecopetrol SA  5.875  09-18-23  1,350,000  1,545,750 
Ecopetrol SA  5.875  05-28-45  6,950,000  7,495,297 
Grupo Aval, Ltd.  4.750  09-26-22  3,200,000  3,216,000 
Pacific Rubiales Energy Corp. (S)  5.125  03-28-23  3,200,000  3,232,000 
Pacific Rubiales Energy Corp. (S)  5.375  01-26-19  1,200,000  1,248,000 
Transportadora de Gas Internacional SA ESP (S)  5.700  03-20-22  2,000,000  2,150,000 

 

12  Emerging Markets Debt Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Costa Rica 1.5%        $7,407,514 
Banco Nacional de Costa Rica  6.250  11-01-23  2,500,000  2,575,000 
Instituto Costarricense de Electricidad  6.375  05-15-43  5,400,000  4,832,514 
 
Guatemala 1.0%        4,793,970 
Agromercantil Senior Trust (S)  6.250  04-10-19  2,500,000  2,607,850 
Cementos Progreso Trust (S)  7.125  11-06-23  2,000,000  2,186,120 
 
India 1.6%        7,680,538 
Bharti Airtel International Netherlands BV (S)  5.125  03-11-23  2,650,000  2,803,038 
Reliance Industries, Ltd. (Q)(S)  5.875  02-05-18  550,000  541,750 
Vedanta Resources PLC (S)  7.125  05-31-23  4,100,000  4,335,750 
 
Indonesia 5.2%        25,658,076 
Majapahit Holding BV  7.750  01-20-20  870,000  1,025,513 
Pertamina Persero PT (S)  6.000  05-03-42  8,000,000  8,060,000 
Pertamina Persero PT (S)  6.450  05-30-44  9,700,000  10,330,500 
Perusahaan Listrik Negara PT (S)  5.250  10-24-42  6,850,000  6,242,063 
 
Ireland 3.0%        14,640,453 
Metalloinvest Finance, Ltd.  5.625  04-17-20  4,000,000  3,650,000 
MMC Norilsk Nickel OJSC (S)  5.550  10-28-20  4,300,000  4,246,250 
MTS International Funding, Ltd. (S)  8.625  06-22-20  1,650,000  1,867,140 
Rosneft Oil Company (S)  4.199  03-06-22  2,900,000  2,457,750 
Vnesheconombank  6.902  07-09-20  2,475,000  2,419,313 
 
Israel 0.5%        2,301,560 
Israel Electric Corp., Ltd. (S)  6.875  06-21-23  2,000,000  2,301,560 
 
Jamaica 0.8%        4,087,000 
Digicel Group, Ltd. (S)  8.250  09-30-20  200,000  216,000 
Digicel Group, Ltd.  8.250  09-30-20  1,200,000  1,296,000 
Digicel, Ltd. (S)  6.000  04-15-21  2,500,000  2,575,000 
 
Kazakhstan 1.1%        5,370,430 
KazAgro National Management         
Holding JSC (S)  4.625  05-24-23  2,550,000  2,480,385 
Kazakhstan Temir Zholy Finance BV (S)  6.375  10-06-20  600,000  666,000 
Zhaikmunai LP (S)  7.125  11-13-19  2,050,000  2,224,045 
 
Liechtenstein 0.5%        2,205,002 
VimpelCom Holdings BV (S)  7.504  03-01-22  2,230,000  2,205,002 
 
Luxembourg 0.9%        4,350,228 
Altice Financing SA (S)  7.875  12-15-19  400,000  432,728 
Altice Finco SA (S)  8.125  01-15-24  2,600,000  2,827,500 
Millicom International Cellular SA (S)  6.625  10-15-21  1,000,000  1,090,000 
 
Mexico 12.1%        58,949,168 
Alpek SA de CV  4.500  11-20-22  2,850,000  2,914,125 
America Movil SAB de CV  3.125  07-16-22  400,000  396,936 
America Movil SAB de CV  7.125  12-09-24  MXN 52,500,000  4,114,727 
Banco Santander Mexico SA Institucion de         
Banca Multiple Grupo Financiero  4.125  11-09-22  2,400,000  2,424,000 
Comision Federal de Electricidad (S)  4.875  05-26-21  3,000,000  3,247,500 
Credito Real SAB de CV (S)  7.500  03-13-19  4,220,000  4,557,600 
Empresas ICA SAB de CV (S)  8.875  05-29-24  4,000,000  4,150,000 

 

See notes to financial statements  Annual report | Emerging Markets Debt Fund  13 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Mexico (continued)         
Grupo Bimbo SAB de CV (S)  4.500  01-25-22  1,000,000  $1,064,600 
Grupo Televisa SAB  8.500  03-11-32  1,200,000  1,714,080 
Mexichem SAB de CV (S)  4.875  09-19-22  1,800,000  1,917,000 
Mexichem SAB de CV  6.750  09-19-42  300,000  332,250 
Mexichem SAB de CV (S)  6.750  09-19-42  1,600,000  1,772,000 
Office Depot de Mexico SA de CV (S)  6.875  09-20-20  2,600,000  2,769,000 
Petroleos Mexicanos  5.500  01-21-21  1,710,000  1,923,750 
Petroleos Mexicanos  6.500  06-02-41  1,050,000  1,281,000 
Petroleos Mexicanos  6.625  06-15-35  11,380,000  14,025,850 
Tenedora Nemak SA de CV (S)  5.500  02-28-23  4,225,000  4,351,750 
Trust F/1401 (S)  5.250  12-15-24  1,850,000  1,961,000 
Trust F/1401 (S)  6.950  01-30-44  3,600,000  4,032,000 
 
Netherlands 0.6%        2,703,740 
Nostrum Oil & Gas Finance BV (S)  6.375  02-14-19  2,600,000  2,703,740 
 
Paraguay 0.2%        1,075,000 
Telefonica Celular del Paraguay SA  6.750  12-13-22  1,000,000  1,075,000 
 
Peru 2.9%        14,272,700 
Abengoa Transmision Sur SA (S)  6.875  04-30-43  4,250,000  4,675,000 
Cia Minera Ares SAC (S)  7.750  01-23-21  2,100,000  2,278,500 
SAN Miguel Industrias Pet SA (S)  7.750  11-06-20  4,000,000  4,300,000 
Volcan Cia Minera SAA (S)  5.375  02-02-22  2,960,000  3,019,200 
 
Russia 3.8%        18,593,377 
EuroChem Mineral & Chemical Company OJSC  5.125  12-12-17  2,850,000  2,736,000 
Gazprom Neft OAO (S)  4.375  09-19-22  2,700,000  2,349,000 
Lukoil International Finance BV  4.563  04-24-23  2,250,000  2,022,750 
Lukoil International Finance BV  4.563  04-24-23  370,000  332,630 
Russian Agricultural Bank OJSC (S)  5.100  07-25-18  2,200,000  2,071,027 
Russian Agricultural Bank OJSC  7.750  05-29-18  600,000  618,720 
Sberbank of Russia (S)  6.125  02-07-22  200,000  195,000 
Sberbank of Russia  6.125  02-07-22  2,500,000  2,437,500 
Severstal OAO  5.900  10-17-22  3,350,000  3,224,375 
TMK OAO  6.750  04-03-20  2,900,000  2,606,375 
 
South Africa 0.7%        3,668,760 
AngloGold Ashanti Holdings PLC  8.500  07-30-20  2,000,000  2,245,000 
Myriad International Holdings BV (S)  6.000  07-18-20  1,300,000  1,423,760 
 
Spain 0.9%        4,162,500 
BBVA Bancomer SA  6.500  03-10-21  3,700,000  4,162,500 
 
Thailand 0.9%        4,530,998 
PTT Global Chemical PCL (S)  4.250  09-19-22  1,400,000  1,439,068 
PTTEP Canada International Finance, Ltd. (S)  6.350  06-12-42  2,600,000  3,091,930 
 
Turkey 2.3%        11,472,807 
KOC Holding AS (S)  3.500  04-24-20  200,000  191,556 
KOC Holding AS  3.500  04-24-20  1,600,000  1,532,451 
Mersin Uluslararasi Liman Isletmeciligi AS (S)  5.875  08-12-20  1,500,000  1,597,650 
TC Ziraat Bankasi AS (S)  4.250  07-03-19  4,500,000  4,482,900 
Turkiye Garanti Bankasi AS (S)  5.250  09-13-22  3,650,000  3,668,250 

 

14  Emerging Markets Debt Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
United States 0.7%        $3,301,826 
Rio Oil Finance Trust Series 2014-1 (S)  6.250  07-06-24  3,100,000  3,301,826 
 
Venezuela 7.8%        38,025,650 
Petroleos de Venezuela SA  8.500  11-02-17  10,300,000  9,228,800 
Petroleos de Venezuela SA  9.000  11-17-21  12,200,000  9,479,400 
Petroleos de Venezuela SA (S)  9.000  11-17-21  400,000  310,800 
Petroleos de Venezuela SA  9.750  05-17-35  25,650,000  19,006,650 
 
Foreign Government Obligations 27.8%    $135,726,862 
(Cost $132,193,015)         
 
Argentina 2.6%        12,483,746 
Republic of Argentina (H)         
Bond  8.280  12-31-33  15,604,683  12,483,746 
 
Bahrain 0.5%        2,267,500 
Kingdom of Bahrain         
Bond (S)  6.125  08-01-23  2,000,000  2,267,500 
 
Bolivia 0.2%        824,000 
Republic of Bolivia         
Bond  4.875  10-29-22  800,000  824,000 
 
Brazil 3.5%        17,280,413 
Banco Nacional de Desenvolvimento         
Economico e Social         
Bond (S)  5.750  09-26-23  3,125,000  3,398,438 
Federative Republic of Brazil         
Bond  5.625  01-07-41  4,300,000  4,837,500 
Bond  10.000  01-01-21  BRL 21,000,000  9,044,475 
 
Chile 0.5%        2,493,250 
Republic of Chile         
Bond  2.250  10-30-22  1,300,000  1,251,250 
Bond  3.625  10-30-42  1,350,000  1,242,000 
 
Colombia 0.6%        3,069,000 
Republic of Colombia         
Bond  4.000  02-26-24  1,200,000  1,254,000 
Bond  4.375  07-12-21  500,000  539,000 
Bond  5.625  02-26-44  1,100,000  1,276,000 
 
Costa Rica 0.2%        952,500 
Republic of Costa Rica         
Bond  4.250  01-26-23  1,000,000  952,500 
 
Croatia 0.4%        1,983,030 
Republic of Croatia         
Bond  5.500  04-04-23  1,900,000  1,983,030 
 
Dominican Republic 0.3%        1,671,125 
Government of Dominican Republic         
Bond  7.500  05-06-21  1,450,000  1,671,125 
 
Hungary 0.4%        2,145,000 
Republic of Hungary         
Bond  5.375  02-21-23  2,000,000  2,145,000 

 

See notes to financial statements  Annual report | Emerging Markets Debt Fund  15 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Indonesia 2.1%    $10,291,813 
Republic of Indonesia       
Bond (S)  5.375  10-17-23  2,650,000  2,905,063 
Bond  5.875  03-13-20  800,000  897,000 
Bond  5.875  01-15-24  1,100,000  1,249,875 
Bond  6.625  02-17-37  4,450,000  5,239,875 
 
Jamaica 0.6%      2,662,500 
Government of Jamaica       
Bond  7.625  07-09-25  2,500,000  2,662,500 
 
Kenya 0.7%      3,510,000 
Republic of Kenya       
Bond (S)  6.875  06-24-24  3,250,000  3,510,000 
 
Lithuania 0.3%      1,581,125 
Republic of Lithuania       
Bond (S)  6.625  02-01-22  1,300,000  1,581,125 
 
Mexico 5.4%      26,415,527 
Government of Mexico       
Bond  4.000  10-02-23  1,200,000  1,272,000 
Bond  5.550  01-21-45  1,100,000  1,290,850 
Bond  6.750  09-27-34  3,400,000  4,488,000 
Bond  7.750  05-29-31  MXN 222,440,400  19,364,677 
 
Nigeria 0.5%      2,195,400 
Federal Republic of Nigeria       
Bond (S)  6.375  07-12-23  2,000,000  2,195,400 
 
Panama 1.1%      5,579,250 
Republic of Panama       
Bond  4.300  04-29-53  200,000  182,500 
Bond  6.700  01-26-36  3,050,000  3,919,250 
Bond  8.875  09-30-27  1,000,000  1,477,500 
 
Paraguay 0.0%      207,500 
Republic of Paraguay       
Bond (S)  4.625  01-25-23  200,000  207,500 
 
Peru 1.0%      4,841,500 
Republic of Peru       
Bond  6.550  03-14-37  2,700,000  3,496,500 
Bond  7.350  07-21-25  1,000,000  1,345,000 
 
Philippines 1.3%      6,250,038 
Republic of Philippines       
Bond  4.950  01-15-21  PHP 48,000,000  1,169,725 
Bond  5.500  03-30-26  2,100,000  2,464,875 
Bond  7.750  01-14-31  1,850,000  2,615,438 
 
Turkey 4.4%      21,456,770 
Republic of Turkey       
Bond  6.000  01-14-41  7,650,000  8,453,250 
Bond  6.250  09-26-22  3,560,000  4,058,400 
Bond  6.875  03-17-36  6,400,000  7,793,920 
Bond  7.000  03-11-19  1,000,000  1,151,200 
 
Uruguay 0.7%      3,179,750 
Republic of Uruguay       
Bond  7.625  03-21-36  2,300,000  3,179,750 

 

16  Emerging Markets Debt Fund | Annual report  See notes to financial statements 

 


    Maturity     
  Rate (%)  date  Par value^  Value 
Venezuela 0.5%        $2,386,125 
Republic of Venezuela         
Bond  9.375  01-13-34  3,150,000  2,386,125 
 
      Par value  Value 
Short-Term Investments 7.8%      $38,040,000 
(Cost $38,040,000)         
 
Repurchase Agreement 7.8%        38,040,000 
Barclays Tri-Party Repurchase Agreement dated 8-29-14 at 0.030%     
to be repurchased at $32,025,107 on 9-2-14, collateralized       
by $30,909,300 U.S. Treasury Inflation Index Notes, 0.125%     
due 1-15-22 (valued at $32,665,712, including interest)    $32,025,000  32,025,000 
Repurchase Agreement with State Street Corp. dated 8-29-14 at     
0.000% to be repurchased at $6,015,000 on 9-2-14, collateralized     
by $6,225,000 U.S. Treasury Notes, 0.625% due 11-30-17       
(valued at $6,137,788, including interest)      6,015,000  6,015,000 
 
Total investments (Cost $472,508,643)† 98.5%    $481,293,140 
 
Other assets and liabilities, net 1.5%    $7,526,467 
 
Total net assets 100.0%      $488,819,607 
 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the fund.

^ All par values are denominated in U.S. dollars unless otherwise indicated.

BRL  Brazilian Real 
CMT  Constant Maturity Treasury 
MXN  Mexican Peso 
PHP  Philippine Peso 

 

(H) Non-income producing — Issuer is in default.

(Q) Perpetual bonds have no stated maturity date. Date shown as maturity date is next call date.

(S) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold, normally to qualified institutional buyers, in transactions exempt from registration. Rule 144A securities amounted to $182,460,065 or 37.3% of the fund’s net assets as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $473,406,407. Net unrealized appreciation aggregated $7,886,733, of which $14,303,812 related to appreciated investment securities and $6,417,079 related to depreciated investment securities.

The fund had the following sector composition as a percentage of net assets on 8-31-14:

Foreign Government Obligations  27.8% 
Energy  24.5% 
Financials  11.8% 
Materials  9.7% 
Industrials  4.8% 
Utilities  4.6% 
Telecommunication Services  4.1% 
Consumer Staples  2.1% 
Information Technology  0.7% 
Consumer Discretionary  0.6% 
Short-Term Investments & Other  9.3% 
 
Total  100.0% 

 

See notes to financial statements  Annual report | Emerging Markets Debt Fund  17 

 


F I N A N C I A L   S T A T E M E N T S

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum public offering price per share.

Assets   
 
Total investments, at value (Cost $472,508,643)  481,293,140 
Cash  8,181 
Foreign currency, at value (Cost $9,653)  9,601 
Receivable for fund shares sold  35,900 
Receivable for forward foreign currency exchange contracts  293,425 
Interest receivable  7,323,663 
Receivable for securities lending income  102 
Receivable due from advisor  23,176 
Other receivables and prepaid expenses  45,152 
 
Total assets  489,032,340 
 
Liabilities   
Payable for fund shares repurchased  1,576 
Distributions payable  801 
Payable to affiliates   
Accounting and legal services fees  10,036 
Transfer agent fees  2,504 
Trustees’ fees  18 
Other liabilities and accrued expenses  197,798 
 
Total liabilities  212,733 
 
Net assets  $488,819,607 
 
Net assets consist of   
Paid-in capital  $480,694,413 
Undistributed net investment income  84,199 
Accumulated net realized gain (loss) on investments and foreign   
currency transactions  (1,036,221) 
Net unrealized appreciation (depreciation) on investments and translation of   
assets and liabilities in foreign currencies and foreign currency transactions  9,077,216 
 
Net assets  $488,819,607 
 
Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($4,108,763 ÷ 405,265 shares)1  $10.14 
Class C ($99,849 ÷ 9,852 shares)1  $10.13 
Class I ($9,955,531 ÷ 981,041 shares)  $10.15 
Class NAV ($474,655,464 ÷ 46,820,537 shares)  $10.14 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 96%)2  $10.56 

 

1 Redemption price per share is equal to the 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.

18  Emerging Markets Debt Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L   S T A T E M E N T S

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Interest  $16,347,083 
Securities lending  2,441 
 
Total investment income  16,349,524 
 
Expenses   
Investment management fees  1,958,859 
Distribution and service fees  3,149 
Accounting and legal services fees  33,267 
Transfer agent fees  4,157 
Trustees’ fees  2,729 
State registration fees  47,981 
Printing and postage  753 
Professional fees  78,965 
Custodian fees  170,271 
Registration and filing fees  52,483 
Expense recapture  75,199 
Other  13,972 
 
Total expenses  2,441,785 
Less expense reductions  (73,587) 
 
Net expenses  2,368,198 
 
Net investment income  13,981,326 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers and foreign currency transactions  (828,672) 
Investments in affiliated issuers  (82) 
 
  (828,754) 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers and translation of assets and liabilities in   
foreign currencies  19,220,385 
 
  19,220,385 
 
Net realized and unrealized gain  18,391,631 
 
Increase in net assets from operations  $32,372,957 

 

See notes to financial statements  Annual report | Emerging Markets Debt Fund  19 

 


F I N A N C I A L   S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-141  8-31-132 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $13,981,326  $1,651,907 
Net realized gain (loss)  (828,754)  1,063,254 
Change in net unrealized appreciation (depreciation)  19,220,385  (10,663,593) 
 
Increase (decrease) in net assets resulting from operations  32,372,957  (7,948,432) 
 
Distributions to shareholders     
From net investment income     
Class A  (48,000)  (508,291) 
Class C  (28)  — 
Class I  (113,329)  (139,370) 
Class NAV  (13,805,296)  (1,117,429) 
From net realized gain     
Class A  (1,004)  (277,644) 
Class I  (4,443)  (69,411) 
Class NAV  (920,803)  — 
 
Total distributions  (14,892,903)  (2,112,145) 
 
From fund share transactions  275,809,415  189,902,247 
 
Total increase  293,289,469  179,841,670 
 
Net assets     
Beginning of year  195,530,138  15,688,468 
 
End of year  $488,819,607  $195,530,138 
 
Undistributed net investment income  $84,199  $75,006 

 

1 The inception date for Class C shares is 8-28-14.

2 The inception date for Class NAV shares is 6-20-13.

20  Emerging Markets Debt Fund | Annual report  See notes to financial statements 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $9.35  $10.46  $10.37  $10.54  $10.00 
Net investment income2  0.45  0.53  0.62  0.61  0.34 
Net realized and unrealized gain (loss) on investments  0.84  (0.92)  0.31  (0.03)  0.58 
Total from investment operations  1.29  (0.39)  0.93  0.58  0.92 
Less distributions           
From net investment income  (0.46)  (0.49)  (0.64)  (0.68)  (0.38) 
From net realized gain  (0.04)  (0.23)  (0.20)  (0.07)  — 
Total distributions  (0.50)  (0.72)  (0.84)  (0.75)  (0.38) 
Net asset value, end of period  $10.14  $9.35  $10.46  $10.37  $10.54 
Total return (%)3,4  14.19  (4.30)  9.62  5.63  9.365 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $4  —6  $13  $12  $13 
Ratios (as a percentage of average net assets):           
Expenses before reductions  3.43  1.86  1.99  1.82  1.857 
Expenses including reductions  1.35  1.35  1.35  1.35  1.257 
Net investment income  4.50  4.90  6.12  5.82  5.097 
Portfolio turnover (%)  24  92  191  123  112 

 

1 Period from 1-4-10 (commencement of operations) to 8-31-10.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Not annualized.
6 Less than $500,000.
7 Annualized.

 

CLASS C SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $10.15 
Net investment loss2  (0.03) 
Net realized and unrealized gain on investments  0.01 
Total from investment operations  (0.02) 
From net investment income  —3 
Net asset value, end of period  $10.13 
Total return (%)4,5  (0.17)6 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  $—7 
Ratios (as a percentage of average net assets):   
Expenses before reductions  18.138 
Expenses including reductions  2.308 
Net investment loss  (30.30)8 
Portfolio turnover (%)  249 

 

1 The inception date for Class C shares is 8-28-14.
2 Based on average daily shares outstanding.
3 Less than $0.005 per share.
4 Does not reflect the effect of sales charges, if any.
5 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
6 Not annualized.
7 Less than $500,000.
8 Annualized.
9 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

See notes to financial statements  Annual report | Emerging Markets Debt Fund  21 

 


CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-101 
 
Per share operating performance           
Net asset value, beginning of period  $9.35  $10.46  $10.37  $10.54  $10.00 
Net investment income2  0.45  0.56  0.66  0.67  0.36 
Net realized and unrealized gain (loss) on investments  0.88  (0.91)  0.31  (0.04)  0.58 
Total from investment operations  1.33  (0.35)  0.97  0.63  0.94 
Less distributions           
From net investment income  (0.49)  (0.53)  (0.68)  (0.73)  (0.40) 
From net realized gain  (0.04)  (0.23)  (0.20)  (0.07)  — 
Total distributions  (0.53)  (0.76)  (0.88)  (0.80)  (0.40) 
Net asset value, end of period  $10.15  $9.35  $10.46  $10.37  $10.54 
Total return (%)3  14.61  (3.96)  10.06  6.12  9.624 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $10  $1  $3  $3  $3 
Ratios (as a percentage of average net assets):           
Expenses before reductions  2.04  1.52  1.64  1.41  1.515 
Expenses including reductions  1.04  0.98  0.95  0.88  0.885 
Net investment income  4.60  5.26  6.52  6.28  5.475 
Portfolio turnover (%)  24  92  191  123  112 

 

1 Period from 1-4-10 (commencement of operations) to 8-31-10.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.

 

CLASS NAV SHARES Period ended  8-31-14  8-31-131 
 
Per share operating performance     
Net asset value, beginning of period  $9.34  $9.84 
Net investment income2  0.50  0.07 
Net realized and unrealized gain (loss) on investments  0.85  (0.50) 
Total from investment operations  1.35  (0.43) 
Less distributions     
From net investment income  (0.51)  (0.07) 
From net realized gain  (0.04)  — 
Total distributions  (0.55)  (0.07) 
Net asset value, end of period  $10.14  $9.34 
Total return (%)3  14.83  (4.36)4 
 
Ratios and supplemental data     
Net assets, end of period (in millions)  $475  $195 
Ratios (as a percentage of average net assets):     
Expenses before reductions  0.88  0.905 
Expenses including reductions  0.87  0.875 
Net investment income  5.15  3.735 
Portfolio turnover (%)  24  926 

 

1 The inception date for Class NAV shares is 6-20-13.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.
6 The portfolio turnover is shown for the period from 9-1-12 to 8-31-13.

 

22  Emerging Markets Debt Fund | Annual report  See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock Emerging Markets Debt Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek total return with an emphasis on current income as well as capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are open to all investors. Class I shares are offered to institutions and certain investors. Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees if any, transfer agent fees, printing and postage and state registration fees for each class may differ

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 intends to qualify as investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Foreign securities and currencies, including forward foreign currency contracts, are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.

Other fund securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at

Annual report | Emerging Markets Debt Fund  23 

 


the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund’s Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

As of August 31, 2014, all investments are categorized as Level 2 under the hierarchy described above.

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, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the collateral value may decline or the counterparty may have insufficient assets to pay back claims resulting from close-out of the transactions.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

24  Emerging Markets Debt Fund | Annual report 

 


Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.

Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.

Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.

Line of credit. The fund may 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31,

Annual report | Emerging Markets Debt Fund  25 

 


2014 were $453. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, as of August 31, 2014, the fund has a short-term capital loss carryforward of $138,457 available to offset future net realized capital gains. These carryforwards as of August 31, 2014, do not expire.

As of August 31, 2014, 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. The fund typically declares and pays capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $14,444,390  $1,842,355 
Long-Term Capital Gain  $448,513  $269,790 
Total  $14,892,903  $2,112,145 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $378,425 of undistributed ordinary income.

Such distributions and distributable earnings, on a tax basis, are determined in conformity with income tax regulations, which may differ 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

26  Emerging Markets Debt Fund | Annual report 

 


differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to derivative transactions and wash sale loss deferrals.

Note 3 — Derivative instruments

The fund may invest in derivatives in order to meet its investment objectives. Derivatives include a variety of different instruments that may be traded in the over-the-counter 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 are typically traded through the OTC market. Certain Non-deliverable forwards are regulated by the Commodity Futures Trading Commission (the CFTC) as swaps. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC counterparties. The ISDA gives each party to the agreement the right to terminate all transactions traded under the agreement if there is certain deterioration in the credit quality or contractual default of the other party, as defined in the ISDA. Upon an event of default or a termination of the ISDA, the non-defaulting party has the right to close out all transactions and to net amounts owed.

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 maximum risk of loss due to counterparty risk is equal to the asset value of outstanding contracts offset by collateral received.

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.

Annual report | Emerging Markets Debt Fund  27 

 


During the year ended August 31, 2014, the fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currency and maintain diversity and liquidity of the fund. During the year ended August 31, 2014, the fund held forward foreign currency contracts with U.S. dollar notional values ranging from $2.3 million to $15.5 million, as measured at each quarter end. The following table summarizes the contracts held at August 31, 2014.

        CONTRACTUAL      NET UNREALIZED 
CONTRACT  CONTRACT    SETTLEMENT  UNREALIZED  UNREALIZED  APPRECIATION/ 
TO BUY  TO SELL  COUNTERPARTY  DATE  APPRECIATION  DEPRECIATION  (DEPRECIATION) 
USD  15,538,845 CAD  16,587,250  Toronto Dominion Bank  10-1-14  $293,425  —  $293,425 
          $293,425  —  $293,425 

 

Currency Abbreviation  
CAD  Canadian Dollar 

 

Fair value of derivative instruments by risk category

The table below summarizes the fair value of derivatives held by the fund at August 31, 2014, by risk category:

    FINANCIAL  ASSET  LIABILITY 
  STATEMENT OF ASSETS AND  INSTRUMENTS  DERIVATIVES  DERIVATIVES 
RISK  LIABILITIES LOCATION  LOCATION  FAIR VALUE  FAIR VALUE 
Foreign exchange  Receivable/payable for  Forward foreign  $293,425  — 
contracts  forward foreign currency  currency     
  exchange contracts  contracts     

 

For financial reporting purposes, the fund does not offset OTC derivative assets or liabilities that are subject to master netting arrangements, as defined by the ISDAs, in the Statement of assets and liabilities. In the event of default by the counterparty or a termination of the agreement, the ISDA allows an offset of amounts across the various transactions between the fund and the applicable counterparty.

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 August 31, 2014:

    INVESTMENTS IN UNAFFILIATED 
    ISSUERS AND FOREIGN CURRENCY 
RISK  STATEMENT OF OPERATIONS LOCATION  TRANSACTIONS* 
Foreign exchange contracts  Net realized gain (loss)  ($368,889) 

 

*Realized gain/loss associated with forward foreign currency contracts is included in the 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 August 31, 2014:

    INVESTMENTS IN UNAFFILIATED ISSUERS 
    AND TRANSLATION OF ASSETS AND 
RISK  STATEMENT OF OPERATIONS LOCATION  LIABILITIES IN FOREIGN CURRENCIES* 
Foreign exchange contracts  Change in unrealized  $369,152 
  appreciation (depreciation)   

 

*Change in unrealized appreciation/depreciation associated with forward foreign currency contracts is included in this caption of the Statement of operations.

 

28  Emerging Markets Debt Fund | Annual report 

 


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 or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).

Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor equivalent, on an annual basis, to the sum of: (a) 0.725% of the first $250 million of the fund’s average daily net assets, (b) 0.700% of the next $500 million of the fund’s average daily net assets, and (c) 0.675% of the fund’s average daily net assets in excess of $750 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 complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.

The Advisor has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund’s total operating expenses at 1.35%, 2.30% and 1.04%, for Class A, Class C and Class I shares, respectively, excluding certain expenses such as taxes, brokerage commissions, interest expense, acquired fund fees and expenses, short dividend expense and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. The current expense limitation agreement expires on December 31, 2014 for Class A and Class I shares and December 15, 2015 for Class C shares, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

Additionally, the Advisor has voluntarily agreed to waive and/or reimburse a portion of its management fee or other expenses of the fund if certain expenses of the fund exceed 0.15% of

Annual report | Emerging Markets Debt Fund  29 

 


average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent fees and service fees, blue sky fees, printing and postage, acquired fund fees and short dividend expense. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

Accordingly, these expense reductions amounted to $21,791, $129, $23,325 and $28,342 for Class A, Class C, Class I and Class NAV shares, respectively, for the year ended August 31, 2014.

The investment management fees, including the impact of the waivers, reimbursements and amounts recaptured as described above, incurred for the year ended August 31, 2014, were equivalent to a net annual effective rate of 0.69% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNT RECOVERED 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  DURING THE PERIOD 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  ENDED 8-31-2014 
$72,377  $81,330  $55,696  $75,199 

 

Amounts recovered by class

 

CLASS A  CLASS C  CLASS I  CLASS NAV  TOTAL 
$1,566  $1  $812  $72,820  $75,199 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted a distribution and service plan with respect to Class A and Class C shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund pays contractual rates of distribution and service fees under this arrangements, expressed as an annual percentage of average daily net assets of 0.30% and 1.00% for Class A and Class C shares, respectively.

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $3,977 for the year ended August 31, 2014. Of this amount, $538 was retained and used for printing prospectuses, advertising, sales literature and other purposes, and $3,439 was paid as sales commissions to broker-dealers. The up-front sales charge for Class A shares is 4.00%. Prior to February 3, 2014, the up-front sales charge for Class A shares was 4.50%.

Class A and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class C shares that are redeemed within

30  Emerging Markets Debt Fund | Annual report 

 


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 August 31, 2014, there were no CDSCs received by the Distributor for Class A and Class C shares.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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.

Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
SHARE CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  $3,141  $1,356  $23,926  — 
Class C  8  1  126  — 
Class I  —  2,800  23,929  $753 
Total  $3,149  $4,157  $47,981  $753 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with certain other funds advised by the Advisor, may be allowed to participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans at period end are presented under the caption Payable for interfund lending in the Statement of assets and liabilities. At period end, no interfund loans were outstanding. The fund’s activity in this program during the period for which loans were outstanding was as follows:

  AVERAGE LOAN  DAYS  WEIGHTED AVERAGE  INTEREST 
BORROWER OR LENDER  BALANCE  OUTSTANDING  INTEREST RATE  INCOME 
Lender  $8,167,380  1  0.45%  $102 

 

Annual report | Emerging Markets Debt Fund  31 

 


Note 6 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  444,495  $4,430,048  —  — 
Distributions reinvested  4,251  42,547  —  — 
Repurchased  (53,644)  (531,038)  (1,189,837)  (11,707,996) 
 
Net increase (decrease)  395,102  $3,941,557  (1,189,837)  ($11,707,996) 
 
Class C shares1         
Sold  9,852  $100,000  —  — 
 
Net increase  9,852  $100,000  —  — 
 
Class I shares         
Sold  937,422  $9,515,707  69,347  $670,273 
Distributions reinvested  11,218  112,063  235  2,195 
Repurchased  (47,344)  (460,828)  (289,837)  (2,851,996) 
 
Net increase (decrease)  901,296  $9,166,942  (220,255)  ($2,179,528) 
 
Class NAV shares2         
Sold  25,823,488  $261,252,273  20,823,611  $203,637,438 
Distributions reinvested  1,499,392  14,726,100  118,195  1,117,429 
Repurchased  (1,341,465)  (13,377,457)  (102,684)  (965,096) 
 
Net increase  25,981,415  $262,600,916  20,839,122  $203,789,771 
 
Total net increase  27,287,665  $275,809,415  19,429,030  $189,902,247 

 

1 The inception date for Class C shares is 8-28-14.

2 The inception date for Class NAV shares is 6-20-13.

Affiliates of the fund owned 3%, 100%, 1% and 100% of shares of beneficial interest of Class A, Class C, Class I and Class NAV, respectively, on August 31, 2014:

Note 7 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments and U.S. Treasury obligations, amounted to $316,637,523 and $62,725,159, respectively, for the year ended August 31, 2014.

Note 8 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 97.1% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATE 
FUND  CONCENTRATION 
John Hancock Lifestyle Balanced Portfolio  32.1% 
John Hancock Lifestyle Growth Portfolio  22.8% 
John Hancock Lifestyle Conservative Portfolio  15.7% 
John Hancock Lifestyle Moderate Portfolio  15.1% 

 

32  Emerging Markets Debt Fund | Annual report 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Emerging Markets Debt Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Emerging Markets Debt Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

Annual report | Emerging Markets Debt Fund  33 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $448,513 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

34  Emerging Markets Debt Fund | Annual report 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with John Hancock Asset Management a division of Manulife Asset Management (US) LLC (the Subadvisor), for John Hancock Emerging Markets Debt Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board noted the affiliation of the Subadvisor with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Annual report | Emerging Markets Debt Fund  35 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

36  Emerging Markets Debt Fund | Annual report 

 


Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index and peer group average for the period from June 30, 2013 to December 31, 2013. The Board took into account management’s discussion of the fund’s performance and noted that the fund had a limited performance history (inception December 31, 2009). The Board noted that a new portfolio management team started managing the fund in May 2013 and that the performance record prior to that date reflects the performance record of the prior team. The Board concluded that the fund’s performance is being monitored and reasonably addressed.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees for the fund are higher than the peer group median and total expenses for the fund are lower than the peer group median. The Board took into account management’s discussion of the fund’s expenses, including action taken that will further reduce certain fund expenses. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board noted that the fund has a voluntary fee waiver and/or expense reimbursement, which reduces certain expenses of the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisor) from the Advisor’s relationship with the Trust, the Board:

Annual report | Emerging Markets Debt Fund  37 

 


(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the fund’s Subadvisor is an affiliate of the Advisor;

(i) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(j) noted that the subadvisory fee for the fund is paid by the Advisor; and

(k) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisor) from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through

38  Emerging Markets Debt Fund | Annual report 

 


their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds; and

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Annual report | Emerging Markets Debt Fund  39 

 


Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund. The Board also considered any potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund is being monitored and reasonably addressed;

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

40  Emerging Markets Debt Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Emerging Markets Debt Fund  41 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

42  Emerging Markets Debt Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Emerging Markets Debt Fund  43 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

44  Emerging Markets Debt Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  John Hancock Asset Management a division of 
Peter S. Burgess*  Manulife Asset Management (US) LLC 
William H. Cunningham 
Grace K. Fey  Principal distributor 
Theron S. Hoffman*  John Hancock Funds, LLC
Deborah C. Jackson 
Hassell H. McClellan  Custodian 
Gregory A. Russo  State Street Bank and Trust Company 
Warren A. Thomson† 
  Transfer agent 
Officers  John Hancock Signature Services, Inc. 
Andrew G. Arnott 
President  Legal counsel 
  K&L Gates LLP 
John J. Danello 
Senior Vice President, Secretary,  Independent registered 
and Chief Legal Officer  public accounting firm 
  PricewaterhouseCoopers LLP 
Francis V. Knox, Jr.   
Chief Compliance Officer   
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Emerging Markets Debt Fund  45 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


 
This report is for the information of the shareholders of John Hancock Emerging Markets Debt Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  358A 8/14 
MF198765  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
Since  Since 
  1-year  5-year  10-year  inception 1  1-year  5-year  10-year  inception 1 
Class A2  13.88  5.59  —  3.21  13.88  31.27  —  26.13 
Class I2,3  20.18  7.13  —  4.38  20.18  41.12  —  36.96 
Class R62,3  20.19  7.16  —  4.41  20.19  41.33  —  37.23 
Class NAV3  20.46  7.31  —  4.54  20.46  42.31  —  38.52 
Index†  20.40  8.24  —  4.41  20.40  48.60  —  37.24 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charges on Class A shares of 5%. Sales charges are not applicable to Class I, Class R6, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A  Class I  Class R6  Class NAV 
Gross (%)  1.65  1.25  16.99  1.08 
Net (%)  1.65  1.25  1.08  1.08 

 

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, 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 MSCI Emerging Markets Index.

See the following page for footnotes.

6  Emerging Markets Fund | Annual report 

 



    With maximum  Without   
  Start date  sales charge  sales charge  Index 
Class I2,3  5-1-07  $13,696  $13,696  $13,724 
Class R62,3  5-1-07  13,723  13,723  13,724 
Class NAV3  5-1-07  13,852  13,852  13,724 

 

MSCI Emerging Markets Index is an unmanaged index designed to measure the performance of developing markets.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Footnotes related to performance pages

1 From 5-1-07.

2 Class A shares and Class I shares were first offered on 3-31-11; Class R6 shares were first offered on 9-1-11. The returns prior to these dates are those of Class NAV shares that have been recalculated to apply the gross fees and expenses of Class A, Class I, and Class R6 shares, as applicable.

3 For certain types of investors, as described in the fund’s prospectuses.

Annual report | Emerging Markets Fund  7 

 


Management’s discussion of
Fund performance

Dimensional Fund Advisors LP

Emerging-market equities posted strong returns in the 12 months ended August 31, 2014. Early in the period, emerging-market equities surged as it increasingly appeared that a tightening of monetary policy by the U.S. Federal Reserve would be gradual. In January 2014, worsening economic conditions in certain emerging markets—primarily Argentina, Turkey, Russia, and South Africa—triggered rapid declines in the values of their currencies. However, currencies began to recover in February and through the spring as political and economic crises were either averted or eased in several emerging markets. Emerging-market equities rebounded strongly.

Some of the biggest gains came in India, primarily as a result of a resounding election victory in May for newly elected Prime Minister Narendra Modi. The accommodative policies of many of the world’s central banks also supported emerging-market equity prices.

For the 12 months ended August 31, 2014, John Hancock Emerging Markets Fund’s Class A shares returned 19.83%, excluding sales charges. This result trailed the 20.40% return for the fund’s benchmark, the MSCI Emerging Markets Index.

The fund’s positions in small-cap stocks relative to the benchmark were a key contributor to relative performance. Within the small-cap universe, the makeup of the fund’s portfolio among the smallest grouping of companies had the most significant positive impact.

From a sector standpoint, holdings differences in consumer staples and materials aided relative performance, while an underweight in information technology as well as holdings differences in the sector detracted. At the country level, holdings differences in Indian stocks aided performance. Holdings differences within Brazil detracted.

This commentary reflects the views of the managers through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Emerging Markets Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,142.30  $8.42  1.56% 
Class C2  1,000.00  1,138.60  4.47  2.35% 
Class I  1,000.00  1,143.40  6.65  1.23% 
Class R6  1,000.00  1,144.60  6.54  1.21% 
Class NAV  1,000.00  1,145.50  5.84  1.08% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 

 
Annual report | Emerging Markets Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’ 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 March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,017.30  $7.93  1.56% 
Class C2  1,000.00  1,013.40  4.19  2.35% 
Class I  1,000.00  1,019.00  6.26  1.23% 
Class R6  1,000.00  1,019.10  6.16  1.21% 
Class NAV  1,000.00  1,019.80  5.50  1.08% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

2 The inception date for Class C shares is 6-27-14. Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 65/365 (to reflect the period).

10  Emerging Markets Fund | Annual report 

 


Portfolio summary

Top 10 Holdings (10.7% of Net Assets on 8-31-14)1,2     
Samsung Electronics Company, Ltd.  2.5%  China Mobile, Ltd., ADR  0.9% 
  
Taiwan Semiconductor    MTN Group, Ltd.  0.8% 
Manufacturing Company, Ltd.  1.5% 
China Construction Bank   
Hon Hai Precision Industry    Corp., H Shares  0.8% 
Company, Ltd.  1.0% 
Sasol, Ltd.  0.7% 
Tencent Holdings, Ltd.  1.0%   
CNOOC, Ltd.  0.6% 
Industrial & Commercial Bank of China,   
Ltd., H Shares  0.9%     
 
Sector Composition1,3       
Financials  23.6%  Consumer Staples  7.9% 
  
Information Technology  15.9%  Telecommunication Services  5.3% 
  
Consumer Discretionary  11.0%  Utilities  4.0% 
  
Materials  10.8%  Health Care  2.5% 
  
Industrials  10.2%  Short-Term Investments & Other  0.8% 
  
Energy  8.0%     
 
Top 10 Countries1,2,3       
Taiwan  15.1%  South Africa  8.1% 
  
South Korea  15.0%  Mexico  5.3% 
  
Brazil  10.8%  Malaysia  4.6% 
  
China  10.5%  Hong Kong  4.5% 
  
India  8.7%  Indonesia  3.2% 
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Value stocks may decline in price. The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies, and illiquid securities may be difficult to sell at a price approximating their value. Currency transactions are affected by fluctuations in exchange rates. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

Annual report | Emerging Markets Fund  11 

 


Fund’s investments

Summary of fund’s investments as of 8-31-14
(showing percentage of total net assets)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling 1-800-225-5291. This complete schedule, filed on the fund’s Form N-CSR is also available on the SEC’s website at http://www.sec.gov.

      % of 
      Net 
  Shares  Value  Assets 
 
Common Stocks 97.6%  $2,554,847,460   
(Cost $2,136,691,138)       
 
Australia 0.0%    451,006  0.0% 
 
Brazil 9.3%    243,083,786  9.3% 
 
AMBEV SA, ADR (L)  1,136,323  8,283,795  0.3% 
Banco Bradesco SA, ADR  477,247  8,704,985  0.3% 
Banco do Brasil SA  532,774  8,327,792  0.3% 
BRF SA, ADR (L)  386,423  10,302,037  0.4% 
Itau Unibanco Holding SA, ADR  782,454  14,084,172  0.5% 
Kroton Educacional SA  291,368  8,727,373  0.3% 
Petroleo Brasileiro SA, ADR  568,759  11,835,875  0.5% 
Petroleo Brasileiro SA, ADR (L)  342,492  6,702,568  0.3% 
Vale SA, ADR, Ordinary A Shares (L)  539,442  7,045,113  0.3% 
OTHER SECURITIES    159,070,076  6.1% 
 
Canada 0.0%    117,720  0.0% 
 
Chile 1.5%    40,191,670  1.5% 
 
China 10.5%    274,237,184  10.5% 
 
Bank of China, Ltd., H Shares  22,185,075  10,271,340  0.4% 
China Construction Bank Corp., H Shares  29,155,000  21,623,635  0.8% 
China Petroleum & Chemical Corp., ADR (L)  129,123  13,041,423  0.5% 
CNOOC, Ltd.  8,121,000  16,276,445  0.6% 
Industrial & Commercial Bank of China, Ltd.,       
H Shares  37,214,000  24,627,591  0.9% 
Tencent Holdings, Ltd.  1,625,100  26,449,924  1.0% 
OTHER SECURITIES    161,946,826  6.3% 
 
Colombia 0.6%    14,591,583  0.6% 
 
Cyprus 0.1%    2,071,166  0.1% 
 
Czech Republic 0.2%    5,171,679  0.2% 
 
Egypt 0.1%    1,669,462  0.1% 
 
Greece 0.6%    15,922,356  0.6% 
 
Guernsey Channel Islands 0.0%    311,957  0.0% 

 

12  Emerging Markets Fund | Annual report  See notes to financial statements 

 


      % of 
      Net 
  Shares  Value  Assets 
 
Hong Kong 4.5%    $117,980,698  4.5% 
 
China Mobile, Ltd., ADR (L)  358,226  22,310,315  0.9% 
OTHER SECURITIES    95,670,383  3.6% 
 
Hungary 0.2%    4,654,152  0.2% 
 
India 8.7%    228,532,058  8.7% 
 
HDFC Bank, Ltd.  538,287  8,015,286  0.3% 
Infosys, Ltd., ADR (L)  107,637  6,404,402  0.2% 
Reliance Industries, Ltd.  753,846  12,450,087  0.5% 
OTHER SECURITIES    201,662,283  7.7% 
 
Indonesia 3.2%    83,338,945  3.2% 
 
Astra International Tbk PT  10,389,900  6,727,128  0.3% 
Bank Rakyat Indonesia Persero Tbk PT  7,767,900  7,334,601  0.3% 
OTHER SECURITIES    69,277,216  2.6% 
 
Luxembourg 0.0%    103,216  0.0% 
 
Malaysia 4.6%    120,317,583  4.6% 
 
CIMB Group Holdings BHD  2,678,177  6,270,573  0.2% 
Malayan Banking BHD  2,219,063  7,111,365  0.3% 
OTHER SECURITIES    106,935,645  4.1% 
 
Malta 0.1%    3,006,880  0.1% 
 
Mexico 5.3%    139,678,330  5.3% 
 
Alfa SAB de CV, Class A  2,376,350  7,672,357  0.3% 
America Movil SAB de CV, Series L  6,441,854  7,916,385  0.3% 
America Movil SAB de CV, Series L, ADR (L)  351,768  8,621,834  0.3% 
Cemex SAB de CV, ADR (I)(L)  785,393  10,390,749  0.4% 
Fomento Economico Mexicano SAB de       
CV, ADR  101,045  9,792,271  0.4% 
Grupo Financiero Banorte SAB de CV, Series O  1,171,567  8,259,450  0.3% 
Grupo Mexico SAB de CV, Series B  2,056,249  7,492,708  0.3% 
OTHER SECURITIES    79,532,576  3.0% 
 
Netherlands 0.1%    1,589,712  0.1% 
 
Peru 0.1%    3,465,664  0.1% 
 
Philippines 1.3%    34,603,750  1.3% 
 
Poland 2.0%    51,347,442  2.0% 
 
Russia 1.7%    43,323,290  1.7% 
 
Gazprom OAO, ADR  1,677,622  11,997,131  0.5% 
Lukoil OAO, ADR  114,200  6,358,692  0.2% 
OTHER SECURITIES    24,967,467  1.0% 
 
South Africa 8.1%    212,522,418  8.1% 
 
FirstRand, Ltd.  1,794,737  7,279,762  0.3% 
MTN Group, Ltd. (L)  956,727  21,641,563  0.8% 
Naspers, Ltd.  53,318  6,800,818  0.3% 
Sanlam, Ltd.  1,275,265  7,901,158  0.3% 
Sasol, Ltd.  295,861  17,194,781  0.7% 
Standard Bank Group, Ltd.  665,971  8,627,641  0.3% 
OTHER SECURITIES    143,076,695  5.4% 

 

See notes to financial statements  Annual report | Emerging Markets Fund  13 

 


      % of 
      Net 
  Shares  Value  Assets 
 
South Korea 15.0%    $392,260,281  15.0% 
 
Hyundai Motor Company  56,440  12,974,393  0.5% 
KB Financial Group, Inc., ADR (L)  170,990  6,957,583  0.3% 
Kia Motors Corp.  124,957  7,545,881  0.3% 
LG Display Company, Ltd., ADR (I)(L)  370,028  6,386,683  0.2% 
NAVER Corp.  10,011  7,601,801  0.3% 
Samsung Electronics Company, Ltd.  53,483  65,120,413  2.5% 
Samsung Electronics Company, Ltd., GDR  2,125  1,294,737  0.0% 
Shinhan Financial Group Company, Ltd.,       
ADR (L)  238,879  12,352,433  0.5% 
SK Hynix, Inc. (I)  188,306  8,441,962  0.3% 
OTHER SECURITIES    263,584,395  10.1% 
 
Spain 0.0%    717,057  0.0% 
 
Taiwan 15.1%    394,357,829  15.1% 
 
Hon Hai Precision Industry Company, Ltd.  7,854,499  26,866,330  1.0% 
Taiwan Semiconductor Manufacturing       
Company, Ltd.  9,233,000  38,587,271  1.5% 
OTHER SECURITIES    328,904,228  12.6% 
 
Thailand 2.8%    74,585,869  2.8% 
 
PTT PCL  655,700  6,589,847  0.3% 
OTHER SECURITIES    67,996,022  2.5% 
 
Turkey 1.9%    50,015,262  1.9% 
 
Ukraine 0.0%    328,184  0.0% 
 
United States 0.0%    299,271  0.0% 
 
 
Preferred Securities 1.6%    $40,221,309   
(Cost $43,731,710)       
 
Brazil 1.5%    39,419,514  1.5% 
 
Itau Unibanco Holding SA  455,606  8,214,545  0.3% 
OTHER SECURITIES    31,204,969  1.2% 
 
Chile 0.1%    490,535  0.1% 
 
Colombia 0.0%    311,260  0.0% 
 
Warrants 0.0%    $90,328  0.0% 
(Cost $0)    90,328  0.0% 
 
Rights 0.0%    $47,486  0.0% 
(Cost $54,528)    47,486  0.0% 

 

14  Emerging Markets Fund | Annual report  See notes to financial statements 

 


        % of 
        Net 
  Yield (%)  Shares  Value  Assets 
 
Securities Lending Collateral 7.9%      $207,443,008   
(Cost $207,391,230)         
 
John Hancock Collateral         
Investment Trust (W)  0.0970 (Y)  20,729,583  207,443,008  7.9% 
 
Short-Term Investments 0.1%      $3,334,868   
(Cost $3,334,868)         
 
Money Market Funds 0.1%      3,334,868  0.1% 
 
State Street Institutional         
Liquid Reserves Fund  0.0747 (Y)  3,334,868  3,334,868  0.1% 
 
Total investments (Cost $2,391,203,474)† 107.2%  $2,805,984,459  107.2% 
 
Other Assets And Liabilities, Net (7.2%)    (188,646,171)  (7.2)% 
 
Total net assets 100.0%    $2,617,338,288  100.0% 

 

The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund.

ADR American Depositary Receipts

GDR Global Depositary Receipt

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $2,413,347,075. Net unrealized appreciation aggregated $392,637,384 of which $651,012,606 related to appreciated investment securities and $258,375,222 related to depreciated investment securities.

The fund had the following sector composition as a percentage of net assets on 8-31-14:

Financials  23.6% 
Information Technology  15.9% 
Consumer Discretionary  11.0% 
Materials  10.8% 
Industrials  10.2% 
Energy  8.0% 
Consumer Staples  7.9% 
Telecommunication Services  5.3% 
Utilities  4.0% 
Health Care  2.5% 
Short-Term Investments & Other  0.8% 
 
Total  100.0% 

 

See notes to financial statements  Annual report | Emerging Markets Fund  15 

 


FINANCIAL STATEMENTS

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $2,183,812,244)   
including ($200,856,469) of securities loaned  $2,598,541,451 
Investments in affiliated issuers, at value (Cost $207,391,230)  207,443,008 
 
Total investments, at value (Cost $2,391,203,474)  2,805,984,459 
Cash  279,010 
Foreign currency, at value (Cost $9,848,838)  9,866,852 
Receivable for investments sold  7,003,469 
Receivable for fund shares sold  4,407,056 
Dividends and interest receivable  5,898,729 
Receivable for securities lending income  172,744 
Receivable due from advisor  328 
Other receivables and prepaid expenses  81,444 
 
Total assets  2,833,694,091 
 
Liabilities   
Foreign capital gains tax payable  676,916 
Payable for investments purchased  6,348,086 
Payable for fund shares repurchased  436,821 
Payable upon return of securities loaned  207,442,240 
Payable to affiliates   
Accounting and legal services fees  53,499 
Transfer agent fees  74,362 
Trustees’ fees  335 
Other liabilities and accrued expenses  1,323,544 
 
Total liabilities  216,355,803 
 
Net assets  $2,617,338,288 
 
Net assets consist of   
Paid-in capital  $2,228,942,091 
Undistributed net investment income  15,940,859 
Accumulated net realized gain (loss) on investments and foreign   
currency transactions  (41,671,450) 
Net unrealized appreciation (depreciation) on investments and translation   
of assets and liabilities in foreign currencies  414,126,788 
 
Net assets  $2,617,338,288 

 

16  Emerging Markets Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($336,727,352 ÷ 29,746,655 shares)1  $11.32 
Class C ($269,711 ÷ 23,823 shares)  $11.32 
Class I ($50,630,087 ÷ 4,471,836 shares)  $11.32 
Class R6 ($145,115 ÷ 12,820 shares)  $11.32 
Class NAV ($2,229,566,023 ÷ 196,665,292 shares)  $11.34 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $11.92 

 

1 Redemption price is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | Emerging Markets Fund  17 

 


FINANCIAL STATEMENTS

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Dividends  $66,295,785 
Securities lending  2,090,689 
Interest  11,825 
Less foreign taxes withheld  (7,806,152) 
 
Total investment income  60,592,147 
 
Expenses   
Investment management fees  22,398,614 
Distribution and service fees  473,057 
Accounting and legal services fees  294,200 
Transfer agent fees  274,288 
Trustees’ fees  30,792 
State registration fees  72,483 
Printing and postage  35,581 
Professional fees  110,531 
Custodian fees  2,592,720 
Registration and filing fees  43,251 
Expense recapture  112 
Other  53,181 
 
Total expenses  26,378,810 
Less expense reductions  (172,843) 
 
Net expenses  26,205,967 
 
Net investment income  34,386,180 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers and foreign currency transactions  22,505,1731 
Investments in affiliated issuers  643 
Futures contracts  (1,313,838) 
  21,191,978 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers and translation of assets and liabilities in   
foreign currencies  381,106,2382 
Investments in affiliated issuers  (9,992) 
 
  381,096,246 
 
Net realized and unrealized gain  402,288,224 
 
Increase in net assets from operations  $436,674,404 

 

1 Net of foreign taxes of $2,880.

2 Net of $676,916 increase in accrued foreign taxes.

18  Emerging Markets Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $34,386,180  $31,282,955 
Net realized gain  21,191,978  34,013,490 
Change in net unrealized appreciation (depreciation)  381,096,246  (43,182,662) 
 
Increase in net assets resulting from operations  436,674,404  22,113,783 
 
Distributions to shareholders     
From net investment income     
Class A  (1,219,758)  (130,173) 
Class I  (1,228,293)  (1,141,447) 
Class R6  (2,072)  (1,209) 
Class NAV  (40,776,992)  (30,510,643) 
 
Total distributions  (43,227,115)  (31,783,472) 
 
From fund share transactions  (38,986,592)  25,588,956 
 
Total increase  354,460,697  15,919,267 
 
Net assets     
Beginning of year  2,262,877,591  2,246,958,324 
 
End of year  $2,617,338,288  $2,262,877,591 
 
Undistributed net investment income  $15,940,859  $20,702,661 

 

See notes to financial statements  Annual report | Emerging Markets Fund  19 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-111 
 
Per share operating performance         
Net asset value, beginning of period  $9.58  $9.59  $10.65  $12.23 
Net investment income2  0.16  0.09  0.11  0.10 
Net realized and unrealized gain (loss) on investments  1.72  (0.03)  (1.10)  (1.68) 
Total from investment operations  1.88  0.06  (0.99)  (1.58) 
Less distributions         
From net investment income  (0.14)  (0.07)  (0.06)  — 
From net realized gain  —  —  (0.01)  — 
Total distributions  (0.14)  (0.07)  (0.07)  — 
Net asset value, end of period  $11.32  $9.58  $9.59  $10.65 
Total return (%)3,4  19.83  0.60  (9.25)  (12.92)5 
 
Ratios and supplemental data         
Net assets, end of period (in millions)  $337  $32  $14  $4 
Ratios (as a percentage of average net assets):         
Expenses before reductions  1.56  1.747  1.96  2.266 
Expenses including reductions  1.56  1.74  1.75  1.756 
Net investment income  1.57  0.85  1.10  2.296 
Portfolio turnover (%)  17  7  23  118 

 

1 The inception date for Class A shares is 3-31-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Not annualized.
6 Annualized.
7 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
8 The portfolio turnover is shown for the period from 9-1-10 to 8-31-11.

 

20  Emerging Markets Fund | Annual report  See notes to financial statements 

 


CLASS C SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $10.86 
Net investment income2  0.03 
Net realized and unrealized gain on investments  0.43 
Total from investment operations  0.46 
Net asset value, end of period  $11.32 
Total return (%)3,4  4.245 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —6 
Ratios (as a percentage of average net assets):   
Expenses before reductions  11.757 
Expenses including reductions  2.357 
Net investment income  1.337 
Portfolio turnover (%)  178 

 

1 The inception date for Class C shares is 6-27-14.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Less than $500,000.
7 Annualized
8 The portfolio turnover is shown for the period 9-1-13 to 8-31-14.

 

CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-111 
 
Per share operating performance         
Net asset value, beginning of period  $9.59  $9.60  $10.67  $12.23 
Net investment income2  0.12  0.13  0.11  0.13 
Net realized and unrealized gain (loss) on investments  1.79  (0.01)  (1.06)  (1.69) 
Total from investment operations  1.91  0.12  (0.95)  (1.56) 
Less distributions         
From net investment income  (0.18)  (0.13)  (0.11)  — 
From net realized gain  —  —  (0.01)  — 
Total distributions  (0.18)  (0.13)  (0.12)  — 
Net asset value, end of period  $11.32  $9.59  $9.60  $10.67 
Total return (%)3  20.18  1.13  (8.87)  (12.76)4 
 
Ratios and supplemental data         
Net assets, end of period (in millions)  $51  $67  $126  $250 
Ratios (as a percentage of average net assets):         
Expenses before reductions  1.26  1.21  1.23  1.265 
Expenses including reductions  1.25  1.21  —  — 
Net investment income  1.14  1.29  1.11  2.995 
Portfolio turnover (%)  17  7  23  116 

 

1 The inception date for Class I shares is 3-31-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.
6 The portfolio turnover is shown for the period from 9-1-10 to 8-31-11.

 

See notes to financial statements  Annual report | Emerging Markets Fund  21 

 


CLASS R6 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $9.59  $9.60  $10.68 
Net investment income2  0.15  0.12  0.13 
Net realized and unrealized gain (loss) on investments  1.76  —  (1.08) 
Total from investment operations  1.91  0.12  (0.95) 
Less distributions       
From net investment income  (0.18)  (0.13)  (0.12) 
From net realized gain  —  —  (0.01) 
Total distributions  (0.18)  (0.13)  (0.13) 
Net asset value, end of period  $11.32  $9.59  $9.60 
Total return (%)3  20.19  1.12  (8.80) 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  —4  —4  —4 
Ratios (as a percentage of average net assets):       
Expenses before reductions  17.51  16.99  20.83 
Expenses including reductions  1.21  1.22  1.22 
Net investment income  1.40  1.18  1.33 
Portfolio turnover (%)  17  7  235 

 

1 The inception date for Class R6 shares is 9-1-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Less than $500,000.
5 The portfolio turnover is shown for the period 9-1-11 to 8-31-12.

 

CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.60  $9.61  $10.68  $10.82  $9.09 
Net investment income1  0.15  0.13  0.14  0.15  0.08 
Net realized and unrealized gain (loss)           
on investments  1.79  —  (1.08)  0.61  1.77 
Total from investment operations  1.94  0.13  (0.94)  0.76  1.85 
Less distributions           
From net investment income  (0.20)  (0.14)  (0.12)  (0.09)  (0.08) 
From net realized gain  —  —  (0.01)  (0.81)  (0.04) 
Total distributions  (0.20)  (0.14)  (0.13)  (0.90)  (0.12) 
Net asset value, end of period  $11.34  $9.60  $9.61  $10.68  $10.82 
Total return (%)2  20.46  1.25  (8.71)  6.13  20.43 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $2,230  $2,163  $2,107  $2,099  $1,590 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.08  1.08  1.07  1.07  1.08 
Expenses including reductions  1.08  1.08  1.07  1.07  1.08 
Net investment income  1.46  1.30  1.49  1.25  0.81 
Portfolio turnover (%)  17  7  23  11  29 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.

22  Emerging Markets Fund | Annual report  See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock Emerging Markets Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek long term capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered by the Trust are detailed in the Statement of assets and liabilities. Class A and Class C shares are open to all investors. Class I shares are offered to institutions and certain investors. Class R6 shares are only available to certain retirement plans, institutions and other investors. Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Lifestyle II Portfolios, Retirement Choices, Retirement Living Portfolios and Retirement Living Through II Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. 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, printing and postage and state registration 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 intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time (ET). In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the funds in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Futures contracts are valued at settlement prices, which are the official closing prices published by the exchange on which they trade. Foreign index futures that trade in the electronic trading market subsequent to the close of regular trading and have sufficient liquidity will be valued at the last traded price in the electronic trading market as of 4:00 p.m. ET. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.

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

Annual report | Emerging Markets Fund  23 

 


procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund’s Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

The following is a summary of the values by input classification of the fund’s investments as of August 31, 2014, by major security category or type:

        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Common Stocks         
Australia  $451,006  —  $451,006  — 
Brazil  243,083,786  $243,083,786  —  — 
Canada  117,720  117,720  —  — 
Chile  40,191,670  40,191,670  —  — 
China  274,237,184  29,612,164  243,548,107  $1,076,913 
Colombia  14,591,583  14,591,583  —  — 
Cyprus  2,071,166  —  2,071,166  — 
Czech Republic  5,171,679  —  5,171,679  — 
Egypt  1,669,462  —  1,669,462  — 
Greece  15,922,356  —  15,922,356  — 
Guernsey Channel         
Islands  311,957  —  311,957  — 
Hong Kong  117,980,698  27,222,163  90,363,145  395,390 
Hungary  4,654,152  —  4,654,152  — 
India  228,532,058  16,972,372  211,515,698  43,988 
Indonesia  83,338,945  3,580,704  79,300,267  457,974 
Luxembourg  103,216  —  103,216  — 
Malaysia  120,317,583  —  120,317,583  — 
Malta  3,006,880  —  3,006,880  — 
Mexico  139,678,330  139,566,379  5,834  106,117 
Netherlands  1,589,712  1,558,376  31,336  — 

 

24  Emerging Markets Fund | Annual report 

 


        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Common Stocks (cont.)         
Peru  $3,465,664  $3,465,664  —  — 
Philippines  34,603,750  —  $34,603,750  — 
Poland  51,347,442  —  51,347,442  — 
Russia  43,323,290  257,718  43,065,572  — 
South Africa  212,522,418  18,977,551  193,519,330  $25,537 
South Korea  392,260,281  29,722,367  361,185,446  1,352,468 
Spain  717,057  717,057  —  — 
Taiwan  394,357,829  14,526,512  379,831,317  — 
Thailand  74,585,869  —  74,412,148  173,721 
Turkey  50,015,262  664,318  49,120,561  230,383 
Ukraine  328,184  —  328,184  — 
United States  299,271  —  299,271  — 
Preferred Securities         
Brazil  39,419,514  39,419,514  —  — 
Chile  490,535  490,535  —  — 
Colombia  311,260  311,260  —  — 
Warrants  90,328  59,694  30,634  — 
Rights  47,486  15,191  32,295  — 
Securities Lending         
Collateral  207,443,008  207,443,008  —  — 
Short-Term Investments  3,334,868  3,334,868  —  — 
 
Total Investments in         
Securities  $2,805,984,459  $835,902,174  $1,966,219,794  $3,862,491 

 

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Annual report | Emerging Markets Fund  25 

 


Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Obligations to repay collateral received by the fund is shown on the Statements of assets and liabilities as Payable upon return of securities loaned.

Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.

Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.

Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.

Line of credit. The fund may 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $1,482.

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, transfer agent

26  Emerging Markets Fund | Annual report 

 


fees, state registration fees and printing and postage expenses, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses for an unlimited period. Capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, as of August 31, 2014, the fund has a short-term capital loss carryforward of $15,747,514 and a long-term capital loss carryforward of $23,059,052 available to offset future net realized capital gains. These carryforwards do not expire.

As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $43,227,115  $31,783,472 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $35,219,570 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 wash sale loss deferrals and investments in passive foreign investment companies.

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 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

Annual report | Emerging Markets Fund  27 

 


obligations. OTC derivatives transactions typically can only be closed out with the other party to the transaction.

Futures are traded on an exchange. Exchange-traded 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.

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 collateral 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 August 31, 2014, the fund used futures contracts to gain exposure to certain securities markets, as a substitute for securities purchased and to maintain diversity and liquidity of the portfolio. During the year ended August 31, 2014, the fund held futures contracts with notional values ranging from $38.6 million to $70.6 million, as measured at each quarter end. There were no open futures contracts held at August 31, 2014.

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 August 31, 2014:

RISK  STATEMENT OF OPERATION LOCATION  FUTURES CONTRACTS 
Equity contracts  Net realized gain (loss) on  ($1,313,838) 

 

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 or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management

28  Emerging Markets Fund | Annual report 

 


contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).

Management fee. The fund has an investment management contract with the Advisor under which the Fund pays a daily management fee to the Advisor equivalent, on an annual basis, to the sum of: (a) 1.00% of the first $100 million of the fund’s aggregate net assets and (b) 0.950% of the fund’s aggregate net assets in excess of $100 million. The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. The fund is not responsible for payment of the subadvisory fees.

The Advisor has contractually agreed to waive a portion of its management fee for certain funds (the participating portfolios) of the Trust and John Hancock Variable Insurance Trust. All funds covered in this report are participating portfolios. The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than $100 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that equals or exceeds $100 billion. 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. This arrangement may be amended or terminated at any time by the Advisor upon notice to the funds and with the approval of the Board of Trustees.

The Advisor has agreed to contractually waive and/or reimburse fund expense for Class C shares, to the extent that the expenses for such class exceed 2.35% of the average daily net assets attributable to the class. This limit excludes taxes, brokerage commissions, interest expense, acquired fund fees, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. The fee waiver and/or reimbursement will continue in effect until December 31, 2015, unless renewed by mutual agreement of the fund and the advisor based upon a determination that this is appropriate under the circumstances at the time.

The Advisor has agreed to contractually waive and/or reimburse fund expense for Class R6 shares, to the extent that the expenses for such class exceed 1.22% of the average daily net assets attributable to the class. This limit excludes taxes, brokerage commissions, interest expense, acquired fund fees, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. The fee waiver and/or reimbursement will continue in effect until December 31, 2014, unless renewed by mutual agreement of the fund and the advisor based upon a determination that this is appropriate under the circumstances at that time. Prior to January 1, 2014 the fee waivers and/or reimbursements were such that these expenses did not exceed 1.75% for Class A and the limits for the remainder of the share classes above were unchanged.

Effective February 1, 2014, for Class R6 shares, the Advisor has contractually agreed to waive and/or reimburse all class-specific expenses of the fund, including transfer agency fees and service fees, blue sky fees and printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. The agreement expires on December 31, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time. This waiver was in effect on a voluntary basis as of January 1, 2014.

The Advisor has voluntarily agreed to waive and/or reimburse a portion of its management fee if certain expenses of the fund exceed 0.25% of average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, acquired fund fees, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred

Annual report | Emerging Markets Fund  29 

 


in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent fees and service fees, state registration fees and printing and postage. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

Accordingly, these expense reductions amounted to $10,638, $2,788, $3,523, $19,414 and $136,480 for Class A, Class C, Class I, Class R6 and Class NAV shares, respectively, for the year ended August 31, 2014.

The investment management fees, including the impact of the waivers, reimbursements and amounts recaptured as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 0.94% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014 and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates. Certain reimbursements or waivers are not subject to recapture.

AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNT RECOVERED DURING 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  THE PERIOD ENDED 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  AUGUST 31, 2014 
$16,620  $16,413  $8,692  $112 

 

Amounts recovered by class

 

CLASS R6 
$112 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A and Class C shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund pays contractual rates of distribution and service fees under this arrangement, expressed as an annual percentage of average daily net assets of 0.30% for Class A shares and 1.00% for Class C shares.

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $450,913 for the year ended August 31, 2014. Of this amount, $76,985 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $372,943 was paid as sales commissions to broker-dealers and $985 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.

Class A shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. CDSCs are applied to the lesser of the current market

30  Emerging Markets Fund | Annual report 

 


value at the time of redemption or original purchase cost of the shares being redeemed. Proceeds from CDSC’s are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, there were no CDSCs received by the Distributor for Class A shares.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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 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.

Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  472,760  206,713  30,752  22,585 
Class C  297  37  2,805  9 
Class I  —  67,514  19,747  12,733 
Class R6  —  24  19,179  254 
Total  473,057  274,288  72,483  35,581 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Interfund lending program. Pursuant to an Exemptive Order issued by the SEC, the fund(s), along with certain other funds advised by the Advisor, may be allowed to participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans at period end are presented under the caption Payable for interfund lending in the Statement of assets and liabilities. At period end, no interfund loans were outstanding. The fund’s activity in this program during the period for which loans were outstanding was as follows:

BORROWER  WEIGHTED AVERAGE  DAYS  WEIGHTED AVERAGE  INTEREST 
OR LENDER  LOAN BALANCE  OUTSTANDING  INTEREST RATE  EXPENSE 
Borrower  $14,067,670  10  0.44%  $1,715 

 

Annual report | Emerging Markets Fund  31 

 


Note 6 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  29,158,009  $303,382,054  2,469,135  $25,368,394 
Distributions reinvested  120,613  1,218,190  12,335  130,132 
Repurchased  (2,868,336)  (30,490,509)  (584,842)  (6,053,656) 
 
Net increase  26,410,286  $274,109,735  1,896,628  $19,444,870 
 
Class C shares1         
Sold  23,823  $262,938  —  — 
 
Net increase  23,823  $262,938  —  — 
 
Class I shares         
Sold  1,243,116  $12,996,295  9,385,696  $97,581,488 
Distributions reinvested  36,667  369,965  14,732  154,983 
Repurchased  (3,843,812)  (38,143,560)  (15,530,268)  (156,542,145) 
 
Net decrease  (2,564,029)  ($24,777,300)  (6,129,840)  ($58,805,674) 
 
Class R6 shares         
Sold  2,645  $28,058  1,743  $18,133 
Distributions reinvested  35  351  —  — 
Repurchased  (431)  (4,382)  (535)  (5,635) 
 
Net increase  2,249  $24,027  1,208  $12,498 
 
Class NAV shares         
Sold  4,179,164  $43,871,050  12,033,436  $123,328,337 
Distributions reinvested  4,041,327  40,776,992  2,900,251  30,510,643 
Repurchased  (36,850,047)  (373,254,034)  (8,836,498)  (88,901,718) 
 
Net increase (decrease)  (28,629,556)  ($288,605,992)  6,097,189  $64,937,262 
 
Total net increase (decrease)  (4,757,227)  ($38,986,592)  1,865,185  $25,588,956 

 

1 The inception date for Class C is 6-27-14.

Affiliates of the fund owned 39%, 73% and 100% of shares of beneficial interest of Class C, Class R6 and Class NAV, respectively, on August 31, 2014:

Note 7 — Purchase and sale of securities

Purchases and sales of securities, other than short-term securities, amounted to $391,964,528 and 464,397,751, respectively, for the year ended August 31, 2014.

32  Emerging Markets Fund | Annual report 

 


Note 8 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 82.3% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATE 
FUND  CONCENTRATION 
John Hancock Lifestyle Growth Portfolio  29.8% 
John Hancock Lifestyle Balanced Portfolio  20.5% 
John Hancock Lifestyle Aggressive Portfolio  14.3% 

 

Annual report | Emerging Markets Fund  33 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Emerging Markets Fund:

In our opinion, the accompanying statement of assets and liabilities, including the summary schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Emerging Markets Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

34  Emerging Markets Fund | Annual report 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

Income derived from foreign sources was $57,381,901. The fund intends to pass through foreign tax credits of $6,661,206.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | Emerging Markets Fund  35 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Dimensional Fund Advisors LP (the Subadvisor), for John Hancock Emerging Markets Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

36  Emerging Markets Fund | Annual report 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

Annual report | Emerging Markets Fund  37 

 


The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index and peer group average for the one-year period ended December 31, 2013. The Board took into account management’s discussion of the fund’s performance and the factors that contributed to the fund’s more recent relative performance, including the effect of market conditions and the fund’s investment strategies. The Board noted that the fund’s NAV class (the fund’s oldest share class) outperformed its benchmark index and Morningstar category over the five-year period ended April 30, 2014. The Board concluded that the fund’s performance is being monitored and reasonably addressed.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees for the fund are higher than the peer group median and total expenses for the fund are lower than the peer group median. The Board took into account management’s discussion of the fund’s expenses, including action taken that will further reduce certain fund expenses. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

38  Emerging Markets Fund | Annual report 

 


Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion

Annual report | Emerging Markets Fund  39 

 


and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

40  Emerging Markets Fund | Annual report 

 


The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

Annual report | Emerging Markets Fund  41 

 


The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund is being monitored and reasonably addressed;

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

42  Emerging Markets Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Emerging Markets Fund  43 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

44  Emerging Markets Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Emerging Markets Fund  45 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

46  Emerging Markets Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  Dimensional Fund Advisors LP 
Peter S. Burgess*   
William H. Cunningham  Principal distributor 
Grace K. Fey  John Hancock Funds, LLC 
Theron S. Hoffman*   
Deborah C. Jackson  Custodian 
Hassell H. McClellan  State Street Bank and Trust Company 
Gregory A. Russo   
Warren A. Thomson†  Transfer agent 
  John Hancock Signature Services, Inc. 
Officers   
Andrew G. Arnott  Legal counsel 
President  K&L Gates LLP 
   
John J. Danello  Independent registered 
Senior Vice President, Secretary,  public accounting firm 
and Chief Legal Officer  PricewaterhouseCoopers LLP 
   
Francis V. Knox, Jr.   
Chief Compliance Officer   
   
Charles A. Rizzo   
Chief Financial Officer   
   
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Emerging Markets Fund  47 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com

 
 
This report is for the information of the shareholders of John Hancock Emerging Markets Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  368A 8/14 
MF198763  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
  1-year  5-year  10-year  Since inception1  1-year  5-year  10-year  Since inception1 
Class A2  14.03  13.18  —  5.69  14.03  85.68  —  63.26 
Class I2,3  20.53  14.83  —  6.77  20.53  99.66  —  78.63 
Class 12,3  20.60  14.91  —  6.85  20.60  100.35  —  79.81 
Class NAV3  20.56  14.96  —  6.90  20.56  100.81  —  80.51 
Index†  24.74  17.22  —  8.52  24.74  121.35  —  106.09 

 

Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%. Sales charges are not applicable to Class I, Class 1, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A  Class I  Class 1  Class NAV 
Gross (%)  1.34  0.97  0.84  0.79 
Net (%)  1.33  0.90  0.84  0.79 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the fund’s current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund’s website at jhinvestments.com.

The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index is the Russell 3000 Index.

See the following page for footnotes.

6  U.S. Equity Fund | Annual report 

 



    With maximum  Without   
  Start date  sales charge  sales charge  Index 
Class I2,3  10-29-05  $17,863  $17,863  $20,609 
Class 12,3  10-29-05  17,981  17,981  20,609 
Class NAV3  10-29-05  18,051  18,051  20,609 

 

Russell 3000 Index is an unmanaged index of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Footnotes related to performance pages

1 From 10-29-05.

2 Class A and Class I shares were first offered on 10-31-11; Class 1 shares were first offered on 5-7-12. The returns prior to these dates are those of Class NAV shares that have been recalculated to reflect the gross fees and expenses of Class A, Class I, and Class 1 shares, as applicable.

3 For certain types of investors, as described in the fund’s prospectuses.

Annual report | U.S. Equity Fund  7 

 


Management’s discussion of

Fund performance

By Grantham, Mayo Van Otterloo & Co. LLC (GMO)

The stock market fared very well during the 12 months ended August 31, 2014, amid a favorable environment for performance. Specifically, the U.S. economy maintained a mostly steady growth pace, while the employment picture continued to improve. These conditions helped disproportionately lift the shares of more-speculative, more-volatile companies, while high-quality stocks enjoyed strong absolute gains but were unable to keep up with the overall market.

For the 12 months ended August 31, 2014, John Hancock U.S. Equity Fund’s Class A shares added 20.07%, excluding sales charges, which lagged the 24.74% gain of the Russell 3000 Index. The biggest relative detractor was the fund’s substantial overweighting in consumer staples, given that the sector trailed the benchmark, the Russell 3000 Index, by a wide margin. Within this category, specific holdings failed to meet our expectations, including branded consumer products giant The Procter & Gamble Company; tobacco manufacturer Philip Morris International, Inc.; and beverage producer The Coca-Cola Company. In all three cases, we found their valuations to be unusually compelling and, at period end, believed in their long-term prospects. Our security selection within consumer discretionary was also disappointing, especially the fund’s position in Amazon.com, Inc., the dominant Internet retailer.

Meanwhile, the fund benefited from a substantial overweighting in the information technology sector, which outperformed the benchmark. Despite subpar security selection in this group, several of the fund’s positions worked out well, including software company Microsoft Corp. and Internet search leader Google Inc., which returned approximately 40% and 36%, respectively, during the 12 months. In the healthcare sector, two notable contributors were pharmaceutical companies Allergan, Inc. and Bristol-Myers Squibb Company.

Despite a rising stock market, at period end, we continued to find value among high-quality companies, especially within consumer staples, healthcare, and information technology.

This commentary reflects the views of the portfolio managers through the end of the period discussed in this report. As such, they are in no way a guarantee of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  U.S. Equity Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141,2  expense ratio 
Class A  $1,000.00  $1,070.50  $6.63  1.27% 
Class C  1,000.00  1,000.00  0.17  2.05% 
Class I  1,000.00  1,072.20  4.65  0.89% 
Class 1  1,000.00  1,073.00  4.34  0.83% 
Class NAV  1,000.00  1,073.00  4.08  0.78% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 


 
Annual report | U.S. Equity Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20143  expense ratio 
Class A  $1,000.00  $1,018.80  $6.46  1.27% 
Class C  1,000.00  1,014.90  10.41  2.05% 
Class I  1,000.00  1,020.70  4.53  0.89% 
Class 1  1,000.00  1,021.00  4.23  0.83% 
Class NAV  1,000.00  1,021.30  3.97  0.78% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio for Class A, Class I, Class 1 and Class NAV shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

2 Expenses are equal to the fund’s annualized expense ratio for Class C shares, multiplied by the average account value over the period, multiplied by 3/365 (to reflect period).

3 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  U.S. Equity Fund | Annual report 

 


Portfolio summary

Top 10 Holdings (41.5% of Total Net Assets on 8-31-14)1,2   
Amazon.com, Inc.  5.2%  Johnson & Johnson  3.9% 
Microsoft Corp.  5.1%  Exxon Mobil Corp.  3.6% 
Philip Morris International, Inc.  4.8%  International Business Machines Corp.  3.4% 
Oracle Corp.  4.6%  The Procter & Gamble Company  3.4% 
Express Scripts Holding Company  4.5%  JPMorgan Chase & Company  3.0% 
 
Sector Composition1,3       
Information Technology  30.6%  Industrials  4.6% 
Health Care  21.0%  Financials  4.0% 
Consumer Staples  18.6%  Materials  0.8% 
Consumer Discretionary  10.1%  Short-Term Investments & Other  1.2% 
Energy  9.1%     
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 Large company stocks could fall out of favor. Value stocks may decline in price. Hedging and other strategic transactions may increase volatility and result in losses if not successful. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

Annual report | U.S. Equity Fund  11 

 


Fund’s investments

As of 8-31-14

  Shares  Value 
Common Stocks 98.8%  $1,220,723,134 
(Cost $846,414,055)     
 
Consumer Discretionary 10.1%    124,367,841 
 
Auto Components 0.0%     
Gentex Corp.  12,200  360,510 
 
Automobiles 0.0%     
General Motors Company  1,001  34,835 
 
Distributors 0.2%     
Genuine Parts Company  27,100  2,377,754 
 
Diversified Consumer Services 0.0%     
Capella Education Company  300  19,533 
 
Hotels, Restaurants & Leisure 1.2%     
McDonald’s Corp.  155,930  14,613,759 
Starbucks Corp.  800  62,248 
Yum! Brands, Inc.  480  34,766 
 
Household Durables 0.1%     
Garmin, Ltd.  5,100  277,083 
Tupperware Brands Corp.  5,800  424,908 
 
Internet & Catalog Retail 5.2%     
Amazon.com, Inc. (I)  188,796  64,009,396 
 
Leisure Products 0.1%     
Hasbro, Inc.  9,700  510,754 
Mattel, Inc.  18,500  638,065 
Polaris Industries, Inc.  3,600  523,368 
 
Media 0.0%     
Scripps Networks Interactive, Inc., Class A  4,800  382,608 
 
Multiline Retail 0.1%     
Dollar Tree, Inc. (I)  28,600  1,533,675 
 
Specialty Retail 1.6%     
AutoZone, Inc. (I)  1,300  700,492 
Bed Bath & Beyond, Inc. (I)  144,700  9,298,422 
Ross Stores, Inc.  40,800  3,077,136 
The TJX Companies, Inc.  90,200  5,376,822 
Tiffany & Company  4,800  484,512 
Urban Outfitters, Inc. (I)  7,300  290,467 

 

12  U.S. Equity Fund | Annual report  See notes to financial statements 

 


  Shares  Value 
Textiles, Apparel & Luxury Goods 1.6%     
Coach, Inc.  55,300  $2,036,699 
Fossil Group, Inc. (I)  3,800  384,902 
NIKE, Inc., Class B  136,760  10,742,498 
Ralph Lauren Corp.  11,000  1,861,200 
VF Corp.  67,240  4,311,429 
 
Consumer Staples 18.6%    230,284,758 
 
Beverages 4.5%     
Brown-Forman Corp., Class B  24,400  2,260,904 
Coca-Cola Company  855,200  35,678,944 
Monster Beverage Corp. (I)  28,220  2,494,930 
PepsiCo, Inc.  165,170  15,276,573 
 
Food & Staples Retailing 2.8%     
Costco Wholesale Corp.  66,500  8,051,820 
CVS Caremark Corp.  8,400  667,380 
Sysco Corp.  116,300  4,399,629 
United Natural Foods, Inc. (I)  5,800  372,882 
Wal-Mart Stores, Inc. (L)  276,333  20,863,142 
Walgreen Company  500  30,260 
 
Food Products 1.1%     
General Mills, Inc.  97,600  5,209,888 
Hormel Foods Corp.  28,700  1,454,516 
Kellogg Company  19,000  1,234,430 
McCormick & Company, Inc.  23,900  1,665,591 
Mead Johnson Nutrition Company  10,800  1,032,480 
The Hershey Company  30,000  2,742,600 
 
Household Products 4.8%     
Church & Dwight Company, Inc.  27,300  1,862,952 
Colgate-Palmolive Company  191,700  12,408,741 
Kimberly-Clark Corp.  15,900  1,717,200 
Procter & Gamble Company  507,300  42,161,703 
The Clorox Company (L)  14,300  1,266,980 
 
Personal Products 0.3%     
Herbalife, Ltd. (L)  18,200  927,836 
The Estee Lauder Companies, Inc., Class A  44,360  3,408,179 
 
Tobacco 5.1%     
Altria Group, Inc.  1,000  43,080 
Lorillard, Inc.  670  39,999 
Philip Morris International, Inc.  693,457  59,346,050 
Reynolds American, Inc.  62,700  3,666,069 
 
Energy 9.1%    112,405,397 
 
Oil, Gas & Consumable Fuels 9.1%     
Apache Corp.  53,218  5,419,189 
Chevron Corp.  262,214  33,943,602 
ConocoPhillips  162,200  13,173,884 
Exxon Mobil Corp.  442,200  43,981,212 
Hess Corp.  25,400  2,567,940 

 

See notes to financial statements  Annual report | U.S. Equity Fund  13 

 


  Shares  Value 
Oil, Gas & Consumable Fuels (continued)     
Marathon Oil Corp.  108,000  $4,502,520 
Occidental Petroleum Corp.  85,000  8,817,050 
 
Financials 4.0%    49,430,582 
 
Banks 4.0%     
JPMorgan Chase & Company  619,974  36,857,454 
Wells Fargo & Company  242,700  12,484,488 
 
Insurance 0.0%     
American International Group, Inc.  800  44,848 
MetLife, Inc.  800  43,792 
 
Health Care 21.0%    259,029,887 
 
Biotechnology 1.8%     
Amgen, Inc.  92,800  12,934,464 
Biogen Idec, Inc. (I)  27,490  9,430,170 
Celgene Corp. (I)  500  47,510 
 
Health Care Equipment & Supplies 6.0%     
Abbott Laboratories  366,000  15,459,840 
Baxter International, Inc.  105,500  7,910,390 
Becton, Dickinson and Company  43,900  5,143,763 
C.R. Bard, Inc.  14,780  2,193,943 
Covidien PLC  160,200  13,910,166 
Edwards Lifesciences Corp. (I)  22,320  2,215,483 
IDEXX Laboratories, Inc. (I)  10,500  1,301,685 
Intuitive Surgical, Inc. (I)  7,770  3,651,978 
Medtronic, Inc.  90,034  5,748,671 
ResMed, Inc. (L)  27,400  1,453,570 
Sirona Dental Systems, Inc. (I)  4,300  350,493 
St. Jude Medical, Inc.  65,000  4,263,350 
Stryker Corp.  64,400  5,365,164 
Varian Medical Systems, Inc. (I)  21,500  1,827,930 
Zimmer Holdings, Inc.  36,900  3,664,539 
 
Health Care Providers & Services 7.5%     
Aetna, Inc.  605  49,689 
Express Scripts Holding Company (I)  756,210  55,906,605 
Henry Schein, Inc. (I)  17,100  2,046,699 
Humana, Inc.  29,600  3,810,704 
Laboratory Corp. of America Holdings (I)  38,400  4,117,632 
MEDNAX, Inc. (I)  26,900  1,540,025 
UnitedHealth Group, Inc.  252,046  21,847,347 
WellPoint, Inc.  31,700  3,693,367 
 
Health Care Technology 0.3%     
Cerner Corp. (I)  49,640  2,862,242 
 
Life Sciences Tools & Services 0.2%     
Mettler-Toledo International, Inc. (I)  1,200  324,576 
Waters Corp. (I)  16,600  1,716,938 

 

14  U.S. Equity Fund | Annual report  See notes to financial statements 

 


  Shares  Value 
Pharmaceuticals 5.2%     
Allergan, Inc.  44,726  $7,320,752 
Bristol-Myers Squibb Company  1,000  50,650 
Eli Lilly & Company  135,400  8,606,024 
Johnson & Johnson  464,200  48,151,466 
Merck & Company, Inc.  1,125  67,624 
Pfizer, Inc.  1,512  44,438 
 
Industrials 4.6%    56,877,678 
 
Aerospace & Defense 0.4%     
General Dynamics Corp.  8,900  1,096,925 
Honeywell International, Inc.  16,000  1,523,680 
Precision Castparts Corp.  9,900  2,416,194 
United Technologies Corp.  400  43,192 
 
Air Freight & Logistics 0.2%     
C.H. Robinson Worldwide, Inc. (L)  31,600  2,157,016 
Expeditors International of Washington, Inc.  9,500  392,350 
 
Commercial Services & Supplies 0.2%     
Rollins, Inc.  15,450  459,638 
Stericycle, Inc. (I)  14,600  1,735,210 
 
Electrical Equipment 0.7%     
AMETEK, Inc.  6,600  349,404 
Emerson Electric Company  110,600  7,080,612 
Hubbell, Inc., Class B  2,900  350,610 
Rockwell Automation, Inc.  4,300  501,423 
 
Industrial Conglomerates 2.5%     
3M Company  141,900  20,433,600 
Danaher Corp.  122,300  9,369,403 
Roper Industries, Inc.  2,900  436,624 
 
Machinery 0.3%     
CLARCOR, Inc.  5,000  316,050 
Dover Corp.  6,500  571,155 
Illinois Tool Works, Inc.  21,100  1,861,231 
Pall Corp.  4,400  371,228 
Snap-on, Inc.  2,800  349,860 
Wabtec Corp.  5,800  483,488 
 
Professional Services 0.0%     
Equifax, Inc.  4,300  338,668 
 
Road & Rail 0.0%     
Landstar System, Inc.  4,500  305,393 
 
Trading Companies & Distributors 0.3%     
Fastenal Company (L)  26,700  1,208,976 
MSC Industrial Direct Company, Inc., Class A  3,800  342,532 
W.W. Grainger, Inc.  9,680  2,383,216 

 

See notes to financial statements  Annual report | U.S. Equity Fund  15 

 


  Shares  Value 
Information Technology 30.6%    $377,829,690 
 
Communications Equipment 4.9%     
Cisco Systems, Inc.  1,256,906  31,410,081 
F5 Networks, Inc. (I)  6,300  782,397 
QUALCOMM, Inc.  362,898  27,616,538 
 
Electronic Equipment, Instruments & Components 0.0%     
Amphenol Corp., Class A  3,800  391,438 
 
Internet Software & Services 4.9%     
Akamai Technologies, Inc. (I)  12,200  737,124 
eBay, Inc. (I)  223,700  12,415,350 
Google, Inc., Class A (I)  60,300  35,116,308 
Google, Inc., Class C (I)  22,000  12,575,200 
 
IT Services 6.2%     
Accenture PLC, Class A  131,100  10,626,966 
Automatic Data Processing, Inc.  21,880  1,826,542 
Cognizant Technology Solutions Corp., Class A (I)  114,800  5,249,804 
Gartner, Inc. (I)  4,200  313,278 
International Business Machines Corp.  221,497  42,593,873 
Jack Henry & Associates, Inc.  17,700  1,023,237 
MasterCard, Inc., Class A  85,300  6,466,593 
Paychex, Inc.  63,600  2,648,940 
Teradata Corp. (I)  130,000  5,937,100 
Total System Services, Inc.  9,600  302,016 
 
Semiconductors & Semiconductor Equipment 0.2%     
Analog Devices, Inc.  11,100  567,432 
Intel Corp.  1,400  48,888 
Linear Technology Corp.  12,800  577,408 
Xilinx, Inc.  22,300  942,175 
 
Software 10.6%     
ANSYS, Inc. (I)  18,100  1,471,530 
CA, Inc.  19,500  550,680 
Citrix Systems, Inc. (I)  36,000  2,529,360 
FactSet Research Systems, Inc. (L)  3,800  484,120 
Intuit, Inc.  55,300  4,599,854 
Microsoft Corp.  1,395,785  63,410,513 
Oracle Corp.  1,357,655  56,383,410 
Red Hat, Inc. (I)  7,700  469,084 
Synopsys, Inc. (I)  25,000  1,022,500 
 
Technology Hardware, Storage & Peripherals 3.8%     
Apple, Inc.  333,400  34,173,500 
EMC Corp.  396,700  11,714,551 
Hewlett-Packard Company  4,334  164,692 
NetApp, Inc.  16,300  687,208 
 
Materials 0.8%    10,462,166 
 
Chemicals 0.8%     
International Flavors & Fragrances, Inc.  2,900  294,611 
Monsanto Company  68,300  7,898,895 
Sigma-Aldrich Corp.  19,100  1,986,400 

 

16  U.S. Equity Fund | Annual report  See notes to financial statements 

 


    Shares  Value 
Containers & Packaging 0.0%       
AptarGroup, Inc.    4,400  $282,260 
 
Telecommunication Services 0.0%      35,135 
 
Diversified Telecommunication Services 0.0%       
AT&T, Inc.    1,005  35,135 
 
Rights 0.0%      $1,092 
(Cost $1,820)       
 
Community Health Systems, Inc. (Expiration Date: 1-27-16) (I)(N)  28,000  1,092 
 
Warrants 0.0%      $88 
(Cost $280)       
 
Tejon Ranch Company (Expiration Date: 8-31-16; Strike Price: $40.00) (I)  44  88 
 
  Yield (%)  Shares  Value 
Securities Lending Collateral 1.8%      $21,949,610 
(Cost $21,949,332)       
 
John Hancock Collateral Investment Trust (W)  0.0970 (Y)  2,193,404  21,949,610 
 
Money Market Funds 1.4%      17,272,389 
(Cost $17,272,389)       
 
State Street Institutional Treasury Money       
Market Fund  0.0000 (Y)  17,272,389  17,272,389 
 
Total investments (Cost $885,637,876)† 102.0%    $1,259,946,313 
 
Other assets and liabilities, net (2.0%)      ($24,907,950) 
 
Total net assets 100.0%    $1,235,038,363 
 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the fund.

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(N) Strike price and/or expiration date not available.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $907,993,193. Net unrealized appreciation aggregated $351,953,120, of which $354,187,300 related to appreciated investment securities and $2,234,180 related to depreciated investment securities.

See notes to financial statements  Annual report | U.S. Equity Fund  17 

 


F I N A N C I A L   S T A T E M E N T S

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $863,688,544) including   
$21,520,305 of securities loaned  $1,237,996,703 
Investments in affiliated issuers, at value (Cost $21,949,332)  21,949,610 
 
Total investments, at value (Cost $885,637,876)  1,259,946,313 
Foreign currency, at value (Cost $17)  17 
Receivable for investments sold  1,818,824 
Receivable for fund shares sold  63,913 
Dividends and interest receivable  2,700,512 
Receivable for securities lending income  4,799 
Receivable due from advisor  1,092 
Other receivables and prepaid expenses  53,498 
 
Total assets  1,264,588,968 
 
Liabilities   
Payable for investments purchased  1,923,158 
Payable for fund shares repurchased  5,451,732 
Payable upon return of securities loaned  21,960,608 
Payable to affiliates   
Accounting and legal services fees  25,762 
Transfer agent fees  34,346 
Trustees’ fees  183 
Other liabilities and accrued expenses  154,816 
 
Total liabilities  29,550,605 
 
Net assets  $1,235,038,363 
 
Net assets consist of   
Paid-in capital  $703,013,460 
Undistributed net investment income  9,642,943 
Accumulated net realized gain (loss) on investments  148,073,786 
Net unrealized appreciation (depreciation) on investments  374,308,174 
 
Net assets  $1,235,038,363 

 

18  U.S. Equity Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L   S T A T E M E N T S

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($52,209,169 ÷ 3,777,264 shares)1  $13.82 
Class C ($100,019 ÷ 7,241 shares)1  $13.81 
Class I ($119,613,267 ÷ 8,659,628 shares)  $13.81 
Class 1 ($57,881,309 ÷ 4,191,168 shares)  $13.81 
Class NAV ($1,005,234,599 ÷ 72,766,392 shares)  $13.81 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $14.55 

 

1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | U.S. Equity Fund  19 

 


F I N A N C I A L   S T A T E M E N T S

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Dividends  $24,885,956 
Securities lending  152,407 
Interest  11 
 
Total investment income  25,038,374 
 
Expenses   
Investment management fees  8,876,466 
Distribution and service fees  166,278 
Accounting and legal services fees  147,256 
Transfer agent fees  194,575 
Trustees’ fees  16,139 
State registration fees  63,268 
Printing and postage  15,984 
Professional fees  64,144 
Custodian fees  143,267 
Registration and filing fees  25,700 
Expense recapture  2,247 
Other  24,063 
 
Total expenses  9,739,387 
Less expense reductions  (144,426) 
 
Net expenses  9,594,961 
 
Net investment income  15,443,413 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers  189,149,983 
Investments in affiliated issuers  (25) 
 
  189,149,958 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers  15,481,971 
Investments in affiliated issuers  (940) 
 
  15,481,031 
 
Net realized and unrealized gain  204,630,989 
 
Increase in net assets from operations  $220,074,402 

 

20  U.S. Equity Fund | Annual report  See notes to financial statements 

 


F I N A N C I A L   S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $15,443,413  $25,473,193 
Net realized gain  189,149,958  232,222,898 
Change in net unrealized appreciation (depreciation)  15,481,031  (12,546,041) 
 
Increase in net assets resulting from operations  220,074,402  245,150,050 
 
Distributions to shareholders     
From net investment income     
Class A  (628,059)  (275,342) 
Class I  (1,916,341)  (918,712) 
Class 1  (1,070,734)  (718,206) 
Class NAV  (17,961,426)  (23,728,681) 
From net realized gain     
Class A  (4,581,829)  — 
Class I  (10,753,939)  — 
Class 1  (5,861,712)  — 
Class NAV  (95,978,912)  — 
 
Total distributions  (138,752,952)  (25,640,941) 
 
From fund share transactions  35,559,738  (711,668,690) 
 
Total increase (decrease)  116,881,188  (492,159,581) 
 
Net assets     
Beginning of year  1,118,157,175  1,610,316,756 
 
End of year  $1,235,038,363  $1,118,157,175 
 
Undistributed net investment income  $9,642,943  $15,786,199 

 

See notes to financial statements  Annual report | U.S. Equity Fund  21 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $13.02  $11.56  $10.33 
Net investment income2  0.11  0.13  0.10 
Net realized and unrealized gain on investments  2.35  1.45  1.20 
Total from investment operations  2.46  1.58  1.30 
Less distributions       
From net investment income  (0.20)  (0.12)  (0.07) 
From net realized gain  (1.46)  —  — 
Total distributions  (1.66)  (0.12)  (0.07) 
Net asset value, end of period  $13.82  $13.02  $11.56 
Total return (%)3,4  20.07  13.84  12.645 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $52  $36  $28 
Ratios (as a percentage of average net assets):       
Expenses before reductions  1.29  1.356  1.397 
Expenses including reductions  1.28  1.35  1.357 
Net investment income  0.85  1.03  1.067 
Portfolio turnover (%)  52  42  488,9 

 

1 The inception date for Class A shares is 10-31-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Not annualized.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 Annualized.
8 Excludes merger activity.
9 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.

 

22  U.S. Equity Fund | Annual report  See notes to financial statements 

 


CLASS C SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $13.81 
Net investment income2  —3 
Net realized and unrealized gain on investments  —3 
Total from investment operations  —3 
Net asset value, end of period  $13.81 
Total return (%)4,5  0.006 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —7 
Ratios (as a percentage of average net assets):   
Expenses before reductions  17.058 
Expenses including reductions  2.058 
Net investment income  0.468 
Portfolio turnover (%)  529 

 

1 The inception date for Class C shares is 8-28-14.
2 Based on average daily shares outstanding.
3 Less than $0.005 per share.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Does not reflect the effect of sales charges, if any.
6 Not annualized.
7 Less than $500,000.
8 Annualized.
9 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

CLASS I SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $13.02  $11.56  $10.33 
Net investment income2  0.16  0.18  0.13 
Net realized and unrealized gain (loss) on investments  2.35  1.46  1.21 
Total from investment operations  2.51  1.64  1.34 
Less distributions       
From net investment income  (0.26)  (0.18)  (0.11) 
From net realized gain  (1.46)  —  — 
Total distributions  (1.72)  (0.18)  (0.11) 
Net asset value, end of period  $13.81  $13.02  $11.56 
Total return (%)3  20.53  14.35  13.114 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $120  $88  $59 
Ratios (as a percentage of average net assets):       
Expenses before reductions  0.96  0.92  0.965 
Expenses including reductions  0.89  0.89  0.895 
Net investment income  1.24  1.48  1.475 
Portfolio turnover (%)  52  42  486,7 

 

1 The inception date for Class I shares is 10-31-11.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.
6 Excludes merger activity.
7 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.

 

See notes to financial statements  Annual report | U.S. Equity Fund  23 

 


CLASS 1 SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $13.02  $11.56  $11.04 
Net investment income2  0.17  0.19  0.06 
Net realized and unrealized gain on investments  2.35  1.45  0.46 
Total from investment operations  2.52  1.64  0.52 
Less distributions       
From net investment income  (0.27)  (0.18)  — 
From net realized gain  (1.46)  —  — 
Total distributions  (1.73)  (0.18)  — 
Net asset value, end of period  $13.81  $13.02  $11.56 
Total return (%)3  20.60  14.41  4.714 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $58  $54  $46 
Ratios (as a percentage of average net assets):       
Expenses before reductions  0.84  0.83  0.845 
Expenses including reductions  0.83  0.83  0.845 
Net investment income  1.29  1.54  1.775 
Portfolio turnover (%)  52  42  486,7 

 

1 The inception date for Class 1 shares is 5-7-12.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.
6 Excludes merger activity.
7 Portfolio turnover is shown for the period from 9-1-11 to 8-31-12.

 

CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $13.03  $11.56  $9.84  $8.30  $8.25 
Net investment income1  0.18  0.20  0.16  0.14  0.12 
Net realized and unrealized gain on investments  2.33  1.46  1.68  1.52  0.05 
Total from investment operations  2.51  1.66  1.84  1.66  0.17 
Less distributions           
From net investment income  (0.27)  (0.19)  (0.12)  (0.12)  (0.12) 
From net realized gain  (1.46)  —  —  —  — 
Total distributions  (1.73)  (0.19)  (0.12)  (0.12)  (0.12) 
Net asset value, end of period  $13.81  $13.03  $11.56  $9.84  $8.30 
Total return (%)2  20.56  14.55  18.86  20.03  1.92 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $1,005  $939  $1,477  $1,049  $902 
Ratios (as a percentage of average net assets):           
Expenses before reductions  0.79  0.78  0.79  0.79  0.79 
Expenses including reductions  0.78  0.78  0.79  0.79  0.79 
Net investment income  1.34  1.60  1.51  1.47  1.33 
Portfolio turnover (%)  52  42  483  72  34 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
3 Excludes merger activity.

 

24  U.S. Equity Fund | Annual report  See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock U.S. Equity Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek long-term capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, and transfer agent fees, state registration fees and printing and postage for each class may differ.

Note 2 — Significant accounting policies

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the funds in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from

Annual report | U.S. Equity Fund  25 

 


independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

As of August 31, 2014, all investments are categorized as Level 1 under the hierarchy described above.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Obligations to repay collateral received by the fund is shown on the Statement of assets and liabilities as Payable upon return of securities loaned.

Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund’s custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

26  U.S. Equity Fund | Annual report 

 


In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $980. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $22,275,225  $25,640,941 
Long-Term Capital Gain  $116,477,727  — 
Total  $138,752,952  $25,640,941 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $23,707,431 of undistributed ordinary income and $156,364,616 of long-term capital gains.

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 wash sale loss deferrals.

Annual report | U.S. Equity Fund  27 

 


Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. 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 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) 0.780% of the first $500 million aggregate net assets; b) 0.760% of the aggregate net assets between $500 million and $1 billion; and c) 0.740% of the fund’s aggregate net assets in excess of $1 billion. Aggregate net assets include the net assets of the fund and the net assets of John Hancock U.S. Equity Trust, a series of John Hancock Variable Insurance Trust (JHVIT). The Advisor has a subadvisory agreement with Grantham, Mayo, Van Otterloo & Co. LLC. The fund is not responsible for payment of the subadvisory fees.

The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.

The Advisor has contractually agreed to waive fees and/or reimburse certain fund expenses excluding taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, short dividend expense and acquired fund fees. The fee waivers and/or reimbursements are such that these expenses will not exceed 1.35% for Class A shares, 2.05% for Class C shares and 0.89% for Class I shares. The fee waivers and/or reimbursements will continue in effect until December 31, 2014 for Classes A and I shares and until December 31, 2015 for Class C shares, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.

Additionally, the Advisor has voluntarily agreed to limit the fund’s total expenses, excluding taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expense not incurred in the ordinary course of the fund’s business, advisory fees,

28  U.S. Equity Fund | Annual report 

 


Rule 12b-1 fees, transfer agent fees and service fees and state registration fees, printing and postage, short dividend expense and acquired fund fees. The waivers are such that these expenses will not exceed 0.20% of the fund’s average net assets. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

The expense reductions described above amounted to $2,957, $123, $76,127, $3,644 and $61,575 for Class A, Class C, Class I, Class 1 and Class NAV shares, respectively, for the year ended August 31, 2014.

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 0.74% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNT RECOVERED 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  DURING THE YEAR 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  ENDED 8-31-14 
$30,968  $20,437  $69,147  $2,247 

 

The amount recovered by Class A shares was $2,247.

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A, Class C and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund’s shares.

CLASS  RULE 12b-1 FEE 
Class A  0.30% 
Class C  1.00% 
Class 1  0.05% 

 

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $104,354 for the year ended August 31, 2014. Of this amount, $16,778 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $86,960 was paid as sales commissions to broker-dealers and $616 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.

 

Annual report | U.S. Equity Fund  29 

 


Class A and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, CDSCs received by the Distributor amounted to $2,080 for Class A shares.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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 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.

Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  $137,771  $61,628  $18,808  $6,986 
Class C  $8  $1  $125  — 
Class I  —  $132,946  $44,335  $8,994 
Class 1  $28,499  —  —  $4 
Total  $166,278  $194,575  $63,268  $15,984 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Note 5 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

  Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  1,770,759  $23,580,013  1,934,007  $24,468,892 
Distributions reinvested  399,274  5,066,786  22,838  261,948 
Repurchased  (1,170,743)  (15,486,969)  (1,558,723)  (19,107,027) 
 
Net increase  999,290  $13,159,830  398,122  $5,623,813 

 

30  U.S. Equity Fund | Annual report 

 


  Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class C shares1         
Sold  7,241  $100,000  —  — 
 
Net increase  7,241  $100,000  —  — 
 
Class I shares         
Sold  3,328,867  $43,694,487  3,557,592  $45,081,226 
Distributions reinvested  965,747  12,216,695  64,128  733,620 
Repurchased  (2,412,688)  (31,695,629)  (1,988,482)  (25,091,798) 
 
Net increase  1,881,926  $24,215,553  1,633,238  $20,723,048 
 
Class 1 shares         
Sold  330,561  $4,394,473  869,126  $10,834,092 
Distributions reinvested  548,453  6,932,446  62,835  718,206 
Repurchased  (860,736)  (11,450,094)  (740,955)  (9,205,791) 
 
Net increase  18,278  ($123,175)  191,006  $2,346,507 
 
Class NAV shares         
Sold  2,578,639  $33,981,695  2,600,931  $30,528,632 
Distributions reinvested  9,014,267  113,940,338  2,076,000  23,728,681 
Repurchased  (10,945,578)  (149,714,503)  (60,334,344)  (794,619,371) 
 
Net increase (decrease)  647,328  ($1,792,470)  (55,657,413)  ($740,362,058) 
 
Total net increase (decrease)  3,554,063  $35,559,738  (53,435,047)  ($711,668,690) 

 

1 The inception date for Class C shares is 8-28-14.

Affiliates of the fund owned 100% of shares of beneficial interest of Class NAV on August 31, 2014.

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to $608,790,779 and $694,743,276, respectively, for the year ended August 31, 2014.

Note 7 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 80.9% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATE 
FUND  CONCENTRATION 
John Hancock Lifestyle Growth Portfolio  26.5% 
John Hancock Lifestyle Balanced Portfolio  24.9% 
John Hancock Lifestyle Moderate Portfolio  7.6% 
John Hancock Lifestyle Aggressive Portfolio  6.6% 

 

Annual report | U.S. Equity Fund  31 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock U.S. Equity Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock U.S. Equity Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

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Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $116,477,727 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | U.S. Equity Fund  33 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Grantham, Mayo, Van Otterloo & Co. LLC (the Subadvisor), for John Hancock U.S. Equity Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

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Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

Annual report | U.S. Equity Fund  35 

 


The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index and peer group average for the one-year period ended December 31, 2013. The Board took into account management’s discussion of the fund’s performance, including the impact of market conditions on the subadvisor’s investment style relative to its peer group. The Board concluded that the fund’s performance is being monitored and reasonably addressed.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees for the fund are higher than the peer group median and total expenses for the fund are lower than the peer group median.

The Board took into account management’s discussion of the fund’s expenses. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

36  U.S. Equity Fund | Annual report 

 


Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion

Annual report | U.S. Equity Fund  37 

 


and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

38  U.S. Equity Fund | Annual report 

 


The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

Annual report | U.S. Equity Fund  39 

 


The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund is being monitored and reasonably addressed;

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

40  U.S. Equity Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | U.S. Equity Fund  41 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

42  U.S. Equity Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | U.S. Equity Fund  43 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

44  U.S. Equity Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  Grantham, Mayo, Van Otterloo & Co. LLC 
Peter S. Burgess* 
William H. Cunningham  Principal distributor 
Grace K. Fey  John Hancock Funds, LLC 
Theron S. Hoffman* 
Deborah C. Jackson  Custodian 
Hassell H. McClellan  State Street Bank and Trust Company 
Gregory A. Russo 
Warren A. Thomson†  Transfer agent 
  John Hancock Signature Services, Inc. 
Officers 
Andrew G. Arnott  Legal counsel 
President  K&L Gates LLP 
 
John J. Danello  Independent registered 
Senior Vice President, Secretary,  public accounting firm 
and Chief Legal Officer  PricewaterhouseCoopers LLP 
 
Francis V. Knox, Jr.   
Chief Compliance Officer   
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | U.S. Equity Fund  45 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


 
This report is for the information of the shareholders of John Hancock U.S. Equity Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  390A 8/14 
MF198776  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
        Since        Since 
  1-year  5-year  10-year  inception1  1-year  5-year  10-year  inception1 
Class A2  –0.34  —  —  4.31  –0.34  —  —  13.16 
Class I2,3  5.22  —  —  6.49  5.22  —  —  20.19 
Class R62,3  5.34  —  —  6.60  5.34  —  —  20.57 
Class NAV3  5.44  —  —  6.62  5.44  —  —  20.64 
Index 1†  25.25  —  —  23.51  25.25  —  —  85.49 
Index 2†  16.85  —  —  14.30  16.85  —  —  47.88 

 

Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%. Sales charges are not applicable to Class I, Class R6, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A*  Class I*  Class R6*  Class NAV 
Gross (%)  1.64  1.33  1.23  1.14 
Net (%)  1.64  1.33  1.21  1.14 

 

* Expenses have been estimated for the class’s first period of operations.

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, the fund’s current performance may be higher or lower than the performance shown. For current to the most recent month-end performance data, please call 800-225-5291 or visit the fund’s website at jhinvestments.com.

The performance table above and the chart on the next page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index 1 is the S&P 500 Index; Index 2 is the CBOE S&P 500 Buy-Write Index.

See the following page for footnotes.

6  Redwood Fund | Annual report 

 



    With maximum  Without     
  Start date  sales charge  sales charge  Index 1  Index 2 
Class A2  9-29-11  $11,316  $11,915  $18,549  $14,788 
Class I2,3  9-29-11  12,019  12,019  18,549  14,788 
Class R62,3  9-29-11  12,057  12,057  18,549  14,788 

 

S&P 500 Index — Index 1 — is an unmanaged index that includes 500 widely traded common stocks.

CBOE S&P 500 Buy-Write Index — Index 2 — is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Footnotes related to performance pages

1 From 9-29-11.

2 Class A, Class I, and Class R6 shares were first offered on 12-30-13. The returns prior to this date are those of Class NAV shares that have been recalculated to apply the gross fees and expenses of Class A, Class I, and Class R6 shares, as applicable.

3 For certain types of investors, as described in the fund’s prospectuses.

Annual report | Redwood Fund  7 

 


Management’s discussion of
Fund performance

Todd G. Hawthorne, Robeco Investment Management, Inc.

U.S. equities performed very well in the 12 months ended August 31, 2014, when stocks repeatedly reached new record highs. With stocks reaching all-time highs, volatility indexes touched historic lows during the fiscal year.

For the 12 months ended August 31, 2014, John Hancock Redwood Fund’s Class NAV shares returned 5.44%. By comparison, the fund’s benchmark, the S&P 500 Index, had a return of 25.25%. Effective March 14, 2014, Allianz Global Investors, U.S., LLC (formerly RCM Capital Management LLC) ceased to act as subadvisor to the fund. Robeco Investment Management, Inc. assumed management of the fund’s assets as the sole subadvisor at that time.

The fund’s investment mandate is to seek long-term capital appreciation with a high degree of downside protection and reduced volatility relative to the broad U.S. equity market. It does so primarily by investing in in-the-money options (buy-writes) on U.S. equities, and writing out-of-the-money put options on U.S. equities. This approach increases the probability of delivering positive returns to shareholders with lower volatility of returns than the market as a whole. However, these characteristics mean that the fund will typically hold up better during market declines but also lag in up markets. It is this process that explains the portfolio’s underperformance of the S&P 500 Index.

Among individual positions, one of the leading detractors for the period was the fund’s buy-write position in Coach, Inc., an American luxury leather goods company. The strategy’s return was also negatively impacted by a buy-write position in Whole Foods Market, Inc. At the other end of the spectrum, the portfolio enjoyed positive contributions to return from buy-write positions in a broad range of sectors and industries. In the technology sector, buy-write positions in Apple Inc. and Broadcomm Corp. contributed. The fund’s performance was also aided by a buy-write position in oil and gas exploration company Anadarko Petroleum Corp. Whole Foods, Broadcomm, and Anadarko were sold before period-end.

This commentary reflects the views of the portfolio management team through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Redwood Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141,2  expense ratio 
Class A  $1,000.00  $1,015.00  $8.23  1.62% 
Class C  1,000.00  1,006.10  4.29  2.40% 
Class I  1,000.00  1,015.80  6.66  1.31% 
Class R6  1,000.00  1,016.70  5.90  1.16% 
Class NAV  1,000.00  1,017.60  5.85  1.15% 

 

Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 

 
Annual report | Redwood Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20143  expense ratio 
Class A  $1,000.00  $1,017.00  $8.24  1.62% 
Class C  1,000.00  1,013.10  12.18  2.40% 
Class I  1,000.00  1,018.60  6.67  1.31% 
Class R6  1,000.00  1,019.40  5.90  1.16% 
Class NAV  1,000.00  1,019.40  5.85  1.15% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio for Class A, Class I, Class R6 and Class NAV shares, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

2 Expenses are equal to the fund’s annualized expense ratio for Class C shares, multiplied by the average account value over the period, multiplied by 65/365 (to reflect the one-half year period).

3 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  Redwood Fund | Annual report 

 


Portfolio summary

Top 10 Holdings (26.2% of Net Assets on 8-31-14)1,2,3     
Citigroup, Inc.  4.3%  Edwards Lifesciences Corp.  2.5% 
  
CBS Corp., Class B  2.8%  Cameron International Corp.  2.3% 
  
HCA Holdings, Inc.  2.7%  General Motors Company  2.1% 
  
Abercrombie & Fitch Company, Class A  2.7%  Bristol-Myers Squibb Company  2.1% 
  
Express Scripts Holding Company  2.7%  United Rentals, Inc.  2.0% 
  
 
Sector Composition1,3,4       
Consumer Discretionary  23.8%  Energy  4.2% 
  
Information Technology  12.7%  Consumer Staples  1.8% 
  
Health Care  12.2%  Materials  0.5% 
  
Financials  7.9%  Short-Term Investments & Other  30.9% 
  
Industrials  6.0%     
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 Does not reflect the impact of written options. See Notes to financial statements.

4 While the fund seeks to limit losses through options and other strategies, it may still lose money. The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies. Investments in initial public offerings are often volatile. Foreign investing has additional risks, such as currency and market volatility and political and social instability. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Sector investing is subject to greater risks than the market as a whole. Because the Fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectus for additional risks.

Annual report | Redwood Fund  11 

 


Fund’s investments

As of 8-31-14

  Shares  Value 
 
Common Stocks 69.1%    $377,671,738 
(Cost $325,575,433)     
 
Consumer Discretionary 23.8%    130,173,398 
 
Auto Components 1.0%     
Johnson Controls, Inc. (D)  113,700  5,549,697 
 
Automobiles 2.1%     
General Motors Company (D)  331,200  11,525,760 
 
Diversified Consumer Services 1.4%     
Apollo Education Group, Inc. (D)(I)  286,700  7,961,659 
 
Hotels, Restaurants & Leisure 2.0%     
Las Vegas Sands Corp. (D)  102,700  6,830,577 
Yum! Brands, Inc. (D)  58,200  4,215,426 
 
Household Durables 1.1%     
Lennar Corp., Class A (D)  150,400  5,892,672 
 
Leisure Products 0.9%     
Hasbro, Inc. (D)  96,900  5,102,270 
 
Media 4.2%     
CBS Corp., Class B (D)  254,800  15,107,092 
DISH Network Corp., Class A (D)(I)  120,300  7,796,643 
 
Multiline Retail 2.6%     
Family Dollar Stores, Inc. (D)  70,100  5,596,083 
Macy’s, Inc. (D)  135,700  8,452,753 
 
Specialty Retail 6.6%     
Abercrombie & Fitch Company, Class A (D)  351,800  14,705,240 
Cabela’s, Inc. (D)(I)  67,100  4,094,442 
GNC Holdings, Inc., Class A (D)  101,500  3,851,925 
The Gap, Inc. (D)  130,600  6,027,190 
The Home Depot, Inc.  600  56,100 
Urban Outfitters, Inc. (D)(I)  178,600  7,106,494 
 
Textiles, Apparel & Luxury Goods 1.9%     
Coach, Inc. (D)  140,500  5,174,615 
Ralph Lauren Corp. (D)  30,300  5,126,760 
 
Consumer Staples 1.8%    9,806,832 
 
Food Products 1.7%     
Mead Johnson Nutrition Company (D)  99,800  9,540,880 
 
Household Products 0.1%     
The Procter & Gamble Company (D)  3,200  265,952 

 

12  Redwood Fund | Annual report  See notes to financial statements 

 


  Shares  Value 
 
Energy 4.2%    $22,752,424 
 
Energy Equipment & Services 2.3%     
Cameron International Corp. (D)(I)  170,400  12,665,832 
 
Oil, Gas & Consumable Fuels 1.9%     
Valero Energy Corp. (D)  66,500  3,600,310 
Western Refining, Inc. (D)  139,400  6,486,282 
 
Financials 7.9%    43,027,218 
 
Banks 4.3%     
Citigroup, Inc. (D)  458,800  23,697,020 
 
Capital Markets 1.2%     
Waddell & Reed Financial, Inc., Class A (D)  123,800  6,747,100 
 
Consumer Finance 1.1%     
Capital One Financial Corp. (D)  69,300  5,686,758 
 
Insurance 1.3%     
Genworth Financial, Inc., Class A (D)(I)  486,000  6,896,340 
 
Health Care 12.2%    66,695,197 
 
Biotechnology 1.5%     
Celgene Corp. (D)(I)  86,400  8,209,728 
 
Health Care Equipment & Supplies 3.3%     
Edwards Lifesciences Corp. (D)(I)  137,400  13,638,324 
Thoratec Corp. (D)(I)  168,300  4,207,500 
 
Health Care Providers & Services 5.4%     
Express Scripts Holding Company (D)(I)  197,200  14,578,996 
HCA Holdings, Inc. (D)(I)  211,700  14,780,894 
 
Pharmaceuticals 2.0%     
Bristol-Myers Squibb Company (D)  222,700  11,279,755 
 
Industrials 6.0%    33,009,851 
 
Air Freight & Logistics 1.0%     
Expeditors International of Washington, Inc. (D)  136,700  5,645,710 
 
Electrical Equipment 0.3%     
Eaton Corp. PLC (D)  20,200  1,410,162 
 
Machinery 1.0%     
Flowserve Corp. (D)  71,100  5,395,779 
 
Road & Rail 1.1%     
Hertz Global Holdings, Inc. (D)(I)  213,400  6,305,970 
 
Trading Companies & Distributors 2.6%     
Fastenal Company (D)  70,000  3,169,600 
United Rentals, Inc. (D)(I)  94,200  11,082,630 
 
Information Technology 12.7%    69,328,448 
 
Communications Equipment 1.9%     
Juniper Networks, Inc. (D)  459,400  10,653,486 
 
Internet Software & Services 2.7%     
eBay, Inc. (D)(I)  160,800  8,924,400 
Yahoo!, Inc. (D)(I)  148,700  5,726,437 

 

See notes to financial statements  Annual report | Redwood Fund  13 

 


    Shares  Value 
 
IT Services 1.5%       
Accenture PLC, Class A (D)    98,500  $7,984,410 
 
Software 2.5%       
Citrix Systems, Inc. (D)(I)    92,700  6,513,102 
Microsoft Corp. (D)    900  40,887 
Oracle Corp. (D)    166,100  6,898,133 
 
Technology Hardware, Storage & Peripherals 4.1%       
Apple, Inc. (D)    84,600  8,671,500 
EMC Corp. (D)    309,700  9,145,441 
SanDisk Corp. (D)    48,700  4,770,652 
 
Materials 0.5%      2,878,370 
 
Metals & Mining 0.5%       
Cliffs Natural Resources, Inc. (D)    191,000  2,878,370 
 
  Yield (%)  Shares  Value 
 
Short-Term Investments 44.4%      $242,417,467 
(Cost $242,417,467)       
 
Money Market Funds 44.4%      242,417,467 
 
State Street Institutional U.S. Government       
Money Market Fund       
  0.0000%  242,417,467  242,417,467 
 
Total investments (Cost $567,992,900)† 113.5%      $620,089,205 
 
Other assets and liabilities, net (13.5%)      ($73,818,280) 
 
Total net assets 100.0%      $546,270,925 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the fund.

(I) Non-income producing security.

(D) A portion of this security is segregated at the custodian as collateral pursuant to certain derivative instrument contracts. The value of the securities segregated amounted to $7,287,700 as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $568,149,639. Net unrealized appreciation aggregated $51,939,566 of which $62,909,036 related to appreciated investment securities and $10,969,470 related to depreciated investment securities.

14  Redwood Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments, at value (Cost $567,992,900)  $620,089,205 
Receivable for investments sold  4,693,644 
Receivable for fund shares sold  398,889 
Dividends receivable  143,680 
Receivable due from advisor  566 
Other receivables and prepaid expenses  103,125 
 
Total assets  625,429,109 
 
Liabilities   
Payable for investments purchased  5,446,112 
Written options, at value (premiums received $66,066,529)  73,537,453 
Payable to affiliates   
Accounting and legal services fees  11,235 
Transfer agent fees  69,748 
Trustees’ fees  68 
Other liabilities and accrued expenses  93,568 
 
Total liabilities  79,158,184 
 
Net assets  $546,270,925 
 
Net assets consist of   
Paid-in capital  $487,904,957 
Accumulated net realized gain (loss) on investments and written options  13,740,587 
Net unrealized appreciation (depreciation) on investments and   
written options  44,625,381 
 
Net assets  $546,270,925 
 
Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($104,502 ÷ 9,073 shares)1  $11.52 
Class C ($100,613 ÷ 8,726 shares)1  $11.53 
Class I ($102,328 ÷ 8,865 shares)  $11.54 
Class R6 ($102,433 ÷ 8,865 shares)  $11.55 
Class NAV ($545,861,049 ÷ 47,231,943 shares)  $11.56 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $12.13 

 

1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | Redwood Fund  15 

 


FINANCIAL STATEMENTS

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Dividends  $2,780,872 
 
Expenses   
Investment management fees  5,440,295 
Distribution and service fees  381 
Accounting and legal services fees  61,322 
Transfer agent fees  205 
Trustees’ fees  6,435 
State registration fees  12,410 
Printing and postage  5 
Professional fees  99,991 
Custodian fees  70,266 
Registration and filing fees  32,927 
Other  12,731 
 
Total expenses  5,736,968 
Less expense reductions  (44,126) 
 
Net expenses  5,692,842 
 
Net investment loss  (2,911,970) 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers  39,250,963 
Written options  (1,722,284) 
 
  37,528,679 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers  5,756,545 
Written options  (14,609,917) 
 
  (8,853,372) 
 
Net realized and unrealized gain  28,675,307 
 
Increase in net assets from operations  $25,763,337 

 

16  Redwood Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income (loss)  ($2,911,970)  $1,611,368 
Net realized gain (loss)  37,528,679  (2,296,468) 
Change in net unrealized appreciation (depreciation)  (8,853,372)  27,100,566 
 
Increase in net assets resulting from operations  25,763,337  26,415,466 
 
Distributions to shareholders     
From net investment income     
Class NAV  —  (3,888,334) 
From net realized gain     
Class NAV  (8,617,341)  (5,814,949) 
 
Total distributions  (8,617,341)  (9,703,283) 
 
From fund share transactions  70,670,128  13,677,334 
 
Total increase  87,816,124  30,389,517 
 
Net assets     
Beginning of year  458,454,801  428,065,284 
 
End of year  $546,270,925  $458,454,801 
 
Accumulated distributions in excess of net investment income  —  ($1,241,286) 

 

See notes to financial statements  Annual report | Redwood Fund  17 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $11.28 
Net investment loss2  (0.08) 
Net realized and unrealized gain on investments  0.32 
Total from investment operations  0.24 
Net asset value, end of period  $11.52 
Total return (%)3,4  2.135 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —6 
Ratios (as a percentage of average net assets):   
Expenses before reductions  6.197 
Expenses including reductions  1.627 
Net investment loss  (1.07)7 
Portfolio turnover (%)  868 

 

1 The inception date for Class A shares is 12-30-13.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Not annualized.
6 Less than $500,000.
7 Annualized.
8 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

CLASS C SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $11.46 
Net investment loss2  (0.04) 
Net realized and unrealized gain on investments  0.11 
Total from investment operations  0.07 
Net asset value, end of period  $11.53 
Total return (%)3,4  0.615 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —6 
Ratios (as a percentage of average net assets):   
Expenses before reductions  19.727 
Expenses including reductions  2.407 
Net investment loss  (1.91)7 
Portfolio turnover (%)  868 

 

1 The inception date for Class C shares is 6-27-14.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Does not reflect the effect of sales charges, if any.
5 Not annualized.
6 Less than $500,000.
7 Annualized.
8 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

18  Redwood Fund | Annual report  See notes to financial statements 

 


CLASS I SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $11.28 
Net investment loss2  (0.06) 
Net realized and unrealized gain on investments  0.32 
Total from investment operations  0.26 
Net asset value, end of period  $11.54 
Total return (%)3  2.304 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —5 
Ratios (as a percentage of average net assets):   
Expenses before reductions  5.876 
Expenses including reductions  1.306 
Net investment loss  (0.75)6 
Portfolio turnover (%)  867 

 

1 The inception date for Class I shares is 12-30-13.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

CLASS R6 SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $11.28 
Net investment loss2  (0.05) 
Net realized and unrealized gain on investments  0.32 
Total from investment operations  0.27 
Net asset value, end of period  $11.55 
Total return (%)3  2.394 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —5 
Ratios (as a percentage of average net assets):   
Expenses before reductions  5.786 
Expenses including reductions  1.166 
Net investment loss  (0.60)6 
Portfolio turnover (%)  867 

 

1 The inception date for Class R6 shares is 12-30-13.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

See notes to financial statements  Annual report | Redwood Fund  19 

 


CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-121 
 
Per share operating performance       
Net asset value, beginning of period  $11.17  $10.78  $10.00 
Net investment income (loss)2  (0.07)  0.04  0.04 
Net realized and unrealized gain on investments  0.67  0.58  0.77 
Total from investment operations  0.60  0.62  0.81 
Less distributions       
From net investment income  —  (0.09)  (0.01) 
From net realized gain  (0.21)  (0.14)  (0.02) 
Total distributions  (0.21)  (0.23)  (0.03) 
Net asset value, end of period  $11.56  $11.17  $10.78 
Total return (%)3  5.44  5.85  8.094 
 
Ratios and supplemental data       
Net assets, end of period (in millions)  $546  $458  $428 
Ratios (as a percentage of average net assets):       
Expenses before reductions  1.16  1.14  1.165 
Expenses including reductions  1.15  1.14  1.165 
Net investment income (loss)  (0.59)  0.34  0.415 
Portfolio turnover (%)  86  74  95 

 

1 Period from 9-29-11 (commencement of operations) to 8-31-12.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Annualized.

 

20  Redwood Fund | Annual report  See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock Redwood Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek long-term capital appreciation with a high degree of downside protection and reduced volatility relative to the broad U.S. equity market.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class R6 shares are available only to certain retirement plans, institutions and other investors. Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “fund of funds” that invest in other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ.

Note 2 — Significant accounting policies

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end management investment companies are valued at their respective net asset values each business day. Options listed on an exchange are valued at the mean of the most recent bid and ask prices from the exchange where the option was acquired or most likely will be sold. Securities and options that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.

Other fund securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed.

Annual report | Redwood Fund  21 

 


The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

All investments are categorized as Level 1 under the hierarchy described above, except the option listed in the OTC Options on Securities table on page 26, which is categorized as Level 2.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund’s custodian agreement, the custodian may loan money to 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $598. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

22  Redwood Fund | Annual report 

 


Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $3,391,023  $9,703,283 
Long-Term Capital Gain  5,226,318  — 
Total  $8,617,341  $9,703,283 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $6,294,625 of undistributed ordinary income and $16,365,843 of long-term capital gains.

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 straddle loss deferrals and net operating losses.

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 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.

Certain options are typically traded through the OTC market and maybe regulated by the Commodity Futures Trading Commission (the CFTC) as swaps. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The fund attempts to reduce its exposure to counterparty risk for derivatives traded in the OTC market, whenever possible, by entering into an International Swaps and Derivatives Association (ISDA) Master Agreement with each of its OTC

Annual report | Redwood Fund  23 

 


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.

Certain options are traded or cleared on an exchange or central clearinghouse. Exchange-traded or cleared transactions generally present less counterparty risk to the fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member. Securities pledged by the fund for exchange-traded and cleared transactions, if any, are identified in the Fund’s investments.

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 over-the-counter derivatives contracts.

When the fund purchases an option, the premium paid by the fund is included in the Fund’s 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. If the fund enters into a closing sale transaction, the fund realizes a gain or loss, depending on whether proceeds from the closing sale are greater or less than the original cost. 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 August 31, 2014, the fund wrote option contracts to gain exposure to certain securities markets, substitute for securities purchased and provide downside protection for the portfolio and generate premium income. The following table summarizes the fund’s written options activities during the year ended August 31, 2014 and the contracts held at August 31, 2014.

  NUMBER OF   
  CONTRACTS  PREMIUMS 
Outstanding, beginning of period  112,392  $83,029,262 
Options written  164,257  112,023,971 
Option closed  (86,779)  (71,084,788) 
Options exercised  (61,547)  (55,290,610) 
Options expired  (19,904)  (2,611,306) 
Outstanding, end of period  108,419  $66,066,529 

 

24  Redwood Fund | Annual report 

 


  EXERCISE  EXPIRATION  NUMBER OF     
NAME OF ISSUER  PRICE  DATE  CONTRACTS  PREMIUM  VALUE 
CALLS           
Abercrombie & Fitch Company,           
Class A  $29.00  Jan 2015  1,426  $1,115,050  ($1,864,495) 
Abercrombie & Fitch Company,           
Class A  33.00  Feb 2015  1,327  1,230,051  (1,293,825) 
Abercrombie & Fitch Company,           
Class A  34.00  Feb 2015  765  724,408  (682,763) 
Accenture PLC  75.00  Jan 2015  985  973,119  (684,575) 
Apollo Education Group, Inc.  24.00  Nov 2014  1,545  862,029  (679,800) 
Apollo Education Group, Inc.  25.00  Feb 2015  1,322  868,482  (575,070) 
Apple, Inc.  87.50  Apr 2015  846  1,076,054  (1,442,430) 
Bristol-Myers Squibb Company  45.00  Jan 2015  2,227  1,778,873  (1,341,768) 
Cabela's, Inc.  55.00  Dec 2014  671  615,266  (516,670) 
Cameron International Corp.  52.50  Jan 2015  1,704  2,056,614  (3,791,400) 
Capital One Financial Corp.  70.00  Mar 2015  693  704,739  (887,040) 
CBS Corp., Class B  45.00  Jan 2015  2,548  4,272,821  (3,745,560) 
Celgene Corp.  60.00  Jan 2015  864  1,402,656  (3,047,760) 
CitiGroup, Inc.  45.00  Dec 2014  3,686  1,662,201  (2,626,275) 
CitiGroup, Inc.  50.00  Jan 2015  902  735,984  (315,700) 
Citrix Systems, Inc.  55.00  Jan 2015  927  785,114  (1,441,485) 
Cliffs Natural Resources, Inc.  15.00  Jan 2015  1,910  248,218  (297,960) 
Coach, Inc.  32.00  Feb 2015  485  245,871  (269,175) 
Coach, Inc.  33.00  Feb 2015  920  319,196  (441,600) 
Dish Network Corp.  55.00  Sep 2014  588  677,337  (555,660) 
Dish Network Corp.  50.00  Dec 2014  615  866,491  (913,275) 
Eaton Corp. PLC  57.50  Jan 2015  202  282,181  (254,520) 
eBay, Inc.  50.00  Oct 2014  482  232,300  (279,560) 
eBay, Inc.  50.00  Jan 2015  670  353,055  (440,525) 
eBay, Inc.  52.50  Jan 2015  456  315,527  (221,160) 
Edwards Lifesciences Corp.  65.00  Jan 2015  1,374  1,823,203  (4,623,510) 
EMC Corp.  25.00  Jan 2015  3,097  931,141  (1,471,075) 
Expeditors International  39.00  Jan 2015  1,367  973,228  (451,110) 
Express Scripts Holding           
Company  62.50  Nov 2014  379  264,142  (448,168) 
Express Scripts Holding           
Company  55.00  Jan 2015  1,593  2,376,658  (3,082,455) 
Family Dollar Stores, Inc.  57.50  Oct 2014  701  600,716  (1,573,745) 
Fastenal Company  42.50  Jan 2015  700  621,796  (276,500) 
Flowserve Corp.  70.00  Jan 2015  711  668,140  (536,805) 
General Motors Company  32.00  Jan 2015  2,506  1,573,633  (820,715) 
General Motors Company  30.00  Mar 2015  806  353,795  (409,045) 
Genworth Financial, Inc.  15.00  Dec 2014  2,575  723,456  (164,800) 
Genworth Financial, Inc.  15.00  Jan 2015  2,285  667,113  (171,375) 
GNC Holdings, Inc.  37.50  Dec 2014  1,015  837,316  (324,800) 
Hasbro, Inc.  47.50  Jan 2015  969  850,725  (552,330) 
HCA Holdings, Inc.  45.00  Sep 2014  2,117  1,358,999  (5,250,160) 
Hertz Global Holdings, Inc.  22.00  Jan 2015  2,134  1,337,911  (1,707,200) 
Johnson Controls, Inc.  40.00  Oct 2014  1,137  563,894  (966,450) 
Juniper Networks, Inc.  22.00  Jan 2015  2,222  670,940  (463,287) 
Juniper Networks, Inc.  21.00  Apr 2015  2,372  716,237  (753,110) 
Las Vegas Sands Corp.  67.25  Jan 2015  1,027  1,937,865  (328,640) 
Lennar Corp.  33.00  Jan 2015  1,504  1,397,885  (1,030,240) 
Macy's, Inc.  52.50  Feb 2015  1,357  1,074,666  (1,401,103) 
Mead Johnson Nutrition           
Company  70.00  Jan 2015  568  915,578  (1,446,980) 

 

Annual report | Redwood Fund  25 

 


  EXERCISE  EXPIRATION  NUMBER OF     
NAME OF ISSUER  PRICE  DATE  CONTRACTS  PREMIUM  VALUE 
CALLS (continued)           
Mead Johnson Nutrition           
Company  $80.00  Feb 2015  430  $637,229  ($719,175) 
Microsoft Corp.  30.00  Jan 2015  9  5,958  (13,770) 
Oracle Corp.  35.00  Jan 2015  1,661  700,861  (1,129,480) 
Ralph Lauren Corp.  150.00  Oct 2014  303  608,098  (569,640) 
Sandisk Corp.  80.00  Jan 2015  487  822,505  (948,433) 
The Gap, Inc.  35.00  Dec 2014  1,306  668,605  (1,465,985) 
The Home Depot, Inc.  75.00  Nov 2014  6  4,272  (11,130) 
The Procter & Gamble           
Company  70.00  Jan 2015  32  35,742  (41,520) 
Thoratec Corp.  27.00  Oct 2014  1,683  1,728,335  (75,735) 
United Rentals, Inc.  85.00  Dec 2014  942  1,857,545  (3,132,150) 
Urbank Outfitters, Inc.  33.00  Jan 2015  1,786  1,030,428  (1,303,780) 
Valero Energy Corp.  44.00  Sep 2014  1  882  (1,018) 
Valero Energy Corp.  45.00  Jan 2015  664  575,649  (657,360) 
Waddell & Reed Financial, Inc.  50.00  Dec 2014  1,238  1,221,829  (767,560) 
Western Refining, Inc.  33.00  Jan 2015  1,394  880,933  (1,923,720) 
Yahoo, Inc.  30.00  Jan 2015  1,487  962,008  (1,342,014) 
Yum Brands, Inc.  62.50  Oct 2014  582  468,476  (584,910) 
        $59,852,029  ($71,551,034) 
PUTS           
American Express Company  75.00  Oct 2014  1,345  184,207  (14,123) 
Apple, Inc.  75.71  Jan 2015  672  193,144  (18,144) 
AT&T, Inc.  33.00  Jan 2015  3,158  811,468  (263,693) 
Bank of America Corp  14.00  Jan 2015  3,832  156,955  (86,220) 
Brocade Communications           
Systems  9.00  Apr 2015  4,865  243,059  (218,925) 
Caterpillar, Inc.  82.50  Jan 2015  1,158  507,150  (39,951) 
The Goldman Sachs Group, Inc.  145.00  Jan 2015  522  355,975  (54,810) 
Hewlett-Packard Company  25.00  Jan 2015  2,540  170,074  (15,240) 
Intel Corp.  22.00  Jan 2015  2,448  296,116  (18,360) 
JPMorgan Chase & Company  55.00  Sep 2014  902  259,736  (4,961) 
JPMorgan Chase & Company  47.00  Jan 2015  1,034  123,002  (30,503) 
Morgan Stanley  17.00  Jan 2015  3,786  658,682  (13,251) 
Qualcomm, Inc.  50.00  Jan 2015  1,287  440,096  (9,653) 
Schlumberger LTD.  75.00  Jan 2015  1,076  378,703  (20,444) 
Valero Energy Corp.  45.00  Dec 2014  851  116,550  (50,209) 
Western Digital Corp.  90.00  Apr 2015  429  185,307  (172,673) 
Whole Foods Market, Inc.  46.50  Jan 2015  971  256,301  (786,509) 
        $5,336,525  ($1,817,669) 

 

OTC Options on Securities           
    EXERCISE  EXPIRATION  NUMBER OF     
NAME OF ISSUER  COUNTERPARTY  PRICE  DATE  CONTRACTS  PREMIUM  VALUE 
PUTS             
Google, Inc., Class A  Deutsche Bank  $950  Jan 2015  250  $877,975  ($168,750) 

 

26  Redwood Fund | Annual report 

 


Fair value of derivative instruments by risk category

The table below summarizes the fair value of derivatives held by the fund at August 31, 2014 by risk category:

    FINANCIAL  ASSET  LIABILITY 
  STATEMENT OF ASSETS AND  INSTRUMENTS  DERIVATIVES  DERIVATIVES 
RISK  LIABILITIES LOCATION  LOCATION  FAIR VALUE  FAIR VALUE 
 
Equity contracts  Written options, at value  Written options  —  ($73,537,453) 

 

For financial reporting purposes, the fund does not offset OTC derivative assets or liabilities that are subject to master netting arrangements, as defined by the ISDAs, in the Statement of assets and liabilities. In the event of default by the counterparty or a termination of the agreement, the ISDA allows an offset of amounts across the various transactions between the fund and the applicable counterparty.

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 August 31, 2014:

  STATEMENT OF   
  OPERATIONS  WRITTEN 
RISK  LOCATION  OPTIONS 
 
Equity contracts  Net realized gain  ($1,722,284) 
  (loss) on   

 

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 August 31, 2014:

 

  STATEMENT OF OPERATIONS  WRITTEN 
RISK  LOCATION  OPTIONS 
Equity contracts  Change in net unrealized  ($14,609,917) 
  gain (loss) on   

 

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 or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. 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).

Annual report | Redwood Fund  27 

 


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 the following. If the average daily net assets are less than $200 million, then the following fee schedule applies: a) 1.200% of the first $100 million of average daily net assets and b) 1.150% of the next $100 million of average daily net assets. If average daily net assets equal or exceed $200 million, then the following fee schedule applies: a) 1.100% of the first $500 million of average daily net assets and b) 1.050% of the fund’s average daily net assets in excess of $500 million. The Advisor has a subadvisory agreement with Robeco Investment Management, Inc. Prior to March 14, 2014, the Advisor had a subadvisory agreement with Allianz Global Investors U.S. LLC. The fund is not responsible for payment of the subadvisory fees.

The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. 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.

To the extent that expense of Class A, Class C and Class I shares exceed 1.70%, 2.40% and 1.40%, respectively, of average annual net assets (on an annualized basis) attributable to each share class (the Class Expense Limitation), the Advisor contractually agrees to reduce its management fee, or, if necessary, make payment to the class in an amount equal to the amount by which expenses of the share class exceed the Class Expense Limitation. Expenses mean all fund-level and class-specific operation expenses, excluding (a) taxes, (b) brokerage commissions, (c) interest expense, (d) acquired fund fees, (e) litigation and indemnification expenses and other extraordinary expenses no incurred in the ordinary course of the fund’s business and (f) short dividend expense. The Class Expense Limitation expires on December 31, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.

Effective June 26, 2014, the Advisor has contractually agreed to waive and/or reimburse all transfer agency fees and service fees, as applicable, for Class R6 shares of the fund to the extent they exceed 0.00% of average annual net assets (on an annualized basis) attributable to Class R6 shares (the Class Expense Wavier). The Class Expense Waiver expires on December 31, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at the time.

Effective December 31, 2013 through June 25, 2014, for Class R6 shares, the Advisor voluntarily agreed to waive and/or reimburse all class-specific expenses of the fund, including transfer agency fees and service fees, blue sky fees, and printing and postage as applicable, to the extent they exceed 0.00% of average annual net assets.

Prior to June 26, 2014, the Advisor had voluntarily agreed to reduce all or a portion of its management fee and/or make payment to the fund to the extent necessary to maintain the fund’s total operating expense at 1.65%. 1.35% and 1.25% for Class A, Class I and Class R6 shares, respectively, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, acquired fund fees and short dividend expenses.

28  Redwood Fund | Annual report 

 


The expense reductions described above amounted to the following for the year ended August 31, 2014:

  EXPENSE 
CLASS  REDUCTIONS 
Class A  $3,086 
Class C  3,089 
Class I  3,085 
Class R6  3,120 
Class NAV  31,746 
Total  $44,126 

 

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 1.09% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. For the year ended August 31, 2014, no amounts were recaptured. The table below outlines the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration date.

AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017 
 
—  —  $9,249 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A and Class C shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rates of distribution fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund’s shares.

CLASS  12b–1 FEES 
Class A  0.30% 
Class C  1.00% 

 

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $112 for the year ended August 31, 2014. Of this amount, $18 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $0 was paid as sales commissions to broker-dealers and $94 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.

 

Annual report | Redwood Fund  29 

 


Class A and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014 there were no CDSCs received by the Distributor for Class A.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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.

Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  $202  $90  $3,103  — 
Class C  179  22  3,102  $5 
Class I  —  80  3,102  — 
Class R6  —  13  3,103  — 
Total  $381  $205  $12,410  $5 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

 

30  Redwood Fund | Annual report 

 


Note 6 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

  Year ended 8-31-14  Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares1         
Sold  9,073  $102,388  —  — 
 
Net increase  9,073  $102,388  —  — 
 
Class C shares2         
Sold  8,726  $100,000  —  — 
 
Net increase  8,726  $100,000  —  — 
 
Class I shares1         
Sold  8,865  $100,000  —  — 
 
Net increase  8,865  $100,000  —  — 
 
Class R6 shares1         
Sold  8,865  $100,000  —  — 
 
Net increase  8,865  $100,000  —  — 
 
Class NAV shares         
Sold  8,727,782  $99,412,561  8,939,128  $97,901,246 
Distributions reinvested  764,627  8,617,341  900,119  9,703,283 
Repurchased  (3,311,989)  (37,762,162)  (8,491,646)  (93,927,195) 
 
Net increase  6,180,420  $70,267,740  1,347,601  $13,677,334 
 
Total net increase  6,215,949  $70,670,128  1,347,601  $13,677,334 

 

1 The inception date for Class A, Class I and Class R6 shares is 12-30-13.

2The inception date for Class C shares is 6-27-14.

Affiliates of the fund owned 98%, 100%, 100%, 100% and 100% of shares of beneficial interest of Class A, Class C, Class I, Class R6 and Class NAV, respectively, on August 31, 2014.

Note 7 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to $311,949,292 and $292,592,151, respectively, for the year ended August 31, 2014.

Note 8 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 100% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATED 
FUND  CONCENTRATION 
John Hancock Funds II Alternative Asset Allocation Fund  28.6% 
John Hancock Funds II Lifestyle Growth Fund  20.0% 
John Hancock Funds II Lifestyle Balanced Fund  19.6% 
John Hancock Funds II Lifestyle Moderate Fund  7.1% 
John Hancock Funds II Lifestyle Aggressive Fund  6.6% 
John Hancock Funds II Lifestyle Conservative Fund  5.1% 

 

Annual report | Redwood Fund  31 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Redwood Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Redwood Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian and brokers, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

32  Redwood Fund | Annual report 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $5,226,318 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | Redwood Fund  33 

 


Evaluation of Investment Advisory and Subadvisory Agreements

Evaluation of Subadvisory Agreement by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the subadvisory agreement between John Hancock Advisers, LLC (the Advisor) and Robeco Investment Management, Inc. (Robeco or the Subadvisor) (Subadvisory Agreement), dated March 14, 2014, for John Hancock Redwood Fund (the fund). At the March 10-13, 2014 meeting, the Board approved the Subadvisory Agreement and the termination of a subadvisory agreement, dated April 28, 2006, between Advisor and Allianz Global Investors U.S. LLC (Allianz) for the fund. Robeco succeeded Allianz as subadvisor to the fund, effective on March 14, 2014.

Approval of Subadvisory Agreement

At its in-person meeting held on March 10–13, 2014, the Board, including all of the Independent Trustees, approved the subadvisory agreement appointing Robeco as the new subadvisor to the fund, replacing Allianz.

In considering the new subadvisory agreement, the Board took into account the nature, extent, and quality of services provided by the subadvisor under the new and prior subadvisory agreements. The Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by Robeco, including quarterly performance reports prepared by management containing reviews of investment results and periodic presentations from the subadvisor with respect to the other funds it manages.

Throughout the process, the Board asked questions of and were afforded the opportunity to request additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also discussed the new subadvisory agreement in private sessions with their independent legal counsel at which no representatives of management were present.

In approving the subadvisory agreement with Robeco, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (such as conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. In making its determination with respect to approval of the new subadvisory agreement, the Board considered information relating to the subadvisor’s business, including current subadvisory services to other funds in the John Hancock family of funds and the proposed subadvisory fee for the fund, which is identical to the prior subadvisory fee.

Nature, Extent and Qualities of Services. With respect to the services to be provided by Robeco, the Board considered information regarding Robeco, as well as took into account information presented throughout the year. The Board noted that the Advisor conducts regular periodic reviews of the subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s Chief Compliance Officer and his staff conduct regular, periodic compliance reviews with the subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the subadvisor and procedures reasonably designed by it to assure compliance with the federal securities laws. The Board also took into account the financial condition of the subadvisor.

The Board considered the subadvisor’s investment processes and philosophies. The Board took into account that the subadvisor’s responsibilities will include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objectives,

34  Redwood Fund | Annual report 

 


the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services.

Subadvisor compensation. In considering the cost of services to be provided by the subadvisor and the profitability to the subadvisor of its relationship to the fund, the Board noted that the fees under the new subadvisory agreement are paid by the Advisor and not the fund. The Board also relied on the ability of the Advisor to negotiate the new subadvisory agreement with Robeco, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by Robeco from its relationship with the Trust were not a material factor in the Board’s consideration of the new subadvisory agreement with Robeco. The Board considered any other potential conflicts of interests the Advisor might have in connection with the new subadvisory agreement. In addition, the Board considered other potential indirect benefits that the subadvisor and their affiliates may receive from the subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional John Hancock Funds and reputational benefits.

The Board considered that the fund will pay advisory fees to the Advisor and that, in turn, the Advisor will pay subadvisory fees to the subadvisor.

The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the subadvisor. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the subadvisor. The Board was mindful of the Advisor’s focus on the subadvisor’s performance.

Particular considerations of the Board at the March 10–13, 2014 meeting in approving the new subadvisory agreement with Robeco for the fund included the following:

• Robeco has demonstrated skillful management, is currently the subadvisor to multiple funds in the John Hancock Funds complex, and may be expected to provide a high quality of investment management services and personnel to the fund;

• the fund’s performance has been in-line with expectations and the portfolio manager who has managed the fund since its inception recently joined Robeco and will continue to serve as portfolio manager to the fund;

• the subadvisory fees for the fund are paid by the Advisor, not the fund, and approval of the new subadvisory agreement will not result in any change in the advisory fees for the fund;

• the subadvisory fee rates under the new subadvisory agreement with Robeco are the same as the rates under the prior subadvisory agreement with Allianz. In addition, the subadvisory fees are reasonable in relation to the level and quality of services to be provided; and

• the subadvisory fee rates under the new subadvisory agreement with Robeco contain breakpoints that are reflected in the fund’s advisory fee rates in order to permit shareholders to benefit from economies of scale as the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that approval of the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Subadvisory Agreement.

 

Annual report | Redwood Fund  35 

 


Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Robeco Investment Management, Inc. (the Subadvisor), for John Hancock Redwood Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

36  Redwood Fund | Annual report 

 


Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

Annual report | Redwood Fund  37 

 


(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index for the one-year period ended December 31, 2013. The Board also noted that the fund had outperformed its peer group average for the one-year period ended December 31, 2013. The Board took into account management’s discussion of the fund’s performance. The Board noted the fund’s favorable performance relative to the peer group for the one-year period and since the fund’s inception on September 30, 2011. The Board also took into account the relatively short performance history of the fund and that a new subadvisor, Robeco Investment Management, Inc., assumed management of the fund on March 17, 2014 and the performance for the period ended December 31, 2013 is that of the prior subadvisor, Allianz Global Investors U.S. LLC.

The Board concluded that the fund’s performance has generally outperformed the historical performance of comparable funds.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees and total expenses for the fund are lower than the peer group median. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

38  Redwood Fund | Annual report 

 


(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit

Annual report | Redwood Fund  39 

 


from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

40  Redwood Fund | Annual report 

 


The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1)the Subadvisor has extensive experience and demonstrated skills as a manager;

(2)the performance of the fund has generally outperformed the historical performance of comparable funds;

(3)the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4)subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Annual report | Redwood Fund  41 

 


Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

42  Redwood Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Redwood Fund  43 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

44  Redwood Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Redwood Fund  45 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

46  Redwood Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisors 
Craig Bromley†  Robeco Investment Management, Inc. 
Peter S. Burgess*   
William H. Cunningham  Principal distributor 
Grace K. Fey  John Hancock Funds, LLC 
Theron S. Hoffman*   
Deborah C. Jackson  Custodian 
Hassell H. McClellan  State Street Bank and Trust Company 
Gregory A. Russo   
Warren A. Thomson†  Transfer agent 
  John Hancock Signature Services, Inc. 
Officers   
Andrew G. Arnott  Legal counsel 
President  K&L Gates LLP 
   
John J. Danello  Independent registered 
Senior Vice President, Secretary,  public accounting firm 
and Chief Legal Officer  PricewaterhouseCoopers LLP 
   
Francis V. Knox, Jr.   
Chief Compliance Officer   
   
Charles A. Rizzo   
Chief Financial Officer   
   
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Redwood Fund  47 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com

 
 
This report is for the information of the shareholders of John Hancock Redwood Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  423A 8/14 
MF198773  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
Since  Since 
  1-year  5-year  10-year  inception 1  1-year  5-year  10-year  inception 1 
Class A2  13.43  9.42  —  2.86  13.43  56.82  —  26.48 
Class I2,3  19.71  10.96  —  3.89  19.71  68.22  —  37.50 
Class NAV3  19.98  11.14  —  4.05  19.98  69.59  —  39.28 
Index 1†  19.70  11.73  —  4.01  19.70  74.14  —  38.74 
Index 2†  19.06  11.56  —  3.89  19.06  72.80  —  37.41 

 

Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5.00%. Sales charges are not applicable to Class I and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. The expense ratios are as follows:

  Class A  Class I  Class NAV 
Gross (%)  16.58  16.26  1.09 
Net (%)  1.63  1.23  1.09 

 

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, 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 may pay on fund distributions or on the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index 1 is the MSCI World ex-USA Small Cap Index; Index 2 is the MSCI EAFE Small Cap Index.

See the following page for footnotes.

6  International Small Company Fund | Annual report 

 



    With maximum  Without     
  Start date  sales charge  sales charge  Index 1  Index 2 
Class I2,3  4-28-06  $13,750  $13,750  $13,874  $13,741 
Class NAV3  4-28-06  13,928  13,928  13,874  13,741 

 

MSCI World ex-USA Small Cap Index (gross of foreign withholding taxes on dividends) — Index 1 — is an unmanaged index that is a free float-adjusted market capitalization index that is designed to track the performance of publicly traded small-cap stocks of developed-market companies outside the United States.

MSCI EAFE Small Cap Index (gross of foreign withholding taxes on dividends) (Europe, Australasia, Far East) — Index 2 — is an unmanaged index that is a free float-adjusted market capitalization index that is designed to measure developed market equity performance of the eligible small cap universe in each industry group of each country represented by the MSCI EAFE Index.

Prior to June 26, 2014, the fund compared its performance solely to the MSCI EAFE Small Cap Index. From this date, to better reflect the universe of investment opportunities based on the fund’s investment strategy, the fund added the MSCI World ex-USA Small Cap Index as the primary benchmark index and retained the MSCI EAFE Small Cap Index as the secondary benchmark index to which the fund compares its performance.

It is not possible to invest directly in an index. Index figures do not reflect expenses, sales charges, or foreign currency impact, which would have resulted in lower values.

Footnotes related to performance pages

1 From 4-28-06.

2 Class A and Class I shares were first offered on 6-27-13. Returns prior to this date are those of Class NAV shares that have been recalculated to reflect the gross fees and expenses of Class A and Class I shares, as applicable.

3 For certain types of investors as described in the fund’s prospectuses.

Annual report | International Small Company Fund  7 

 


Management’s discussion of
Fund performance

Dimensional Fund Advisors LP

Small-cap stocks in the globe’s developed markets outside the United States generated strong performance during the 12 months ended August 31, 2014. Key catalysts included the eurozone’s return to modest economic growth following a protracted recession and the continuing economic recovery in the United Kingdom. Many of the world’s major central banks provided further support by embracing accommodative monetary policies.

In the 12 months ended August 31, 2014, John Hancock International Small Company Fund’s Class A shares returned 19.40%, excluding sales charges. This result slightly trailed the 19.70% return for the fund’s benchmark, the MSCI World ex-USA Small Cap Index.

Holdings differences in the smallest companies within the small-cap equity universe had the most significant positive impact by far on the fund’s performance relative to its benchmark. The fund’s positions within the smallest market capitalization segment outperformed by a wide margin.

The chief detractor to performance was the fund’s lack of exposure to international real estate investment trusts, or REITs, which are included in the fund’s benchmark. REITs outperformed relative to the benchmark by a wide margin as accommodative monetary policies helped to keep fixed-income yields low, making REITs’ equity yields relatively attractive.

On a geographic basis, the fund’s holdings differences versus the index had a beneficial effect in large markets such as the United Kingdom, Japan, and Germany.

At the sector level, holdings differences in healthcare, information technology, financials, and energy contributed. Holdings differences in utilities detracted, as did a modest overweight in consumer discretionary, a sector that underperformed.

This commentary reflects the views of the portfolio managers through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  International Small Company Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $993.60  $8.19  1.63% 
Class C2  1,000.00  977.30  4.14  2.35% 
Class I  1,000.00  995.40  6.19  1.23% 
Class NAV  1,000.00  996.30  5.53  1.10% 

 

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 August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 

 
 
Annual report | International Small Company Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’ 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 March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,017.00  $8.29  1.63% 
Class C  1,000.00  1,013.40  11.93  2.35% 
Class I  1,000.00  1,019.00  6.26  1.23% 
Class NAV  1,000.00  1,019.70  5.60  1.10% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectuses for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

2 The inception date for Class C shares is 6-27-14. Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 65/365 (to reflect the period).

10  International Small Company Fund | Annual report 

 


Portfolio summary

Top 10 Holdings (3.0% of Net Assets on 8-31-14)1,2     
Smurfit Kappa Group PLC  0.3%  Delta Lloyd NV  0.3% 
  
Deutsche Wohnen AG  0.3%  Inchcape PLC  0.3% 
  
AMEC PLC  0.3%  Pennon Group PLC  0.3% 
  
Cobham PLC  0.3%  Informa PLC  0.3% 
  
Inmarsat PLC  0.3%  DCC PLC  0.3% 
  
 
Sector Composition1,3       
Industrials  25.0%  Health Care  5.9% 
  
Consumer Discretionary  18.9%  Consumer Staples  5.7% 
  
Financials  14.1%  Utilities  2.4% 
  
Materials  10.2%  Telecommunication Services  1.9% 
  
Information Technology  8.9%  Short-Term Investments & Other  0.5% 
  
Energy  6.5%     
 
Top 10 Countries1,2       
Japan  21.9%  Switzerland  4.3% 
  
United Kingdom  19.2%  France  3.9% 
  
Canada  10.3%  Italy  3.4% 
  
Australia  6.1%  Sweden  3.4% 
  
Germany  5.0%  Hong Kong  3.0% 
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies, and illiquid securities may be more difficult to sell at a price approximating their value. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors, and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

Annual report | International Small Company Fund  11 

 


Fund’s investments

Summary of fund’s investments as of 8-31-14 (showing percentage of total net assets)

This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling 1-800-225-5291. This complete schedule, filed on the fund’s Form N-CSR is also available on the SEC’s website at http://www.sec.gov.

      % of 
      Net 
  Shares  Value  Assets 
 
Common Stocks 99.5%    $589,486,339   
(Cost $493,366,563)       
 
Australia 6.1%    36,187,775  6.1% 
 
Austria 0.9%    5,258,112  0.9% 
 
Bahamas 0.0%    114,534  0.0% 
 
Belgium 1.2%    7,281,740  1.2% 
 
Ackermans & van Haaren NV  9,050  1,094,665  0.2% 
OTHER SECURITIES    6,187,075  1.0% 
 
Bermuda 0.4%    2,444,757  0.4% 
 
Cambodia 0.0%    151,163  0.0% 
 
Canada 10.3%    60,696,729  10.3% 
 
Cayman Islands 0.0%    66,669  0.0% 
 
China 0.1%    284,101  0.1% 
 
Cyprus 0.1%    357,093  0.1% 
 
Denmark 1.7%    9,714,822  1.7% 
 
Faroe Islands 0.1%    239,088  0.1% 
 
Finland 2.5%    14,693,600  2.5% 
 
Elisa OYJ, Class A  54,577  1,487,803  0.3% 
OTHER SECURITIES    13,205,797  2.2% 
 
France 3.9%    23,239,021  3.9% 
 
Lagardere SCA  39,934  1,099,872  0.2% 
Teleperformance  19,264  1,250,921  0.2% 
OTHER SECURITIES    20,888,228  3.5% 

 

12  International Small Company Fund | Annual report  See notes to financial statements 

 


      % of 
      Net 
  Shares  Value  Assets 
 
Gabon 0.0%    $107,725  0.0% 
 
Germany 5.0%    29,642,601  5.0% 
 
Celesio AG  34,202  1,162,993  0.2% 
Deutsche Wohnen AG  79,007  1,785,478  0.3% 
Rhoen-Klinikum AG  39,678  1,242,952  0.2% 
OTHER SECURITIES    25,451,178  4.3% 
 
Gibraltar 0.1%    490,315  0.1% 
 
Greece 0.0%    98  0.0% 
 
Guernsey, Channel Islands 0.0%    64,881  0.0% 
 
Hong Kong 3.0%    17,731,618  3.0% 
 
India 0.1%    624,333  0.1% 
 
Ireland 1.7%    10,039,754  1.7% 
 
DCC PLC  27,000  1,604,513  0.3% 
Henderson Group PLC  332,360  1,280,598  0.2% 
Smurfit Kappa Group PLC  83,710  1,899,869  0.3% 
OTHER SECURITIES    5,254,774  0.9% 
 
Isle of Man 0.0%    146,356  0.0% 
 
Israel 0.8%    4,928,472  0.8% 
 
Italy 3.4%    20,271,624  3.4% 
 
Banca Popolare dell’Emilia Romagna SC (I)  131,719  1,106,952  0.2% 
Prysmian SpA  58,459  1,188,662  0.2% 
OTHER SECURITIES    17,976,010  3.0% 
 
Japan 21.9%    129,522,407  21.9% 
 
Jersey, Channel Islands 0.2%    1,269,736  0.2% 
 
Liechtenstein 0.1%    318,794  0.1% 
 
Luxembourg 0.3%    1,888,107  0.3% 
 
Malaysia 0.0%    141,049  0.0% 
 
Malta 0.1%    588,400  0.1% 
 
Monaco 0.0%    53,726  0.0% 
 
Mongolia 0.0%    40,583  0.0% 
 
Netherlands 2.1%    12,514,136  2.1% 
 
Delta Lloyd NV  68,633  1,653,769  0.3% 
OTHER SECURITIES    10,860,367  1.8% 
 
New Zealand 1.1%    6,569,525  1.1% 
 
Norway 1.0%    5,754,554  1.0% 
 
Peru 0.0%    87,620  0.0% 
 
Portugal 0.7%    4,213,655  0.7% 
 
Banco Comercial Portugues SA (I)  11,738,463  1,599,489  0.3% 
OTHER SECURITIES    2,614,166  0.4% 

 

See notes to financial statements  Annual report | International Small Company Fund  13 

 


      % of 
      Net 
  Shares  Value  Assets 
 
Republic of Georgia 0.1%    $530,684  0.1% 
 
Singapore 1.5%    8,555,162  1.5% 
 
South Africa 0.1%    709,368  0.1% 
 
Spain 1.8%    10,876,137  1.8% 
 
Sweden 3.4%    20,054,399  3.4% 
 
Switzerland 4.3%    25,532,556  4.3% 
 
Dufry AG (I)  8,056  1,374,526  0.2% 
GAM Holding AG (I)  62,411  1,215,080  0.2% 
Lonza Group AG (I)  12,538  1,437,801  0.2% 
OTHER SECURITIES    21,505,149  3.7% 
 
Thailand 0.0%    19,362  0.0% 
 
United Arab Emirates 0.0%    223,856  0.0% 
 
United Kingdom 19.2%    113,859,784  19.2% 
 
AMEC PLC  91,864  1,716,532  0.3% 
Amlin PLC  165,498  1,237,154  0.2% 
Ashtead Group PLC  85,952  1,399,928  0.2% 
Barratt Developments PLC  196,742  1,209,803  0.2% 
Bellway PLC (I)  42,123  1,117,472  0.2% 
Berkeley Group Holdings PLC  36,334  1,448,978  0.2% 
Booker Group PLC  487,010  1,083,746  0.2% 
BTG PLC (I)  111,260  1,183,460  0.2% 
Close Brothers Group PLC  49,398  1,112,995  0.2% 
Cobham PLC  339,361  1,674,911  0.3% 
Croda International PLC  38,831  1,406,851  0.2% 
Daily Mail & General Trust PLC  83,972  1,210,203  0.2% 
Drax Group PLC  129,743  1,351,761  0.2% 
DS Smith PLC  307,884  1,454,717  0.2% 
Halma PLC  122,902  1,262,120  0.2% 
Hikma Pharmaceuticals PLC  46,394  1,331,341  0.2% 
Howden Joinery Group PLC  197,239  1,158,951  0.2% 
ICAP PLC  181,432  1,143,342  0.2% 
IG Group Holdings PLC  111,076  1,121,016  0.2% 
Inchcape PLC  146,217  1,640,478  0.3% 
Informa PLC  188,246  1,614,360  0.3% 
Inmarsat PLC  143,288  1,669,293  0.3% 
John Wood Group PLC  105,549  1,376,857  0.2% 
Man Group PLC  602,130  1,184,567  0.2% 
Melrose Industries PLC  337,557  1,529,673  0.3% 
Pennon Group PLC  120,792  1,633,524  0.3% 
Persimmon PLC (I)  54,780  1,205,991  0.2% 
Rentokil Initial PLC  518,728  1,092,613  0.2% 
Rightmove PLC  29,446  1,232,364  0.2% 
Rotork PLC  26,720  1,223,380  0.2% 
Spectris PLC  36,384  1,177,477  0.2% 
Spirax-Sarco Engineering PLC  25,266  1,244,060  0.2% 
Taylor Wimpey PLC  837,733  1,596,362  0.3% 
OTHER SECURITIES    69,813,504  11.8% 

 

14  International Small Company Fund | Annual report  See notes to financial statements 

 


        % of 
        Net 
      Value  Assets 
 
United States 0.2%      $1,385,758  0.2% 
 
Warrants 0.0%      $5,455  0.0% 
(Cost $4,091)      $5,455  0.0% 
 
Rights 0.0%      $18,002  0.0% 
(Cost $0)      $18,002  0.0% 
 
        % of 
        Net 
  Yield  Shares  Value  Assets 
 
Securities Lending Collateral 5.0%    $29,701,878   
(Cost $29,700,877)         
 
John Hancock Collateral         
Investment Trust (W)  0.0970 (Y)  2,968,080  29,701,878  5.0% 
 
Short-Term Investments 0.6%      $3,559,469   
(Cost $3,559,469)         
 
Money Market Funds 0.6%      3,559,469  0.6% 
 
State Street Institutional         
Liquid Reserves Fund  0.0747 (Y)  3,559,469  3,559,469  0.6% 
 
Total investments (Cost $526,631,000)† 105.1%  $622,771,143  105.1% 
 
Other assets and liabilities, Net (5.1%)    (30,345,136)  (5.1)% 
 
Total net assets 100.0%      $592,426,007  100.0% 

 

The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund.

(I) Non-income producing security.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $530,083,629. Net unrealized appreciation aggregated $92,687,514, of which $134,394,515 related to appreciated investment securities and $41,707,001 related to depreciated investment securities.

The fund had the following sector composition as a percentage of total net assets on 8-31-14:

Industrials  25.0% 
Consumer Discretionary  18.9% 
Financials  14.1% 
Materials  10.2% 
Information Technology  8.9% 
Energy  6.5% 
Health Care  5.9% 
Consumer Staples  5.7% 
Utilities  2.4% 
Telecommunication Services  1.9% 
Short-Term Investments & Other  0.5% 
 
Total  100.0% 

 

See notes to financial statements  Annual report | International Small Company Fund  15 

 


FINANCIAL STATEMENTS

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum public offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $496,930,123) including   
($27,833,633) of securities loaned  $593,069,265 
Investments in affiliated issuers, at value (Cost $29,700,877)  29,701,878 
 
Total investments, at value (Cost $526,631,000)  622,771,143 
Cash  150 
Foreign currency, at value (Cost $2,157,445)  2,154,134 
Receivable for investments sold  411,694 
Receivable for fund shares sold  57,386 
Dividends and interest receivable  1,106,544 
Receivable for securities lending income  45,940 
Receivable due from advisor  431 
Other receivables and prepaid expenses  49,227 
 
Total assets  626,596,649 
 
Liabilities   
Payable for investments purchased  3,903,953 
Payable for fund shares repurchased  167,867 
Payable upon return of securities loaned  29,702,857 
Payable to affiliates   
Accounting and legal services fees  12,247 
Transfer agent fees  1,200 
Trustees’ fees  77 
Other liabilities and accrued expenses  382,441 
 
Total liabilities  34,170,642 
 
Net assets  $592,426,007 
 
Net assets consist of   
Paid-in capital  $587,984,205 
Undistributed net investment income  5,030,019 
Accumulated net realized gain (loss) on investments and foreign   
currency transactions  (96,721,482) 
Net unrealized appreciation (depreciation) on investments and translation   
of assets and liabilities in foreign currencies  96,133,265 
 
Net assets  $592,426,007 

 

16  International Small Company Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($5,461,918 ÷ 506,363 shares)1  $10.79 
Class C ($102,553 ÷ 9,521 shares)1  $10.77 
Class I ($256,730 ÷ 23,791 shares)  $10.79 
Class NAV ($586,604,806 ÷ 54,324,786 shares)  $10.80 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $11.36 

 

1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | International Small Company Fund  17 

 


FINANCIAL STATEMENTS

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Dividends  $16,044,391 
Securities lending  705,653 
Interest  2,013 
Less foreign taxes withheld  (1,232,712) 
 
Total investment income  15,519,345 
 
Expenses   
Investment management fees  5,530,011 
Distribution and service fees  8,072 
Accounting and legal services fees  72,271 
Transfer agent fees  3,631 
Trustees’ fees  7,871 
State registration fees  47,063 
Printing and postage  1,053 
Professional fees  75,961 
Custodian fees  645,388 
Registration and filing fees  36,482 
Other  17,036 
 
Total expenses  6,444,839 
Less expense reductions  (82,979) 
 
Net expenses  6,361,860 
 
Net investment income  9,157,485 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers and foreign currency transactions  30,858,161 
Investments in affiliated issuers  (1,017) 
 
  30,857,144 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers and translation of assets and liabilities in   
foreign currencies  62,649,483 
Investments in affiliated issuers  300 
 
  62,649,783 
 
Net realized and unrealized gain  93,506,927 
 
Increase in net assets from operations  $102,664,412 

 

18  International Small Company Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statements of changes in net assets

These Statements of changes in net assets show how the value of the portfolio’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of portfolio share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
 
From operations     
Net investment income  $9,157,485  $5,563,433 
Net realized gain (loss)  30,857,144  (724,925) 
Change in net unrealized appreciation (depreciation)  62,649,783  57,207,212 
 
Increase in net assets resulting from operations  102,664,412  62,045,720 
 
Distributions to shareholders     
From net investment income     
Class A  (3,939)  — 
Class I  (1,428)  — 
Class NAV  (7,586,748)  (4,447,729) 
From capital paid-in     
 
Total distributions  (7,592,115)  (4,447,729) 
 
From fund share transactions  (20,417,978)  210,109,848 
 
Total increase  74,654,319  267,707,839 
 
Net assets     
Beginning of year  517,771,688  250,063,849 
 
End of year  $592,426,007  $517,771,688 
 
Undistributed net investment income  $5,030,019  $2,810,390 

 

See notes to financial statements  Annual report | International Small Company Fund  19 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-14  8-31-131 
 
Per share operating performance     
Net asset value, beginning of period  $9.11  $8.50 
Net investment income2  0.18  —3 
Net realized and unrealized gain on investments  1.58  0.61 
Total from investment operations  1.76  0.61 
Less distributions     
From net investment income  (0.08)  — 
Total distributions  (0.08)  — 
Net asset value, end of period  $10.79  $9.11 
Total return (%)4,5  19.40  7.186 
 
Ratios and supplemental data     
Net assets, end of period (in millions)  $5  —7 
Ratios (as a percentage of average net assets):     
Expenses before reductions  2.41  18.738 
Expenses including reductions  1.63  1.638 
Net investment income  1.67  0.088 
Portfolio turnover (%)  11  99 

 

1 The inception date for Class A shares is 6-27-13.
2 Based on average daily shares outstanding.
3 Less than $0.005 per share.
4 Does not reflect the effect of sales charges, if any.
5 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
6 Not annualized.
7 Less than $500,000.
8 Annualized.
9 The portfolio turnover is shown for the period from 9-1-12 to 8-31-13.

 

20  International Small Company Fund | Annual report  See notes to financial statements 

 


CLASS C SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $11.02 
Net investment loss2  (0.01) 
Net realized and unrealized loss on investments  (0.24) 
Total from investment operations  (0.25) 
From net investment income  — 
Total distributions  — 
Net asset value, end of period  $10.77 
Total return (%)3,4  (2.27)5 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —6 
Ratios (as a percentage of average net assets):   
Expenses before reductions  17.767 
Expenses including reductions  2.357 
Net investment loss  (0.71)7 
Portfolio turnover (%)  118 

 

1 The inception date for Class C shares is 6-27-14.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Less than $500,000.
7 Annualized.
8 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

CLASS I SHARES Period ended  8-31-14  8-31-131 
 
Per share operating performance     
Net asset value, beginning of period  $9.12  $8.50 
Net investment income2  0.16  0.01 
Net realized and unrealized gain (loss) on investments  1.63  0.61 
Total from investment operations  1.79  0.62 
Less distributions     
From net investment income  (0.12)  — 
Total distributions  (0.12)  — 
Net asset value, end of period  $10.79  $9.12 
Total return (%)3  19.71  7.294 
 
Ratios and supplemental data     
Net assets, end of period (in millions)  —5  —5 
Ratios (as a percentage of average net assets):     
Expenses before reductions  14.40  18.786 
Expenses including reductions  1.23  1.236 
Net investment income  1.49  0.476 
Portfolio turnover (%)  11  97 

 

1 The inception date for Class I shares is 6-27-13.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-12 to 8-31-13.

 

See notes to financial statements  Annual report | International Small Company Fund  21 

 


CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $9.12  $7.59  $8.15  $7.08  $7.11 
Net investment income1  0.17  0.15  0.14  0.14  0.08 
Net realized and unrealized gain (loss) on investments  1.64  1.52  (0.55)  1.08  0.20 
Total from investment operations  1.81  1.67  (0.41)  1.22  0.28 
Less distributions           
From net investment income  (0.13)  (0.14)  (0.15)  (0.15)  (0.31) 
Total distributions  (0.13)  (0.14)  (0.15)  (0.15)  (0.31) 
Net asset value, end of period  $10.80  $9.12  $7.59  $8.15  $7.08 
Total return (%)2  19.98  22.17  (4.87)  17.11  3.87 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $587  $518  $250  $191  $151 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.10  1.09  1.09  1.09  1.12 
Expenses including reductions  1.09  1.09  1.09  1.09  1.12 
Net investment income  1.57  1.73  1.91  1.61  1.11 
Portfolio turnover (%)  11  9  9  14  28 

 

1 Based on average daily shares outstanding.
2 Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

22  International Small Company Fund | Annual report  See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock International Small Company Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act). The investment objective of the fund is to seek long-term capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A and Class C shares are offered to all investors. Class I shares are offered to institutions and certain investors. Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, and transfer agent fees, state registration fees and printing and postage for each class may differ.

Note 2 — Significant accounting policies

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP), which require management to make certain estimates and assumptions as of the date of the financial statements. Actual results could differ from those estimates and those differences could be significant. The fund intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the fund in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.

Other portfolio securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the fund’s Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation

Annual report | International Small Company Fund  23 

 


of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the fund’s Pricing Committee, following procedures established by the Board of Trustees. The fund uses fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.

The fund uses a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques 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 August 31, 2014, by major security category or type:

        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Common Stocks         
Australia  $36,187,775  $207,649  $35,892,247  $87,879 
Austria  5,258,112  —  5,258,112  — 
Bahamas  114,534  —  114,534  — 
Belgium  7,281,740  —  7,281,740  — 
Bermuda  2,444,757  —  2,444,757  — 
Cambodia  151,163  —  151,163  — 
Canada  60,696,729  60,691,822  2,794  2,113 
Cayman Islands  66,669  66,669  —  — 
China  284,101  —  284,101  — 
Cyprus  357,093  —  357,093  — 
Denmark  9,714,822  —  9,714,822  — 
Faroe Islands  239,088  —  239,088  — 
Finland  14,693,600  —  14,693,600  — 
France  23,239,021  —  23,224,604  14,417 
Gabon  107,725  —  107,725  — 
Germany  29,642,601  43,949  29,598,652  — 
Gibraltar  490,315  —  490,315  — 
Greece  98  —  —  98 
Guernsey, Channel         
Islands  64,881  3,283  50,309  11,289 
Hong Kong  17,731,618  12,517  17,697,106  21,995 
India  624,333  —  624,333  — 
Ireland  10,039,754  438,381  9,601,373  — 
Isle of Man  146,356  —  146,356  — 
Israel  4,928,472  223,859  4,704,613  — 
Italy  20,271,624  —  20,271,624  — 

 

24  International Small Company Fund | Annual report 

 


        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Common Stocks (continued)         
Japan  $129,522,407  —  $129,522,407  — 
Jersey, Channel Islands  1,269,736  —  1,269,736  — 
Liechtenstein  318,794  —  318,794  — 
Luxembourg  1,888,107  —  1,888,107  — 
Malaysia  141,049  —  141,049  — 
Malta  588,400  —  588,400  — 
Monaco  53,726  —  53,726  — 
Mongolia  40,583  —  40,583  — 
Netherlands  12,514,136  —  12,514,136  — 
New Zealand  6,569,525  —  6,569,525  — 
Norway  5,754,554  —  5,754,554  — 
Peru  87,620  —  87,620  — 
Portugal  4,213,655  —  4,213,655  — 
Republic of Georgia  530,684  —  530,684  — 
Singapore  8,555,162  —  8,555,162  — 
South Africa  709,368  —  709,368  — 
Spain  10,876,137  —  10,876,137  — 
Sweden  20,054,399  —  20,054,399  — 
Switzerland  25,532,556  —  25,532,556  — 
Thailand  19,362  —  19,362  — 
United Arab Emirates  223,856  —  223,856  — 
United Kingdom  113,859,784  $320,230  113,538,327  $1,227 
United States  1,385,758  675,647  710,111  — 
Warrants  5,455  5,381  74  — 
Rights  18,002  —  18,002  — 
Securities Lending         
Collateral  29,701,878  29,701,878  —  — 
Short-Term Investments  3,559,469  3,559,469  —  — 
 
Total Investments in         
Securities  $622,771,143  $95,950,734  $526,681,391  $139,018 

 

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission (SEC) as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

Annual report | International Small Company Fund  25 

 


If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Obligations to repay collateral received by the fund is shown on the Statement of assets and liabilities as Payable upon return of securities loaned.

Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.

Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.

Foreign taxes. The fund may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the fund invests. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.

Line of credit. The fund may 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 maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $601. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a

26  International Small Company Fund | Annual report 

 


specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Under the Regulated Investment Company Modernization Act of 2010, the fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, as of August 31, 2014, the fund has a short-term capital loss carryforward of $96,083,261 available to offset future net realized capital gains, which expires on August 31, 2018.

As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $7,592,115  $4,447,729 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $7,844,427 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 passive foreign investment companies and wash sale loss deferrals.

Annual report | International Small Company Fund  27 

 


Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).

Management fee. The fund has an investment management agreement with the Advisor under which the fund pays a daily management fee to the Advisor, on an annual basis, to 0.950% of the fund’s average daily aggregate net assets. Aggregate net assets include the net assets of the fund and International Small Company Trust, a series of John Hancock Variable Insurance Trust (combined average daily aggregated net assets). The Advisor has a subadvisory agreement with Dimensional Fund Advisors LP. 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 complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.

The Advisor has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the fund to the extent necessary to maintain the fund’s total operating expenses at 1.63%, 2.35% and 1.23% for Class A, Class C and Class I shares, respectively, excluding certain expenses such as taxes, brokerage commissions, interest expense, acquired fund fees and expenses, short dividend expense and litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. The current expense limitation agreement expires on December 31, 2014 for Class A and Class I shares, and until December 31, 2015 for Class C shares, unless renewed by the mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

Additionally, the Advisor has voluntarily agreed to waive and/or reimburse a portion of its management fee or other expenses of the fund if certain expenses of the fund exceed 0.25% of average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent

28  International Small Company Fund | Annual report 

 


fees and service fees, blue sky fees, printing and postage, acquired fund fees and short dividend expense. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

The expense reductions described above amounted to $20,603, $2,798, $22,550 and $37,028 for Class A, Class C, Class I and Class NAV shares, respectively, for the period ended August 31, 2014.

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 0.94% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. For the year ended August 31, 2014, no amounts were recaptured. The table below outlines the amount of waived or reimbursed expenses subject to potential recovery in future periods and the respective expiration dates.

AMOUNTS ELIGIBLE  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR 
FOR RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017 
 
—  $6,722  $45,759 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A and Class C shares, pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rates of distribution and service fees under these arrangements, expressed as an annual percentage of average daily net assets for each class of the fund’s shares.

CLASS  RULE 12b-1 FEE 
Class A  0.30% 
Class C  1.00% 

 

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $6,559 for the year ended August 31, 2014. Of this amount, $3,077 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $3,482 was paid as sales commissions to broker-dealers.

Class A and Class C shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. Class C shares that are redeemed within one year of purchase are subject to a 1.00% CDSC. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related

Annual report | International Small Company Fund  29 

 


services in connection with the sale of these shares. During the year ended August 31, 2014, there were no CDSCs received by the Distributor for Class A or Class C shares.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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 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.

Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER  STATE  PRINTING AND 
CLASS  AND SERVICE FEES  AGENT FEES  REGISTRATION FEES  POSTAGE 
Class A  $7,890  $3,404  $22,129  $615 
Class C  182  23  2,805  5 
Class I  —  204  22,129  433 
Total  $8,072  $3,631  $47,063  $1,053 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Interfund lending program. Pursuant to an Exemptive Order issued by the SEC, the fund, along with certain other funds advised by the Advisor, may be allowed to participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans at period end are presented under the caption Payable for interfund lending in the Statement of assets and liabilities. At period end, no interfund loans were outstanding. The fund’s activity in this program during the period for which loans were outstanding was as follows:

  AVERAGE  DAYS  WEIGHTED AVERAGE   
BORROWER OR LENDER  LOAN BALANCE  OUTSTANDING  INTEREST RATE  EXPENSE 
BORROWER  $11,098,775  4  0.44%  $542 

 

30  International Small Company Fund | Annual report 

 


Note 5 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

  Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  548,025  $5,911,229  12,208  $103,984 
Distributions reinvested  291  2,969  —  — 
Repurchased  (54,161)  (580,234)  —  — 
 
Net increase  494,155  $5,333,964  12,208  $103,984 
 
Class C shares1         
Sold  9,521  $104,907  —  — 
 
Net increase  9,521  $104,907  —  — 
 
Class I shares         
Sold  12,026  $129,216  11,765  $100,000 
 
Net increase  12,026  $129,216  11,765  $100,000 
 
Class NAV shares         
Sold  2,178,344  $23,096,102  23,920,670  $210,947,692 
Distributions reinvested  746,727  7,586,748  541,086  4,447,729 
Repurchased  (5,327,405)  (56,668,915)  (687,829)  (5,489,557) 
 
Net increase (decrease)  (2,402,334)  ($25,986,065)  23,773,927  $209,905,864 
 
Total net increase (decrease)  (1,886,632)  ($20,417,978)  23,797,900  $210,109,848 

 

1 The inception date for Class C shares is 6-27-14.

Affiliates of the fund owned 95%, 49% and 100% of shares of beneficial interest of Class C, Class I and Class NAV shares, respectively, on August 31, 2014.

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to $61,953,363 and $82,905,941, respectively, for the year ended August 31, 2014.

Note 7 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 99.0% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATED 
FUND  CONCENTRATION 
John Hancock Lifestyle Growth Portfolio  33.5% 
John Hancock Lifestyle Balanced Portfolio  25.7% 
John Hancock Lifestyle Aggressive Portfolio  15.2% 
John Hancock Lifestyle Moderate Portfolio  5.3% 

 

Annual report | International Small Company Fund  31 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock International Small Company Fund:

In our opinion, the accompanying statement of assets and liabilities, including the summary schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock International Small Company Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

32  International Small Company Fund | Annual report 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

Income derived from foreign sources was $13,466,830. The fund intends to pass through foreign tax credits of $867,833.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | International Small Company Fund  33 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Dimensional Fund Advisors LP (the Subadvisor), for John Hancock International Small Company Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy,

34  International Small Company Fund | Annual report 

 


the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Annual report | International Small Company Fund  35 

 


Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index for the one-, three- and five-year periods ended December 31, 2013. The Board also noted that the fund had outperformed its peer group average for the one-year period ended December 31, 2013 and underperformed its peer group average for the three- and five-year periods ended December 31, 2013.

The Board took into account management’s discussion of the fund’s performance, including the factors that contributed to the fund’s performance and noted the fund’s improved more recent performance for the one-year period relative to the peer group. The Board concluded that the fund’s performance is being monitored and reasonably addressed.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs. The Board noted that net management fees and total expenses for the fund are lower than the peer group median.

The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

36  International Small Company Fund | Annual report 

 


Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

Annual report | International Small Company Fund  37 

 


The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fee for the fund and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

38  International Small Company Fund | Annual report 

 


The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

Annual report | International Small Company Fund  39 

 


The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund is being monitored and reasonably addressed; and

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

40  International Small Company Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | International Small Company Fund  41 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

42  International Small Company Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | International Small Company Fund  43 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

44  International Small Company Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  Dimensional Fund Advisors LP 
Peter S. Burgess*   
William H. Cunningham  Principal distributor 
Grace K. Fey  John Hancock Funds, LLC 
Theron S. Hoffman*   
Deborah C. Jackson  Custodian 
Hassell H. McClellan  State Street Bank and Trust Company 
Gregory A. Russo   
Warren A. Thomson†  Transfer agent 
  John Hancock Signature Services, Inc. 
Officers   
Andrew G. Arnott  Legal counsel 
President  K&L Gates LLP 
   
John J. Danello  Independent registered 
Senior Vice President, Secretary,  public accounting firm 
and Chief Legal Officer  PricewaterhouseCoopers LLP 
   
Francis V. Knox, Jr.   
Chief Compliance Officer   
   
Charles A. Rizzo   
Chief Financial Officer   
   
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | International Small Company Fund  45 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com

 
 
This report is for the information of the shareholders of John Hancock International Small Company Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  424A 8/14 
MF198770  10/14 

 




A look at performance

Total returns for the period ended August 31, 2014

  Average annual total returns (%)  Cumulative total returns (%)   
  with maximum sales charge    with maximum sales charge   
Since  Since 
  1-year  5-year  10-year  inception 1  1-year  5-year  10-year  inception 1 
Class A2  9.63  15.19  —  17.65  9.63  102.82  —  152.92 
Class I2,3  15.74  16.74  —  19.08  15.74  116.84  —  171.05 
Class R62,3  15.90  16.87  —  19.21  15.90  118.00  —  172.70 
Class NAV3  15.88  16.94  —  19.26  15.88  118.73  —  173.41 
Index†  18.10  15.74  —  17.97  18.10  107.71  —  156.89 

 

Performance figures assume all distributions have been reinvested. Figures reflect maximum sales charges on Class A shares of 5%. Sales charges are not applicable to Class I, Class R6, and Class NAV shares.

The expense ratios of the fund, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The expense ratios are as follows:

  Class A*  Class I*  Class R6*  Class NAV 
Gross (%)  1.67  1.36  1.26  1.15 
Net (%)  1.64  1.34  1.15  1.15 

 

* Expenses have been estimated for the first year of operations.

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, 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 may pay on fund distributions or on the redemption of fund shares. The fund’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

† Index is the Russell 2000 Value Index.

See the following page for footnotes.

6  Small Cap Value Fund | Annual report 

 



    With maximum  Without   
  Start date  sales charge  sales charge  Index 
Class A2  12-16-08  $25,292  $26,632  $25,689 
Class I2,3  12-16-08  27,105  27,105  25,689 
Class R62,3  12-16-08  27,270  27,270  25,689 

 

Russell 2000 Value Index tracks the performance of publicly traded small-cap companies in the U.S. with lower price-to-book ratios and lower forecasted growth values.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Footnotes related to performance pages

1 From 12-16-08.

2 Class A, Class I, and Class R6 shares were first offered on 12-30-13. The returns prior to this date are those of Class NAV shares that have been recalculated to reflect the gross fees and expenses of Class A, Class I, and Class R6 shares, as applicable.

3 For certain types of investors, as described in the fund’s prospectuses.

Annual report | Small Cap Value Fund  7 

 


Management’s discussion of
Fund performance

By Wellington Management

For the 12 months ended August 31, 2014, John Hancock Small Cap Value Fund’s Class NAV shares gained 15.88%. This result lagged the 18.10% gain of its benchmark, the Russell 2000 Value Index.

While 2013 was their best year since 1997, U.S. stocks began 2014 with their worst month in nearly two years. Worries about emerging markets dominated headlines throughout the first quarter as economic and political concerns led to investor risk aversion across global markets. In the second quarter of 2014, however, U.S. equities rallied amid renewed signs of life in the housing market and the best payroll gain in more than two years. Despite solid corporate earnings and better-than-expected second-quarter economic growth, U.S. equities fell sharply in late July before bouncing back strongly in August.

By far, the biggest factor behind the fund’s relative underperformance of its benchmark was unfavorable stock selection within the industrials sector. Stock picking within materials also hurt results, as did the fund’s small average cash weighting, which held back returns in a rising overall market.

Most notably within industrials, international freight forwarder and logistics service provider UTi Worldwide Inc. and air cargo and aircraft outsourcing solutions provider Atlas Air Worldwide Holdings, Inc., were particularly meaningful individual detractors.

While stock picking in the healthcare sector contributed modestly, the fund was materially hampered on an individual basis by a position in ICU Medical, Inc., a maker of medical devices whose stock struggled during the 12 months.

On the positive side, our stock selection was extremely helpful within the information technology and consumer discretionary sectors. Within technology—the source of the fund’s strongest performance during the 12 months—a position in Zebra Technologies Corp. proved especially helpful on a relative basis. This maker of bar code printing devices benefited from strong profits and sales. Elsewhere, oil and natural gas exploration and production company Diamondback Energy, Inc. and transportation equipment company GATX Corp. also added relative value.

This commentary reflects the views of the portfolio management team through the end of the period discussed in this report. As such, they are in no way guarantees of future events and are not intended to be used as investment advice or a recommendation regarding any specific security. They are also subject to change at any time as market and other conditions warrant.

Past performance does not guarantee future results.

8  Small Cap Value Fund | Annual report 

 


Your expenses

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 going to present only your ongoing operating expenses here.

Actual expenses/actual returns

This example is intended to provide information about the fund’s actual ongoing operating expenses and is based on the fund’s actual return. It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,003.60  $8.08  1.60% 
Class I  1,000.00  1,005.70  6.57  1.30% 
Class R6  1,000.00  1,006.20  5.66  1.12% 
Class NAV  1,000.00  1,006.80  5.77  1.14% 

 

Together with the value of your account, you may use this information to estimate the operating expenses that you paid over the period. Simply divide your account value at August 31, 2014, by $1,000.00, then multiply it by the “expenses paid” for your share class from the table above. For example, for an account value of $8,600.00, the operating expenses should be calculated as follows:

 

 
 
Annual report | Small Cap Value Fund  9 

 


Your expenses

Hypothetical example for comparison purposes

This table allows you to compare the fund’s ongoing operating expenses with those of any other fund. It provides an example of the fund’s hypothetical account values and hypothetical expenses based on each class’s actual expense ratio and an assumed 5% annualized return before expenses (which is not the fund’s actual return). It assumes an account value of $1,000.00 on March 1, 2014, with the same investment held until August 31, 2014. 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.

      Expenses paid   
  Account value  Ending value  during period  Annualized 
  on 3-1-2014  on 8-31-2014  ended 8-31-20141  expense ratio 
Class A  $1,000.00  $1,017.10  $8.13  1.60% 
Class I  1,000.00  1,018.70  6.61  1.30% 
Class R6  1,000.00  1,019.60  5.70  1.12% 
Class NAV  1,000.00  1,019.50  5.80  1.14% 

 

Remember, these examples do not include any transaction costs, therefore, these examples will not help you to determine the relative total costs of owning different funds. If transaction costs were included, your expenses would have been higher. See the prospectus for details regarding transaction costs.

1 Expenses are equal to the fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

10  Small Cap Value Fund | Annual report 

 


Portfolio summary

Top 10 Holdings (22.3% of Net Assets on 8-31-14)1,2     
Belden, Inc.  3.3%  GATX Corp.  2.1% 
  
Helen of Troy, Ltd.  2.5%  G&K Services, Inc., Class A  2.0% 
  
The Cato Corp., Class A  2.2%  Albany International Corp., Class A  2.0% 
  
Charles River Laboratories    United Stationers, Inc.  1.9% 
International, Inc.  2.2% 
ICU Medical, Inc.  1.9% 
Mueller Industries, Inc.  2.2%   
 
Sector Composition1,3       
Financials  19.7%  Materials  7.1% 
  
Industrials  19.6%  Energy  5.9% 
  
Health Care  12.4%  Consumer Staples  3.5% 
  
Information Technology  11.8%  Utilities  2.8% 
  
Consumer Discretionary  11.0%  Short-Term Investments & Other  6.2% 
  

 

1 As a percentage of net assets on 8-31-14.

2 Cash and cash equivalents are not included.

3 The prices of small company stocks can change more frequently and dramatically than those of large company stocks. Value stocks may not increase in price as anticipated or may decline further in value. Foreign investing has additional risks, such as currency and market volatility and political and social instability. The use of hedging and derivatives transactions could produce disproportionate gains or losses and may increase volatility and costs. Sector investing is subject to greater risks than the market as a whole. Because the fund may focus on particular sectors of the economy, its performance may depend on the performance of those sectors and investments focused in one sector may fluctuate more widely than investments diversified across sectors. Please see the fund’s prospectuses for additional risks.

Annual report | Small Cap Value Fund  11 

 


Fund’s investments

As of 8-31-14

  Shares  Value 
 
Common Stocks 93.8%    $204,222,792 
(Cost $145,952,143)     
 
Consumer Discretionary 11.0%    23,996,196 
 
Diversified Consumer Services 1.7%     
Matthews International Corp., Class A  82,480  3,806,447 
 
Household Durables 2.5%     
Helen of Troy, Ltd. (I)  92,490  5,384,768 
 
Multiline Retail 1.2%     
Fred’s, Inc., Class A  190,810  2,715,226 
 
Specialty Retail 5.6%     
Advance Auto Parts, Inc.  4,090  557,958 
Ascena Retail Group, Inc. (I)  222,850  3,875,362 
CST Brands, Inc.  6,160  214,614 
Stage Stores, Inc. (L)  145,680  2,545,030 
The Cato Corp., Class A  141,240  4,896,791 
 
Consumer Staples 3.5%    7,535,459 
 
Food & Staples Retailing 1.4%     
Casey’s General Stores, Inc.  42,170  3,023,167 
 
Food Products 2.1%     
Cranswick PLC  108,004  2,386,147 
Post Holdings, Inc. (I)  57,510  2,126,145 
 
Energy 5.9%    12,926,482 
 
Energy Equipment & Services 2.2%     
Era Group, Inc. (I)  85,038  2,177,823 
SEACOR Holdings, Inc. (I)(L)  31,938  2,606,141 
 
Oil, Gas & Consumable Fuels 3.7%     
Diamondback Energy, Inc. (I)  37,045  3,198,836 
Dorian LPG, Ltd. (I)  45,850  900,036 
Scorpio Tankers, Inc.  414,640  3,963,958 
Whiting Petroleum Corp. (I)  860  79,688 
 
Financials 19.7%    42,834,347 
 
Banks 9.8%     
First Busey Corp.  264,872  1,523,014 
First Midwest Bancorp, Inc.  189,860  3,199,141 
First Niagara Financial Group, Inc.  205,690  1,789,503 

 

12  Small Cap Value Fund | Annual report  See notes to financial statements 

 


  Shares  Value 
 
Banks (continued)     
Flushing Financial Corp.  87,268  $1,684,272 
Hancock Holding Company  67,270  2,236,055 
International Bancshares Corp.  143,090  3,771,852 
MB Financial, Inc.  86,680  2,452,177 
Webster Financial Corp.  132,580  3,911,110 
WestAmerica Bancorp. (L)  16,117  779,579 
 
Capital Markets 0.9%     
Ares Capital Corp.  10,480  179,732 
Solar Capital, Ltd.  89,490  1,789,800 
 
Insurance 3.9%     
Alleghany Corp. (I)  570  245,744 
AMERISAFE, Inc.  42,600  1,607,298 
Assured Guaranty, Ltd.  2,995  72,329 
Platinum Underwriters Holdings, Ltd.  33,480  2,091,496 
Primerica, Inc.  77,220  3,886,483 
Reinsurance Group of America, Inc.  3,850  319,473 
White Mountains Insurance Group, Ltd.  315  199,786 
 
Real Estate Investment Trusts 3.7%     
Campus Crest Communities, Inc.  106,609  876,326 
Corrections Corp. of America  5,990  213,484 
DiamondRock Hospitality Company  165,162  2,199,958 
Education Realty Trust, Inc.  201,860  2,198,255 
Kite Realty Group Trust  6,365  163,708 
Mid-America Apartment Communities, Inc.  2,880  208,282 
Summit Hotel Properties, Inc.  193,210  2,115,650 
 
Thrifts & Mortgage Finance 1.4%     
Northwest Bancshares, Inc.  247,410  3,119,840 
 
Health Care 12.4%    27,080,455 
 
Health Care Equipment & Supplies 4.7%     
Haemonetics Corp. (I)  66,310  2,366,604 
ICU Medical, Inc. (I)  64,420  4,032,048 
Integra LifeSciences Holdings Corp. (I)  15,810  790,342 
STERIS Corp.  53,480  3,010,389 
 
Health Care Providers & Services 1.5%     
Amsurg Corp. (I)  44,400  2,388,276 
Corvel Corp. (I)  24,360  996,324 
 
Health Care Technology 1.9%     
Allscripts Healthcare Solutions, Inc. (I)  152,790  2,257,472 
MedAssets, Inc. (I)  85,660  1,970,180 
 
Life Sciences Tools & Services 3.6%     
Charles River Laboratories International, Inc. (I)  82,560  4,879,296 
ICON PLC (I)  58,640  2,905,026 
 
Pharmaceuticals 0.7%     
Phibro Animal Health Corp.  77,560  1,484,498 

 

See notes to financial statements  Annual report | Small Cap Value Fund  13 

 


  Shares  Value 
 
Industrials 19.6%    $42,561,102 
 
Aerospace & Defense 1.7%     
Cubic Corp.  83,140  3,711,370 
 
Air Freight & Logistics 1.1%     
Atlas Air Worldwide Holdings, Inc. (I)  18,818  629,462 
UTi Worldwide, Inc.  195,260  1,792,487 
 
Commercial Services & Supplies 7.3%     
ACCO Brands Corp. (I)  346,210  2,676,203 
Clean Harbors, Inc. (I)  2,720  164,669 
G&K Services, Inc., Class A  77,570  4,335,387 
SP Plus Corp. (I)  130,548  2,826,364 
Steelcase, Inc., Class A  105,740  1,660,118 
United Stationers, Inc.  104,050  4,229,633 
 
Industrial Conglomerates 0.2%     
Carlisle Companies, Inc.  4,150  344,035 
 
Machinery 6.2%     
Albany International Corp., Class A  113,990  4,282,604 
ESCO Technologies, Inc.  76,940  2,769,840 
Luxfer Holdings PLC, ADR  82,440  1,558,116 
Mueller Industries, Inc.  163,460  4,779,570 
 
Professional Services 1.0%     
FTI Consulting, Inc. (I)  58,570  2,172,947 
 
Trading Companies & Distributors 2.1%     
GATX Corp.  69,840  4,628,297 
 
Information Technology 11.8%    25,610,983 
 
Electronic Equipment, Instruments & Components 6.5%     
Belden, Inc.  98,010  7,161,591 
Coherent, Inc. (I)  31,530  2,032,739 
MTS Systems Corp.  17,200  1,222,576 
ScanSource, Inc. (I)  75,590  2,914,750 
Zebra Technologies Corp., Class A (I)  10,460  816,194 
 
IT Services 2.1%     
Forrester Research, Inc.  75,560  2,936,262 
MAXIMUS, Inc.  41,138  1,694,886 
 
Semiconductors & Semiconductor Equipment 1.1%     
Maxim Integrated Products, Inc.  8,820  272,450 
Micrel, Inc.  160,920  2,016,328 
 
Software 0.6%     
Verint Systems, Inc. (I)  24,270  1,216,655 
 
Technology Hardware, Storage & Peripherals 1.5%     
Diebold, Inc.  87,610  3,326,552 
 
Materials 7.1%    15,553,124 
 
Chemicals 4.7%     
Innospec, Inc.  56,300  2,374,734 
Koppers Holdings, Inc.  67,860  2,518,285 
Sensient Technologies Corp.  54,240  3,043,406 
Zep, Inc.  143,800  2,283,544 

 

14  Small Cap Value Fund | Annual report  See notes to financial statements 

 


    Shares  Value 
 
Containers & Packaging 1.1%       
AptarGroup, Inc.    2,290  $146,904 
Greif, Inc., Class A    46,910  2,246,520 
 
Paper & Forest Products 1.3%       
Deltic Timber Corp.    44,380  2,939,731 
 
Utilities 2.8%      6,124,644 
 
Electric Utilities 0.1%       
Westar Energy, Inc.    3,590  132,579 
 
Gas Utilities 2.7%       
Atmos Energy Corp.    2,958  149,556 
New Jersey Resources Corp.    28,350  1,480,721 
The Laclede Group, Inc.    44,630  2,206,954 
UGI Corp.    5,260  278,675 
WGL Holdings, Inc.    43,140  1,876,159 
 
  Yield (%)  Shares  Value 
 
Securities Lending Collateral 1.5%      $3,258,207 
(Cost $3,257,396)       
 
John Hancock Collateral Investment Trust (W)  0.0970 (Y)  325,590  3,258,207 
 
    Par value  Value 
 
Short-Term Investments 9.2%      $20,100,000 
(Cost $20,100,000)       
 
Repurchase Agreement 9.2%      20,100,000 
 
Deutsche Bank Tri-Party Repurchase Agreement dated 8-29-14 at     
0.060% to be repurchased at $20,100,134 on 9-2-14, collateralized     
by $19,020,740 Government National Mortgage Association,     
3.500%–4.500% due 12-20-26 to 12-15-43 (valued at $20,502,000,     
including interest)    $20,100,000  20,100,000 
 
Total investments (Cost $169,309,539)† 104.5%    $227,580,999 
 
Other assets and liabilities, net (4.5%)      ($9,877,398) 
 
Total net assets 100.0%      $217,703,601 

 

The percentage shown for each investment category is the total value of that category as a percentage of the net assets of the fund.

ADR American Depositary Receipts

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $169,762,328. Net unrealized appreciation aggregated $57,818,671, of which $59,337,831 related to appreciated investment securities and $1,519,160 related to depreciated investment securities.

See notes to financial statements  Annual report | Small Cap Value Fund  15 

 


FINANCIAL STATEMENTS

Financial statements

Statement of assets and liabilities 8-31-14

This Statement of assets and liabilities is the fund’s balance sheet. It shows the value of what the fund owns, is due and owes. You’ll also find the net asset value and the maximum offering price per share.

Assets   
Investments in unaffiliated issuers, at value (Cost $166,052,143) including   
($3,185,017) of securities loaned  $224,322,792 
Investments in affiliated issuers, at value (Cost $3,257,396)  3,258,207 
 
Total investments, at value (Cost $169,309,539)  227,580,999 
Cash  79,408 
Receivable for investments sold  333,948 
Receivable for fund shares sold  4,503,094 
Dividends and interest receivable  190,268 
Receivable for securities lending income  277 
Receivable due from advisor  1,267 
Other receivables and prepaid expenses  41,956 
 
Total assets  232,731,217 
 
Liabilities   
Payable for investments purchased  11,651,839 
Payable upon return of securities loaned  3,254,421 
Payable to affiliates   
Accounting and legal services fees  4,162 
Transfer agent fees  53,645 
Trustees’ fees  24 
Other liabilities and accrued expenses  63,525 
 
Total liabilities  15,027,616 
 
Net assets  $217,703,601 
 
Net assets consist of   
Paid-in capital  $148,663,352 
Undistributed net investment income  779,519 
Accumulated net realized gain (loss) on investments and foreign   
currency transactions  9,989,938 
Net unrealized appreciation (depreciation) on investments and translation   
of assets and liabilities in foreign currencies  58,270,792 
 
Net assets  $217,703,601 

 

16  Small Cap Value Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statement of assets and liabilities (continued)

Net asset value per share   
Based on net asset values and shares outstanding — the fund has an   
unlimited number of shares authorized with no par value   
Class A ($2,263,455 ÷ 117,266 shares)1  $19.30 
Class I ($161,042 ÷ 8,329 shares)  $19.34 
Class R6 ($100,514 ÷ 5,192 shares)  $19.36 
Class NAV ($215,178,590 ÷ 11,117,509 shares)  $19.35 
 
Maximum offering price per share   
Class A (net asset value per share ÷ 95%)2  $20.32 

 

1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

See notes to financial statements  Annual report | Small Cap Value Fund  17 

 


FINANCIAL STATEMENTS

Statement of operations For the year ended 8-31-14

This Statement of operations summarizes the fund’s investment income earned and expenses incurred in operating the fund. It also shows net gains (losses) for the period stated.

Investment income   
Dividends  $3,011,306 
Securities lending  11,776 
Interest  4,040 
 
Total investment income  3,027,122 
 
Expenses   
Investment management fees  1,840,033 
Distribution and service fees  2,347 
Accounting and legal services fees  22,305 
Transfer agent fees  1,133 
Trustees’ fees  2,403 
State registration fees  37,960 
Printing and postage  1,169 
Professional fees  52,329 
Custodian fees  26,573 
Registration and filing fees  38,474 
Other  9,859 
 
Total expenses  2,034,585 
Less expense reductions  (50,222) 
 
Net expenses  1,984,363 
 
Net investment income  1,042,759 
 
Realized and unrealized gain (loss)   
 
Net realized gain (loss) on   
Investments in unaffiliated issuers and foreign currency transactions  13,437,430 
Investments in affiliated issuers  281 
 
  13,437,711 
Change in net unrealized appreciation (depreciation) of   
Investments in unaffiliated issuers and translation of assets and liabilities in   
foreign currencies  9,800,656 
Investments in affiliated issuers  (533) 
 
  9,800,123 
 
Net realized and unrealized gain  23,237,834 
 
Increase in net assets from operations  $24,280,593 

 

18  Small Cap Value Fund | Annual report  See notes to financial statements 

 


FINANCIAL STATEMENTS

Statements of changes in net assets

These Statements of changes in net assets show how the value of the fund’s net assets has changed during the last two periods. The difference reflects earnings less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of fund share transactions.

  Year  Year 
  ended  ended 
  8-31-14  8-31-13 
 
Increase (decrease) in net assets     
From operations     
Net investment income  $1,042,759  $698,666 
Net realized gain  13,437,711  15,238,018 
Change in net unrealized appreciation (depreciation)  9,800,123  13,481,384 
 
Increase in net assets resulting from operations  24,280,593  29,418,068 
 
Distributions to shareholders     
From net investment income     
Class NAV  (333,052)  (1,674,157) 
From net realized gain     
Class NAV  (16,952,094)  (11,908,469) 
From capital paid-in     
 
Total distributions  (17,285,146)  (13,582,626) 
 
From fund share transactions  67,746,456  1,488,676 
 
Total increase  74,741,903  17,324,118 
 
Net assets     
Beginning of year  142,961,698  125,637,580 
 
End of year  $217,703,601  $142,961,698 
 
Undistributed net investment income  $779,519  $86,014 

 

See notes to financial statements  Annual report | Small Cap Value Fund  19 

 


Financial highlights

The Financial highlights show how the fund’s net asset value for a share has changed during the period.

CLASS A SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $19.26 
Net investment income2  0.04 
Net realized and unrealized loss on investments  — 
Total from investment operations  0.04 
Net asset value, end of period  $19.30 
Total return (%)3,4  0.215 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  $2 
Ratios (as a percentage of average net assets):   
Expenses before reductions  3.276 
Expenses including reductions  1.606 
Net investment income  0.346 
Portfolio turnover (%)  207 

 

1 Period from 12-30-13 (inception date) to 8-31-14.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Not annualized.
6 Annualized.
7 The portfolio turnover is shown for the period 9-1-13 to 8-31-14.

 

CLASS I SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $19.26 
Net investment income2  0.07 
Net realized and unrealized loss on investments  0.01 
Total from investment operations  0.08 
Net asset value, end of period  $19.34 
Total return (%)3  0.424 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —5 
Ratios (as a percentage of average net assets):   
Expenses before reductions  14.796 
Expenses including reductions  1.306 
Net investment income  0.566 
Portfolio turnover (%)  207 

 

1 Period from 12-30-13 (inception date) to 8-31-14.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period 9-1-13 to 8-31-14.

 

20  Small Cap Value Fund | Annual report  See notes to financial statements 

 


CLASS R6 SHARES Period ended  8-31-141 
 
Per share operating performance   
Net asset value, beginning of period  $19.26 
Net investment income2  0.08 
Net realized and unrealized loss on investments  0.02 
Total from investment operations  0.10 
Net asset value, end of period  $19.36 
Total return (%)3  0.524 
 
Ratios and supplemental data   
Net assets, end of period (in millions)  —5 
Ratios (as a percentage of average net assets):   
Expenses before reductions  20.706 
Expenses including reductions  1.126 
Net investment income  0.666 
Portfolio turnover (%)  207 

 

1 Period from 12-30-13 (inception date) to 8-31-14.
2 Based on average daily shares outstanding.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Not annualized.
5 Less than $500,000.
6 Annualized.
7 The portfolio turnover is shown for the period from 9-1-13 to 8-31-14.

 

CLASS NAV SHARES Period ended  8-31-14  8-31-13  8-31-12  8-31-11  8-31-10 
 
Per share operating performance           
Net asset value, beginning of period  $18.47  $16.57  $15.81  $13.72  $12.50 
Net investment income1  0.11  0.09  0.17  0.10  0.07 
Net realized and unrealized gain on investments  2.81  3.63  1.78  2.75  1.39 
Total from investment operations  2.92  3.72  1.95  2.85  1.46 
Less distributions           
From net investment income  (0.04)  (0.22)  (0.06)  (0.10)  (0.06) 
From net realized gain  (2.00)  (1.60)  (1.13)  (0.66)  (0.18) 
Total distributions  (2.04)  (1.82)  (1.19)  (0.76)  (0.24) 
Net asset value, end of period  $19.35  $18.47  $16.57  $15.81  $13.72 
Total return (%)2  15.88  24.20  12.84  20.54  11.72 
 
Ratios and supplemental data           
Net assets, end of period (in millions)  $215  $143  $126  $149  $131 
Ratios (as a percentage of average net assets):           
Expenses before reductions  1.12  1.11  1.11  1.11  1.14 
Expenses including reductions  1.12  1.11  1.11  1.11  1.14 
Net investment income  0.59  0.51  1.05  0.61  0.51 
Portfolio turnover (%)  20  19  18  16  22 

 

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 | Small Cap Value Fund  21 

 


Notes to financial statements

Note 1 — Organization

John Hancock Small Cap Value Fund (the fund) is a series of John Hancock Funds II (the Trust), an open-end management investment company organized as a Massachusetts business trust and registered under the Investment Company Act of 1940, as amended (the 1940 Act).The investment objective of the fund is to seek long-term capital appreciation.

The fund may offer multiple classes of shares. The shares currently offered are detailed in the Statement of assets and liabilities. Class A shares are open to all investors. Class I shares are offered to institutions and certain investors. Class R6 shares are only available to certain retirement plans, institutions and other investors. Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Lifestyle II Portfolios, Retirement Choices, Retirement Living Portfolios and Retirement Living Through II Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. 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, printing and postage and state registration 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 intends to qualify as an investment company under Topic 946 of Accounting Standards Codification of US GAAP.

Events or transactions occurring after the end of the fiscal period through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the fund:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the fund uses the following valuation techniques: Equity securities held by the fund are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the funds in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Foreign securities are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost. 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 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,

22  Small Cap Value Fund | Annual report 

 


prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the fund’s own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

The following is a summary of the values by input classification of the fund’s investments as of August 31, 2014, by major security category or type:

        LEVEL 3 
      LEVEL 2  SIGNIFICANT 
  TOTAL MARKET  LEVEL 1  SIGNIFICANT  UNOBSERVABLE 
  VALUE AT 8-31-14  QUOTED PRICE  OBSERVABLE INPUTS  INPUTS 
Common Stocks         
Consumer Discretionary  $23,996,196  $23,996,196  —  — 
Consumer Staples  7,535,459  5,149,312  $2,386,147  — 
Energy  12,926,482  12,926,482  —  — 
Financials  42,834,347  42,834,347  —  — 
Health Care  27,080,455  27,080,455  —  — 
Industrials  42,561,102  42,561,102  —  — 
Information Technology  25,610,983  25,610,983  —  — 
Materials  15,553,124  15,553,124  —  — 
Utilities  6,124,644  6,124,644  —  — 
Securities Lending         
Collateral  3,258,207  3,258,207  —  — 
Short-Term Investments  20,100,000  —  20,100,000  — 
 
Total Investments in         
Securities  $227,580,999  $205,094,852  $22,486,147  — 

 

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

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, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statement of assets and liabilities. In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during

Annual report | Small Cap Value Fund  23 

 


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. 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.

Securities lending. The fund may lend its securities to earn additional income. The fund receives cash collateral from the borrower in an amount not less than the market value of the loaned securities. The fund will invest its collateral in JHCIT, an affiliate of the fund, which has a floating net asset value and is registered with the Securities and Exchange Commission as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. The fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible and indemnifies the fund for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the fund could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The fund may receive compensation for lending its securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statement of operations.

Obligations to repay collateral received by the fund is shown on the Statements of assets and liabilities as Payable upon return of securities loaned.

Line of credit. The fund may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the fund’s custodian agreement, the custodian may loan money to the fund to make properly authorized payments. The fund is obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security entitlement in any fund property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

In addition, the fund and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statement of operations. Commitment fees for the year ended August 31, 2014 were $451. For the year ended August 31, 2014, the fund had no borrowings under the line of credit.

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual fund are allocated to such fund. Expenses that are not readily attributable to a specific fund are allocated among all funds in an equitable manner, taking into consideration, among other things, the nature and type of expense and the fund’s relative net assets. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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Class allocations. Income, common expenses and realized and unrealized gains (losses) are determined at the fund level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The fund intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, the fund had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The fund’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. The fund generally declares and pays dividends and capital gain distributions, if any, annually. The tax character of distributions for the years ended August 31, 2014 and 2013 was as follows:

  AUGUST 31, 2014  AUGUST 31, 2013 
Ordinary Income  $1,136,066  $1,683,395 
Long-Term Capital Gain  $16,149,080  $11,899,231 
Total  $17,285,146  $13,582,626 

 

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 August 31, 2014, the components of distributable earnings on a tax basis consisted of $1,626,521 of undistributed ordinary income and $9,595,725 of long-term capital gains.

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 wash sale loss deferrals.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the fund. Additionally, in the normal course of business, the fund enters into contracts with service providers that contain general indemnification clauses. The fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the fund that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the fund. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the fund. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management

Annual report | Small Cap Value Fund  25 

 


contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the fund. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).

Management fee. The fund has an investment management contract with the Advisor under which the fund pays a daily management fee to the Advisor equivalent, on an annual basis, to the sum of: (a) 1.10% of the first $100 million of the fund’s aggregate net assets and (b) 1.05% of the next $500 million of the fund’s aggregate net assets and c) 1.00% of the fund’s average daily net assets in excess of $600 million. The Advisor has a subadvisory agreement with Wellington Management Company, LLP. 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 complex, including the fund (the participating portfolios). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. This arrangement may be amended or terminated at any time by the Advisor upon notice to the fund and with the approval of the Board of Trustees.

The Advisor has voluntarily agreed to waive and/or reimburse a portion of its management fee if certain expenses of the fund exceed 0.20% of average net assets. Expenses excluded from this waiver include taxes, brokerage commissions, interest expense, acquired fund fees, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, advisory fees, Rule 12b-1 fees, transfer agent fees and service fees, state registration fees and printing and postage. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

The Advisor has agreed to contractually waive and/or reimburse fund expense for Class A, Class I, and Class R6 shares, to the extent that the expenses for each class exceed 1.60%, 1.30%, and 1.20%, respectively, of the average daily net assets attributable to the classes. This limit excludes taxes, brokerage commissions, interest expense, acquired fund fees, short dividend expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. The fee waiver and/or reimbursement will continue in effect until December 31, 2014, unless renewed by mutual agreement of the fund and the advisor based upon a determination of that this is appropriate under the circumstances at that time.

Effective January 1, 2014, for Class R6 shares, the Advisor has contractually agreed to waive and/or reimburse all class-specific expenses of the fund, including transfer agency fees and service fees, blue sky fees and printing and postage, as applicable, to the extent they exceed 0.00% of average annual net assets. The agreement expires on December 31, 2015, unless renewed by mutual agreement of the fund and the Advisor based upon a determination that this is appropriate under the circumstances at that time. This waiver was in effect on a voluntary basis as of January 1, 2014.

26  Small Cap Value Fund | Annual report 

 


Accordingly, these expense reductions amounted to $13,045, $12,910, $12,955 and $11,312 for Class A, Class I, Class R6 and Class NAV shares, respectively, for the year ended August 31, 2014.

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of 1.01% of the fund’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that the fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014 and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

      AMOUNT RECOVERED 
AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  AMOUNTS ELIGIBLE FOR  DURING THE 
RECOVERY THROUGH  RECOVERY THROUGH  RECOVERY THROUGH  PERIOD ENDED 
AUGUST 1, 2015  AUGUST 1, 2016  AUGUST 1, 2017  AUGUST 31, 2014 
—  —  $25,893  — 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the fund reimburses the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets.

Distribution and service plans. The fund has a distribution agreement with the Distributor. The fund has adopted distribution and service plans with respect to Class A pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the fund. The fund may pay up to the following contractual rate of distribution and service fees under this arrangement, expressed as an annual percentage of average daily net assets of 0.30% for Class A shares.

Sales charges. Class A shares are assessed up-front sales charges, which resulted in payments to the Distributor amounting to $17,473 for the year ended August 31, 2014. Of this amount, $2,929 was retained and used for printing prospectuses, advertising, sales literature and other purposes, $14,535 was paid as sales commissions to broker-dealers and $9 was paid as sales commissions to sales personnel of Signator Investors, Inc., a broker-dealer affiliate of the Advisor.

Class A shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. 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 August 31, 2014, there were no CDSCs received by the Distributor for Class A shares.

Transfer agent fees. The fund has a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost)

Annual report | Small Cap Value Fund  27 

 


of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the fund and to all other John Hancock affiliated funds. It also includes out-of-pocket expenses, 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 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.

Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  DISTRIBUTION  TRANSFER AGENT  STATE REGISTRATION  PRINTING AND 
CLASS  AND SERVICE FEES  FEES  FEES  POSTAGE 
A  $2,347  $1,008  $12,653  $584 
I  —  113  12,653  300 
R6  —  12  12,654  285 
Total  $2,347  $1,133  $37,960  $1,169 

 

Trustee expenses. The fund compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Note 5 — Fund share transactions

Transactions in fund shares for the years ended August 31, 2014 and 2013 were as follows:

  Year ended 8-31-14  Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares1         
Sold  128,204  $2,458,156  —  — 
Repurchased  (10,938)  (207,111)  —  — 
 
Net increase  117,266  $2,251,045  —  — 
 
Class I shares1         
Sold  8,329  $160,000  —  — 
 
Net increase  8,329  $160,000  —  — 
 
Class R6 shares1         
Sold  5,192  $100,000  —  — 
 
Net increase  5,192  $100,000  —  — 

 

28  Small Cap Value Fund | Annual report 

 


  Year ended 8-31-14  Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class NAV shares         
Sold  3,057,523  $59,575,257  229,949  $4,077,510 
Distributions reinvested  901,677  17,285,146  851,042  13,582,626 
Repurchased  (582,526)  (11,624,992)  (924,561)  (16,171,460) 
 
Net increase  3,376,674  $65,235,411  156,430  $1,488,676 
 
Total net increase  3,507,461  $67,746,456  156,430  $1,488,676 

 

1 The inception date for A, I and R6 is 12-30-13.

Affiliates of the fund owned 4%, 62%, 100% and 100% of shares of beneficial interest of Class A, Class I, Class R6 and Class NAV, respectively, on August 31, 2014.

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term securities, amounted to $76,404,961 and $34,304,076 respectively, for the year ended August 31, 2014.

Note 7 — Investment by affiliated funds

Certain investors in the fund are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the fund for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. At August 31, 2014, funds within the John Hancock group of funds complex held 98.9% of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the fund’s net assets:

  AFFILIATED 
FUND  CONCENTRATION 
John Hancock Lifestyle Growth Portfolio  32.8% 
John Hancock Lifestyle Balanced Portfolio  26.7% 
John Hancock Lifestyle Aggressive Portfolio  16.3% 
John Hancock Lifestyle Moderate Portfolio  7.0% 

 

Annual report | Small Cap Value Fund  29 

 


Auditor’s report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of John Hancock Funds II and Shareholders of
John Hancock Small Cap Value Fund:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the John Hancock Small Cap Value Fund (the “Fund”) at August 31, 2014, 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 then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

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Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the fund, if any, paid during its taxable year ended August 31, 2014.

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.

The fund paid $16,149,080 in capital gain dividends.

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

Annual report | Small Cap Value Fund  31 

 


Continuation of Investment Advisory and Subadvisory Agreements

Evaluation of Advisory and Subadvisory Agreements by the Board of Trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and the Subadvisory Agreement (the Subadvisory Agreement) with Wellington Management Company, LLP (the Subadvisor), for John Hancock Small Cap Value Fund (the fund). The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period the continuation of the Advisory Agreement between the Trust and the Advisor and the Subadvisory Agreement between the Advisor and the Subadvisor with respect to the fund.

In considering the Advisory Agreement and the Subadvisory Agreement, the Board received in advance of the meetings a variety of materials relating to the fund, the Advisor and the Subadvisor, including comparative performance, fee and expense information for a peer group of similar funds prepared by an independent third-party provider of fund data, performance information for an applicable benchmark index; and, with respect to the Subadvisor, comparative performance information for comparably managed accounts, as applicable, and other information provided by the Advisor and the Subadvisor regarding the nature, extent and quality of services provided by the Advisor and the Subadvisor under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the fund and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreement are considered, particular focus is given to information concerning fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisor is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisor to the fund, including quarterly performance reports prepared by management containing reviews of investment results and prior presentations from the Subadvisor with respect to the fund. The Board also considered the nature, quality, and extent of non-advisory services, if any, to be provided to the fund by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

32  Small Cap Value Fund | Annual report 

 


Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets, and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, extent, and quality of services. Among the information received by the Board from the Advisor relating to the nature, extent, and quality of services provided to the fund, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the fund’s compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the fund, including, but not limited to, general supervision of and coordination of the services provided by the Subadvisor, and is also responsible for monitoring and reviewing the activities of the Subadvisor and other third-party service providers.

In considering the nature, extent, and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationship, the Advisor’s oversight and monitoring of the Subadvisor’s investment performance and compliance programs, such as the Subadvisor’s compliance with fund policies and objectives, review of brokerage matters, including with respect to trade allocation and best execution and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the fund;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the fund; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

Annual report | Small Cap Value Fund  33 

 


The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the fund.

Investment performance. In considering the fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the fund’s performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the fund’s performance;

(b) considered the comparative performance of an applicable benchmark index;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of fund data; and

(d) took into account the Advisor’s analysis of the fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally.

The Board noted that the fund underperformed its benchmark index and peer group average for the one-year period ended December 31, 2013 and outperformed its benchmark index and peer group average for the three- and five-year periods ended December 31, 2013.

The Board noted the fund’s favorable performance relative to the benchmark index and to the peer group for the three- and five-year periods. The Board concluded that the fund’s performance has generally outperformed the historical performance of comparable funds and the fund’s benchmark index.

Fees and expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data, including, among other data, the fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the fund. The Board considered the fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the fund’s ranking within a broader group of funds. In comparing the fund’s contractual and net management fees to those of comparable funds, the Board noted that such fees include both advisory and administrative costs.

The Board noted that net management fees and total expenses for the fund are higher than the peer group median. The Board took into account management’s discussion of the fund’s expenses, including underlying fund expenses. The Board also took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor pays the subadvisory fee, and that such fees are negotiated at arm’s length with respect to the Subadvisor. In addition, the Board took into account that management had agreed, effective July 1, 2014, to implement an overall fee waiver across the complex, including the fund, which is discussed further below. The Board also noted actions taken over the past several years to reduce the fund’s operating expenses. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to the fund and that the fund has breakpoints in its contractual management fee schedule that reduces management fees as assets increase. The Board reviewed information provided by the Advisor concerning the investment advisory fee charged by the Advisor or one of its advisory affiliates to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to the fund and the services they provide to other comparable clients or funds. The Board concluded that the advisory fee paid with respect to the fund is reasonable.

34  Small Cap Value Fund | Annual report 

 


Profitability/indirect benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates with respect to the fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain funds of the Trust and noted that these tax benefits, which are not available to participants in qualified retirement plans under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the fund on a cost basis pursuant to an administrative services agreement;

(g) noted that affiliates of the Advisor provide transfer agency services and distribution services to the fund, and that the fund’s distributor also receives Rule 12b-1 payments to support distribution of the fund;

(h) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the fund;

(i) noted that the subadvisory fee for the fund is paid by the Advisor and is negotiated at arm’s length; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to the fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates from their relationship with the fund was reasonable and not excessive.

Economies of scale. In considering the extent to which economies of scale would be realized as the fund grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for the fund and each of the other John Hancock funds in the complex (except for those discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement):

The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion

Annual report | Small Cap Value Fund  35 

 


and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are the funds of funds in the complex, which benefit from such overall management fee waiver through their investment in underlying portfolios that include Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the fund’s advisory fee structure and concluded that: (i) the fund’s fee structure contains breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees for the fund; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the fund to benefit from economies of scale if the fund grows. The Board also took into account management’s discussion of the fund’s advisory fee structure; and

(c) the Board also considered the effect of the fund’s growth in size on its performance and fees. The Board also noted that if the fund’s assets increase over time, the fund may realize other economies of scale.

Approval of Subadvisory Agreement

In making its determination with respect to approval of the Subadvisory Agreement, the Board reviewed:

(1) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of the fund and comparative performance information relating to an applicable benchmark index and comparable funds;

(3) the subadvisory fee for the fund, including any breakpoints, and to the extent available, comparable fee information prepared by an independent third party provider of fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and Subadvisor.

Nature, extent, and quality of services. With respect to the services provided by the Subadvisor, the Board received information provided to the Board by the Subadvisor, including the Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered the Subadvisor’s current level of staffing and its overall resources, as well as received information relating to the Subadvisor’s compensation program. The Board reviewed the Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the fund. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed the Subadvisor’s regulatory history, including whether it was involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of the Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisor and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisor and procedures reasonably designed to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisor.

36  Small Cap Value Fund | Annual report 

 


The Board considered the Subadvisor’s investment process and philosophy. The Board took into account that the Subadvisor’s responsibilities include the development and maintenance of an investment program for the fund that is consistent with the fund’s investment objective, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to the Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor compensation. In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the fund, the Board noted that the fees under the Subadvisory Agreement are paid by the Advisor and not the fund.

The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with the Subadvisor, which is not affiliated with the Advisor, and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the Subadvisor) of any material relationships, if any, with respect to the Subadvisor, which include arrangements in which the Subadvisor or its affiliates provide advisory, distribution, or management services in connection with financial products sponsored by the Advisor or its affiliates, and may include other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interest the Advisor might have in connection with the Subadvisory Agreement.

In addition, the Board considered other potential indirect benefits that the Subadvisor and its affiliates may receive from the Subadvisor’s relationship with the fund, such as the opportunity to provide advisory services to additional funds in the John Hancock fund complex and reputational benefits.

Subadvisory fee. The Board considered that the fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to the Subadvisor. As noted above, the Board also considered the fund’s subadvisory fee as compared to similarly situated investment companies deemed to be comparable to the fund as included in the report prepared by the independent third party provider of fund data, to the extent available. The Board noted that the limited size of the peer group was not sufficient for comparative purposes. The Board also took into account the sub-advisory fee paid by the Advisor to the Subadvisor with respect to the fund to fees charged by the Subadvisor to manage other subadvised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor performance. As noted above, the Board considered the fund’s performance as compared to the fund’s peer group and the benchmark index and noted that the Board reviews information about the fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisor. The Board was mindful of the Advisor’s focus on the Subadvisor’s performance. The Board also noted the Subadvisor’s long-term performance record for similar accounts, as applicable.

Annual report | Small Cap Value Fund  37 

 


The Board’s decision to approve the Subadvisory Agreement was based on a number of determinations, including the following:

(1) the Subadvisor has extensive experience and demonstrated skills as a manager;

(2) the performance of the fund is has generally outperformed the historical performance of comparable funds and the fund’s benchmark index;

(3) the subadvisory fee is reasonable in relation to the level and quality of services being provided; and

(4) subadvisory fee breakpoints are reflected as breakpoints in the advisory fees for the fund in order to permit shareholders to benefit from economies of scale if the fund grows.

* * * 

 

Based on the Board’s evaluation of all factors that the Board deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and the Subadvisory Agreement would be in the best interest of the fund and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement for an additional one-year period.

 

38  Small Cap Value Fund | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, 
Emerson Investment Management, Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. 
(formerly IBEX Capital Markets, Inc.) (financial services company) (1997–2011); Director, Stifel Financial 
(since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut River 
Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).   
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and 
since 2012) and Chairperson of the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and 
Chairperson of the Board (since 2005), John Hancock Variable Insurance Trust; Trustee and Chairperson 
of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); 
Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System 
and former President of the University of Texas, Austin, Texas; Director, LIN Television (since 2009); 
Chairman (since 2009) and Director (since 2006), Lincoln National Corporation (insurance); Director, 
Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, 
Inc. (until 2007); former Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); 
former Advisory Director, JP Morgan Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009). 
 
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).     

 

Annual report | Small Cap Value Fund  39 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2008).     
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and 
John Hancock Funds II (since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The 
Barnes Group (since 2010); Associate Professor, The Wallace E. Carroll School of Management, Boston 
College (retired 2013).     
 
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). 
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director 
and President, Greenscapes of Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First 
American Bank (until 2010); Managing Director, Jon James, LLC (real estate) (since 2000); Director, 
First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and 
Vice Chairperson of the Board, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and 
John Hancock Funds II (since 2012).     

 

40  Small Cap Value Fund | Annual report 

 


Independent Trustees (continued)     
 
Name, Year of Birth  Trustee  Number of John 
Position(s) held with Fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The Moorings, Inc. (nonprofit continuing care 
community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
Name, year of birth  Trustee  Number of John 
Position(s) held with fund  of the  Hancock funds 
Principal occupation(s) and other  Trust  overseen by 
directorships during past 5 years  since1  Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General 
Manager, U.S. Division, Manulife Financial Corporation (since 2012); President and Chief Executive 
Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, including prior positions). 
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock 
Funds II (since 2012).     
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The 
Manufacturers Life Insurance Company (since 2009); Chairman and Chief Executive Officer, Manulife 
Asset Management (since 2001, including prior positions); Director (since 2006), and President and 
Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).     
 
 
Principal officers who are not Trustees     
 
Name, year of birth    Officer 
Position(s) held with fund    of the 
Principal occupation(s) and other    Trust 
directorships during past 5 years    since 
 
Andrew G. Arnott, Born: 1971    2009 
President     
Senior Vice President, John Hancock Financial Services (since 2009); 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 
(effective 3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable 
Insurance Trust, and John Hancock Funds II (since 2007, including prior positions).   

 

Annual report | Small Cap Value Fund  41 

 


Principal officers who are not Trustees (continued)   
 
Name, Year of Birth  Officer 
Position(s) held with Fund  of the 
Principal occupation(s) and other  Trust 
directorships during past 5 years  since 
 
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 funds3 and John Hancock Variable   
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions).   

 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

42  Small Cap Value Fund | Annual report 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisor 
Craig Bromley†  Wellington Management Company LLP 
Peter S. Burgess*   
William H. Cunningham  Principal distributor 
Grace K. Fey  John Hancock Funds, LLC 
Theron S. Hoffman*   
Deborah C. Jackson  Custodian 
Hassell H. McClellan  State Street Bank and Trust Company 
Gregory A. Russo   
Warren A. Thomson†  Transfer agent 
  John Hancock Signature Services, Inc. 
Officers   
Andrew G. Arnott  Legal counsel 
President  K&L Gates LLP 
   
John J. Danello  Independent registered 
Senior Vice President, Secretary,  public accounting firm 
and Chief Legal Officer  PricewaterhouseCoopers LLP 
   
Francis V. Knox, Jr.   
Chief Compliance Officer   
   
Charles A. Rizzo   
Chief Financial Officer   
   
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The fund’s proxy voting policies and procedures, as well as the fund’s proxy voting record for the most recent twelve-month period ended June 30, are available free of charge on the Securities and Exchange Commission (SEC) 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  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Small Cap Value Fund  43 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com

 
 
This report is for the information of the shareholders of John Hancock Small Cap Value Fund.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  439A 8/14 
MF198774  10/14 

 




John Hancock Funds II

Annual report — Table of contents

Manager’s commentary and fund performance (See below for each fund’s page #) 3
Shareholder expense example 45
Portfolio of investments (See below for each fund’s page #) 50
Statements of assets and liabilities 246
Statements of operations 257
Statements of changes in net assets 268
Financial highlights 275
Notes to financial statements 284
Report of independent registered public accounting firm 348
Federal tax information 349
Evaluation of advisory and subadvisory agreements by the board of trustees 350
Appendix A 354
Trustees and officers information 365
For more information 369

 

Manager’s commentary & Portfolio of Manager’s commentary & Portfolio of
Fund fund performance investments Fund fund performance investments
Active Bond Fund 4 50 Lifestyle II Balanced Portfolio 25 130
All Cap Core Fund 5 69 Lifestyle II Conservative Portfolio 26 130
Alpha Opportunities Fund 6 72 Lifestyle II Growth Portfolio 27 131
Asia Pacific Total Return Bond Fund 7 76 Lifestyle II Moderate Portfolio 28 131
Blue Chip Growth Fund 8 79 Mid Cap Stock Fund 29 132
Capital Appreciation Fund 9 81 Mid Value Fund 30 134
Capital Appreciation Value Fund 10 83 Real Estate Equity Fund 31 136
Core Bond Fund 11 87 Real Estate Securities Fund 32 137
Equity-Income Fund 12 94 Real Return Bond Fund 33 138
Fundamental Global Franchise Fund 13 96 Science & Technology Fund 34 140
Global Bond Fund 14 97 Short Term Government Income Fund 35 142
Global Equity Fund 15 103 Small Cap Growth Fund 36 143
Global Real Estate Fund 16 104 Small Cap Opportunities Fund 37 145
Health Sciences Fund 17 105 Small Company Growth Fund 38 156
High Yield Fund 18 107 Small Company Value Fund 39 158
International Growth Opportunities Fund 19 114 Spectrum Income Fund 40 161
International Growth Stock Fund 20 116 Strategic Equity Allocation Fund 41 193
International Small Cap Fund 21 117 Total Return Fund 42 230
International Value Fund 22 118 U.S. High Yield Bond Fund 43 236
Investment Quality Bond Fund 23 120 Value Fund 44 241
Lifestyle II Aggressive Portfolio 24 130      

 

2

 


John Hancock Funds II

Manager’s commentary and fund performance

Fund performance

In the following pages we have set forth information regarding the performance of each fund of John Hancock Funds II (the Trust). There are several ways to evaluate a fund’s historical performance. One can look at the total percentage change in value, the average annual percentage change, or the growth of a hypothetical $10,000 investment. With respect to all performance information presented, it is important to understand that past performance does not guarantee future results. Return and principal fluctuate, and shares, when redeemed, may be worth more or less than their original cost.

Performance tables

The performance tables show two types of total return information: cumulative and average annual total returns. A cumulative total return is an expression of a fund’s total change in share value in percentage terms over a set period of time—one, five, and ten years (or since the fund’s inception if less than the applicable period). An average annual total return takes the fund’s cumulative total return for a time period greater than one year and shows what would have happened if the fund had performed at a constant rate each year. The tables show all cumulative and average annual total returns, net of fees and expenses of the Trust, but do not reflect the expenses of any insurance company separate accounts (including a possible contingent deferred sales charge) that may invest in the funds as applicable. If these were included, performance would be lower.

Graph—Change in value of $10,000 investment and comparative indices

The performance graph for each fund shows the change in value of a $10,000 investment over the life or ten-year period of each fund, whichever is shorter. Each fund’s performance is compared with the performance of one or more broad-based securities indices as a “benchmark.” All performance information includes the reinvestment of dividends and capital gain distributions, as well as the deduction of ongoing management fees and fund operating expenses. The benchmarks used for comparison are unmanaged and include reinvestment of dividends and capital gains distributions, if any, but do not reflect any fees or expenses. Funds that invest in multiple asset classes are compared with a customized benchmark. This benchmark is comprised of a set percentage allocation from each of the asset classes in which the fund invests.

Portfolio manager’s commentary

Finally, we have provided a commentary by each portfolio manager regarding each fund’s performance during the period ended August 31, 2014. The views expressed are those of the portfolio manager as of August 31, 2014, and are subject to change based on market and other conditions. Information about a fund’s holdings, asset allocation, or country diversification is historical and is no indication of future fund composition, which will vary. Information provided in this report should not be considered a recommendation to purchase or sell securities. The funds are not insured by the FDIC, are not a deposit or other obligation of, or guaranteed by, banks, and are subject to investment risks, including loss of principal amount invested. For a more detailed discussion of the risks associated with the funds, see the funds’ prospectuses.

“Standard & Poor’s,” “Standard & Poor’s 500,” “S&P 500,” and “S&P MidCap 400 Index” are trademarks of The McGraw-Hill Companies, Inc. “Russell 1000,” “Russell 2000,” “Russell 3000,” and “Russell Midcap” are trademarks of Frank Russell Company. “Wilshire 5000” is a trademark of Wilshire Associates. “EAFE” and “MSCI” are trademarks of MSCI, Inc. “Barclays” is a registered trademark of Barclays Bank PLC. ”Lipper“ is a registered trademark of Reuters S.A. None of the funds in the Trust are sponsored, endorsed, managed, advised, sold, or promoted by any of these companies, and none of these companies make any representation regarding the advisability of investing in the Trust.

3

 


Active Bond Fund
Subadvisors: Declaration Management & Research LLC and John Hancock Asset Management a division of Manulife Asset Management (US) LLC
(John Hancock Asset Management)
Portfolio Managers: Peter Farley, CFA, Jeffrey N. Given, Howard C. Greene, and Joshua Kuhnert, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek income and capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in a diversified mix of debt securities and instruments.


Portfolio Composition* % of Total
Financials 19.1
U.S. Government Agency 17.6
Collateralized Mortgage Obligations 17.2
Asset Backed Securities 6.8
U.S. Government 6.5
Energy 6.5
Industrials 4.6
Consumer Discretionary 3.7
U.S. Government Agency Collateralized  
Mortgage Obligations 3.5
Utilities 2.9
Telecommunication Services 2.6
Materials 2.5
Health Care 1.8
Consumer Staples 1.8
Information Technology 0.5
Foreign Government Obligations 0.2
Municipal Bonds 0.1
Short-Term Investments & Other 2.1

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $16,828.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Active Bond Fund Class NAV shares returned 8.41% and the benchmark, the Barclays U.S. Aggregate Bond Index, returned 5.66%.

Environment ►The bond market delivered healthy positive returns for the year thanks to the steady downward movement for long term interest rates. Short rates moved slightly higher anticipating the first Fed Funds hike by the U.S. Federal Reserve Board (“Fed”). As expected though, the economic recovery is not strong enough yet for the Fed to make aggressive moves besides ending the Quantitative Easing program. Although economic growth has not been robust, unemployment has trended lower, inflation remains tame, and corporate profits are healthy.

Declaration Management & Research, LLC

Commentary

In the investment opportunity set for the fund, corporate bonds were the best performers, especially longer maturity bonds. Agency mortgage backed securities (MBS), commercial MBS and asset backed securities were all solid, with MBS outperforming. Even sovereign bonds posted very strong returns. There were bouts of weakness in emerging markets, but the global bond market as a whole has regained some resilience and is much less prone now to volatility on news of isolated problems. The fund outperformed the benchmark thanks to asset allocation and security selection. Underweighting U.S. treasuries and overweighting credit spread products led to strong outperformance. In particular, our overweights in commercial MBS interest-only bonds, real estate investment trusts and insurance products were our best performing positions relative to the index. While we gave up some performance on yield curve exposure, we are comfortable with the Fund’s curve positioning looking forward.

John Hancock Asset Management Commentary

U.S. bonds posted positive returns for the year ended August 31, with both high-yield and investment-grade corporate bonds materially leading the pack, while the Treasury sector was the laggard. Returns varied during the period, as interest rates ebbed and flowed with changing economic outlooks and Fed policy expectations. There was little change in short-term interest rates early in 2014, although the yield curve flattened as a result of a decline in long-term interest rates. The decline in interest rates was, in turn, largely in response to the Fed reducing its monthly purchases of Treasury bonds and mortgage-backed securities (MBS), which left investors believing that a federal funds rate hike was inevitable. Later in the period, economic growth continued, albeit at a relatively slow pace, as observed in key indicators for housing and consumer spending, among others. Investors appeared to be receptive of the Fed’s measured approach to tapering its monthly asset purchases. Interest rates increased slightly at the short end of the yield curve, but declined in the mid and long areas of the curve. Spreads for corporate bonds and government agency MBS tightened as well. The fund’s asset allocation and security selection contributed to its relative performance over the period. From a sector perspective, the fund’s position across the financials sector contributed to its performance, as did its holdings in high-yield securities and commercial and non-agency residential MBS. Conversely, the fund’s yield curve positioning detracted modestly from performance, as did a small number of various individual securities across some of the emerging markets sectors.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Active Bond Fund Class 1 (began 10/15/05) 8.25% 7.48% — 6.04% 43.44% — 68.28%
Active Bond Fund Class NAV (began 10/27/05) 8.41% 7.54% — 6.16% 43.83% — 69.68%
Barclays U.S. Aggregate Bond Index (10/15/05)3,4 5.66% 4.48% — 5.04% 24.50% — 54.79%
Barclays U.S. Aggregate Bond Index (10/27/05)3,4 5.66% 4.48% — 5.10% 24.50% — 55.32%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Active Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares — 0.68% and Class NAV shares — 0.63%.

4

 


All Cap Core Fund
Subadvisor: QS Investors, LLC
Portfolio Managers: Robert Wang and Russell Shtern, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Under normal market conditions, the fund invests in common stocks and other equity securities within all asset classes (small-, mid- and large-cap) of those within the Russell 3000 Index.


Sector Weighting* % of Total
Information Technology 19.6
Financials 15.8
Health Care 15.1
Industrials 12.1
Energy 10.3
Consumer Discretionary 10.3
Consumer Staples 6.2
Materials 4.8
Telecommunication Services 2.1
Utilities 2.0
Short-Term Investments & Other 1.7

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the All Cap Core Fund Class NAV shares returned 22.18% and the benchmark, the Russell 3000 Index, returned 24.74%.

Environment ►Over the last 12 months, we have seen volatility creeping away from underreaction and towards its historical median as global headlines concerned investors. Over the last six months, there was a pull back to lower volatility levels. Many economic outlook and economic strength indicators have held steady.

Detractors relative to the benchmark were significant in the consumer discretionary sector. Positions in Best Buy Company and GameStop Corp. were primarily responsible for the relative shortfall. Within information technology, an underweight position in the computer software and services also detracted from relative performance. Underweight positions in Google, Inc. and Facebook, Inc. (which both posted strong gains), and an overweight position in LinkedIn Corp. (which fell) and Manhattan Associates, Inc. (which pulled back late in the period) were primarily responsible for the relative shortfall. Health care detracted, largely due to the negative return from WellCare Health Plans, Inc.

The strongest contributions to relative performance for the period came from overweight positions in strong-performing industries. These included the airlines, notably Southwest Airlines Company and US Airways Group, Inc. The aerospace industry also added value, as evidenced by positions in Lockheed Martin Corp. and Alliant Techsystems, Inc. Stock selection was important in the technology hardware companies. Relative returns were boosted by Hewlett Packard Company. A position in Lexmark International, Inc. also provided a significant contribution.

For the 12-month period ending August 31, 2014, we’ve seen mixed performance from our various style categories. Our quantitative model is favoring growth and sentiment factors. But 2014 has been a tough year for these two styles, with the market consistently not rewarding momentum since the start of the year. However, there were some signs in early July and August that the market was beginning to reverse this trend and begin to reward momentum and growth factors. For the 12 month rolling period, valuation factors are the only style category with positive contribution to excess returns, while quality and growth factors were detractors.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
All Cap Core Fund Class NAV (began 4/28/06) 22.18% 15.65% — 5.99% 106.88% — 62.51%
Russell 3000 Index3,4 24.74% 17.22% — 7.62% 121.35% — 84.47%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the All Cap Core Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 3000 Index is an unmanaged index of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.83%.

5

 


Alpha Opportunities Fund
Subadvisor: Wellington Management Company, LLP
Portfolio Managers: Kent M. Stahl, CFA and Gregg R. Thomas, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term total return. The fund employs a multiple sleeve structure, which means the fund has several components that are managed separately in different investment styles. The fund seeks to obtain its objective by combining these different components into a single fund.


Sector Weighting* % of Total
Information Technology 20.9
Industrials 16.4
Health Care 15.2
Consumer Discretionary 15.1
Financials 12.0
Energy 7.8
Consumer Staples 5.3
Materials 3.9
Utilities 0.9
Telecommunication Services 0.4
Short-Term Investments & Other 2.1

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Alpha Opportunities Fund Class NAV shares returned 21.69% and the benchmark, the Russell 3000 Index, returned 24.74%.

Environment ►During the year, U.S. equities reached all-time highs early in the period. Despite political turmoil, stocks continued to climb during the fourth quarter of 2013, amid accommodative rhetoric from then U.S. Federal Reserve (Fed) chair nominee Janet Yellen. After finishing 2013 as their best year since 1997, U.S. stocks began 2014 with their worst month in nearly two years. Worries about emerging markets dominated headlines throughout the quarter. Economic and political developments sparked risk aversion across global markets, and a slowdown in China and other emerging markets overshadowed a fairly benign domestic environment. Equities rallied during the second quarter amid renewed signs of life in the housing market and the best payroll gain in more than two years. As expected, the Fed announced further reductions in its asset purchase program. Despite solid corporate earnings and better-than-expected second quarter economic growth, U.S. equities fell in July. Fear gripped the market as heightened geopolitical risks, a potential Portuguese banking crisis, and worries over Fed tightening dominated.

Weak security selection was the primary driver of underperformance during the period, particularly within the energy, industrials, and consumer discretionary sectors. Partially offsetting weak relative results was positive selection in the information technology, health care, and financials sectors. Sector allocation decisions, a residual of the bottom-up stock selection process of the underlying managers, also modestly detracted from relative performance. An overweight to consumer discretionary and a modest residual cash position in a strong performing equity market was a drag on relative results. Underweight positions in consumer staples and financials helped relative performance and partially offset the negative factors.

Top detractors from relative performance during the period included oil exploration and production company Cobalt International Energy, Inc., an underweight to designer, manufacturer, and retailer of personal electronic products Apple, Inc., and our position in manufacturer of wireless integrated circuits ParkerVision, Inc.

Top relative contributors during the period included U.K.-based multinational pharmaceutical company AstraZeneca PLC, leading developer, supplier, and solar installation company SunEdison, Inc., and flash memory semiconductor manufacturer Micron Technology, Inc.

At the end of the period, stock-by-stock decisions resulted in the industrials, consumer discretionary and information technology sectors being the fund’s largest overweights. The financials sector was the fund’s largest underweight, followed by consumer staples, utilities, and telecommunication services.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Alpha Opportunities Fund Class NAV (began 10/7/08) 21.69% 16.22% — 15.22% 112.05% — 130.71%
Russell 3000 Index3,4 24.74% 17.22% — 14.40% 121.35% — 121.26%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Alpha Opportunities Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 3000 Index is an unmanaged index of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 1.01%.

6

 


Asia Pacific Total Return Bond Fund (formerly Asia Total Return Bond Fund)
Subadvisor: John Hancock Asset Management
Portfolio Managers: Neal Capecci, Luc Froehlich, and Endre Pedersen

INVESTMENT OBJECTIVE & POLICIES ►The fund seeks to maximize total return. Under normal market conditions, the fund invests at least 80% of net assets (plus borrowings for investment purposes) in a diversified portfolio of bonds issued by governments, government agencies, international organizations issuing supranational bonds, and corporate issuers in Asia. Asia means those countries that are located on the Asian continent or are in the Asian region, including Australia and New Zealand.


Portfolio Composition* % of Total
Foreign Government Obligations 37.8
Financials 36.9
Utilities 4.7
Energy 4.3
Consumer Discretionary 3.1
Consumer Staples 2.7
Industrials 2.3
Materials 2.3
Telecommunication Services 2.0
Other 3.9

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Asia Pacific Total Return Bond Fund, Class NAV shares returned 8.12% and the benchmark, a blend of 50% J.P. Morgan Asia Credit Index and 50% J.P. Morgan Emerging Local Markets Plus Asia Index, returned 7.95%.

Environment ►Asian bond markets gained during the past 12 months amid falling U.S. Treasury yields, improving economic data in Asia and renewed capital inflows. The Federal Reserve began lowering its monthly asset purchases in January amid improved labor market conditions, but reiterated interest rates would likely remain low for an extended period. Treasuries were volatile; after reaching 3.03% in December, 10-year Treasuries gradually declined to 2.34% by August. The European Central Bank announced stimulus measures to cut deposit rates, which sent German Bund yields to historical lows. Geopolitical tensions in Russia, Ukraine and the Middle East remained a market concern in 2014.

China’s manufacturing Purchasing Managers’ Index remained above 50 over the period, indicating some expansion. The market was positive on reforms initiated during the period. Property prices continued to cool down in 2014. In June, the People’s Bank of China reduced the reserve requirement for several mid-sized banks to support growth. In India, Narendra Modi became the country’s 15th Prime Minister and his government was expected to implement a series of measures to bolster the economy. Bank Indonesia tightened its monetary policy as inflation surged. Thailand’s prolonged political uncertainty weakened business and consumer sentiment. The Thai military declared martial law in May, which was followed by a coup. S&P raised the credit rating of the Philippines to BBB, one year after the upgrade to investment grade status.

All major Asian currencies recorded positive returns against the US dollar, except for the Japanese yen. The Indian rupee and Korean won were the best performers, supported by expectations of pro-growth policies from India’s new Prime Minister and continued capital inflow in Asia.

The fund’s main performance contributions came from yield curve positioning, security selection, and local market allocation. Overall, currency allocation contributed positively to the performance. The fund’s overweight in Australian and New Zealand dollars contributed positively, while the underweight in the Indian rupee and Singapore dollar detracted from the gains. Within interest rate markets, the fund’s overweight in Indonesia, Singapore, and Thailand helped, while an underweight in U.S. dollar interest rate duration detracted. Lastly, security selection within U.S. dollar denominated Asian bonds contributed positively to relative results.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Asia Pacific Total Return Bond Fund Class NAV (began 1/16/13) 8.12% — — 0.01% — — 0.01%
J.P. Morgan Asia Credit Index3,4 11.70% — — 3.64% — — 5.99%
J.P. Morgan Emerging Local Markets Plus Asia Index4,5 4.31% — — –0.09% — — –0.14%
Combined Index4,6 7.95% — — 1.78% — — 2.90%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Asia Pacific Total Return Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 J.P. Morgan Asia Credit Index measures the performance of Asia ex Japan USD denominated bond market.
4 It is not possible to invest directly in an index.
5 J.P. Morgan Emerging Local Markets Plus Asia Index tracks total returns for local-currency-denominated money market instruments in over 20 emerging markets countries.
6 Combined Index is 50% J.P. Morgan Asia Credit Index and 50% J.P. Morgan Emerging Local Markets Plus Asia Index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares the net expense is 0.86% and the gross expense is 0.89%.

7

 


Blue Chip Growth Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: Larry J. Puglia

INVESTMENT OBJECTIVE & POLICIES ►To provide long-term growth of capital. Current income is a secondary objective. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of large- and medium-sized blue chip growth companies that are considered well established in their industries and have the potential for above-average earnings growth.


Sector Weighting* % of Total
Consumer Discretionary 25.9
Information Technology 21.5
Health Care 20.4
Industrials 13.3
Financials 7.5
Energy 4.4
Materials 3.6
Consumer Staples 2.0
Telecommunication Services 0.4
Short-Term Investments & Other 1.0

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $22,745.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Blue Chip Growth Class NAV shares returned 28.11% and the benchmark, the S&P 500 Index, returned 25.25%.

Environment ►U.S. equities posted double-digit gains for the twelve-month period ended August 31, 2014. During the period, the housing sector seemed to regain momentum, after a slight pause, amid appealing prices and mortgage rates that remained near historically low levels. A sharp correction in many highly valued growth stocks in March and April made selected stocks more attractive; however, some of those stocks have rebounded, and their valuations again seem excessive. Currently, high valuations are impediments to continued stock gains, which certainly argues that the next year is unlikely to repeat recent strong performance. However, a combination of reasonable valuations for selected stocks, rising but still favorable interest rates, and improving corporate profits could offset various risks and drive continued positive stock performance.

Stock selection was the primary driver of relative performance, while sector weighting was also positive. The health care sector made the most significant contribution to relative returns, led by companies in the biotechnology industry. Gilead Sciences, Inc. continues to perform well, driven by sales of its HIV treatments, which are some of the most widely prescribed treatments in the market. In addition, the company is seeing strong sales of its hepatitis C treatment, Sovaldi, which received FDA approval in December. Stock selection in the financials sector aided relative performance due primarily to positions in the real estate investment trusts and banking industries.

Conversely, the consumer discretionary sector detracted the most from relative performance due to unfavorable sector allocation. Companies in the textiles, apparel and luxury goods industry and also the media industry dampened relative results within the sector. In industrials, stock picks in the aerospace and defense and road and rail industries detracted from relative sector performance. Shares of aerospace and defense company Precision Castparts Corp. moved lower during the first half of 2014 as the company felt the negative effects of weakness in the defense division. We believe the stock was oversold during the period, and our long-term thesis for the company remains intact.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Blue Chip Growth Fund Class 1 (began 10/15/05) 28.06% 18.84% — 9.70% 137.01% — 127.45%
Blue Chip Growth Fund Class NAV (began 10/15/05) 28.11% 18.89% — 9.75% 137.54% — 128.41%
S&P 500 Index3,4 25.25% 16.88% — 8.35% 118.10% — 103.88%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Blue Chip Growth Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely traded common stocks.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.86% and Class NAV shares – 0.81%.

8

 


Capital Appreciation Fund
Subadvisor: Jennison Associates LLC
Portfolio Managers: Michael A. Del Balso, Kathleen A. McCarragher, and Spiros “Sig” Segalas

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Under normal market conditions, the fund invests at least 65% of the fund’s total assets in equity-related securities of companies that exceed $1 billion in market capitalization and that are believed to have above-average growth prospects.


Sector Weighting* % of Total
Information Technology 30.9
Consumer Discretionary 28.9
Health Care 19.7
Industrials 6.4
Energy 5.2
Consumer Staples 3.6
Financials 2.3
Materials 1.8
Short-Term Investments & Other 1.2

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $21,358.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Capital Appreciation Fund Class NAV shares returned 28.49% and the benchmark, the Russell 1000 Growth Index, returned 26.29%.

Environment ►The market’s advance in the period reflected sustained improvement in the economic outlook. Corporate profits remained strong, housing and employment indicators improved, and consumer confidence rose. The U.S. Federal Reserve began tapering its quantitative-easing program in January 2014, signaling confidence in the health of U.S. economic activity and labor market conditions. U.S. GDP contracted in early 2014, largely because of severe winter weather, before quickly rebounding. Conditions in Europe stabilized, but Ukraine-Russia tensions created new challenges.

Health care holdings were strong contributors to portfolio returns as stock selection and an overweight relative to the benchmark were beneficial. Illumina Inc.’s earnings and revenue reflected robust demand for the company’s gene-sequencing technology. Innovative applications of the technology are only beginning to be explored, suggesting future growth. Allergan, Inc. advanced on a takeover bid. The stock could benefit either from further bids or its own efforts to manage spending more efficiently and redeploy cash in ways that benefit shareholders. Gilead Sciences Inc.’s strength reflected impressive sales of hepatitis C drug Sovaldi. A pill taken once a day, Sovaldi has a higher cure rate, a shorter duration of treatment, and fewer side effects than previous treatments.

Information technology holdings were major contributors to the fund’s absolute return, although the sector detracted on a relative basis. Some of the biggest declines were from FireEye, Inc. and Rackspace Hosting, Inc. Rackspace was sold prior to year-end. Security software vendor FireEye declined with a broad sell-off of high-multiple software stocks in March and April; the company’s fundamentals remain intact. Rackspace’s difficulties reflected business execution issues and concerns about the commoditization of its business. The company provides Web- and cloud-hosting services. Elsewhere in technology, Apple, Inc. and Facebook, Inc. posted gains. Apple’s revenue and earnings strength reflected expanding global acceptance of its platform, especially in China. Facebook reported strong financial results and healthy user metrics. The world’s preeminent Internet-based social network has successfully implemented its mobile interface, and monetization of both mobile and desktop has improved. In consumer staples, Whole Foods Market was hurt by intensifying competition in the market for organic and natural foods; this position was also sold.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Capital Appreciation Fund Class 1 (began 10/15/05) 28.39% 17.12% — 8.92% 120.36% — 113.58%
Capital Appreciation Fund Class NAV (began 10/15/05) 28.49% 17.17% — 8.98% 120.85% — 114.56%
Russell 1000 Growth Index3,4 26.29% 17.82% — 9.30% 127.06% — 120.19%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Capital Appreciation Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 1000 Growth Index is an unmanaged index composed of the Russell 1000 Index securities that have a greater-than-average growth orientation.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.79% and Class NAV shares – 0.74%.

9

 


Capital Appreciation Value Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: David R. Giroux

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation. Under normal market conditions, the fund invests primarily in common stocks of established U.S. companies that have above-average potential for capital growth.


Portfolio Composition* % of Total
Financials 14.4
Health Care 13.7
Industrials 12.1
Consumer Discretionary 11.5
Energy 9.6
Consumer Staples 7.3
Information Technology 7.2
Utilities 5.5
Telecommunication Services 5.5
U.S. Government 2.6
Asset Backed Securities 0.6
Materials 0.4
Short-Term Investments & Other 9.6

 

* As a percentage of net assets.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Capital Appreciation Value Fund Class NAV shares returned 17.68% and the benchmark, the S&P 500 Index, returned 25.25%.

Environment ►U.S. equities produced excellent returns over the last year on the back of accommodative U.S. Federal Reserve (Fed) policy, continued economic improvement, generally favorable corporate earnings, and an increase in merger and acquisition activity. Concerns about the U.S. government shutdown and the direction of Fed policy weighed on stocks earlier in the period, and geopolitical uncertainty in Iraq and Ukraine has more recently served as an overhang, but equity market performance has proven resilient in the face of these challenges. In this environment, the S&P 500 Index posted strong, double-digit returns. All sectors ended in positive territory, led by the information technology, health care, materials, and industrials sectors. Telecommunication services and consumer staples stocks trailed the overall index.

From an asset class perspective, the fund’s stock holdings performed the best and outperformed the S&P 500 Index. The bond positions posted modest results for the period, marginally underperforming the Barclays U.S. Aggregate Index. The majority of portfolio underperformance relative to the all-equity index was due to asset allocation.

Among equities, the leading contributor to relative returns was the health care sector due to stock selection and an overweight position. Companies in the pharmaceuticals and life sciences industries drove relative returns in the sector. Stock selection in the financials and consumer discretionary sectors also supported relative performance.

The leading detractor from relative performance in the equity portion of the fund was stock selection in the industrials sector, particularly in the aerospace and defense industry. Stock choices in the consumer staples sector also weighed on relative performance.

During the period, short call options were used in a covered call strategy to decrease exposure to underlying securities. The covered call strategy represented, on average, about 5% of the overall portfolio and generated a small positive impact on performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Capital Appreciation Value Fund Class NAV (began 1/6/11) 17.68% — — 12.69% — — 54.70%
S&P 500 Index3,4 25.25% — — 15.59% — — 69.73%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Capital Appreciation Value Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely traded common stocks.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.87%.

10

 


Core Bond Fund
Subadvisor: Wells Capital Management, Inc.
Portfolio Managers: Thomas O’Connor, CFA and Troy Ludgood

INVESTMENT OBJECTIVE & POLICIES ►To seek total return consisting of income and capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in a broad range of investment grade debt securities, including U.S. Government obligations, corporate bonds, mortgage-backed and other asset-backed securities, and money market instruments.


Portfolio Composition* % of Total
U.S. Government 30.7
U.S. Government Agency 23.2
Asset Backed Securities 12.2
Collateralized Mortgage Obligations 8.6
Financials 7.7
Energy 2.9
Consumer Discretionary 2.2
Utilities 1.6
Telecommunication Services 1.6
Health Care 1.3
Foreign Government Obligations 1.3
Information Technology 1.2
Municipal Bonds 1.1
Consumer Staples 1.0
Industrials 0.8
Materials 0.4
Short-Term Investments 2.2

 

* As a percentage of total investments.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $16,041.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Core Bond Fund Class NAV shares returned 6.29% and the benchmark, the Barclays U.S. Aggregate Bond Index returned 5.66%.

Environment ►Over the last twelve months we have seen the market digest the transition out of quantitative easing (QE) and towards an eventual normalization of U.S. monetary policy. Economic growth, while not always living up to the market’s expectations, has demonstrated a sustained and slow recovery. Geopolitical tensions have frequently dominated headlines, but ultimately have not forestalled a broad rally in risk assets.

September 2013 began with a delay in what had been widely expected as the beginning of the U.S. Federal Reserve’s (Fed) tapering and an improving global growth picture. Markets navigated a U.S. government shutdown and debt ceiling brinksmanship, continued positive signals on global economic growth, and an announcement that the Fed would begin tapering QE in January 2014. Risk assets rallied to multi-year highs. January saw a pronounced flight to safety, driven by concerns about Chinese growth, emerging market turmoil, and disappointing U.S. data, while unrest began intensifying in Ukraine. Risk assets ultimately performed well in the first quarter, as Yellen took the reins at the Fed and reaffirmed a dovish posture, and emerging markets showed signs of stabilization. The second quarter was strong, with data suggesting an improving growth picture in the U.S. and China, and central banks both in the U.S. and overseas reaffirming accommodating stances. On the geopolitical front, we saw significant deterioration in the Middle East and Ukraine in July. Stronger U.S. economic data helped drive risk assets in August.

Consistent with our investment process, security selection was the most significant contributor to the fund’s performance. Given our bottom-up process, we maintain a neutral duration. We maintain modest overweights to asset-backed securities (ABS) and commercial mortgage-backed securities (MBS), a neutral position in credit, and a modest underweight to agency MBS. The fund continues to be underweight agency debt and U.S. Treasuries.

Within agency MBS, security selection was a significant contributor, with our overweight to agency hybrid adjustable rate mortgages and pre-pay protected higher coupon bonds driving outperformance. In credit, security selection was the main contributor, and was concentrated in the telecommunication, bank, and utility subsectors. Detractors centered in the basic industry, cable, and energy subsectors. Within structured products, sector overweights to commercial MBS and ABS both contributed to performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Core Bond Fund Class 1 (began 10/15/05) 6.22% 5.21% — 5.47% 28.90% — 60.41%
Core Bond Fund Class NAV (began 10/15/05) 6.29% 5.27% — 5.52% 29.26% — 61.09%
Barclays U.S. Aggregate Bond Index3,4 5.66% 4.48% — 5.04% 24.50% — 54.79%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Core Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.67% and Class NAV shares – 0.62%.

11

 


Equity-Income Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: Brian C. Rogers, CFA, CIC

INVESTMENT OBJECTIVE & POLICIES ►To provide substantial dividend income and also long-term growth of capital. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities, with at least 65% in common stocks of well-established companies paying above-average dividends.


Sector Weighting* % of Total
Financials 18.2
Energy 14.2
Industrials 13.1
Consumer Discretionary 10.1
Information Technology 9.9
Health Care 6.2
Utilities 5.6
Materials 4.8
Consumer Staples 4.7
Telecommunication Services 3.5
Short-Term Investments & Other 9.7

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $19,242.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Equity-Income Fund Class NAV shares returned 19.25% and the benchmark, the Russell 1000 Value Index, returned 24.43%.

Environment ►U.S. equities produced excellent returns over the last year on the back of accommodative U.S. Federal Reserve (Fed) policy, continued economic improvement, generally favorable corporate earnings, and an increase in merger and acquisition activity. Concerns about the U.S. government shutdown and the direction of Fed policy weighed on stocks earlier in the period, and geopolitical uncertainty in Iraq and Ukraine has more recently served as an overhang, but equity market performance has proven resilient in the face of these challenges. In this environment, the Russell 1000 Value Index posted strong, double-digit returns. All sectors ended in positive territory, led by the information technology, materials, health care, and consumer discretionary sectors. Telecommunication services and consumer staples stocks trailed the overall index return the most.

Overall, stock selection detracted from relative performance while sector weighting was slightly positive. The leading detractor from relative performance was the consumer discretionary sector due to stock selection. Weak holiday season sales in late 2013 and growing inventories have weighed on shares of toy manufacturer Mattel, Inc. Despite recent challenges, we remain positive on the company as it has strong brands, solid international growth prospects, good management, and an attractive dividend yield. Stock choices in the information technology sector also hindered relative results, particularly in the semiconductors and semiconductor equipment industry. In the materials and health care sectors, stock selection also weighed on relative performance.

The most notable contributor to relative performance during the period was the financials sector due primarily to stock selection. Asset manager Legg Mason, Inc. has improved earnings, through increased generation of fee revenue and stabilizing assets under management. Stock choices in the industrials sector also supported relative performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Equity-Income Fund Class 1 (began 10/15/05) 19.24% 14.79% — 7.65% 99.28% — 92.42%
Equity-Income Fund Class NAV (began 10/15/05) 19.25% 14.86% — 7.70% 99.87% — 93.20%
Russell 1000 Value Index3,4 24.43% 16.62% — 7.78% 115.69% — 94.52%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Equity-Income Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 1000 Value Index is an unmanaged index containing those securities in the Russell 1000 Index with a less-than-average growth orientation.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: For Class 1 shares – 0.87% and Class NAV shares – 0.82%.

12

 


Fundamental Global Franchise Fund
Subadvisor: John Hancock Asset Management
Portfolio Managers: Walter T. McCormick, CFA, Emory W. Sanders, Jr., CFA

INVESTMENT OBJECTIVE & POLICIES ►The fund seeks to provide capital appreciation. Under normal market conditions, the fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in securities of franchise companies. A franchise company is one whose return on invested capital over a three-year period is above its cost of capital.


Sector Weighting* % of Total
Consumer Staples 42.9
Information Technology 22.1
Consumer Discretionary 21.8
Industrials 3.8
Health Care 2.4
Short-Term Investments & Other 7.0

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class A on 6/29/12 (commencement of operations) would have been valued at $13,285, with maximum sales charge and $13,984 excluding sales charges. A $10,000 investment in Class I Shares on 6/29/12 (commencement of operations) would have been valued at $14,106.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, Fundamental Global Franchise Fund Class NAV shares returned 15.62% and the benchmark, the MSCI World Index, returned 21.74%.

Environment ►Despite concern about geopolitical tensions, the timing of higher U.S. interest rates, stagnant economic growth in Europe and slowdowns in emerging markets, stock markets worldwide rallied for the reporting period. U.S. and Canadian stocks were particularly strong performers, benefiting from steadily improving economic data and rising commodity prices. Many European markets gained, buoyed by new economic stimulus measures. Emerging markets were somewhat mixed, with strong returns in countries such as India and Brazil, and weak returns in Russia and Eastern Europe.

The fund maintained its long-term focus on 20 to 30 financially sound companies with global franchises, competitive advantages and sustainable cash flows. While this strategy helps to lower volatility and mitigate downside risk in a market decline, it can also inhibit relative outperformance in the type of strong market we saw this past year.

An overweighting in the weaker-performing consumer staples sector and disappointing security selection in the consumer discretionary and industrials sectors were significant detractors from fund performance. Almost half of the fund’s net assets were in consumer staples sector, where companies tend to be less cyclical. Many of these global businesses have significant exposure to emerging markets, which hampered their results this past year. Among them was U.K.-based spirits company Diageo PLC. Other detractors from performance included food products company Danone SA in France, which saw its stock negatively impacted by an unnecessary recall of one of its infant formulas in China; the stock was also hurt by the company’s large exposure to Europe. In consumer discretionary, a sizable overweight in Germany-based athletic apparel company adidas AG detracted from performance. The stock declined as a result of weaker-than-expected sales in Europe and emerging markets, particularly Russia.

The fund gained ground versus the index from having a sizable overweight position in the top-performing information technology sector. Notable individual contributors to performance included consumer technology leader Apple, Inc., which saw better-than-expected earnings results, positive expectations for new products, a large stock buyback, and a dividend increase drive its stock sharply higher. Elsewhere, U.K.-based Imperial Tobacco Group PLC also contributed to performance, as cost cutting drove better-than-expected earnings and investors speculated that the company might be able to buy attractively priced assets from two U.S. tobacco companies that are merging.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Fundamental Global Franchise Fund Class A (began 6/29/12)3 9.30% — — 13.95% — — 32.85%
Fundamental Global Franchise Fund Class I (began 6/29/12) 15.52% — — 17.13% — — 41.06%
Fundamental Global Franchise Fund Class NAV (began 6/29/12) 15.62% — — 17.24% — — 41.34%
MSCI World Index4,5 21.74% — — 22.01% — — 54.16%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Fundamental Global Franchise Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Class A returns reflect maximum sales charge of 5%.
4 MSCI World Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
5 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class A, Class I, and Class NAV shares, the net expenses equal the gross expenses, and are 1.37%, 1.03%, and 0.90%, respectively.

13

 


Global Bond Fund
Subadvisor: Pacific Investment Management Company LLC
Portfolio Manager: Scott Mather

INVESTMENT OBJECTIVE & POLICIES ►To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in fixed-income instruments that are economically tied to at least three countries, one of which may be the United States, which may be represented by futures contracts (including related options) with respect to such securities, and options on such securities.


Portfolio Composition* % of Total
Foreign Government Obligations 46.9
Collateralized Mortgage Obligations 12.2
Financials 11.4
U.S. Government Agency 8.0
U.S. Government 7.6
Energy 1.5
Certificate of Deposit 1.2
Asset Backed Securities 1.2
Consumer Discretionary 0.7
Telecommunication Services 0.6
Consumer Staples 0.6
Industrials 0.6
Information Technology 0.3
Short-Term Investments 7.2

 

* As a percentage of total investments.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $16,087.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Global Bond Fund Class NAV shares returned 6.77% and the benchmark, the J.P. Morgan Global Government Bond Unhedged Index, returned 5.35%.

Environment ►At the beginning of the fiscal period, the U.S. Federal Reserve’s (Fed) choice to delay tapering surprised investors. The Fed also noted it would not begin raising rates until after quantitative easing (Q.E.) had been wound down. In January, the Fed began tapering its five-year Q.E. program by $10 billion a month. As expected, the Fed provided even greater assurances that the policy fed funds rate would remain near zero until signs of sustainable growth were more broadly evident.

Uncertainty and volatility increased at the start of 2014 amid geopolitical tensions and weak economic data. An uncharacteristically cold winter took a toll on economic data in the U.S., resulting in a weak first quarter (GDP declined 2.9%). Rising tensions between Russia and Ukraine led to volatile swings in financial markets, particularly in equities.

During the second half of the period, the Fed continued tapering its asset purchases and remains on track to eliminate these purchases during the fourth quarter of 2014. The European Central Bank announced new easing measures, including a historic negative rate on deposits, policy rate cuts, and targeted long-term refinancing operations to spur business lending. U.S. equities ended the fiscal year at all-time highs on the heels of central bank actions and improved second quarter economic data.

The 10-year U.S. Treasury yield fell during the period to end August at 2.34%. During this period, the U.S. Treasury yield curve flattened as the 2-year U.S. Treasury yield rose while the 30-year U.S. Treasury yield fell sharply.

The fund’s duration as of August 31, 2013 was 7.74 years, and 7.43 years as of August 31, 2014. Overall, duration strategies, including yield curve positioning and non-U.S. interest rate allocations, were positive for returns over the period. A duration underweight to developed countries, particularly the U.S., the U.K., and Canada, detracted from to returns as their interest rates fell. In contrast, exposure to emerging-market local rates, specifically in Brazil and Mexico, contributed to returns as yields fell during the reporting period.

An allocation to non-Agency mortgage-backed securities contributed to performance over the last year, benefitting from the ongoing housing recovery. Exposure within investment grade corporates added to returns as they outperformed like-duration Treasuries. An allocation to high yield corporates also contributed to returns as investors reached for higher yields. Lastly, currency positioning in both developed countries and emerging markets added to performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Global Bond Fund Class 1 (began 10/15/05) 6.76% 5.86% — 5.50% 32.94% — 60.87%
Global Bond Fund Class NAV (began 10/15/05) 6.77% 5.90% — 5.56% 33.21% — 61.68%
J.P. Morgan Global Government Bond Unhedged Index3,4 5.35% 3.01% — 4.92% 16.00% — 53.22%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Global Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 J.P. Morgan Global Government Bond Unhedged Index is an unmanaged index which measures the performance of leading government bond markets based on total return in U.S. currency, and reflects reinvestment of all applicable dividends, capital gains and interest.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.85% and Class NAV shares – 0.80%.

14

 


Global Equity Fund
Subadvisor: John Hancock Asset Management
Portfolio Managers: Paul Boyne, Doug McGraw

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation by investing at least 80% of net assets (plus borrowings for investment purposes) in a diversified portfolio of equity securities. Under normal market conditions, at least 40% of the value of the fund’s net assets will be invested in issuers domiciled outside of the United States, including emerging markets.


Sector Weighting* % of Total
Consumer Discretionary 16.1
Industrials 15.3
Consumer Staples 14.8
Financials 14.3
Health Care 10.7
Information Technology 8.2
Energy 7.0
Telecommunication Services 5.0
Materials 4.9
Short-Term Investments & Other 3.7

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class A on 5/15/13 (commencement of operations) would have been valued at $11,191, with maximum sales charge and $11,780 excluding sales charges. A $10,000 investment in Class I Shares on 5/15/13 (commencement of operations) would have been valued at $11,835.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Global Equity Fund Class NAV shares returned 19.06% and the benchmark, the MSCI World Index, returned 21.74%.

Environment ►Despite heightened concern about geopolitical tensions, the timing of a hike in U.S. interest rates, stagnant economic growth in Europe and slowdowns in emerging markets, stock markets worldwide rallied over the reporting period. U.S. and Canadian stocks were particularly strong performers, benefiting from steadily improving economic data. Many European markets posted gains and were buoyed by new and prospective economic stimulus measures. Emerging markets were somewhat mixed, with strong returns in countries such as India and Brazil, and weaker returns in Russia and Eastern Europe.

From a geographic perspective, the fund’s stock selection in Europe (excluding the U.K.) and the Pacific region (excluding Japan) contributed to its relative performance. On a sector basis, significant contributors to performance included the fund’s stock selection in the telecommunication services and industrials sectors. Individual contributors to performance included Macy’s, Inc. and Vivendi SA. Macy’s benefited from a cost-cutting plan aimed at saving the company $100 million annually. Vivendi sold its stake in Maroc Telecom SA, a Moroccan telecommunications company, and announced its intention to spin off or sell SFR, a French telecommunications business.

Stock selection in North America and the U.K. detracted from the fund’s performance. From a sector perspective, stock selection in the health care and consumer discretionary sectors detracted from relative performance over the period. Individual detractors from fund performance included Target Corp. and Pearson PLC. A data breach impacting customer credit cards, a change in the company’s chief executive officer and a reduced earnings forecast negatively impacted Target’s price during the period. Pearson’s price weakened after the company lowered its earnings guidance in early 2014. Target was sold by August 31.

The global central banks of major developed markets continue in their efforts to stimulate their local economies, although whether these steps will ultimately result in inflation and sustainable economic growth — without any unforeseen and/or unintended consequences —is still in question. In an environment where operating earnings growth may prove difficult to find, we will continue to focus on investing in companies that we believe have strong balance sheets and the ability to maintain or increase their profit margins.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Global Equity Fund Class A (began 5/15/13)3 12.59% — — 9.07% — — 11.91%
Global Equity Fund Class I (began 5/15/13) 18.95% — — 13.89% — — 18.35%
Global Equity Fund Class NAV (began 5/15/13) 19.06% — — 13.97% — — 18.47%
MSCI World Index4,5 21.74% — — 14.72% — — 19.48%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Global Equity Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Class A returns reflect maximum sales charge of 5%.
4 MSCI World Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets.
5 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class A shares 1.48%, Class I shares 1.09%, and Class NAV shares 0.99%.

15

 


Global Real Estate Fund
Subadvisor: Deutsche Investment Management Americas Inc.
Portfolio Managers: John F. Robertson, CFA, Daniel Ekins, John Hammond, John W. Vojticek, Joseph D. Fisher, CFA, Chris Robinson, and
David W. Zonavetch, CPA

INVESTMENT OBJECTIVE & POLICIES ►To seek a combination of long-term capital appreciation and current income. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of U.S. REITs, foreign entities with tax-transparent structures similar to REITs and U.S. and foreign real estate operating companies.


Industry Weighting* % of Total
Retail REITs 22.1
Specialized REITs 14.1
Diversified REITs 13.7
Real Estate Management & Development 13.5
Office REITs 13.0
Residential REITs 9.6
Real Estate Operating Companies 9.0
Industrial REITs 3.6
Real Estate Development 0.4
Marine Ports & Services 0.1
Other 0.9

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Global Real Estate Fund Class NAV shares returned 19.95% and the benchmark, the EPRA/NAREIT Global Index, returned 19.47%.

Environment ►Global real estate securities started off the reporting period underperforming the broader equity market in the fourth quarter of 2013 as rising bond yields and substantial equity capital markets activity kept returns in check. Economic releases were generally biased towards positive surprises at the end of 2013, and this improved data allowed the U.S. Federal Reserve (Fed) to announce in mid-December a decision to begin tapering their purchases of long term treasuries and mortgage backed securities. On the real estate investment trust (REIT) front, initial public offerings increased, and several companies took advantage of lower treasuries to issue long term debt at attractive rates. During the first half of 2014, the global real estate market bounced back after a rough second half of 2013, and outperformed the broader equity market by a significant margin. The Fed continued to reduce its monthly asset purchases. The January decision to pull back on the bond program was unanimous among Fed governors, marking the first time there has not been a dissent at a policy meeting since June 2011. However, February ended on a cautious note as investors monitored developments in Crimea and escalating tensions between Russia and Ukraine prompted a sharp sell-off in equities to start the month of March. In the second quarter, markets were spurred by strengthening economic data, further easing by the European Central Bank and signs the Chinese economy is continuing to stabilize. To end the period, global REITs started continued to rise at a steady rate as earnings were very strong.

For the annual reporting period ending August 31, 2014, the fund outperformed the EPRA/NAREIT Global Index. Performance was driven by positive stock selection, particularly in the Americas, Japan and Continental Europe. Weak stock selection in Asia (excluding Japan) somewhat offset this. Regional allocation decisions slightly detracted from relative performance, primarily from positioning in Australia which outperformed the broader global real estate market. During the last year, the fund’s largest overweight regions included the United Kingdom and Australia, while the Americas and Asia ex-Japan were the largest underweight regions.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Global Real Estate Fund Class NAV (began 4/28/06) 19.95% 12.74% — 3.43% 82.15% — 32.51%
EPRA/NAREIT Global Index3,4 19.47% 12.95% — 4.59% 83.86% — 45.39%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Global Real Estate Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 EPRA/NAREIT Global Index is an unmanaged index, designed to track the performance of listed real estate companies and REITs worldwide.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 1.00%.

16

 


Health Sciences Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: Taymour Tamaddon

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in common stocks of companies engaged, at the time of investment, in the research, development, production, or distribution of products or services related to healthcare, medicine, or the life sciences.


Sector Weighting* % of Total
Health Care 93.3
Industrials 2.8
Consumer Staples 2.4
Information Technology 0.6
Short-term Investments & Other 0.9

 

* As a percentage of net assets.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Health Sciences Fund Class NAV shares returned 37.41% and the benchmark, the Lipper Health/Biotechnology Index, returned 36.67%.

Environment ►U.S. equities produced excellent returns over the last year on the back of accommodative U.S. Federal Reserve (Fed) policy, continued economic improvement, generally favorable corporate earnings, and an increase in merger and acquisition activity. Concerns about the U.S. government shutdown and the direction of Fed policy weighed on stocks early in the period, and geopolitical uncertainty in Iraq and Ukraine has more recently served as an overhang, but equity market performance has proven resilient in the face of these challenges. In this environment, the Lipper Health/Biotech Funds Index posted very strong returns, with all sectors recording double-digit gains. Life sciences and biotechnology shares posted the strongest returns. The products and devices industry had the lowest absolute returns but still finished well into positive territory.

The most significant contributor to relative returns by far was stock selection in the biotechnology sector, though an underweight position to the strong-performing sector did reduce the positive effect of stock selection slightly. Puma Biotechnology, Inc. and InterMune, Inc. drove relative returns in this area. Both companies benefited from positive news surrounding key treatments, in particular Puma Biotechnology’s breast cancer treatment Neratinib and InterMune’s promising oral therapy for idiopathic pulmonary fibrosis.

The leading detractor from relative performance was stock selection in the life sciences industry, driven by Agilent Technologies, Inc. and Illumina, Inc. Agilent’s electronic measurement group has struggled from cyclical weakness, but we believe the company’s decision to spin out this business into a separate public company later this year should benefit shareholders. The combination of stock selection and an overweight to the services sector also weighed on relative performance. Catamaran Corp.’s shares fell during the year over concerns about the potential impact of private exchanges on company margins. We have eliminated our position in light of increased risk.

During the year, short call options were used in a covered call strategy which in order to decrease exposure to underlying securities. The estimated return impact from employing options was slightly negative.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Health Sciences Fund Class NAV (began 9/30/11) 37.41% — — 37.33% — — 152.79%
Lipper Health/Biotechnology Index3,5 36.67% — — 34.79% — — 139.34%
S&P 500 Index4,5 25.25% — — 23.19% — — 83.99%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Health Sciences Fund expenses was reimbursed. If such expenses were not reimbursed, returns would be lower.
3 Lipper Health/Biotechnology Index measures the performance of health and biotech funds.
4 S&P 500 Index is an unmanaged index that includes 500 widely traded stocks.
5 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 1.09%.

17

 


High Yield Fund
Subadvisor: Legg Mason (formerly Western Asset Management Company)
Portfolio Managers: Michael C. Buchanan and S. Kenneth Leech

INVESTMENT OBJECTIVE & POLICIES ►To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) at the time of investment in high yield securities. The fund’s investments may include mortgage-backed securities, loan assignments or participations and convertible securities.


Portfolio Composition* % of Total
Energy 18.8
Industrials 18.0
Consumer Discretionary 16.5
Financials 11.2
Materials 9.4
Telecommunication Services 6.7
Consumer Staples 5.2
Health Care 5.1
Utilities 2.7
Information Technology 2.6
Foreign Government Obligations 1.2
Short-Term Investments & Other 2.6

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $20,578.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the High Yield Fund Class NAV shares returned 10.57% and the benchmark, the Citigroup High Yield Index, returned 10.15%.

Market Environment ►The high yield market performed well over the 12 month period, based on the Citigroup High Yield Index. The economic environment provided a favorable backdrop during the period, with the exception of the first quarter of 2014 when severe winter weather in many parts of the country led to a decline in overall economic output. Apart from this weather related slowdown, U.S. economic growth was reasonable throughout the remainder of the reporting period. The unemployment rate ended the period at its lowest level in six years, while reports on consumer spending, manufacturing activity, and the housing market showed signs of strength. Credit markets saw narrowing spreads and falling interest rates. BB-rated bonds actually generated the best returns across the quality spectrum, due to their higher sensitivity to a decline in interest rates. Single B- and CCC-rated issues both gained nearly 10%. Default rates continued to decline. According to Moody’s, the trailing 12-month issuer-weighted default rate declined to 1.8%, falling by 1% from last year at this time. Moody’s forecast calls for defaults to remain subdued, but increasing modestly one year from now.

The fund’s quality positioning was marginally additive for the period. The fund benefited from an overweight to one of the best performing ratings segment of the market, CCC-rated bonds. Though these are at the riskier end of the spectrum, we believed that they would perform well based on our belief that default rates would remain below the long term average given strong fundamentals, conservative management teams and a minimal amount of near term maturities.

At the same time, relative performance was hurt by an underweight to BB rated issues, which outperformed broad high yield market. Sector allocation generally had a negative impact on relative returns. The fund was underweight to a number of outperforming sectors, including technology, the top performing sector, and communications. Additionally, the fund was overweight to transportation, which lagged. However, the fund maintained an overweight to the outperforming energy sector and an underweight to the bottom performing consumer cyclical sector. Issue selection added to performance for the year. Wireless provider Sprint Capital Corp., packaging company Reynolds Group Inc., and electric utility NRG REMA LLC (parent company of GenOn) all outperformed and boosted outperformance. Exposure to a few underperforming issuers, like The Gymboree Corp., detracted.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
High Yield Fund Class 1 (began 10/15/05) 10.53% 12.49% — 8.47% 80.15% — 105.78%
High Yield Fund Class NAV (began 10/15/05) 10.57% 12.55% — 8.52% 80.60% — 106.62%
Citigroup High Yield Index3,4,5 10.15% 12.02% — 8.67% 76.42% — 109.22%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the High Yield Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Citigroup High Yield Index is an unmanaged index which measures the performance of below-investment grade debt issued by corporations domiciled in the U.S. or Canada.
4 Since inception returns for the index may begin on the month-end closest to the actual inception date of the fund.
5 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.76% and Class NAV shares – 0.71%.

18

 


International Growth Opportunities Fund
Subadvisor: Baillie Gifford Overseas Ltd
Portfolio Managers: James Anderson, Lawrence Burns, Tom Coutts, David Salter, Kave Sigaroudinia, Nick Thomas, CFA, and Sarah Whitley

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation. The fund normally invests at least 80% of the value of its net assets (plus borrowings for investment purposes) in common stocks issued by companies domiciled outside the United States.


Sector Weighting* % of Total
Financials 25.7
Information Technology 19.2
Consumer Discretionary 18.9
Industrials 13.4
Materials 7.0
Consumer Staples 5.3
Health Care 4.8
Telecommunication Services 4.3
Short-Term Investments & Other 1.4

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the International Growth Opportunities Fund Class NAV shares returned 18.51% and the benchmark, the MSCI EAFE Index, returned 16.92%.

Environment ►We remain as enthusiastic as ever about our holdings and the strategic positioning of the fund, which is driven by some enduring and powerful global trends. We believe we are in an unusual period where many large sectors are changing rapidly, and some special businesses are being created. Although market sentiment continues to swing around quite markedly, we disagree with those who are predicting dramatic economic developments. The tapering of the U.S. Federal Reserve’s bond-buying program is a signal that the U.S. economy is broadening. We believe Europe is more likely to grow from here than relapse, and we are increasingly enthusiastic about China’s leadership, which is pursuing a more balanced, sustainable growth path driven by home-grown innovation.

We largely ignore short-term headlines; the long-term opportunities for our companies are more important. This was epitomized by recent events surrounding Fiat, S.p.A, a positive contributor over the past twelve months. The completion of its Chrysler purchase and the beginnings of Maserati’s renaissance were well received, but CEO Marchionne’s subsequent long-term growth plan was met with skepticism by the market. However, we think they can accomplish much more through a revival of Alfa Romeo, a radical removal of unprofitable capacity and still further steps forward in America.

The strongest contributions to performance over the past year have come from two groups of companies: our Asian internet titans Tencent Holdings, Ltd, Baidu, Inc. and Naver Corp., which are growing rapidly and making considerable progress in monetizing mobile users. Other boosts to performance came from several of our economically sensitive European stocks, such as Banco Popular Español SA, Unicredit, S.p.A, and Banco Santander SA, which have all benefited from clearer signs of successful economic reform in southern Europe. These gains more than offset weakness in some of our holdings exposed to commodity prices, such as agribusiness Syngenta, AG, and those selling luxury goods, such as Kering SA and Cie Financiere Richemon SA.

We have continued to invest in companies where change is driving growth and we believe the potential returns can make a significant difference to the fund. We have invested in some diverse businesses benefiting from the increasing reach of the internet such as Ocado Group, PLC, a pure online food retailer in the U.K., and M3, Inc., a Japanese provider of online marketing support for Pharmaceutical companies.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
International Growth Opportunities Fund Class NAV              
(began 7/19/12) 18.51% — — 19.23% — — 45.19%
MSCI EAFE Index3,4 16.92% — — 19.26% — — 45.27%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the International Growth Opportunities Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 MSCI EAFE Index (Europe, Australasia, Far East) (gross of foreign withholding taxes on dividends) is a free-float-adjusted market capitalization index that is designed to measure developed market equity performance.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.98%.

19

 


International Growth Stock Fund
Subadvisor: Invesco Advisers, Inc.
Portfolio Managers: Clas Olsson, Shuxin Cao, CFA, CPA, Jason Holzer, CFA, Mathew Dennis, CFA, Mark Jason, CFA, Richard Nield, CFA, and
Brentley Bates, CFA, CPA

INVESTMENT OBJECTIVE & POLICIES ►The fund seeks to achieve long-term growth of capital. The fund invests primarily in a diversified portfolio of international securities whose issuers are considered by the fund’s portfolio managers to have strong earnings growth. Under normal market conditions, the fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in stocks of any market capitalization.


Sector Weighting* % of Total
Consumer Discretionary 22.5
Financials 17.0
Information Technology 13.1
Industrials 10.2
Health Care 10.1
Consumer Staples 8.8
Energy 7.8
Materials 3.8
Utilities 0.8
Short-Term Investments & Other 5.9

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the International Growth Stock Fund Class NAV shares returned 19.26% and the benchmark, the MSCI AC World ex-USA Growth Index, returned 16.61%.

Environment ►The year began with strong performance as global markets generally rose in late 2013. Equity investors remained optimistic during the end of the calendar year despite Middle East violence, a government shutdown in the U.S., and concerns surrounding central bank tapering. After a strong finish to 2013, global equity markets began 2014 in relatively quiet fashion. Major headlines early in 2014 focused upon Russia and Ukraine, severe winter weather in the U.S. (and its impact on the economy) and the beginning of Janet Yellen’s term as the U.S. Federal Reserve Board Chair. International equity markets moved higher in the second quarter of the year. Most notably, emerging markets performed well, as investors began to anticipate negative earnings revisions coming to an end. After a brief downturn in late July and early August, international markets posted strong returns in late August and ended the fiscal year on a positive note.

The fund posted positive returns for the period and outperformed its benchmark. Relative outperformance was driven primarily by stock selection in Europe along with stock selection within the health care and financials sectors.

In broad geographic terms, the fund outperformed the index across Europe, Latin America and the Asia/Pacific regions. At the country-level, strong stock selection in the U.K. and select holdings in Ireland and Singapore led relative performance. From a sector perspective, relative performance was supported by strong stock selection across the health care, financials, information technology, industrials and consumer staples sectors.

The fund’s cash position was the largest detractor from relative performance. It is important to note that cash is simply a residual of our long-term, bottom-up, stock picking investment process and is not the result of any top-down allocation decision. Stock selection within the utilities sector hurt relative results as well. Geographically, stock selection in Switzerland and South Korea as well as having no exposure to India hurt relative performance relative to the index.

During the period, the fund meaningfully increased its exposure to the financials, health care and materials sectors. While exposure to the energy and information technology sectors decreased. Geographically, exposure to Brazil, Denmark and Thailand meaningfully increased. While exposure to China, Sweden and the U.K decreased.

Over the long-term, the managers believe their focus on corporate fundamentals continues to serve fund investors well in an environment that remains dominated by macro-economic and political uncertainties. They continue to believe that for long-term investors the resulting market volatility can often provide opportunities to buy high-quality companies at attractive prices.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
International Growth Stock Fund Class NAV (began 9/16/10) 19.26% — — 10.42% — — 48.04%
MSCI AC World ex-USA Growth Index3,5 16.61% — — 8.04% — — 35.83%
MSCI EAFE Growth Index4,5 14.45% — — 9.50% — — 43.25%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the International Growth Stock Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 MSCI AC World ex-USA Growth Index (gross of foreign withholding taxes on dividends) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets and emerging markets, excluding the Unites States of America, that have higher than average growth characteristics.
4 MSCI EAFE Growth Index (Europe, Australasia, Far East) (gross of foreign withholding taxes on dividends) is a free-float-adjusted market capitalization index that is designed to measure developed market equity performance, of securities with greater than average growth orientation.
5 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.92%.

20

 


International Small Cap Fund
Subadvisor: Franklin Templeton Investment Corp.
Portfolio Managers: Harlan B. Hodes, CPA and Martin Cobb

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in investments of smaller companies outside the U.S., including emerging markets, which have total stock market capitalizations or annual revenues of $4 billion or less.


Sector Weighting* % of Total
Consumer Discretionary 28.2
Industrials 14.2
Financials 13.9
Information Technology 13.0
Consumer Staples 7.9
Health Care 6.3
Energy 5.2
Materials 4.8
Utilities 1.0
Short-Term Investments & Other 5.5

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $18,192.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the International Small Cap Fund Class NAV shares returned 17.17% and the benchmark, the S&P Citigroup Global ex U.S. <$2 Billion Index, returned 20.91%.

Environment ►During the 12-month period, international small-capitalization stocks outperformed their larger-capitalization counterparts amid generally positive economic data and moves by the European Central Bank to ease monetary policy.

Several holdings underperformed during the period. For example, the share price of cosmetics retailer Oriflame Cosmetics SA slipped to its lowest level in nearly nine years after the company missed earnings estimates and issued weak guidance. Heavy exposure to Russia and Ukraine, which account for over one-third of Oriflame’s sales, also weighed on the stock. Nevertheless, we believe the market undervalued the firm’s long-term growth potential as it cut costs, increased salesforce productivity and expanded its presence in attractive new markets.

Steiner Leisure Ltd., another detractor, is a major worldwide provider of spa services, serving over 90% of the capacity of the cruise industry. The company’s operations include spas and salons on 146 cruise ships and in 70 resort spas and two luxury day spas. We believe Steiner is an attractively valued company with a powerful niche in the cruise industry and benefits from the positive demographic trends of the cruise industry without the high operating leverage and risk of margin depression from higher fuel costs. Despite recent weakness in on-board revenues and share price performance, we believe that revenue should grow as consumer demand strengthens.

Other holdings performed relatively well during the period under review. Switzerland-based Logitech International SA sells computer accessories for home use. Its product portfolio includes computer peripherals like keyboards and web-cams, and remotes. The company’s share price was up significantly based on earnings that beat analysts’ estimates. Logitech remains focused on renewed efforts in research and development.

Square Enix Holdings Company, Ltd. operates a network of leading computer game development studios in North America, Europe and Japan. The company boasts a valuable intellectual property portfolio, including Final Fantasy, Dragon Quest, Tomb Raider, and Space Invaders. Square Enix’s latest mobile-game, DQM SL (Dragon Quest Monsters: Super Light), was immediately popular, which we saw as evidence that the company’s new president was successful in changing the company’s strategy from fixed to flexible pricing and de-emphasizing console games.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
International Small Cap Fund Class 1 (began 10/15/05) 17.10% 11.52% — 6.97% 72.48% — 81.92%
International Small Cap Fund Class NAV (began 10/15/05) 17.17% 11.58% — 7.03% 72.94% — 82.86%
S&P Citigroup Global ex U.S. <$2 Billion Index3,4 20.91% 10.49% — 7.79% 64.70% — 94.61%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the International Small Cap Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P Citigroup Global ex U.S. <$2 Billion Index is an unmanaged index which follows an objective, free float-weighted, rules based methodology, capturing the broad investable opportunity set.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 1.20% and Class NAV shares – 1.15%.

21

 


International Value Fund
Subadvisor: Templeton Investment Counsel, LLC
Portfolio Managers: Tucker Scott, CFA, Neil Devlin, CFA, Peter A. Nori, CFA, and Cindy L. Sweeting, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Under normal market conditions, the fund invests primarily in equity securities of companies located outside the U.S., including emerging markets.


Sector Weighting* % of Total
Financials 24.9
Energy 16.6
Health Care 15.4
Industrials 9.5
Information Technology 8.4
Consumer Discretionary 8.2
Telecommunication Services 5.8
Materials 5.6
Consumer Staples 3.0
Utilities 0.2
Short-Term Investments & Other 2.4

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $16,774.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the International Value Fund Class NAV shares returned 16.90% and the benchmark, the MSCI EAFE Index, returned 16.92%.

Environment ►During the 12 months under review, international equities overcame considerable challenges to post solid gains. Market head-winds included the tapering of U.S. quantitative easing programs, which prompted a correction in emerging markets that had been benefiting from cheap U.S. dollar liquidity, and a host of escalating geopolitical conflicts. In addition, investors had fundamental concerns about the resiliency of the global economic recovery.

The fund’s relative performance was primarily attributable to stock selection in Asia, where an underweighting and holdings in Japan were particularly favorable. On the other hand, stock selection among modestly underweighted European holdings detracted from returns due to fading regional strength amid conflict in eastern Ukraine, faltering growth in core economies and occasional stability concerns in the periphery. We continued to find select, bottom-up values in Europe. At period-end, European stocks traded near their lowest levels ever relative to U.S. peers and continued to earn less than U.S. companies by a record margin despite having higher operating leverage and more diversified global revenues.

From a sector standpoint, stock picking among nearly even-weighted financials holdings drove the bulk of the fund’s relative performance. Financials stocks were among the fund’s top performing holdings including restructured, recapitalized European firms like Aviva, PLC (U.K., insurance), ING Groep NV (Netherlands, financial services), and UniCredit SpA (Italy, banking) as well as what seemed to us low-valued South Korean lenders Hana Financial Group, Inc. and KB Financial Group, Inc.

Stock selection and favorable allocations also supported performance of the fund’s overweighted telecommunications and underweighted materials and consumer discretionary holdings. However, stock-specific weakness from our underweighted consumer staples holdings detracted, pressured by U.K. grocer Tesco, PLC, which downgraded earnings. We believed the stock looked cheap on an array of valuation measures and its price could rise over our long-term horizon should new management realize even modest success with what we deemed were sensible restructuring initiatives.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
International Value Fund Class 1 (began 10/15/05) 16.80% 9.21% — 6.00% 55.36% — 67.74%
International Value Fund Class NAV (began 10/15/05) 16.90% 9.27% — 6.06% 55.75% — 68.61%
MSCI EAFE Index3,4 16.92% 8.69% — 5.69% 51.70% — 63.49%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the International Value Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 MSCI EAFE Index (gross of foreign withholding taxes on dividends) (Europe, Australasia, Far East) is a free-float-adjusted market capitalization index that is designed to measure developed market equity performance. The MSCI EAFE Index consists of 22 developed market country indices.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.96% and Class NAV shares – 0.91%.

22

 


Investment Quality Bond Fund
Subadvisor: Wellington Management Company, LLP
Portfolio Managers: Lucius T. (L.T.) Hill, III, Campe Goodman, CFA, and Joseph F. Marvan, CFA

INVESTMENT OBJECTIVE & POLICIES ►To provide a high level of current income consistent with the maintenance of principal and liquidity. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in bonds rated investment grade at the time of investment. The fund will tend to focus on corporate bonds and U.S. government bonds with intermediate- to longer-term maturities.


Portfolio Composition* % of Total
U.S. Government Agency 20.7
Financials 18.0
U.S. Government 16.0
Collateralized Mortgage Obligations 15.1
Consumer Discretionary 5.3
Energy 2.9
Telecommunication Services 2.8
Asset Backed Securities 2.7
Municipal Bonds 2.0
Health Care 2.0
Industrials 1.9
Foreign Government Obligations 1.3
Consumer Staples 1.3
Utilities 1.1
Materials 0.9
Information Technology 0.8
Short-Term Investments & Other 5.2

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $15,670.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Investment Quality Bond Fund Class NAV shares returned 6.51%. The Barclays U.S. Government Index returned 3.54%; the Barclays U.S. Credit Index returned 9.06%; and the combined index returned 6.27%.

Environment ►Early in the period, the U.S. Federal Reserve (Fed) had signaled that short rates were unlikely to be raised for an extended period. When the Federal Open Market Committee announced that it would begin tapering its bond buying program in January, the market took the news rather well.

Towards the end of the period, persistent geopolitical risks – including tension between Ukraine and Russia, violence in Iraq, and China’s economic slowdown raised questions about the global growth rate, keeping a lid on risk appetites overall. Meanwhile, divergence in central bank monetary policy grew. The ECB unveiled a set of unconventional monetary policy measures to fight disinflationary forces and rekindle growth in the eurozone. The People’s Bank of China also announced stimulus measures, including targeted cuts in the reserve ratio requirement for certain banks.

Contributing to relative returns was the fund’s investment grade credit exposure, specifically an overweight to financials as well as security selection within financials and industrials. Allocations to high yield and bank loans also contributed to relative returns, as did exposure to non-dollar markets. The fund’s exposure to treasury inflation-protected securities, as well as an underweight to agency mortgage backed securities detracted from relative performance.

Derivatives are an important part of the investment process for the fund. Treasury futures, interest rate swaps, interest rate options, and swaptions are used to manage the fund’s duration and yield curve positioning. Credit default swaps are used to gain exposure to specific credits and also to hedge existing credit exposure. We bought and sold protection on credit default swap indices to gain/reduce exposure to certain sectors like emerging markets, and to tactically manage credit exposure at the overall portfolio level. Additionally, interest rate futures and currency forward contracts were used to implement the fund’s non-US rate and currency positions. In isolation, the derivative instruments used detracted from performance during the period. The derivatives did not have a meaningful impact on the risk of the portfolio as they were used to gain or reduce exposure to securities or indexes, or to hedge certain exposures.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Investment Quality Bond Fund Class 1 (began 10/15/05) 6.54% 5.26% — 5.19% 29.24% — 56.70%
Investment Quality Bond Fund Class NAV (began 10/15/05) 6.51% 5.30% — 5.24% 29.49% — 57.35%
Barclays U.S. Aggregate Bond Index3,7 5.66% 4.48% — 5.04% 24.50% — 54.79%
Barclays U.S. Government Index4,7 3.54% 3.38% — 4.52% 18.05% — 48.03%
Barclays U.S. Credit Index5,7 9.06% 6.77% — 6.07% 38.74% — 68.76%
Combined Index6,7 6.27% 5.07% — 5.32% 28.06% — 58.50%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Investment Quality Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment grade debt issues.
4 Barclays U.S. Government Index is an unmanaged index that represents securities issued by the U.S. Government (i.e. securities in the Treasury and Agency indices).
5 Barclays U.S. Credit Index is and unmanaged index of publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality requirements.
6 Combined Index represents 50% of the Barclays U.S. Government Index and 50% Barclays U.S. Credit Index.
7 It is not possible to invest directly in an index.

Prior to March 20, 2014, the fund compared its performance to the Barclays U.S. Credit Index, the Barclays U.S. Government Index and a composite of these indices. After this date, to better reflect the universe of investment opportunities based on the fund’s investment strategy, the fund added the Barclays U.S. Aggregate Bond Index as the primary benchmark index and retained 50% Barclays U.S. Credit Index/50% Barclays U.S. Government Index as the secondary benchmark index to which the fund compares its performance.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.68% and Class NAV shares – 0.63%.

23

 


Lifestyle II Aggressive Portfolio
Subadvisors: John Hancock Asset Management and John Hancock Asset Management, a division of Manulife Asset Management (North America)
Limited (John Hancock Asset Management (North America),
Portfolio Managers: Robert M. Boyda, Michelle Daher, CFA, Steven E. Medina, Nathan W. Thooft, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Current income is not a consideration. To pursue this goal, the portfolio, which is a fund of funds, normally invests approximately 100% of its assets in underlying funds that invest primarily in equity securities.


Asset Allocation* % of Total
Affiliated Investment Companies 67.0
Equity 67.0
Unaffiliated Investment Companies/  
Exchange Traded Funds 32.9
Equity 32.9
Other Assets 0.1

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class R6 on 12/30/13 (commencement of operations) would have been valued at $10,770.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►From its inception (December 30, 2013) through August 31, 2014, the Lifestyle II Aggressive Portfolio’s Class 1 shares returned 7.70%. The S&P 500 Index returned 10.32%, and the MSCI EAFE Index returned 3.34%.

Environment ►During the period, capital markets generated positive total returns across most regions and asset classes. While there were moments of volatility, when market participants seemed to wrestle with uncertainty about the strength of the global economic recovery, investors ultimately took comfort in accommodative measures from key central banks.

The S&P 500 Index returned 10.32%, reflecting an upbeat outlook on employment and housing. Outside the U.S., developed-market equities, as represented by the MSCI EAFE Index, delivered a more modest gain of 3.34%. The eurozone emerged from recession, but economic momentum slowed more recently, and inflation in Europe continued to hover below its target. Investors seemed to shrug off concerns of a slowdown in China, and emerging-market stocks enjoyed a relative rebound, besting developed-market international stocks, after an extended period of relative underperformance.

Bonds delivered respectable gains, surprising many market observers. At the beginning of the year, market consensus pointed to a prospective rise in interest rates. Instead, yields fell, driving prices of fixed-income securities higher. Disappointing first-quarter GDP figures kept bids for bonds strong, and the Barclays U.S. Aggregate Bond Index returned 4.90%.

While it trailed the S&P 500 Index during the period, the portfolio finished ahead of the MSCI EAFE Index. The portfolio benefited from solid total returns from a range of its underlying exposures. An allocation to emerging-market equity boosted returns, as did targeted exposure to real estate investment trusts, health care, and information technology stocks.

The portfolio’s exposure to international developed-market equities weighed on relative returns. Europe and Japan faced headwinds as each tried to stimulate growth and fight off deflationary pressures. The portfolio’s allocation to U.S. small cap stocks was also a relative hindrance during this particular period.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Lifestyle II Aggressive Portfolio Class 1 (began 12/30/13) — — — — — — 7.70%
Lifestyle II Aggressive Portfolio Class R6 (began 12/30/13) — — — — — — 7.70%
S&P 500 Index3,5 — — — — — — 10.32%
MSCI EAFE Index4,5 — — — — — — 3.34%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Lifestyle II Aggressive Portfolio expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely-traded common Stocks.
4 MSCI EAFE Index (Europe, Australasia, Far East) (gross of foreign withholding taxes on dividends) is a free-float-adjusted market capitalization index that is designed to measure developed market equity performance.
5 It is not possible to invest directly in an index.

The expense ratios of the portfolio, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class 1 and R6 shares the gross expense is 0.76% and 0.86%, respectively, and the net expense is 0.71% and 0.76%, respectively.

24

 


Lifestyle II Balanced Portfolio
Subadvisors: John Hancock Asset Management and John Hancock Asset Management (North America)
Portfolio Managers: Robert M. Boyda, Michelle Daher, CFA, Steven E. Medina, Nathan W. Thooft, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. To pursue this goal, the portfolio, which is a fund of funds, normally invests approximately 60% of its assets in underlying funds that invest primarily in equity securities and approximately 40% in underlying funds that invest primarily in fixed-income securities.


Asset Allocation* % of Total
Affiliated Investment Companies 40.5
Equity 40.5
Unaffiliated Investment Companies/  
Exchange Traded Funds 59.4
Fixed Income 39.4
Equity 20.0
Other Assets 0.1

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class R6 on 12/30/13 (commencement of operations) would have been valued at $10,673.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►From its inception (December 30, 2013) through August 31, 2014, the Lifestyle II Balanced Portfolio’s Class 1 shares returned 6.74%. The S&P 500 Index returned 10.32%, and the Barclays U.S. Aggregate Bond Index returned 4.90%. The portfolio’s blended benchmark, a combination of 60% S&P 500 Index and 40% Barclays U.S. Aggregate Bond Index, posted an 8.19% return for the period.

Environment ►During the period, capital markets generated positive total returns across most regions and asset classes. While there were moments of volatility, when market participants seemed to wrestle with uncertainty about the strength of the global economic recovery, investors ultimately took comfort in accommodative measures from key central banks.

The S&P 500 Index returned 10.32%, reflecting an upbeat outlook on employment and housing. U.S. small-cap stocks underperformed on a relative basis. Outside the U.S., developed-market equities, as represented by the MSCI EAFE Index, delivered a more modest gain of 3.34%. The eurozone emerged from recession, but economic momentum slowed more recently, and inflation in Europe continued to hover below its target. Investors seemed to shrug off concerns of a slowdown in China, and emerging-market stocks enjoyed a relative rebound, besting developed-market international stocks, after an extended period of relative underperformance.

Bonds delivered respectable gains, surprising many market observers. At the beginning of the year, market consensus pointed to a prospective rise in interest rates. Instead, yields fell, driving prices of fixed-income securities higher. Disappointing first-quarter GDP figures kept bids for bonds strong, and the Barclays U.S. Aggregate Bond Index returned 4.90%.

While it trailed its blended reference benchmark during the period, the portfolio benefited from solid total returns from a range of its underlying exposures. An allocation to emerging-market equity boosted returns, as did targeted exposure to real estate investment trusts, health care, and information technology stocks.

The portfolio’s exposure to international developed-market equities weighed on relative returns. Europe and Japan faced headwinds as each tried to stimulate growth and fight off deflationary pressures. The portfolio’s allocation to U.S. small cap stocks was also a relative hindrance during this particular period.

Within fixed income, allocations to credit-oriented sectors, including investment-grade and high-yield corporate bonds, were key contributors to performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Lifestyle II Balanced Portfolio Class 1 (began 12/30/13) — — — — — — 6.74%
Lifestyle II Balanced Portfolio Class R6 (began 12/30/13) — — — — — — 6.73%
S&P 500 Index3,6 — — — — — — 10.32%
Barclays U.S. Aggregate Bond Index4,6 — — — — — — 4.90%
Combined Index5,6 — — — — — — 8.19%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Lifestyle II Balanced Portfolio expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely-traded common Stocks.
4 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
5 Combined Index is comprised of 60% S&P 500 Index and 40% Barclays U.S. Aggregate Bond Index.
6 It is not possible to invest directly in an index.

The expense ratios of the portfolio, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.77% and Class NAV shares – 0.80%.

25

 


Lifestyle II Conservative Portfolio
Subadvisors: John Hancock Asset Management and John Hancock Asset Management (North America)
Portfolio Managers: Robert M. Boyda, Michelle Daher, CFA, Steven E. Medina, Nathan W. Thooft, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek a balance between a high level of current income and growth of capital, with a greater emphasis on income. To pursue this goal, the portfolio, which is a fund of funds, normally invests approximately 20% of its assets in underlying funds that invest primarily in equity securities and approximately 80% in underlying funds that invest primarily in fixed-income securities.


Asset Allocation* % of Total
Affiliated Investment Companies 12.7
Equity 12.7
Unaffiliated Investment Companies/  
Exchange Traded Funds 87.3
Fixed Income 80.6
Equity 6.7

 

* As a percentage of total investments.

** A $10,000 investment at net asset value in Class R6 on 12/30/13 (commencement of operations) would have been valued at $10,555.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►From its inception (December 30, 2013) through August 31, 2014, the Lifestyle II Conservative Portfolio’s Class 1 shares returned 5.57%. The S&P 500 Index returned 10.32%, and the Barclays U.S. Aggregate Bond Index returned 4.90%. The portfolio’s blended benchmark, a combination of 20% S&P 500 Index and 80% Barclays U.S. Aggregate Bond Index, posted a 6.01% return for the period.

Environment ►During the period, capital markets generated positive total returns across most regions and asset classes. While there were moments of volatility, when market participants seemed to wrestle with uncertainty about the strength of the global economic recovery, investors ultimately took comfort in accommodative measures from key central banks.

The S&P 500 Index returned 10.32%, reflecting an upbeat outlook on employment and housing.

U.S. small-cap stocks underperformed on a relative basis. Outside the U.S., developed-market equities, as represented by the MSCI EAFE Index, delivered a more modest gain of 3.34%. The eurozone emerged from recession, but economic momentum slowed more recently, and inflation in Europe continued to hover below its target. Investors seemed to shrug off concerns of a slowdown in China, and emerging-market stocks enjoyed a relative rebound, besting developed-market international stocks, after an extended period of relative underperformance.

Bonds delivered respectable gains, surprising many market observers. At the beginning of the year, market consensus pointed to a prospective rise in interest rates. Instead, yields fell, driving prices of fixed-income securities higher. Disappointing first-quarter GDP figures kept bids for bonds strong, and the Barclays U.S. Aggregate Bond Index returned 4.90%.

While it slightly trailed its blended reference benchmark during the period, the portfolio benefited from solid total returns from a range of its underlying exposures. In particular, targeted allocations to real estate investment trusts boosted returns.

The portfolio’s exposure to international developed-market equities weighed on relative returns. Europe and Japan faced headwinds as each tried to stimulate growth and fight off deflationary pressures. The portfolio’s allocation to U.S. small cap stocks was also a relative hindrance during this particular period.

Within fixed income, allocations to credit-oriented sectors, including investment-grade and high-yield corporate bonds, were key contributors to performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Lifestyle II Conservative Portfolio Class 1 (began 12/30/13) — — — — — — 5.57%
Lifestyle II Conservative Portfolio Class R6 (began 12/30/13) — — — — — — 5.55%
S&P 500 Index3,6 — — — — — — 10.32%
Barclays U.S. Aggregate Bond Index4,6 — — — — — — 4.90%
Combined Index5,6 — — — — — — 6.01%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Lifestyle II Conservative Portfolio expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely-traded common Stocks.
4 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
5 Combined Index is comprised of 20% S&P 500 Index and 80% Barclays U.S. Aggregate Bond Index.
6 It is not possible to invest directly in an index.

The expense ratios of the portfolio, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class 1 and Class R6 shares the gross expense is 0.92% and 0.99%, respectively, and the net expense is 0.85% and 0.90%, respectively.

26

 


Lifestyle II Growth Portfolio
Subadvisors: John Hancock Asset Management and John Hancock Asset Management (North America)
Portfolio Managers: Robert M. Boyda, Michelle Daher, CFA, Steven E. Medina, Nathan W. Thooft, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Current income is also a consideration. To pursue this goal, the portfolio, which is a fund of funds, normally invests approximately 80% of its assets in underlying funds that invest primarily in equity securities, and approximately 20% in underlying funds that invest primarily in fixed-income securities.


Asset Allocation* % of Total
Affiliated Investment Companies 54.5
Equity 54.5
Unaffiliated Investment Companies/  
Exchange Traded Funds 45.4
Equity 26.8
Fixed Income 18.6
Other Assets 0.1

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class R6 on 12/30/13 (commencement of operations) would have been valued at $10,710.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►From its inception (December 30, 2013) through August 31, 2014, the Lifestyle II Growth Portfolio’s Class 1 shares returned 7.10%. The S&P 500 Index returned 10.32%, and the Barclays U.S. Aggregate Bond Index returned 4.90%. The portfolio’s blended benchmark, a combination of 80% S&P 500 Index and 20% Barclays U.S. Aggregate Bond Index, posted a 9.26% return for the period.

Environment ►During the period, capital markets generated positive total returns across most regions and asset classes. While there were moments of volatility, when market participants seemed to wrestle with uncertainty about the strength of the global economic recovery, investors ultimately took comfort in accommodative measures from key central banks.

The S&P 500 Index returned 10.32%, reflecting an upbeat outlook on employment and housing.

U.S. small-cap stocks underperformed on a relative basis. Outside the U.S., developed-market equities, as represented by the MSCI EAFE Index, delivered a more modest gain of 3.34%. The eurozone emerged from recession, but economic momentum slowed more recently, and inflation in Europe continued to hover below its target. Investors seemed to shrug off concerns of a slowdown in China, and emerging-market stocks enjoyed a relative rebound, besting developed-market international stocks, after an extended period of relative underperformance.

Bonds delivered respectable gains, surprising many market observers. At the beginning of the year, market consensus pointed to a prospective rise in interest rates. Instead, yields fell, driving prices of fixed-income securities higher. Disappointing first-quarter GDP figures kept bids for bonds strong, and the Barclays U.S. Aggregate Bond Index returned 4.90%.

While it trailed its blended reference benchmark during the period, the portfolio benefited from solid total returns from a range of its underlying exposures. An allocation to emerging-market equity boosted returns, as did targeted exposure to real estate investment trusts, health care, and information technology stocks.

The portfolio’s exposure to international developed-market equities weighed on relative returns. Europe and Japan faced headwinds as each tried to stimulate growth and fight off deflationary pressures. The portfolio’s allocation to U.S. small cap stocks was also a relative hindrance during this particular period.

Within fixed income, allocations to credit-oriented sectors, including investment-grade and high-yield corporate bonds, were key contributors to performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Lifestyle II Growth Portfolio Class 1 (began 12/30/13) — — — — — — 7.10%
Lifestyle II Growth Portfolio Class R6 (began 12/30/13) — — — — — — 7.10%
S&P 500 Index3,6 — — — — — — 10.32%
Barclays U.S. Aggregate Bond Index4,6 — — — — — — 4.90%
Combined Index5,6 — — — — — — 9.26%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Lifestyle II Growth Portfolio expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely-traded common Stocks.
4 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
5 Combined Index is comprised of 80% S&P 500 Index and 20% Barclays U.S. Aggregate Bond Index
6 It is not possible to invest directly in an index.

The expense ratios of the portfolio, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.74% and Class NAV shares – 0.77%.

27

 


Lifestyle II Moderate Portfolio
Subadvisors: John Hancock Asset Management and John Hancock Asset Management (North America)
Portfolio Managers: Robert M. Boyda, Michelle Daher, CFA, Steven E. Medina, Nathan W. Thooft, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Current income is also a consideration. To pursue this goal, the portfolio, which is a fund of funds, normally invests approximately 40% of its assets in underlying funds that invest primarily in equity securities and approximately 60% in underlying funds that invest primarily in fixed-income securities.


Asset Allocation* % of Total
Affiliated Investment Companies 26.8
Equity 26.8
Unaffiliated Investment Companies/  
Exchange Traded Funds 69.4
Fixed Income 56.8
Equity 12.6
Other Assets 3.8

 

* As a percentage of net assets.

**TA $10,000 investment at net asset value in Class R6 on 12/30/13 (commencement of operations) would have been valued at $10,597.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►From its inception (December 30, 2013) through August 31, 2014, the Lifestyle II Moderate Portfolio’s Class 1 shares returned 5.90%. The S&P 500 Index returned 10.32%, and the Barclays U.S. Aggregate Bond Index returned 4.90%. The portfolio’s blended benchmark, a combination of 40% S&P 500 Index and 60% Barclays U.S. Aggregate Bond Index, posted a 7.11% return for the period.

Environment ►During the period, capital markets generated positive total returns across most regions and asset classes. While there were moments of volatility, when market participants seemed to wrestle with uncertainty about the strength of the global economic recovery, investors ultimately took comfort in accommodative measures from key central banks.

The S&P 500 Index returned 10.32%, reflecting an upbeat outlook on employment and housing.

U.S. small-cap stocks underperformed on a relative basis. Outside the U.S., developed-market equities, as represented by the MSCI EAFE Index, delivered a more modest gain of 3.34%. The eurozone emerged from recession, but economic momentum slowed more recently, and inflation in Europe continued to hover below its target. Investors seemed to shrug off concerns of a slowdown in China, and emerging-market stocks enjoyed a relative rebound, besting developed-market international stocks, after an extended period of relative underperformance.

Bonds delivered respectable gains, surprising many market observers. At the beginning of the year, market consensus pointed to a prospective rise in interest rates. Instead, yields fell, driving prices of fixed-income securities higher. Disappointing first-quarter GDP figures kept bids for bonds strong, and the Barclays U.S. Aggregate Bond Index returned 4.90%.

While it trailed its blended reference benchmark during the period, the portfolio benefited from solid total returns from a range of its underlying exposures. In particular, targeted allocations to real estate investment trusts boosted returns.

The portfolio’s exposure to international developed-market equities weighed on relative returns. Europe and Japan faced headwinds as each tried to stimulate growth and fight off deflationary pressures. The portfolio’s allocation to U.S. small cap stocks was also a relative hindrance during this particular period.

Within fixed income, allocations to credit-oriented sectors, including investment-grade and high-yield corporate bonds, were key contributors to performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Lifestyle II Moderate Portfolio Class 1 (began 12/30/13) — — — — — — 5.90%
Lifestyle II Moderate Portfolio Class R6 (began 12/30/13) — — — — — — 5.97%
S&P 500 Index3,6 — — — — — — 10.32%
Barclays U.S. Aggregate Bond Index4,6 — — — — — — 4.90%
Combined Index5,6 — — — — — — 7.11%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not predict future performance.
2 Since inception, a portion of the Lifestyle II Conservative Portfolio expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index comprised of 500 widely traded U.S. common stocks.
4 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and non-convertible investment-grade debt issues.
5 The Combined Index is comprised of 60% Barclays U.S. Aggregate Bond Index and 40% S&P 500 Index.
6 It is not possible to invest directly in an index.

The expense ratios of the portfolio, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class 1 and Class R6 shares the gross expense is 0.88% and 0.94%, respectively, and the net expense is 0.82% and 0.87%, respectively.

28

 


Mid Cap Stock Fund
Subadvisor: Wellington Management Company, LLP
Portfolio Managers: Michael T. Carmen, CFA, Mario E. Abularach, CFA, and Stephen Mortimer

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth and capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of medium-sized companies with significant capital appreciation potential.


Sector Weighting* % of Total
Information Technology 24.6
Consumer Discretionary 23.0
Industrials 18.6
Health Care 15.7
Consumer Staples 5.5
Energy 4.0
Financials 3.8
Materials 3.1
Short-Term Investments & Other 1.7

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $22,501.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ending August 31, 2014, the Mid Cap Stock Fund Class NAV shares returned 19.10% and the benchmark, the Russell Midcap Growth Index, returned 23.67%.

Environment ►During the year, U.S. equities reached all-time highs early in the period. Despite political turmoil, stocks continued to climb during the fourth quarter of 2013, amid accommodative rhetoric from then U.S. Federal Reserve (Fed) chair nominee Janet Yellen. After finishing 2013 as their best year since 1997, U.S. stocks began 2014 with their worst month in nearly two years. Worries about emerging markets dominated headlines throughout the quarter. Economic and political developments sparked risk aversion across global markets, and a slowdown in China and other emerging markets overshadowed a fairly benign domestic environment. Equities rallied during the second quarter amid renewed signs of life in the housing market and the best payroll gain in more than two years. As expected, the Fed announced further reductions in its asset purchase program. Despite solid corporate earnings and better-than-expected second quarter economic growth, U.S. equities fell in July. Fear gripped the market as heightened geopolitical risks, a potential Portuguese banking crisis, and worries over Fed tightening dominated.

Within the fund, stock selection was the primary driver of underperformance. Weak security selection within the consumer discretionary, industrials, and information technology sectors more than offset positive security selection among health care, materials, and energy holdings. Sector allocation, a product of the bottom-up stock selection process, detracted from relative results during the period. In particular, an overweight to information technology and a small cash balance in a strong rising market weighed on relative results. An overweight to health care and an underweight to energy and financials was additive to relative performance.

Top detractors from relative performance during the period included premium athletic apparel manufacturer and retailer Lululemon Athletica, Inc., internet-based home services information provider Angie’s List, Inc., and software-based fleet management solutions provider FleetMatics Group, Ltd. During the period, we eliminated our positions in Lululemon Athletica and Angie’s List.

Top contributors to relative performance during the period included specialty chemical and technical services provider Platform Specialty Products Corp., pharmaceutical company Forest Laboratories, Inc., and Netherlands-based semiconductor company NXP Semiconductors NV. During the period we eliminated our position in Forest Labs.

At the end of the period, the fund’s most significant overweight allocations were to the information technology, health care, and industrials sectors. Financials, energy, and consumer staples represented the fund’s largest underweights at the end of the period.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Mid Cap Stock Fund Class 1 (began 10/15/05) 19.04% 17.44% — 9.56% 123.38% — 125.01%
Mid Cap Stock Fund Class NAV (began 10/15/05) 19.10% 17.51% — 9.62% 124.05% — 126.03%
Russell Midcap Growth Index3,4 23.67% 19.14% — 9.95% 140.05% — 132.14%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Mid Cap Stock Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell Midcap Growth Index is an unmanaged index that contains those stocks from the Russell Midcap Index with a greater than average growth orientation.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.92% and Class NAV shares – 0.87%.

29

 


Mid Value Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: David J. Wallack

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets in companies with market capitalizations that are within the S&P MidCap 400 Index or the Russell Midcap Value Index.


Sector Weighting* % of Total
Financials 26.4
Industrials 11.1
Consumer Discretionary 10.8
Energy 10.0
Health Care 8.5
Consumer Staples 8.3
Utilities 7.9
Materials 7.6
Information Technology 3.9
Telecommunication Services 0.7
Short-Term Investments & Other 4.8

 

* As a percentage of net assets.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Mid Value Fund Class NAV shares returned 26.44% and the benchmark, the Russell Midcap Value Index, returned 27.20%.

Environment ►In 2014 thus far, U.S. equity markets have continued their positive trajectory, building off of the first quarter’s gains. Although poor weather temporarily created a drag on the U.S. economy in the first quarter, there was a moderate pick-up after that. The U.S. energy sector boomed, employment rose, interest rates remained low and inflation benign. The financial markets continue to show resilience in the face of reduced bond buying by the U.S. Federal Reserve Bank, a deceleration in the housing upturn, and the most volatile geopolitical environment in some time. Mid-cap equity valuations remain high after several years of strong performance in the markets. As a result, our opportunity set is limited. Still, our investment process yielded new investment ideas in a variety of sectors in the period, including the pharmaceutical, diversified financial services, retail, and mining industries.

Stock selection in industrials and financials aided relative returns the most, while stock selection in consumer staples and consumer discretionary pared relative results somewhat for the period.

In industrials, stock selection added to relative returns for the year. Shares of Southwest Airlines Company moved sharply higher as the company continues to benefit from increased consolidation within its industry in recent years, including Southwest’s acquisition of AirTran. The firm has been realigning assets and routes to maximize profitability and has increased its share repurchase and continues to be shareholder friendly.

In financials, stock selection further added to relative results, particularly among holdings within the capital markets industry. Lazard, Ltd. operates a boutique investment bank with a best-in-class restructuring franchise and an asset management segment with a focus on equity investments. The firm has reported healthy results recently on strong profitability in its restructuring segment as well as its asset management business. Its focus on primarily equity assets under management was helpful as the capital markets provided healthy gains to equity investments.

Stock selection in consumer staples was a notable detractor from relative performance for the period. Avon Products, Inc. has been working to improve results and faced headwinds from weak performance in emerging markets. The drag weighed on relative performance for the trailing twelve month period.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Mid Value Fund Class NAV (began 1/2/09) 26.44% 16.44% — 19.15% 114.04% — 169.90%
Russell Midcap Value Index3,4 27.20% 19.45% — 20.95% 143.13% — 193.71%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Mid Value Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value Index.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 1.06%.

30

 


Real Estate Equity Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: David M. Lee

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth through a combination of capital appreciation and current income. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in the equity securities of real estate companies.


Industry Weighting* % of Total
Retail REITs 32.5
Residential REITs 18.2
Office REITs 15.2
Specialized REITs 11.7
Industrial REITs 8.3
Diversified REITs 4.9
Hotels, Resorts & Cruise Lines 3.5
Real Estate Operating Companies 1.0
Real Estate Management & Development 0.3
Short-term investments & Other 4.4

 

* As a percentage of net assets.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Real Estate Equity Fund Class NAV shares returned 24.75% and the benchmark, the Wilshire U.S. REIT Index returned 24.47%.

Environment ►The U.S. economy continues to improve at a moderate pace. Despite recent geopolitical developments, including the escalation of sectarian violence in Iraq, there have not been significant impacts on financial markets or the U.S. economy. As we have moved further along in the U.S. Federal Reserve’s (Fed) progress to taper asset purchases, the economy generally continues to show resilience. Long-term interest rates have continued to ease down throughout 2014, and have not spiked as some had feared at the end of 2013.

As a healthier fundamental outlook continues to underpin the Fed’s decision to dial back asset purchases, the conditions for an attractive environment for real estate investment remain.

Improving economic activity drives the demand for our properties, and we look forward to continued improvement in property fundamentals as new construction supply still appears constrained. The second half of 2013 brought increased investor concerns–that a rise in interest rates would place downward pressure on calculated net asset values when higher capitalization rates are factored in – but that has not materialized. Improving fundamentals should continue to help temper these concerns by leading to higher rents with growth in cash flows and distributions. We maintain a favorable long-term view of real estate fundamentals, with improving demand, somewhat limited supply, and continued access to capital markets.

An underweight position in health care real estate investment trusts (REITs) was beneficial. Stock selection was strong in the apartment segment. Essex Property Trust, Inc. is a California-based apartment REIT with properties in several west coast markets. It owns a high quality portfolio and has a history of good capital allocation and selective property development. Its acquisition of BRE Properties has been viewed favorably by the market, and shares rose during the period. Stock selection was also positive in office REITs. Favorable trends in employment have provided tailwinds to the segment. Kilroy Realty Corp. and Highwoods Properties, Inc. performed well. SL Green Realty Corp., an office REIT focusing on the Manhattan market, is benefiting from solid fundamentals. Stock selection and positioning detracted in the “other real estate” segment, where we hold Plum Creek Timber Company, which ended the period lower. An overweight position within industrial REITs detracted from relative performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Real Estate Equity Fund Class NAV (began 4/28/06) 24.75% 18.51% — 5.25% 133.73% — 53.22%
Wilshire U.S. REIT Index3,4 24.47% 19.04% — 5.87% 139.07% — 60.91%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Real Estate Equity Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Wilshire U.S. REIT Index is an unmanaged index consisting of actively traded real estate investment trusts.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.94%.

31

 


Real Estate Securities Fund
Subadvisor: Deutsche Investment Management Americas Inc.
Portfolio Managers: John F. Robertson, CFA, John W. Vojticek, Joseph D. Fisher, CFA, and David W. Zonavetch, CPA

INVESTMENT OBJECTIVE & POLICIES ►To seek to achieve a combination of long-term capital appreciation and current income. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of real estate investment trusts (REITs) and real estate companies.


Industry Weighting* % of Total
Specialized REITs 26.2
Retail REITs 25.4
Residential REITs 17.0
Office REITs 14.8
Diversified REITs 11.3
Industrial REITs 4.1
Short-Term Investments & Other 1.2

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Real Estate Securities Fund Class 1 shares returned 24.28% and the benchmark, the MSCI U.S. REIT Index, returned 24.41%.

Environment ►U.S. REITs started off the reporting period underperforming the broader equity market in the fourth quarter of 2013 as the 10-year Treasury rate trended higher to 3.03%. Economic releases were generally biased towards positive surprises at the end of 2013, and this improved data allowed the U.S. Federal Reserve Board (Fed) to announce in mid-December a decision to begin tapering purchases of long term treasuries and mortgage backed securities. On the REIT front, initial public offerings increased, and several companies took advantage of lower treasuries to issue long term debt at attractive rates. During the first half of 2014, the U.S. REIT market bounced back after a rough second half of 2013, and outperformed the broader equity market by a significant margin. The Fed continued to reduce its monthly asset purchases. The January decision to pull back on the bond program was unanimous among Fed governors, marking the first time there has not been a dissent at a policy meeting since June 2011. Comments by Fed Chair Janet Yellen at her first congressional testimony were also well received. However, February ended on a cautious note as investors monitored developments in Crimea and escalating tensions between Russia and Ukraine prompted a sharp sell-off in equities to start the month of March. In the second quarter, after months of speculation about potential easing, the European Central Bank lowered all three of its interest rates to combat low inflation. To end the period, REITs continued to rise at a steady rate as earnings were very strong.

For the annual reporting period ending August 31, 2014, the fund’s return was slightly behind that of the MSCI U.S. REIT Index. Performance relative to the benchmark was primarily a result of strong stock selection, while sector positioning had an overall neutral effect on relative performance. Stock selection was particularly beneficial in the specialty, office and hotel segments. Weak stock selection in the regional mall and healthcare industries somewhat offset this. Sector allocation was neutral, as an overweight to the outperforming office and industrial segments was offset by positioning in the regional mall and apartment sectors. During the last year, the fund’s largest overweight sectors included industrial and office, while specialty and health-care were the largest underweight areas.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Real Estate Securities Fund Class 1 (began 10/15/05) 24.28% 18.69% — 8.07% 135.58% — 99.21%
MSCI U.S. REIT Index3,4 24.41% 18.93% — 8.03% 137.89% — 98.52%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Real Estate Securities Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 MSCI U.S. REIT Index is an unmanaged index consisting of the most actively traded real estate investment trusts.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class 1 shares, the net expense equals the gross expense and is 0.79%.

32

 


Real Return Bond Fund
Subadvisor: Pacific Investment Management Company LLC
Portfolio Manager: Mihir Worah

INVESTMENT OBJECTIVE & POLICIES ►To seek maximum real return, consistent with preservation of real capital and prudent investment management. Under normal market conditions, the fund invests at least 80% of its net assets (plus borrowings for investment purposes) in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or instrumentalities and corporations which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements.


Portfolio Composition* % of Total
U.S. Government 83.9
Foreign Government Obligations 10.0
Collateralized Mortgage Obligations 2.0
Asset Backed Securities 1.5
Energy 0.6
Financials 0.5
Industrials 0.3
Utilities 0.2
Municipal Bonds 0.1
Short-Term Investments 0.9

 

* As a percentage of total investments.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $15,576.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Real Return Bond Fund Class NAV shares returned 6.62% and the benchmark, the Barclays Global Real U.S. TIPS Index, returned 5.71%.

Environment ►At the beginning of the fiscal period, the U.S. Federal Reserve’s (Fed) choice to delay tapering surprised investors. The Fed also noted it would not begin hiking rates until after quantitative easing (Q.E.) had been wound down. In January, the Fed began tapering its five-year Q.E. program by $10 billion a month. As expected, the Fed provided even greater assurances that the fed funds rate would remain near zero until signs of sustainable growth were more broadly evident. Uncertainty and volatility increased at the start of 2014 amid geopolitical tensions and weak economic data. An uncharacteristically cold winter took a toll on economic data in the U.S., resulting in a weak first quarter (GDP declined 2.9%). Rising tensions between Russia and Ukraine led to volatile swings in financial markets, particularly in equities. During the second half of the period, the Fed continued tapering its asset purchases and remains on track to eliminate these purchases during the fourth quarter of 2014. The European Central Bank announced new easing measures, including a historic negative rate on deposits, policy rate cuts, and targeted long-term refinancing operations to spur business lending. U.S. equities ended the fiscal year at all-time highs on the heels of central bank actions and improved second quarter economic data. The 10-year U.S. Treasury yield fell during the period to end August at 2.34%. During this period, the U.S. Treasury yield curve flattened as the 2-year U.S. Treasury yield rose while the 30-year U.S. Treasury yield fell sharply.

The fund’s duration as of August 31, 2013 was 6.21 years, and 6.69 years as of August 31, 2014. Exposure to inflation-linked bonds added to returns over the period. In the U.S., an overweight to treasury inflation-protected securities added to returns as intermediate and longer-dated yields rallied. Tactical out-of-benchmark exposure to developed non-U.S. bonds, particularly in Australia, Italy, and Spain, also added to returns over the period. Conversely, pay fixed exposure to long-end U.S. nominal interest rates detracted from performance as U.S. nominal yields rallied. Short exposure to Japanese nominal duration also detracted from returns, as rates declined during the reporting period.

An allocation to non-agency mortgage-backed securities contributed to performance over the last year, benefitting from the ongoing housing recovery. Exposure within investment grade corporates added to returns as they outperformed like-duration Treasuries. Lastly, holdings of emerging-market local debt, specifically in Brazil, added to returns as yields fell during the reporting period.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Real Return Bond Fund Class 1 (began 10/15/05) 6.50% 5.60% — 5.12% 31.30% — 55.76%
Real Return Bond Fund Class NAV (began 10/15/05) 6.62% 5.65% — 5.17% 31.65% — 56.41%
Barclays Global Real U.S. TIPS Index3,4 5.71% 5.45% — 5.07% 30.40% — 55.20%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Real Return Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Barclays Global Real U.S. TIPS Index is an unmanaged index that consists of Inflation-Protection securities issued by the U.S.Treasury.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.80% and Class NAV shares – 0.75%.

33

 


Science & Technology Fund
Subadvisors: T. Rowe Price Associates Inc. and Allianz Global Investors U.S., LLC
Portfolio Managers: Ken Allen, Walter C. Price, and Huachen Chen

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Current income is incidental to the fund’s objective. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in the common stocks of companies expected to benefit from the development, advancement, and/or use of science and technology.


Sector Weighting* % of Total
Information Technology 75.5
Consumer Discretionary 12.8
Health Care 3.5
Telecommunication Services 2.4
Industrials 1.5
Financials 0.3
Short-Term Investments & Other 4.0

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Science & Technology Fund Class NAV shares returned 32.14% and the benchmark, the Lipper Science & Technology Index, returned 27.46%.

Environment ►During the period, global equity markets rose amid stabilization and slight improvement in the growth outlooks for several major economies. Against this generally supportive backdrop, investors expected corporate chief information officers to increase spending on technology products and services in order to maintain profitability at their firms. This helped technology stocks outperform the broader equity markets with notable improvements in areas which struggled last year.

T. Rowe Price Associates, Inc.

Stock selection in software was by far the largest contributor to relative results for the period. Shares of Autodesk, Inc. were up sharply after the company reported several better-than-expected earnings reports over the course of the period and updated its earnings outlook for the year to account for its transition to a subscription and cloud-based model moving forward, which should allow for more revenue growth over time. An overweight and stock selection in media also contributed to relative returns. Shares of Baidu, Inc. moved higher as the company continues to benefit from its mobile monetization efforts in China.

Stock selection in semiconductors modestly hurt relative performance for the period, although an overweight to the sector helped temper most of the relative shortfall. Despite posting positive absolute returns for the period, our holdings in the digital semiconductors industry lagged their benchmark counterparts for the period.

Allianz Global Investors U.S., LLC

Last year’s strongest tech segment, internet software and services, rose more modestly during the current period after a sell-off acutely impacted the shares of stocks for which investors had high growth expectations. The selling pressures on these stocks abated after investors gained more comfort with the reset in valuation on these shares. Despite the mid-period declines, some of the fund’s top contributors to outperformance were these high expectations stocks, which exhibit high growth rates though rich valuations. In particular, our investments in electric vehicles maker Tesla Motors, Inc. and social networking company Facebook, Inc. maintained last year’s strength as quarterly reports released during the period continued to show healthy growth in demand. As ballast to the relatively volatile nature of our high-growth holdings, we also held several attractively valued stocks in traditional hardware component areas such as memory and hard disk drives. As intended, this group did well during the period in which some of our high-growth names came under selling pressure. On the negative side, our underweight to several large benchmark holdings such as Apple, Inc. and Microsoft Corp. detracted from relative performance. In the cases of Apple and Microsoft, we have narrowed our underweight to these companies given our expectations of strong product cycles. The fund’s position in Sina Corp., which runs a variety of Chinese-language news, entertainment, and social websites, was among the top detractors from returns. We decided to exit our position during the period, and will continue to monitor the Chinese social networking space closely.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Science & Technology Fund Class NAV (began 2/14/13) 32.14% — — 29.10% — — 48.39%
Lipper Science & Technology Index3,4 27.46% — — 25.04% — — 41.24%
S&P 500 Index4,5 25.25% — — 22.09% — — 36.12%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Science & Technology Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Lipper Science & Technology Index consists of the 30 largest funds in the Lipper peer category that invest primarily in the equity securities of domestic companies engaged in science and technology.
4 It is not possible to invest directly in an index.
5 S&P 500 Index is an unmanaged index that includes 500 widely traded stocks.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expenses equal the gross expenses and are 1.13%.

34

 


Short Term Government Income Fund
Subadvisor: John Hancock Asset Management
Portfolio Managers: Jeffrey N. Given and Howard C. Greene

INVESTMENT OBJECTIVE & POLICIES ►To seek a high level of current income consistent with preservation of capital; maintaining a stable share price is a secondary goal. The fund seeks to achieve its objective by investing under normal circumstances at least 80% of its net assets (plus borrowings for investment purposes) in obligations issued or guaranteed by the U.S. government and its agencies, authorities or instrumentalities (U.S. government securities). Under normal circumstances, the fund’s effective duration is no more than 3 years.


Portfolio Composition* % of Total
U.S. Government Agency 76.0
U.S. Government 19.8
Collateralized Mortgage Obligations 1.9
Short-Term Investments & Other 2.3

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Short Term Government Income Fund Class NAV shares returned 1.36% and the benchmark, the Barclays U.S. Government 1–5 Year Index returned 1.32%.

Environment ►U.S. bonds posted positive returns for the fiscal year. Returns varied during the period as interest rates ebbed and flowed with changing economic outlooks and U.S. Federal Reserve Board’s (Fed) policy expectations. Returns were negative overall late in 2013, as economic data improved steadily throughout the final quarter of the year, led by better-than-expected results in job growth, retail sales and manufacturing. In addition, third-quarter economic growth was revised upward to a 4.1% annual rate, the fastest quarterly growth rate in nearly two years. There was little change in short-term interest rates early in 2014, although the yield curve flattened as a result of a decline in long-term interest rates. The decline in interest rates was, in turn, largely in response to the Fed reducing its monthly purchases of Treasury bonds and mortgage-backed securities (MBS), which left investors believing that a federal funds rate hike was inevitable

Later in the period, economic growth continued, albeit at a relatively slow pace, as observed in key indicators for housing, consumer spending, manufacturing production and business fixed-investment activity. Inflation remained low and well below the Fed’s target. The Fed maintained its accommodative stance on short-term interest rates and announced its intention to support economic growth, with a focus on the labor and housing markets. In addition, investors appeared to be receptive of the Fed’s measured approach to tapering its monthly asset purchases. Interest rates increased slightly at the short end of the yield curve but declined in the mid and long areas of the curve. Spreads for government agency MBS tightened.

Over the period, the fund’s asset allocation and sector selection contributed to its performance. From a sector perspective, the fund’s U.S. agency holdings contributed to performance, as did U.S. Treasuries. On an individual securities basis, the fund’s holdings in Federal Farm Credit Bank and Federal Home Loan Bank contributed to performance.

Conversely, the fund’s yield curve positioning detracted from performance. From a sector perspective, the fund’s U.S. MBS agency collateralized mortgage obligations detracted from performance, as did its cash position. On an individual securities basis, the fund’s holdings in Tennessee Valley Authority and Federal Agricultural Mortgage Corp. detracted from performance.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Short Term Government Income Fund Class NAV (began 1/2/09) 1.36% 1.45% — 1.52% 7.45% — 8.95%
Barclays U.S. Government 1–5 Year Index3,4 1.32% 1.77% — 1.67% 9.16% — 9.83%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Short Term Government Income Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 The Barclays U.S. Government 1–5 Year Index is an unmanaged index of securities issued by the U.S. government with maturities of one to five years.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.62%.

35

 


Small Cap Growth Fund
Subadvisor: Wellington Management Company, LLP
Portfolio Managers: Steven C. Angeli, CFA, Mario E. Abularach, CFA, and Stephen Mortimer

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term capital appreciation. Under normal conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in small-cap companies.


Sector Weighting* % of Total
Information Technology 27.5
Industrials 20.9
Health Care 19.4
Consumer Discretionary 15.1
Financials 7.3
Energy 4.1
Materials 2.5
Consumer Staples 0.7
Short-Term Investments & Other 2.5

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Small Cap Growth Fund Class NAV shares returned 19.49% and the benchmark, the Russell 2000 Growth Index, returned 17.30%.

Environment ►During the year, U.S. equities reached all-time highs early in the period. Despite political turmoil, stocks continued to climb during the fourth quarter of 2013, amid accommodative rhetoric from then U.S. Federal Reserve (Fed) chair nominee Janet Yellen. After finishing their best year since 1997, U.S. stocks began 2014 with their worst month in nearly two years. Worries about emerging markets dominated headlines throughout the quarter. Economic and political developments sparked risk aversion across global markets, and a slowdown in China and other emerging markets overshadowed a fairly benign domestic environment. Equities rallied during the second quarter amid renewed signs of life in the housing market and the best payroll gain in more than two years. As expected, the Fed announced further reductions in its asset purchase program. Despite solid corporate earnings and better-than-expected second quarter economic growth, U.S. equities fell in July. Fear gripped the market as heightened geopolitical risks, a potential Portuguese banking crisis, and worries over Fed tightening dominated.

Security selection within the industrials, consumer discretionary, and materials sectors contributed the most to relative returns. Weak security selection in the information technology and energy sectors partially offset favorable results elsewhere in the portfolio. Underweight exposure to materials and energy and an overweight exposure to information technology weighed on relative performance. A residual cash position also detracted as equity markets surged during the period.

Top contributors to relative performance included designer and developer of software and related technologies for camera-based advanced driver assistance systems Mobileye NV, U.S.-based low cost airline Spirit Airlines, Inc., and pharmaceutical firm Salix Pharmaceuticals, Ltd. Top detractors from relative performance included software-based fleet management solutions provider FleetMatics Group, Ltd., internet-based home services information provider Angie’s List,Inc., and internet service provider Web.com Group, Inc. We eliminated our position in Angie’s List during the period.

At the end of the period, the fund was most overweight the industrials and information technology sectors. The materials, consumer staples, and health care sectors represented the fund’s largest underweights at the end of the period.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Small Cap Growth Fund Class NAV (began 9/10/08) 19.49% 17.30% — 10.96% 122.11% — 86.13%
Russell 2000 Growth Index3,4 17.30% 18.29% — 11.75% 131.55% — 94.17%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Small Cap Growth Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 2000 Growth Index is an unmanaged index that contains those securities from the Russell 2000 Index with a greater than average growth orientation.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 1.12%.

36

 


Small Cap Opportunities Fund
Subadvisors: Dimensional Fund Advisors LP and Invesco Advisers, Inc.
Portfolio Managers: Juliet Ellis, CFA, Juan Hartsfield, CFA, Henry F. Gray, Jed S. Fogdall, and Joseph H. Chi, CFA

INVESTMENT OBJECTIVE & POLICIES ►The fund seeks long-term capital appreciation. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of small-capitalization companies.


Sector Weighting* % of Total
Financials 21.0
Industrials 17.2
Information Technology 16.5
Consumer Discretionary 11.6
Health Care 10.6
Energy 9.0
Materials 6.2
Consumer Staples 2.2
Utilities 0.8
Telecommunication Services 0.7
Short-Term Investments & Other 4.2

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $17,554.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Small Cap Opportunities Fund Class NAV shares returned 18.72% and the benchmark, the Russell 2000 Index, returned 17.68%.

Environment ►The U.S. market had positive performance for the one year period ending August 31, 2014 and outperformed both non-U.S. developed and emerging markets. In terms of relative price, low relative price stocks (value stocks) outperformed high relative price (growth stocks) among small caps during the period. The outperformance of value names was even stronger among mid-caps and micro caps. Along the market capitalization dimension, small caps (Russell 2000) underperformed large caps (Russell 1000) for the period.

Dimensional Fund Advisors, L.P.

In terms of relative performance, the fund benefited from its inclusion of mid cap stocks, which are largely absent from the benchmark. Mid cap deep value stocks contributed much of the outperformance, particularly in the industrials sector. Within that sector, greater weights as well as holdings differences in the road & rail and machinery industries benefited the fund, as those industries performed particularly well during the period. In addition, within the financials sector, lesser weights in both the capital markets and commercial banks industries, along with greater weights in the insurance industry also contributed to relative performance. In contrast with the previous year, the fund’s exclusion of real estate investment trusts (REITs) and highly regulated utilities detracted from performance.

Invesco Advisors, Inc.

During the reporting period, the fund posted solid positive returns. Performance in the consumer discretionary and health care sectors hurt returns, with strong stock selection in the financials sector offsetting some of the impact. In the consumer discretionary sector, gaming company Bally Technologies, Inc. was the leading detractor from relative performance. Home décor retailer Pier 1 Imports Inc., also hurt relative performance during the period. The fund underperformed in the health care sector due to stock selection. Globus Medical Inc. is an implant manufacturer with leadership in spinal products and strong product development system. The stock was impacted negatively due to pricing pressures on a group of large contracts with similar renewal periods which impacted revenue expectations.

Stock selection in other sectors contributed to results, most notably within the financials sector. E*Trade Financial Corp. and Jones Lang Lasalle, Inc. were leading contributors to performance within the sector. Throughout the year, the fund’s holdings were tilted in favor of cyclical growth while still maintaining exposure to more defensive areas of the market. Changes during the period were moderate within this framework, however the most significant changes included a reduction in consumer discretionary exposure and an increase in allocations to health care and information technology stocks.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Small Cap Opportunities Fund Class 1 (began 10/15/05) 18.66% 18.06% — 6.54% 129.37% — 75.54%
Small Cap Opportunities Fund Class NAV (began 10/15/05) 18.72% 18.12% — 6.59% 129.92% — 76.30%
Russell 2000 Index3,4 17.68% 17.03% — 8.66% 119.49% — 109.00%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Small Cap Opportunities Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 2000 Index is an unmanaged index composed of 2,000 U.S. small capitalization stocks.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses are as follows: Class 1 shares – 1.04% and Class NAV shares are 0.99%. Had the fee waivers and expense limitations not been in place, the gross expenses would be as follows: Class 1 shares –1.13% and Class NAV shares – 1.08%.

37

 


Small Company Growth Fund
Subadvisor: Invesco Advisers, Inc.
Portfolio Managers: Juliet Ellis, CFA, Juan Hartsfield, CFA, and Clay Manley, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in securities of small-capitalization companies. The fund considers a company to be a small-capitalization company if it has a market capitalization at the time of investment no larger than the largest capitalization company included in the Russell 2000 Growth Index.


Sector Weighting* % of Total
Information Technology 24.6
Health Care 18.9
Industrials 17.1
Consumer Discretionary 12.1
Financials 9.9
Energy 7.2
Materials 4.0
Consumer Staples 2.0
Telecommunication Services 1.5
Utilities 0.9
Short-Term Investments & Other 1.8

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Small Company Growth Fund Class NAV shares returned 21.25% and the benchmark, the Russell 2000 Growth Index, returned 17.30%.

Environment ►The U.S. equity market indexes rose to multiyear or all-time highs during the fiscal year ended August 31, 2014. Corporate earnings were generally resilient in the face of modest economic growth, driven by strong profitability across many sectors, and fundamentals for corporations and consumers remained relatively stable following significant recovery in prior years. U.S. equities rallied steadily throughout the end of 2013, however, the market turned volatile in the first months of 2014 as investors began to worry that stocks may have risen too far, too fast. Adding to investor uncertainty was political upheaval in Ukraine and signs of economic sluggishness in the U.S. and China. The continued ‘good but not great’ economic environment and historically low interest rates were key factors that generally led stocks higher through the end of the fiscal year.

During the reporting period, the fund posted double-digit positive returns and outperformed its style-specific index, the Russell 2000 Growth Index. Outperformance was driven by strong stock selection especially within the health care, consumer discretionary and industrials sectors.

Stock selection in the health care sector was particularly strong and included several of the top contributors for the fund overall. Notably, pharmaceuticals and biotechnology stocks including Intermune Inc., Salix Pharmaceuticals, Ltd., Jazz Pharmaceuticals PLC, and Incyte Corp. drove strong performance during the period.

Positive stock selection within the consumer discretionary sector also contributed to relative results. Fast food retailer Jack in the Box, Inc. was the strongest performing stock in the sector. Auto parts manufacturer Tenneco, Inc. was also a top contributor.

Relative performance also benefitted from stock selection in the industrials sector. Pitney Bowes, Inc. was the leading contributor within the sector and Wabtec contributed to performance as well.

Some of the outperformance was offset by performance in the energy and consumer staples sectors. Within the energy sector, Laredo Petroleum, Inc. was the largest detractor from performance. Natural and organic foods producer, Annies, Inc. was the largest relative detractor in the consumer staples sector.

Throughout the year, the fund maintained a positioning that was tilted in favor of cyclical growth while still maintaining exposure to more defensive areas of the market. Changes during the period were moderate within this framework, the most significant changes included reductions in the consumer discretionary sector.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Small Company Growth Fund Class NAV (began 10/29/05) 21.25% 19.21% — 10.31% 140.75% — 138.31%
Russell 2000 Growth Index3,4 17.30% 18.29% — 9.60% 131.55% — 124.96%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Small Company Growth Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 2000 Growth Index is an unmanaged index that contains those securities from the Russell 2000 Index with a greater than average growth orientation.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 1.07%.

38

 


Small Company Value Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: J. David Wagner, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek long-term growth of capital. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in companies with market capitalizations that do not exceed the maximum market capitalization of any security in the Russell 2000 Index at the time of purchase. The Fund invests in small companies whose common stocks are believed to be undervalued.


Sector Weighting* % of Total
Industrials 25.3
Financials 23.4
Consumer Discretionary 13.7
Information Technology 10.5
Materials 9.7
Energy 6.8
Utilities 4.2
Health Care 3.7
Consumer Staples 0.7
Telecommunication Services 0.4
Short-Term Investments & Other 1.6

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $20,425.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Small Company Value Fund Class NAV shares returned 14.54% and the benchmark, the Russell 2000 Value Index, returned 18.10%.

Environment ►The stock market has been encouragingly resilient thus far in 2014, absorbing continued tapering by the Federal Reserve Board and shaking off news of a sharp contraction in the economy in the first three months of the year. With weather-related weakness behind us, the economy appears to be on firmer footing as we continue through the back half of the year. The labor market has improved substantially, and business confidence has increased, as evidenced by the pickup in M&A activity. We are cautiously optimistic that continued loose monetary policy will result in continued economic expansion and provide a tailwind to stock prices. Nevertheless, the brief but sharp sell-off this spring in highflying segments such as therapeutics-oriented biotechnology firms, software-as-a-service providers, and certain social media stocks served as a reminder of the importance of maintaining a valuation discipline. This may be particularly true among small-caps, where valuations are generally less attractive than among larger shares.

Stock selection in consumer discretionary was the largest relative detractor for the period. Aaron’s Inc. is a specialty retailer of consumer electronics, computers, residential furniture, household appliances, and accessories using a lease ownership sales model for a majority of transactions. During the period, the company released disappointing earnings results and provided a muted 2014 outlook from management, which weighed on shares.

Stock selection in health care also hurt relative performance for the period. Diagnostic testing solutions firm Quidel Corp.’s share price tends to be sensitive to the onset of seasonal flu, which got off to a slow start and weighed on share price during early 2014, and its first-quarter 2014 earnings release showed weakness in revenue as a result of this weak flu season. The firm has an interesting pipeline that should increasingly insulate it from such significant dependence on the flu season in the coming years.

On the positive side, certain industrials companies were key contributors to relative performance, while an overweight to the sector also helped. Alaska Air Group, Inc. continued to show strong revenue and has benefited with the airlines industry in general from a more rationalized environment, in light of the consolidation of several major competitors in recent years.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Small Company Value Fund Class 1 (began 10/15/05) 14.48% 14.70% — 8.38% 98.53% — 104.25%
Small Company Value Fund Class NAV (began 10/15/05) 14.54% 14.76% — 8.43% 99.01% — 105.13%
Russell 2000 Value Index3,4 18.10% 15.74% — 7.67% 107.71% — 92.75%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Small Company Value Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell 2000 Value Index is an unmanaged index that measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 1.34% and Class NAV shares – 1.29%.

39

 


Spectrum Income Fund
Subadvisor: T. Rowe Price Associates, Inc.
Portfolio Manager: Charles M. Shriver

INVESTMENT OBJECTIVE & POLICIES ►To seek a high level of current income with moderate share price fluctuation. Under normal market conditions, the fund diversifies its assets widely among various income and equity market segments. The fund seeks to maintain broad exposure primarily to domestic and international fixed-income markets in an attempt to reduce the impact of markets that are declining and to benefit from good performance in particular market segments over time.


Portfolio Composition* % of Total
U.S. Government Agency 17.2
Foreign Government Obligations 14.2
Financials 11.8
Energy 8.9
Consumer Discretionary 8.5
U.S. Government 6.1
Industrials 5.2
Telecommunication Services 3.8
Materials 3.6
Information Technology 3.3
Asset Backed Securities 3.3
Collateralized Mortgage Obligations 3.2
Utilities 2.7
Consumer Staples 2.5
Health Care 2.4
Municipal Bonds 0.6
Short-Term Investments & Other 2.7

 

* As a percentage of net assets.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Spectrum Income Fund Class NAV shares returned 9.30% and the benchmark, the Barclays U.S. Aggregate Bond Index, returned 5.66%.

Environment ►U.S. equities produced excellent returns, with the S&P 500 Index closing above the 2,000 mark for the first time in August. Performance was supported by low interest rates, generally slow-but-steady economic growth in developed countries, positive corporate earnings growth, and new monetary stimulus measures in the eurozone.

U.S. bonds produced good results over the last year. The U.S. Federal Reserve Board (Fed) kept its fed funds target rate in the 0.00% to 0.25% range and bought $85 billion in Treasuries and agency mortgage-backed securities every month in 2013. In 2014, monthly purchases were trimmed by $10 billion increments on several occasions and asset purchases will wind down by the end of 2014.

International bonds performed very well over the year, but recent returns were marginal due to eurozone economic weakness and the continuing conflict between Russia and Ukraine. Emerging markets bonds outperformed bonds in developed non-U.S. markets despite concerns about reduced global liquidity stemming from the Fed’s tapering of asset purchases and slowing growth in emerging countries.

The fund’s outperformance was driven by our allocation to diversifying sectors, particularly dividend-paying equities, high yield bonds, and emerging market bonds, which significantly outperformed the Barclays U.S. Aggregate Bond Index for the period. Security selection also boosted relative results as a majority of positions outperformed their style-specific benchmarks for the period, most notably the investment-grade bond exposure. Conversely, our tactical underweight to long-term U.S. Treasuries detracted from relative results as the sector was one of the strong performers within the market and the portfolio.

As of 8/31/14, the fund held interest rate futures, interest rate swap futures, interest rate future options, currency forwards, and credit default. Currency forwards were used to both increase and decrease certain portfolio currency exposures. Credit default swaps were used to adjust the fund’s duration. The estimated return impact from employing currency forwards and futures was slightly negative; the impact from options and swaps was negligible.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Spectrum Income Fund Class NAV (began 10/29/05) 9.30% 7.43% — 6.49% 43.10% — 74.47%
Barclays U.S. Aggregate Bond Index3,4 5.66% 4.48% — 5.10% 24.50% — 55.19%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Spectrum Income Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.80%.

40

 


Strategic Equity Allocation Fund
Subadvisor: John Hancock Asset Management
Portfolio Managers: Robert Boyda, Steve Medina, Marcelle Daher, CFA, and Nathan Thooft, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek capital appreciation. The fund seeks to achieve its objective by investing under normal market conditions at least 80% of its net assets (plus any borrowings for investment purposes) in U.S. and foreign equity securities of any market capitalization, including futures on indexes of equity securities. The fund’s allocation to various markets and types of securities will be actively managed.


Sector Weighting* % of Total
Financials 19.0
Information Technology 15.1
Consumer Discretionary 11.3
Health Care 11.3
Industrials 10.5
Energy 8.7
Consumer Staples 8.4
Materials 4.9
Utilities 3.1
Telecommunication Services 2.9
Short-Term & Investments & Other 4.8

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Strategic Equity Allocation Fund Class NAV shares returned 21.80% and the benchmark, S&P 500 Index, returned 25.25%.

Environment ►Market returns were strong across most regions and asset classes. While there were moments when stocks seemed to wrestle with uncertainty about the strength of the global economic recovery, investors ultimately took comfort in accommodative measures from key central banks.

U.S. stocks were among the best performing equity markets, with several widely followed benchmarks reaching all-time highs. Emerging markets were able to shrug off concerns about growth and country specific catalysts helped and deliver positive absolute returns that surpassed those of the developed markets towards the latter part of the period.

The return of the fund was close to that of the high performing S&P 500, and exceeded the returns of the international and small-cap indexes, which are a part of the design construction of the fund. The fund posted strong absolute gains and was in the top quartile of its World Stock peer group over the period.

Performance over the fiscal year was driven by asset class positioning. On a geographic basis, U.S. equities contributed significantly to performance as economic data in the U.S. improved steadily over the period, particularly benefiting large- and mid-capitalization equities. Small cap equities, while posting positive absolute returns, lagged the performance of the S&P 500. Likewise, allocations to developed-market international equities also contributed to absolute performance, but detracted from relative performance. Within the international equities sleeve however, an out of benchmark allocation to emerging markets relative to developed markets contributed positively to performance.

On the whole the fund remains fundamentally positive on equities. While the potential for a sentiment-driven pullback in equities exists; we believe it is unlikely to represent a breakdown in the overall trajectory of the equity market and should present buying opportunities for long-term investors. We expect the global economic expansion to continue, reinforced by ample liquidity and added stability in emerging economies. Despite the fact that it began in 2009, the U.S. economic recovery appears ready to shift into higher gear. Loose monetary policy led by the European Central Bank, People’s Bank of China, and Bank of Japan are likely to continue to help build the momentum of global growth. While our outlook for capital markets remains upbeat, factors tempering our optimism include unintended consequences of the U.S. Federal Reserve’s tapering process, the potential for a sudden slump in China, and escalating geopolitical instability in many parts of the world. Given this challenging environment, we firmly believe that a balanced strategy employing a range of diversified asset classes is an important key to long-term investment success.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Strategic Equity Allocation Fund Class NAV (began 4/13/12) 21.80% — — 17.13% — — 45.84%
S&P 500 Index3,4 25.25% — — 19.18% — — 52.02%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Strategic Equity Allocation Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 S&P 500 Index is an unmanaged index that includes 500 widely traded common stocks.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expenses equal the gross expenses and are 0.67%.

41

 


Total Return Fund
Subadvisor: Pacific Investment Management Company, LLC
Portfolio Managers: Scott A. Mather, Mark R. Kiesel, and Mihir P. Worah

INVESTMENT OBJECTIVE & POLICIES ►To seek maximum total return, consistent with preservation of capital and prudent investment management. Under normal market conditions, the fund invests at least 65% of its net assets in a diversified portfolio of fixed-income instruments of varying maturities, which may be represented by forwards or derivatives, such as options, futures contracts or swap agreements.


Portfolio Composition* % of Total
U.S. Government Agency 20.1
Financials 18.6
Foreign Government Obligations 15.3
Collateralized Mortgage Obligations 8.9
U.S. Government 8.9
Municipal Bonds 5.8
Consumer Discretionary 3.6
Asset Backed Securities 3.1
Telecommunication Services 2.0
Health Care 1.6
Energy 1.5
Industrials 1.4
Materials 0.7
Utilities 0.1
Short-Term Investments 8.4

 

* As a percentage of total investments.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $16,710.

PORTFOLIO MANAGER’S COMMENTARY

Performance ►For the year ended August 31, 2014, the Total Return Fund Class NAV shares returned 5.52% and the benchmark, the Barclays U.S. Aggregate Bond Index, returned 5.66%.

Environment ►At the beginning of the fiscal period, the U.S. Federal Reserve’s (Fed) choice to delay tapering surprised investors. The Fed also noted it would not begin hiking rates until after quantitative easing (Q.E.) had been wound down. In January, the Fed began tapering its five-year Q.E. program by $10 billion a month. As expected, the Fed provided even greater assurances that the policy fed funds rate would remain near zero until signs of sustainable growth were more broadly evident. Uncertainty and volatility increased at the start of 2014 amid geopolitical tensions and weak economic data. An uncharacteristically cold winter took a toll on economic data in the U.S., resulting in a weak first quarter (GDP declined 2.9%). Rising tensions between Russia and Ukraine led to volatile swings in financial markets, particularly in equities. During the second half of the period, the Fed continued tapering its asset purchases and remains on track to eliminate these purchases during the fourth quarter of 2014. The European Central Bank announced new easing measures, including a historic negative rate on deposits, policy rate cuts, and targeted long-term refinancing operations to spur business lending. U.S. equities ended the fiscal year at all-time highs on the heels of central bank actions and improved second quarter economic data. The 10-year U.S. Treasury yield fell during the period to end August at 2.34%. During this period, the U.S. Treasury yield curve flattened as the 2-year U.S. Treasury yield rose while the 30-year U.S. Treasury yield fell sharply.

The fund’s duration as of August 31, 2013 was 5.02 years, and 5.55 years as of August 31, 2014. An underweight to U.S. duration was negative for returns over the period as U.S. yields rallied. Continued tactical duration exposure to Italy and Spain added to returns, as these countries benefited from ongoing central bank support. Holdings of emerging-market local debt, specifically in Mexico, added to returns as yields on such debt fell during the reporting period.

An allocation to non-agency mortgage-backed securities contributed to performance over the period, benefiting from the ongoing housing recovery. Within credit, an underweight to investment grade corporates detracted from returns as they outperformed Treasuries of similar duration. However, an allocation to high yield corporates largely offset this negative exposure as investors reached for higher yields. Lastly, short currency positioning in the yen and euro were positive for performance as these currencies depreciated against the U.S. dollar.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Total Return Fund Class 1 (began 10/15/05) 5.45% 5.06% — 5.95% 27.99% — 67.10%
Total Return Fund Class NAV (began 10/15/05) 5.52% 5.11% — 6.01% 28.27% — 67.92%
Barclays U.S. Aggregate Bond Index3,4 5.66% 4.48% — 5.04% 24.50% — 54.79%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Total Return Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Barclays U.S. Aggregate Bond Index is an unmanaged index of dollar-denominated and nonconvertible investment-grade debt issues.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.79% and Class NAV shares – 0.74%.

42

 


U.S. High Yield Bond Fund
Subadvisor: Wells Capital Management, Inc.
Portfolio Managers: Philip Susser and Niklas Nordenfelt, CFA

INVESTMENT OBJECTIVE & POLICIES ►To seek total return with a high level of current income. Under normal market conditions, the fund invests at least 80% of its net assets (plus any borrowings for investment purposes) in U.S. corporate debt securities that are, at the time of investment, below investment grade, including preferred and other convertible securities in below-investment-grade debt securities (sometimes referred to as “junk bonds” or high yield securities). The fund also invests in corporate debt securities that are investment grade, and may buy preferred and other convertible securities and bank loans that are investment grade.


Portfolio Composition* % of Total
Consumer Discretionary 18.8
Energy 17.1
Financials 15.7
Telecommunication Services 11.6
Industrials 9.9
Health Care 8.2
Information Technology 6.9
Utilities 6.8
Materials 2.0
Consumer Staples 1.4
Short-Term Investments & Other 1.6

 

* As a percentage of net assets.

** A $10,000 investment at net asset value in Class 1 on 10/15/05 (commencement of operations) would have been valued at $19,487.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the U.S. High Yield Bond Fund Class NAV shares returned 9.66% and the benchmark, the BofA Merrill Lynch U.S. High Yield Master II Index, returned 10.60%.

Environment ►During the year, high-yield bonds continued to benefit from rising stock prices, rising treasury prices, and relatively low volatility. Treasury rates have been consistently declining since the end of 2013 proving to be attractive relative to European sovereign bonds. This has provided a strong backdrop for high yield bonds and long duration high yield bonds in particular.

The fund participated in the strong appreciation of the high-yield bond market with the fund’s longer duration assets outperforming its short dated assets. Holdings of pipeline and wireless companies helped relative performance. Given the strong high yield market, cash had a negative impact on relative performance even though cash levels were not particularly elevated. Less sensitivity to interest rates and a slightly lower risk profile detracted from relative performance. Underperformance of portfolio holdings within media and entertainment and cable/satellite TV companies also hurt.

Yields have declined over the past year, which has both reduced the return of high yield and increased the risk of a fall in prices of high yield. Companies’ balance sheets have remained relatively stable as companies have increased debt and cash flow at roughly the same rate. So long as there are no external shocks or unexpected rises in interest rates, we believe high yield can stay at these historically high levels.

High yield and most other asset classes have been underpinned by low rates and quantitative easing. Investors’ alternative safe haven assets such as treasuries and German Bunds have negative real yields and virtually no absolute yields. If rates rise meaningfully over the next year, we would not be surprised to see a slight sell-off in the high yield market as these assets become more viable alternatives. If the rise is coincident with a strong economy, we expect high yield to outperform most other fixed income assets. Higher rates and a slowdown in the economy would lead to greater uncertainty over which (if any) assets perform well.

In the long run, we expect high yield’s relative performance will be primarily driven by corporate fundamentals. Our near-term default outlook remains very benign. Over a full cycle, we believe the best way to protect the fund from periodic bouts of systemic volatility will be our continued focus on a bottom-up approach that attempts to minimize downside risk while capturing the return potential of high yield issuers.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
U.S. High Yield Bond Fund Class 1 (began 10/15/05) 9.60% 9.89% — 7.80% 60.25% — 94.87%
U.S. High Yield Bond Fund Class NAV (began 10/15/05) 9.66% 9.93% — 7.85% 60.56% — 95.66%
BofA Merrill Lynch U.S. High Yield Master II Index3,4 10.60% 12.16% — 8.90% 77.51% — 113.23%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the U.S. High Yield Bond Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 BofA Merrill Lynch U.S. High Yield Master II Index is an unmanaged index composed of U.S. currency high-yield bonds issued by U.S. and non-U.S. issuers.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectuses for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. The net expenses equal the gross expenses and are as follows: Class 1 shares – 0.81% and Class NAV shares – 0.76%.

43

 


Value Fund
Subadvisor: Invesco Advisers, Inc.
Portfolio Managers: Thomas Copper, CFA, John Mazanec, and Sergio Marcheli

INVESTMENT OBJECTIVE & POLICIES ►To realize an above-average total return over a market cycle of three to five years, consistent with reasonable risk. Under normal market conditions, the fund invests in equity securities of companies with capitalizations, at the time of investment, similar to the market capitalization of companies in the Russell Midcap Value Index.


Sector Weighting* % of Total
Financials 25.9
Industrials 17.1
Information Technology 11.9
Health Care 11.5
Consumer Discretionary 11.0
Energy 6.4
Materials 5.6
Consumer Staples 3.2
Utilities 3.2
Telecommunication Services 2.6
Short-Term Investments & Other 1.6

 

* As a percentage of net assets.

PORTFOLIO MANAGERS’ COMMENTARY

Performance ►For the year ended August 31, 2014, the Value Fund Class NAV shares returned 24.03% and the benchmark, the Russell Midcap Value Index, returned 27.20%

Environment ►The fiscal year began amid uncertainty created by a two-week federal government shutdown, yet equities shrugged off this news and rallied steadily throughout the fourth quarter of 2013. In December, the U.S. Federal Reserve (Fed) officially announced that it would begin reducing the scope of Quantitative Easing in early 2014. Despite the Fed’s actions, equities continued to rise, as the announcement was widely anticipated and largely priced into stock valuations. However, the U.S. equity market turned volatile in the first four months of 2014 as investors worried that stocks may have risen too far, too fast. Adding to investor uncertainty was political upheaval abroad and signs of economic sluggishness in the U.S. and China. However, investors’ confidence in the economic recovery returned, and stocks rallied through the summer, with the S&P 500 surpassing the 2,000 level by the end of August. The other major U.S. equity market indexes delivered double-digit gains, and all sectors of the Russell Midcap Value Index posted positive returns.

On the negative side, stock selection in the consumer staples sector was the largest detractor from relative results during the period. Within the sector, Avon Products, Inc. was a key detractor after missing earnings estimates and warning of a larger than expected fine to settle a bribery probe. Though the consumer discretionary sector generated a positive absolute return, poor stock selection detracted from relative performance during the period. The largest detractor in the sector was Express, Inc., a women’s fashion retailer that was negatively impacted by severe winter weather in the first quarter of 2014. Stock selection and an underweight in the information technology sector detracted from performance, and the fund’s cash position also muted results relative to the benchmark.

On the positive side, strong stock selection in energy positively contributed to the fund’s relative return, and within the sector, Newfield Exploration Company and Williams Companies, Inc. were two of the top contributors to performance. Newfield’s earnings topped analyst’s expectations, and management reported a better than expected production outlook for 2014. Stock selection and an overweight position in the health care and utilities sectors also had a positive impact on performance.

During the period, managers increased exposure to information technology, financials, health care and industrials, and decreased exposure to materials, consumer discretionary, energy and utilities. At the end of the period, the fund’s largest sector overweights were in industrials and health care, and the largest underweights were in utilities and financials.

PERFORMANCE TABLE1,2   Average Annual Total Return   Cumulative Total Return
        Since     Since
Periods Ending August 31, 2014 1-year 5-year 10-year Inception 5-year 10-year Inception
Value Fund Class NAV (began 10/27/06) 24.03% 19.20% — 9.46% 140.62% — 103.23%
Russell Midcap Value Index3,4 27.20% 19.45% — 8.16% 143.13% — 85.04%

 

1 Performance does not reflect the deduction of taxes on fund distributions or redemptions of fund shares. Past performance does not guarantee future results.
2 Since inception, a portion of the Value Fund expenses was reimbursed. If such expenses had not been reimbursed, returns would be lower.
3 Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values.
4 It is not possible to invest directly in an index.

The expense ratios of the fund, both net (including any fee waivers or expense limitations) and gross (excluding any fee waivers or expense limitations), are set forth according to the most recent publicly available prospectus for the fund and may differ from the expense ratios disclosed in the financial highlights tables in this report. For Class NAV shares, the net expense equals the gross expense and is 0.78%.

44

 


John Hancock Funds II

Shareholder expense example

As a shareholder of John Hancock Funds II, you incur ongoing costs, such as management fees, distribution (Rule 12b-1) fees and other expenses. In the case of Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio and Lifestyle II Moderate Portfolio, in addition to the operating expenses which the fund bears directly, the funds indirectly bears a pro rata share of the operating expenses of the underlying funds in which the funds invest. Because the underlying funds have varied operating expenses and transaction costs and the funds may own different proportions of the underlying funds at different times, the amount of expenses incurred indirectly by the funds will vary. If these indirect expenses were included, your expenses paid during the period would have been higher.

This example is intended to help you understand your ongoing costs (in dollars) of investing in the funds so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (March 1, 2014 through August 31, 2014).

Actual expenses:

The first line of each share class in the table below and on the following pages provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes:

The second line of each share class in the table below and on the following pages provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed annualized rate of return of 5% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please remember that these hypothetical account values may not be used to estimate the actual ending account balance or expenses you paid for the period.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs and insurance-related charges. Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

      Expenses Paid  
  Beginning Ending During Period1 Annualized
  Account Value Account Value 3/1/2014– Expense
  3/1/2014 8/31/2014 8/31/2014 Ratio
Active Bond Fund        
Class 1 — Actual $1,000.00 $1,036.80 $3.49 0.68%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.80 3.47 0.68%
Class NAV — Actual 1,000.00 1,038.00 3.24 0.63%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.00 3.21 0.63%
All Cap Core Fund        
Class NAV — Actual $1,000.00 $1,060.20 $4.21 0.81%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.10 4.13 0.81%
Alpha Opportunities Fund        
Class NAV — Actual $1,000.00 $1,031.90 $4.97 0.97%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.30 4.94 0.97%
Asia Pacific Total Return Bond Fund        
Class NAV — Actual $1,000.00 $1,040.00 $4.42 0.86%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.90 4.38 0.86%

 

45

 


John Hancock Funds II

Shareholder expense example

      Expenses Paid  
  Beginning Ending During Period1 Annualized
  Account Value Account Value 3/1/2014– Expense
  3/1/2014 8/31/2014 8/31/2014 Ratio
Blue Chip Growth Fund        
Class 1 — Actual $1,000.00 $1,030.10 $4.25 0.83%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.00 4.23 0.83%
Class NAV — Actual 1,000.00 1,030.40 3.99 0.78%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.30 3.97 0.78%
Capital Appreciation Fund        
Class 1 — Actual $1,000.00 $1,025.20 $3.98 0.78%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.30 3.97 0.78%
Class NAV — Actual 1,000.00 1,025.20 3.73 0.73%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.50 3.72 0.73%
Capital Appreciation Value Fund        
Class NAV — Actual $1,000.00 $1,056.60 $4.20 0.81%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.10 4.13 0.81%
Core Bond Fund        
Class 1 — Actual $1,000.00 $1,027.60 $3.48 0.68%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.80 3.47 0.68%
Class NAV — Actual 1,000.00 1,027.10 3.22 0.63%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.00 3.21 0.63%
Equity-Income Fund        
Class 1 — Actual $1,000.00 $1,070.30 $4.33 0.83%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.00 4.23 0.83%
Class NAV — Actual 1,000.00 1,070.40 4.07 0.78%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.30 3.97 0.78%
Fundamental Global Franchise Fund        
Class A — Actual $1,000.00 $1,037.60 $7.70 1.50%
Class A — Hypothetical (5% annualized return before expenses) 1,000.00 1,017.60 7.63 1.50%
Class I — Actual 1,000.00 1,039.90 5.24 1.02%
Class I — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.10 5.19 1.02%
Class NAV — Actual 1,000.00 1,039.90 4.63 0.90%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.70 4.58 0.90%
Global Bond Fund        
Class 1 — Actual $1,000.00 $1,026.80 $4.24 0.83%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.00 4.23 0.83%
Class NAV — Actual 1,000.00 1,026.90 3.98 0.78%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.30 3.97 0.78%
Global Equity Fund        
Class A — Actual $1,000.00 $1,056.20 $7.00 1.35%
Class A — Hypothetical (5% annualized return before expenses) 1,000.00 1,018.40 6.87 1.35%
Class I — Actual 1,000.00 1,058.80 5.40 1.04%
Class I — Hypothetical (5% annualized return before expenses) 1,000.00 1,019.90 5.30 1.04%
Class NAV — Actual 1,000.00 1,058.80 4.83 0.93%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.50 4.74 0.93%
Global Real Estate Fund        
Class NAV — Actual $1,000.00 $1,098.20 $5.39 1.02%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.10 5.19 1.02%
Health Sciences Fund        
Class NAV — Actual $1,000.00 $1,061.30 $4.99 0.96%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.40 4.89 0.96%
High Yield Fund        
Class 1 — Actual $1,000.00 $1,031.90 $3.84 0.75%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.40 3.82 0.75%
Class NAV — Actual 1,000.00 1,032.40 3.59 0.70%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.70 3.57 0.70%

 

46

 


John Hancock Funds II

Shareholder expense example

      Expenses Paid  
  Beginning Ending During Period1 Annualized
  Account Value Account Value 3/1/2014– Expense
  3/1/2014 8/31/2014 8/31/2014 Ratio
International Growth Opportunities Fund        
Class NAV — Actual $1,000.00 $1,009.20 $4.81 0.95%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.40 4.84 0.95%
International Growth Stock Fund        
Class NAV — Actual $1,000.00 $1,054.80 $4.82 0.93%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.50 4.74 0.93%
International Small Cap Fund        
Class 1 — Actual $1,000.00 $1,017.20 $5.85 1.15%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,019.40 5.85 1.15%
Class NAV — Actual 1,000.00 1,017.30 5.59 1.10%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,019.70 5.60 1.10%
International Value Fund        
Class 1 — Actual $1,000.00 $1,020.90 $4.94 0.97%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.30 4.94 0.97%
Class NAV — Actual 1,000.00 1,021.50 4.69 0.92%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.60 4.69 0.92%
Investment Quality Bond Fund        
Class 1 — Actual $1,000.00 $1,026.00 $3.52 0.69%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.70 3.52 0.69%
Class NAV — Actual 1,000.00 1,025.40 3.27 0.64%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.00 3.26 0.64%
Lifestyle II Aggressive Portfolio        
Class R6 — Actual $1,000.00 $1,067.40 $1.96 0.38%2
Class R6 — Hypothetical (5% annualized return before expenses) 1,000.00 1,023.30 1.92 0.38%2
Class 1 — Actual 1,000.00 1,067.40 1.72 0.33%2
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,023.50 1.68 0.33%2
Lifestyle II Balanced Portfolio        
Class R6 — Actual $1,000.00 $1,050.40 $2.58 0.50%2
Class R6 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.90 2.55 0.50%2
Class 1 — Actual 1,000.00 1,050.60 2.33 0.45%2
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.90 2.29 0.45%2
Lifestyle II Conservative Portfolio        
Class R6 — Actual $1,000.00 $1,033.80 $3.23 0.63%2
Class R6 — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.00 3.21 0.63%2
Class 1 — Actual 1,000.00 1,034.00 2.99 0.58%2
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.30 2.97 0.58%2
Lifestyle II Growth Portfolio        
Class R6 — Actual $1,000.00 $1,058.30 $2.28 0.44%2
Class R6 — Hypothetical (5% annualized return before expenses) 1,000.00 1,023.00 2.24 0.44%2
Class 1 — Actual 1,000.00 1,058.30 2.02 0.39%2
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,023.20 1.99 0.39%2
Lifestyle II Moderate Portfolio        
Class R6 — Actual $1,000.00 $1,042.00 $2.93 0.57%2
Class R6 — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.30 2.91 0.57%2
Class 1 — Actual 1,000.00 1,040.20 2.67 0.52%2
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,012.60 2.65 0.52%2
Mid Cap Stock Fund        
Class 1 — Actual $1,000.00 $997.80 $4.58 0.91%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.60 4.63 0.91%
Class NAV — Actual 1,000.00 998.20 4.33 0.86%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.90 4.38 0.86%
Mid Value Fund        
Class NAV — Actual $1,000.00 $1,089.80 $5.16 0.98%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.30 4.99 0.98%

 

47

 


John Hancock Funds II

Shareholder expense example

      Expenses Paid  
  Beginning Ending During Period1 Annualized
  Account Value Account Value 3/1/2014– Expense
  3/1/2014 8/31/2014 8/31/2014 Ratio
Real Estate Equity Fund        
Class NAV — Actual $1,000.00 $1,103.30 $4.67 0.88%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.80 4.48 0.88%
Real Estate Securities Fund        
Class 1 — Actual $1,000.00 $1,107.90 $4.14 0.78%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.30 3.97 0.78%
Real Return Bond Fund        
Class 1 — Actual $1,000.00 $1,040.40 $4.06 0.79%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.20 4.02 0.79%
Class NAV — Actual 1,000.00 1,041.00 3.81 0.74%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.50 3.77 0.74%
Science & Technology Fund        
Class NAV — Actual $1,000.00 $1,068.30 $5.27 1.01%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.10 5.14 1.01%
Short Term Government Income Fund        
Class NAV — Actual $1,000.00 $1,004.00 $3.13 0.62%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.10 3.16 0.62%
Small Cap Growth Fund        
Class NAV — Actual $1,000.00 $985.70 $5.51 1.10%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,019.70 5.60 1.10%
Small Cap Opportunities Fund        
Class 1 — Actual $1,000.00 $1,017.20 $5.24 1.03%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.00 5.24 1.03%
Class NAV — Actual 1,000.00 1,017.60 4.98 0.98%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.30 4.99 0.98%
Small Company Growth Fund        
Class NAV — Actual $1,000.00 $1,002.40 $5.30 1.05%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,019.90 5.35 1.05%
Small Company Value Fund        
Class 1 — Actual $1,000.00 $988.60 $5.31 1.06%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,019.90 5.40 1.06%
Class NAV — Actual 1,000.00 988.90 5.06 1.01%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,020.10 5.14 1.01%
Spectrum Income Fund        
Class NAV — Actual $1,000.00 $1,036.60 $3.85 0.75%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.40 3.82 0.75%
Strategic Equity Allocation Fund        
Class NAV — Actual $1,000.00 $1,062.40 $2.76 0.53%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,022.50 2.70 0.53%
Total Return Fund        
Class 1 — Actual $1,000.00 $1,017.70 $3.76 0.74%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.50 3.77 0.74%
Class NAV — Actual 1,000.00 1,018.70 3.51 0.69%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.70 3.52 0.69%
U.S. High Yield Bond Fund        
Class 1 — Actual $1,000.00 $1,033.00 $4.20 0.82%
Class 1 — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.10 4.18 0.82%
Class NAV — Actual 1,000.00 1,033.30 3.95 0.77%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.30 3.92 0.77%

 

48

 


John Hancock Funds II

Shareholder expense example

      Expenses Paid  
  Beginning Ending During Period1 Annualized
  Account Value Account Value 3/1/2014– Expense
  3/1/2014 8/31/2014 8/31/2014 Ratio
Value Fund        
Class NAV — Actual $1,000.00 $1,077.60 $3.82 0.73%
Class NAV — Hypothetical (5% annualized return before expenses) 1,000.00 1,021.50 3.72 0.73%

 

1 Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (184) and divided by 365 (to reflect the one-half year period).

2 The funds’ expense ratios do not include fees and expenses indirectly incurred by the underlying funds whose expense ratios can vary based on the mix of underlying funds held by the funds. The range of expense ratios of the underlying funds held by the funds was as follows:

Fund Range
Lifestyle II Aggressive Portfolio 0.09% – 0.52%
Lifestyle II Balanced Portfolio 0.08% – 0.65%
Lifestyle II Conservative Portfolio 0.08% – 0.65%
Lifestyle II Growth Portfolio 0.08% – 0.65%
Lifestyle II Moderate Portfolio 0.08% – 0.65%

 

49

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund      
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 24.1%      
U.S. Government - 6.5%      
U.S. Treasury Bonds      
3.125%, 02/15/2042 $ 9,190,000 $ 9,324,983
3.375%, 05/15/2044   44,205,000 46,802,044
U.S. Treasury Notes      
0.875%, 07/15/2017   6,380,000 6,372,523
1.375%, 09/30/2018   5,000,000 4,992,190
1.500%, 07/31/2016   2,740,000 2,792,553
1.625%, 03/31/2019   8,000,000 8,023,128
2.000%, 07/31/2020   3,000,000 3,026,016
2.250%, 04/30/2021   8,000,000 8,127,188
2.375%, 05/31/2018 to 08/15/2024   21,775,000 21,970,649
 
      111,431,274
U.S. Government Agency - 17.6%      
Federal Home Loan Banks      
2.900%, 09/05/2025   623,810 609,028
3.170%, 10/04/2027   635,000 613,387
3.250%, 06/21/2027   854,545 846,209
Federal Home Loan Mortgage Corp.      
2.558%, 06/01/2044 (P)   1,635,079 1,679,730
2.694%, 05/01/2044 (P)   1,696,968 1,750,355
3.000%, 03/01/2043   3,263,509 3,273,835
3.036%, 03/01/2044 (P)   559,069 579,742
3.500%, 01/01/2042 to 09/01/2043   4,072,405 4,206,585
4.000%, 02/01/2044   2,169,837 2,301,737
4.500%, 09/01/2041 to 10/01/2041   8,362,180 9,036,843
5.000%, 03/01/2041 to 04/01/2041   6,039,971 6,687,814
5.500%, 07/01/2037   112,084 124,750
6.500%, 11/01/2037 to 09/01/2039   1,356,759 1,524,715
Federal National Mortgage Association      
1.946%, 05/01/2035 (P)   570,616 605,042
2.180%, 01/01/2036 (P)   399,678 427,953
2.191%, 04/01/2036 (P)   113,516 120,217
2.497%, 07/01/2033 (P)   941 1,008
2.531%, 06/01/2044 (P)   2,940,801 3,022,003
2.549%, 04/01/2044 (P)   2,847,285 2,928,860
2.910%, 03/01/2044 (P)   495,015 512,273
3.000%, TBA (C)   28,250,000 28,115,372
3.000%, 07/01/2027 to 05/01/2043   29,944,150 30,059,709
3.400%, 09/27/2032   2,315,000 2,241,237
3.500%, TBA (C)   14,000,000 14,410,638
3.500%, 02/01/2026 to 07/01/2043   13,522,176 14,109,542
4.000%, TBA (C)   10,500,000 11,123,922
4.000%, 12/01/2024 to 01/01/2044   38,198,229 40,593,059
4.500%, 02/01/2041 to 11/01/2042   39,244,731 42,628,850
5.000%, 05/01/2018 to 04/01/2041   36,625,582 40,517,354
5.500%, 02/01/2018 to 03/01/2039   18,251,404 20,363,700
6.000%, 09/01/2022 to 02/01/2037   5,000,201 5,653,069
6.250%, 05/15/2029   157,000 215,129
6.500%, 02/01/2036 to 06/01/2039   3,327,602 3,761,259
7.000%, 04/01/2017 to 06/01/2032   7,375 8,558
7.500%, 09/01/2029 to 08/01/2031   1,652 1,970
Government National      
Mortgage Association      
4.000%, 02/15/2041   6,157,473 6,578,678
5.000%, 04/15/2035   19,356 21,426
5.500%, 03/15/2035   10,617 11,934
6.000%, 03/15/2033 to 06/15/2033   8,524 9,755
6.500%, 09/15/2028 to 08/15/2031   1,955 2,263
7.000%, 04/15/2029   1,196 1,406

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Government National Mortgage      
Association (continued)      
8.000%, 10/15/2026 $ 1,146 $ 1,365
 
      301,282,281
TOTAL U.S. GOVERNMENT & AGENCY    
OBLIGATIONS (Cost $407,687,373)   $ 412,713,555
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 0.2%      
Argentina - 0.1%      
City of Buenos Aires      
9.950%, 03/01/2017 (S)   1,235,000 1,193,010
Republic of Argentina      
8.280%, 12/31/2033 (H)   1,016,478 813,182
9.224%, 12/15/2035 (P) ARS 393,449 3,466
 
      2,009,658
Japan - 0.0%      
Government of Japan      
1.500%, 09/20/2014 JPY 1,350,000 12,984
Mexico - 0.0%      
Government of Mexico      
8.000%, 12/07/2023 MXN 238,900 21,243
Panama - 0.0%      
Republic of Panama      
8.875%, 09/30/2027 $ 6,000 8,865
9.375%, 04/01/2029   1,000 1,545
 
      10,410
Turkey - 0.1%      
Republic of Turkey      
6.625%, 02/17/2045   1,000,000 1,191,500
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $3,073,050)   $ 3,245,795
 
CORPORATE BONDS - 43.8%      
Consumer Discretionary - 3.7%      
21st Century Fox America, Inc.      
5.400%, 10/01/2043   1,000,000 1,153,692
6.150%, 03/01/2037 to 02/15/2041   1,165,000 1,428,002
6.400%, 12/15/2035   430,000 547,877
6.650%, 11/15/2037   865,000 1,108,138
6.750%, 01/09/2038   2,000 2,509
7.750%, 12/01/2045   9,000 13,428
Advance Auto Parts, Inc.      
4.500%, 12/01/2023   1,350,000 1,432,686
AMC Entertainment, Inc.      
5.875%, 02/15/2022   1,110,000 1,143,300
Arcos Dorados Holdings, Inc.      
10.250%, 07/13/2016 (S) BRL 1,355,000 569,905
AutoNation, Inc.      
5.500%, 02/01/2020 $ 1,965,000 2,156,588
Bed Bath & Beyond, Inc.      
3.749%, 08/01/2024   555,000 565,637
5.165%, 08/01/2044   555,000 577,575
Brinker International, Inc.      
3.875%, 05/15/2023   1,010,000 996,880
CCM Merger, Inc.      
9.125%, 05/01/2019 (S)   1,180,000 1,256,700
Chrysler Group LLC      
8.000%, 06/15/2019   440,000 473,286

 

The accompanying notes are an integral part of the financial statements. 50

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Comcast Corp.      
6.550%, 07/01/2039 $ 1,000,000 $ 1,337,121
Conn’s, Inc.      
7.250%, 07/15/2022 (S)   1,400,000 1,351,000
Cox Communications, Inc.      
5.450%, 12/15/2014   70,000 70,973
Dana Holding Corp.      
6.000%, 09/15/2023   1,170,000 1,246,050
Delphi Corp.      
5.000%, 02/15/2023   3,070,000 3,296,413
Ford Motor Company      
4.750%, 01/15/2043   435,000 455,754
Ford Motor Credit Company LLC      
5.875%, 08/02/2021   5,253,000 6,173,741
General Motors Company      
4.875%, 10/02/2023   1,370,000 1,465,900
6.250%, 10/02/2043   1,210,000 1,418,725
Harley-Davidson Financial Services, Inc.      
2.700%, 03/15/2017 (S)   1,000,000 1,032,891
Hot Topic, Inc.      
9.250%, 06/15/2021 (S)   645,000 706,275
Hyatt Hotels Corp.      
3.375%, 07/15/2023   1,590,000 1,567,393
Jo-Ann Stores Holdings, Inc., PIK      
9.750%, 10/15/2019 (S)   1,345,000 1,291,200
L Brands, Inc.      
6.625%, 04/01/2021   1,620,000 1,824,525
Macy’s Retail Holdings, Inc.      
7.875%, 08/15/2036   1,440,000 1,595,328
MDC Holdings, Inc.      
5.500%, 01/15/2024   1,330,000 1,362,354
Myriad International Holdings BV      
6.000%, 07/18/2020 (S)   840,000 919,968
New Look Bondco I PLC      
8.375%, 05/14/2018 (S)   380,000 402,800
Pearson Funding Five PLC      
3.250%, 05/08/2023 (S)   1,740,000 1,681,886
Quiksilver, Inc.      
7.875%, 08/01/2018 (S)   1,175,000 1,107,438
QVC, Inc.      
4.375%, 03/15/2023   910,000 917,220
5.125%, 07/02/2022   820,000 880,410
5.450%, 08/15/2034 (S)   950,000 958,879
Royal Caribbean Cruises, Ltd.      
5.250%, 11/15/2022   1,000,000 1,050,000
Seminole Indian Tribe of Florida      
6.535%, 10/01/2020 (S)   1,205,000 1,307,425
Stackpole International Intermediate      
Company SA      
7.750%, 10/15/2021 (S)   800,000 816,000
The Hillman Group, Inc.      
6.375%, 07/15/2022 (S)   355,000 354,113
Time Warner Cable, Inc.      
4.500%, 09/15/2042   1,650,000 1,671,910
5.500%, 09/01/2041   1,450,000 1,679,818
8.250%, 04/01/2019   1,010,000 1,270,610
Time Warner Companies, Inc.      
7.570%, 02/01/2024   34,000 44,395
Time Warner Entertainment Company LP      
8.375%, 07/15/2033   535,000 805,001
Time Warner, Inc.      
3.400%, 06/15/2022   1,500,000 1,519,118
7.625%, 04/15/2031   9,000 12,471

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Toll Brothers Finance Corp.      
4.000%, 12/31/2018 $ 1,400,000 $ 1,424,500
Tops Holding II Corp.      
8.750%, 06/15/2018   785,000 806,588
Viacom, Inc.      
4.375%, 03/15/2043   1,078,000 1,010,085
6.125%, 10/05/2017   1,500,000 1,704,333
Waterford Gaming LLC      
8.625%, 09/15/2014 (S)   90,905 20,139
WideOpenWest Finance LLC      
10.250%, 07/15/2019   320,000 356,800
Yum! Brands, Inc.      
3.875%, 11/01/2023   1,400,000 1,437,402
6.250%, 03/15/2018   88,000 100,531
6.875%, 11/15/2037   250,000 329,625
 
      64,211,311
Consumer Staples - 1.7%      
Ajecorp BV      
6.500%, 05/14/2022 (S)   1,110,000 1,065,600
Alliance One International, Inc.      
9.875%, 07/15/2021   2,450,000 2,450,000
Anheuser-Busch Companies, Inc.      
6.500%, 02/01/2043   10,000 13,648
Bunge, Ltd. Finance Corp.      
8.500%, 06/15/2019   855,000 1,070,573
Cargill, Inc.      
6.125%, 09/15/2036 (S)   665,000 842,002
Crestview DS Merger Sub II, Inc.      
10.000%, 09/01/2021   980,000 1,107,400
CVS Pass-Through Trust      
8.353%, 07/10/2031 (S)   332,450 454,010
Embotelladora Andina SA      
5.000%, 10/01/2023 (S)   1,000,000 1,067,086
Fomento Economico Mexicano SAB      
de CV      
4.375%, 05/10/2043   2,000,000 1,925,460
General Mills, Inc.      
5.700%, 02/15/2017   245,000 271,427
Grupo Bimbo SAB de CV      
4.500%, 01/25/2022 (S)   1,000,000 1,064,600
Harbinger Group, Inc.      
7.875%, 07/15/2019   1,215,000 1,318,275
Kraft Foods Group, Inc.      
6.125%, 08/23/2018   429,000 495,258
McCormick & Company, Inc.      
5.750%, 12/15/2017   1,000,000 1,136,443
Nabisco, Inc.      
7.550%, 06/15/2015   229,000 241,580
Prestige Brands, Inc.      
5.375%, 12/15/2021 (S)   770,000 764,225
Revlon Consumer Products Corp.      
5.750%, 02/15/2021   840,000 852,600
Reynolds American, Inc.      
3.250%, 11/01/2022   2,000,000 1,958,028
SABMiller PLC      
6.500%, 07/15/2018 (S)   470,000 547,018
Safeway, Inc.      
4.750%, 12/01/2021   415,000 419,966
5.000%, 08/15/2019   2,385,000 2,460,430
SC Johnson & Son, Inc.      
4.000%, 05/15/2043 (S)   1,590,000 1,610,125
Tate & Lyle International Finance PLC      
5.000%, 11/15/2014 (S)   208,000 209,692

 

The accompanying notes are an integral part of the financial statements. 51

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Staples (continued)      
TESCO PLC      
6.150%, 11/15/2037 (S) $ 570,000 $ 674,966
The Clorox Company      
5.950%, 10/15/2017   500,000 565,733
The Kroger Company      
6.800%, 12/15/2018   920,000 1,091,196
7.000%, 05/01/2018   580,000 674,782
Tops Holding Corp.      
8.875%, 12/15/2017   488,000 520,940
Tyson Foods, Inc.      
3.950%, 08/15/2024   835,000 853,039
Vector Group, Ltd.      
7.750%, 02/15/2021   790,000 841,350
 
      28,567,452
Energy - 6.4%      
Access Midstream Partners LP      
4.875%, 05/15/2023 to 03/15/2024   1,760,000 1,851,220
Afren PLC      
6.625%, 12/09/2020 (S)   1,300,000 1,238,510
10.250%, 04/08/2019 (S)   510,000 536,775
Anadarko Petroleum Corp.      
6.450%, 09/15/2036   1,550,000 1,989,653
8.700%, 03/15/2019   500,000 637,590
Apache Corp.      
6.900%, 09/15/2018   455,000 540,467
Astoria Depositor Corp.      
8.144%, 05/01/2021 (S)   1,670,000 1,761,850
Baytex Energy Corp.      
5.625%, 06/01/2024 (S)   195,000 195,000
BJ Services Company      
6.000%, 06/01/2018   880,000 1,004,781
Boardwalk Pipelines LP      
3.375%, 02/01/2023   1,150,000 1,084,663
BP Capital Markets PLC      
2.750%, 05/10/2023   720,000 700,225
4.750%, 03/10/2019   1,000,000 1,114,613
Buckeye Partners LP      
4.875%, 02/01/2021   1,104,000 1,204,126
Cameron International Corp.      
5.950%, 06/01/2041   1,177,000 1,425,774
Chaparral Energy, Inc.      
7.625%, 11/15/2022   1,000,000 1,073,750
Chesapeake Energy Corp.      
5.750%, 03/15/2023   1,000,000 1,116,250
Cimarex Energy Company      
4.375%, 06/01/2024   1,300,000 1,353,625
CNOOC Finance 2003, Ltd.      
5.500%, 05/21/2033 (S)   10,000 11,571
CNOOC Finance 2013, Ltd.      
3.000%, 05/09/2023   1,345,000 1,279,387
Compressco Partners LP      
7.250%, 08/15/2022 (S)   725,000 732,250
ConocoPhillips Canada Funding Company      
5.950%, 10/15/2036   1,000,000 1,275,469
Continental Resources, Inc.      
5.000%, 09/15/2022   2,530,000 2,729,238
DCP Midstream LLC      
9.750%, 03/15/2019 (S)   1,195,000 1,546,463
DCP Midstream LLC (5.850% to      
05/21/2023, then 3 month      
LIBOR + 3.850%)      
05/21/2043 (S)   2,940,000 2,851,800

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
DCP Midstream Operating LP      
3.875%, 03/15/2023 $ 690,000 $ 705,961
Denbury Resources, Inc.      
5.500%, 05/01/2022   820,000 840,500
Devon Energy Corp.      
4.000%, 07/15/2021   1,000,000 1,069,308
Devon Financing Corp. ULC      
7.875%, 09/30/2031   1,060,000 1,516,284
Ecopetrol SA      
5.875%, 09/18/2023   640,000 732,800
El Paso Pipeline Partners Operating      
Company LLC      
5.000%, 10/01/2021   500,000 546,045
Enbridge Energy Partners LP      
6.500%, 04/15/2018   600,000 693,137
7.500%, 04/15/2038   600,000 811,436
Encana Corp.      
6.500%, 08/15/2034   1,000,000 1,268,877
Energy Transfer Partners LP      
5.200%, 02/01/2022   2,165,000 2,388,647
6.700%, 07/01/2018   700,000 816,374
9.700%, 03/15/2019   1,090,000 1,412,051
Energy XXI Gulf Coast, Inc.      
6.875%, 03/15/2024 (S)   470,000 478,225
Enterprise Products Operating LLC      
4.850%, 08/15/2042   500,000 531,083
6.125%, 10/15/2039   1,000,000 1,247,300
6.300%, 09/15/2017   820,000 937,385
6.875%, 03/01/2033   209,000 276,684
Enterprise Products Operating LLC      
(7.000% to 06/01/2017, then 3 month      
LIBOR + 2.778%)      
06/01/2067   1,780,000 1,869,000
Enterprise Products Operating LLC      
(8.375% to 08/01/2016, then 3 month      
LIBOR + 3.708%)      
08/01/2066   1,330,000 1,485,444
EP Energy LLC      
7.750%, 09/01/2022   635,000 712,788
EV Energy Partners LP      
8.000%, 04/15/2019   1,110,000 1,148,850
Exterran Partners LP      
6.000%, 04/01/2021   310,000 313,100
FTS International, Inc.      
6.250%, 05/01/2022 (S)   570,000 582,825
Halcon Resources Corp.      
8.875%, 05/15/2021   690,000 726,225
Hess Corp.      
5.600%, 02/15/2041   1,500,000 1,779,165
Jones Energy Holdings LLC      
6.750%, 04/01/2022 (S)   480,000 506,400
Kerr-McGee Corp.      
6.950%, 07/01/2024   1,005,000 1,285,995
Key Energy Services, Inc.      
6.750%, 03/01/2021   895,000 908,425
Kinder Morgan Energy Partners LP      
4.150%, 03/01/2022   1,000,000 1,033,635
5.800%, 03/15/2035   208,000 230,001
7.300%, 08/15/2033   212,000 264,591
7.750%, 03/15/2032   480,000 621,179
Kosmos Energy, Ltd.      
7.875%, 08/01/2021 (S)   650,000 663,000

 

The accompanying notes are an integral part of the financial statements. 52

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Linn Energy LLC      
6.500%, 05/15/2019 $ 1,000,000 $ 1,029,375
Lukoil International Finance BV      
3.416%, 04/24/2018 (S)   1,885,000 1,781,702
Marathon Oil Corp.      
6.800%, 03/15/2032   760,000 978,853
MarkWest Energy Partners LP      
6.500%, 08/15/2021   716,000 762,540
Memorial Resource Development Corp.      
5.875%, 07/01/2022 (S)   445,000 451,675
Midstates Petroleum Company, Inc.      
9.250%, 06/01/2021 (L)   1,425,000 1,542,563
Nabors Industries, Inc.      
5.000%, 09/15/2020   1,000,000 1,118,155
Newfield Exploration Company      
5.750%, 01/30/2022   1,085,000 1,198,925
Nexen Energy ULC      
5.875%, 03/10/2035   212,000 248,868
6.400%, 05/15/2037   1,625,000 2,031,361
Noble Holding International, Ltd.      
4.900%, 08/01/2020   1,250,000 1,370,360
5.250%, 03/15/2042   500,000 527,703
6.200%, 08/01/2040   500,000 583,210
Nostrum Oil & Gas Finance BV      
6.375%, 02/14/2019 (S)   1,080,000 1,123,092
Offshore Group Investment, Ltd.      
7.125%, 04/01/2023   765,000 759,263
ONEOK Partners LP      
6.650%, 10/01/2036   1,245,000 1,570,875
Pacific Rubiales Energy Corp.      
5.125%, 03/28/2023 (S)   875,000 883,750
5.375%, 01/26/2019 (S)   1,125,000 1,170,000
Petro-Canada      
6.050%, 05/15/2018   396,000 454,804
Petrobras Global Finance BV      
4.375%, 05/20/2023   1,180,000 1,164,282
Petrobras International Finance Company      
5.375%, 01/27/2021   790,000 832,897
Petroleos de Venezuela SA      
5.375%, 04/12/2027   1,860,000 1,025,790
Petroleos Mexicanos      
4.875%, 01/24/2022   660,000 717,090
Plains Exploration & Production Company      
6.500%, 11/15/2020   845,000 935,838
6.750%, 02/01/2022   1,385,000 1,571,975
6.875%, 02/15/2023   494,000 573,658
Precision Drilling Corp.      
6.625%, 11/15/2020   645,000 683,700
Regency Energy Partners LP      
5.000%, 10/01/2022   290,000 299,788
5.500%, 04/15/2023   1,565,000 1,639,338
5.875%, 03/01/2022   285,000 306,375
Rex Energy Corp.      
8.875%, 12/01/2020   560,000 613,200
RKI Exploration & Production LLC      
8.500%, 08/01/2021 (S)   830,000 892,250
Rowan Companies, Inc.      
4.875%, 06/01/2022   830,000 890,873
Spectra Energy Capital LLC      
6.200%, 04/15/2018   1,000,000 1,142,946
6.750%, 02/15/2032   511,000 612,148
Summit Midstream Holdings LLC      
7.500%, 07/01/2021   495,000 544,500

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Suncor Energy, Inc.      
6.100%, 06/01/2018 $ 760,000 $ 876,424
Sunoco Logistics Partners Operations LP      
3.450%, 01/15/2023   1,460,000 1,436,682
Talisman Energy, Inc.      
6.250%, 02/01/2038   1,150,000 1,355,477
Texas Eastern Transmission LP      
6.000%, 09/15/2017 (S)   685,000 766,830
TransCanada Pipelines, Ltd.      
3.750%, 10/16/2023   2,000,000 2,090,672
7.125%, 01/15/2019   400,000 484,624
TransCanada Pipelines, Ltd. (6.350% to      
05/15/2017, then 3 month      
LIBOR + 2.210%)      
05/15/2067   1,640,000 1,707,650
Transocean, Inc.      
6.000%, 03/15/2018   1,000,000 1,112,789
6.375%, 12/15/2021   500,000 565,960
Trinidad Drilling, Ltd.      
7.875%, 01/15/2019 (S)   500,000 525,625
Tullow Oil PLC      
6.000%, 11/01/2020 (S)   765,000 772,650
6.250%, 04/15/2022 (S)   805,000 805,000
Weatherford International, Ltd.      
6.500%, 08/01/2036   1,100,000 1,333,050
Williams Partners LP      
4.300%, 03/04/2024   1,300,000 1,359,992
WPX Energy, Inc.      
6.000%, 01/15/2022   790,000 847,275
 
      109,732,192
Financials - 17.5%      
Allied World Assurance Company, Ltd.      
7.500%, 08/01/2016   490,000 545,909
American Express Bank FSB      
6.000%, 09/13/2017   805,000 912,398
American International Group, Inc.      
4.125%, 02/15/2024   940,000 999,107
5.850%, 01/16/2018   1,100,000 1,248,221
6.250%, 03/15/2037   119,000 134,291
American International Group, Inc.      
(8.175% to 05/15/2038, then 3 month      
LIBOR + 4.195%)      
05/15/2058   141,000 194,228
American Tower Corp.      
3.400%, 02/15/2019   740,000 766,493
4.700%, 03/15/2022   1,100,000 1,179,701
5.000%, 02/15/2024   1,330,000 1,437,767
5.900%, 11/01/2021   1,500,000 1,722,767
Aquarius + Investments PLC (6.375% to      
09/01/2019, then 5 Year U.S. Swap      
Rate + 5.210%)      
09/01/2024   735,000 777,263
ARC Properties Operating Partnership LP      
4.600%, 02/06/2024 (S)   3,455,000 3,557,399
Aspen Insurance Holdings, Ltd.      
4.650%, 11/15/2023   2,000,000 2,092,352
Assurant, Inc.      
4.000%, 03/15/2023   1,740,000 1,772,394
Assured Guaranty US Holdings, Inc.      
5.000%, 07/01/2024 (L)   1,430,000 1,487,526
AvalonBay Communities, Inc.      
5.700%, 03/15/2017   1,500,000 1,654,518

 

The accompanying notes are an integral part of the financial statements. 53

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
AXA SA      
8.600%, 12/15/2030 $ 820,000 $ 1,108,542
AXA SA (6.379% to 12/14/2036, then      
3 month LIBOR + 2.256%)      
12/14/2036 (Q)(S)   1,095,000 1,188,075
AXA SA (6.463% to 12/14/2018, then      
3 month LIBOR + 1.449%)      
12/14/2018 (Q)(S)   1,000,000 1,061,250
Banco do Brasil SA (6.250% to      
04/15/2024, then 10 Year      
U.S. Treasury + 4.398%)      
04/15/2024 (Q)(S)   1,400,000 1,123,500
Banco Santander Brasil SA      
8.000%, 03/18/2016 (S) BRL 2,600,000 1,120,840
Banco Santander Chile      
5.375%, 12/09/2014 (S) $ 5,000 5,057
Bank of America Corp.      
3.300%, 01/11/2023   690,000 684,351
3.625%, 03/17/2016   1,250,000 1,299,399
4.200%, 08/26/2024   840,000 852,798
5.000%, 05/13/2021   2,620,000 2,929,870
5.625%, 07/01/2020   1,000,000 1,146,006
5.650%, 05/01/2018   1,000,000 1,124,603
5.750%, 12/01/2017   849,000 952,283
6.875%, 04/25/2018   1,835,000 2,139,654
7.625%, 06/01/2019   685,000 838,500
Barclays Bank PLC      
10.179%, 06/12/2021 (S)   1,440,000 1,983,652
Boston Properties LP      
3.700%, 11/15/2018   1,042,000 1,110,004
BPCE SA      
5.700%, 10/22/2023 (S)   1,870,000 2,070,670
Brandywine Operating Partnership LP      
5.700%, 05/01/2017   1,500,000 1,641,596
Capital One Financial Corp.      
3.150%, 07/15/2016   1,000,000 1,039,213
3.500%, 06/15/2023   605,000 609,576
4.750%, 07/15/2021   2,475,000 2,738,635
CIT Group, Inc.      
5.500%, 02/15/2019 (S)   1,000,000 1,078,750
Citigroup, Inc.      
3.500%, 05/15/2023   1,390,000 1,362,025
3.750%, 06/16/2024   1,100,000 1,123,206
3.875%, 10/25/2023   580,000 601,330
4.450%, 01/10/2017   1,350,000 1,447,303
4.500%, 01/14/2022   1,000,000 1,092,643
5.375%, 08/09/2020   195,000 222,908
5.500%, 09/13/2025   1,000,000 1,120,520
6.125%, 08/25/2036   1,060,000 1,245,912
CNA Financial Corp.      
6.500%, 08/15/2016   985,000 1,087,079
7.250%, 11/15/2023   1,435,000 1,801,796
Commerzbank AG      
8.125%, 09/19/2023 (S)   1,915,000 2,307,767
CommonWealth REIT      
5.875%, 09/15/2020   1,200,000 1,304,538
Corrections Corp. of America      
4.625%, 05/01/2023   1,010,000 1,001,163
Credit Acceptance Corp.      
6.125%, 02/15/2021 (S)   1,410,000 1,452,300

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Credit Agricole SA (7.875% to      
01-23-2024, then 5 Year U.S. Swap      
Rate + 4.898%)      
01/23/2024 (Q)(S) $ 1,875,000 $ 2,022,656
Credit Agricole SA (8.125% to      
09/19/2018, then 5 year U.S. Swap      
Rate + 6.283%)      
09/19/2033 (S)   755,000 862,588
Credit Suisse AG      
6.500%, 08/08/2023 (S)   1,500,000 1,649,961
Credit Suisse Group AG (7.500% to      
12/11/2023, then 5 year U.S. Swap      
Rate + 4.598%)      
12/11/2023 (Q)(S)   975,000 1,057,875
Credito Real SAB de CV      
7.500%, 03/13/2019 (S)   1,415,000 1,528,200
Crown Castle International Corp.      
5.250%, 01/15/2023   1,000,000 1,032,810
Crown Castle Towers LLC      
4.174%, 08/15/2017 (S)   2,000,000 2,119,358
4.883%, 08/15/2020 (S)   1,705,000 1,897,902
6.113%, 01/15/2020 (S)   1,448,000 1,693,417
DDR Corp.      
3.500%, 01/15/2021   1,350,000 1,373,400
7.500%, 04/01/2017   2,330,000 2,664,947
Discover Bank      
7.000%, 04/15/2020   380,000 455,303
Discover Financial Services      
5.200%, 04/27/2022   1,200,000 1,333,392
Doric Nimrod Air Alpha 2013-1      
Pass Through Trust      
5.250%, 05/30/2023 (S)   1,177,092 1,247,717
6.125%, 11/30/2019 (S)   835,450 887,666
Doric Nimrod Air Finance Alpha, Ltd.      
2012-1 Class A Pass Through      
5.125%, 11/30/2022 (S)   734,459 779,756
Dresdner Bank AG      
7.250%, 09/15/2015   281,000 295,006
Enova International, Inc.      
9.750%, 06/01/2021 (S)   1,240,000 1,267,900
EPR Properties      
5.250%, 07/15/2023   2,000,000 2,139,560
7.750%, 07/15/2020   920,000 1,118,893
ERP Operating LP      
5.125%, 03/15/2016   1,670,000 1,780,305
5.750%, 06/15/2017   775,000 867,654
Essex Portfolio LP      
5.500%, 03/15/2017   1,430,000 1,564,722
Fifth Street Finance Corp.      
4.875%, 03/01/2019   1,345,000 1,404,567
Fifth Third Bancorp (5.100% to      
06/30/2023, then 3 month      
LIBOR + 3.033%)      
06/30/2023 (Q)   1,325,000 1,262,063
FS Investment Corp.      
4.000%, 07/15/2019   1,115,000 1,125,603
General Electric Capital Corp.      
0.714%, 08/15/2036 (P)   1,470,000 1,263,496
4.375%, 09/16/2020   685,000 753,348
5.550%, 05/04/2020   1,285,000 1,492,049

 

The accompanying notes are an integral part of the financial statements. 54

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
General Electric Capital Corp. (7.125%      
until 06/15/2022, then 3 month      
LIBOR + 5.296%)      
06/15/2022 (Q) $ 1,775,000 $ 2,092,281
General Shopping Investments, Ltd.      
(12.000% to 03/20/2017, then 5 Year      
USGG + 11.052%)      
03/20/2017 (Q)(S)   690,000 662,400
Genworth Financial, Inc. (6.150% to      
11/15/2016, then 3 month      
LIBOR + 2.003%)      
11/15/2066   1,000,000 880,000
Genworth Holdings, Inc.      
4.900%, 08/15/2023   1,500,000 1,591,061
Goodman Funding Pty, Ltd.      
6.375%, 04/15/2021 (S)   1,315,000 1,537,879
Hartford Financial Services Group, Inc.      
5.500%, 03/30/2020   1,325,000 1,515,470
6.625%, 03/30/2040   500,000 667,329
HBOS PLC      
6.000%, 11/01/2033 (S)   1,475,000 1,697,002
6.750%, 05/21/2018 (S)   2,570,000 2,944,809
HCP, Inc.      
3.750%, 02/01/2019   1,250,000 1,326,946
4.250%, 11/15/2023   1,000,000 1,039,015
Health Care REIT, Inc.      
4.500%, 01/15/2024   2,000,000 2,110,836
4.950%, 01/15/2021   575,000 640,100
Healthcare Realty Trust, Inc.      
5.750%, 01/15/2021   1,000,000 1,130,187
Highwoods Realty LP      
5.850%, 03/15/2017   2,255,000 2,490,968
Host Hotels & Resorts LP      
5.250%, 03/15/2022   280,000 311,393
ICICI Bank, Ltd.      
4.700%, 02/21/2018 (S)   1,010,000 1,067,363
5.750%, 11/16/2020 (S)   980,000 1,085,002
ING Bank NV      
5.800%, 09/25/2023 (S)   825,000 936,684
Intercorp Retail Trust      
8.875%, 11/14/2018 (S)   385,000 420,613
Invesco Finance PLC      
3.125%, 11/30/2022   1,150,000 1,153,450
iStar Financial, Inc.      
5.000%, 07/01/2019   435,000 435,000
Jefferies Group LLC      
5.125%, 04/13/2018   1,100,000 1,201,267
6.875%, 04/15/2021   1,630,000 1,925,845
8.500%, 07/15/2019   1,280,000 1,597,760
JPMorgan Chase & Company      
3.150%, 07/05/2016   1,000,000 1,039,657
3.375%, 05/01/2023   1,750,000 1,723,682
4.500%, 01/24/2022   1,300,000 1,424,448
4.625%, 05/10/2021   2,465,000 2,725,836
6.300%, 04/23/2019   1,267,000 1,486,081
JPMorgan Chase & Company (5.000% to      
07/01/2019, then 3 month      
LIBOR + 3.320%)      
07/01/2019 (Q)   1,615,000 1,603,630
JPMorgan Chase & Company (5.150% to      
05/01/2023, then 3 month      
LIBOR + 3.250%)      
05/01/2023 (Q)   1,220,000 1,187,975

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
JPMorgan Chase & Company (6.750% to      
02/01/2024, then 3 month      
LIBOR + 3.780%)      
02/01/2024 (Q) $ 2,540,000 $ 2,727,325
JPMorgan Chase & Company (7.900% to      
04/30/2018, then 3 month      
LIBOR + 3.470%)      
04/30/2018 (Q)   1,360,000 1,504,500
Kimco Realty Corp.      
6.875%, 10/01/2019   545,000 652,988
Legg Mason, Inc.      
3.950%, 07/15/2024   1,340,000 1,373,740
Leucadia National Corp.      
5.500%, 10/18/2023   4,095,000 4,347,055
Liberty Mutual Group, Inc.      
4.250%, 06/15/2023 (S)   2,000,000 2,081,290
7.800%, 03/15/2037 (S)   1,445,000 1,705,100
Liberty Property LP      
4.400%, 02/15/2024   1,000,000 1,058,015
5.500%, 12/15/2016   1,500,000 1,633,094
Lincoln National Corp.      
6.250%, 02/15/2020   1,000,000 1,178,512
8.750%, 07/01/2019   900,000 1,158,712
Lincoln National Corp. (6.050% to      
04/20/2017, then 3 month      
LIBOR + 2.040%)      
04/20/2067   2,332,000 2,393,215
Lloyds Banking Group PLC (7.500% to      
06-27-2024, then 5 year U.S. Swap      
Rate + 4.760%)      
06/27/2024 (Q)   1,220,000 1,279,475
Loews Corp.      
2.625%, 05/15/2023   870,000 837,842
Macquarie Group, Ltd.      
3.000%, 12/03/2018 (S)   1,350,000 1,390,470
6.000%, 01/14/2020 (S)   720,000 816,559
Manufacturers & Traders Trust Company      
(5.629% to 12/01/2016, then 3 month      
LIBOR + 6.400%)      
12/01/2021   485,000 504,400
Markel Corp.      
5.000%, 03/30/2043   1,730,000 1,838,824
5.350%, 06/01/2021   1,500,000 1,694,769
Marsh & McLennan Companies, Inc.      
4.050%, 10/15/2023   2,000,000 2,131,406
MBIA Insurance Corp.      
11.494%, 01/15/2033 (H)(S)   650,000 494,000
MetLife, Inc.      
6.400%, 12/15/2036   840,000 947,100
Metropolitan Life Global Funding I      
3.650%, 06/14/2018 (S)   1,500,000 1,601,264
Mizuho Financial Group Cayman 3, Ltd.      
4.600%, 03/27/2024 (S)   1,380,000 1,458,943
Montpelier Re Holdings, Ltd.      
4.700%, 10/15/2022   1,420,000 1,487,947
Morgan Stanley      
0.684%, 10/18/2016 (P)   830,000 831,624
3.750%, 02/25/2023   1,700,000 1,744,984
4.100%, 05/22/2023   2,745,000 2,796,688
4.875%, 11/01/2022   1,140,000 1,231,609
5.500%, 01/26/2020 to 07/24/2020   2,690,000 3,062,294
5.550%, 04/27/2017   805,000 888,311
5.625%, 09/23/2019   1,000,000 1,142,695

 

The accompanying notes are an integral part of the financial statements. 55

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Morgan Stanley (continued)      
5.750%, 01/25/2021 $ 1,435,000 $ 1,666,266
5.950%, 12/28/2017   290,000 328,028
6.000%, 04/28/2015   1,000,000 1,035,358
6.625%, 04/01/2018   140,000 162,108
7.300%, 05/13/2019   2,790,000 3,376,081
Morgan Stanley (5.450% to 07/15/2019,      
then 3 month LIBOR + 3.610%)      
07/15/2019 (Q)   1,370,000 1,393,975
MPT Operating Partnership LP      
6.375%, 02/15/2022   835,000 897,625
6.875%, 05/01/2021   635,000 682,625
NANA Development Corp.      
9.500%, 03/15/2019 (S)   795,000 767,175
National Retail Properties, Inc.      
3.300%, 04/15/2023   1,740,000 1,712,604
Nationstar Mortgage LLC      
7.875%, 10/01/2020   945,000 973,350
9.625%, 05/01/2019   855,000 946,913
Nippon Life Insurance Company (5.000%      
to 10-18-22, then 3 month      
LIBOR + 4.240%)      
10/18/2042 (S)   965,000 1,027,725
Ocwen Financial Corp.      
6.625%, 05/15/2019 (S)   970,000 940,900
Oil Casualty Insurance, Ltd.      
8.000%, 09/15/2034 (S)   873,000 1,003,479
Omega Healthcare Investors, Inc.      
4.950%, 04/01/2024 (S)   2,010,000 2,076,310
Oversea-Chinese Banking Corp., Ltd.      
(4.000% to 10/15/2019, then 5 year      
U.S. Swap Rate + 2.203%)      
10/15/2024 (S)   635,000 647,247
Pacific LifeCorp.      
6.000%, 02/10/2020 (S)   740,000 849,593
Piedmont Operating Partnership LP      
4.450%, 03/15/2024   1,000,000 1,030,486
Prologis International Funding II      
4.875%, 02/15/2020 (S)   1,900,000 2,050,704
Prologis LP      
4.500%, 08/15/2017   1,250,000 1,344,649
Prudential Financial, Inc.      
5.375%, 06/21/2020   700,000 801,723
Prudential Financial, Inc. (5.200% to      
3-15-24, then 3 month      
LIBOR + 3.040%)      
03/15/2044   355,000 359,438
Prudential Financial, Inc. (5.875% to      
09/15/2022, then 3 month      
LIBOR + 4.175%)      
09/15/2042   1,815,000 1,945,499
Rabobank Nederland NV      
3.875%, 02/08/2022   2,660,000 2,846,269
Rabobank Nederland NV (11.000% to      
06/30/2019, then 3 month      
LIBOR + 10.868%)      
06/30/2019 (Q)(S)   1,737,000 2,301,525
Realty Income Corp.      
3.250%, 10/15/2022   1,020,000 1,017,590
5.375%, 09/15/2017   1,250,000 1,386,170
5.950%, 09/15/2016   560,000 612,307
Reinsurance Group of America, Inc.      
4.700%, 09/15/2023   1,500,000 1,617,482

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
RLI Corp.      
4.875%, 09/15/2023 $ 2,000,000 $ 2,106,238
Simon Property Group LP      
5.750%, 12/01/2015   530,000 557,320
Sirius International Group, Ltd. (7.506%      
to 06/30/2017, then 3 month      
LIBOR + 3.200%)      
06/30/2017 (Q)(S)   3,115,000 3,286,325
SL Green Realty Corp.      
7.750%, 03/15/2020   775,000 931,821
State Street Corp.      
3.100%, 05/15/2023   1,540,000 1,521,070
Stifel Financial Corp.      
4.250%, 07/18/2024   2,555,000 2,599,664
SunTrust Banks, Inc.      
3.500%, 01/20/2017   1,000,000 1,052,923
Synchrony Financial      
4.250%, 08/15/2024   1,120,000 1,146,581
Synovus Financial Corp.      
7.875%, 02/15/2019   530,000 598,900
Teachers Insurance & Annuity Association      
of America      
6.850%, 12/16/2039 (S)   1,455,000 1,962,132
The Allstate Corp.      
5.750%, 08/15/2053 (P)   2,000,000 2,140,000
The Bear Stearns Companies LLC      
7.250%, 02/01/2018   925,000 1,089,406
The Charles Schwab Corp. (7.000% to      
02/01/2022, then 3 month      
LIBOR + 4.820%)      
02/01/2022 (Q)   900,000 1,058,625
The Goldman Sachs Group, Inc.      
3.625%, 01/22/2023   2,200,000 2,232,076
5.250%, 07/27/2021   3,305,000 3,724,933
5.375%, 03/15/2020   1,000,000 1,129,805
5.500%, 11/15/2014   447,000 451,584
5.950%, 01/18/2018   750,000 846,300
6.150%, 04/01/2018   1,000,000 1,139,386
The PNC Financial Services Group, Inc.      
2.854%, 11/09/2022 (P)   2,280,000 2,253,062
4.454%, 10/20/2014 (P)(Q)   810,000 810,608
The PNC Financial Services Group, Inc.      
(4.850% to 06/01/2023, then 3 month      
LIBOR + 3.040%)      
06/01/2023 (Q)   1,010,000 968,338
Transatlantic Holdings, Inc.      
5.750%, 12/14/2015   575,000 609,010
USB Realty Corp.      
1.381%, 11/15/2017 (P)(Q)(S)   1,125,000 1,035,000
USI, Inc.      
7.750%, 01/15/2021 (S)   1,165,000 1,199,950
Ventas Realty LP      
4.000%, 04/30/2019   960,000 1,029,121
4.750%, 06/01/2021   1,360,000 1,499,173
Vornado Realty LP      
4.250%, 04/01/2015   1,000,000 1,011,598
5.000%, 01/15/2022   1,250,000 1,376,456
Voya Financial, Inc. (5.650% to      
05/15/2023, then 3 month      
LIBOR + 3.580%)      
05/15/2053   825,000 839,438
W.R. Berkley Corp.      
6.150%, 08/15/2019   14,000 15,886

 

The accompanying notes are an integral part of the financial statements. 56

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Walter Investment Management Corp.      
7.875%, 12/15/2021 (S) $ 1,490,000 $ 1,516,075
Weingarten Realty Investors      
3.375%, 10/15/2022   1,505,000 1,514,563
Wells Fargo & Company      
3.450%, 02/13/2023   1,100,000 1,107,766
3.500%, 03/08/2022   1,700,000 1,770,955
5.375%, 11/02/2043   2,000,000 2,278,322
Wells Fargo & Company (5.900% to      
06/15/2024, then 3 month      
LIBOR + 3.110%)      
06/15/2024 (Q)   2,085,000 2,184,038
Wells Fargo & Company, Series K      
(7.980% to 03/15/2018, then 3 month      
LIBOR + 3.770%)      
03/15/2018 (Q)   2,314,000 2,614,820
Wells Fargo Bank NA      
5.850%, 02/01/2037   930,000 1,174,674
Weyerhaeuser Company      
7.375%, 03/15/2032   1,490,000 2,056,432
Willis Group Holdings PLC      
5.750%, 03/15/2021   1,350,000 1,532,426
XL Group PLC, Series E (6.500% to      
04/15/2017, then 3 month      
LIBOR + 2.458%)      
04/15/2017 (Q)   2,288,000 2,210,780
 
      300,073,265
Health Care - 1.7%      
AbbVie, Inc.      
4.400%, 11/06/2042   2,000,000 2,008,962
Agilent Technologies, Inc.      
3.875%, 07/15/2023   930,000 946,511
Alere, Inc.      
7.250%, 07/01/2018   890,000 938,950
Allergan, Inc.      
5.750%, 04/01/2016   400,000 429,186
Cigna Corp.      
4.500%, 03/15/2021   1,000,000 1,105,027
6.150%, 11/15/2036   500,000 632,094
Community Health Systems, Inc.      
6.875%, 02/01/2022 (S)   335,000 355,938
Covidien International Finance SA      
6.000%, 10/15/2017   610,000 691,714
Endo Finance LLC      
7.250%, 01/15/2022 (S)   1,123,000 1,217,051
Grifols Worldwide Operations, Ltd.      
5.250%, 04/01/2022 (S)   1,145,000 1,176,488
HCA, Inc.      
4.750%, 05/01/2023   1,000,000 1,008,750
7.500%, 02/15/2022   935,000 1,089,275
Laboratory Corp. of America Holdings      
4.000%, 11/01/2023   2,000,000 2,070,856
Mallinckrodt International Finance SA      
5.750%, 08/01/2022 (S)   950,000 970,188
Medco Health Solutions, Inc.      
7.125%, 03/15/2018   795,000 935,532
Mylan, Inc.      
2.600%, 06/24/2018   940,000 957,668
Perrigo Company PLC      
2.300%, 11/08/2018 (S)   2,000,000 1,996,546
Quest Diagnostics, Inc.      
2.700%, 04/01/2019   1,065,000 1,074,912
4.250%, 04/01/2024   1,170,000 1,205,171

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Health Care (continued)      
Salix Pharmaceuticals, Ltd.      
6.000%, 01/15/2021 (S) $ 735,000 $ 797,475
Select Medical Corp.      
6.375%, 06/01/2021   885,000 919,847
Teva Pharmaceutical Finance      
Company LLC      
6.150%, 02/01/2036   170,000 208,233
UnitedHealth Group, Inc.      
5.375%, 03/15/2016   15,000 16,062
5.700%, 10/15/2040   1,500,000 1,856,039
5.800%, 03/15/2036   115,000 144,207
Valeant Pharmaceuticals International, Inc.      
7.500%, 07/15/2021 (S)   790,000 861,100
WellCare Health Plans, Inc.      
5.750%, 11/15/2020   625,000 647,656
WellPoint, Inc.      
3.300%, 01/15/2023   1,500,000 1,503,986
4.650%, 08/15/2044   1,280,000 1,323,849
6.375%, 06/15/2037   415,000 528,959
 
      29,618,232
Industrials - 4.4%      
Aeropuertos Dominicanos Siglo XXI SA      
9.750%, 11/13/2019 (S)   1,335,000 1,288,275
Ahern Rentals, Inc.      
9.500%, 06/15/2018 (S)   570,000 625,575
Air Lease Corp.      
3.375%, 01/15/2019   1,305,000 1,324,575
3.875%, 04/01/2021   680,000 686,800
4.750%, 03/01/2020   2,190,000 2,332,350
5.625%, 04/01/2017   570,000 614,175
Aircastle, Ltd.      
6.250%, 12/01/2019   620,000 671,150
7.625%, 04/15/2020   430,000 493,554
America West Airlines 2000-1 Pass      
Through Trust      
8.057%, 07/02/2020   304,860 350,589
American Airlines 2011-1 Class B Pass      
Through Trust      
7.000%, 01/31/2018 (S)   1,989,455 2,153,585
American Airlines 2013-2 Class A Pass      
Through Trust      
4.950%, 01/15/2023   2,038,971 2,196,992
American Airlines 2013-2 Class B Pass      
Through Trust      
5.600%, 07/15/2020   567,664 588,951
British Airways PLC 2013-1 Class A Pass      
Through Trust      
4.625%, 06/20/2024 (S)   1,999,388 2,119,351
British Airways PLC 2013-1 Class B Pass      
Through Trust      
5.625%, 06/20/2020 (S)   826,368 883,701
Casella Waste Systems, Inc.      
7.750%, 02/15/2019   1,150,000 1,184,500
Caterpillar Financial Services Corp.      
5.450%, 04/15/2018   870,000 986,709
5.500%, 03/15/2016   405,000 434,961
7.150%, 02/15/2019   450,000 548,069
Continental Airlines 1997-4 Class A Pass      
Through Trust      
6.900%, 01/02/2018   747,259 799,567
Continental Airlines 1998-1 Class A Pass      
Through Trust      
6.648%, 09/15/2017   217,668 231,817

 

The accompanying notes are an integral part of the financial statements. 57

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
Continental Airlines 1999-1 Class A Pass      
Through Trust      
6.545%, 02/02/2019 $ 420,010 $ 467,261
Continental Airlines 2000-2 Class B Pass      
Through Trust      
8.307%, 04/02/2018   36,898 40,680
Continental Airlines 2007-1 Class A Pass      
Through Trust      
5.983%, 04/19/2022   1,070,291 1,193,374
Continental Airlines 2012-1 Class B Pass      
Through Trust      
6.250%, 04/11/2020   575,134 618,269
CSX Corp.      
7.375%, 02/01/2019   727,000 883,426
Delta Air Lines 2002-1 Class G-1 Pass      
Through Trust      
6.718%, 01/02/2023   1,812,835 2,130,081
Delta Air Lines 2007-1 Class A Pass      
Through Trust      
6.821%, 08/10/2022   1,934,301 2,270,483
Delta Air Lines 2010-1 Class A Pass      
Through Trust      
6.200%, 07/02/2018   225,893 253,000
Embraer Overseas, Ltd.      
5.696%, 09/16/2023 (S)   827,000 889,025
Empresa de Transporte de Pasajeros      
Metro SA      
4.750%, 02/04/2024 (S)   660,000 693,093
ERAC USA Finance LLC      
3.300%, 10/15/2022 (S)   2,000,000 2,008,254
Florida East Coast Holdings Corp.      
6.750%, 05/01/2019 (S)   810,000 854,550
GATX Corp.      
5.200%, 03/15/2044   400,000 438,788
General Electric Company      
2.700%, 10/09/2022   1,400,000 1,382,584
Global Ship Lease, Inc.      
10.000%, 04/01/2019 (S)   480,000 506,400
Huntington Ingalls Industries, Inc.      
7.125%, 03/15/2021   755,000 821,063
International Lease Finance Corp.      
7.125%, 09/01/2018 (S)   650,000 745,875
Iron Mountain, Inc.      
5.750%, 08/15/2024   1,330,000 1,366,575
6.000%, 08/15/2023   1,215,000 1,297,013
JB Hunt Transport Services, Inc.      
3.850%, 03/15/2024   1,300,000 1,351,708
Masco Corp.      
5.850%, 03/15/2017   705,000 761,400
7.125%, 03/15/2020   810,000 931,500
Navios Maritime Acquisition Corp.      
8.125%, 11/15/2021 (S)   950,000 988,000
Navios South American Logistics, Inc.      
7.250%, 05/01/2022 (S)   1,135,000 1,176,144
Northwest Airlines 2007-1 Class A Pass      
Through Trust      
7.027%, 11/01/2019   776,680 891,240
Odebrecht Finance, Ltd.      
7.125%, 06/26/2042 (S)   1,020,000 1,124,550
7.500%, 09/14/2015 (Q)(S)   620,000 637,050
8.250%, 04/25/2018 (S) BRL 1,300,000 534,286
Odebrecht Offshore Drilling Finance, Ltd.      
6.625%, 10/01/2022 (S) $ 395,560 423,744

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
Owens Corning      
4.200%, 12/15/2022 $ 1,255,000 $ 1,294,003
Parker Hannifin Corp.      
5.500%, 05/15/2018   1,000,000 1,128,942
Ryder System, Inc.      
2.450%, 11/15/2018   1,850,000 1,878,803
Safway Group Holding LLC      
7.000%, 05/15/2018 (S)   530,000 557,825
SPL Logistics Escrow LLC      
8.875%, 08/01/2020 (S)   569,000 630,168
Stanley Black & Decker, Inc.      
5.750%, 12/15/2053 (P)   1,350,000 1,463,400
Tenedora Nemak SA de CV      
5.500%, 02/28/2023 (S)   975,000 1,004,250
Textron Financial Corp. (6.000% to      
02/15/2017, then 3 month      
LIBOR + 1.735%)      
02/15/2067 (S)   4,145,000 3,771,950
Textron, Inc.      
5.600%, 12/01/2017   1,106,000 1,235,768
7.250%, 10/01/2019   710,000 854,637
The Dun & Bradstreet Corp.      
4.375%, 12/01/2022   1,700,000 1,759,327
Tutor Perini Corp.      
7.625%, 11/01/2018   1,320,000 1,377,750
Tyco Electronics Group SA      
4.875%, 01/15/2021   500,000 555,982
6.550%, 10/01/2017   730,000 836,263
UAL 2009-1 Pass Through Trust      
10.400%, 11/01/2016   173,144 193,056
UAL 2009-2A Pass Through Trust      
9.750%, 01/15/2017   588,200 666,137
Union Pacific Corp.      
4.163%, 07/15/2022   686,000 753,512
United Airlines 2014-2 Class A Pass      
Through Trust      
3.750%, 09/03/2026   1,305,000 1,308,263
United Airlines 2014-2 Class B Pass      
Through Trust      
4.625%, 09/03/2022   755,000 755,000
United Rentals North America, Inc.      
5.750%, 11/15/2024   985,000 1,031,788
6.125%, 06/15/2023   2,000,000 2,135,000
US Airways 2010-1 Class A Pass      
Through Trust      
6.250%, 04/22/2023   761,976 861,033
US Airways 2012-1 Class A Pass      
Through Trust      
5.900%, 10/01/2024   491,362 555,240
 
      74,802,759
Information Technology - 0.5%      
Altice Financing SA      
6.500%, 01/15/2022 (S)   480,000 505,200
Ancestry.com, Inc.      
11.000%, 12/15/2020   885,000 1,019,963
Ancestry.com, Inc., PIK      
9.625%, 10/15/2018 (S)   590,000 603,275
Blackboard, Inc.      
7.750%, 11/15/2019 (S)   465,000 475,463
Leidos, Inc.      
5.500%, 07/01/2033   825,000 794,801
Micron Technology, Inc.      
5.875%, 02/15/2022 (S)   1,185,000 1,269,431

 

The accompanying notes are an integral part of the financial statements. 58

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Information Technology (continued)      
Tyco Electronics Group SA      
2.375%, 12/17/2018 $ 2,020,000 $ 2,038,216
XLIT, Ltd.      
5.750%, 10/01/2021   1,000,000 1,169,030
 
      7,875,379
Materials - 2.5%      
Alcoa, Inc.      
5.720%, 02/23/2019   150,000 166,490
5.870%, 02/23/2022   650,000 722,353
Allegheny Technologies, Inc.      
9.375%, 06/01/2019   2,090,000 2,568,248
American Gilsonite Company      
11.500%, 09/01/2017 (S)   1,350,000 1,466,438
AngloGold Ashanti Holdings PLC      
8.500%, 07/30/2020 (L)   1,300,000 1,459,250
ArcelorMittal      
10.350%, 06/01/2019   825,000 1,039,500
Ardagh Finance Holdings SA, PIK      
8.625%, 06/15/2019 (S)   800,000 829,000
Ashland, Inc.      
4.750%, 08/15/2022   1,000,000 1,001,250
AuRico Gold, Inc.      
7.750%, 04/01/2020 (S)   400,000 411,000
Axiall Corp.      
4.875%, 05/15/2023   1,000,000 1,001,250
Ball Corp.      
4.000%, 11/15/2023   1,000,000 957,500
Braskem America Finance Company      
7.125%, 07/22/2041 (S)   1,000,000 1,030,000
Braskem Finance, Ltd.      
7.000%, 05/07/2020 (S)   1,360,000 1,533,400
Cemex SAB de CV      
6.500%, 12/10/2019 (S)   1,100,000 1,166,000
CF Industries, Inc.      
4.950%, 06/01/2043   730,000 753,077
7.125%, 05/01/2020   785,000 957,887
Commercial Metals Company      
7.350%, 08/15/2018   655,000 740,150
Corp. Nacional del Cobre de Chile      
5.625%, 10/18/2043 (S)   2,000,000 2,312,862
Eastman Chemical Company      
4.500%, 01/15/2021   1,000,000 1,080,676
Edgen Murray Corp.      
8.750%, 11/01/2020 (S)   644,000 721,280
FMG Resources August 2006 Pty, Ltd.      
6.000%, 04/01/2017 (S)   1,000,000 1,042,500
Gerdau Trade, Inc.      
4.750%, 04/15/2023 (S)   740,000 733,525
Glencore Finance Canada, Ltd.      
4.250%, 10/25/2022 (S)   655,000 678,091
4.950%, 11/15/2021 (S)   1,100,000 1,197,504
Glencore Funding LLC      
4.125%, 05/30/2023 (S)   1,235,000 1,260,577
Incitec Pivot Finance LLC      
6.000%, 12/10/2019 (S)   875,000 991,777
JMC Steel Group      
8.250%, 03/15/2018 (S)   440,000 445,500
Magnesita Finance, Ltd.      
8.625%, 04/29/2049 (Q)(S)   1,120,000 1,131,200
Methanex Corp.      
5.250%, 03/01/2022   840,000 935,381
MMC Norilsk Nickel OJSC      
5.550%, 10/28/2020 (S)   760,000 750,500

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Materials (continued)      
Rain CII Carbon LLC      
8.000%, 12/01/2018 (S) $ 850,000 $ 884,000
8.250%, 01/15/2021 (S)   630,000 661,500
Rayonier AM Products, Inc.      
5.500%, 06/01/2024 (S)   300,000 294,000
SunCoke Energy, Inc.      
7.625%, 08/01/2019   246,000 260,145
Tekni-Plex, Inc.      
9.750%, 06/01/2019 (S)   630,000 691,425
The Dow Chemical Company      
3.000%, 11/15/2022   460,000 453,789
4.125%, 11/15/2021   1,700,000 1,820,987
The Mosaic Company      
4.250%, 11/15/2023   1,700,000 1,816,969
Thompson Creek Metals Company, Inc.      
7.375%, 06/01/2018   1,010,000 1,010,000
Valspar Corp.      
4.200%, 01/15/2022   1,000,000 1,065,934
Vedanta Resources PLC      
7.125%, 05/31/2023 (S)   850,000 898,875
Wise Metals Group LLC      
8.750%, 12/15/2018 (S)   1,010,000 1,090,800
 
      42,032,590
Telecommunication Services - 2.6%      
America Movil SAB de CV      
4.375%, 07/16/2042   1,500,000 1,462,611
AT&T, Inc.      
4.350%, 06/15/2045   762,000 742,781
5.100%, 09/15/2014   16,000 16,024
5.350%, 09/01/2040   257,000 287,652
5.550%, 08/15/2041   800,000 916,435
5.600%, 05/15/2018   500,000 568,359
CenturyLink, Inc.      
5.625%, 04/01/2020   415,000 438,863
5.800%, 03/15/2022   1,400,000 1,477,000
6.450%, 06/15/2021   890,000 974,550
7.600%, 09/15/2039   1,850,000 1,882,375
Columbus International, Inc.      
7.375%, 03/30/2021 (S)   625,000 680,469
Comcel Trust      
6.875%, 02/06/2024 (S)   1,040,000 1,144,000
Deutsche Telekom      
International Finance BV      
6.750%, 08/20/2018   870,000 1,024,135
8.750%, 06/15/2030   227,000 340,091
Digicel Group, Ltd.      
8.250%, 09/30/2020 (S)   1,155,000 1,247,400
GTP Acquisition Partners I LLC      
4.704%, 05/15/2018 (S)   2,975,000 2,957,150
Millicom International Cellular SA      
4.750%, 05/22/2020 (S)   1,145,000 1,142,138
6.625%, 10/15/2021 (S)   1,000,000 1,090,000
Oi SA      
9.750%, 09/15/2016 (S) BRL 1,650,000 670,762
PAETEC Holding Corp.      
9.875%, 12/01/2018 $ 907,000 967,089
Rogers Communications, Inc.      
5.450%, 10/01/2043   2,000,000 2,256,416
SBA Tower Trust      
2.933%, 12/15/2017 (S)   1,220,000 1,242,642
3.598%, 04/15/2018 (S)   2,465,000 2,475,609
5.101%, 04/17/2017 (S)   940,000 998,750

 

The accompanying notes are an integral part of the financial statements. 59

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Telecommunication Services (continued)      
SoftBank Corp.      
4.500%, 04/15/2020 (S) $ 1,300,000 $ 1,322,750
Sprint Capital Corp.      
6.875%, 11/15/2028   900,000 877,500
8.750%, 03/15/2032   685,000 763,775
T-Mobile USA, Inc.      
6.125%, 01/15/2022   485,000 502,581
6.250%, 04/01/2021   560,000 581,000
Telecom Italia Capital SA      
6.999%, 06/04/2018   870,000 985,275
7.200%, 07/18/2036   960,000 1,065,600
Telefonica Emisiones SAU      
6.421%, 06/20/2016   875,000 957,069
Verizon Communications, Inc.      
3.450%, 03/15/2021   1,330,000 1,379,493
5.012%, 08/21/2054 (S)   1,643,000 1,716,117
5.150%, 09/15/2023   3,500,000 3,963,180
6.550%, 09/15/2043   1,641,000 2,115,513
6.900%, 04/15/2038   450,000 595,199
Wind Acquisition Finance SA      
7.375%, 04/23/2021 (S)   925,000 975,875
 
      44,804,228
Utilities - 2.8%      
AES Corp.      
4.875%, 05/15/2023   1,300,000 1,277,250
Appalachian Power Company      
7.000%, 04/01/2038   425,000 587,519
Arizona Public Service Company      
5.500%, 09/01/2035   222,000 269,988
Beaver Valley II Funding Corp.      
9.000%, 06/01/2017   190,000 201,386
Berkshire Hathaway Energy Company      
3.750%, 11/15/2023   2,000,000 2,077,574
BVPS II Funding Corp.      
8.890%, 06/01/2017   111,000 115,550
CenterPoint Energy Houston Electric LLC      
6.950%, 03/15/2033   10,000 14,171
CenterPoint Energy Resources Corp.      
4.500%, 01/15/2021   202,000 224,335
CenterPoint Energy, Inc.      
6.500%, 05/01/2018   1,000,000 1,160,542
Centrica PLC      
4.000%, 10/16/2023 (S)   2,000,000 2,048,198
CMS Energy Corp.      
5.050%, 03/15/2022   1,110,000 1,259,705
Commonwealth Edison Company      
5.800%, 03/15/2018   1,270,000 1,445,195
DPL, Inc.      
7.250%, 10/15/2021   1,400,000 1,484,000
Duke Energy Corp.      
3.950%, 10/15/2023   2,000,000 2,123,718
Electricite de France SA (5.250% to      
01/29/2023, then 10 Year Swap      
Rate + 3.709%)      
01/29/2023 (Q)(S)   1,520,000 1,569,400
Entergy Corp.      
4.700%, 01/15/2017   1,000,000 1,075,018
Exelon Generation Company LLC      
5.600%, 06/15/2042   298,000 329,364
FirstEnergy Corp.      
4.250%, 03/15/2023   1,500,000 1,512,482

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities (continued)      
Integrys Energy Group, Inc. (6.110% to      
12/01/2016, then 3 month      
LIBOR + 2.120%)      
12/01/2066 $ 1,840,000 $ 1,886,000
Israel Electric Corp., Ltd.      
5.625%, 06/21/2018 (S)   1,120,000 1,194,200
6.875%, 06/21/2023 (S)   655,000 753,761
7.250%, 01/15/2019 (S)   1,195,000 1,344,973
Michigan Consolidated Gas Company      
5.700%, 03/15/2033   14,000 17,271
NextEra Energy Capital Holdings, Inc.      
(6.350% to 10/01/2016, then 3 month      
LIBOR + 2.068%)      
10/01/2066   650,000 650,000
NextEra Energy Capital Holdings, Inc.      
(6.650% to 06/15/2017, then 3 month      
LIBOR + 2.125%)      
06/15/2067   535,000 547,038
NiSource Finance Corp.      
4.800%, 02/15/2044   1,740,000 1,779,820
5.650%, 02/01/2045   2,000,000 2,313,424
NRG Energy, Inc.      
6.625%, 03/15/2023   385,000 408,100
7.625%, 01/15/2018   1,085,000 1,221,710
8.250%, 09/01/2020   855,000 925,538
NRG Yield Operating LLC      
5.375%, 08/15/2024 (S)   790,000 817,650
Oncor Electric Delivery Company LLC      
4.100%, 06/01/2022   1,650,000 1,793,147
Pacific Gas & Electric Company      
8.250%, 10/15/2018   455,000 564,470
Peco Energy Company      
5.350%, 03/01/2018   1,000,000 1,122,396
PNPP II Funding Corp.      
9.120%, 05/30/2016   209,000 215,957
PPL Capital Funding, Inc.      
3.400%, 06/01/2023   1,590,000 1,605,200
3.500%, 12/01/2022   1,530,000 1,561,512
PPL Capital Funding, Inc. (6.700% to      
03/30/2017, then 3 month      
LIBOR + 2.665%)      
03/30/2067   1,285,000 1,310,559
PSEG Power LLC      
8.625%, 04/15/2031   214,000 312,895
Public Service Company of New Mexico      
7.950%, 05/15/2018   1,000,000 1,201,345
San Diego Gas & Electric Company      
6.125%, 09/15/2037   1,000,000 1,342,557
Sierra Pacific Power Company      
6.000%, 05/15/2016   840,000 914,144
Southern California Edison Company      
(6.250% to 02/01/2022, then 3 month      
LIBOR + 4.199%)      
02/01/2022 (Q)   900,000 978,750
TransAlta Corp.      
6.650%, 05/15/2018   580,000 656,284
Virginia Electric and Power Company      
6.000%, 01/15/2036   620,000 800,585
W3A Funding Corp.      
8.090%, 01/02/2017   856,021 856,021

 

The accompanying notes are an integral part of the financial statements. 60

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities (continued)      
Wisconsin Energy Corp. (6.250% to      
05/15/2017, then 3 month      
LIBOR + 2.113%)      
05/15/2067 $ 945,000 $ 981,619
   
      48,852,321
TOTAL CORPORATE BONDS (Cost $699,690,231) $ 750,569,729
 
CAPITAL PREFERRED SECURITIES - 1.1%    
Financials - 1.1%      
Allfirst Preferred Capital Trust      
1.734%, 07/15/2029 (P)   310,000 282,100
BAC Capital Trust XIV, Series G      
4.000%, 10/06/2014 (P)(Q)   1,939,000 1,580,285
Goldman Sachs Capital II      
4.000%, 10/20/2014 (P)(Q)   2,155,000 1,702,450
HSBC Finance Capital Trust IX (5.911%      
to 11/30/2015, then 3 month      
LIBOR + 1.926%)      
11/30/2035   1,650,000 1,709,813
ILFC E-Capital Trust II (6.25% to      
12/21/2015, then 1.80% + Highest of      
3 month LIBOR, 10 year CMT and      
30 year CMT)      
12/21/2065 (S)   1,300,000 1,290,250
MetLife Capital Trust IV (7.875% to      
12/15/2032, then 3 month      
LIBOR + 3.960%)      
12/15/2037 (S)   375,000 479,063
MetLife Capital Trust X (9.250% to      
04/08/2033, then 3 month      
LIBOR + 5.540%)      
04/08/2038 (S)   855,000 1,241,888
Sovereign Capital Trust VI      
7.908%, 06/13/2036   1,227,000 1,312,691
State Street Capital Trust IV      
1.231%, 06/15/2037 (P)   2,170,000 1,874,338
SunTrust Preferred Capital I      
4.000%, 10/20/2014 (P)(Q)   102,000 82,620
The PNC Financial Services Group, Inc.      
(6.750% to 08/01/2021, then 3 month      
LIBOR + 3.678%)      
08/01/2021 (Q)   1,440,000 1,616,400
USB Capital IX      
3.500%, 10/20/2014 (P)(Q)   1,525,000 1,288,625
ZFS Finance USA Trust II (6.450% to      
6-15-16 then 3 month      
LIBOR + 2.000%)      
12/15/2065 (S)   2,620,000 2,809,950
ZFS Finance USA Trust V (6.500% to      
05/09/2017, then 3 month      
LIBOR + 2.285%)      
05/09/2037 (S)   2,047,000 2,200,525
 
      19,470,998
TOTAL CAPITAL PREFERRED      
SECURITIES (Cost $18,095,740)   $ 19,470,998
 
TERM LOANS (M) - 0.4%      
Consumer Discretionary - 0.0%      
Marina District Finance Company, Inc.      
6.750%, 08/15/2018   323,375 326,120

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
TERM LOANS (M) (continued)      
Consumer Staples - 0.1%      
The Sun Products Corp.      
5.500%, 03/23/2020 $ 1,259,465 $ 1,206,986
Energy - 0.1%      
Paragon Offshore Finance Company      
TBD 07/18/2021 (T)   490,000 483,875
Templar Energy LLC      
8.000%, 11/25/2020   770,000 758,450
 
      1,242,325
Financials - 0.0%      
Ocwen Loan Servicing LLC      
5.000%, 02/15/2018   217,250 214,371
Walter Investment Management Corp.      
4.750%, 12/11/2020   456,218 445,240
 
      659,611
Health Care - 0.1%      
CRC Health Corp.      
5.250%, 03/29/2021   259,350 259,917
9.000%, 09/28/2021   500,000 501,667
 
      761,584
Industrials - 0.1%      
Delta Air Lines, Inc.      
3.250%, 10/18/2018   786,010 777,027
WP CPP Holdings LLC      
4.750%, 12/27/2019   492,500 492,940
 
      1,269,967
Materials - 0.0%      
FMG Resources August 2006 Pty, Ltd.      
3.750%, 06/30/2019   756,583 753,325
Utilities - 0.0%      
La Frontera Generation LLC      
4.500%, 09/30/2020   515,667 516,957
TOTAL TERM LOANS (Cost $6,749,669)   $ 6,736,875
 
MUNICIPAL BONDS - 0.1%      
Buckeye Ohio Tobacco Settlement      
Financing Authority, Series A-2      
5.875%, 06/01/2030   850,000 688,526
New Jersey State Turnpike Authority      
7.414%, 01/01/2040   540,000 801,430
TOTAL MUNICIPAL BONDS (Cost $1,302,450) $ 1,489,956
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 20.7%      
Commercial & Residential - 17.2%      
Adjustable Rate Mortgage Trust,      
Series 2005-4, Class 7A12      
0.735%, 08/25/2035 (P)   809,275 765,632
American Home Mortgage Assets Trust,      
Series 2006-6, Class XP IO      
2.754%, 12/25/2046   10,707,886 813,148
American Home      
Mortgage Investment Trust      
Series 2005-1, Class 1A1,      
0.375%, 06/25/2045 (P)   1,833,813 1,738,193
Series 2004-4, Class 5A,      
2.332%, 02/25/2045 (P)   184,022 183,873
Americold 2010 LLC Trust      
Series 2010-ARTA, Class C,      
6.811%, 01/14/2029 (S)   2,150,000 2,513,455

 

The accompanying notes are an integral part of the financial statements. 61

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Americold 2010 LLC Trust (continued)      
Series 2010-ARTA, Class D,      
7.443%, 01/14/2029 (S) $ 3,595,000 $ 4,098,685
BAMLL Commercial      
Mortgage Securities Trust      
Series 2014-ICTS, Class D,      
2.055%, 06/15/2028 (P)(S)   300,000 299,384
Series 2014-ICTS, Class E,      
3.105%, 06/15/2028 (P)(S)   390,000 388,975
Banc of America Commercial Mortgage      
Securities Trust, Series 2013-DSNY,      
Class E 2.755%, 09/15/2026 (P)(S)   1,145,000 1,150,142
Banc of America Commercial      
Mortgage Trust, Series 2007-3,      
Class AJ 5.765%, 06/10/2049 (P)   1,500,000 1,549,602
Banc of America      
Commercial Mortgage Trust, Inc.      
Series 2005-5, Class XC IO,      
0.207%, 10/10/2045 (S)   56,191,633 61,755
Series 2006-5, Class AM,      
5.448%, 09/10/2047   1,750,000 1,867,107
Series 2006-6, Class AJ,      
5.421%, 10/10/2045   1,800,000 1,859,202
Series 2006-6, Class AM,      
5.390%, 10/10/2045   1,650,000 1,766,013
Series 2007-1, Class A3,      
5.449%, 01/15/2049   151,436 151,242
Series 2007-2, Class A2,      
5.634%, 04/10/2049 (P)   349,048 349,175
Series 2007-3, Class AM,      
5.765%, 06/10/2049 (P)   1,000,000 1,088,486
Series 2007-3, Class AMF,      
5.317%, 06/10/2049   1,100,000 1,188,928
Series 2007-4, Class AM,      
6.015%, 02/10/2051 (P)   2,800,000 3,100,006
Series 2007-5, Class AM,      
5.772%, 02/10/2051 (P)   747,000 804,877
Series 2005-2, Class AJ,      
4.953%, 07/10/2043 (P)   50,846 52,114
Bayview Commercial Asset Trust      
Series 2005-1A, Class A2,      
0.505%, 04/25/2035 (P)(S)   1,472,301 1,362,950
Series 2005-4A , Class A2,      
0.545%, 01/25/2036 (P)(S)   1,177,766 1,036,487
Series 2006-2A, Class A2,      
0.435%, 07/25/2036 (P)(S)   1,156,030 1,001,066
Bear Stearns Adjustable      
Rate Mortgage Trust      
Series 2005-2, Class A1,      
2.580%, 03/25/2035 (P)   1,358,987 1,378,294
Series 2005-5, Class A2,      
2.260%, 08/25/2035 (P)   1,464,859 1,485,774
Bear Stearns Alt-A Trust      
Series 2004-12, Class 1A1,      
0.855%, 01/25/2035 (P)   2,546,652 2,471,411
Series 2005-1, Class A1,      
0.715%, 01/25/2035 (P)   1,400,967 1,394,893
Series 2005-5, Class 1A4,      
0.715%, 07/25/2035 (P)   1,597,686 1,439,617
Series 2005-7, Class 11A1,      
0.695%, 08/25/2035 (P)   3,402,526 3,201,603

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Bear Stearns Asset      
Backed Securities Trust      
Series 2004-AC5, Class A1,      
5.750%, 10/25/2034 (P) $ 1,030,822 $ 1,058,298
Series 2003-AC4, Class A,      
5.500%, 09/25/2033 (P)   1,102,835 1,139,585
Bear Stearns Commercial      
Mortgage Securities Trust      
Series 2007-PWR16, Class AJ,      
5.897%, 06/11/2040 (P)   700,000 716,603
Series 2007-PWR16, Class C,      
5.897%, 06/11/2040 (P)(S)   860,000 732,060
Bear Stearns Commercial      
Mortgage Securities, Inc.      
Series 2004-PWR6, Class X1 IO,      
0.812%, 11/11/2041 (S)   23,040,517 172,850
Series 2005-PWR8, Class X1 IO,      
0.942%, 06/11/2041 (S)   49,046,091 177,302
Series 2004-PWR5, Class X1 IO,      
0.978%, 07/11/2042 (S)   58,309 731
Series 2004-T16, Class X1 IO,      
0.899%, 02/13/2046 (S)   81,906 375
Bear Stearns Mortgage Funding Trust,      
Series 2006-AR4, Class A1      
0.365%, 12/25/2036 (P)   1,094,289 804,164
BHMS Mortgage Trust      
4.846%, 07/08/2033   1,000,000 998,566
Series 2014-ATLS, Class DFL,      
1.000%, 07/05/2033   1,900,000 1,899,998
BWAY Mortgage Trust, Series 2013-1515,      
Class XB IO 0.534%, 03/10/2033 (S)   46,410,000 1,763,626
CD Mortgage Trust, Series 2006-CD3,      
Class AJ 5.688%, 10/15/2048   500,000 485,167
CFCRE Commercial Mortgage Trust,      
Series 2011-C1, Class XA IO      
1.604%, 04/15/2044 (S)   12,973,494 469,692
CHL Mortgage Pass Through Trust,      
Series 2004-HYB2, Class 4A      
2.491%, 07/20/2034 (P)   515,397 522,167
Citigroup/Deutsche Bank      
Commercial Mortgage Trust      
Series 2007-CD4, Class AMFX,      
5.366%, 12/11/2049 (P)   2,450,000 2,573,593
Series 2005-CD1, Class C,      
5.399%, 07/15/2044 (P)   1,055,000 1,089,124
COBALT CMBS Commercial      
Mortgage Trust, Series 2007-C3,      
Class AJ 5.969%, 05/15/2046 (P)   700,000 719,361
Commercial Mortgage Pass      
Through Certificates      
Series 2006-GG7, Class AM,      
6.014%, 07/10/2038 (P)   2,965,000 3,184,745
Series 2007-GG11, Class AJ,      
6.257%, 12/10/2049 (P)   1,230,000 1,286,429
Series 2010-C1, Class D,      
6.079%, 07/10/2046 (P)(S)   1,675,000 1,831,720
Series 2012-CR2, Class XA IO,      
2.081%, 08/15/2045   26,033,694 2,714,221
Series 2012-LC4, Class B,      
4.934%, 12/10/2044 (P)   930,000 1,018,619
Series 2012-LC4, Class C,      
5.823%, 12/10/2044 (P)   2,055,000 2,304,370

 

The accompanying notes are an integral part of the financial statements. 62

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Commercial Mortgage Pass Through      
Certificates (continued)      
Series 2012-LC4, Class XA IO,      
2.652%, 12/10/2044 (S) $ 6,053,204 $ 755,113
Series 2013-300P, Class D,      
4.540%, 08/10/2030 (P)(S)   2,020,000 2,043,887
Series 2013-300P, Class E,      
4.540%, 08/10/2030 (P)(S)   800,000 766,336
Series 2013-CR11, Class B,      
5.332%, 10/10/2046 (P)   2,740,000 3,042,926
Series 2013-CR13, Class C,      
4.915%, 12/10/2023 (P)   1,420,000 1,483,913
Series 2013-LC13, Class B,      
5.009%, 08/10/2046 (P)(S)   1,780,000 1,935,123
Series 2014-CR14, Class C,      
4.759%, 02/10/2047 (P)   1,000,000 1,039,187
Series 2014-CR14, Class D,      
4.759%, 02/10/2047 (P)(S)   800,000 752,364
Series 2014-CR15, Class D,      
4.921%, 02/10/2047 (P)(S)   500,000 476,234
Series 2014-CR15, Class XA IO,      
1.511%, 02/10/2047   18,405,440 1,368,205
Series 2014-CR16, Class C,      
5.070%, 04/10/2047 (P)   1,710,000 1,783,757
Series 2014-CR16, Class XA IO,      
1.444%, 04/10/2047   12,197,600 956,768
Series 2014-FL4, Class D,      
2.600%, 07/13/2031 (P)(S)   1,840,000 1,838,082
Series 2014-TWC, Class D,      
2.406%, 02/13/2032 (P)(S)   1,390,000 1,384,927
Series 2014-UBS2, Class D,      
5.183%, 03/10/2047 (P)(S)   1,000,000 955,476
Series 2014-UBS2, Class XA IO,      
1.604%, 03/10/2047   10,470,636 969,560
Commercial Mortgage Trust      
Series 2005-GG5, Class AJ,      
5.412%, 04/10/2037 (P)   925,000 937,366
Series 2007-GG11, Class AM,      
5.867%, 12/10/2049 (P)   1,500,000 1,644,804
Credit Suisse Commercial Mortgage Trust      
Series 2007-C2, Class AMFL,      
0.385%, 01/15/2049 (P)   1,000,000 951,880
Series 2007-C3, Class AM,      
5.892%, 06/15/2039 (P)   1,550,000 1,639,571
Series 2007-C4, Class A1,      
6.097%, 09/15/2039 (P)   3,600,000 3,928,810
Credit Suisse First Boston Mortgage      
Securities Corp., Series 2005-C1,      
Class AX IO 0.492%, 02/15/2038 (S)   49,988,757 31,043
DBUBS Mortgage Trust      
Series 2011-LC1A, Class A1,      
3.742%, 11/10/2046 (S)   2,705,728 2,801,362
Series 2011-LC1A, Class A3,      
5.002%, 11/10/2046 (S)   2,000,000 2,256,764
Deutsche Mortgage Securities, Inc.      
Mortgage Loan Trust, Series 2004-4,      
Class 2AR1 0.695%, 06/25/2034 (P)   1,653,312 1,554,040
DSLA Mortgage Loan Trust,      
Series 2004-AR3, Class 2A2B      
0.606%, 07/19/2044 (P)   1,920,023 1,759,062

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Extended Stay America Trust      
Series 2013-ESFL, Class DFL,      
3.296%, 12/05/2031 (P)(S) $ 1,660,000 $ 1,664,519
Series 2013-ESH5, Class C5,      
2.675%, 12/05/2031 (S)   1,150,000 1,150,182
First Horizon Alternative Mortgage      
Securities, Series 2004-AA2, Class 2A1      
2.188%, 08/25/2034 (P)   840,972 834,303
FREMF Mortgage Trust      
Series 2011-K10, Class B,      
4.774%, 11/25/2049 (P)(S)   1,055,000 1,131,097
Series 2011-K11, Class B,      
4.570%, 12/25/2048 (P)(S)   875,000 924,546
GE Capital Commercial Mortgage Corp.      
Series 2005-C1, Class AJ,      
4.826%, 06/10/2048 (P)   1,175,000 1,188,167
Series 2005-C3, Class A7A,      
4.974%, 07/10/2045 (P)   2,500,000 2,561,555
Series 2005-C1, Class XC IO,      
0.625%, 06/10/2048 (S)   843,474 748
GMAC Mortgage Loan Trust,      
Series 2004-AR2, Class 3A      
2.920%, 08/19/2034 (P)   1,105,129 1,080,818
GS Mortgage Securities Corp. II      
Series 2010-C2, Class XA IO,      
0.833%, 12/10/2043 (S)   59,713,019 694,104
Series 2013-GC10, Class C,      
4.285%, 02/10/2046 (P)(S)   1,140,200 1,155,593
Series 2005-GG4, Class XC IO,      
0.881%, 07/10/2039 (S)   1,324,060 3,363
Series 2006-GG6, Class AM,      
5.622%, 04/10/2038 (P)   3,000,000 3,161,970
GS Mortgage Securities Corp. Trust,      
Series 2014-NEW, Class D      
3.790%, 01/10/2031 (S)   1,300,000 1,256,199
GS Mortgage Securities Trust,      
Series 2006-GG6, Class AJ      
5.755%, 04/10/2038 (P)   1,500,000 1,552,467
HarborView Mortgage Loan Trust      
Series 2005-11, Class X IO,      
2.434%, 08/19/2045   4,517,715 241,534
Series 2005-9, Class 2A1C,      
0.606%, 06/20/2035 (P)   2,135,791 1,982,614
Series 2005-8, Class 1X IO,      
2.112%, 09/19/2035   4,816,755 251,237
Series 2007-3, Class ES IO,      
0.349%, 05/19/2047 (P)(S)   5,785,843 61,475
Series 2007-4, Class ES IO,      
0.349%, 07/19/2047 (P)   6,198,163 61,982
Series 2007-6, Class ES IO,      
0.342%, 08/19/2037 (P)(S)   4,851,467 51,547
HILT Mortgage Trust, Series 2014-ORL,      
Class D 2.159%, 07/15/2029 (P)(S)   1,770,000 1,770,002
Hilton USA Trust      
Series 2013-HLF, Class EFL,      
3.906%, 11/05/2030 (P)(S)   1,680,000 1,685,307
Series 2013-HLT, Class DFX,      
4.407%, 11/05/2030 (S)   1,186,000 1,214,229
Series 2013-HLT, Class EFX,      
5.609%, 11/05/2030 (P)(S)   1,000,000 1,023,026

 

The accompanying notes are an integral part of the financial statements. 63

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
IndyMac Index Mortgage Loan Trust      
Series 2005-AR12, Class AX2 IO,      
2.191%, 07/25/2035 $ 22,099,970 $ 1,568,170
Series 2005-AR18, Class 1X IO,      
2.046%, 10/25/2036   15,592,868 1,232,621
Series 2005-AR18, Class 2X IO,      
1.690%, 10/25/2036   20,378,045 705,814
Irvine Core Office Trust, Series 2013-IRV,      
Class XA IO 1.211%, 05/15/2048 (S)   28,158,038 1,346,095
JPMBB Commercial Mortgage      
Securities Trust, Series 2014-C19,      
Class C 4.835%, 04/15/2047 (P)   2,035,000 2,087,591
JPMorgan Chase Commercial      
Mortgage Securities Corp.      
Series 2005-CB13, Class AJ,      
5.490%, 01/12/2043 (P)   1,000,000 987,102
Series 2005-LDP2, Class A3,      
4.697%, 07/15/2042   599,698 602,853
Series 2005-LDP5, Class A3,      
5.433%, 12/15/2044 (P)   2,807,859 2,821,118
Series 2005-LDP5, Class AM,      
5.446%, 12/15/2044 (P)   2,000,000 2,102,936
Series 2005-LDP5, Class A4,      
5.404%, 12/15/2044 (P)   2,025,000 2,100,158
Series 2006-LDP8, Class AJ,      
5.480%, 05/15/2045 (P)   2,000,000 2,103,424
Series 2006-LDP8, Class AM,      
5.440%, 05/15/2045   2,670,000 2,870,869
Series 2006-LDP8, Class C,      
5.549%, 05/15/2045 (P)   1,000,000 1,002,857
Series 2007-CB19, Class AJ,      
5.892%, 02/12/2049 (P)   700,000 631,448
Series 2011-C3A, Class XA IO,      
1.367%, 02/15/2046 (S)   23,654,014 1,078,126
Series 2011-C4, Class XA IO,      
1.667%, 07/15/2046 (S)   33,823,672 1,611,563
Series 2013-JWRZ, Class E,      
3.895%, 04/15/2030 (P)(S)   1,000,000 1,000,042
Series 2005-LDP2, Class A4,      
4.738%, 07/15/2042   1,830,000 1,859,953
Series 2006-LDP9, Class A3,      
5.336%, 05/15/2047   1,234,453 1,327,623
Series 2007-LDPX, Class A3,      
5.420%, 01/15/2049   3,787,391 4,099,407
JPMorgan Chase Commercial      
Mortgage Securities Trust      
Series 2007-LD12, Class AM,      
6.217%, 02/15/2051 (P)   4,690,330 5,195,277
Series 2007-LDPX, Class AM,      
5.464%, 01/15/2049 (P)   5,055,000 5,325,726
Series 2012-HSBC, Class XA IO,      
1.582%, 07/05/2032 (S)   26,750,000 2,611,736
Series 2013-JWRZ, Class D,      
3.145%, 04/15/2030 (P)(S)   1,455,000 1,459,490
Series 2014-FBLU, Class D,      
2.755%, 12/15/2028 (P)(S)   2,260,000 2,267,153
Series 2014-FBLU, Class E,      
3.655%, 12/15/2028 (P)(S)   1,620,000 1,620,885
Series 2014-INN, Class F,      
4.155%, 06/15/2029 (P)(S)   2,510,000 2,504,024

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
LB-UBS Commercial Mortgage Trust      
Series 2005-C2, Class A5,      
5.150%, 04/15/2030 (P) $ 1,500,000 $ 1,517,145
Series 2005-C2, Class AJ,      
5.205%, 04/15/2030 (P)   1,000,000 1,021,008
Series 2006-C1, Class AJ,      
5.276%, 02/15/2041 (P)   800,000 818,554
Series 2006-C4, Class AJ,      
6.049%, 06/15/2038 (P)   950,000 995,819
Series 2007-C1, Class AJ,      
5.484%, 02/15/2040   1,000,000 1,037,586
Series 2007-C7, Class AJ,      
6.456%, 09/15/2045 (P)   1,300,000 1,369,316
Series 2004-C1, Class XCL IO,      
0.700%, 01/15/2036 (S)   5,451,858 32,897
Series 2005-C1, Class XCL IO,      
0.983%, 02/15/2040 (S)   304,870 982
Lehman Brothers Small Balance      
Commercial, Series 2005-1A, Class A      
0.405%, 02/25/2030 (P)(S)   1,380,991 1,256,833
MASTR Adjustable Rate Mortgages Trust      
Series 2004-11, Class M2,      
1.255%, 11/25/2034 (P)   1,675,000 1,624,763
Series 2004-13, Class 2A1,      
2.642%, 04/21/2034 (P)   312,092 315,861
Series 2004-8, Class 5A1,      
2.517%, 08/25/2034 (P)   295,938 294,908
MASTR Alternative Loans Trust,      
Series 2004-4, Class 8A1      
6.500%, 05/25/2034   1,021,940 1,062,375
Merrill Lynch Mortgage Investors Trust,      
Series 2004-1, Class 2A1      
2.147%, 12/25/2034 (P)   1,425,063 1,397,225
Merrill Lynch Mortgage Trust      
Series 2008-C1, Class X IO,      
0.531%, 02/12/2051 (S)   51,830,965 638,506
Series 2004-KEY2, Class A4,      
4.864%, 08/12/2039 (P)   5,961 5,955
Series 2005-CIP1, Class XC IO,      
0.416%, 07/12/2038 (S)   128,415,779 236,028
Series 2006-C2, Class X IO,      
0.536%, 08/12/2043 (S)   14,025,485 90,927
Merrill Lynch/Countrywide      
Commercial Mortgage Trust      
Series 2007-5, Class AM,      
5.419%, 08/12/2048   3,740,000 3,945,876
Series 2007-5, Class AMFL,      
0.336%, 08/12/2048 (P)(S)   1,000,000 934,083
Series 2007-6, Class AM,      
5.526%, 03/12/2051 (P)   3,050,000 3,189,178
ML-CFC Commercial Mortgage Trust,      
Series 2006-4, Class AJ      
5.239%, 12/12/2049   1,000,000 1,003,071
Morgan Stanley Bank of America      
Merrill Lynch Trust      
Series 2012-C5, Class XA IO,      
2.024%, 08/15/2045 (S)   18,972,495 1,672,938
Series 2012-C6, Class XA IO,      
2.304%, 11/15/2045 (S)   14,611,480 1,480,669
Series 2013-C7, Class B,      
3.769%, 02/15/2046   1,000,000 1,005,856

 

The accompanying notes are an integral part of the financial statements. 64

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Morgan Stanley Bank of America Merrill      
Lynch Trust (continued)      
Series 2013-C7, Class C,      
4.326%, 02/15/2046 (P) $ 1,149,000 $ 1,153,348
Series 2013-C7, Class XA IO,      
1.864%, 02/15/2046   8,531,777 803,019
Morgan Stanley Capital I Trust      
Series 2006-HQ9, Class D,      
5.862%, 07/12/2044 (P)   900,000 902,905
Series 2006-T23, Class A4,      
5.984%, 08/12/2041 (P)   630,000 674,930
Series 2007-IQ14, Class AM,      
5.869%, 04/15/2049 (P)   3,595,000 3,805,631
Series 2011-C3, Class XA IO,      
1.411%, 07/15/2049 (S)   20,142,467 823,484
Series 2012-C4, Class AS,      
3.773%, 03/15/2045   2,371,500 2,456,001
Series 2005-IQ9, Class X1 IO,      
1.281%, 07/15/2056 (S)   321,332 3,974
Series 2005-T17, Class X1 IO,      
0.836%, 12/13/2041 (S)   699,907 1,743
Morgan Stanley Mortgage Loan Trust,      
Series 2004-6AR, Class 2A2      
2.677%, 08/25/2034 (P)   2,293,355 2,275,605
MortgageIT Trust, Series 2005-2,      
Class 1A2 0.485%, 05/25/2035 (P)   1,435,117 1,339,828
Motel 6 Trust, Series 2012-MTL6,      
Class D 3.781%, 10/05/2025 (S)   4,755,000 4,797,686
Nomura Asset Acceptance Corp.      
Alternative Loan Trust,      
Series 2004-AP3, Class A6      
4.793%, 10/25/2034 (P)   486,268 502,737
Opteum Mortgage Acceptance Corp.,      
Series 2005-3, Class APT      
0.445%, 07/25/2035 (P)   1,657,421 1,625,514
Residential Accredit Loans, Inc.      
Series 2005-QO4, Class XIO IO,      
2.366%, 12/25/2045   11,408,762 1,326,435
Series 2004-QS16, Class 1A1,      
5.500%, 12/25/2034   2,849 2,895
Sequoia Mortgage Trust, Series 2005-3,      
Class A1 0.356%, 05/20/2035 (P)   4,045 3,776
Springleaf Mortgage Loan Trust,      
Series 2012-3A, Class M1      
2.660%, 12/25/2059 (P)(S)   810,000 810,022
Structured Agency Credit Risk Debt      
Notes, Series 2013-DN2, Class M1      
1.605%, 11/25/2023 (P)   1,722,505 1,726,221
Thornburg Mortgage Securities Trust,      
Series 2004-1, Class II2A      
1.636%, 03/25/2044 (P)   1,410,449 1,395,665
TimberStar Trust, Series 2006-1A,      
Class A 5.668%, 10/15/2036 (S)   900,000 971,289
UBS Commercial Mortgage Trust      
Series 2012-C1, Class B,      
4.822%, 05/10/2045   1,015,000 1,098,179
Series 2012-C1, Class C,      
5.719%, 05/10/2045 (P)(S)   815,000 897,783
UBS-Barclays Commercial      
Mortgage Trust, Series 2012-C2,      
Class XA IO 1.929%, 05/10/2063 (S)   23,237,056 1,951,541

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
VNDO Mortgage Trust,      
Series 2013-PENN, Class D      
4.079%, 12/13/2029 (P)(S) $ 1,919,000 $ 1,944,189
Wachovia Bank      
Commercial Mortgage Trust      
Series 2005-C16, Class C,      
4.985%, 10/15/2041 (P)   1,700,000 1,713,748
Series 2005-C21, Class AJ,      
5.414%, 10/15/2044 (P)   2,170,000 2,244,930
Series 2007-C30, Class AJ,      
5.413%, 12/15/2043 (P)   2,000,000 2,060,470
Series 2007-C31, Class AJ,      
5.660%, 04/15/2047 (P)   1,500,000 1,551,129
Series 2007-C31, Class AM,      
5.591%, 04/15/2047 (P)   2,900,000 3,146,051
Series 2007-C33, Class AJ,      
6.140%, 02/15/2051 (P)   1,000,000 1,050,062
Series 2005-C17, Class XC IO,      
0.438%, 03/15/2042 (S)   49,549,435 49,847
Series 2005-C19, Class AJ,      
4.793%, 05/15/2044   37,517 38,481
WaMu Mortgage Pass      
Through Certificates      
Series 2004-AR8, Class A2,      
0.555%, 06/25/2044 (P)   1,127,868 1,047,436
Series 2004-CB2, Class 1A,      
5.000%, 07/25/2034   1,363,586 1,441,976
Series 2005-AR13, Class X IO,      
1.456%, 10/25/2045   60,670,407 3,259,851
Series 2005-AR19, Class A1A2,      
0.445%, 12/25/2045 (P)   2,088,567 1,968,825
Series 2005-AR2, Class 2A1B,      
0.525%, 01/25/2045 (P)   2,946,898 2,733,867
Series 2005-AR2, Class 2A3,      
0.505%, 01/25/2045 (P)   1,167,339 1,092,302
Series 2005-AR8, Class 2AB2,      
0.575%, 07/25/2045 (P)   3,570,999 3,392,542
Series 2005-AR8, Class 2AB3,      
0.515%, 07/25/2045 (P)   905,149 855,224
Washington Mutual Alternative Mortgage      
Pass Through Certificates,      
Series 2005-1, Class 6A1      
6.500%, 03/25/2035   8,231 8,399
Wells Fargo Commercial Mortgage Trust      
Series 2013-120B, Class C,      
2.800%, 03/18/2028 (P)(S)   4,595,000 4,440,806
Series 2013-BTC, Class E,      
3.668%, 04/16/2035 (P)(S)   3,190,000 2,873,727
Wells Fargo Mortgage Backed      
Securities Trust, Series 2005-AR3,      
Class 1A2 2.619%, 03/25/2035 (P)   1,019,556 1,012,314
WF-RBS Commercial Mortgage Trust      
Series 2011-C3, Class XA IO,      
1.789%, 03/15/2044 (S)   24,209,109 1,440,757
Series 2012-C10, Class XA IO,      
1.955%, 12/15/2045 (S)   8,885,186 924,282
Series 2012-C9, Class XA IO,      
2.388%, 11/15/2045 (S)   26,749,152 3,142,250
Series 2013-C15, Class B,      
4.634%, 08/15/2046 (P)   1,505,000 1,592,424
Series 2013-C15, Class C,      
4.634%, 08/15/2046 (P)   1,000,000 1,032,932

 

The accompanying notes are an integral part of the financial statements. 65

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
WF-RBS Commercial      
Mortgage Trust (continued)      
Series 2013-C16, Class B,      
5.150%, 09/15/2046 (P) $ 880,000 $ 966,056
Series 2013-C16, Class XA IO,      
1.227%, 09/15/2046   15,590,834 902,600
 
      294,334,707
U.S. Government Agency - 3.5%      
Federal Home Loan Mortgage Corp.      
Series 290, Class IO,      
3.500%, 11/15/2032   5,120,715 920,857
Series 3387, Class SB IO,      
6.265%, 11/15/2037   8,408,633 1,482,696
Series 3632, Class AP,      
3.000%, 02/15/2040   3,434,207 3,550,369
Series 3794, Class PI IO,      
4.500%, 02/15/2038   1,262,804 139,180
Series 3830, Class NI IO,      
4.500%, 01/15/2036   5,571,039 561,362
Series 3943, Class DI IO,      
4.000%, 11/15/2039   4,335,678 577,919
Series 4030, Class BI IO,      
5.000%, 01/15/2042   3,296,871 722,042
Series 4077, Class IK IO,      
5.000%, 07/15/2042   2,521,928 538,713
Series K006, Class BX1 IO,      
5.532%, 02/25/2020   4,479,053 1,140,985
Series K010, Class X1 IO,      
0.527%, 10/25/2020   37,244,197 568,942
Series K011, Class X1 IO,      
0.494%, 11/25/2020   55,817,658 956,324
Series K014, Class X1 IO,      
1.423%, 04/25/2021   15,136,135 1,043,273
Series K017, Class X1 IO,      
1.586%, 12/25/2021   24,753,903 2,048,806
Series K018, Class X1 IO,      
1.593%, 01/25/2022   10,831,447 905,368
Series K021, Class A2,      
2.396%, 06/25/2022   1,000,000 986,513
Series K021, Class X1 IO,      
1.642%, 06/25/2022   16,899,820 1,584,950
Series K022, Class X1 IO,      
1.427%, 07/25/2022   18,723,219 1,517,948
Series K024, Class X1,      
1.021%, 09/25/2022   11,134,374 639,592
Series K026, Class X1 IO,      
1.174%, 11/25/2022   13,714,675 942,939
Series K038, Class A2,      
3.389%, 03/25/2024   3,600,000 3,766,244
Series K705, Class X1 IO,      
1.891%, 09/25/2018   15,667,655 970,987
Series K707, Class X1 IO,      
1.688%, 12/25/2018   11,523,629 667,863
Series K709, Class X1 IO,      
1.670%, 03/25/2019   9,574,893 577,088
Series K710, Class X1 IO,      
1.911%, 05/25/2019   21,096,186 1,501,289
Series KAIV, Class X1 IO,      
1.368%, 06/25/2021   26,014,872 1,812,664
Series KS01, Class X1 IO,      
1.785%, 01/25/2023   19,536,348 1,687,765

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal Home Loan Mortgage Corp. (continued)    
Series T-41, Class 3A,      
6.539%, 07/25/2032 (P) $ 2,011 $ 2,305
Federal National Mortgage Association      
Series 2001-50, Class BA,      
7.000%, 10/25/2041   460 526
Series 2002-W3, Class A5,      
7.500%, 11/25/2041   15,460 18,056
Series 2009-50, Class GI IO,      
5.000%, 05/25/2039   711,372 118,261
Series 2009-78, Class IB IO,      
5.000%, 06/25/2039   848,771 125,115
Series 2011-118, Class CD,      
3.500%, 10/25/2039   4,628,142 4,831,368
Series 2011-41, Class KA,      
4.000%, 01/25/2041   1,587,390 1,676,205
Series 2011-86, Class NA,      
4.000%, 01/25/2041   2,729,800 2,832,727
Series 2012-103, Class PS IO,      
6.495%, 04/25/2042   4,184,253 862,993
Series 2012-118, Class IB IO,      
3.500%, 11/25/2042   4,213,569 906,815
Series 2012-137, Class WI IO,      
3.500%, 12/25/2032   5,142,691 939,045
Series 2012-30, Class PB,      
2.250%, 10/25/2040   3,172,716 3,191,965
Series 2012-38, Class PA,      
2.000%, 09/25/2041   2,705,680 2,586,430
Series 2012-M5, Class X IO,      
0.740%, 02/25/2022   15,428,819 579,506
Series 2012-MB, Class X1 IO,      
2.322%, 12/25/2019   12,742,157 921,678
Series 402, Class 3 IO,      
4.000%, 11/25/2039   579,060 113,211
Series 402, Class 4 IO,      
4.000%, 10/25/2039   892,951 162,353
Series 402, Class 7 IO,      
4.500%, 11/25/2039   887,827 177,759
Series 407, Class 15 IO,      
5.000%, 01/25/2040   1,640,667 338,455
Series 407, Class 21 IO,      
5.000%, 01/25/2039   801,938 124,911
Series 407, Class 7 IO,      
5.000%, 03/25/2041   1,428,472 311,975
Series 407, Class 8 IO,      
5.000%, 03/25/2041   711,449 151,959
Series 407, Class C6 IO,      
5.500%, 01/25/2040   5,495,629 1,224,287
Government National      
Mortgage Association      
Series 2012-114, Class IO,      
1.038%, 01/16/2053   22,144,600 1,930,788
Series 2012-120, Class IO,      
0.992%, 02/16/2053   17,012,950 1,302,920
Series 2012-125, Class IO,      
0.860%, 02/16/2053   21,948,350 1,499,928
Series 2012-70, Class IO,      
0.967%, 08/16/2052   14,849,589 939,355

 

The accompanying notes are an integral part of the financial statements. 66

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Government National Mortgage      
Association (continued)      
Series 2013-42, Class IA IO,      
3.500%, 03/20/2043 $ 7,231,568 $ 1,075,601
 
      60,759,175
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $345,826,569)   $ 355,093,882
 
ASSET BACKED SECURITIES - 6.8%      
ACE Securities Corp. Home Equity      
Loan Trust, Series 2005-HE3, Class M2      
0.830%, 05/25/2035 (P)   1,035,000 988,017
ACG Trust III 3.405%, 12/25/2035 (P)(S)   861,487 803,337
Aegis Asset Backed Securities Trust      
Series 2005-4, Class M1,      
0.605%, 10/25/2035 (P)   2,220,000 1,930,901
Series 2004-3, Class A1,      
0.875%, 09/25/2034 (P)   452,156 443,258
Aircraft Lease Securitisation, Ltd.      
0.419%, 05/10/2032 (P)(S)   1,039,128 1,018,345
Airlie CLO 2006-I, Ltd., Series 2006-1A,      
Class B 0.981%, 05/20/2020 (P)(S)   1,500,000 1,480,145
Ally Master Owner Trust, Series 2012-4,      
Class A 1.720%, 07/15/2019   690,000 694,352
Alterna Funding I LLC, Series 2014-1A      
1.639%, 02/15/2021 (S)   1,000,000 1,000,000
Ameriquest Mortgage Securities, Inc.      
0.565%, 01/25/2036 (P)   1,100,000 1,001,938
Series 2005-R3, Class M2,      
0.625%, 05/25/2035 (P)   1,480,000 1,395,529
Amresco Residential Securities Mortgage      
Loan Trust, Series 1998-1, Class A6      
6.510%, 08/25/2027   74 79
Apidos CDO IV      
3.835%, 10/27/2018 (P)(S)   700,000 687,978
Apidos Cinco CDO, Ltd.      
4.483%, 05/14/2020 (P)(S)   1,000,000 984,180
Applebee’s/IHOP Funding LLC,      
Series 2014-1, Class A2      
4.277%, 09/05/2044 (S)   3,035,000 3,036,827
Argent Securities, Inc.      
Series 2004-W6, Class M1,      
0.980%, 05/25/2034 (P)   813,463 791,457
Series 2003-W10, Class M1,      
1.235%, 01/25/2034 (P)   814,059 783,403
ARL First LLC, Series 2012-1A, Class A2      
3.810%, 12/15/2042 (S)   1,100,000 1,113,992
Asset Backed Funding Certificates,      
Series 2005-HE1, Class M1      
0.785%, 03/25/2035 (P)   1,221,842 1,168,253
Babson Mid-Market CLO, Inc.,      
Series 2007-2A, Class E      
3.884%, 04/15/2021 (P)   1,000,000 978,136
Battalion Clo, Ltd., Series 2007-1A,      
Class D 2.384%, 07/14/2022 (P)(S)   1,000,000 964,689
Bayview Financial Mortgage Pass-      
Through Trust, Series 2006-A,      
Class 1A3 5.865%, 02/28/2041 (P)   1,275,000 1,296,906
Bravo Mortgage Asset Trust,      
Series 2006-1A, Class A2      
0.395%, 07/25/2036 (P)(S)   1,653,899 1,543,230

 

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)      
Business Loan Express SBA Loan Trust,      
Series 2005-1A, Class A      
0.455%, 06/27/2033 (P)(S) $ 1,574,960 $ 1,386,453
CarMax Auto Owner Trust, Series 2014-3,      
Class A3 1.160%, 06/17/2019   1,985,000 1,984,559
Chase Issuance Trust, Series 2014-A6,      
Class A 1.260%, 07/15/2019   1,666,000 1,664,592
Citibank Credit Card Issuance Trust,      
Series 2007-A8, Class A8      
5.650%, 09/20/2019   1,115,000 1,256,165
Citicorp Residential Mortgage      
Securities, Inc., Series 2007-2, Class A6      
5.719%, 06/25/2037 (P)   752,290 777,842
CKE Restaurant Holdings, Inc.,      
Series 2013-1A, Class A2      
4.474%, 03/20/2043 (S)   3,969,156 4,055,350
Conseco Financial Corp., Series 1996-10,      
Class M1 7.240%, 11/15/2028 (P)   1,583,889 1,694,981
Countrywide Asset-Backed Certificates,      
Series 2004-10, Class AF5B      
5.380%, 02/25/2035 (P)   1,376,520 1,405,902
Credit Suisse Mortgage Trust      
Series 2006-CF2, Class M1,      
0.625%, 05/25/2036 (P)(S)   2,300,000 2,217,632
Series 2014-ICE, Class D,      
2.500%, 04/15/2027 (P)   1,400,000 1,404,182
Credit-Based Asset Servicing      
and Securitization LLC      
Series 2005-CB4, Class M1,      
0.575%, 07/25/2035 (P) $ 790,000 759,143
Series 2005-CB2, Class M1,      
0.815%, 04/25/2036 (P)   1,150,008 1,136,695
Series 2006-MH1, Class B1,      
5.500%, 10/25/2036 (P)(S)   460,000 326,438
Cronos Containers Program, Ltd.,      
Series 2013-1A, Class A      
3.080%, 04/18/2028 (S)   1,906,667 1,906,598
Dominos Pizza Master Issuer LLC,      
Series 2012-1A, Class A2      
5.216%, 01/25/2042 (S)   2,977,016 3,159,680
Duane Street CLO III, Ltd.,      
Series 2006-3A, Class D      
1.734%, 01/11/2021 (P)(S)   1,200,000 1,173,059
Encore Credit Receivables Trust,      
Series 2005-2, Class M2      
0.845%, 11/25/2035 (P)   1,850,000 1,804,127
Fairway Loan Funding Company,      
Series 2006-1A, Class B2L      
4.033%, 10/17/2018 (P)(S)   1,500,000 1,501,520
Foothill CLO, Ltd., Series 2007-1A,      
Class D 1.685%, 02/22/2021 (P)(S)   1,000,000 963,081
Ford Credit Auto Owner Trust,      
Series 2014-1, Class B      
2.410%, 11/15/2025 (S)   1,470,000 1,476,070
Ford Credit Floorplan Master Owner Trust      
Series 2014-4, Class A1,      
1.400%, 08/15/2019   2,905,000 2,898,260
Series 2012-5, Class A,      
1.490%, 09/15/2019   1,340,000 1,339,054
Fremont Home Loan Trust, Series 2005-1,      
Class M3 0.920%, 06/25/2035 (P)   612,197 613,791
FRS I LLC, Series 2013-1A, Class B      
3.960%, 04/15/2043 (S)   1,594,874 1,624,094

 

The accompanying notes are an integral part of the financial statements. 67

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Gale Force 4 CLO, Ltd., Series 2007-4A,      
Class D 3.732%, 08/20/2021 (P)(S) $ 1,000,000 $ 987,416
Golden Knight CDO, Ltd.,      
Series 2007-2A, Class D      
1.634%, 04/15/2019 (P)(S)   2,000,000 1,918,406
Goldentree Loan Opportunities V, Ltd.,      
Series 2007-5A, Class E      
5.234%, 10/18/2021 (P)(S)   1,100,000 1,100,767
GSAA Home Equity Trust,      
Series 2005-11, Class 3A1      
0.425%, 10/25/2035 (P)   2,169,722 2,037,408
GSAA Trust, Series 2005-10, Class M3      
0.705%, 06/25/2035 (P)   2,000,000 1,897,690
GSRPM Mortgage Loan Trust,      
Series 2006-1, Class A1      
0.455%, 03/25/2035 (P)(S)   1,833,433 1,784,682
Harch CLO III, Ltd., Series 2007-1A,      
Class D 1.984%, 04/17/2020 (P)(S)   1,300,000 1,253,214
Hewett’s Island Clo V, Ltd.,      
Series 2006-5A, Class E      
3.827%, 12/05/2018 (P)(S)   512,365 503,368
HOA Funding LLC, Series 2014-1A,      
Class A2 4.846%, 08/20/2044 (S)   500,000 501,999
Home Equity Asset Trust      
Series 2005-6, Class M1,      
0.625%, 12/25/2035 (P)   1,025,000 1,022,008
Series 2005-1, Class M4,      
1.175%, 05/25/2035 (P)   875,000 843,335
Home Equity Mortgage Loan Asset-      
Backed Trust, Series 2005-C,      
Class AII3 0.525%, 10/25/2035 (P)   1,490,000 1,426,896
Honda Auto Receivables Owner Trust,      
Series 2014-3, Class A4      
1.310%, 10/15/2020   1,580,000 1,578,730
John Deere Owner Trust, Series 2014-B,      
Class A4 1.500%, 06/15/2021   1,700,000 1,698,406
LCM V Ltd., Series 5A, Class D      
0.900%, 03/21/2019 (P)(S)   2,000,000 1,932,690
Loomis Sayles CLO I, Ltd.      
Series 2006-1A, Class D,      
1.835%, 10/26/2020 (P)(S)   2,200,000 2,160,149
4.085%, 10/26/2020 (P)(S)   531,679 523,178
Merrill Lynch Mortgage Investors, Inc.,      
Series 2005-WMC1, Class M1      
0.905%, 09/25/2035 (P)   640,103 602,418
New Century Home Equity Loan Trust,      
Series 2005-1, Class M1      
0.830%, 03/25/2035 (P)   2,500,000 2,361,030
Northwoods Capital V, Ltd.,      
Series 2005-5A, Class C2      
1.020%, 12/07/2020 (S)   2,000,000 1,999,488
Northwoods Capital VII, Ltd.,      
Series 2006-7A, Class A3      
0.472%, 10/22/2021 (P)(S)   552,086 551,590
RAMP Series Trust, Series 2005-RS7,      
Class M1 0.655%, 07/25/2035 (P)   1,400,000 1,200,688
RAMP Trust, Series 2005-RS3, Class M1      
0.575%, 03/25/2035 (P)   985,000 930,846
Renaissance Home Equity Loan Trust,      
Series 2005-2, Class AF4      
4.934%, 08/25/2035 (P)   1,545,000 1,501,241
Sierra Timeshare Receivables      
Funding LLC, Series 2014-2A, Class A      
2.050%, 06/20/2031 (S)   1,923,053 1,918,784

 

Active Bond Fund (continued)      
    Shares or    
    Principal    
    Amount   Value
 
 
ASSET BACKED SECURITIES (continued)      
Sonic Capital LLC, Series 2011-1A,        
Class A2 5.438%, 05/20/2041 (S) $ 1,205,154 $ 1,276,214
Soundview Home Loan Trust        
Series 2006-OPT2, Class A3,        
0.335%, 05/25/2036 (P)   632,316   586,972
Series 2005-CTX1, Class M2,        
0.595%, 11/25/2035 (P)   1,240,000   1,159,223
Specialty Underwriting &        
Residential Finance Trust        
Series 2006-BC1, Class A2D,        
0.455%, 12/25/2036 (P)   3,250,000   3,129,344
Series 2005-AB1, Class M1,        
0.585%, 03/25/2036 (P)   1,000,000   978,264
Structured Asset Securities Corp.        
Mortgage Loan Trust, Series 2005-2XS,        
Class 2A2 1.655%, 02/25/2035 (P)   1,495,208   1,482,731
TAL Advantage V LLC        
Series 2013-1A, Class A,        
2.830%, 02/22/2038 (S)   1,105,000   1,100,147
Series 2014-1A, Class A,        
3.510%, 02/22/2039 (S)   2,275,250   2,311,340
Volkswagen Credit Auto Master Trust,        
Series 2014-1A, Class A2        
1.400%, 07/22/2019 (S)   1,185,000   1,183,467
Westgate Resorts LLC        
Series 2012-3A, Class A,        
2.500%, 03/20/2025 (S)   713,124   716,913
Series 2012-2A, Class A,        
3.000%, 01/20/2025 (S)   892,285   899,814
Series 2013-1A, Class B,        
3.750%, 08/20/2025 (S)   512,635   517,537
Series 2012-2A, Class B,        
4.500%, 01/20/2025 (S)   2,492,856   2,532,587
Series 2012-3A, Class B,        
4.500%, 03/20/2025 (S)   1,416,644   1,440,108
Series 2014-AA, Class A,        
6.250%, 10/20/2026 (S)   1,117,982   1,117,982
TOTAL ASSET BACKED SECURITIES (Cost $114,930,281) $ 117,303,290
 
COMMON STOCKS - 0.0%        
Financials - 0.0%        
BTA Bank JSC, GDR (I)(S)   17 10
TOTAL COMMON STOCKS (Cost $443)     $ 10
 
PREFERRED SECURITIES - 0.7%        
Consumer Staples - 0.0%        
Ocean Spray Cranberries, Inc.,        
Series A, 6.250% (S)   5,034 $ 455,892
Financials - 0.5%        
Ally Financial, Inc., 7.000% (S)   1,662   1,670,985
Discover Financial Services, 6.500%   31,500   805,770
FNB Corp. (7.250% to 02/15/2024, then        
3 month LIBOR + 4.600%) (L)   30,650   874,445
GMAC Capital Trust I (8.125% to        
02/15/2016, then        
3 month LIBOR + 5.785%)   48,000   1,290,240
Regions Financial Corp., 6.375%   46,355   1,153,776
The Goldman Sachs Group, Inc., 5.500%   35,450   867,816
Wells Fargo & Company,        
Series L, 7.500%   1,246   757,549
Weyerhaeuser Company, 6.375%   5,600   323,456
 
        7,744,037

 

The accompanying notes are an integral part of the financial statements. 68

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Active Bond Fund (continued)      
    Shares or    
    Principal    
    Amount   Value
 
 
PREFERRED SECURITIES (continued)        
Industrials - 0.1%        
Continental Airlines        
Finance Trust II, 6.000%   15,000 $ 745,313
United Technologies Corp., 7.500% (L)   16,493   990,570
 
        1,735,883
Utilities - 0.1%        
Dominion Resources, Inc., 6.375%   29,102   1,479,255
Exelon Corp., 6.500%   13,538   683,669
 
        2,162,924
TOTAL PREFERRED SECURITIES (Cost $11,598,180) $ 12,098,736
 
ESCROW CERTIFICATES - 0.0%        
Financials - 0.0%        
Lehman Brothers        
Holdings, Inc., 01/26/2017 (I)   1,120,000   221,200
TOTAL ESCROW CERTIFICATES (Cost $29,440)   $ 221,200
 
SECURITIES LENDING COLLATERAL - 0.3%      
John Hancock Collateral        
Investment Trust, 0.0970% (W)(Y)   439,171 $ 4,394,828
TOTAL SECURITIES LENDING        
COLLATERAL (Cost $4,394,536)     $ 4,394,828
 
SHORT-TERM INVESTMENTS - 4.5%        
Money Market Funds - 3.3%        
State Street Institutional U.S. Government        
Money Market Fund, 0.0000% (Y)   55,610,167   55,610,167
Repurchase Agreement - 1.2%        
Barclays Tri-Party Repurchase Agreement        
dated 08/29/2014 at 0.030% to be        
repurchased at $17,152,000 on        
09/02/2014, collateralized by        
$12,258,300 Treasury Inflation Index        
Bonds, 2.000% due 01/15/2026 (valued        
at $17,495,149, including interest) $ 17,152,000 $ 17,152,000
Repurchase Agreement with State        
Street Corp. dated 08/29/2014 at        
0.000% to be repurchased at $3,628,000        
on 09/02/2014, collateralized by        
$3,755,000 U.S. Treasury Notes,        
0.625% due 11/30/2017 (valued at        
$3,702,392, including interest)   3,628,000   3,628,000
 
        20,780,000
TOTAL SHORT-TERM INVESTMENTS (Cost $76,390,167) $ 76,390,167
Total Investments (Active Bond Fund)        
(Cost $1,689,768,129) - 102.7%     $ 1,759,729,021
Other assets and liabilities, net - (2.7%)       (46,558,913)
 
TOTAL NET ASSETS - 100.0%     $ 1,713,170,108
 

 

All Cap Core Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 98.3%    
Consumer Discretionary - 10.3%    
Auto Components - 0.7%    
Lear Corp. 45,200 $ 4,571,076
Tower International, Inc. (I) 16,300 546,539
 
    5,117,615
Diversified Consumer Services - 0.2%    
Capella Education Company 8,500 553,435
Strayer Education, Inc. (I) 10,900 661,848
 
    1,215,283
Hotels, Restaurants & Leisure - 1.4%    
Burger King Worldwide, Inc. 21,500 688,860
Marriott International, Inc., Class A 142,600 9,896,440
 
    10,585,300
Household Durables - 1.1%    
Harman International Industries, Inc. 73,000 8,400,840
Internet & Catalog Retail - 1.4%    
Expedia, Inc. 109,300 9,388,870
Nutrisystem, Inc. 96,000 1,566,720
 
    10,955,590
Media - 2.5%    
Cablevision Systems Corp., Class A (L) 301,000 5,571,510
The Walt Disney Company 36,800 3,307,584
Thomson Reuters Corp. 124,400 4,714,760
Time Warner Cable, Inc. 1,600 236,688
Time Warner, Inc. 65,000 5,006,950
 
    18,837,492
Specialty Retail - 1.7%    
Aaron’s, Inc. 84,400 2,162,328
AutoZone, Inc. (I) 5,900 3,179,156
O’Reilly Automotive, Inc. (I) 30,900 4,819,782
The Gap, Inc. 59,800 2,759,770
 
    12,921,036
Textiles, Apparel & Luxury Goods - 1.3%    
Hanesbrands, Inc. 42,100 4,322,828
Skechers U.S.A., Inc., Class A (I) 99,000 5,778,630
 
    10,101,458
 
    78,134,614
Consumer Staples - 6.2%    
Beverages - 0.8%    
Dr. Pepper Snapple Group, Inc. 99,100 6,235,372
Monster Beverage Corp. (I) 1,300 114,933
 
    6,350,305
Food & Staples Retailing - 0.9%    
CVS Health Corp. 84,300 6,697,635
Food Products - 3.7%    
Archer-Daniels-Midland Company 77,500 3,864,150
Omega Protein Corp. (I) 6,900 103,983
Pilgrim’s Pride Corp. (I) 254,000 7,586,980
Sanderson Farms, Inc. (L) 91,400 8,529,448
Tyson Foods, Inc., Class A 216,700 8,247,602
 
    28,332,163
Household Products - 0.8%    
Kimberly-Clark Corp. 52,900 5,713,200
 
    47,093,303

 

The accompanying notes are an integral part of the financial statements. 69

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

All Cap Core Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Energy - 10.3%    
Energy Equipment & Services - 4.2%    
Baker Hughes, Inc. 149,600 $ 10,343,344
Matrix Service Company (I) 19,900 561,379
Nabors Industries, Ltd. 365,800 9,953,418
Patterson-UTI Energy, Inc. 288,200 9,954,428
Pioneer Energy Services Corp. (I) 29,100 447,558
RPC, Inc. 37,300 849,321
 
    32,109,448
Oil, Gas & Consumable Fuels - 6.1%    
ConocoPhillips 148,400 12,053,048
EOG Resources, Inc. 76,900 8,449,772
Exxon Mobil Corp. 49,700 4,943,162
Hess Corp. 67,300 6,804,030
REX American Resources Corp. (I) 25,100 2,681,433
SM Energy Company 20,800 1,852,032
Whiting Petroleum Corp. (I) 106,200 9,840,492
 
    46,623,969
   
    78,733,417
Financials - 15.8%    
Banks - 4.7%    
Associated Banc-Corp. 53,600 974,448
Banc of California, Inc. 7,800 93,756
BOK Financial Corp. 8,000 539,040
City National Corp. 27,700 2,101,876
Comerica, Inc. 180,700 9,096,438
First Citizens BancShares, Inc., Class A 9,300 2,137,047
Frost Bankers, Inc. 32,200 2,530,920
JPMorgan Chase & Company 185,400 11,022,030
MidSouth Bancorp, Inc. 7,600 145,236
OFG Bancorp 52,500 834,750
Popular, Inc. (I) 44,300 1,371,528
Simmons First National Corp., Class A 9,700 387,224
Sterling Bancorp 17,900 226,793
SVB Financial Group (I) 7,800 868,296
United Community Banks, Inc. 12,700 215,392
Wintrust Financial Corp. 73,700 3,432,209
 
    35,976,983
Capital Markets - 3.4%    
Ameriprise Financial, Inc. 22,900 2,879,904
Arlington Asset Investment Corp., Class A (L) 40,500 1,151,010
BlackRock, Inc. 13,400 4,429,102
Invesco, Ltd. 171,400 6,999,976
Lazard, Ltd., Class A 176,400 9,642,024
Piper Jaffray Companies (I) 9,200 490,912
 
    25,592,928
Consumer Finance - 0.7%    
Capital One Financial Corp. 62,300 5,112,338
Diversified Financial Services - 0.4%    
Voya Financial, Inc. 71,000 2,775,390
Insurance - 3.9%    
Alleghany Corp. (I) 19,100 8,234,583
American Financial Group, Inc. 5,600 335,832
Aspen Insurance Holdings, Ltd. 29,700 1,262,844
Lincoln National Corp. 61,000 3,357,440
PartnerRe, Ltd. 39,500 4,411,755
Principal Financial Group, Inc. 155,000 8,414,950
The Allstate Corp. 46,100 2,834,689
The Progressive Corp. 46,700 1,168,434
 
    30,020,527

 

All Cap Core Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Investment Trusts - 2.3%    
AG Mortgage Investment Trust, Inc. 72,000 $ 1,437,840
American Tower Corp. 32,700 3,224,220
Annaly Capital Management, Inc. 818,900 9,744,910
Capstead Mortgage Corp. 72,500 958,450
Potlatch Corp. 58,200 2,483,976
 
    17,849,396
Real Estate Management & Development - 0.4%    
Jones Lang LaSalle, Inc. 25,000 3,340,250
 
    120,667,812
Health Care - 15.1%    
Biotechnology - 3.6%    
Alexion Pharmaceuticals, Inc. (I) 25,800 4,367,682
Amgen, Inc. 3,200 446,016
Gilead Sciences, Inc. (I) 138,000 14,846,040
PDL BioPharma, Inc. (L) 708,300 7,146,747
United Therapeutics Corp. (I) 5,200 612,716
 
    27,419,201
Health Care Equipment & Supplies - 0.2%    
Edwards Lifesciences Corp. (I) 15,700 1,558,382
Health Care Providers & Services - 5.4%    
Aetna, Inc. 41,400 3,400,182
Health Net, Inc. (I) 134,800 6,362,560
McKesson Corp. 55,400 10,804,662
Universal Health Services, Inc., Class B 85,100 9,738,844
WellPoint, Inc. 91,500 10,660,665
 
    40,966,913
Life Sciences Tools & Services - 1.1%    
Illumina, Inc. (I) 46,400 8,322,304
PAREXEL International Corp. (I) 1,800 101,592
 
    8,423,896
Pharmaceuticals - 4.8%    
AbbVie, Inc. 60,600 3,349,968
Akorn, Inc. (I) 63,100 2,462,162
Allergan, Inc. 66,900 10,950,192
Hospira, Inc. (I) 44,100 2,369,934
Johnson & Johnson 166,900 17,312,537
 
    36,444,793
 
    114,813,185
Industrials - 12.1%    
Aerospace & Defense - 6.0%    
General Dynamics Corp. 85,000 10,476,250
Huntington Ingalls Industries, Inc. 91,800 9,373,698
Lockheed Martin Corp. 61,700 10,735,800
Northrop Grumman Corp. 79,400 10,101,268
Spirit Aerosystems Holdings, Inc., Class A (I) 55,100 2,113,085
The Boeing Company 19,800 2,510,640
 
    45,310,741
Airlines - 2.7%    
Delta Air Lines, Inc. 257,800 10,203,724
Hawaiian Holdings, Inc. (I) 37,600 586,560
Southwest Airlines Company 312,400 9,999,924
 
    20,790,208
Commercial Services & Supplies - 0.1%    
Kimball International, Inc., Class B 49,800 790,824
Construction & Engineering - 0.2%    
Argan, Inc. 30,400 1,217,520

 

The accompanying notes are an integral part of the financial statements. 70

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

All Cap Core Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electrical Equipment - 0.1%    
Enphase Energy, Inc. (I)(L) 63,300 $ 891,264
Machinery - 1.8%    
Blount International, Inc. (I) 13,900 222,122
IDEX Corp. 38,700 2,977,578
Illinois Tool Works, Inc. 13,500 1,190,835
Trinity Industries, Inc. 196,700 9,516,346
 
    13,906,881
Marine - 0.3%    
Kirby Corp. (I) 15,800 1,884,782
Professional Services - 0.7%    
Heidrick & Struggles International, Inc. 4,200 90,972
ManpowerGroup, Inc. 66,500 5,159,070
RPX Corp. (I) 22,800 346,332
 
    5,596,374
Road & Rail - 0.2%    
Landstar System, Inc. 22,900 1,554,109
Trading Companies & Distributors - 0.0%    
United Rentals, Inc. (I) 1,600 188,240
 
    92,130,943
Information Technology - 19.6%    
Electronic Equipment, Instruments & Components - 0.2%  
Sanmina Corp. (I) 47,700 1,119,996
Internet Software & Services - 2.9%    
Akamai Technologies, Inc. (I) 30,800 1,860,936
Facebook, Inc., Class A (I) 190,100 14,223,282
LogMeIn, Inc. (I) 101,000 4,270,280
WebMD Health Corp. (I)(L) 40,600 1,963,010
 
    22,317,508
IT Services - 2.1%    
Broadridge Financial Solutions, Inc. 114,500 4,870,830
Computer Sciences Corp. 146,900 8,783,151
DST Systems, Inc. 15,200 1,410,712
Fiserv, Inc. (I) 5,200 335,244
Forrester Research, Inc. 2,800 108,808
Gartner, Inc. (I) 7,100 529,589
 
    16,038,334
Semiconductors & Semiconductor Equipment - 3.4%  
Amkor Technology, Inc. (I) 108,000 1,123,200
Cirrus Logic, Inc. (I) 16,600 401,388
Intel Corp. 54,800 1,913,616
Micron Technology, Inc. (I) 315,800 10,295,080
Monolithic Power Systems, Inc. 14,700 702,366
NVIDIA Corp. 42,400 824,680
Skyworks Solutions, Inc. 176,100 9,977,826
TriQuint Semiconductor, Inc. (I) 35,700 737,741
 
    25,975,897
Software - 4.7%    
AVG Technologies NV (I) 117,800 2,066,212
Electronic Arts, Inc. (I) 257,600 9,747,584
FactSet Research Systems, Inc. (L) 36,800 4,688,320
Manhattan Associates, Inc. (I) 208,100 6,009,928
Microsoft Corp. 70,893 3,220,669
NetScout Systems, Inc. (I) 61,500 2,833,305
Take-Two Interactive Software, Inc. (I) 315,000 7,405,650
 
    35,971,668
Technology Hardware, Storage & Peripherals - 6.3%  
Apple, Inc. 259,673 26,616,482

 

All Cap Core Fund (continued)      
  Shares or    
  Principal    
  Amount   Value
 
COMMON STOCKS (continued)      
Technology Hardware, Storage & Peripherals (continued)    
Hewlett-Packard Company 313,700 $ 11,920,600
Lexmark International, Inc., Class A 181,300   9,166,528
 
      47,703,610
 
      149,127,013
Materials - 4.8%      
Chemicals - 1.4%      
Minerals Technologies, Inc. 3,200   200,384
PPG Industries, Inc. 49,700   10,231,242
 
      10,431,626
Metals & Mining - 3.4%      
Alcoa, Inc. 599,900   9,964,339
Compass Minerals International, Inc. 74,400   6,626,808
United States Steel Corp. (L) 244,400   9,446,060
 
      26,037,207
 
      36,468,833
Telecommunication Services - 2.1%      
Diversified Telecommunication Services - 2.1%      
Verizon Communications, Inc. 315,200   15,703,264
Utilities - 2.0%      
Electric Utilities - 1.7%      
Edison International 107,700   6,369,378
Entergy Corp. 74,000   5,728,340
NRG Yield, Inc., Class A (L) 14,600   794,094
 
      12,891,812
Gas Utilities - 0.3%      
AGL Resources, Inc. 43,600   2,324,316
 
      15,216,128
TOTAL COMMON STOCKS (Cost $661,637,791)   $ 748,088,512
SECURITIES LENDING COLLATERAL - 3.0%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 2,260,486   22,620,906
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $22,620,370)   $ 22,620,906
SHORT-TERM INVESTMENTS - 1.5%      
Money Market Funds - 1.5%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y) 10,991,377   10,991,377
TOTAL SHORT-TERM INVESTMENTS (Cost $10,991,377) $ 10,991,377
Total Investments (All Cap Core Fund)      
(Cost $695,249,538) - 102.8%   $ 781,700,795
Other assets and liabilities, net - (2.8%)     (20,970,691)
 
TOTAL NET ASSETS - 100.0%   $ 760,730,104
 

 

The accompanying notes are an integral part of the financial statements. 71

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Alpha Opportunities Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 97.0%    
Consumer Discretionary - 15.1%    
Automobiles - 1.3%    
Dongfeng Motor Group Company, Ltd.,    
H Shares 525,590 $ 974,701
Fiat SpA (I) 255,530 2,499,094
Ford Motor Company 667,908 11,628,272
Harley-Davidson, Inc. 107,016 6,801,937
Tesla Motors, Inc. (I)(L) 7,210 1,944,537
 
    23,848,541
Diversified Consumer Services - 0.0%    
The Honest Company, Inc. (I) 8,330 225,387
Hotels, Restaurants & Leisure - 1.4%    
Boyd Gaming Corp. (I)(L) 95,672 1,018,907
Compass Group PLC 86,764 1,412,143
McDonald’s Corp. 154,523 14,481,896
OPAP SA 98,335 1,574,849
Whitbread PLC 44,015 3,209,566
Wyndham Worldwide Corp. 53,958 4,367,361
 
    26,064,722
Household Durables - 3.1%    
D.R. Horton, Inc. 315,300 6,835,704
Harman International Industries, Inc. 5,072 583,686
KB Home (L) 459,510 8,156,303
Lennar Corp., Class A 155,254 6,082,852
Newell Rubbermaid, Inc. 14,178 475,247
NVR, Inc. (I) 9,421 11,052,623
PulteGroup, Inc. 486,679 9,353,970
Whirlpool Corp. 97,928 14,984,943
 
    57,525,328
Internet & Catalog Retail - 2.6%    
Amazon.com, Inc. (I) 23,700 8,035,248
Ctrip.com International, Ltd., ADR (I)(L) 9,835 631,112
Expedia, Inc. 16,522 1,419,240
Groupon, Inc. (I)(L) 911,654 6,199,247
Netflix, Inc. (I) 29,405 14,045,004
The Priceline Group, Inc. (I) 14,796 18,410,811
TripAdvisor, Inc. (I) 9,726 963,749
Vipshop Holdings, Ltd., ADR (I)(L) 1,177 231,434
 
    49,935,845
Media - 1.0%    
CyberAgent, Inc. 21,373 732,319
Dentsu, Inc. 7,167 291,238
DHX Media, Ltd. 407,595 2,852,752
DISH Network Corp., Class A (I) 34,005 2,203,864
Loral Space & Communications, Inc. (I) 28,405 2,128,103
Solocal Group (I) 3,260,078 2,573,262
Time Warner, Inc. 49,332 3,800,044
Tribune Company (I) 10,785 822,896
WPP PLC 181,744 3,814,073
 
    19,218,551
Multiline Retail - 0.2%    
Intime Retail Group Company, Ltd. 2,080,505 1,892,290
Tuesday Morning Corp. (I)(L) 144,141 2,533,999
 
    4,426,289
Specialty Retail - 4.8%    
Advance Auto Parts, Inc. 170,406 23,246,787
AutoZone, Inc. (I) 10,134 5,460,605
CarMax, Inc. (I) 20,365 1,067,126
Lowe’s Companies, Inc. 514,865 27,035,561
Office Depot, Inc. (I) 183,916 941,650

 

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Specialty Retail (continued)    
Outerwall, Inc. (I)(L) 23,144 $ 1,363,876
Signet Jewelers, Ltd. 26,925 3,173,650
The Home Depot, Inc. 123,322 11,530,607
The TJX Companies, Inc. 213,972 12,754,871
Tiffany & Company 24,280 2,450,823
Zhongsheng Group Holdings, Ltd. 1,334,835 1,478,960
 
    90,504,516
Textiles, Apparel & Luxury Goods - 0.7%    
ANTA Sports Products, Ltd. 553,239 1,064,509
Asics Corp. 35,348 724,056
Deckers Outdoor Corp. (I) 4,991 460,370
Kate Spade & Company (I) 32,125 1,038,923
Samsonite International SA 2,543,700 8,781,497
Skechers U.S.A., Inc., Class A (I) 9,299 542,783
Under Armour, Inc., Class A (I) 9,692 662,545
 
    13,274,683
 
    285,023,862
Consumer Staples - 5.3%    
Beverages - 2.5%    
Anheuser-Busch InBev NV 41,166 4,592,189
Anheuser-Busch InBev NV, ADR 76,902 8,596,106
Diageo PLC 315,204 9,301,759
Diageo PLC, ADR 39,577 4,744,095
Molson Coors Brewing Company, Class B 84,409 6,242,046
Monster Beverage Corp. (I) 23,210 2,051,996
Treasury Wine Estates, Ltd. 2,279,835 10,912,749
 
    46,440,940
Food & Staples Retailing - 0.3%    
Metro AG (I) 20,326 715,963
Seven & I Holdings Company, Ltd. 89,108 3,577,704
Walgreen Company 32,525 1,968,413
 
    6,262,080
Food Products - 2.2%    
Archer-Daniels-Midland Company 8,102 403,966
Greencore Group PLC 1,192,527 5,270,120
Ingredion, Inc. 96,340 7,684,078
Keurig Green Mountain, Inc. 22,407 2,987,301
Kraft Foods Group, Inc. 136,172 8,020,531
Mead Johnson Nutrition Company 5,147 492,053
Mondelez International, Inc., Class A 178,536 6,461,218
The Hershey Company 50,233 4,592,301
The WhiteWave Foods Company, Class A (I) 14,270 499,735
Unilever NV - NY Shares 124,118 5,168,274
 
    41,579,577
Household Products - 0.1%    
Svenska Cellulosa AB SCA, B Shares 90,307 2,172,525
Personal Products - 0.0%    
Kao Corp. 7,113 306,850
Tobacco - 0.2%    
Philip Morris International, Inc. 43,895 3,756,534
 
    100,518,506
Energy - 7.8%    
Energy Equipment & Services - 1.2%    
Baker Hughes, Inc. 41,867 2,894,684
Halliburton Company 71,885 4,860,145
Helmerich & Payne, Inc. 11,256 1,182,443
McDermott International, Inc. (I)(L) 106,289 765,281
Schlumberger, Ltd. 8,890 974,700

 

The accompanying notes are an integral part of the financial statements. 72

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Energy Equipment & Services (continued)    
Seventy Seven Energy, Inc. (I) 1,678 $ 39,383
Superior Energy Services, Inc. 8,817 316,001
Trican Well Service, Ltd. 767,520 11,089,616
 
    22,122,253
Oil, Gas & Consumable Fuels - 6.6%    
Anadarko Petroleum Corp. 57,981 6,533,879
Athlon Energy, Inc. (I) 59,477 2,768,060
BG Group PLC 575,444 11,470,661
Cameco Corp. (L) 94,992 1,858,993
Chesapeake Energy Corp. 23,492 638,982
Chevron Corp. 72,998 9,449,591
Cobalt International Energy, Inc. (I) 752,340 11,548,419
Concho Resources, Inc. (I) 4,164 591,455
Diamondback Energy, Inc. (I) 31,944 2,758,364
Energen Corp. 13,872 1,116,419
Exxon Mobil Corp. 91,887 9,139,081
Golar LNG, Ltd. (I)(L) 6,133 386,379
Imperial Oil, Ltd. (L) 188,309 10,027,454
Karoon Gas Australia, Ltd. (I) 1,277,037 4,529,095
Marathon Oil Corp. 7,171 298,959
Occidental Petroleum Corp. 45,347 4,703,844
Pacific Rubiales Energy Corp. 164,800 3,429,986
Pioneer Natural Resources Company 124,467 25,970,040
Suncor Energy, Inc. 206,245 8,474,607
Tesoro Corp. 8,974 580,977
Tsakos Energy Navigation, Ltd. 702,282 5,407,571
Whiting Petroleum Corp. (I) 11,062 1,025,005
YPF SA, ADR 49,227 1,626,460
 
    124,334,281
   
    146,456,534
Financials - 11.9%    
Banks - 3.7%    
BOK Financial Corp. 59,311 3,996,375
Citigroup, Inc. 97,120 5,016,248
Fifth Third Bancorp 22,499 459,092
First Republic Bank 60,526 2,959,721
Frost Bankers, Inc. (L) 15,860 1,246,596
Grupo Financiero Banorte SAB    
de CV, Series O 470,500 3,316,986
HDFC Bank, Ltd. 218,285 3,250,342
JPMorgan Chase & Company 162,094 9,636,488
M&T Bank Corp. (L) 91,681 11,334,522
The PNC Financial Services Group, Inc. 204,908 17,365,953
Wells Fargo & Company 223,947 11,519,834
 
    70,102,157
Capital Markets - 1.9%    
BlackRock, Inc. 83,906 27,733,450
Henderson Group PLC 644,965 2,485,078
Julius Baer Group, Ltd. (I) 46,982 2,138,430
SEI Investments Company 107,503 4,073,826
 
    36,430,784
Diversified Financial Services - 0.6%    
Berkshire Hathaway, Inc., Class B (I) 35,989 4,939,490
McGraw-Hill Financial, Inc. 34,837 2,826,326
Moody’s Corp. 31,090 2,909,091
 
    10,674,907
Insurance - 5.0%    
ACE, Ltd. 148,480 15,787,878
Alleghany Corp. (I) 9,615 4,145,315

 

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Insurance (continued)    
American International Group, Inc. 201,179 $ 11,278,095
Assured Guaranty, Ltd. 121,343 2,930,433
Fairfax Financial Holdings, Ltd. 10,514 4,844,679
FNF Group (I) 17,273 488,999
Markel Corp. (I) 15,834 10,447,273
Marsh & McLennan Companies, Inc. 386,681 20,532,761
MetLife, Inc. 322,715 17,665,419
St James’s Place PLC 228,742 2,727,550
White Mountains Insurance Group, Ltd. 6,253 3,965,903
 
    94,814,305
Real Estate Investment Trusts - 0.4%    
Kennedy Wilson Europe Real Estate PLC 190,963 3,480,145
SL Green Realty Corp. 30,524 3,337,799
 
    6,817,944
Real Estate Management & Development - 0.3%    
Daito Trust Construction Company, Ltd. 23,200 2,871,905
GAGFAH SA (I) 91,471 1,791,963
Jones Lang LaSalle, Inc. 3,258 435,301
Realogy Holdings Corp. (I) 29,330 1,195,784
 
    6,294,953
 
    225,135,050
Health Care - 15.2%    
Biotechnology - 2.2%    
Alkermes PLC (I) 9,516 425,651
Alnylam Pharmaceuticals, Inc. (I) 55,210 3,846,481
Arena Pharmaceuticals, Inc. (I)(L) 258,145 1,063,557
Biogen Idec, Inc. (I) 10,936 3,751,485
Celgene Corp. (I) 44,915 4,267,823
Gilead Sciences, Inc. (I) 56,028 6,027,492
Incyte Corp. (I) 57,276 3,104,359
Innate Pharma SA (I)(L) 97,354 1,121,157
Medivation, Inc. (I) 8,524 777,900
NPS Pharmaceuticals, Inc. (I) 17,650 532,677
Portola Pharmaceuticals, Inc. (I)(L) 85,177 2,375,587
Regeneron Pharmaceuticals, Inc. (I) 19,365 6,787,820
TESARO, Inc. (I)(L) 36,255 1,071,698
Vertex Pharmaceuticals, Inc. (I) 72,532 6,786,819
 
    41,940,506
Health Care Equipment & Supplies - 0.5%    
Medtronic, Inc. 135,400 8,645,290
Health Care Providers & Services - 2.9%    
Acadia Healthcare Company, Inc. (I) 57,657 2,952,615
Aetna, Inc. 62,457 5,129,593
Cardinal Health, Inc. 136,288 10,044,426
Envision Healthcare Holdings, Inc. (I) 332,751 12,165,377
HCA Holdings, Inc. (I) 25,739 1,797,097
Humana, Inc. 8,207 1,056,569
Laboratory Corp. of America Holdings (I) 54,876 5,884,353
Tenet Healthcare Corp. (I) 24,516 1,499,889
UnitedHealth Group, Inc. 139,942 12,130,173
Universal Health Services, Inc., Class B 13,667 1,564,051
 
    54,224,143
Health Care Technology - 0.1%    
CareView Communications, Inc. (I) 1,950,070 1,101,790
Life Sciences Tools & Services - 0.2%    
Illumina, Inc. (I) 24,793 4,446,872
Pharmaceuticals - 9.3%    
Actavis PLC (I) 70,686 16,044,308

 

The accompanying notes are an integral part of the financial statements. 73

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Pharmaceuticals (continued)    
Astellas Pharma, Inc. 22,500 $ 324,452
AstraZeneca PLC 114,995 8,775,086
AstraZeneca PLC, ADR 41,682 3,168,249
Bristol-Myers Squibb Company 998,469 50,572,455
Eli Lilly & Company 122,998 7,817,753
Jazz Pharmaceuticals PLC (I) 13,897 2,264,099
Johnson & Johnson 166,957 17,318,450
Merck & Company, Inc. 433,329 26,047,406
Novo Nordisk A/S, Class B 19,702 903,648
Ono Pharmaceutical Company, Ltd. 132,808 11,875,060
Pacira Pharmaceuticals, Inc. (I) 5,710 618,165
Roche Holding AG 59,114 17,264,712
Salix Pharmaceuticals, Ltd. (I) 41,344 6,578,244
TherapeuticsMD, Inc. (I) 1,167,878 6,481,723
 
    176,053,810
   
    286,412,411
Industrials - 16.3%    
Aerospace & Defense - 3.0%    
Bombardier, Inc., Class B (L) 420,435 1,415,242
Curtiss-Wright Corp. 6,866 493,253
DigitalGlobe, Inc. (I) 265,528 8,064,085
Esterline Technologies Corp. (I) 29,908 3,506,115
Lockheed Martin Corp. 65,470 11,391,780
Moog, Inc., Class A (I) 31,010 2,198,609
Northrop Grumman Corp. 78,617 10,001,655
Raytheon Company 11,400 1,098,276
Rolls-Royce Holdings PLC (I) 177,613 3,013,873
Safran SA 51,621 3,384,738
TransDigm Group, Inc. 21,722 4,083,519
United Technologies Corp. 81,301 8,778,882
 
    57,430,027
Air Freight & Logistics - 1.0%    
FedEx Corp. 8,830 1,305,780
United Parcel Service, Inc., Class B 170,262 16,571,600
UTi Worldwide, Inc. (I) 146,450 1,344,411
 
    19,221,791
Airlines - 0.8%    
AirAsia BHD 3,348,392 2,560,014
American Airlines Group, Inc. 194,926 7,584,571
Gol Linhas Aereas Inteligentes SA, ADR (L) 43,515 267,617
JetBlue Airways Corp. (I)(L) 288,922 3,533,516
United Continental Holdings, Inc. (I) 13,399 637,926
 
    14,583,644
Building Products - 0.6%    
Daikin Industries, Ltd. 6,754 466,266
Geberit AG 1,156 392,662
Lennox International, Inc. 99,195 8,308,573
Owens Corning 82,014 2,952,504
 
    12,120,005
Commercial Services & Supplies - 0.3%    
Clean Harbors, Inc. (I) 90,649 5,487,890
Construction & Engineering - 1.2%    
AECOM Technology Corp. (I) 388,089 14,685,288
China Machinery Engineering Corp., H Shares 2,356,000 1,364,694
Jacobs Engineering Group, Inc. (I) 103,455 5,577,259
 
    21,627,241
Electrical Equipment - 2.2%    
Acuity Brands, Inc. 109,875 13,611,315

 

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electrical Equipment (continued)    
Capstone Turbine Corp. (I)(L) 2,281,810 $ 2,852,263
Eaton Corp. PLC 123,846 8,645,689
Hubbell, Inc., Class B 13,847 1,674,102
Nidec Corp. 85,549 5,467,824
Schneider Electric SE (I) 39,131 3,310,425
SolarCity Corp. (I)(L) 14,186 974,294
Zumtobel Group AG 211,669 4,416,032
 
    40,951,944
Industrial Conglomerates - 0.9%    
3M Company 35,656 5,134,464
Danaher Corp. 147,802 11,323,111
 
    16,457,575
Machinery - 1.5%    
Allison Transmission Holdings, Inc. 290,963 8,926,745
Arcam AB (I)(L) 108,225 2,962,929
Barnes Group, Inc. 44,669 1,529,467
IDEX Corp. 50,441 3,880,931
PACCAR, Inc. 116,529 7,319,186
Pall Corp. 43,563 3,675,410
SMC Corp. 1,404 367,592
 
    28,662,260
Marine - 0.3%    
Mitsui O.S.K. Lines, Ltd. 753,280 2,760,303
Nippon Yusen KK 651,935 1,919,107
Pacific Basin Shipping, Ltd. 2,345,000 1,439,481
 
    6,118,891
Professional Services - 1.9%    
IHS, Inc., Class A (I) 111,051 15,821,436
ManpowerGroup, Inc. 90,713 7,037,515
Nielsen Holdings NV 246,771 11,595,769
Robert Half International, Inc. 10,256 514,954
 
    34,969,674
Road & Rail - 0.8%    
AMERCO 7,860 2,183,587
Canadian National Railway Company 55,264 3,969,066
DSV A/S 128,967 3,960,982
Hertz Global Holdings, Inc. (I) 95,127 2,811,003
Kansas City Southern 13,765 1,587,930
 
    14,512,568
Trading Companies & Distributors - 1.8%    
HD Supply Holdings, Inc. (I) 468,613 13,013,383
MSC Industrial Direct Company, Inc., Class A 90,227 8,133,062
Rexel SA 265,642 5,291,519
WESCO International, Inc. (I) 91,491 7,684,329
 
    34,122,293
Transportation Infrastructure - 0.0%    
Groupe Eurotunnel SA 41,062 528,533
 
    306,794,336
Information Technology - 20.2%    
Communications Equipment - 1.6%    
Cisco Systems, Inc. 952,306 23,798,127
F5 Networks, Inc. (I) 38,295 4,755,856
Palo Alto Networks, Inc. (I) 7,787 661,817
Parkervision, Inc. (I)(L) 1,388,500 1,721,740
 
    30,937,540
Electronic Equipment, Instruments & Components - 0.2%  
TE Connectivity, Ltd. 48,430 3,035,592

 

The accompanying notes are an integral part of the financial statements. 74

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electronic Equipment, Instruments &    
Components (continued)    
Truly International Holdings, Ltd. 1,489,700 $ 808,893
 
    3,844,485
Internet Software & Services - 4.5%    
Akamai Technologies, Inc. (I) 203,763 12,311,360
Angie’s List, Inc. (I)(L) 208,826 1,601,695
AOL, Inc. (I) 115,745 5,002,499
Baidu, Inc., ADR (I) 15,092 3,237,536
CoStar Group, Inc. (I) 15,745 2,279,089
Facebook, Inc., Class A (I) 215,968 16,158,726
Gogo, Inc. (I)(L) 298,891 5,060,225
Google, Inc., Class A (I) 7,724 4,498,149
Google, Inc., Class C (I) 19,398 11,087,897
InterActiveCorp 23,554 1,639,123
Monster Worldwide, Inc. (I) 718,500 4,145,745
Pandora Media, Inc. (I) 62,260 1,683,510
Tencent Holdings, Ltd. 37,840 615,879
Yahoo!, Inc. (I) 7,767 299,107
Yelp, Inc. (I)(L) 178,934 14,747,740
 
    84,368,280
IT Services - 1.3%    
Accenture PLC, Class A 131,836 10,686,626
Amadeus IT Holding SA, A Shares 24,305 904,321
Automatic Data Processing, Inc. 68,259 5,698,261
Fidelity National Information Services, Inc. 10,303 584,695
Optimal Payments PLC (I) 618,288 4,964,978
Total System Services, Inc. 65,410 2,057,799
Xerox Corp. 35,171 485,712
 
    25,382,392
Semiconductors & Semiconductor Equipment - 5.8%  
Analog Devices, Inc. 67,768 3,464,300
Applied Materials, Inc. 178,267 4,118,859
First Solar, Inc. (I) 23,721 1,652,879
Freescale Semiconductor, Ltd. (I)(L) 214,554 4,516,362
GCL-Poly Energy Holdings, Ltd. (I) 14,573,805 5,224,249
GT Advanced Technologies, Inc. (I)(L) 272,902 4,860,385
Intel Corp. 360,971 12,605,107
Lam Research Corp. 27,330 1,965,300
Maxim Integrated Products, Inc. 128,381 3,965,689
Micron Technology, Inc. (I) 597,568 19,480,717
NXP Semiconductor NV (I) 334,807 22,940,976
SK Hynix, Inc. (I) 79,121 3,547,080
Sumco Corp. (L) 769,545 6,649,650
SunEdison, Inc. (I) 417,063 9,187,898
SunPower Corp. (I)(L) 129,422 4,946,509
 
    109,125,960
Software - 4.7%    
Activision Blizzard, Inc. 220,893 5,199,821
Adobe Systems, Inc. (I) 56,362 4,052,428
Cadence Design Systems, Inc. (I) 534,321 9,425,422
Concur Technologies, Inc. (I)(L) 139,365 13,989,459
Ellie Mae, Inc. (I)(L) 78,869 2,823,510
EnerNOC, Inc. (I) 211,690 4,157,592
FactSet Research Systems, Inc. (L) 38,610 4,918,914
Fortinet, Inc. (I) 19,069 492,171
Microsoft Corp. 508,403 23,096,748
Monitise PLC (I)(L) 2,496,356 2,034,085
Oracle Corp. 206,983 8,596,004
Solera Holdings, Inc. 16,066 979,383
Symantec Corp. 174,160 4,228,605
Tableau Software, Inc., Class A (I) 29,365 1,923,114

 

Alpha Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Software (continued)    
UBISOFT Entertainment SA (I) 160,300 $ 2,664,122
 
    88,581,378
Technology Hardware, Storage & Peripherals - 2.1%  
Apple, Inc. 216,896 22,231,840
Lenovo Group, Ltd. 2,570,000 3,924,457
NEC Corp. 1,035,000 3,686,696
Nokia OYJ, ADR 155,169 1,298,765
SanDisk Corp. 45,740 4,480,690
Stratasys, Ltd. (I)(L) 29,930 3,590,403
 
    39,212,851
 
    381,452,886
Materials - 3.9%    
Chemicals - 2.0%    
Ecolab, Inc. 18,460 2,119,577
Givaudan SA (I) 941 1,564,544
Methanex Corp. (L) 41,178 2,751,514
Platform Specialty Products Corp. (I) 252,779 6,903,394
Praxair, Inc. 86,782 11,416,172
The Dow Chemical Company 121,715 6,517,838
The Sherwin-Williams Company 15,779 3,441,558
Wacker Chemie AG 30,119 3,587,831
 
    38,302,428
Construction Materials - 0.2%    
Headwaters, Inc. (I) 34,036 442,128
Martin Marietta Materials, Inc. 19,242 2,519,932
Vulcan Materials Company 10,110 640,772
 
    3,602,832
Containers & Packaging - 0.7%    
Berry Plastics Group, Inc. (I) 14,716 354,803
Graphic Packaging Holding Company (I) 100,232 1,281,967
Packaging Corp. of America 64,939 4,415,203
Silgan Holdings, Inc. 59,497 2,995,674
Smurfit Kappa Group PLC 128,322 2,912,377
 
    11,960,024
Metals & Mining - 0.5%    
Barrick Gold Corp. (L) 231,368 4,254,858
Continental Gold, Ltd. (I) 45,610 146,818
Fortescue Metals Group, Ltd. 887,834 3,468,020
Rio Tinto PLC, ADR (L) 34,897 1,875,365
 
    9,745,061
Paper & Forest Products - 0.5%    
Norbord, Inc. (L) 464,180 9,848,830
 
    73,459,175
Telecommunication Services - 0.4%    
Diversified Telecommunication Services - 0.4%    
tw telecom, Inc. (I) 45 1,847
Verizon Communications, Inc. 151,805 7,562,925
 
    7,564,772
 
    7,564,772
Utilities - 0.9%    
Gas Utilities - 0.7%    
UGI Corp. 261,273 13,842,244

 

The accompanying notes are an integral part of the financial statements. 75

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Alpha Opportunities Fund (continued)  
  Shares or    
  Principal    
  Amount   Value
 
 
COMMON STOCKS (continued)      
Independent Power and Renewable Electricity      
Producers - 0.2%      
China Longyuan Power Group Corp., H Shares 2,583,500 $ 2,792,121
   
      16,634,365
TOTAL COMMON STOCKS (Cost $1,609,899,717)   $ 1,829,451,897
 
PREFERRED SECURITIES - 0.8%      
Consumer Discretionary - 0.0%      
The Honest Company, Inc. (I)(R) 19,437 525,913
Financials - 0.0%      
LendingClub Corp., Series D (I)(R) 18,316 372,593
Health Care - 0.0%      
ConforMIS, Inc. (I)(R) 58,961 471,688
Industrials - 0.1%      
Lithium Technology Corp. (I)(R) 184,771 900,574
Information Technology - 0.7%      
Apigee Corp., Series H (I)(R) 280,906 817,436
Cloudera, Inc., Series F (I)(R) 28,981 806,483
Datalogix Holdings, Inc. (I)(R) 96,724 996,257
DocuSign, Inc., Series B (I)(R) 1,637 20,741
DocuSign, Inc., Series B1 (I)(R) 491 6,221
DocuSign, Inc., Series D (I)(R) 1,177 14,913
DocuSign, Inc., Series E (I)(R) 30,429 385,535
Dropbox, Inc., Series C (I)(R) 20,535 326,712
Essence Group Holdings Corp. (I)(R) 381,964 604,000
Lookout, Inc., Series F (I)(R) 51,118 583,926
New Relic, Inc., Series F (I)(R) 21,494 621,907
Nutanix, Inc. (I)(R) 70,054 938,478
Pure Storage, Inc., Series F (I)(R) 119,359 1,877,028
Uber Technologies, Inc. (I)(R) 69,284 4,299,225
Veracode, Inc. (I)(R) 40,760 752,670
 
      13,051,532
TOTAL PREFERRED SECURITIES (Cost $15,018,910) $ 15,322,300
 
WARRANTS - 0.1%      
Moscow Exchange MICEX (Counterparty:      
Deutsche Bank AG; Expiration Date:      
04/18/2023; Strike Price: RUB 0.00) (I)(S) 1,048,780   1,796,801
TOTAL WARRANTS (Cost $1,681,677)   $ 1,796,801
 
SECURITIES LENDING COLLATERAL - 6.7%      
Securities Lending Collateral - 6.7%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 12,746,102   127,551,522
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $127,551,572)   $ 127,551,522

 

Alpha Opportunities Fund (continued)    
    Shares or    
    Principal    
    Amount   Value
 
 
SHORT-TERM INVESTMENTS - 2.9%        
Repurchase Agreement - 2.9%        
Deutsche Bank Tri-Party Repurchase        
Agreement dated 08/29/2014 at 0.060% to      
be repurchased at $54,500,091 on        
09/02/2014 collateralized by $54,643,867      
Federal National Mortgage Association,        
2.500% due 08/01/2028, (valued at        
$55,590,000 including interest) $ 54,500,000 $ 54,500,000
TOTAL SHORT-TERM INVESTMENTS (Cost $54,500,000) $ 54,500,000
Total Investments (Alpha Opportunities Fund)      
(Cost $1,808,651,876) - 107.5%     $ 2,028,622,520
Other assets and liabilities, net - (7.5%)       (142,347,713)
 
TOTAL NET ASSETS - 100.0%     $ 1,886,274,807
 

 

Asia Pacific Total Return Bond Fund  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 37.8%      
Australia - 6.7%      
New South Wales Treasury Corp.      
6.000%, 04/01/2015 AUD 7,000,000 $ 6,664,867
Queensland Treasury Corp.      
6.000%, 04/21/2016 to 04/21/2016   11,500,000 11,222,687
7.125%, 09/18/2017 NZD 5,565,000 5,007,345
Treasury Corp. of Victoria      
5.750%, 11/15/2016 AUD 7,000,000 6,962,474
 
      29,857,373
China - 8.8%      
Republic of China      
1.400%, 08/18/2016 CNY 52,000,000 8,266,808
1.800%, 12/01/2015   27,500,000 4,433,618
1.940%, 08/18/2018   23,500,000 3,690,256
2.480%, 12/01/2020   31,000,000 4,765,296
2.560%, 06/29/2017   21,000,000 3,414,390
2.600%, 11/22/2016   25,000,000 4,070,077
The Export-Import Bank of China      
3.000%, 05/14/2016   20,000,000 3,247,842
3.250%, 01/21/2017   23,000,000 3,737,088
3.650%, 05/14/2019   20,000,000 3,261,593
 
      38,886,968
Hong Kong - 0.4%      
Hong Kong Mortgage Corp.      
3.785%, 02/22/2017 (P) AUD 2,000,000 1,895,583
 
      1,895,583
Indonesia - 4.6%      
Republic of Indonesia      
5.625%, 05/15/2023 IDR 36,000,000,000 2,615,944
6.875%, 01/17/2018 $ 5,500,000 6,270,000
7.000%, 05/15/2027 IDR 24,000,000,000 1,831,161
8.250%, 06/15/2032   35,000,000,000 2,864,928
8.375%, 03/15/2024   50,000,000,000 4,349,220
9.500%, 07/15/2031   26,000,000,000 2,378,286
 
      20,309,539

 

The accompanying notes are an integral part of the financial statements. 76

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Asia Pacific Total Return Bond Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Malaysia - 3.1%      
Government of Malaysia      
3.314%, 10/31/2017 MYR 6,000,000 $ 1,890,683
3.418%, 08/15/2022   12,000,000 3,669,822
3.580%, 09/28/2018   10,000,000 3,169,822
4.262%, 09/15/2016   7,000,000 2,264,538
4.392%, 04/15/2026   8,000,000 2,615,505
 
      13,610,370
New Zealand - 1.8%      
Dominion of New Zealand      
5.000%, 03/15/2019 NZD 1,900,000 1,658,038
5.500%, 04/15/2023   4,100,000 3,780,482
6.000%, 12/15/2017   2,940,000 2,619,967
 
      8,058,487
Philippines - 2.4%      
Republic of the Philippines      
3.900%, 11/26/2022 PHP 231,000,000 5,258,429
4.950%, 01/15/2021   76,000,000 1,852,064
7.000%, 01/27/2016   79,800,000 1,944,528
7.750%, 08/23/2017   57,000,000 1,486,964
 
      10,541,985
Singapore - 2.3%      
Republic of Singapore      
1.125%, 04/01/2016 SGD 10,000,000 8,093,319
4.000%, 09/01/2018   2,450,000 2,187,148
 
      10,280,467
South Korea - 4.3%      
Republic of Korea      
2.750%, 03/10/2018 KRW 2,000,000,000 1,980,995
4.000%, 03/10/2016   9,500,000,000 9,588,615
5.000%, 06/10/2020   1,000,000,000 1,099,181
5.750%, 09/10/2018   6,000,000,000 6,603,385
 
      19,272,176
Thailand - 2.6%      
Bank of Thailand      
3.200%, 10/22/2014 THB 100,000,000 3,135,504
Kingdom of Thailand      
1.200%, 07/14/2021   129,232,800 3,948,765
3.250%, 06/16/2017   134,000,000 4,273,115
 
      11,357,384
Vietnam - 0.8%      
Socialist Republic of Vietnam      
6.750%, 01/29/2020 $ 3,000,000 3,390,000
 
      3,390,000
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $176,149,221)   $ 167,460,332
 
CORPORATE BONDS - 56.9%      
Australia - 2.5%      
Australia & New Zealand Banking      
Group, Ltd.      
3.450%, 08/08/2022 (P)   4,000,000 4,126,043
Crown Group Finance, Ltd.      
5.750%, 07/18/2017 AUD 2,500,000 2,443,045
FMG Resources August 2006 Pty, Ltd.      
8.250%, 11/01/2019 $ 2,000,000 2,190,000
SGSP Australia Assets Pty, Ltd.      
6.250%, 02/21/2017 AUD 2,000,000 1,972,889

 

Asia Pacific Total Return Bond Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Australia (continued)      
Telstra Corp., Ltd.      
4.000%, 11/15/2017 AUD 520,000 $ 495,178
 
      11,227,155
Cayman Islands - 4.5%      
Champion MTN, Ltd.      
3.750%, 01/17/2023 $ 4,188,000 3,875,391
China Overseas Finance Cayman V, Ltd.      
3.950%, 11/15/2022   4,000,000 3,808,072
China Overseas Grand Oceans Finance      
Cayman II, Ltd.      
5.125%, 01/23/2019   2,000,000 2,052,250
Sino MTN, Ltd.      
3.250%, 09/21/2017   6,000,000 6,048,540
Sun Hung Kai Properties Capital      
Market, Ltd.      
4.500%, 02/14/2022   4,000,000 4,264,172
 
      20,048,425
China - 5.8%      
Agile Property Holdings, Ltd.      
8.875%, 04/28/2017   2,000,000 2,080,000
China Merchants Finance Company, Ltd.      
5.000%, 05/04/2022   4,000,000 4,195,936
China Shanshui Cement Group, Ltd.      
10.500%, 04/27/2017   2,000,000 2,150,000
Country Garden Holdings Company, Ltd.      
7.500%, 01/10/2023 (S)   2,000,000 1,955,000
ENN Energy Holdings, Ltd.      
6.000%, 05/13/2021   2,000,000 2,247,264
Longfor Properties Company, Ltd.      
6.875%, 10/18/2019   2,000,000 2,070,000
Parkson Retail Group, Ltd.      
4.500%, 05/03/2018   2,000,000 1,910,000
Tingyi Cayman Islands Holding Corp.      
3.875%, 06/20/2017   5,332,000 5,598,547
Wanda Properties International      
Company, Ltd.      
7.250%, 01/29/2024   2,000,000 2,152,560
Want Want China Finance, Ltd.      
1.875%, 05/14/2018 (S)   1,200,000 1,178,120
 
      25,537,427
Germany - 0.9%      
KFW      
6.000%, 03/28/2017 AUD 4,000,000 4,019,262
 
      4,019,262
Hong Kong - 8.5%      
Bangkok Bank PCL      
2.750%, 03/27/2018 $ 4,000,000 4,036,144
Bank of East Asia, Ltd.      
4.250%, 09/13/2022 (P) SGD 4,750,000 3,935,828
China Oil & Gas Group, Ltd.      
5.250%, 04/25/2018 $ 1,000,000 1,030,395
5.250%, 04/25/2018 (S)   1,300,000 1,339,514
FPT Finance, Ltd.      
6.375%, 09/28/2020   3,000,000 3,270,000
Franshion Investment, Ltd.      
4.700%, 10/26/2017   2,000,000 2,040,000
Gemdale International Investment, Ltd.      
7.125%, 11/16/2017   2,000,000 2,070,000
Henson Finance, Ltd.      
5.500%, 09/17/2019   3,519,000 3,840,841

 

The accompanying notes are an integral part of the financial statements. 77

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Asia Pacific Total Return Bond Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Hong Kong (continued)      
HKCG Finance, Ltd.      
1.400%, 04/11/2016 CNY 1,000,000 $ 157,726
HLP Finance, Ltd.      
4.750%, 06/25/2022 $ 4,000,000 4,143,636
Lotte Shopping Business Management      
Hong Kong, Ltd.      
4.000%, 02/09/2015 CNY 9,200,000 1,498,641
Shimao Property Holdings, Ltd.      
6.625%, 01/14/2020 $ 2,300,000 2,323,000
Texhong Textile Group, Ltd.      
7.625%, 01/19/2016   2,000,000 2,060,000
Wharf Finance No 1, Ltd.      
4.000%, 03/27/2018 CNY 21,560,000 3,540,733
Wharf Finance, Ltd.      
6.125%, 11/06/2017 $ 2,000,000 2,222,892
 
      37,509,350
India - 1.2%      
Bharti Airtel International Netherlands BV      
5.125%, 03/11/2023 (S)   3,600,000 3,807,900
Vedanta Resources PLC      
9.500%, 07/18/2018   1,400,000 1,631,000
 
      5,438,900
Indonesia - 2.5%      
Adaro Indonesia PT      
7.625%, 10/22/2019   2,500,000 2,600,000
Pertamina Persero PT      
4.875%, 05/03/2022   4,000,000 4,100,000
Perusahaan Listrik Negara PT      
5.500%, 11/22/2021   4,000,000 4,260,000
 
      10,960,000
Japan - 0.7%      
Hitachi Capital Corp.      
3.750%, 03/22/2015 CNY 6,550,000 1,067,399
ORIX Corp.      
4.000%, 11/29/2014   13,800,000 2,247,640
 
      3,315,039
Luxembourg - 0.1%      
European Investment Bank      
6.125%, 01/23/2017 AUD 500,000 501,586
 
      501,586
Malaysia - 4.4%      
IOI Investment L BHD      
4.375%, 06/27/2022 $ 4,915,000 4,973,213
Malayan Banking BHD      
3.250%, 09/20/2022 (P)   4,000,000 4,048,500
3.800%, 04/28/2021 (P) SGD 5,250,000 4,296,232
SSG Resources, Ltd.      
4.250%, 10/04/2022 $ 6,000,000 6,152,664
 
      19,470,609
Netherlands - 2.4%      
Indo Energy Finance II BV      
6.375%, 01/24/2023 (S)   2,000,000 1,705,000
6.375%, 01/24/2023   2,000,000 1,705,000
Indosat Palapa Company BV      
7.375%, 07/29/2020   1,700,000 1,831,750
Listrindo Capital BV      
6.950%, 02/21/2019   3,000,000 3,217,500

 

Asia Pacific Total Return Bond Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Netherlands (continued)      
Majapahit Holding BV      
8.000%, 08/07/2019 $ 2,000,000 $ 2,365,000
 
      10,824,250
Philippines - 2.1%      
Asian Development Bank      
2.850%, 10/21/2020 CNY 20,000,000 3,159,913
Petron Corp.      
7.000%, 11/10/2017 PHP 40,000,000 964,095
Philippine Long Distance Telephone      
Company      
8.350%, 03/06/2017 $ 900,000 1,038,375
Power Sector Assets & Liabilities      
Management Corp.      
7.250%, 05/27/2019   3,500,000 4,182,500
 
      9,344,883
Singapore - 8.0%      
Alam Synergy Pte, Ltd.      
6.950%, 03/27/2020 (S)   800,000 804,000
9.000%, 01/29/2019 (S)   2,000,000 2,180,760
9.000%, 01/29/2019   1,000,000 1,090,380
DBS Bank, Ltd.      
3.625%, 09/21/2022 (P)   4,485,000 4,643,572
Global Logistic Properties, Ltd.      
3.375%, 05/11/2016 CNY 27,000,000 4,381,408
Joynote, Ltd.      
3.408%, 07/20/2018 SGD 500,000 410,578
Mapletree Treasury Services, Ltd.      
(5.125% to 07/25/2017, then 10 year      
Singapore Swap Offered      
Rate + 4.467%)      
07/25/2017 (Q)   3,250,000 2,691,858
Oversea-Chinese Banking Corp., Ltd.      
3.150%, 03/11/2023 (P) $ 2,000,000 2,019,064
Singapore Post, Ltd. (4.250% to      
03/02/2022, then 10 year Singapore      
Swap Offered Rate + 3.692%)      
03/02/2022 (Q) SGD 5,000,000 4,145,234
TBG Global Pte, Ltd.      
4.625%, 04/03/2018 (S) $ 1,800,000 1,818,000
Theta Capital Pte, Ltd.      
7.000%, 05/16/2019   2,000,000 2,126,396
United Overseas Bank, Ltd.      
2.875%, 10/17/2022 (P)   5,000,000 5,066,000
3.150%, 07/11/2022 (P) SGD 5,000,000 4,059,217
 
      35,436,467
Thailand - 2.1%      
PTT Global Chemical PCL      
4.250%, 09/19/2022 $ 4,000,000 4,111,624
PTTEP Canada International Finance, Ltd.      
6.350%, 06/12/2042   900,000 1,070,284
Thai Oil PCL      
3.625%, 01/23/2023 (S)   4,075,000 4,003,076
 
      9,184,984
United Kingdom - 1.7%      
Bank Negara Indonesia Persero Tbk PT      
4.125%, 04/27/2017   2,000,000 2,077,500
European Bank for Reconstruction      
& Development      
5.000%, 05/28/2015 INR 40,000,000 653,362

 

The accompanying notes are an integral part of the financial statements. 78

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Asia Pacific Total Return Bond Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
United Kingdom (continued)      
European Bank for Reconstruction &      
Development (continued)      
12.000%, 09/19/2014 IDR 57,000,000,000 $ 4,882,582
   
      7,613,444
United States - 7.0%      
Ford Motor Company      
4.875%, 03/26/2015 CNY 34,400,000 5,638,269
Inter-American Development Bank      
4.500%, 02/04/2016 IDR 60,000,000,000 4,962,342
5.000%, 07/24/2015 INR 250,000,000 4,065,590
International Finance Corp.      
1.800%, 01/27/2016 CNY 22,750,000 3,662,760
7.750%, 12/03/2016 INR 265,000,000 4,390,860
Morgan Stanley      
4.750%, 11/16/2018 AUD 2,000,000 1,911,295
7.375%, 02/22/2018   2,250,000 2,317,234
Reliance Holdings USA, Inc.      
5.400%, 02/14/2022 $ 3,500,000 3,861,722
 
      30,810,072
Virgin Islands - 2.5%      
Bestgain Real Estate, Ltd.      
2.625%, 03/13/2018   3,000,000 2,900,910
COSL Finance BVI, Ltd.      
3.250%, 09/06/2022   4,000,000 3,856,580
Poly Real Estate Finance, Ltd.      
4.500%, 08/06/2018   2,000,000 2,028,560
Wiseyear Holdings, Ltd.      
5.875%, 04/06/2021   2,000,000 2,214,544
 
      11,000,594
TOTAL CORPORATE BONDS (Cost $253,740,118) $ 252,242,447
 
CAPITAL PREFERRED SECURITIES - 1.4%    
Cayman Islands - 1.4%      
Hutchison Whampoa International 10, Ltd.      
(6.000% to 10/28/2015, then reset of      
5 Year U.S. Treasury      
Note Rate + 4.885% until 10/28/2020,      
then 3 month LIBOR + 5.638%)      
10/28/2015 (Q)   6,000,000 6,240,000
TOTAL CAPITAL PREFERRED      
SECURITIES (Cost $6,432,750)   $ 6,240,000
Total Investments (Asia Pacific Total Return Bond Fund)  
(Cost $436,322,089) - 96.1%   $ 425,942,779
Other assets and liabilities, net - 3.9%     17,078,947
   
TOTAL NET ASSETS - 100.0%   $ 443,021,726
   

 

Blue Chip Growth Fund    
  Shares or  
  Principal  
  Amount Value
 
COMMON STOCKS - 99.0%    
Consumer Discretionary - 25.9%    
Auto Components - 0.4%    
Delphi Automotive PLC 128,600 $ 8,947,988
TRW Automotive Holdings Corp. (I) 21,500 2,070,235
 
    11,018,223

 

Blue Chip Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Automobiles - 0.6%    
Harley-Davidson, Inc. 51,400 $ 3,266,984
Tesla Motors, Inc. (I)(L) 48,800 13,161,360
 
    16,428,344
Hotels, Restaurants & Leisure - 7.3%    
Carnival Corp. 7,900 299,252
Chipotle Mexican Grill, Inc. (I) 59,300 40,243,945
Hilton Worldwide Holdings, Inc. (I) 423,934 10,734,009
Las Vegas Sands Corp. 423,100 28,140,381
Marriott International, Inc., Class A 59,185 4,107,439
MGM Resorts International (I)(L) 527,300 12,903,031
Starbucks Corp. 540,200 42,032,962
Starwood Hotels & Resorts Worldwide, Inc. 146,900 12,418,926
Wynn Macau, Ltd. 2,071,200 7,904,806
Wynn Resorts, Ltd. 217,000 41,854,960
 
    200,639,711
Internet & Catalog Retail - 10.2%    
Amazon.com, Inc. (I) 360,711 122,295,457
Ctrip.com International, Ltd., ADR (I)(L) 243,200 15,606,144
Netflix, Inc. (I) 69,500 33,195,980
The Priceline Group, Inc. (I) 73,100 90,959,061
TripAdvisor, Inc. (I) 36,500 3,616,785
Vipshop Holdings, Ltd., ADR (I)(L) 65,000 12,780,950
 
    278,454,377
Leisure Products - 0.0%    
Polaris Industries, Inc. 1,800 261,684
Media - 1.2%    
Discovery Communications, Inc., Series C (I) 389,800 16,749,706
The Walt Disney Company 164,100 14,749,308
Twenty-First Century Fox, Inc., Class A 51,700 1,831,214
 
    33,330,228
Multiline Retail - 0.0%    
Dollar Tree, Inc. (I) 20,100 1,077,863
Specialty Retail - 5.0%    
AutoZone, Inc. (I) 9,400 5,065,096
CarMax, Inc. (I) 131,800 6,906,320
L Brands, Inc. 158,378 10,112,435
Lowe’s Companies, Inc. 573,700 30,124,987
O’Reilly Automotive, Inc. (I) 167,100 26,064,258
Ross Stores, Inc. 162,000 12,218,040
The Home Depot, Inc. 309,400 28,928,900
Tiffany & Company 27,700 2,796,038
Tractor Supply Company 233,400 15,626,130
 
    137,842,204
Textiles, Apparel & Luxury Goods - 1.2%    
Fossil Group, Inc. (I) 8,000 810,320
Hanesbrands, Inc. 108,100 11,099,708
Michael Kors Holdings, Ltd. (I) 129,800 10,399,576
NIKE, Inc., Class B 102,300 8,035,665
PVH Corp. 5,700 665,418
Ralph Lauren Corp. 2,900 490,680
VF Corp. 12,000 769,440
 
    32,270,807
 
    711,323,441
Consumer Staples - 2.0%    
Beverages - 0.2%    
Constellation Brands, Inc., Class A (I) 44,400 3,866,796
Monster Beverage Corp. (I) 14,100 1,246,581

 

The accompanying notes are an integral part of the financial statements. 79

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Blue Chip Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Beverages (continued)    
PepsiCo, Inc. 3,500 $ 323,715
 
    5,437,092
Food & Staples Retailing - 1.3%    
Costco Wholesale Corp. 109,800 13,294,584
CVS Health Corp. 224,110 17,805,540
Walgreen Company 95,600 5,785,712
 
    36,885,836
Food Products - 0.0%    
Keurig Green Mountain, Inc. 4,100 546,612
Personal Products - 0.5%    
The Estee Lauder Companies, Inc., Class A 166,200 12,769,146
 
    55,638,686
Energy - 4.4%    
Energy Equipment & Services - 0.3%    
Schlumberger, Ltd. 88,908 9,747,873
Oil, Gas & Consumable Fuels - 4.1%    
Concho Resources, Inc. (I) 159,700 22,683,788
Continental Resources, Inc. (I)(L) 40,300 6,499,987
EOG Resources, Inc. 10,000 1,098,800
EQT Corp. 215,600 21,357,336
Pioneer Natural Resources Company 204,200 42,606,330
Range Resources Corp. 226,076 17,767,313
 
    112,013,554
 
    121,761,427
Financials - 7.5%    
Banks - 0.0%    
Citigroup, Inc. 5,800 299,570
Capital Markets - 4.0%    
Ameriprise Financial, Inc. 142,989 17,982,297
Invesco, Ltd. 599,800 24,495,832
Morgan Stanley 730,100 25,049,731
Northern Trust Corp. 66,311 4,598,668
State Street Corp. 237,629 17,116,417
TD Ameritrade Holding Corp. 656,000 21,720,160
 
    110,963,105
Consumer Finance - 0.8%    
American Express Company 242,548 21,720,173
Diversified Financial Services - 0.3%    
Intercontinental Exchange Group, Inc. 47,250 8,930,250
Insurance - 0.3%    
Marsh & McLennan Companies, Inc. 131,200 6,966,720
Real Estate Investment Trusts - 2.1%    
American Tower Corp. 573,762 56,572,933
 
    205,452,751
Health Care - 20.4%    
Biotechnology - 11.6%    
Alexion Pharmaceuticals, Inc. (I) 285,700 48,366,153
Biogen Idec, Inc. (I) 214,500 73,582,080
Celgene Corp. (I) 538,400 51,158,768
Gilead Sciences, Inc. (I) 1,025,800 110,355,564
Pharmacyclics, Inc. (I) 115,400 14,354,606
Regeneron Pharmaceuticals, Inc. (I) 37,700 13,214,604
Vertex Pharmaceuticals, Inc. (I) 86,700 8,112,519
 
    319,144,294

 

Blue Chip Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Health Care Equipment & Supplies - 1.5%    
Becton, Dickinson and Company 74,200 $ 8,694,014
Covidien PLC 107,200 9,308,176
Intuitive Surgical, Inc. (I) 33,700 15,839,337
Stryker Corp. 79,621 6,633,226
 
    40,474,753
Health Care Providers & Services - 3.6%    
AmerisourceBergen Corp. 117,200 9,070,108
Cardinal Health, Inc. 178,900 13,184,930
Henry Schein, Inc. (I) 4,800 574,512
McKesson Corp. 376,000 73,331,280
UnitedHealth Group, Inc. 34,600 2,999,128
 
    99,159,958
Life Sciences Tools & Services - 1.3%    
Thermo Fisher Scientific, Inc. 295,900 35,570,139
Pharmaceuticals - 2.4%    
AbbVie, Inc. 9,200 508,576
Actavis PLC (I) 41,300 9,374,274
Allergan, Inc. 235,600 38,563,008
Valeant    
Pharmaceuticals International, Inc. (I)(L) 134,700 15,800,310
 
    64,246,168
 
    558,595,312
Industrials - 13.3%    
Aerospace & Defense - 4.0%    
Honeywell International, Inc. 86,416 8,229,396
Precision Castparts Corp. 212,200 51,789,532
The Boeing Company 316,700 40,157,560
United Technologies Corp. 83,100 8,973,138
 
    109,149,626
Air Freight & Logistics - 0.5%    
FedEx Corp. 97,300 14,388,724
Airlines - 2.3%    
American Airlines Group, Inc. 784,800 30,536,568
Delta Air Lines, Inc. 383,200 15,167,056
United Continental Holdings, Inc. (I) 383,600 18,263,196
 
    63,966,820
Industrial Conglomerates - 3.1%    
3M Company 26,000 3,744,000
Danaher Corp. 840,474 64,388,713
Roper Industries, Inc. 114,500 17,239,120
 
    85,371,833
Machinery - 0.7%    
Flowserve Corp. 73,100 5,547,559
Pall Corp. 8,300 700,271
Wabtec Corp. 162,700 13,562,672
 
    19,810,502
Professional Services - 0.5%    
IHS, Inc., Class A (I) 76,300 10,870,461
Nielsen Holdings NV (L) 38,800 1,823,212
 
    12,693,673
Road & Rail - 2.2%    
Canadian Pacific Railway, Ltd. 58,600 11,755,160
J.B. Hunt Transport Services, Inc. 59,000 4,457,450
Kansas City Southern 160,600 18,526,816
Union Pacific Corp. 231,800 24,401,586
 
    59,141,012

 

The accompanying notes are an integral part of the financial statements. 80

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Blue Chip Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Trading Companies & Distributors - 0.0%    
W.W. Grainger, Inc. 100 $ 24,620
   
    364,546,810
Information Technology - 21.5%    
Communications Equipment - 0.2%    
QUALCOMM, Inc. 61,523 4,681,900
Electronic Equipment, Instruments & Components - 0.0%  
Trimble Navigation, Ltd. (I) 15,700 522,182
Internet Software & Services - 12.7%    
Akamai Technologies, Inc. (I) 207,100 12,512,982
Baidu, Inc., ADR (I) 290,900 62,403,868
Facebook, Inc., Class A (I) 864,265 64,664,307
Google, Inc., Class A (I) 127,684 74,358,054
Google, Inc., Class C (I) 132,784 75,899,334
LinkedIn Corp., Class A (I) 88,700 20,024,025
NAVER Corp. 9,656 7,332,233
Tencent Holdings, Ltd. 1,664,700 27,094,448
Twitter, Inc. (I) 59,100 2,940,225
 
    347,229,476
IT Services - 5.4%    
Cognizant Technology    
Solutions Corp., Class A (I) 264,200 12,081,866
Fiserv, Inc. (I) 244,400 15,756,468
FleetCor Technologies, Inc. (I) 13,100 1,882,339
MasterCard, Inc., Class A 826,600 62,664,546
Visa, Inc., Class A 264,600 56,232,792
 
    148,618,011
Software - 2.0%    
Autodesk, Inc. (I) 19,500 1,045,980
Electronic Arts, Inc. (I) 100,600 3,806,704
Intuit, Inc. 3,300 274,494
Microsoft Corp. 7,000 318,010
Red Hat, Inc. (I) 240,503 14,651,443
Salesforce.com, Inc. (I) 503,600 29,757,724
VMware, Inc., Class A (I) 52,500 5,175,450
 
    55,029,805
Technology Hardware, Storage & Peripherals - 1.2%  
Apple, Inc. 316,700 32,461,750
 
    588,543,124
Materials - 3.6%    
Chemicals - 3.6%    
Ecolab, Inc. 316,700 36,363,494
Monsanto Company 3,204 370,543
Praxair, Inc. 117,900 15,509,745
The Sherwin-Williams Company 206,600 45,061,526
 
    97,305,308
   
    97,305,308
Telecommunication Services - 0.4%    
Wireless Telecommunication Services - 0.4%    
SoftBank Corp. 143,000 10,332,483
TOTAL COMMON STOCKS (Cost $1,391,631,725) $ 2,713,499,342

 

Blue Chip Growth Fund (continued)    
  Shares or    
  Principal    
  Amount   Value
 
SECURITIES LENDING COLLATERAL - 2.3%      
Securities Lending Collateral - 2.3%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 6,476,797   64,813,952
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $64,813,434)   $ 64,813,952
 
SHORT-TERM INVESTMENTS - 0.4%      
Money Market Funds - 0.4%      
State Street Institutional U.S. Government      
Money Market Fund, 0.0000% (Y) 450,000   450,000
T. Rowe Price Prime Reserve Investment      
Fund, 0.0575% (Y) 9,793,075   9,793,075
 
      10,243,075
TOTAL SHORT-TERM INVESTMENTS (Cost $10,243,075) $ 10,243,075
Total Investments (Blue Chip Growth Fund)      
(Cost $1,466,688,234) - 101.7%   $ 2,788,556,369
Other assets and liabilities, net - (1.7%)     (46,741,422)
 
TOTAL NET ASSETS - 100.0%   $ 2,741,814,947
 

 

Capital Appreciation Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 98.8%    
Consumer Discretionary - 28.9%    
Automobiles - 1.3%    
Tesla Motors, Inc. (I)(L) 114,806 $ 30,963,178
Hotels, Restaurants & Leisure - 5.7%    
Chipotle Mexican Grill, Inc. (I) 46,954 31,865,332
Dunkin’ Brands Group, Inc. 402,240 17,513,530
Las Vegas Sands Corp. 290,466 19,318,891
Marriott International, Inc., Class A 448,780 31,145,332
Starbucks Corp. 439,118 34,167,772
 
    134,010,857
Internet & Catalog Retail - 7.7%    
Amazon.com, Inc. (I) 184,277 62,477,274
Netflix, Inc. (I) 75,918 36,261,474
The Priceline Group, Inc. (I) 45,450 56,553,890
TripAdvisor, Inc. (I) 265,038 26,262,615
 
    181,555,253
Media - 3.9%    
Discovery Communications, Inc., Class A (I) 232,202 10,151,871
Discovery Communications, Inc., Series C (I) 232,202 9,977,720
The Walt Disney Company 525,534 47,234,996
Twenty-First Century Fox, Inc., Class A 735,747 26,060,159
 
    93,424,746
Specialty Retail - 5.1%    
Inditex SA 1,228,542 35,591,275
O’Reilly Automotive, Inc. (I) 147,454 22,999,875
The TJX Companies, Inc. 587,816 35,039,712
Tiffany & Company 270,122 27,266,115
 
    120,896,977
Textiles, Apparel & Luxury Goods - 5.2%    
Luxottica Group SpA 417,261 22,280,821
Michael Kors Holdings, Ltd. (I) 267,975 21,470,157
NIKE, Inc., Class B 582,933 45,789,387

 

The accompanying notes are an integral part of the financial statements. 81

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Capital Appreciation Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
COMMON STOCKS (continued)    
Textiles, Apparel & Luxury Goods (continued)    
Under Armour, Inc., Class A (I)(L) 487,280 $ 33,310,461
 
    122,850,826
 
    683,701,837
Consumer Staples - 3.6%    
Food & Staples Retailing - 1.5%    
Costco Wholesale Corp. 291,744 35,324,364
Food Products - 2.1%    
Mead Johnson Nutrition Company 192,341 18,387,800
Mondelez International, Inc., Class A 862,728 31,222,126
 
    49,609,926
 
    84,934,290
Energy - 5.2%    
Energy Equipment & Services - 2.4%    
Schlumberger, Ltd. 514,710 56,432,804
Oil, Gas & Consumable Fuels - 2.8%    
Concho Resources, Inc. (I) 244,118 34,674,521
EOG Resources, Inc. 288,813 31,734,772
 
    66,409,293
 
    122,842,097
Financials - 2.3%    
Capital Markets - 1.0%    
Morgan Stanley 675,983 23,192,977
Real Estate Investment Trusts - 1.3%    
American Tower Corp. 314,152 30,975,387
 
    54,168,364
Health Care - 19.7%    
Biotechnology - 9.8%    
Alexion Pharmaceuticals, Inc. (I) 234,317 39,667,525
Biogen Idec, Inc. (I) 179,446 61,557,156
Celgene Corp. (I) 515,287 48,962,571
Gilead Sciences, Inc. (I) 421,965 45,394,995
Incyte Corp. (I) 166,890 9,045,438
Vertex Pharmaceuticals, Inc. (I) 300,064 28,076,988
 
    232,704,673
Health Care Equipment & Supplies - 1.6%    
Abbott Laboratories 897,368 37,904,824
Life Sciences Tools & Services - 1.8%    
Illumina, Inc. (I) 233,710 41,918,226
Pharmaceuticals - 6.5%    
Allergan, Inc. 133,258 21,811,669
Bristol-Myers Squibb Company 695,051 35,204,333
Merck & Company, Inc. 595,465 35,793,401
Novo Nordisk A/S, ADR 994,681 45,715,539
Perrigo Company PLC 112,386 16,716,294
 
    155,241,236
 
    467,768,959
Industrials - 6.4%    
Aerospace & Defense - 3.4%    
Precision Castparts Corp. 159,100 38,829,946
The Boeing Company 328,361 41,636,175
 
    80,466,121
Road & Rail - 3.0%    
Canadian Pacific Railway, Ltd. 183,734 36,857,040

 

Capital Appreciation Fund (continued)  
    Shares or    
    Principal    
    Amount   Value
 
 
COMMON STOCKS (continued)        
Road & Rail (continued)        
Union Pacific Corp.   330,762 $ 34,819,316
 
        71,676,356
 
        152,142,477
Information Technology - 30.9%        
Internet Software & Services - 11.0%        
Facebook, Inc., Class A (I)   1,109,554   83,016,830
Google, Inc., Class A (I)   81,681   47,567,747
Google, Inc., Class C (I)   83,069   47,482,240
LinkedIn Corp., Class A (I)   203,372   45,911,229
Pandora Media, Inc. (I)   249,091   6,735,421
Twitter, Inc. (I)   607,984   30,247,204
 
        260,960,671
IT Services - 6.4%        
FleetCor Technologies, Inc. (I)   154,861   22,251,977
MasterCard, Inc., Class A   1,033,001   78,311,806
Visa, Inc., Class A   240,824   51,179,916
 
        151,743,699
Semiconductors & Semiconductor Equipment - 0.6%    
ARM Holdings PLC, ADR   282,753   13,722,003
Software - 7.7%        
Adobe Systems, Inc. (I)   426,827   30,688,861
FireEye, Inc. (I)(L)   219,990   6,850,489
Red Hat, Inc. (I)   568,343   34,623,456
Salesforce.com, Inc. (I)   698,432   41,270,347
Splunk, Inc. (I)   383,923   20,712,646
VMware, Inc., Class A (I)   269,977   26,614,333
Workday, Inc., Class A (I)   251,251   22,881,429
 
        183,641,561
Technology Hardware, Storage & Peripherals - 5.2%    
Apple, Inc.   1,192,478   122,228,995
 
        732,296,929
Materials - 1.8%        
Chemicals - 1.8%        
Monsanto Company   367,593   42,512,130
TOTAL COMMON STOCKS (Cost $1,311,953,605)   $ 2,340,367,083
 
SECURITIES LENDING COLLATERAL - 1.4%      
John Hancock Collateral        
Investment Trust, 0.0970% (W)(Y)   3,330,968   33,333,327
TOTAL SECURITIES LENDING        
COLLATERAL (Cost $33,331,564)     $ 33,333,327
 
SHORT-TERM INVESTMENTS - 0.3%        
Repurchase Agreement - 0.3%        
Repurchase Agreement with State Street Corp.      
dated 08/29/2014 at 0.000% to be        
repurchased at $8,278,000 on 09/02/2014,      
collateralized by $8,565,000 U.S. Treasury      
Notes, 0.625% due 11/30/2017 (valued at      
$8,445,004, including interest) $ 8,278,000 $ 8,278,000
TOTAL SHORT-TERM INVESTMENTS (Cost $8,278,000) $ 8,278,000
Total Investments (Capital Appreciation Fund)      
(Cost $1,353,563,169) - 100.5%     $ 2,381,978,410
Other assets and liabilities, net - (0.5%)       (12,815,470)
 
TOTAL NET ASSETS - 100.0%     $ 2,369,162,940
 

 

The accompanying notes are an integral part of the financial statements. 82

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Capital Appreciation Value Fund  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 62.0%    
Consumer Discretionary - 7.0%    
Auto Components - 1.5%    
Delphi Automotive PLC 197,300 $ 13,728,113
Johnson Controls, Inc. 251,600 12,280,596
TRW Automotive Holdings Corp. (I) 44,800 4,313,792
 
    30,322,501
Media - 1.8%    
Liberty Global PLC, Series A (I) 89,500 3,908,465
Liberty Global PLC, Series C (I) 257,900 10,813,747
Twenty-First Century Fox, Inc., Class B 474,200 16,331,448
Viacom, Inc., Class B 47,600 3,862,740
 
    34,916,400
Specialty Retail - 3.7%    
AutoZone, Inc. (I) 82,200 44,292,648
Lowe’s Companies, Inc. 323,400 16,981,734
O’Reilly Automotive, Inc. (I) 85,000 13,258,300
 
    74,532,682
   
    139,771,583
Consumer Staples - 4.5%    
Beverages - 1.0%    
PepsiCo, Inc. 207,000 19,145,430
Food & Staples Retailing - 0.7%    
CVS Health Corp. 170,400 13,538,280
Food Products - 0.8%    
Mondelez International, Inc., Class A 463,900 16,788,541
Household Products - 0.6%    
Procter & Gamble Company 141,100 11,726,821
Tobacco - 1.4%    
Philip Morris International, Inc. 317,300 27,154,534
 
    88,353,606
Energy - 3.7%    
Oil, Gas & Consumable Fuels - 3.7%    
Anadarko Petroleum Corp. 40,100 4,518,869
Apache Corp. 168,800 17,188,904
Canadian Natural Resources, Ltd. 168,300 7,329,465
Chesapeake Energy Corp. 547,300 14,886,560
Concho Resources, Inc. (I) 69,800 9,914,392
Pioneer Natural Resources Company 43,600 9,097,140
Range Resources Corp. 132,671 10,426,614
 
    73,361,944
Financials - 12.1%    
Banks - 1.7%    
JPMorgan Chase & Company 552,600 32,852,070
Capital Markets - 4.9%    
Invesco, Ltd. 570,300 23,291,052
State Street Corp. 517,400 37,268,322
TD Ameritrade Holding Corp. 1,050,500 34,782,055
UBS AG (I) 110,426 1,981,794
 
    97,323,223
Insurance - 3.1%    
Marsh & McLennan Companies, Inc. 976,500 51,852,150
XL Group PLC 294,920 10,080,366
 
    61,932,516
Real Estate Investment Trusts - 2.4%    
American Tower Corp. 267,500 26,375,500

 

Capital Appreciation Value Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Investment Trusts (continued)    
Crown Castle International Corp. 277,900 $ 22,095,829
 
    48,471,329
 
    240,579,138
Health Care - 12.9%    
Health Care Equipment & Supplies - 0.4%    
Abbott Laboratories 178,700 7,548,288
Health Care Providers & Services - 4.5%    
Cigna Corp. 71,000 6,716,600
DaVita HealthCare Partners, Inc. (I) 283,800 21,194,184
Henry Schein, Inc. (I) 96,300 11,526,147
Humana, Inc. 25,000 3,218,500
UnitedHealth Group, Inc. 554,000 48,020,720
 
    90,676,151
Life Sciences Tools & Services - 2.8%    
Agilent Technologies, Inc. 175,500 10,031,580
Thermo Fisher Scientific, Inc. 379,300 45,595,653
 
    55,627,233
Pharmaceuticals - 5.2%    
Allergan, Inc. 209,300 34,258,224
Eli Lilly & Company 104,200 6,622,952
Perrigo Company PLC 126,400 18,800,736
Pfizer, Inc. 529,601 15,564,973
Zoetis, Inc. 789,393 27,976,088
 
    103,222,973
 
    257,074,645
Industrials - 9.8%    
Aerospace & Defense - 3.5%    
The Boeing Company 135,800 17,219,440
United Technologies Corp. 472,800 51,052,944
 
    68,272,384
Commercial Services & Supplies - 1.3%    
Iron Mountain, Inc. 254,100 9,142,518
Tyco International, Ltd. 374,500 16,710,190
 
    25,852,708
Industrial Conglomerates - 5.0%    
Danaher Corp. 1,072,600 82,171,886
Roper Industries, Inc. 115,300 17,359,568
 
    99,531,454
 
    193,656,546
Information Technology - 6.4%    
Electronic Equipment, Instruments & Components - 0.2%  
TE Connectivity, Ltd. 67,700 4,243,436
Internet Software & Services - 1.0%    
Google, Inc., Class A (I) 17,400 10,133,064
Google, Inc., Class C (I) 17,700 10,117,320
 
    20,250,384
IT Services - 3.7%    
Fidelity National Information Services, Inc. 94,800 5,379,900
Fiserv, Inc. (I) 713,100 45,973,557
Visa, Inc., Class A 105,800 22,484,616
 
    73,838,073
Semiconductors & Semiconductor Equipment - 1.1%  
NXP Semiconductor NV (I) 72,300 4,953,996

 

The accompanying notes are an integral part of the financial statements. 83

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Capital Appreciation Value Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)      
Semiconductors & Semiconductor Equipment (continued)  
Texas Instruments, Inc.   360,100 $ 17,349,618
 
      22,303,614
Technology Hardware, Storage & Peripherals - 0.4%    
Apple, Inc.   23,300 2,388,250
Seagate Technology PLC   29,200 1,827,336
Western Digital Corp.   31,300 3,224,213
 
      7,439,799
 
      128,075,306
Materials - 0.4%      
Chemicals - 0.4%      
Cytec Industries, Inc.   79,200 8,160,768
Telecommunication Services - 0.5%      
Wireless Telecommunication Services - 0.5%    
SBA Communications Corp., Class A (I)   88,200 9,727,578
Utilities - 4.7%      
Electric Utilities - 2.7%      
Duke Energy Corp.   68,500 5,068,315
FirstEnergy Corp.   208,500 7,139,040
Xcel Energy, Inc.   1,317,900 42,238,695
 
      54,446,050
Multi-Utilities - 2.0%      
PG&E Corp.   848,319 39,429,867
 
      93,875,917
TOTAL COMMON STOCKS (Cost $954,546,296) $ 1,232,637,031
 
PREFERRED SECURITIES - 0.4%      
Energy - 0.0%      
Chesapeake Energy Corp., 4.500%   636 61,215
Financials - 0.2%      
U.S. Bancorp (6.000% to 04/15/2017, then      
3 month LIBOR + 4.861%)   75,000 2,054,250
U.S. Bancorp (6.500% to 01/15/2022, then      
3 month LIBOR + 4.468%)   60,000 1,749,600
 
      3,803,850
Utilities - 0.2%      
SCE Trust I, 5.625%   60,000 1,462,200
SCE Trust II, 5.100%   9,890 220,745
SCE Trust III (5.750% to 03/15/2024, then      
3 month LIBOR + 2.990%)   108,739 2,890,283
 
      4,573,228
TOTAL PREFERRED SECURITIES (Cost $7,879,836) $ 8,438,293
 
CORPORATE BONDS - 18.7%      
Consumer Discretionary - 3.6%      
American Honda Finance Corp.      
0.334%, 11/13/2014 (P)(S) $ 1,250,000 $ 1,250,333
CCO Holdings LLC      
7.250%, 10/30/2017   710,000 741,950
Cedar Fair LP      
5.250%, 03/15/2021   850,000 862,750
Daimler Finance North America LLC      
1.100%, 08/01/2018 (P)(S)   750,000 762,777
Delphi Corp.      
5.000%, 02/15/2023   525,000 563,719
6.125%, 05/15/2021   1,875,000 2,071,875
Ford Motor Credit Company LLC      
0.799%, 12/06/2017 (P)   4,225,000 4,233,120

 

Capital Appreciation Value Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Ford Motor Credit Company LLC (continued)    
1.483%, 05/09/2016 (P) $ 2,955,000 $ 2,998,273
1.724%, 12/06/2017   1,425,000 1,422,287
2.375%, 03/12/2019   2,900,000 2,902,683
2.750%, 05/15/2015   2,300,000 2,334,723
3.875%, 01/15/2015   3,260,000 3,300,704
4.250%, 02/03/2017   1,110,000 1,184,158
5.000%, 05/15/2018   1,490,000 1,644,953
6.625%, 08/15/2017   1,225,000 1,398,870
Group 1 Automotive, Inc.      
5.000%, 06/01/2022 (S)   175,000 173,688
L Brands, Inc.      
5.625%, 02/15/2022 to 10/15/2023   5,075,000 5,467,250
6.625%, 04/01/2021   375,000 422,344
6.900%, 07/15/2017   650,000 725,563
7.000%, 05/01/2020   650,000 736,125
8.500%, 06/15/2019   650,000 783,250
Lamar Media Corp.      
5.000%, 05/01/2023   1,250,000 1,246,875
5.875%, 02/01/2022   675,000 708,750
Toyota Motor Credit Corp.      
0.379%, 03/10/2015 (P)   2,250,000 2,251,780
0.403%, 01/23/2015 (P)   1,595,000 1,596,016
Unitymedia Hessen GmbH & Company KG      
5.500%, 01/15/2023 (S)   2,250,000 2,300,625
7.500%, 03/15/2019 (S)   5,975,000 6,318,563
7.500%, 03/15/2019 (S)   720,000 1,005,550
Univision Communications, Inc.      
5.125%, 05/15/2023 (S)   625,000 654,688
6.750%, 09/15/2022 (S)   4,902,000 5,379,945
6.875%, 05/15/2019 (S)   7,875,000 8,347,500
7.875%, 11/01/2020 (S)   4,350,000 4,741,500
Virgin Media Finance PLC      
8.375%, 10/15/2019   650,000 680,875
 
      71,214,062
Consumer Staples - 0.9%      
B&G Foods, Inc.      
4.625%, 06/01/2021   1,100,000 1,083,500
General Mills, Inc.      
0.534%, 01/29/2016 (P)   2,365,000 2,370,558
0.875%, 01/29/2016   590,000 591,477
Heineken NV      
0.800%, 10/01/2015 (S)   940,000 942,698
Rite Aid Corp.      
8.000%, 08/15/2020   5,525,000 6,029,156
SABMiller Holdings, Inc.      
0.930%, 08/01/2018 (P)(S)   1,045,000 1,053,107
2.200%, 08/01/2018 (S)   1,450,000 1,469,684
The Procter & Gamble Company      
3.100%, 08/15/2023   5,000,000 5,148,710
 
      18,688,890
Energy - 5.9%      
Antero Resources Corp.      
5.125%, 12/01/2022 (S)   1,550,000 1,573,250
Antero Resources Finance Corp.      
5.375%, 11/01/2021   3,100,000 3,193,000
6.000%, 12/01/2020   2,850,000 3,010,170
Athlon Holdings LP      
7.375%, 04/15/2021   1,800,000 1,953,000
Chesapeake Energy Corp.      
3.250%, 03/15/2016   675,000 676,688

 

The accompanying notes are an integral part of the financial statements. 84

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Capital Appreciation Value Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Concho Resources, Inc.      
5.500%, 10/01/2022 to 04/01/2023 $ 7,875,000 $ 8,413,938
6.500%, 01/15/2022   650,000 711,750
7.000%, 01/15/2021   5,200,000 5,655,000
Energy Transfer Partners LP      
4.150%, 10/01/2020   1,400,000 1,480,896
4.900%, 02/01/2024   1,800,000 1,942,114
EQT Corp.      
4.875%, 11/15/2021   8,885,000 9,808,676
6.500%, 04/01/2018   1,165,000 1,339,218
8.125%, 06/01/2019   2,791,000 3,462,824
Laredo Petroleum, Inc.      
5.625%, 01/15/2022   575,000 590,813
7.375%, 05/01/2022   400,000 438,000
9.500%, 02/15/2019   6,600,000 7,095,000
MarkWest Energy Partners LP      
4.500%, 07/15/2023   10,750,000 10,924,688
5.500%, 02/15/2023   6,855,000 7,232,025
6.250%, 06/15/2022   4,768,000 5,125,600
6.500%, 08/15/2021   3,225,000 3,434,625
6.750%, 11/01/2020   825,000 882,750
ONEOK Partners LP      
2.000%, 10/01/2017   1,120,000 1,133,919
Range Resources Corp.      
5.000%, 08/15/2022 to 03/15/2023   19,575,000 20,808,626
5.750%, 06/01/2021   5,370,000 5,732,475
6.750%, 08/01/2020   1,500,000 1,605,000
SM Energy Company      
6.500%, 11/15/2021 to 01/01/2023   3,100,000 3,363,500
Spectra Energy Partners LP      
4.750%, 03/15/2024   1,855,000 2,027,738
Targa Resources Partners LP      
4.250%, 11/15/2023   2,425,000 2,418,938
5.250%, 05/01/2023   1,025,000 1,078,813
 
      117,113,034
Financials - 1.3%      
American Tower Corp.      
3.500%, 01/31/2023   350,000 344,649
4.625%, 04/01/2015   170,000 173,785
5.000%, 02/15/2024   580,000 626,996
CBRE Services, Inc.      
5.000%, 03/15/2023   525,000 532,245
6.625%, 10/15/2020   400,000 421,000
Crown Castle International Corp.      
4.875%, 04/15/2022   2,475,000 2,518,313
5.250%, 01/15/2023   2,150,000 2,220,542
E*TRADE Financial Corp.      
6.000%, 11/15/2017   4,650,000 4,806,938
6.375%, 11/15/2019   2,900,000 3,110,250
6.750%, 06/01/2016   5,025,000 5,383,031
Host Hotels & Resorts LP      
5.875%, 06/15/2019   1,325,000 1,408,963
KFW      
0.500%, 04/19/2016   4,762,000 4,764,000
Regions Bank      
7.500%, 05/15/2018   75,000 88,499
Synovus Financial Corp.      
5.125%, 06/15/2017   85,000 87,125
 
      26,486,336
Health Care - 0.6%      
Baxter International, Inc.      
0.401%, 12/11/2014 (P)   2,400,000 2,400,804

 

Capital Appreciation Value Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Health Care (continued)      
DaVita Healthcare Partners, Inc.      
5.125%, 07/15/2024 $ 6,650,000 $ 6,745,594
Fresenius Medical Care US Finance II, Inc.      
5.625%, 07/31/2019 (S)   625,000 673,438
5.875%, 01/31/2022 (S)   350,000 385,000
Zoetis, Inc.      
1.150%, 02/01/2016   695,000 697,665
1.875%, 02/01/2018   410,000 410,080
 
      11,312,581
Industrials - 2.1%      
Actuant Corp.      
5.625%, 06/15/2022   100,000 104,750
Burlington Northern Santa Fe LLC      
3.750%, 04/01/2024   425,000 441,125
3.850%, 09/01/2023   4,250,000 4,468,238
Caterpillar Financial Services Corp.      
0.700%, 11/06/2015   1,595,000 1,599,463
1.250%, 11/06/2017   1,700,000 1,693,987
CNH Industrial Capital LLC      
3.625%, 04/15/2018   2,375,000 2,392,813
3.875%, 11/01/2015   775,000 786,625
6.250%, 11/01/2016   1,250,000 1,340,625
Continental Airlines 2009-1 Pass      
Through Trust      
9.000%, 07/08/2016   1,343,449 1,511,380
Continental Airlines 2009-2 Class A Pass      
Through Trust      
7.250%, 11/10/2019   320,276 375,123
Continental Airlines 2012-1 Class A Pass      
Through Trust      
4.150%, 04/11/2024   1,716,160 1,776,226
Continental Airlines 2012-1 Class B Pass      
Through Trust      
6.250%, 04/11/2020   390,912 420,230
Delta Air Lines 2011-1 Class A Pass      
Through Trust      
5.300%, 04/15/2019   111,875 122,504
Hawaiian Airlines 2013-1 Class A Pass      
Through Certificates      
3.900%, 01/15/2026   835,000 835,000
International Lease Finance Corp.      
2.181%, 06/15/2016 (P)   1,620,000 1,630,125
John Deere Capital Corp.      
0.304%, 01/12/2015 (P)   4,250,000 4,251,262
0.333%, 10/08/2014 (P)   3,250,000 3,250,621
0.700%, 09/04/2015   2,335,000 2,342,222
PACCAR Financial Corp.      
0.366%, 05/05/2015 (P)   1,005,000 1,005,876
0.419%, 06/06/2017 (P)   1,085,000 1,085,595
0.504%, 02/08/2016 (P)   455,000 455,955
0.750%, 05/16/2016   825,000 826,318
Schaeffler Finance BV      
7.750%, 02/15/2017 (S)   1,000,000 1,112,500
United Airlines, Inc.      
6.750%, 09/15/2015 (S)   170,000 170,272
United Technologies Corp.      
0.734%, 06/01/2015 (P)   3,976,000 3,990,783
US Airways 2010-1 Class A Pass      
Through Trust      
6.250%, 04/22/2023   80,632 91,115
US Airways 2012-2 Class A Pass      
Through Trust      
4.625%, 06/03/2025   277,214 293,153

 

The accompanying notes are an integral part of the financial statements. 85

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Capital Appreciation Value Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
US Airways 2012-2 Class B Pass      
Through Trust      
6.750%, 06/03/2021 $ 340,586 $ 370,387
US Airways 2013-1 Class A Pass      
Through Trust      
3.950%, 11/15/2025   1,525,000 1,551,688
US Airways 2013-1 Class B Pass      
Through Trust      
5.375%, 11/15/2021   455,000 469,788
Xylem, Inc.      
3.550%, 09/20/2016   1,100,000 1,154,277
4.875%, 10/01/2021   100,000 109,778
 
      42,029,804
Information Technology - 0.7%      
NXP BV      
3.750%, 06/01/2018 (S)   2,575,000 2,587,875
5.750%, 02/15/2021 to 03/15/2023 (S)   8,025,000 8,436,875
Xilinx, Inc.      
3.000%, 03/15/2021   1,750,000 1,768,337
 
      12,793,087
Materials - 0.0%      
Rexam PLC (6.750% to 06/29/2017, then      
3 month EURIBOR + 2.900%)      
06/29/2067   550,000 767,117
Telecommunication Services - 3.0%      
Intelsat Jackson Holdings SA      
5.500%, 08/01/2023   2,950,000 2,938,938
7.250%, 04/01/2019 to 10/15/2020   11,425,000 12,181,625
7.500%, 04/01/2021   950,000 1,028,375
8.500%, 11/01/2019   4,400,000 4,617,250
Matterhorn Mobile SA      
5.399%, 05/15/2019 (P)(S)   450,000 495,071
6.750%, 05/15/2019 (S)   1,400,000 1,616,470
SBA Communications Corp.      
5.625%, 10/01/2019   575,000 602,313
SBA Telecommunications, Inc.      
5.750%, 07/15/2020   1,025,000 1,081,375
Sprint Communications, Inc.      
9.000%, 11/15/2018 (S)   4,980,000 5,919,975
11.500%, 11/15/2021   330,000 430,650
Telesat Canada      
6.000%, 05/15/2017 (S)   650,000 669,500
UPCB Finance III, Ltd.      
6.625%, 07/01/2020 (S)   10,065,000 10,643,738
UPCB Finance V, Ltd.      
7.250%, 11/15/2021 (S)   5,750,000 6,296,250
UPCB Finance VI, Ltd.      
6.875%, 01/15/2022 (S)   5,250,000 5,683,125
Verizon Communications, Inc.      
0.429%, 03/06/2015 (P)(S)   4,200,000 4,201,088
0.631%, 06/09/2017 (P)   1,520,000 1,525,007
 
      59,930,750
Utilities - 0.6%      
AmeriGas Finance LLC      
6.750%, 05/20/2020   125,000 133,125
7.000%, 05/20/2022   650,000 705,250
AmeriGas Partners LP      
6.250%, 08/20/2019   300,000 315,750
CMS Energy Corp.      
6.550%, 07/17/2017   745,000 844,817
8.750%, 06/15/2019   345,000 443,399

 

Capital Appreciation Value Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities (continued)      
Duke Energy Corp.      
0.612%, 04/03/2017 (P) $ 1,210,000 $ 1,213,411
ITC Holdings Corp.      
3.650%, 06/15/2024   575,000 580,965
Northern States Power Company      
3.300%, 06/15/2024   675,000 687,276
NSTAR Electric Company      
0.471%, 05/17/2016 (P)   1,800,000 1,797,998
Pennsylvania Electric Company      
4.150%, 04/15/2025 (S)   1,220,000 1,246,700
Suburban Propane Partners LP      
7.375%, 03/15/2020 to 08/01/2021   1,025,000 1,088,250
7.500%, 10/01/2018   700,000 728,000
Xcel Energy, Inc.      
0.750%, 05/09/2016   1,990,000 1,990,816
 
      11,775,757
TOTAL CORPORATE BONDS (Cost $364,049,780) $ 372,111,418
 
CONVERTIBLE BONDS - 0.2%      
Industrials - 0.2%      
United Airlines, Inc. 4.500%, 01/15/2015   1,324,000 3,348,065
TOTAL CONVERTIBLE BONDS (Cost $1,752,158) $ 3,348,065
 
TERM LOANS (M) - 5.9%      
Consumer Discretionary - 0.9%      
Cequel Communications LLC      
3.500%, 02/14/2019   2,782,390 2,763,956
Charter Communications Operating LLC      
3.000%, 07/01/2020   1,980,000 1,945,350
3.000%, 01/03/2021   809,339 795,176
TBD 07/24/2021 (T)   3,075,000 3,092,777
Hilton Worldwide Finance LLC      
3.500%, 10/26/2020   2,309,211 2,292,212
Kasima LLC      
3.250%, 05/17/2021   550,000 545,188
Peninsula Gaming LLC      
4.250%, 11/20/2017   4,117,061 4,102,651
Wendy’s International, Inc.      
3.250%, 05/15/2019   3,069,000 3,055,846
 
      18,593,156
Consumer Staples - 1.9%      
Charger OpCo BV      
TBD 06/30/2020 (T)   6,125,000 6,033,125
TBD 06/30/2021 (T)   1,500,000 1,933,663
HJ Heinz Company      
3.500%, 06/05/2020   26,056,500 26,020,672
Pinnacle Foods Finance LLC      
3.250%, 04/29/2020   2,940,526 2,905,185
Rite Aid Corp.      
3.500%, 02/21/2020   498,750 495,633
 
      37,388,278
Financials - 0.8%      
Crown Castle Operating Company      
3.000%, 01/31/2021   15,698,659 15,600,542
Health Care - 0.2%      
DaVita HealthCare Partners, Inc.      
3.500%, 06/24/2021   2,375,000 2,367,790
HCA, Inc.      
2.907%, 03/31/2017   794,000 793,008
 
      3,160,798

 

The accompanying notes are an integral part of the financial statements. 86

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Capital Appreciation Value Fund (continued)
    Shares or    
    Principal    
    Amount   Value
 
 
TERM LOANS (M) (continued)        
Information Technology - 0.1%        
First Data Corp.        
3.000%, 09/24/2018 $ 250,000 $ 246,875
3.655%, 03/23/2018   1,000,000   988,333
 
        1,235,208
Telecommunication Services - 2.0%        
Intelsat Jackson Holdings SA        
3.750%, 06/30/2019   23,973,120   23,800,825
Telesat Canada        
3.500%, 03/28/2019   3,495,216   3,469,002
4.373%, 03/24/2017   742,500   677,763
4.614%, 03/26/2019   3,703,125   3,380,255
UPC Financing Partnership        
3.250%, 06/30/2021   8,950,000   8,787,781
 
        40,115,626
Utilities - 0.0%        
Texas Competitive Electric Holdings        
Company LLC        
3.750%, 05/05/2016   366,832   369,010
TOTAL TERM LOANS (Cost $117,380,384)     $ 116,462,618
 
ASSET BACKED SECURITIES - 0.6%        
Ally Master Owner Trust, Series 2012-3,        
Class A1 0.855%, 06/15/2017 (P) $ 9,050,000 $ 9,079,105
Ford Credit Auto Owner Trust, Series 2012-C,        
Class A3 0.580%, 12/15/2016   1,321,047   1,322,071
Honda Auto Receivables Owner Trust,        
Series 2012-3, Class A3        
0.560%, 05/15/2016   1,254,781   1,255,916
TOTAL ASSET BACKED SECURITIES (Cost $11,625,773) $ 11,657,092
 
U.S. GOVERNMENT & AGENCY        
OBLIGATIONS - 2.6%        
U.S. Government - 2.6%        
U.S. Treasury Notes        
2.500%, 08/15/2023 $ 18,650,000 $ 19,005,506
2.750%, 11/15/2023   31,250,000   32,448,719
 
        51,454,225
TOTAL U.S. GOVERNMENT & AGENCY        
OBLIGATIONS (Cost $48,609,524)     $ 51,454,225
 
SHORT-TERM INVESTMENTS - 9.2%        
Money Market Funds - 9.2%        
State Street Institutional U.S. Government        
Money Market Fund, 0.0000% (Y)   9,833,907   9,833,907
T. Rowe Price Reserve Investment        
Fund, 0.0575% (Y)   174,128,487   174,128,487
 
        183,962,394
TOTAL SHORT-TERM INVESTMENTS (Cost $183,962,394) $ 183,962,394
Total Investments (Capital Appreciation Value Fund)    
(Cost $1,689,806,145) - 99.6%     $ 1,980,071,136
Other assets and liabilities, net - 0.4%       7,198,088
 
TOTAL NET ASSETS - 100.0%     $ 1,987,269,224
 

 

Core Bond Fund      
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 59.5%      
U.S. Government - 33.9%      
U.S. Treasury Bonds      
2.750%, 11/15/2042 $ 1,348,000 $ 1,264,803
3.125%, 02/15/2043 to 08/15/2044   3,406,000 3,440,833
3.375%, 05/15/2044   1,909,000 2,021,154
3.625%, 08/15/2043 to 02/15/2044   4,551,000 5,041,628
3.750%, 11/15/2043   1,275,000 1,444,136
4.500%, 08/15/2039   147,000 186,598
U.S. Treasury Notes      
0.375%, 06/30/2016 (C)   5,450,000 5,445,956
0.500%, 06/30/2016 to 08/31/2016   20,457,000 20,467,538
0.625%, 10/15/2016 to 09/30/2017   19,486,000 19,365,022
0.750%, 03/15/2017   4,814,000 4,813,625
0.875%, 04/15/2017 to 08/15/2017   36,054,000 36,021,127
1.000%, 08/31/2019   1,705,000 1,651,187
1.375%, 02/28/2019   8,234,000 8,174,814
1.500%, 05/31/2019   5,213,000 5,189,787
1.625%, 03/31/2019 to 08/31/2019   28,016,000 28,040,540
1.625%, 04/30/2019 (C)   2,582,000 2,579,983
2.000%, 08/31/2021   3,567,000 3,556,410
2.250%, 07/31/2021   2,441,000 2,475,135
2.375%, 08/15/2024   4,830,000 4,843,582
2.500%, 05/15/2024   11,121,000 11,280,864
2.750%, 02/15/2024   343,000 355,809
3.125%, 04/30/2017   4,028,000 4,270,937
 
      171,931,468
U.S. Government Agency - 25.6%      
Federal Home Loan Mortgage Corp.      
2.500%, 03/01/2028   778,014 791,903
2.684%, 11/01/2042 (P)   572,720 580,556
2.707%, 07/01/2042 (P)   1,950,317 1,984,102
2.773%, 08/01/2044 (P)   553,912 568,953
2.820%, 08/01/2044 (P)   245,000 252,138
2.840%, 08/01/2044 (P)   725,000 746,773
2.870%, 06/01/2044 (P)   516,063 532,320
2.949%, 01/01/2044 (P)   459,307 469,272
2.959%, 11/01/2043 (P)   913,877 935,113
2.985%, 10/01/2043 (P)   641,496 656,756
3.030%, 11/01/2043 (P)   618,246 634,800
3.079%, 07/01/2044 (P)   1,111,557 1,152,873
3.083%, 04/01/2044 (P)   481,210 499,644
3.128%, 03/01/2044 (P)   508 528
3.168%, 02/01/2042 (P)   1,014,332 1,053,773
3.220%, 06/01/2044 (P)   588,819 607,203
3.237%, 06/01/2044 (P)   1,185,819 1,224,115
3.421%, 04/01/2044 (P)   308,213 320,487
3.500%, 06/01/2042 to 08/01/2043   6,019,761 6,173,757
4.000%, 03/01/2029 to 05/01/2034   3,328,387 3,566,694
4.500%, 06/01/2042 to 09/01/2042   2,839,256 3,108,337
5.000%, 08/01/2039 to 08/01/2041   4,157,471 4,621,569
5.500%, 07/01/2038   1,618,938 1,814,539
Federal National Mortgage Association      
2.129%, 10/09/2019 (Z)   1,435,000 1,270,418
2.500%, 11/01/2027 to 08/01/2029   5,036,391 5,121,719
2.556%, 05/01/2043 (P)   384,970 387,849
2.760%, 08/01/2044 (P)   730,817 755,346
2.812%, 07/01/2044 (P)   552,766 569,650
2.850%, 12/01/2043 (P)   701,530 725,184
2.869%, 07/01/2044 (P)   1,445,510 1,492,750
2.978%, 01/01/2044 (P)   353,391 362,143
3.000%, TBA (C)   5,600,000 5,561,594
3.000%, 12/01/2037 to 04/01/2038   591,474 588,447
3.120%, 09/25/2044 (P)   685,000 705,315

 

The accompanying notes are an integral part of the financial statements. 87

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal National Mortgage      
Association (continued)      
3.152%, 07/01/2044 (P) $ 215,663 $ 222,059
3.188%, 07/01/2044 (P)   661,982 683,078
3.235%, 04/01/2044 (P)   1,133,247 1,172,756
3.290%, 09/25/2044 (P)   541,000 555,766
3.500%, TBA (C)   11,600,000 11,907,118
3.500%, 07/01/2032 to 09/01/2042   5,994,016 6,184,160
4.000%, TBA (C)   5,000,000 5,279,528
4.000%, 03/01/2025 to 08/01/2034   17,536,355 18,833,010
4.500%, TBA (C)   1,100,000 1,184,808
4.500%, 05/01/2034 to 01/01/2044   2,754,387 2,987,590
5.000%, 03/01/2041 to 08/01/2041   3,429,053 3,834,994
5.500%, 09/01/2034 to 04/01/2040   1,467,595 1,645,476
6.000%, 08/01/2034 to 07/01/2037   1,573,038 1,782,599
6.500%, 10/01/2036   61,442 69,602
Government National Mortgage Association      
3.500%, TBA (C)   3,000,000 3,119,400
4.000%, TBA (C)   11,500,000 12,249,828
4.500%, TBA (C)   7,900,000 8,588,077
 
      130,136,469
TOTAL U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (Cost $300,805,327)   $ 302,067,937
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 1.4%      
Canada - 0.1%      
Province of Manitoba      
3.050%, 05/14/2024   425,000 432,848
Mexico - 0.3%      
Government of Mexico      
5.750%, 10/12/2110   1,305,000 1,451,813
Paraguay - 0.1%      
Republic of Paraguay      
6.100%, 08/11/2044 (S)   550,000 588,500
Poland - 0.2%      
Republic of Poland      
4.000%, 01/22/2024   853,000 894,046
Slovakia - 0.2%      
Government of Slovakia      
4.375%, 05/21/2022 (S)   1,175,000 1,264,688
Slovenia - 0.4%      
Republic of Slovenia      
5.250%, 02/18/2024 (S)   890,000 965,650
5.500%, 10/26/2022 (S)   560,000 618,520
5.850%, 05/10/2023 (S)   275,000 311,025
 
      1,895,195
Tunisia - 0.1%      
Republic of Tunisia      
2.452%, 07/24/2021   740,000 744,588
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $6,970,645)   $ 7,271,678
 
CORPORATE BONDS - 22.9%      
Consumer Discretionary - 2.4%      
Bed Bath & Beyond, Inc. 5.165%, 08/01/2044 320,000 333,016
Comcast Corp. 4.200%, 08/15/2034   605,000 622,191
Daimler Finance North America LLC      
1.875%, 09/15/2014 to 01/11/2018 (S)   1,099,000 1,102,984

 

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Daimler Finance North      
America LLC (continued)      
2.375%, 08/01/2018 (S) $ 655,000 $ 669,067
DIRECTV Holdings LLC      
3.800%, 03/15/2022   525,000 547,246
4.450%, 04/01/2024   655,000 702,861
General Motors Company      
3.500%, 10/02/2018   665,000 679,131
4.875%, 10/02/2023   435,000 465,450
Grupo Televisa SAB 5.000%, 05/13/2045   305,000 313,482
Johnson Controls, Inc.      
4.625%, 07/02/2044   290,000 296,233
4.950%, 07/02/2064   160,000 165,373
LVMH Moet Hennessy Louis Vuitton SA      
1.625%, 06/29/2017 (S)   875,000 883,227
Thomson Reuters Corp. 5.650%, 11/23/2043 120,000 137,129
Toyota Motor Credit Corp.      
1.125%, 05/16/2017   1,260,000 1,259,021
2.100%, 01/17/2019   440,000 443,609
2.750%, 05/17/2021   710,000 718,489
Viacom, Inc. 5.250%, 04/01/2044   605,000 651,203
Volkswagen Group of America Finance LLC    
2.125%, 05/23/2019 (S)   500,000 499,363
Volkswagen International Finance NV      
1.125%, 11/18/2016 (S)   1,255,000 1,259,633
Yum! Brands, Inc. 5.350%, 11/01/2043   350,000 393,240
 
      12,141,948
Consumer Staples - 1.2%      
Altria Group, Inc. 5.375%, 01/31/2044   370,000 411,349
Anheuser-Busch InBev Finance, Inc.      
2.150%, 02/01/2019   825,000 835,312
2.625%, 01/17/2023   410,000 401,575
Anheuser-Busch InBev Worldwide, Inc.      
7.750%, 01/15/2019   365,000 450,410
Pernod-Ricard SA 5.750%, 04/07/2021 (S)   807,000 932,907
Tyson Foods, Inc.      
3.950%, 08/15/2024   285,000 291,157
4.500%, 06/15/2022   550,000 594,330
4.875%, 08/15/2034   110,000 116,157
Wm Wrigley Jr. Company      
2.000%, 10/20/2017 (S)   230,000 233,035
2.400%, 10/21/2018 (S)   300,000 304,955
2.900%, 10/21/2019 (S)   611,000 626,514
3.375%, 10/21/2020 (S)   620,000 639,826
 
      5,837,527
Energy - 3.2%      
Access Midstream Partners LP      
4.875%, 05/15/2023   720,000 757,800
Canadian Oil Sands, Ltd.      
6.000%, 04/01/2042 (S)   302,000 360,635
Cimarex Energy Company 4.375%, 06/01/2024 625,000 650,781
CNOOC Nexen Finance 2014 ULC      
1.625%, 04/30/2017   925,000 927,893
Continental Resources, Inc.      
4.500%, 04/15/2023   670,000 723,614
DCP Midstream Operating LP      
2.700%, 04/01/2019   525,000 532,161
Diamond Offshore Drilling, Inc.      
4.875%, 11/01/2043 (L)   290,000 296,919
Ecopetrol SA      
5.875%, 05/28/2045   285,000 307,361
7.375%, 09/18/2043   250,000 319,375

 

The accompanying notes are an integral part of the financial statements. 88

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
El Paso Pipeline Partners      
Operating Company LLC      
4.100%, 11/15/2015 $ 635,000 $ 658,242
4.300%, 05/01/2024   570,000 583,155
Energy Transfer Partners LP      
5.950%, 10/01/2043   230,000 259,350
EQT Midstream Partners LP      
4.000%, 08/01/2024   455,000 457,793
Kerr-McGee Corp. 6.950%, 07/01/2024   600,000 767,758
Kinder Morgan Energy Partners LP      
4.150%, 02/01/2024   405,000 411,704
5.000%, 08/15/2042 to 03/01/2043   365,000 359,003
Newfield Exploration Company      
5.625%, 07/01/2024   455,000 501,046
ONEOK Partners LP 2.000%, 10/01/2017   450,000 455,593
Petrobras Global Finance BV      
3.000%, 01/15/2019   425,000 418,782
4.875%, 03/17/2020   550,000 570,834
Petroleos Mexicanos      
2.254%, 07/18/2018 (P)   290,000 304,210
5.500%, 06/27/2044   360,000 390,510
6.375%, 01/23/2045 (S)   540,000 653,400
Rowan Companies, Inc. 5.400%, 12/01/2042 290,000 287,685
Southeast Supply Header LLC      
4.250%, 06/15/2024 (S)   605,000 624,490
Statoil ASA 2.900%, 11/08/2020   535,000 550,163
Talisman Energy, Inc. 3.750%, 02/01/2021   550,000 569,226
TC PipeLines LP 4.650%, 06/15/2021   166,000 177,126
The Williams Companies, Inc.      
4.550%, 06/24/2024   155,000 156,113
5.750%, 06/24/2044   355,000 358,934
Total Capital International SA      
2.100%, 06/19/2019   715,000 715,644
2.750%, 06/19/2021   290,000 291,212
TransCanada PipeLines, Ltd.      
4.625%, 03/01/2034   680,000 736,971
Western Gas Partners LP 5.375%, 06/01/2021 165,000 187,541
 
      16,323,024
Financials - 8.5%      
ACE INA Holdings, Inc.      
3.350%, 05/15/2024   810,000 820,508
American Express Credit Corp.      
1.750%, 06/12/2015   1,233,000 1,245,831
2.250%, 08/15/2019   1,705,000 1,709,505
American International Group, Inc.      
4.500%, 07/16/2044   130,000 134,080
6.400%, 12/15/2020   359,000 432,665
American International Group, Inc. (8.175% to    
05/15/2038, then 3 month LIBOR + 4.195%)    
05/15/2058   150,000 206,625
American Tower Corp.      
3.450%, 09/15/2021   570,000 570,960
3.500%, 01/31/2023   346,000 340,710
4.500%, 01/15/2018   365,000 393,877
5.050%, 09/01/2020   382,000 420,839
Assurant, Inc.      
2.500%, 03/15/2018   585,000 590,665
Australia & New Zealand Banking Group, Ltd.    
4.500%, 03/19/2024 (S)   675,000 700,289
Bank of America Corp.      
1.500%, 10/09/2015   1,939,000 1,956,864
4.125%, 01/22/2024   275,000 286,333
4.200%, 08/26/2024   650,000 659,903

 

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Bank of America Corp. (continued)      
6.000%, 09/01/2017 $ 670,000 $ 751,931
Berkshire Hathaway, Inc.      
2.100%, 08/14/2019   505,000 506,339
Boston Properties LP      
3.125%, 09/01/2023   325,000 317,802
BPCE SA      
4.000%, 04/15/2024   275,000 284,532
5.700%, 10/22/2023 (S)   360,000 398,632
Citigroup, Inc.      
1.550%, 08/14/2017   950,000 948,931
1.700%, 07/25/2016   670,000 677,814
2.500%, 07/29/2019   1,030,000 1,034,097
2.650%, 03/02/2015   427,000 431,460
4.000%, 08/05/2024   140,000 140,417
Corporate Office Properties LP      
3.700%, 06/15/2021   315,000 315,687
Credit Suisse New York      
1.375%, 05/26/2017   1,070,000 1,069,876
2.300%, 05/28/2019   1,060,000 1,062,196
DDR Corp.      
3.375%, 05/15/2023   735,000 715,046
4.625%, 07/15/2022   700,000 750,363
Federal Realty Investment Trust      
3.000%, 08/01/2022   610,000 608,581
3.950%, 01/15/2024   345,000 361,455
General Electric Capital Corp.      
5.875%, 01/14/2038   635,000 789,413
Healthcare Trust of America Holdings LP      
3.375%, 07/15/2021   375,000 377,074
HSBC Holdings PLC      
4.250%, 03/14/2024   205,000 212,845
5.250%, 03/14/2044   470,000 518,105
HSBC USA, Inc.      
2.375%, 02/13/2015   730,000 736,658
ING Bank NV      
5.800%, 09/25/2023 (S)   555,000 630,133
Inter-American Development Bank      
3.875%, 10/28/2041   528,000 550,884
4.375%, 01/24/2044   190,000 216,842
Intesa Sanpaolo SpA      
2.375%, 01/13/2017   800,000 810,489
5.017%, 06/26/2024 (S)   495,000 499,700
JPMorgan Chase & Company      
4.850%, 02/01/2044   360,000 392,738
Lazard Group LLC      
4.250%, 11/14/2020   575,000 606,064
6.850%, 06/15/2017   1,155,000 1,309,660
Liberty Mutual Group, Inc.      
4.850%, 08/01/2044 (S)   520,000 526,438
6.500%, 05/01/2042 (S)   332,000 412,440
Markel Corp.      
3.625%, 03/30/2023   245,000 246,648
4.900%, 07/01/2022   345,000 380,450
MetLife, Inc.      
3.600%, 04/10/2024   230,000 236,912
Mid-America Apartments LP      
3.750%, 06/15/2024   610,000 612,760
4.300%, 10/15/2023   450,000 475,023
Morgan Stanley      
2.375%, 07/23/2019   1,715,000 1,711,318
3.875%, 04/29/2024   635,000 650,513
5.375%, 10/15/2015   565,000 593,892

 

The accompanying notes are an integral part of the financial statements. 89

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Murray Street Investment Trust I      
4.647%, 03/09/2017 (P) $ 1,041,000 $ 1,119,669
Norddeutsche Landesbank Girozentrale      
2.000%, 02/05/2019 (S)   1,400,000 1,403,777
Royal Bank of Scotland Group PLC      
5.125%, 05/28/2024   390,000 397,816
Sumitomo Mitsui Banking Corp.      
1.350%, 07/11/2017   880,000 879,158
2.250%, 07/11/2019   1,010,000 1,013,076
Sumitomo Mitsui Financial Group, Inc.      
4.436%, 04/02/2024 (S)   605,000 635,844
Synchrony Financial      
3.000%, 08/15/2019   710,000 720,191
4.250%, 08/15/2024   525,000 537,460
Tanger Properties LP      
3.875%, 12/01/2023   300,000 307,607
The Goldman Sachs Group, Inc.      
3.850%, 07/08/2024   720,000 733,723
6.250%, 02/01/2041   235,000 294,682
6.750%, 10/01/2037   244,000 301,220
WR Berkley Corp.      
4.625%, 03/15/2022   330,000 357,045
4.750%, 08/01/2044   325,000 326,969
 
      43,370,049
Health Care - 1.5%      
Actavis Funding SCS      
3.850%, 06/15/2024 (S)   600,000 607,029
4.850%, 06/15/2044 (S)   335,000 344,992
Amgen, Inc.      
1.250%, 05/22/2017   1,140,000 1,139,716
3.625%, 05/22/2024   425,000 432,230
5.375%, 05/15/2043   285,000 328,010
Celgene Corp.      
2.250%, 05/15/2019   570,000 570,416
4.625%, 05/15/2044   290,000 299,107
5.250%, 08/15/2043   250,000 280,964
McKesson Corp. 3.796%, 03/15/2024   340,000 350,015
Mylan, Inc. 5.400%, 11/29/2043   175,000 192,665
St. Jude Medical, Inc. 3.250%, 04/15/2023   260,000 261,079
Teva Pharmaceutical Finance IV BV      
3.650%, 11/10/2021   355,000 369,729
Thermo Fisher Scientific, Inc.      
1.300%, 02/01/2017   675,000 675,570
3.600%, 08/15/2021   275,000 286,192
WellPoint, Inc.      
3.125%, 05/15/2022   703,000 704,028
3.500%, 08/15/2024   380,000 380,212
5.100%, 01/15/2044   210,000 229,978
 
      7,451,932
Industrials - 0.8%      
Burlington Northern Santa Fe LLC      
4.550%, 09/01/2044   285,000 295,286
ERAC USA Finance LLC      
3.850%, 11/15/2024 (S)   225,000 229,987
5.625%, 03/15/2042 (S)   634,000 743,482
L-3 Communications Corp.      
3.950%, 05/28/2024   395,000 395,517
Northrop Grumman Corp.      
3.250%, 08/01/2023   750,000 751,538
4.750%, 06/01/2043   570,000 610,889
Penske Truck Leasing Company LP      
2.500%, 06/15/2019 (S)   735,000 738,461

 

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
Weatherford International, Ltd.      
5.950%, 04/15/2042 $ 340,000 $ 392,004
 
      4,157,164
Information Technology - 1.3%      
Apple, Inc.      
2.850%, 05/06/2021   1,230,000 1,252,337
3.450%, 05/06/2024   765,000 786,684
4.450%, 05/06/2044   410,000 432,892
Broadcom Corp. 4.500%, 08/01/2034   120,000 124,873
Google, Inc. 3.375%, 02/25/2024   330,000 341,986
MasterCard, Inc. 3.375%, 04/01/2024   775,000 792,975
Oracle Corp.      
2.250%, 10/08/2019   580,000 582,416
3.400%, 07/08/2024   515,000 524,600
4.300%, 07/08/2034   745,000 778,784
4.500%, 07/08/2044   300,000 317,609
Tencent Holdings, Ltd.      
3.375%, 05/02/2019 (S)   850,000 868,213
 
      6,803,369
Materials - 0.5%      
BHP Billiton Finance USA, Ltd.      
5.000%, 09/30/2043   290,000 331,830
Glencore Finance Canada, Ltd.      
2.050%, 10/23/2015 (S)   425,000 429,663
International Paper Company      
4.800%, 06/15/2044   415,000 430,508
LYB International Finance BV      
4.875%, 03/15/2044   350,000 377,215
Nucor Corp. 4.000%, 08/01/2023   275,000 287,854
The Mosaic Company      
5.450%, 11/15/2033   170,000 193,916
5.625%, 11/15/2043   215,000 248,471
Vale Overseas, Ltd. 8.250%, 01/17/2034   155,000 204,335
 
      2,503,792
Telecommunication Services - 1.7%      
America Movil SAB de CV      
3.125%, 07/16/2022   1,085,000 1,076,688
AT&T, Inc.      
3.900%, 03/11/2024   600,000 628,797
4.300%, 12/15/2042   270,000 263,002
4.800%, 06/15/2044   410,000 429,220
Bharti Airtel International Netherlands BV      
5.350%, 05/20/2024 (S)   330,000 354,136
Telefonica Chile SA 3.875%, 10/12/2022 (S) 315,000 310,505
Verizon Communications, Inc.      
1.350%, 06/09/2017   1,510,000 1,510,231
3.450%, 03/15/2021   540,000 560,095
4.862%, 08/21/2046 (S)   623,000 653,709
5.050%, 03/15/2034   520,000 568,149
5.150%, 09/15/2023   1,370,000 1,551,302
6.400%, 09/15/2033   601,000 759,177
 
      8,665,011
Utilities - 1.8%      
Alabama Power Company 4.150%, 08/15/2044 200,000 203,738
American Electric Power Company, Inc.      
1.650%, 12/15/2017   725,000 727,672
Berkshire Hathaway Energy Company      
5.150%, 11/15/2043   200,000 233,087
CenterPoint Energy Houston Electric LLC      
4.500%, 04/01/2044   280,000 303,536

 

The accompanying notes are an integral part of the financial statements. 90

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities (continued)      
Connecticut Light & Power Company      
4.300%, 04/15/2044 $ 245,000 $ 258,114
Consolidated Edison Company of New      
York, Inc. 4.450%, 03/15/2044   95,000 99,627
Consumers Energy Company      
4.350%, 08/31/2064   215,000 219,350
Dominion Resources, Inc. 8.875%, 01/15/2019 615,000 784,504
Duke Energy Corp. 3.750%, 04/15/2024   550,000 572,392
Duke Energy Ohio, Inc. 3.800%, 09/01/2023 290,000 309,035
Electricite de France SA      
6.000%, 01/22/2114 (S)   450,000 524,237
Oglethorpe Power Corp. 4.550%, 06/01/2044 305,000 314,496
Pacific Gas & Electric Company      
3.250%, 06/15/2023   275,000 276,601
4.750%, 02/15/2044   195,000 210,535
PacifiCorp 3.600%, 04/01/2024   640,000 666,696
Potomac Electric Power Company      
3.600%, 03/15/2024   290,000 301,565
PPL Capital Funding, Inc. 3.950%, 03/15/2024 305,000 317,720
Public Service Electric & Gas Company      
4.000%, 06/01/2044   955,000 958,789
Puget Energy, Inc. 6.000%, 09/01/2021   800,000 940,262
Southwestern Electric Power Company      
3.550%, 02/15/2022   230,000 238,491
State Grid Overseas Investment 2014, Ltd.      
2.750%, 05/07/2019 (S)   745,000 750,205
 
      9,210,652
TOTAL CORPORATE BONDS (Cost $112,450,385) $ 116,464,468
 
MUNICIPAL BONDS - 1.2%      
County of Clark Department of Aviation      
(Nevada) 6.820%, 07/01/2045   530,000 752,897
Los Angeles Community College District      
(California) 6.750%, 08/01/2049   555,000 814,662
New Jersey State Turnpike Authority      
7.102%, 01/01/2041   718,000 1,032,118
North Texas Tollway Authority      
6.718%, 01/01/2049   640,000 917,082
Port Authority of New York & New Jersey      
4.458%, 10/01/2062   750,000 788,520
State of California 7.600%, 11/01/2040   485,000 742,157
State of Illinois, GO      
5.365%, 03/01/2017   300,000 326,355
5.877%, 03/01/2019   275,000 307,263
The Ohio State University 4.800%, 06/01/2111 199,000 215,177
TOTAL MUNICIPAL BONDS (Cost $4,822,376) $ 5,896,231
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 9.5%      
Commercial & Residential - 5.8%      
Capital Auto Receivables Asset Trust,      
Series 2014-3, Class A3      
1.480%, 11/20/2018   908,000 907,847
CFCRE Commercial Mortgage Trust,      
Series 2011-C1, Class A4      
4.961%, 04/15/2044 (P)(S)   925,000 1,037,898
Citigroup Commercial Mortgage Trust,      
Series 2014-GC19, Class AAB      
3.552%, 03/10/2047   412,000 428,300

 

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Commercial Mortgage Pass      
Through Certificates      
Series 2010-C1, Class A3,      
4.205%, 07/10/2046 (S) $ 477,000 $ 517,379
Series 2012-LC4, Class A3,      
3.069%, 12/10/2044   364,000 375,349
Series 2013-CR12, Class ASB,      
3.623%, 10/10/2046   752,000 786,797
Series 2013-CR7, Class A4,      
3.213%, 03/10/2046   138,000 139,496
Series 2013-CR9, Class ASB,      
3.834%, 07/10/2045   616,000 653,397
Series 2014-CR18, Class ASB,      
3.452%, 07/15/2047   318,000 329,034
Series 2014-CR19, Class A5,      
3.796%, 08/10/2047   712,000 737,130
Series 2014-LC15, Class ASB,      
3.528%, 04/10/2047   611,000 634,933
Series 2014-UBS4, Class A5,      
3.694%, 08/10/2047   1,444,000 1,483,391
Credit Suisse First Boston      
Mortgage Securities Corp.      
Series 2004-C5, Class A4,      
4.829%, 11/15/2037   97,585 97,742
Series 2005-C5, Class A4,      
5.100%, 08/15/2038 (P)   382,573 390,848
DBUBS Mortgage Trust      
Series 2011-LC1A, Class A1,      
3.742%, 11/10/2046 (S)   836,972 866,555
Series 2011-LC2A, Class A4,      
4.537%, 07/10/2044 (S)   773,000 852,849
Greenwich Capital Commercial      
Funding Corp., Series 2005-GG5, Class A5    
5.224%, 04/10/2037 (P)   376,000 387,262
GS Mortgage Securities Trust,      
Series 2014-GC18, Class AAB      
3.648%, 01/10/2047   361,000 377,339
GS Mortgage Securities Trust      
Series 2005-GG4, Class A4A,      
4.751%, 07/10/2039   314,914 318,370
Series 2013-GC16, Class A3,      
4.244%, 11/10/2046   283,000 306,115
Series 2013-GC16, Class AAB,      
3.813%, 11/10/2046   975,000 1,029,488
Series 2014-GC18, Class A4,      
4.074%, 01/10/2047   928,000 987,230
Series 2014-GC20, Class AAB,      
3.655%, 04/10/2047   237,000 247,707
Impac Funding LLC, Series 2010-1, Class A1    
5.314%, 01/25/2051 (S)   1,985,784 2,261,803
JPMBB Commercial Mortgage Securities Trust    
Series 2014-C21, Class ASB,      
3.428%, 08/15/2047   290,000 299,075
Series 2014-C22, Class A4,      
3.801%, 09/15/2047   501,000 520,002
JPMorgan Chase Commercial      
Mortgage Securities Trust      
Series 2004-IN2, Class A2,      
5.115%, 07/15/2041   62,190 62,493
Series 2010-C2, Class A3,      
4.070%, 11/15/2043 (S)   1,577,000 1,695,704

 

The accompanying notes are an integral part of the financial statements. 91

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
JPMorgan Chase Commercial Mortgage      
Securities Trust (continued)      
Series 2010-CNTR, Class A1,      
3.300%, 08/05/2032 (S) $ 302,779 $ 315,164
Series 2012-C8, Class ASB,      
2.379%, 10/15/2045   592,000 588,311
Series 2014-C20, Class ASB,      
3.461%, 07/15/2047   636,000 657,675
Series 2006-CB14, Class A4,      
5.481%, 12/12/2044 (P)   302,198 315,480
LB-UBS Commercial Mortgage Trust,      
Series 2004-C8, Class A6      
4.799%, 12/15/2029 (P)   3,925 3,928
Merrill Lynch/Countrywide      
Commercial Mortgage Trust      
Series 2007-5, Class A4,      
5.378%, 08/12/2048   984,834 1,054,549
Series 2007-7, Class A4,      
5.810%, 06/12/2050 (P)   794,000 867,825
Morgan Stanley Bank of America      
Merrill Lynch Trust      
Series 2012-C5, Class A4,      
3.176%, 08/15/2045   252,000 254,614
Series 2012-C6, Class A3,      
2.506%, 11/15/2045   905,000 902,332
Series 2013-C10, Class A1,      
1.394%, 07/15/2046   1,055,635 1,064,003
Series 2013-C10, Class A3,      
4.103%, 07/15/2046 (P)   812,000 867,072
Series 2014-C15, Class ASB,      
3.654%, 04/15/2047   367,000 383,980
Morgan Stanley Capital I Trust,      
Series 2011-C2, Class A2      
3.476%, 06/15/2044 (S)   786,000 816,098
Motel 6 Trust, Series 2012-MTL6, Class A2    
1.948%, 10/05/2025 (S)   809,000 805,615
UBS-Barclays Commercial Mortgage Trust      
Series 2012-C3, Class A3,      
2.728%, 08/10/2049   669,000 671,871
Series 2013-C5, Class A4,      
3.185%, 03/10/2046   202,000 202,747
Series 2013-C6, Class ASB,      
2.788%, 04/10/2046   750,000 754,578
 
      29,257,375
U.S. Government Agency - 3.7%      
Federal Home Loan Mortgage Corp.      
Series 2013-121, Class LB,      
3.000%, 12/25/2043   2,371,234 2,442,826
Series 2014-HQ1, Class M1,      
1.807%, 08/25/2024 (P)   832,000 835,802
Series 2980, Class QA, 6.000%, 05/15/2035 148,533 165,793
Series 336, Class 300, 3.000%, 08/15/2044 4,571,000 4,482,794
Series 3529, Class AG, 6.500%, 04/15/2039 1,024,204 1,138,424
Series 3622, Class WA, 5.500%, 09/15/2039 106,536 119,905
Series 3664, Class DA, 4.000%, 11/15/2037 532,433 564,941
Series 3876, Class NB, 5.000%, 08/15/2038 839,496 915,257
Series T-48, Class 1A,      
5.698%, 07/25/2033 (P)   18,158 20,645
Series T-57, Class 1A2, 7.000%, 07/25/2043 192,661 222,747
Series T-57, Class 1A3, 7.500%, 07/25/2043 178,182 213,065
Series T-59, Class 1A3, 7.500%, 10/25/2043 248,088 296,115
Series T-60, Class 1A3, 7.500%, 03/25/2044 257,115 307,650

 

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal National Mortgage Association      
3.500%, 09/01/2044 $ 3,766,000 $ 3,971,659
Series 2002-33, Class A2,      
7.500%, 06/25/2032   207,619 243,943
Series 2002-95, Class DB,      
6.000%, 01/25/2033   750,408 847,390
Series 2003-W17, Class 1A7,      
5.750%, 08/25/2033   341,000 370,705
Series 2005-5, Class PA,      
5.000%, 01/25/2035   20,369 22,022
Series 2006-56, Class CA,      
6.000%, 07/25/2036   10,596 11,687
Series 2009-20, Class DT,      
4.500%, 04/25/2039   629,194 673,931
Series 2012-130, Class DC,      
3.000%, 12/25/2042   297,851 292,773
Series 2012-134, Class LC,      
3.000%, 12/25/2042   603,564 595,953
Series 2013-9, Class CB,      
5.500%, 04/25/2042   52,906 59,163
 
      18,815,190
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $47,915,343)   $ 48,072,565
 
ASSET BACKED SECURITIES - 13.5%      
Ally Auto Receivables Trust      
Series 2010-5, Class A4,      
1.750%, 03/15/2016   484,278 485,322
Series 2011-1, Class A4,      
2.230%, 03/15/2016   538,823 540,229
Series 2011-5, Class A4,      
1.320%, 07/15/2016   373,000 374,227
Series 2012-1, Class A3,      
0.930%, 02/16/2016   69,545 69,618
Series 2012-2, Class A3,      
0.740%, 04/15/2016   358,293 358,634
Series 2013-1, Class A4,      
0.840%, 02/15/2018   487,000 486,713
Series 2014-1, Class A4,      
1.530%, 04/15/2019   3,436,000 3,438,134
Ally Master Owner Trust      
Series 2012-5, Class A, 1.540%, 09/15/2019 577,000 575,554
Series 2014-4, Class A2,      
1.430%, 06/17/2019   1,019,000 1,018,173
American Express Credit Account      
Master Trust, Series 2013-2, Class A      
0.575%, 05/17/2021 (P)   619,000 621,399
American Express Issuance Trust II,      
Series 2013-2, Class A      
0.585%, 08/15/2019 (P)   1,216,000 1,218,967
AmeriCredit Automobile Receivables Trust,      
Series 2013-2, Class A2      
0.530%, 11/08/2016   101,193 101,218
Avis Budget Rental Car Funding AESOP LLC,    
Series 2013-1A, Class A      
1.920%, 09/20/2019 (S)   1,162,000 1,157,188
BA Credit Card Trust, Series 2014-A2,      
Class A      
0.425%, 09/16/2019 (P)   1,546,000 1,547,643
California Republic Auto Receivables Trust,      
Series 2014-2, Class A4      
1.570%, 12/16/2019   318,000 317,168

 

The accompanying notes are an integral part of the financial statements. 92

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Capital Auto Receivables Asset Trust      
Series 2013-1, Class A3,      
0.790%, 06/20/2017 $ 1,734,000 $ 1,736,679
Series 2013-2, Class A2,      
0.920%, 09/20/2016   1,031,000 1,033,187
Series 2013-2, Class A4,      
1.560%, 07/20/2018   549,000 554,354
Series 2013-3, Class A4,      
1.680%, 04/20/2018   298,000 301,611
Series 2013-4, Class A3,      
1.090%, 03/20/2018   751,000 752,410
Series 2013-4, Class A4,      
1.470%, 07/20/2018   1,022,000 1,025,933
Series 2014-1, Class A3,      
1.320%, 06/20/2018   705,000 708,559
Series 2014-1, Class A4,      
1.690%, 10/22/2018   607,000 610,840
Series 2014-2, Class A1,      
0.456%, 06/20/2016 (P)   1,159,000 1,159,276
Series 2014-2, Class A3,      
1.260%, 05/21/2018   1,067,000 1,067,545
Series 2014-2, Class A4,      
1.620%, 10/22/2018   305,000 306,293
Capital One Multi-Asset Execution Trust,      
Series 2013-A1, Class A1      
0.630%, 11/15/2018   403,000 402,564
Chase Issuance Trust      
Series 2012-A2, Class A2,      
0.425%, 05/15/2019 (P)   1,523,000 1,526,876
Series 2012-A8, Class A8,      
0.540%, 10/16/2017   398,000 398,164
Series 2013-A7, Class A,      
0.585%, 09/15/2020 (P)   575,000 577,258
Series 2013-A9, Class A,      
0.575%, 11/16/2020 (P)   1,639,000 1,642,463
Series 2014-A5, Class A5,      
0.525%, 04/15/2021 (P)   648,000 649,001
Series 2014-A6, Class A,      
1.260%, 07/15/2019   334,000 333,718
Citibank Credit Card Issuance Trust      
Series 2012-A1, Class A1,      
0.550%, 10/10/2017   338,000 338,077
Series 2013-A7, Class A7,      
0.587%, 09/10/2020 (P)   2,372,000 2,380,646
Series 2014-A6, Class A6,      
2.150%, 07/15/2021   2,587,000 2,594,200
Discover Card Execution Note Trust      
Series 2013-A5, Class A5,      
1.040%, 04/15/2019   200,000 200,130
Series 2014-A1, Class A1,      
0.585%, 07/15/2021 (P)   842,000 842,392
Ford Credit Floorplan Master Owner Trust      
Series 2012-2, Class A, 1.920%, 01/15/2019 1,157,000 1,178,317
Series 2014-1, Class A1,      
1.200%, 02/15/2019   854,000 852,908
Honda Auto Receivables Owner Trust,      
Series 2013-2, Class A3      
0.530%, 02/16/2017   669,000 669,494
Hyundai Auto Receivables Trust,      
Series 2011-C A4      
1.300%, 02/15/2018   411,000 413,681
MMCA Auto Owner Trust, Series 2011-A,      
Class A4      
2.020%, 10/17/2016 (S)   122,424 122,959

 

Core Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Navient Student Loan Trust, Series 2014-1,      
Class A2      
0.465%, 03/27/2023 (P) $ 557,000 $ 557,141
Nelnet Student Loan Trust      
Series 2004-3, Class A5,      
0.414%, 10/27/2036 (P)   920,936 911,550
Series 2005-1, Class A5,      
0.344%, 10/25/2033 (P)   52,000 51,657
Series 2006-1, Class A4,      
0.325%, 11/23/2022 (P)   364,113 363,437
Series 2006-2, Class A4,      
0.314%, 10/26/2026 (P)   1,458,823 1,455,760
Series 2007-1, Class A1,      
0.245%, 11/27/2018 (P)   166,232 166,119
Series 2007-2A, Class A3L,      
0.583%, 03/25/2026 (P)(S)   1,390,000 1,380,791
Series 2010-4, Class A,      
0.955%, 04/25/2046 (P)(S)   491,371 496,480
Series 2014-3A, Class A,      
0.735%, 06/25/2041 (P)(S)   1,640,539 1,639,035
Nissan Auto Receivables Owner Trust,      
Series 2014-A, Class A2      
0.420%, 11/15/2016   358,000 357,958
Santander Drive Auto Receivables Trust      
Series 2012-5, Class A3,      
0.830%, 12/15/2016   146,762 146,853
Series 2012-6, Class A3,      
0.620%, 07/15/2016   69,708 69,714
Series 2013-3, Class A2,      
0.550%, 09/15/2016   401,697 401,785
SLC Student Loan Trust, Series 2007-2,      
Class A2      
0.634%, 05/15/2028 (P)   384,913 384,894
SLM Private Education Loan Trust      
Series 2012-A, Class A1,      
1.555%, 08/15/2025 (P)(S)   964,054 976,165
Series 2012-C, Class A1,      
1.255%, 08/15/2023 (P)(S)   542,743 546,560
Series 2012-D, Class A2,      
2.950%, 02/15/2046 (S)   832,000 860,568
Series 2012-E, Class A1,      
0.905%, 10/16/2023 (P)(S)   1,227,306 1,232,159
Series 2012-E, Class A2B,      
1.905%, 06/15/2045 (P)(S)   1,328,000 1,371,626
Series 2013-B, Class A2A,      
1.850%, 06/17/2030 (S)   1,486,000 1,463,966
Series 2013-C, Class A1,      
1.005%, 02/15/2022 (P)(S)   851,297 855,464
Series 2013-C, Class A2A,      
2.940%, 10/15/2031 (S)   281,000 288,513
Series 2014-A, Class A1,      
0.755%, 07/15/2022 (P)(S)   341,350 342,084
Series 2014-A, Class A2A,      
2.590%, 01/15/2026 (S)   489,000 493,603
SLM Student Loan Trust      
Series 2005-5, Class A3,      
0.334%, 04/25/2025 (P)   124,837 124,413
Series 2005-6, Class A5B,      
1.434%, 07/27/2026 (P)   514,323 523,422
Series 2005-9, Class A5,      
0.354%, 01/27/2025 (P)   915,388 913,532
Series 2006-3, Class A5,      
0.334%, 01/25/2021 (P)   1,012,000 999,282

 

The accompanying notes are an integral part of the financial statements. 93

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Core Bond Fund (continued)      
    Shares or    
    Principal    
    Amount   Value
 
 
ASSET BACKED SECURITIES (continued)      
SLM Student Loan Trust (continued)        
Series 2006-5, Class A5,        
0.344%, 01/25/2027 (P) $ 2,704,000 $ 2,675,554
Series 2007-2, Class B,        
0.404%, 07/25/2025 (P)   388,000   350,001
Series 2008-5, Class A3,        
1.534%, 01/25/2018 (P)   329,620   331,909
Series 2010-1, Class A,        
0.555%, 03/25/2025 (P)   986,629   986,589
Series 2012-3, Class A,        
0.805%, 12/26/2025 (P)   1,817,135   1,830,680
Series 2012-6, Class B,        
1.155%, 04/27/2043 (P)   720,000   677,161
Series 2013-1, Class B,        
1.955%, 11/25/2043 (P)   185,000   185,243
Series 2013-2, Class B,        
1.655%, 06/25/2043 (P)   119,000   116,184
Series 2013-3, Class A2,        
0.455%, 05/26/2020 (P)   641,000   641,222
Series 2013-3, Class B,        
1.655%, 09/25/2043 (P)   366,000   357,256
Series 2013-5, Class A2,        
0.555%, 10/26/2020 (P)   502,000   503,297
Series 2013-6, Class A2,        
0.655%, 02/25/2021 (P)   272,000   273,071
Series 2013-6, Class A3,        
0.805%, 06/26/2028 (P)   1,031,000   1,037,007
Series 2014-1, Class A2,        
0.535%, 07/26/2021 (P)   556,000   557,437
Series 2014-2, Class A3,        
0.745%, 03/26/2029 (P)   840,000   844,488
Trade Maps 1, Ltd., Series 2013-1A, Class A      
0.857%, 12/10/2018 (P)(S)   1,142,000   1,144,858
TOTAL ASSET BACKED SECURITIES (Cost $68,354,961) $ 68,576,210
 
SECURITIES LENDING COLLATERAL - 0.0%      
John Hancock Collateral        
Investment Trust, 0.0970% (W)(Y)   24,101   241,185
TOTAL SECURITIES LENDING        
COLLATERAL (Cost $241,187)     $ 241,185
 
SHORT-TERM INVESTMENTS - 2.4%        
Money Market Funds - 2.4%        
State Street Institutional Liquid Reserves        
Fund, 0.0747% (Y)   12,119,828   12,119,828
TOTAL SHORT-TERM INVESTMENTS (Cost $12,119,828) $ 12,119,828
Total Investments (Core Bond Fund)        
(Cost $553,680,052) - 110.4%     $ 560,710,102
Other assets and liabilities, net - (10.4%)       (52,997,850)
 
TOTAL NET ASSETS - 100.0%     $ 507,712,252
 

 

Equity-Income Fund    
  Shares or  
  Principal  
  Amount Value
 
COMMON STOCKS - 90.3%    
Consumer Discretionary - 10.1%    
Auto Components - 0.6%    
Johnson Controls, Inc. 276,200 $ 13,481,323

 

Equity-Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Automobiles - 1.1%    
Ford Motor Company 687,200 $ 11,964,152
General Motors Company 332,739 11,579,317
 
    23,543,469
Distributors - 0.6%    
Genuine Parts Company 134,950 11,840,513
Hotels, Restaurants & Leisure - 0.8%    
Carnival Corp. 448,800 17,000,544
Household Durables - 0.1%    
Whirlpool Corp. 13,400 2,050,468
Leisure Products - 1.0%    
Mattel, Inc. 599,500 20,676,755
Media - 3.3%    
Cablevision Systems Corp., Class A (L) 510,100 9,441,951
Comcast Corp., Class A 189,200 10,354,916
News Corp., Class A (I) 54,200 955,275
Pearson PLC 295,814 5,458,600
The Madison Square Garden, Inc., Class A (I) 62,725 4,193,794
The New York Times Company, Class A 466,100 5,770,318
The Walt Disney Company 128,500 11,549,580
Time Warner, Inc. 311,066 23,961,414
 
    71,685,848
Multiline Retail - 1.8%    
Kohl’s Corp. 381,700 22,440,143
Macy’s, Inc. 256,300 15,964,927
 
    38,405,070
Specialty Retail - 0.6%    
Staples, Inc. 986,900 11,526,992
Tiffany & Company 14,200 1,433,348
 
    12,960,340
Textiles, Apparel & Luxury Goods - 0.2%    
Coach, Inc. 138,200 5,089,906
 
    216,734,236
Consumer Staples - 4.7%    
Beverages - 0.8%    
PepsiCo, Inc. 180,700 16,712,943
Food Products - 2.4%    
Archer-Daniels-Midland Company 442,000 22,038,120
Bunge, Ltd. 31,700 2,683,405
Campbell Soup Company 386,000 17,300,520
ConAgra Foods, Inc. 51,900 1,671,180
McCormick & Company, Inc. (L) 113,800 7,930,722
 
    51,623,947
Household Products - 1.0%    
Procter & Gamble Company 37,200 3,091,692
The Clorox Company (L) 203,600 18,038,960
 
    21,130,652
Personal Products - 0.5%    
Avon Products, Inc. 730,700 10,259,028
 
    99,726,570
Energy - 14.2%    
Energy Equipment & Services - 1.4%    
Diamond Offshore Drilling, Inc. (L) 258,900 11,376,066
Schlumberger, Ltd. 162,300 17,794,572
 
    29,170,638

 

The accompanying notes are an integral part of the financial statements. 94

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Equity-Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels - 12.8%    
Anadarko Petroleum Corp. 145,036 $ 16,344,107
Apache Corp. 421,000 42,870,430
BP PLC, ADR 224,892 10,758,833
Chevron Corp. 351,460 45,496,497
ConocoPhillips 114,500 9,299,690
CONSOL Energy, Inc. 378,300 15,237,924
Exxon Mobil Corp. 390,624 38,851,463
Hess Corp. 281,300 28,439,430
Murphy Oil Corp. 339,400 21,202,318
Petroleo Brasileiro SA, ADR 313,900 6,143,023
Royal Dutch Shell PLC, ADR 408,900 33,108,633
Talisman Energy, Inc. 662,600 6,672,382
 
    274,424,730
   
    303,595,368
Financials - 18.2%    
Banks - 10.5%    
Bank of America Corp. 2,052,622 33,026,688
JPMorgan Chase & Company 896,314 53,285,867
Regions Financial Corp. 752,900 7,641,935
SunTrust Banks, Inc. 525,800 20,022,464
The PNC Financial Services Group, Inc. 351,600 29,798,100
U.S. Bancorp 859,900 36,356,572
Wells Fargo & Company 860,200 44,248,688
 
    224,380,314
Capital Markets - 1.8%    
Legg Mason, Inc. (L) 309,300 15,254,676
Northern Trust Corp. 317,200 21,997,820
The Bank of New York Mellon Corp. 12,400 485,832
 
    37,738,328
Consumer Finance - 1.0%    
American Express Company 239,900 21,483,045
Insurance - 3.6%    
Loews Corp. 191,900 8,393,706
Marsh & McLennan Companies, Inc. 536,200 28,472,220
MetLife, Inc. 226,500 12,398,610
Sun Life Financial, Inc. (L) 227,900 8,475,601
The Allstate Corp. 76,700 4,716,283
The Chubb Corp. 100,900 9,277,755
Willis Group Holdings PLC 136,100 5,712,117
 
    77,446,292
Real Estate Investment Trusts - 1.3%    
Digital Realty Trust, Inc. 155,500 10,146,375
Weyerhaeuser Company 506,413 17,192,721
 
    27,339,096
   
    388,387,075
Health Care - 6.2%    
Health Care Providers & Services - 0.6%    
Quest Diagnostics, Inc. 207,100 13,090,791
Pharmaceuticals - 5.6%    
Bristol-Myers Squibb Company 433,400 21,951,710
GlaxoSmithKline PLC 414,468 10,129,486
Johnson & Johnson 325,500 33,764,115
Merck & Company, Inc. 466,200 28,023,282
Pfizer, Inc. 881,188 25,898,115
 
    119,766,708
   
    132,857,499

 

Equity-Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Industrials - 13.1%    
Aerospace & Defense - 2.1%    
Honeywell International, Inc. 248,300 $ 23,645,609
The Boeing Company 171,400 21,733,520
 
    45,379,129
Air Freight & Logistics - 1.0%    
United Parcel Service, Inc., Class B 216,300 21,052,479
Airlines - 0.7%    
United Continental Holdings, Inc. (I) 296,200 14,102,082
Building Products - 0.9%    
Masco Corp. 496,800 11,659,896
USG Corp. (I)(L) 270,600 7,839,282
 
    19,499,178
Electrical Equipment - 1.6%    
Eaton Corp. PLC 151,626 10,585,011
Emerson Electric Company 351,200 22,483,824
 
    33,068,835
Industrial Conglomerates - 2.7%    
General Electric Company 2,210,700 57,433,986
Machinery - 4.1%    
Deere & Company 155,800 13,101,222
Illinois Tool Works, Inc. 350,700 30,935,247
Joy Global, Inc. (L) 224,700 14,189,805
Stanley Black & Decker, Inc. 186,500 17,064,750
Xylem, Inc. 358,200 13,346,532
 
    88,637,556
 
    279,173,245
Information Technology - 9.9%    
Communications Equipment - 2.7%    
Cisco Systems, Inc. 727,500 18,180,225
Harris Corp. 282,400 20,160,536
QUALCOMM, Inc. 244,000 18,568,400
 
    56,909,161
Electronic Equipment, Instruments & Components - 0.8%  
Corning, Inc. 862,100 17,983,406
IT Services - 1.3%    
Computer Sciences Corp. 173,600 10,379,544
International Business Machines Corp. 51,800 9,961,140
The Western Union Company (L) 438,300 7,657,101
 
    27,997,785
Semiconductors & Semiconductor Equipment - 2.4%  
Analog Devices, Inc. 284,700 14,553,864
Applied Materials, Inc. 867,300 20,038,967
Texas Instruments, Inc. 329,600 15,880,128
 
    50,472,959
Software - 1.2%    
CA, Inc. 171,900 4,854,456
Microsoft Corp. 472,000 21,442,960
 
    26,297,416
Technology Hardware, Storage & Peripherals - 1.5%  
Apple, Inc. 174,400 17,876,000
Dell, Inc. 1,010,600 14,579,760
 
    32,455,760
 
    212,116,487

 

The accompanying notes are an integral part of the financial statements. 95

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Equity-Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Materials - 4.8%    
Chemicals - 1.0%    
E.I. du Pont de Nemours & Company 181,200 $ 11,979,132
Potash Corp. of Saskatchewan, Inc. 257,100 9,039,636
 
    21,018,768
Construction Materials - 0.7%    
Vulcan Materials Company 243,400 15,426,692
Containers & Packaging - 0.6%    
MeadWestvaco Corp. 274,800 11,816,400
Metals & Mining - 1.3%    
Newmont Mining Corp. 362,500 9,820,125
Nucor Corp. 345,800 18,783,856
 
    28,603,981
Paper & Forest Products - 1.2%    
International Paper Company 522,425 25,311,491
 
    102,177,332
Telecommunication Services - 3.5%    
Diversified Telecommunication Services - 3.3%    
AT&T, Inc. 862,573 30,155,552
CenturyLink, Inc. 312,198 12,796,996
Telefonica SA 399,405 6,336,474
Verizon Communications, Inc. 421,477 20,997,984
 
    70,287,006
Wireless Telecommunication Services - 0.2%    
Vodafone Group PLC 1,205,937 4,144,661
 
    74,431,667
Utilities - 5.6%    
Electric Utilities - 4.0%    
Duke Energy Corp. 323,136 23,908,833
Entergy Corp. 273,000 21,132,930
Exelon Corp. 482,400 16,121,808
FirstEnergy Corp. 359,875 12,322,120
Xcel Energy, Inc. 404,900 12,977,045
 
    86,462,736
Independent Power and Renewable Electricity    
Producers - 0.4%    
AES Corp. 533,000 8,090,940
Multi-Utilities - 1.2%    
NiSource, Inc. 659,700 26,170,299
 
    120,723,975
TOTAL COMMON STOCKS (Cost $1,413,146,830) $ 1,929,923,454
 
SECURITIES LENDING COLLATERAL - 3.1%    
John Hancock Collateral    
Investment Trust, 0.0970% (W)(Y) 6,665,157 66,698,890
TOTAL SECURITIES LENDING    
COLLATERAL (Cost $66,698,484) $ 66,698,890
 
SHORT-TERM INVESTMENTS - 8.9%    
Money Market Funds - 8.9%    
State Street Institutional U.S. Government    
Money Market Fund, 0.0000% (Y) 1,430,811 1,430,811

 

Equity-Income Fund (continued)    
  Shares or    
  Principal    
  Amount   Value
 
 
SHORT-TERM INVESTMENTS (continued)      
Money Market Funds (continued)      
T. Rowe Price Reserve Investment      
Fund, 0.0575% (Y) 188,775,849 $ 188,775,849
 
      190,206,660
TOTAL SHORT-TERM INVESTMENTS (Cost $190,206,660) $ 190,206,660
Total Investments (Equity-Income Fund)      
(Cost $1,670,051,974) - 102.3%   $ 2,186,829,004
Other assets and liabilities, net - (2.3%)     (49,512,320)
 
TOTAL NET ASSETS - 100.0%   $ 2,137,316,684
 
 
 
Fundamental Global Franchise Fund    
  Shares or    
  Principal    
  Amount   Value
 
 
COMMON STOCKS - 93.0%      
Belgium - 1.9%      
Anheuser-Busch InBev NV 76,948 $ 8,583,778
France - 5.2%      
Danone SA 340,061   23,747,125
Germany - 6.8%      
adidas AG 298,722   22,461,963
SAP SE 110,941   8,647,217
 
      31,109,180
Ireland - 2.3%      
Experian PLC 597,583   10,402,225
Netherlands - 5.3%      
Heineken Holding NV 349,311   24,123,307
Switzerland - 1.8%      
Nestle SA 105,610   8,191,990
United Kingdom - 18.1%      
Diageo PLC 504,878   14,899,092
Imperial Tobacco Group PLC 329,205   14,368,136
Intertek Group PLC 148,584   6,909,326
Reckitt Benckiser Group PLC 153,562   13,400,685
SABMiller PLC 592,888   32,759,773
 
      82,337,012
United States - 51.6%      
Amazon.com, Inc. (I) 111,308   37,737,864
Amgen, Inc. 78,885   10,994,991
Apple, Inc. 261,492   26,802,930
AutoZone, Inc. (I) 13,352   7,194,592
Discovery Communications, Inc., Class A (I) 88,934   3,888,194
Discovery Communications, Inc., Series C (I) 88,934   3,821,494
Google, Inc., Class A (I) 13,931   8,112,857
Google, Inc., Class C (I) 13,931   7,962,960
McCormick & Company, Inc. 67,050   4,672,715
McDonald’s Corp. 133,479   12,509,652
Oracle Corp. 435,848   18,100,767
PepsiCo, Inc. 197,488   18,265,665
Philip Morris International, Inc. 39,417   3,373,307
QUALCOMM, Inc. 337,392   25,675,531
Starbucks Corp. 151,146   11,760,670
The Coca-Cola Company 263,679   11,000,688
The Procter & Gamble Company 217,575   18,082,658

 

The accompanying notes are an integral part of the financial statements. 96

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Fundamental Global Franchise Fund (continued)
  Shares or   
  Principal   
  Amount  Value
 
 
COMMON STOCKS (continued)      
United States (continued)      
Visa, Inc., Class A 24,089 $ 5,119,394
      235,076,929
TOTAL COMMON STOCKS (Cost $333,160,323)   $ 423,571,546
 
SHORT-TERM INVESTMENTS - 6.6%      
Repurchase Agreement - 6.6%      
Repurchase Agreement with State Street Corp.      
dated 08/29/2014 at 0.000% to be      
repurchased at $30,161,000 on 09/02/2014,      
collateralized by $31,205,000 U.S. Treasury      
Notes, 0.625% due 11/30/2017 (valued at      
$30,767,818, including interest) $  30,161,000 $ 30,161,000
TOTAL SHORT-TERM INVESTMENTS (Cost $30,161,000) $ 30,161,000
Total Investments (Fundamental Global Franchise Fund)    
(Cost $363,321,323) - 99.6%   $ 453,732,546
Other assets and liabilities, net - 0.4%     1,596,532
TOTAL NET ASSETS - 100.0%   $ 455,329,078
 
 
 
Global Bond Fund      
  Shares or   
  Principal   
  Amount  Value
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 51.4%      
Australia - 0.5%      
New South Wales Treasury Corp.      
2.750%, 11/20/2025 AUD 1,200,000 1,556,787
3.750%, 11/20/2020 200,000 248,386
Queensland Treasury Corp.      
4.250%, 07/21/2023 (S) 1,300,000 1,262,841
 
      3,068,014
Belgium - 0.3%      
European Union      
2.750%, 06/03/2016 EUR  1,200,000 1,651,358
3.250%, 04/04/2018 100,000 145,888
 
      1,797,246
Brazil - 0.4%      
Banco Nacional de Desenvolvimento      
Economico e Social      
4.000%, 04/14/2019 (S) $  1,300,000 1,332,500
5.750%, 09/26/2023 (S) 1,200,000 1,305,000
 
      2,637,500
Canada - 1.8%      
Province of British Columbia      
4.300%, 06/18/2042 CAD  500,000 539,713
Province of Ontario      
2.100%, 09/08/2018  1,000,000 932,365
2.450%, 06/29/2022 $  1,100,000 1,085,170
3.150%, 06/02/2022 CAD 600,000 575,455
3.450%, 06/02/2045 1,100,000 1,005,155
3.500%, 06/02/2024 3,800,000 3,692,322
Province of Quebec      
3.000%, 09/01/2023 1,500,000 1,403,886
4.250%, 12/01/2021 1,900,000 1,950,222
 
      11,184,288

 

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
France - 7.3%      
Caisse d’Amortissement de la Dette      
Sociale      
1.125%, 01/30/2017 (S) $ 2,200,000 $ 2,212,338
Government of France      
1.000%, 05/25/2018 to 11/25/2018 EUR 20,300,000 27,517,068
1.750%, 05/25/2023 to 11/25/2024   1,600,000 2,227,079
3.000%, 04/25/2022   800,000 1,223,971
3.250%, 05/25/2045   7,100,000 11,394,756
 
      44,575,212
Germany - 0.2%      
Federal Republic of Germany, Inflation      
Linked Bond      
0.100%, 04/15/2023   830,592 1,151,108
Italy - 9.2%      
Republic of Italy      
3.750%, 09/01/2024   7,000,000 10,268,164
4.500%, 05/01/2023 to 03/01/2024   15,000,000 23,311,186
4.750%, 09/01/2021   3,100,000 4,879,906
4.750%, 09/01/2028 to 09/01/2044 (S)   3,900,000 6,171,584
5.500%, 09/01/2022 to 11/01/2022   5,300,000 8,735,536
6.000%, 08/04/2028 GBP 1,300,000 2,556,577
 
      55,922,953
Japan - 5.3%      
Government of Japan      
1.600%, 03/20/2033 JPY 360,000,000 3,663,651
1.700%, 09/20/2032   2,720,000,000 28,248,734
 
      31,912,385
Mexico - 7.5%      
Government of Mexico      
1.290%, 06/08/2015   1,100,000,000 10,633,245
7.500%, 06/03/2027 MXN 65,700,000 5,650,127
7.750%, 05/29/2031 to 11/23/2034   106,050,000 9,233,048
8.000%, 12/07/2023   40,000,000 3,556,881
8.500%, 11/18/2038   10,000,000 939,015
9.500%, 12/18/2014   142,800,000 11,125,793
10.000%, 12/05/2024   41,900,000 4,253,619
 
      45,391,728
New Zealand - 2.4%      
Dominion of New Zealand      
5.000%, 03/15/2019 NZD 8,400,000 7,330,271
5.500%, 04/15/2023   1,900,000 1,751,931
6.000%, 05/15/2021   4,600,000 4,289,266
Dominion of New Zealand, Index Linked      
Bond      
2.000%, 09/20/2025   1,100,000 923,205
 
      14,294,673
Norway - 0.7%      
Kommunalbanken AS      
2.375%, 01/19/2016 (S) $ 3,000,000 3,080,100
6.500%, 04/12/2021 AUD 1,300,000 1,408,300
 
      4,488,400
Slovenia - 2.9%      
Republic of Slovenia      
4.125%, 02/18/2019 $ 1,500,000 1,586,250
4.700%, 11/01/2016 (S) EUR 7,600,000 10,764,929
4.750%, 05/10/2018 $ 4,000,000 4,310,000
5.250%, 02/18/2024   500,000 542,500
5.500%, 10/26/2022   300,000 331,350

 

The accompanying notes are an integral part of the financial statements. 97

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Spain - 7.9%      
Autonomous Community of Catalonia      
4.950%, 02/11/2020 EUR 1,000,000 $ 1,486,458
Autonomous Community of Madrid      
4.200%, 09/24/2014   3,400,000 4,475,784
Kingdom of Spain      
3.800%, 04/30/2024 (S)   2,800,000 4,214,363
4.400%, 10/31/2023 (S)   1,500,000 2,360,261
5.400%, 01/31/2023 (S)   21,400,000 35,788,420
 
      48,325,286
Sweden - 0.2%      
Kingdom of Sweden      
4.250%, 03/12/2019 SEK 6,300,000 1,048,232
United Kingdom - 4.8%      
Government of United Kingdom      
2.250%, 09/07/2023 GBP 1,900,000 3,152,740
2.750%, 09/07/2024   1,400,000 2,402,258
3.250%, 01/22/2044   8,800,000 15,438,843
3.500%, 01/22/2045   300,000 551,416
4.250%, 06/07/2032 to 12/07/2040   2,200,000 4,529,535
4.500%, 09/07/2034   800,000 1,665,224
4.750%, 12/07/2030 to 12/07/2038   800,000 1,712,169
 
      29,452,185
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $307,699,954)   $ 312,784,239
 
CORPORATE BONDS - 16.9%      
Australia - 0.6%      
Australia & New Zealand Banking      
Group, Ltd.      
1.000%, 10/06/2015 (S) $ 400,000 402,362
CNOOC Curtis Funding No. 1 Pty, Ltd.      
4.500%, 10/03/2023 (S)   1,900,000 2,021,714
Westpac Banking Corp.      
1.850%, 11/26/2018 (S)   1,500,000 1,502,232
 
      3,926,308
Denmark - 0.4%      
Nykredit Realkredit A/S      
2.000%, 01/01/2015 DKK 7,300,000 1,294,102
Realkredit Danmark A/S      
2.000%, 01/01/2015   5,100,000 904,773
 
      2,198,875
France - 1.6%      
BNP Paribas Home Loan Covered      
Bonds SA      
2.200%, 11/02/2015 (S) $ 5,800,000 5,908,878
Cie de Financement Foncier SA      
2.500%, 09/16/2015 (S)   3,900,000 3,981,175
 
      9,890,053
Germany - 3.1%      
FMS Wertmanagement AoeR      
3.375%, 06/17/2021 EUR 2,600,000 4,043,531
KFW      
2.000%, 09/07/2016   4,000,000 5,463,404
6.250%, 05/19/2021 AUD 8,600,000 9,271,240
 
      18,778,175
Hong Kong - 0.3%      
CNOOC Finance 2012, Ltd.      
3.875%, 05/02/2022 $ 1,500,000 1,537,374

 

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Ireland - 2.4%      
Depfa ACS Bank      
3.875%, 11/14/2016 EUR 1,100,000 $ 1,551,105
German Postal Pensions      
Securitisation PLC      
3.375%, 01/18/2016   9,400,000 12,897,099
Italy - 0.2%      
Banca Carige SpA      
3.750%, 11/25/2016   500,000 691,257
Banca Monte dei Paschi di Siena SpA      
2.875%, 04/16/2021   300,000 414,683
 
      1,105,940
Luxembourg - 0.2%      
Petrobras International Finance Company      
7.875%, 03/15/2019 $ 1,200,000 1,395,514
 
      1,395,514
Macau - 0.3%      
Wynn Macau, Ltd.      
5.250%, 10/15/2021 (S)   1,800,000 1,831,500
Netherlands - 0.9%      
ING Bank NV      
2.500%, 01/14/2016 (S)   2,300,000 2,358,335
Petrobras Global Finance BV      
3.250%, 03/17/2017   2,900,000 2,958,637
Portugal - 0.3%      
Banco Espirito Santo SA      
5.875%, 11/09/2015 EUR 1,300,000 1,724,205
 
      1,724,205
Spain - 0.9%      
Banco Popular Espanol SA      
4.000%, 10/18/2016   800,000 1,122,082
Bankia SA      
3.500%, 12/14/2015   3,300,000 4,494,413
 
      5,616,495
Sweden - 0.3%      
Skandinaviska Enskilda Banken AB      
3.000%, 06/20/2018 SEK 3,000,000 460,878
Stadshypotek AB      
3.000%, 03/21/2018   4,000,000 612,164
Sveriges Sakerstallda Obligationer AB      
4.000%, 03/21/2018   3,000,000 475,638
Swedbank Hypotek AB      
3.750%, 12/20/2017   2,500,000 391,330
 
      1,940,010
Switzerland - 0.6%      
EUROFIMA      
6.250%, 12/28/2018 AUD 3,300,000 3,430,931
Tunisia - 0.5%      
African Development Bank      
5.250%, 03/23/2022   3,200,000 3,273,885
United Kingdom - 0.6%      
Barclays Bank PLC (7.750% to      
04/10/2018, then 5 Year U.S. Swap      
Rate + 6.833%)      
04/10/2023 $ 200,000 222,500
Lloyds Bank PLC      
4.875%, 03/30/2027 GBP 1,000,000 1,951,819
Pearson Dollar Finance Two PLC      
6.250%, 05/06/2018 (S) $ 1,000,000 1,136,032

 

The accompanying notes are an integral part of the financial statements. 98

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
United Kingdom (continued)      
Tate & Lyle International Finance PLC      
5.000%, 11/15/2014 (S) $ 300,000 $ 302,440
      3,612,791
United States - 3.4%      
Ally Financial, Inc.      
2.750%, 01/30/2017   600,000 603,750
4.625%, 06/26/2015   2,300,000 2,360,375
Altria Group, Inc.      
9.250%, 08/06/2019   354,000 465,679
Bank of America Corp.      
0.845%, 08/25/2017 (P)   2,000,000 2,005,282
1.700%, 08/25/2017   700,000 700,623
D.R. Horton, Inc.      
5.250%, 02/15/2015   1,800,000 1,829,250
HJ Heinz Company      
4.250%, 10/15/2020   3,000,000 3,041,250
International Lease Finance Corp.      
6.750%, 09/01/2016 (S)   2,100,000 2,296,864
7.125%, 09/01/2018 (S)   500,000 573,750
Intuit, Inc.      
5.750%, 03/15/2017   2,000,000 2,218,502
Masco Corp.      
6.125%, 10/03/2016   700,000 757,750
Verizon Communications, Inc.      
1.981%, 09/14/2018 (P)   3,800,000 3,999,359
 
      20,852,434
Virgin Islands - 0.3%      
Sinopec Group Overseas Development      
2012, Ltd.      
3.900%, 05/17/2022 (S)   300,000 306,541
Sinopec Group Overseas Development      
2013, Ltd.      
4.375%, 10/17/2023 (S)   1,500,000 1,578,534
 
      1,885,075
TOTAL CORPORATE BONDS (Cost $100,619,806) $ 102,764,741
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 17.1%      
U.S. Government - 8.4%      
Treasury Inflation Protected Securities      
0.125%, 07/15/2022 to 01/15/2023   1,343,048 1,335,903
0.250%, 07/15/2024 (C)   1,003,720 994,388
1.375%, 01/15/2020 to 02/15/2044   747,631 828,118
2.375%, 01/15/2027   590,905 729,675
2.500%, 01/15/2029   5,439,294 6,947,425
U.S. Treasury Bonds      
3.125%, 11/15/2041 to 08/15/2044   6,700,000 6,800,267
3.375%, 05/15/2044   400,000 423,500
3.625%, 08/15/2043 to 02/15/2044   13,500,000 14,956,549
3.750%, 11/15/2043   3,600,000 4,077,562
6.250%, 05/15/2030   700,000 1,018,718
U.S. Treasury Notes      
2.375%, 08/15/2024   800,000 802,250
2.500%, 08/15/2023 to 05/15/2024   3,500,000 3,559,687
2.750%, 11/15/2023   3,700,000 3,841,928
U.S. Treasury Strip Coupon      
2.271%, 11/15/2023   2,900,000 2,315,038
2.391%, 05/15/2026   3,000,000 2,191,203
 
      50,822,211

 

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency - 8.7%      
Federal Home Loan Mortgage Corp.      
4.000%, 12/01/2040 to 09/01/2041 $ 356,266 $ 377,152
Federal National Mortgage Association      
1.322%, 11/01/2042 to 10/01/2044 (P)   1,547,465 1,591,331
1.979%, 11/01/2035 (P)   171,511 179,523
3.500%, TBA (C)   37,000,000 39,080,173
3.730%, 01/01/2018   5,000,000 5,199,469
4.500%, TBA (C)   6,000,000 6,478,527
5.155%, 09/01/2035 (P)   54,680 58,628
5.199%, 07/01/2035 (P)   88,759 95,166
 
      53,059,969
TOTAL U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (Cost $102,057,843)   $ 103,882,180
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 13.4%      
Commercial & Residential - 12.1%      
Adjustable Rate Mortgage Trust,      
Series 2005-5, Class 2A1      
2.735%, 09/25/2035 (P)   86,827 78,229
American Home Mortgage      
Investment Trust, Series 2004-3,      
Class 5A      
2.069%, 10/25/2034 (P)   160,380 160,819
Banc of America Funding Corp.      
Series 2006-A, Class 1A1,      
2.639%, 02/20/2036 (P)   660,836 659,147
Series 2006-J, Class 4A1,      
2.827%, 01/20/2047 (P)   96,342 74,394
Bear Stearns Adjustable      
Rate Mortgage Trust      
Series 2003-5, Class 1A2,      
2.475%, 08/25/2033 (P)   32,840 33,051
Series 2003-7, Class 6A,      
2.518%, 10/25/2033 (P)   68,407 69,250
Series 2003-9, Class 2A1,      
2.790%, 02/25/2034 (P)   12,790 12,623
Series 2004-2, Class 22A,      
2.654%, 05/25/2034 (P)   150,776 145,526
Series 2004-2, Class 23A,      
2.483%, 05/25/2034 (P)   60,205 56,377
Series 2005-2, Class A1,      
2.580%, 03/25/2035 (P)   801,802 813,193
Series 2005-2, Class A2,      
2.528%, 03/25/2035 (P)   159,454 161,361
Series 2005-4, Class 3A1,      
2.503%, 08/25/2035 (P)   380,045 342,131
Series 2005-5, Class A2,      
2.260%, 08/25/2035 (P)   494,159 501,214
Bear Stearns Alt-A Trust      
Series 2005-7, Class 22A1,      
2.607%, 09/25/2035 (P)   1,292,895 1,124,516
Series 2005-9, Class 24A1,      
2.619%, 11/25/2035 (P)   569,218 442,435
Series 2006-8, Class 3A1,      
0.315%, 02/25/2034 (P)   55,733 51,304
Series 2006-6, Class 32A1,      
2.627%, 11/25/2036 (P)   1,253,117 867,609
Bear Stearns Structured      
Products, Inc. Trust, Series 2007-R6,      
Class 1A1      
3.578%, 01/26/2036 (P)   686,467 542,523

 

The accompanying notes are an integral part of the financial statements. 99

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Bella Vista Mortgage Trust,      
Series 2005-2, Class 2A1      
0.406%, 05/20/2045 (P) $ 479,634 $ 392,487
Berica Residential MBS SRL, Series 8,      
Class A      
0.616%, 03/31/2048 (P) EUR 2,137,176 2,716,349
Citigroup Mortgage Loan Trust, Inc.      
Series 2005-11, Class 1A1,      
2.510%, 05/25/2035 (P) $ 185,295 181,276
Series 2005-11, Class A2A,      
2.510%, 10/25/2035 (P)   817,852 808,681
Series 2005-12, Class 2A1,      
0.955%, 08/25/2035 (P)(S)   1,060,388 899,875
Series 2005-6, Class A1,      
2.200%, 09/25/2035 (P)   271,183 272,844
Series 2005-6, Class A2,      
2.280%, 09/25/2035 (P)   292,504 293,899
Countrywide Alternative Loan Trust      
Series 2005-21CB, Class A3,      
5.250%, 06/25/2035   105,989 99,256
Series 2005-56, Class 2A2,      
2.157%, 11/25/2035 (P)   69,450 54,889
Series 2005-56, Class 2A3,      
1.617%, 11/25/2035 (P)   69,403 52,984
Series 2006-OA19, Class A1,      
0.336%, 02/20/2047 (P)   1,624,155 1,213,171
Series 2007-11T1, Class A12,      
0.505%, 05/25/2037 (P)   300,267 208,054
Series 2007-16CB, Class 5A1,      
6.250%, 08/25/2037   143,147 119,143
Series 2005-81, Class A1,      
0.435%, 02/25/2037 (P)   3,012,373 2,416,589
Series 2006-OA1, Class 2A1,      
0.366%, 03/20/2046 (P)   968,319 754,229
Countrywide Home Loan Mortgage      
Pass Through Trust      
Series 2004-12, Class 11A1,      
2.620%, 08/25/2034 (P)   43,506 38,566
Series 2004-22, Class A3,      
2.501%, 11/25/2034 (P)   146,537 138,008
Series 2005-R2, Class 1AF1,      
0.495%, 06/25/2035 (P)(S)   272,021 243,391
Series 2004-12, Class 12A1,      
2.475%, 08/25/2034 (P)   376,795 329,922
Series 2004-25, Class 1A1,      
0.485%, 02/25/2035 (P)   158,148 148,228
Series 2004-25, Class 2A1,      
0.495%, 02/25/2035 (P)   195,694 177,663
Series 2005-HYB9, Class 5A1,      
2.376%, 02/20/2036 (P)   417,759 360,290
Series 2005-HYB9, Class 3A2A,      
2.313%, 02/20/2036 (P)   304,429 280,628
Credit Suisse First Boston      
Mortgage Securities Corp.      
Series 2003-AR18, Class 2A3,      
2.245%, 07/25/2033 (P)   12,130 12,157
Series 2003-AR20, Class 2A1,      
2.472%, 08/25/2033 (P)   109,245 108,828
Credit Suisse Mortgage Capital      
Certificates, Series 2010-UD1, Class A      
5.930%, 12/16/2049 (P)(S)   254,491 269,796

 

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Crusade Global Trust, Series 2005-2,      
Class A2      
2.813%, 08/14/2037 (P) AUD 1,244,182 $ 1,160,128
Darrowby NO 2 PLC, Series 2012-1,      
Class A      
2.263%, 02/20/2044 (P) GBP 1,301,282 2,200,146
Eurosail PLC, Series 2006-1X, Class A2C      
0.694%, 06/10/2044 (P)   1,880,951 3,025,069
First Flexible PLC, Series 7, Class A      
0.798%, 09/15/2033 (P)   238,515 392,198
First Horizon Mortgage Pass      
Through Trust, Series 2005-AR3,      
Class 2A1      
2.612%, 08/25/2035 (P) $ 82,305 77,555
First Republic Mortgage Loan Trust,      
Series 2001-FRB1, Class A      
0.505%, 11/15/2031 (P)   212,225 198,664
Fosse Master Issuer PLC, Series 2012-1A,      
Class 2B2      
2.658%, 10/18/2054 (P)(S) GBP 2,900,000 4,880,683
GMAC Mortgage Corp. Loan Trust,      
Series 2004-AR1, Class 22A      
2.879%, 06/25/2034 (P) $ 11,342 10,891
Great Hall Mortgages PLC      
Series 2006-1, Class A2B,      
0.373%, 06/18/2038 (P) EUR 1,374,650 1,734,835
Series 2007-1, Class A2A,      
0.680%, 03/18/2039 (P) GBP 1,301,697 2,051,004
Series 2007-1, Class A2B,      
0.353%, 03/18/2039 (P) EUR 1,513,601 1,889,549
GreenPoint Mortgage Pass-Through      
Certificates, Series 2003-1, Class A1      
2.795%, 10/25/2033 (P) $ 9,790 9,621
GS Mortgage Securities Corp. II,      
Series 2012-GCJ9, Class XA IO      
2.532%, 11/10/2045   3,420,770 428,366
GSR Mortgage Loan Trust, Series 2003-1,      
Class A2      
1.860%, 03/25/2033 (P)   51,788 51,186
HarborView Mortgage Loan Trust      
Series 2003-1, Class A,      
2.482%, 05/19/2033 (P)   119,291 120,191
Series 2005-4, Class 3A1,      
2.547%, 07/19/2035 (P)   28,227 26,313
Series 2006-1, Class 2A1A,      
0.396%, 03/19/2036 (P)   876,954 658,842
IndyMac Index Mortgage Loan Trust,      
Series 2004-AR11, Class 2A      
2.533%, 12/25/2034 (P)   52,859 49,091
JPMorgan Alternative Loan Trust,      
Series 2006-A6, Class 2A1      
5.500%, 11/25/2036 (P)   2,023 2,023
JPMorgan Mortgage Trust      
Series 2003-A2, Class 3A1,      
1.990%, 11/25/2033 (P)   74,920 75,026
Series 2006-A1, Class 3A2,      
2.619%, 02/25/2036 (P)   710,647 629,717
Series 2007-A1, Class 5A6,      
2.621%, 07/25/2035 (P)   238,564 218,806
Merrill Lynch Mortgage Investors Trust      
Series 2003-A2, Class 1A1,      
2.220%, 02/25/2033 (P)   79,193 76,192

 

The accompanying notes are an integral part of the financial statements. 100

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Merrill Lynch Mortgage      
Investors Trust (continued)      
Series 2005-2, Class 1A,      
1.572%, 10/25/2035 (P) $ 397,590 $ 392,127
Series 2005-A8, Class A3A2,      
0.405%, 08/25/2036 (P)   72,061 68,590
Series 2003-C, Class A1,      
0.815%, 06/25/2028 (P)   297,242 285,584
Merrill Lynch/Countrywide Commercial      
Mortgage Trust, Series 2007-5,      
Class A4      
5.378%, 08/12/2048   927,247 992,886
Merrill Lynch/Countrywide Commercial      
Mortgage Trust, Series 2007-8,      
Class A3      
6.079%, 08/12/2049 (P)   2,000,000 2,201,242
Morgan Stanley Capital I Trust,      
Series 2006-HQ9, Class A4FL      
0.304%, 07/12/2044 (P)   1,285,960 1,283,997
MRFC Mortgage Pass Through Trust,      
Series 2000-TBC3, Class A1      
0.595%, 12/15/2030 (P)   312,197 296,675
NCUA Guaranteed Notes Trust      
Series 2010-R1, Class 1A,      
0.607%, 10/07/2020 (P)   2,200,327 2,211,758
Series 2010-R2, Class 2A,      
0.627%, 11/05/2020 (P)   15,065,852 15,117,347
Newgate Funding PLC, Series 2007-3X,      
Class A1      
1.158%, 12/15/2050 (P) GBP 20,697 34,356
Puma Finance, Ltd.      
Series 2005-P11, Class BA,      
3.035%, 08/22/2037 (P) AUD 109,274 101,941
Series 2006-G5, Class A1,      
0.374%, 02/21/2038 (P)(S) $ 315,168 312,048
Residential Accredit Loans, Inc.      
Series 2006-QO6, Class A1,      
0.335%, 06/25/2046 (P)   1,549,960 710,418
Series 2007-QO2, Class A1,      
0.305%, 02/25/2047 (P)   333,731 196,711
Series 2006-QO3, Class A1,      
0.365%, 04/25/2046 (P)   971,248 486,609
Residential Asset Securitization Trust,      
Series 2006-R1, Class A2      
0.555%, 01/25/2046 (P)   377,495 203,125
Residential Funding Mortgage      
Securities I, Series 2005-SA4,      
Class 1A21      
2.965%, 09/25/2035 (P)   125,218 105,087
RMAC Securities PLC,      
Series 2006-NS1X, Class A2A      
0.685%, 06/12/2044 (P) GBP 811,809 1,267,681
Sequoia Mortgage Trust, Series 5, Class A      
0.856%, 10/19/2026 (P) $ 88,761 88,078
Structured Adjustable Rate      
Mortgage Loan Trust      
Series 2004-1, Class 4A1,      
2.477%, 02/25/2034 (P)   99,539 101,041
Series 2004-1, Class 4A2,      
2.477%, 02/25/2034 (P)   547,465 555,711
Series 2004-12, Class 7A1,      
2.473%, 09/25/2034 (P)   212,502 213,068

 

Global Bond Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Structured Adjustable Rate Mortgage      
Loan Trust (continued)      
Series 2004-19, Class 2A1,      
1.518%, 01/25/2035 (P) $ 549,353 $ 447,468
Series 2004-4, Class 3A2,      
2.456%, 04/25/2034 (P)   220,090 220,613
Structured Asset Mortgage      
Investments, Inc., Series 2006-AR3,      
Class 12A1      
0.375%, 05/25/2036 (P)   1,263,977 942,174
Structured Asset Securities Corp.,      
Series 2006-11, Class A1      
2.612%, 10/28/2035 (P)(S)   151,523 143,736
Swan Trust, Series 2010-1, Class A      
3.905%, 04/25/2041 (P) AUD 845,403 799,227
Thornburg Mortgage Securities Trust      
Series 2007-3, Class 2A1,      
1.405%, 06/25/2047 (P) $ 220,683 197,441
Series 2007-3, Class 3A1,      
5.750%, 06/25/2047 (P)   444,588 393,476
Series 2007-3, Class 4A1,      
5.750%, 06/25/2047 (P)   472,338 462,073
Torrens Trust, Series 2007-1, Class A      
3.048%, 10/19/2038 (P) AUD 493,443 456,741
WaMu Mortgage Pass-      
Through Certificates      
Series 2002-AR17, Class 1A,      
1.317%, 11/25/2042 (P) $ 191,247 187,333
Series 2003-AR5, Class A7,      
2.444%, 06/25/2033 (P)   54,445 55,271
Series 2005-AR13, Class A1A1,      
0.445%, 10/25/2045 (P)   111,104 105,925
Series 2005-AR2, Class 2A1A,      
0.465%, 01/25/2045 (P)   172,063 170,216
Series 2006-AR13, Class 2A,      
2.168%, 10/25/2046 (P)   1,954,176 1,830,083
Series 2006-AR17, Class 1A1A,      
0.927%, 12/25/2046 (P)   299,518 283,578
Series 2006-AR3, Class A1A,      
1.117%, 02/25/2046 (P)   640,737 608,111
Washington Mutual Alternative Mortgage      
Pass-Through Certificates,      
Series 2006-AR5, Class 3A      
1.057%, 07/25/2046 (P)   242,264 145,556
Wells Fargo Mortgage Backed      
Securities Trust, Series 2004-S,      
Class A1      
2.618%, 09/25/2034 (P)   109,312 111,892
 
      73,479,995
U.S. Government Agency - 1.3%      
Federal Home Loan Mortgage Corp.      
Series 4263, Class FB,      
0.555%, 11/15/2043 (P)   2,357,616 2,363,257
Series T-63, Class 1A1,      
1.322%, 02/25/2045 (P)   162,948 166,778
Federal National Mortgage Association      
Series 2003-W6, Class F,      
0.505%, 09/25/2042 (P)   293,393 290,575
Series 2004-W2, Class 5AF,      
0.505%, 03/25/2044 (P)   180,042 179,312
Series 2005-120, Class NF,      
0.255%, 01/25/2021 (P)   19,594 19,586

 

The accompanying notes are an integral part of the financial statements. 101

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Bond Fund (continued)      
  Shares or   
  Principal   
  Amount  Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal National Mortgage      
Association (continued)      
Series 2006-15, Class FC,      
0.285%, 03/25/2036 (P) $ 186,504 $ 176,471
Series 2006-16, Class FC,      
0.455%, 03/25/2036 (P) 742,121 745,867
Series 2006-5, Class 3A2,      
2.210%, 05/25/2035 (P) 284,837 292,827
Series 2010-136, Class FA,      
0.655%, 12/25/2040 (P) 1,689,412 1,698,391
Series 2011-53, Class FT,      
0.735%, 06/25/2041 (P) 2,156,163 2,169,964
 
      8,103,028
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $83,628,020)   $ 81,583,023
 
ASSET BACKED SECURITIES - 1.3%      
Access Group, Inc., Series 2008-1,      
Class A      
1.534%, 10/27/2025 (P) 1,296,467 1,305,299
Globaldrive Auto Receivables BV,      
Series 2011-AA, Class A      
0.839%, 04/20/2019 (P)(S) EUR  259,300 341,423
Jubilee CDO VI BV, Series VI-X,      
Class A1B      
0.710%, 09/20/2022 (P) 1,000,000 1,269,131
Long Beach Mortgage Loan Trust,      
Series 2004-4, Class 1A1      
0.715%, 10/25/2034 (P) $ 134,514 122,226
Magi Funding PLC, Series 2010-1A,      
Class A      
0.677%, 04/11/2021 (P)(S) EUR 489,691 639,815
Mercator CLO II PLC, Series X, Class A1      
0.433%, 02/18/2024 (P) 527,680 691,822
Mid-State Trust, Series 4, Class A      
8.330%, 04/01/2030 $ 455,355 461,617
Neuberger Berman CLO XII, Ltd.,      
Series 2012-12AR, Class A2R      
1.384%, 07/25/2023 (P)(S) 1,400,000 1,399,275
Penta CLO SA, Series 2007-1X, Class A1      
0.614%, 06/04/2024 (P) EUR 871,477 1,128,244
Race Point III CLO, Ltd., Series 2006-3,      
Class A      
0.494%, 04/15/2020 (P)(S) $ 156,085 155,726
SACO I Trust, Series 2005-10, Class 1A      
0.675%, 06/25/2036 (P) 136,630 218,040
SLM Student Loan Trust, Series 2003-6,      
Class A4      
0.431%, 12/17/2018 (P) 65,584 65,569
TOTAL ASSET BACKED SECURITIES (Cost $7,750,472) $ 7,798,187
 
COMMON STOCKS - 0.0%      
United States - 0.0%      
Rescap Liquidating Trust (I)   3,662 70,860
TOTAL COMMON STOCKS (Cost $24,352)   $ 70,860
 
PREFERRED SECURITIES - 0.0%      
United States - 0.0%      
Navient LLC, 4.177%   6,200 $ 151,528
TOTAL PREFERRED SECURITIES (Cost $69,750)   $ 151,528

 

Global Bond Fund (continued)      
  Shares or   
  Principal   
  Amount  Value
 
 
PURCHASED OPTIONS - 0.1%      
Put Options - 0.1%      
Over the Counter on 30 Year Interest Rate      
Swap. Receive a fixed rate of 3.450%      
and pay a floating rate based on 3-      
month LIBOR (Expiration Date:      
09/21/2015; Strike Rate: 3.450%;      
Counterparty: Bank of America NA) (I) 5,000,000 $ 195,630
Over the Counter on 30 Year Interest Rate      
Swap. Receive a fixed rate of 3.450%      
and pay a floating rate based on 3-      
month LIBOR (Expiration Date:      
09/21/2015; Strike Rate: 3.450%;      
Counterparty: Citibank NA) (I) 3,100,000 121,291
 
      316,921
TOTAL PURCHASED OPTIONS (Cost $659,811)   $ 316,921
 
ESCROW SHARES - 0.2%      
United States - 0.2%      
Lehman Brothers Holdings, Inc.      
5.625%, 01/24/2049 (I) 3,600,000 724,500
6.875%, 05/02/2018 (I) 4,200,000 855,750
TOTAL ESCROW SHARES (Cost $227,885)   $ 1,580,250
 
CERTIFICATE OF DEPOSIT - 1.3%      
Credit Suisse New York      
0.614%, 01/28/2016 $  4,600,000 $ 4,601,044
Intesa Sanpaolo SpA      
1.614%, 04/11/2016 (P) 3,200,000 3,229,501
TOTAL CERTIFICATE OF DEPOSIT (Cost $7,800,000) $ 7,830,545
 
SHORT-TERM INVESTMENTS - 7.9%      
Foreign Government - 4.8%      
Government of Mexico      
2.909%, 09/25/2014 * MXN  75,458,000 5,758,449
2.950%, 12/11/2014 * 159,000,000 12,058,065
2.994%, 12/24/2014 * 35,068,000 2,656,498
Republic of Greece      
1.739%, 11/14/2014 * EUR  5,200,000 6,809,227
1.788%, 09/19/2014 *   300,000 393,988
Slovenia Ministry of Finance Treasury Bill      
1.208%, 10/16/2014 * 1,300,000 1,707,351
 
      29,383,578
U.S. Government - 0.2%      
U.S. Treasury Bills      
0.046%, 10/30/2014 *  $ 420,000 419,983
0.047%, 11/06/2014 (D)*   310,000 309,986
0.047%, 02/26/2015 *   320,000 319,926
 
      1,049,895
U.S. Government Agency - 1.0%      
Federal National Mortgage Association      
Discount Notes      
0.085%, 01/12/2015 * 1,700,000 1,699,633
0.115%, 01/28/2015 * 4,500,000 4,498,907
 
      6,198,540

 

The accompanying notes are an integral part of the financial statements. 102

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Bond Fund (continued)      
    Shares or    
    Principal    
    Amount   Value
 
SHORT-TERM INVESTMENTS (continued)      
Repurchase Agreement - 1.9%        
Repurchase Agreement with BNP Paribas        
dated 08/29/2014 at 0.080% to be        
repurchased at $4,400,039 on        
09/02/2014, collateralized by        
$4,478,800 U.S. Treasury Notes,        
1.500% due 12/31/2018 (valued at        
$4,493,603, including interest) $ 4,400,000  $ 4,400,000
Repurchase Agreement with State        
Street Corp. dated 08/29/2014 at        
0.000% to be repurchased at $7,112,000        
on 09/02/2014, collateralized by        
$7,360,000 U.S. Treasury Notes,        
0.625% due 11/30/2017 (valued at        
$7,256,886, including interest).   7,112,000   7,112,000
 
        11,512,000
TOTAL SHORT-TERM INVESTMENTS (Cost $48,399,830) $ 48,144,013
Total Investments (Global Bond Fund)        
(Cost $658,937,723) - 109.6%     $ 666,906,487
Other assets and liabilities, net - (9.6%)       (58,510,308)
TOTAL NET ASSETS - 100.0%     $ 608,396,179
 
SALE COMMITMENTS OUTSTANDING - (7.8)%    
United States - (7.8)%        
Federal National Mortgage Association        
4.000%, TBA (C)   (1,000,000)   (1,055,906)
4.500%, TBA (C)   (28,000,000)   (30,158,752)
4.500%, TBA (C)   (15,000,000)   (16,196,317)
TOTAL SALE COMMITMENTS        
OUTSTANDING (Cost $(47,359,531))     $ (47,410,975)
 
 
 
Global Equity Fund        
    Shares or    
    Principal    
    Amount   Value
 
COMMON STOCKS - 96.3%        
Australia - 3.4%        
Amcor, Ltd.   1,542,638 $ 16,470,605
Bermuda - 1.2%        
Catlin Group, Ltd.   688,588   5,879,243
France - 5.6%        
Safran SA   113,324   7,430,542
Sanofi   89,533   9,812,134
Total SA   147,918   9,760,886
 
        27,003,562
Germany - 1.7%        
Deutsche Boerse AG   114,235   8,132,817
Hong Kong - 1.4%        
Hutchison Whampoa, Ltd.   527,000   6,878,796
Ireland - 3.0%        
Accenture PLC, Class A   88,614   7,183,051
Experian PLC   410,779   7,150,497
 
        14,333,548
Italy - 1.5%        
Eni SpA   290,035   7,242,469

 

Global Equity Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Japan - 9.3%    
Bridgestone Corp. 344,400 $ 11,828,702
Honda Motor Company, Ltd. 280,600 9,525,311
Japan Tobacco, Inc. 337,400 11,560,523
Nippon Telegraph & Telephone Corp. 180,300 12,110,802
 
    45,025,338
Luxembourg - 1.7%    
SES SA 228,179 8,446,181
Netherlands - 4.6%    
Akzo Nobel NV 101,772 7,195,840
Heineken NV (L) 92,337 7,029,992
Koninklijke Ahold NV 468,870 8,010,510
 
    22,236,342
Norway - 1.5%    
Statoil ASA 254,728 7,165,442
Singapore - 1.2%    
ComfortDelGro Corp., Ltd. 2,985,920 6,000,149
Switzerland - 4.9%    
Novartis AG 107,774 9,683,106
Roche Holding AG 32,610 9,524,009
Tyco International, Ltd. 106,227 4,739,849
 
    23,946,964
United Kingdom - 7.8%    
Aon PLC 82,692 7,207,435
British American Tobacco PLC 219,955 13,004,464
HSBC Holdings PLC 881,054 9,523,479
Pearson PLC 440,042 8,120,012
 
    37,855,390
United States - 47.5%    
Apple, Inc. 107,274 10,995,585
Arthur J. Gallagher & Company 179,554 8,480,335
Baxter International, Inc. 94,526 7,087,559
Chevron Corp. 74,579 9,654,252
Eaton Corp. PLC 188,797 13,179,919
Honeywell International, Inc. 75,064 7,148,345
Huntington Bancshares, Inc. 730,250 7,189,311
Johnson & Johnson 150,671 15,629,103
JPMorgan Chase & Company 185,638 11,036,179
Macy’s, Inc. 201,607 12,558,100
Mattel, Inc. 201,961 6,965,635
Microsoft Corp. 210,150 9,547,115
Mondelez International, Inc., Class A 196,885 7,125,268
Northern Trust Corp. 70,560 4,893,336
Philip Morris International, Inc. 167,345 14,321,385
Procter & Gamble Company 129,743 10,782,941
QUALCOMM, Inc. 157,961 12,020,832
Raytheon Company 75,189 7,243,708
Samsonite International SA 2,263,800 7,815,211
United Technologies Corp. 131,802 14,231,980
Verizon Communications, Inc. 245,885 12,249,991
Viacom, Inc., Class B 160,208 13,000,879
Wells Fargo & Company 139,695 7,185,911
 
    230,342,880
TOTAL COMMON STOCKS (Cost $432,595,846) $ 466,959,726
 
SECURITIES LENDING COLLATERAL - 1.1%    
John Hancock Collateral    
Investment Trust, 0.0970% (W)(Y) 525,652 5,260,253
TOTAL SECURITIES LENDING    
COLLATERAL (Cost $5,260,200) $ 5,260,253

 

The accompanying notes are an integral part of the financial statements. 103

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Equity Fund (continued)    
  Shares or   
   Principal  
  Amount  Value
 
 
SHORT-TERM INVESTMENTS - 3.2%      
Money Market Funds - 3.2%      
State Street Institutional Treasury Money      
Market Fund, 0.0000% (Y) 15,898,349 15,898,349
TOTAL SHORT-TERM INVESTMENTS (Cost $15,898,349) $ 15,898,349
Total Investments (Global Equity Fund)      
(Cost $453,754,395) - 100.6%   $ 488,118,328
Other assets and liabilities, net - (0.6%)     (3,119,348)
TOTAL NET ASSETS - 100.0%   $ 484,998,980
 
 
 
Global Real Estate Fund      
  Shares or   
  Principal   
  Amount  Value
 
 
COMMON STOCKS - 99.1%      
Australia - 6.3%      
Dexus Property Group 356,465 $ 401,428
Federation Centres, Ltd. 407,458 1,013,372
Goodman Group 455,607 2,376,941
Investa Office Fund 404,550 1,387,538
Mirvac Group 1,581,380 2,713,312
Scentre Group (I) 1,768,221 5,664,406
Stockland 949,462 3,772,656
The GPT Group 335,534 1,250,987
Westfield Corp. (I) 414,452 2,949,530
 
      21,530,170
Canada - 3.5%      
Allied Properties Real Estate Investment Trust 50,341 1,652,877
Boardwalk Real Estate Investment Trust 27,386 1,734,388
Chartwell Retirement Residences 219,302 2,260,991
First Capital Realty, Inc. 81,666 1,451,106
H&R Real Estate Investment Trust 93,847 1,996,396
RioCan Real Estate Investment Trust 108,349 2,699,507
 
      11,795,265
Finland - 0.5%      
Citycon OYJ 470,500 1,733,303
France - 2.8%      
ICADE 10,000 930,080
Klepierre 65,900 3,139,801
Societe Fonciere Lyonnaise SA 10,500 528,430
Unibail-Rodamco SE 18,290 4,915,162
 
      9,513,473
Germany - 1.8%      
Alstria Office REIT AG (I) 78,600 1,052,331
Deutsche Annington Immobilien SE 61,800 1,857,619
Deutsche Wohnen AG 79,900 1,805,659
DIC Asset AG 35,000 315,349
LEG Immobilien AG (I) 13,800 1,029,440
 
      6,060,398
Hong Kong - 7.5%      
China Overseas Land & Investment, Ltd. 62,000 174,296
Hang Lung Properties, Ltd. 598,000 1,979,667
Henderson Land Development Company, Ltd. 357,770 2,371,049
Hong Kong Land Holdings, Ltd. 501,000 3,432,615
Hysan Development Company, Ltd. 132,000 647,321
Kerry Properties, Ltd. 174,000 645,304
New World Development Company, Ltd. 2,390,466 3,022,645
Sun Hung Kai Properties, Ltd. 371,173 5,634,862

 

Global Real Estate Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Hong Kong (continued)    
The Link REIT 682,500 $ 4,053,623
The Wharf Holdings, Ltd. 449,900 3,523,365
 
    25,484,747
Ireland - 0.3%    
Hibernia REIT PLC (I) 720,000 1,059,646
Japan - 12.7%    
Global One Real Estate Investment Corp. 237 698,719
GLP J-REIT 595 711,696
Japan Real Estate Investment Corp. 439 2,415,324
Japan Retail Fund Investment Corp. 301 631,355
Mitsubishi Estate Company, Ltd. 454,000 10,499,560
Mitsui Fudosan Company, Ltd. 258,000 8,232,951
Mori Hills REIT Investment Corp. 602 872,631
Nippon Accommodations Fund, Inc. 415 1,508,016
Nippon Building Fund, Inc. 514 2,862,306
Nomura Real Estate Master Fund, Inc. 1,421 1,784,783
Nomura Real Estate Office Fund, Inc. 518 2,400,165
NTT Urban Development Corp. 156,300 1,792,288
Premier Investment Corp. 596 2,631,636
Sumitomo Realty &    
Development Company, Ltd. 36,000 1,395,924
Tokyo Tatemono Company, Ltd. 350,000 2,999,115
Tokyu Fudosan Holdings Corp. 188,300 1,445,949
 
    42,882,418
Jersey, Channel Islands - 0.5%    
LXB Retail Properties PLC (I) 703,370 1,544,212
Luxembourg - 0.7%    
GAGFAH SA (I) 113,900 2,231,358
Malta - 0.0%    
BGP Holdings PLC (I) 4,606,148 6
Netherlands - 0.5%    
Wereldhave NV 18,850 1,736,081
Norway - 0.4%    
Norwegian Property ASA (I) 816,735 1,298,880
Singapore - 3.5%    
Ascendas Real Estate Investment Trust 638,000 1,199,461
CapitaCommercial Trust 783,000 1,064,792
CapitaLand, Ltd. 1,150,500 3,056,434
CapitaMall Trust 591,000 945,836
City Developments, Ltd. 58,000 465,456
Global Logistic Properties, Ltd. 1,265,000 2,886,035
Mapletree Industrial Trust 637,000 734,287
Suntec Real Estate Investment Trust 1,050,000 1,533,456
 
    11,885,757
Spain - 0.4%    
Lar Espana Real Estate Socim SA (I) 111,392 1,348,114
Sweden - 0.6%    
Fabege AB 106,500 1,401,161
Hufvudstaden AB, A Shares 60,000 797,673
 
    2,198,834
Switzerland - 0.7%    
PSP Swiss Property AG (I) 25,700 2,324,104
United Kingdom - 6.3%    
British Land Company PLC 426,100 5,174,311
Camper & Nicholsons    
Marina Investments, Ltd. (I) 1,200,000 204,199
Capital & Counties Properties PLC 324,700 1,804,942
Derwent London PLC 20,500 950,261

 

The accompanying notes are an integral part of the financial statements. 104

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Global Real Estate Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
United Kingdom (continued)    
Great Portland Estates PLC 180,500 $ 1,969,622
Hammerson PLC 331,500 3,346,488
Land Securities Group PLC 160,300 2,883,922
NewRiver Retail, Ltd. 165,000 846,793
Quintain Estates & Development PLC (I) 675,000 993,928
Safestore Holdings PLC 205,000 731,053
St. Modwen Properties PLC 177,000 1,091,825
The Unite Group PLC 202,000 1,470,625
 
    21,467,969
United States - 50.1%    
Acadia Realty Trust 45,325 1,306,267
Alexandria Real Estate Equities, Inc. 43,796 3,462,512
American Campus Communities, Inc. 55,628 2,197,862
American Realty Capital Properties, Inc. 132,050 1,737,778
American Residential Properties, Inc. (I) 37,951 720,310
Apartment Investment & Management    
Company, Class A 96,200 3,296,774
AvalonBay Communities, Inc. 47,725 7,354,423
Boston Properties, Inc. 56,373 6,844,810
Brandywine Realty Trust 126,455 2,025,809
Chesapeake Lodging Trust 52,363 1,613,304
CubeSmart 150,821 2,805,271
DDR Corp. 153,091 2,789,318
DiamondRock Hospitality Company 137,951 1,837,507
Digital Realty Trust, Inc. 39,009 2,545,337
Douglas Emmett, Inc. 151,408 4,325,727
Duke Realty Corp. 239,195 4,449,027
Equity Residential 119,854 7,966,695
Essex Property Trust, Inc. 24,629 4,764,480
Extra Space Storage, Inc. 60,670 3,197,309
Federal Realty Investment Trust 36,332 4,533,507
First Industrial Realty Trust, Inc. 17,194 312,931
General Growth Properties, Inc. 266,991 6,559,969
Glimcher Realty Trust 114,343 1,284,072
HCP, Inc. 194,817 8,441,421
Health Care REIT, Inc. 114,333 7,726,624
Healthcare Realty Trust, Inc. 62,876 1,569,385
Home Properties, Inc. 16,229 1,042,226
Host Hotels & Resorts, Inc. 155,532 3,549,240
Hudson Pacific Properties, Inc. 61,269 1,645,073
Lexington Realty Trust 245,441 2,670,398
Mack-Cali Realty Corp. 25,910 547,737
National Retail Properties, Inc. 87,301 3,242,359
Pebblebrook Hotel Trust 33,156 1,284,463
Post Properties, Inc. 38,335 2,109,192
Prologis, Inc. 170,954 6,998,857
Public Storage 24,197 4,238,830
Regency Centers Corp. 60,034 3,430,343
Retail Properties of America, Inc., Class A 88,933 1,406,920
RLJ Lodging Trust 67,767 2,020,134
Senior Housing Properties Trust 102,071 2,381,316
Simon Property Group, Inc. 106,450 18,099,694
SL Green Realty Corp. 40,085 4,383,295
Spirit Realty Capital, Inc. 310,331 3,665,009
Strategic Hotels & Resorts, Inc. (I) 147,154 1,748,190
The Macerich Company 30,829 2,012,825
Ventas, Inc. 36,055 2,371,698
Vornado Realty Trust 48,576 5,142,741
 
    169,658,969
TOTAL COMMON STOCKS (Cost $259,487,270) $ 335,753,704

 

Global Real Estate Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
WARRANTS - 0.0%    
Sun Hung Kai Properties, Ltd. (Expiration    
Date: 04/22/2016; Strike Price:    
HKD 98.60) (I) 36,764 90,605
TOTAL WARRANTS (Cost $0) $ 90,605
Total Investments (Global Real Estate Fund)    
(Cost $259,487,270) - 99.1% $ 335,844,309
Other assets and liabilities, net - 0.9%   3,068,368
 
TOTAL NET ASSETS - 100.0% $ 338,912,677
 
 
 
Health Sciences Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 98.7%    
Consumer Staples - 2.4%    
Food & Staples Retailing - 2.4%    
CP ALL PCL 490,600 $ 729,602
CVS Health Corp. 47,000 3,734,150
Raia Drogasil SA 85,845 836,016
Rite Aid Corp. (I) 1,375,000 8,552,500
Walgreen Company 23,200 1,404,062
 
    15,256,330
 
    15,256,330
Health Care - 92.9%    
Biotechnology - 37.0%    
Abcam PLC 180,093 1,268,726
ACADIA Pharmaceuticals, Inc. (I) 140,900 3,378,782
Acceleron Pharma, Inc. (I) 62,717 1,685,206
Acorda Therapeutics, Inc. (I) 9,500 309,510
Alexion Pharmaceuticals, Inc. (I) 172,100 29,134,809
Alkermes PLC (I) 193,000 8,632,890
Alnylam Pharmaceuticals, Inc. (I) 17,000 1,184,390
Array BioPharma, Inc. (I) 399,200 1,576,840
Avalanche Biotechnologies, Inc. (I) 9,500 281,485
Biogen Idec, Inc. (I) 61,100 20,959,744
BioMarin Pharmaceutical, Inc. (I) 59,100 4,209,102
Cara Therapeutics, Inc. (I) 400 4,088
Celgene Corp. (I) 70,300 6,679,906
Celladon Corp. (I) 49,800 574,194
Chimerix, Inc. (I) 43,900 1,121,206
Clovis Oncology, Inc. (I) 29,469 1,401,546
Dyax Corp. (I) 95,031 970,267
Epizyme, Inc. (I) 22,800 786,372
Exelixis, Inc. (I) 383,300 1,586,862
Five Prime Therapeutics, Inc. (I) 2,500 29,075
Gilead Sciences, Inc. (D)(I) 325,100 34,974,258
Immune Design Corp. (I) 18,400 220,984
Incyte Corp. (I) 220,700 11,961,940
Insmed, Inc. (I) 19,700 274,421
Intercept Pharmaceuticals, Inc. (D)(I) 5,300 1,535,516
InterMune, Inc. (D)(I) 239,600 17,598,620
Intrexon Corp. (I) 9,600 194,688
Ironwood Pharmaceuticals, Inc. (I) 24,600 318,324
Isis Pharmaceuticals, Inc. (I) 52,700 2,148,052
Neurocrine Biosciences, Inc. (I) 243,100 3,964,961
Novavax, Inc. (I) 271,700 1,274,273
Ophthotech Corp. (I) 25,400 989,584
Orexigen Therapeutics, Inc. (I) 276,400 1,575,480

 

The accompanying notes are an integral part of the financial statements. 105

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Health Sciences Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Biotechnology (continued)    
Otonomy, Inc. (I) 13,200 $ 262,944
Pharmacyclics, Inc. (D)(I) 133,200 16,568,748
Portola Pharmaceuticals, Inc. (I) 14,600 407,194
Prothena Corp. PLC (I) 72,887 1,669,112
Puma Biotechnology, Inc. (D)(I) 70,656 18,406,595
Regeneron Pharmaceuticals, Inc. (I) 24,975 8,754,237
Sophiris Bio, Inc. (I) 97,486 294,203
Stemline Therapeutics, Inc. (I) 2,462 27,771
Sunesis Pharmaceuticals, Inc. (I) 128,400 961,716
TESARO, Inc. (I) 63,317 1,871,651
Ultragenyx Pharmaceutical, Inc. (I) 25,058 1,337,095
United Therapeutics Corp. (I) 23,906 2,816,844
Vanda Pharmaceuticals, Inc. (I) 131,688 1,704,043
Versartis, Inc. (I) 11,800 271,400
Vertex Pharmaceuticals, Inc. (D)(I) 124,400 11,640,108
 
    229,799,762
Health Care Equipment & Supplies - 11.0%    
Align Technology, Inc. (I) 27,900 1,519,434
Becton, Dickinson and Company 62,500 7,323,125
CareFusion Corp. (I) 107,900 4,953,689
Covidien PLC 91,400 7,936,262
DENTSPLY International, Inc. 89,100 4,250,516
DexCom, Inc. (I) 29,200 1,290,640
EnteroMedics, Inc. (I) 103,200 150,672
GenMark Diagnostics, Inc. (I) 58,600 629,950
GN Store Nord A/S 143,045 3,262,690
HeartWare International, Inc. (I) 13,300 1,078,630
IDEXX Laboratories, Inc. (I) 27,400 3,396,778
Intuitive Surgical, Inc. (I) 22,000 10,340,220
Oxford Immunotec Global PLC (I) 23,300 327,598
Sirona Dental Systems, Inc. (I) 94,100 7,670,091
St. Jude Medical, Inc. 30,200 1,980,818
The Cooper Companies, Inc. (D) 45,100 7,352,653
Thoratec Corp. (I) 89,971 2,249,275
Tornier NV (I) 92,800 2,006,336
Volcano Corp. (I) 15,369 191,190
 
    67,910,567
Health Care Providers & Services - 20.5%    
Acadia Healthcare Company, Inc. (I) 24,700 1,264,887
Adeptus Health, Inc., Class A (I) 12,400 350,796
Aetna, Inc. 239,600 19,678,348
Air Methods Corp. (I) 55,287 3,243,135
Arseus NV 15,933 867,932
Cardinal Health, Inc. 146,100 10,767,570
Centene Corp. (I) 10,700 835,991
Community Health Systems, Inc. (I) 31,500 1,709,820
DaVita HealthCare Partners, Inc. (I) 36,500 2,725,820
Envision Healthcare Holdings, Inc. (I) 18,600 680,016
HCA Holdings, Inc. (I) 90,400 6,311,728
HealthEquity, Inc. (I) 9,700 187,986
Henry Schein, Inc. (I) 36,900 4,416,561
Humana, Inc. 110,800 14,264,392
LifePoint Hospitals, Inc. (I) 2,000 149,600
McKesson Corp. 105,300 20,536,659
Mediclinic International, Ltd. 98,402 853,302
MEDNAX, Inc. (I) 45,400 2,599,150
MWI Veterinary Supply, Inc. (I) 6,900 980,145
Odontoprev SA 164,600 717,666
Team Health Holdings, Inc. (I) 45,300 2,650,956
UnitedHealth Group, Inc. 201,800 17,492,024
Universal Health Services, Inc., Class B 74,000 8,468,560
WellCare Health Plans, Inc. (I) 27,100 1,784,806

 

Health Sciences Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Health Care Providers & Services (continued)    
WellPoint, Inc. 32,100 $ 3,739,971
 
    127,277,821
Health Care Technology - 1.1%    
athenahealth, Inc. (I) 28,900 4,174,316
Castlight Health, Inc. (I) 59,286 702,022
Castlight Health, Inc., B Shares (I) 17,100 203,661
HMS Holdings Corp. (I) 33,700 770,382
Veeva Systems, Inc., Class A (I) 36,900 1,105,893
 
    6,956,274
Life Sciences Tools & Services - 4.3%    
Agilent Technologies, Inc. 279,334 15,966,731
Bruker Corp. (I) 91,100 1,827,466
Covance, Inc. (I) 37,100 3,075,590
Illumina, Inc. (I) 7,100 1,273,456
Mettler-Toledo International, Inc. (I) 7,000 1,893,360
Thermo Fisher Scientific, Inc. 19,600 2,356,116
 
    26,392,719
Pharmaceuticals - 19.0%    
AbbVie, Inc. 159,000 8,789,520
Achaogen, Inc. (I) 18,900 179,739
Actavis PLC (I) 80,675 18,311,612
Allergan, Inc. (D) 103,700 16,973,616
Aspen Pharmacare Holdings, Ltd. 97,789 2,807,323
Astellas Pharma, Inc. 117,500 1,694,362
AVANIR Pharmaceuticals, Inc., Class A (I) 528,572 3,287,718
Bristol-Myers Squibb Company 58,000 2,937,700
Catalent, Inc. (I) 44,700 961,050
China Medical System Holdings, Ltd. 1,198,100 1,735,087
Eli Lilly & Company 145,100 9,222,556
Horizon Pharma, Inc. (I) 41,800 430,540
Jazz Pharmaceuticals PLC (I) 13,900 2,264,588
Mallinckrodt PLC (I) 19,683 1,603,968
MediWound, Ltd. (I) 12,300 89,790
Merck & Company, Inc. 56,000 3,366,160
Natco Pharma, Ltd. 14,945 298,108
Novartis AG 15,553 1,397,381
Novartis AG, ADR 16,200 1,455,408
Pacira Pharmaceuticals, Inc. (I) 83,800 9,072,188
Supernus Pharmaceuticals, Inc. (I) 67,600 612,118
Takeda Pharmaceutical Company, Ltd. 55,800 2,549,155
Teva Pharmaceutical Industries, Ltd., ADR 132,200 6,943,144
The Medicines Company (I) 81,600 2,089,776
Valeant Pharmaceuticals International, Inc. (I) 141,600 16,609,680
Zeneca, Inc. (I) 33,315 59,967
Zoetis, Inc. 47,800 1,694,032
ZS Pharma, Inc. (I) 9,700 390,813
 
    117,827,099
 
    576,164,242
Industrials - 2.8%    
Industrial Conglomerates - 2.4%    
Danaher Corp. 192,300 14,732,103
Professional Services - 0.4%    
The Advisory Board Company (I) 49,430 2,451,728
 
    17,183,831
Information Technology - 0.6%    
Electronic Equipment, Instruments & Components - 0.6%  
FEI Company 46,900 3,941,476
TOTAL COMMON STOCKS (Cost $390,818,933) $ 612,545,879

 

The accompanying notes are an integral part of the financial statements. 106

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Health Sciences Fund (continued)    
    Shares or    
    Principal    
    Amount   Value
 
PREFERRED SECURITIES - 0.4%        
Health Care - 0.4%        
Avalanche Biotechnologies (I)   31,616   877,334
Bellicum Pharmaceuticals, Inc. (I)   41,506   226,208
Calithera Biosciences, Inc. (I)(R)   924,549   161,981
Diplomat Pharmacy, Inc., Series A (I)(R)    7 996,240
Spark Therapeutics, Inc. (I)(R)   94,307   151,834
 
        2,413,597
Information Technology - 0.0%        
Doximity, Inc. (I)(R)   63,738   307,268
TOTAL PREFERRED SECURITIES (Cost $2,081,599) $ 2,720,865
 
CONVERTIBLE BONDS - 0.0%        
Health Care - 0.0%        
HeartWare International, Inc.        
3.500%, 12/15/2017 $ 100,000 $ 111,188
TOTAL CONVERTIBLE BONDS (Cost $100,948)   $ 111,188
 
RIGHTS - 0.0%        
Wright Medical Group, Inc. (Expiration        
Date: 01/02/2024) (I)(N)   19,300 30,880
TOTAL RIGHTS (Cost $48,250)     $ 30,880
 
SHORT-TERM INVESTMENTS - 0.6%        
Money Market Funds - 0.6%        
State Street Institutional U.S. Government        
Money Market Fund, 0.0000% (Y)   1,976,087 1,976,087
T. Rowe Price Prime Reserve Investment        
Fund, 0.0575% (Y)   1,452,946 1,452,946
TOTAL SHORT-TERM INVESTMENTS (Cost $3,429,033) $ 3,429,033
Total Investments (Health Sciences Fund)      
(Cost $396,478,763) - 99.7%     $ 618,837,845
Other assets and liabilities, net - 0.3%       1,589,475
TOTAL NET ASSETS - 100.0%     $ 620,427,320
 
 
 
High Yield Fund        
    Shares or    
    Principal    
    Amount   Value
 
FOREIGN GOVERNMENT        
OBLIGATIONS - 1.2%        
Argentina - 0.1%        
Republic of Argentina        
7.000%, 10/03/2015 $ 530,000 $ 501,910
Brazil - 0.4%        
Federative Republic of Brazil        
10.000%, 01/01/2017 BRL 8,794,000   3,889,949
Mexico - 0.4%        
Government of Mexico        
6.500%, 06/09/2022 MXN 41,386,000   3,354,178
Venezuela - 0.3%        
Republic of Venezuela        
5.750%, 02/26/2016 $ 1,737,000   1,592,829
7.650%, 04/21/2025   949,000   661,928
8.500%, 10/08/2014   339,000   336,966
9.375%, 01/13/2034   568,000   430,260

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
   
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Venezuela (continued)      
Republic of Venezuela (continued)      
12.093%, 04/15/2020 (Z) $ 305,000 $ 67,100
 
      3,089,083
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $12,239,108)   $ 10,835,120
 
CORPORATE BONDS - 88.1%      
Consumer Discretionary - 15.0%      
24 Hour Holdings III LLC      
8.000%, 06/01/2022 (S)   1,420,000 1,377,400
Altice SA      
7.750%, 05/15/2022 (S)   2,180,000 2,316,251
American Greetings Corp.      
7.375%, 12/01/2021   40,000 42,500
Bossier Casino Venture Holdco, Inc.      
11.000%, 02/09/2018   575,162 572,657
Bossier Casino Venture Holdco, Inc., PIK      
14.000%, 02/09/2018 (S)   2,974,962 2,924,711
Burger King Capital Holdings LLC      
(0.000% to 04/15/16, then 11.000%      
thereafter)      
04/15/2019 (S)   1,020,000 948,600
Caesars Entertainment Operating      
Company, Inc.      
11.250%, 06/01/2017   810,000 666,225
Caesars Entertainment Resort      
Properties LLC      
8.000%, 10/01/2020 (S)   2,850,000 2,828,625
Caesars Entertainment Resort      
Properties LLC      
11.000%, 10/01/2021 (S)   3,800,000 3,852,249
Carmike Cinemas, Inc.      
7.375%, 05/15/2019   1,010,000 1,087,013
Carrols Restaurant Group, Inc.      
11.250%, 05/15/2018   2,000,000 2,190,000
CCO Holdings LLC      
8.125%, 04/30/2020   2,500,000 2,681,250
CEC Entertainment, Inc.      
8.000%, 02/15/2022 (S)   1,300,000 1,319,500
Choctaw Resort Development Enterprise      
7.250%, 11/15/2019 (S)   683,000 677,878
Chrysler Group LLC      
8.250%, 06/15/2021   1,200,000 1,341,000
Clear Channel Worldwide Holdings, Inc.      
6.500%, 11/15/2022   840,000 894,600
CSC Holdings LLC      
6.750%, 11/15/2021   2,250,000 2,475,000
CST Brands, Inc.      
5.000%, 05/01/2023   1,780,000 1,780,000
CTP Transportation Products LLC      
8.250%, 12/15/2019 (S)   1,690,000 1,820,975
DISH DBS Corp.      
5.875%, 07/15/2022   2,000,000 2,122,400
6.750%, 06/01/2021   1,035,000 1,157,855
7.875%, 09/01/2019   950,000 1,102,000
Downstream Development Authority of      
the Quapaw Tribe of Oklahoma      
10.500%, 07/01/2019 (S)   2,000,000 2,120,000
Dufry Finance SCA      
5.500%, 10/15/2020 (S)   1,070,000 1,112,854
Edcon Pty, Ltd.      
9.500%, 03/01/2018 (S)   1,970,000 1,851,800

 

The accompanying notes are an integral part of the financial statements. 107

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Empire Today LLC      
11.375%, 02/01/2017 (S) $ 1,550,000 $ 1,561,625
Enterprise Inns PLC      
6.500%, 12/06/2018 GBP 660,000 1,170,097
Fontainebleau Las Vegas Holdings LLC      
10.250%, 06/15/2015 (H)(S) $ 3,000,000 30,000
Gibson Brands, Inc.      
8.875%, 08/01/2018 (S)   2,900,000 2,929,000
Greektown Holdings LLC      
8.875%, 03/15/2019 (S)   1,740,000 1,783,500
Guitar Center, Inc.      
9.625%, 04/15/2020 (S)   6,240,000 5,226,000
iHeartCommunications, Inc.      
10.000%, 01/15/2018   2,370,000 2,210,025
Interactive Data Corp.      
5.875%, 04/15/2019 (S)   1,750,000 1,743,438
Landry’s Holdings II, Inc.      
10.250%, 01/01/2018 (S)   2,500,000 2,606,250
Landry’s, Inc.      
9.375%, 05/01/2020 (S)   3,500,000 3,762,500
LKQ Corp.      
4.750%, 05/15/2023   4,000,000 3,910,000
Marstons Issuer PLC (5.641% to      
07/15/2019, then 3 month      
LIBOR + 2.550%)      
07/15/2035 GBP 380,000 602,469
MCE Finance, Ltd.      
5.000%, 02/15/2021 (S) $ 3,000,000 2,985,000
MDC Partners, Inc.      
6.750%, 04/01/2020 (S)   2,520,000 2,633,400
Medianews Group, Inc.      
12.000%, 12/31/2018   1,800,000 1,831,146
Modular Space Corp.      
10.250%, 01/31/2019 (S)   3,240,000 3,361,500
Monitronics International, Inc.      
9.125%, 04/01/2020   4,213,000 4,507,910
Murphy Oil USA, Inc.      
6.000%, 08/15/2023   2,190,000 2,321,400
Neiman Marcus Group, Ltd., Inc., PIK      
8.750%, 10/15/2021 (S)   2,000,000 2,175,000
New Cotai LLC, PIK      
10.625%, 05/01/2019 (S)   4,910,205 5,695,838
Numericable Group SA      
6.000%, 05/15/2022 (S)   2,800,000 2,884,000
6.250%, 05/15/2024 (S)   1,080,000 1,113,750
Polish Television Holding BV, PIK      
11.000%, 01/15/2021 (S) EUR 580,000 912,985
Regal Entertainment Group      
5.750%, 03/15/2022 $ 1,140,000 1,168,500
Schaeffler Holding Finance BV, PIK      
6.875%, 08/15/2018 (S) EUR 1,720,000 2,382,034
Service Corp. International      
7.500%, 04/01/2027 $ 1,500,000 1,653,750
Seven Seas Cruises S. de R.L. LLC      
9.125%, 05/15/2019   3,000,000 3,240,000
Sinclair Television Group, Inc.      
5.375%, 04/01/2021   1,540,000 1,570,800
Spencer Spirit Holdings, Inc., PIK      
9.000%, 05/01/2018 (S)   3,845,000 3,902,675
Standard Pacific Corp.      
6.250%, 12/15/2021   2,500,000 2,650,000
Studio City Finance, Ltd.      
8.500%, 12/01/2020 (S)   650,000 715,000

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Taylor Morrison Communities, Inc.      
5.250%, 04/15/2021 (S) $ 970,000 $ 979,700
7.750%, 04/15/2020 (S)   662,000 716,615
The William Carter Company      
5.250%, 08/15/2021   1,650,000 1,724,250
Toll Brothers Finance Corp.      
6.750%, 11/01/2019   480,000 548,400
TVN Finance Corp. III AB      
7.375%, 12/15/2020 (S) EUR 1,233,000 1,794,261
Univision Communications, Inc.      
6.750%, 09/15/2022 (S) $ 500,000 548,750
6.875%, 05/15/2019 (S)   2,000,000 2,120,000
8.500%, 05/15/2021 (S)   2,000,000 2,190,000
Virgin Media Finance PLC      
6.375%, 04/15/2023 (S)   2,780,000 2,960,700
Virgin Media Secured Finance PLC      
5.500%, 01/15/2025 (S)   1,000,000 1,030,000
William Lyon Homes, Inc.      
5.750%, 04/15/2019   1,000,000 1,010,000
8.500%, 11/15/2020   2,840,000 3,138,200
WMG Acquisition Corp.      
6.750%, 04/15/2022 (S)   3,000,000 2,970,000
Woodside Homes Company LLC      
6.750%, 12/15/2021 (S)   3,770,000 3,798,275
 
      142,032,086
Consumer Staples - 5.1%      
Alliance One International, Inc.      
9.875%, 07/15/2021   3,000,000 3,000,000
Beverages & More, Inc.      
10.000%, 11/15/2018 (S)   3,390,000 3,237,450
Carolina Beverage Group LLC      
10.625%, 08/01/2018 (S)   1,990,000 2,029,800
Century Intermediate Holding Company 2,      
PIK      
9.750%, 02/15/2019 (S)   3,560,000 3,791,400
Constellation Brands, Inc.      
4.250%, 05/01/2023   2,012,000 2,032,120
Crestview DS Merger Sub II, Inc.      
10.000%, 09/01/2021   2,400,000 2,712,000
Dole Food Company, Inc.      
7.250%, 05/01/2019 (S)   2,500,000 2,518,750
First Quality Finance Company, Inc.      
4.625%, 05/15/2021 (S)   1,580,000 1,497,050
Hearthside Group Holdings LLC      
6.500%, 05/01/2022 (S)   3,000,000 2,992,500
HJ Heinz Company      
4.250%, 10/15/2020   2,380,000 2,412,725
Hypermarcas SA      
6.500%, 04/20/2021 (S)   2,250,000 2,427,750
Lantheus Medical Imaging, Inc.      
9.750%, 05/15/2017   5,490,000 5,558,625
Pactiv LLC      
7.950%, 12/15/2025   3,400,000 3,663,500
8.375%, 04/15/2027   1,170,000 1,260,675
Reynolds Group Issuer, Inc.      
5.750%, 10/15/2020   1,500,000 1,567,500
Simmons Foods, Inc.      
10.500%, 11/01/2017 (S)   4,000,000 4,250,000
Spectrum Brands, Inc.      
6.375%, 11/15/2020   580,000 623,500
6.625%, 11/15/2022   1,130,000 1,223,225

 

The accompanying notes are an integral part of the financial statements. 108

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Staples (continued)      
Wells Enterprises, Inc.      
6.750%, 02/01/2020 (S) $ 2,000,000 $ 2,090,000
      48,888,570
Energy - 18.7%      
Access Midstream Partners LP      
4.875%, 05/15/2023   2,565,000 2,699,640
6.125%, 07/15/2022   1,780,000 1,935,750
Adaro Indonesia PT      
7.625%, 10/22/2019 (S)   1,720,000 1,788,800
Antero Resources Finance Corp.      
5.375%, 11/01/2021   800,000 824,000
Arch Coal, Inc.      
7.000%, 06/15/2019 (L)   2,240,000 1,596,000
9.875%, 06/15/2019   2,370,000 1,919,700
Atlas Pipeline Partners LP      
4.750%, 11/15/2021   2,060,000 1,993,050
5.875%, 08/01/2023   2,000,000 2,030,000
Atwood Oceanics, Inc.      
6.500%, 02/01/2020   1,000,000 1,060,000
Berry Petroleum Company LLC      
6.375%, 09/15/2022   1,300,000 1,355,250
6.750%, 11/01/2020   1,000,000 1,047,500
Calumet Specialty Products Partners LP      
6.500%, 04/15/2021 (S)   1,500,000 1,496,250
7.625%, 01/15/2022   1,000,000 1,045,000
9.625%, 08/01/2020   1,080,000 1,220,400
Carrizo Oil & Gas, Inc.      
7.500%, 09/15/2020   590,000 631,300
CGG SA      
6.500%, 06/01/2021   2,500,000 2,312,500
Chesapeake Energy Corp.      
6.125%, 02/15/2021   2,000,000 2,265,000
6.625%, 08/15/2020   1,080,000 1,244,700
Cloud Peak Energy Resources LLC      
6.375%, 03/15/2024   1,200,000 1,242,000
Comstock Resources, Inc.      
9.500%, 06/15/2020   1,980,000 2,227,500
CONSOL Energy, Inc.      
5.875%, 04/15/2022 (S)   1,830,000 1,912,350
Corral Petroleum Holdings AB, PIK      
15.000%, 12/31/2017 (S)   5,090,734 4,912,558
Crestwood Midstream Partners LP      
6.000%, 12/15/2020   455,000 472,063
6.125%, 03/01/2022   2,200,000 2,277,000
EDC Finance, Ltd.      
4.875%, 04/17/2020 (S)   1,460,000 1,326,775
EXCO Resources, Inc.      
8.500%, 04/15/2022   2,260,000 2,296,612
Exterran Partners LP      
6.000%, 10/01/2022 (S)   1,030,000 1,032,575
First Wind Capital LLC      
10.250%, 06/01/2018 (S)   4,370,000 4,664,975
Foresight Energy LLC      
7.875%, 08/15/2021 (S)   2,975,000 3,160,938
FTS International, Inc.      
6.250%, 05/01/2022 (S)   3,370,000 3,445,825
Gulfport Energy Corp.      
7.750%, 11/01/2020 (S)   810,000 870,750
Halcon Resources Corp.      
8.875%, 05/15/2021   4,500,000 4,736,250
9.750%, 07/15/2020   1,670,000 1,799,425
Hercules Offshore, Inc.      
7.500%, 10/01/2021 (S)   6,160,000 5,821,200

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Hercules Offshore, Inc. (continued)      
8.750%, 07/15/2021 (S) $ 1,990,000 $ 2,009,900
10.250%, 04/01/2019 (S)   1,290,000 1,399,650
Hiland Partners LP      
5.500%, 05/15/2022 (S)   2,040,000 2,060,400
7.250%, 10/01/2020 (S)   1,780,000 1,917,950
KCA Deutag UK Finance PLC      
7.250%, 05/15/2021 (S)   2,090,000 2,090,000
Key Energy Services, Inc.      
6.750%, 03/01/2021   2,000,000 2,030,000
Kinder Morgan, Inc.      
5.625%, 11/15/2023 (S)   2,830,000 3,120,075
7.750%, 01/15/2032   1,690,000 2,116,725
Lonestar Resources America, Inc.      
8.750%, 04/15/2019 (S)   1,050,000 1,065,750
Magnum Hunter Resources Corp.      
9.750%, 05/15/2020   4,000,000 4,360,000
MEG Energy Corp.      
6.500%, 03/15/2021 (S)   1,800,000 1,899,000
7.000%, 03/31/2024 (S)   2,000,000 2,175,000
Milagro Oil & Gas, Inc.      
10.500%, 05/15/2016 (H)   3,490,000 2,739,650
Murray Energy Corp.      
9.500%, 12/05/2020 (S)   2,650,000 2,915,000
Natural Resource Partners LP      
9.125%, 10/01/2018   1,420,000 1,487,450
New Gulf Resources LLC      
11.750%, 05/15/2019   3,170,000 3,257,175
Pacific Drilling SA      
5.375%, 06/01/2020 (S)   1,420,000 1,384,500
Pacific Drilling V, Ltd.      
7.250%, 12/01/2017 (S)   2,050,000 2,147,375
Pan American Energy LLC      
7.875%, 05/07/2021   1,097,000 1,143,623
Parker Drilling Company      
6.750%, 07/15/2022 (S)   2,560,000 2,656,000
Parsley Energy LLC      
7.500%, 02/15/2022 (S)   3,000,000 3,180,000
Peabody Energy Corp.      
7.875%, 11/01/2026   2,250,000 2,317,500
Petrobras Global Finance BV      
4.375%, 05/20/2023   3,400,000 3,354,712
6.250%, 03/17/2024   1,010,000 1,109,192
Petroleum Geo-Services ASA      
7.375%, 12/15/2018 (S)   1,690,000 1,782,950
Plains Exploration & Production Company      
6.875%, 02/15/2023   371,000 430,824
Puma International Financing SA      
6.750%, 02/01/2021 (S)   4,750,000 4,905,325
QEP Resources, Inc.      
5.250%, 05/01/2023   1,140,000 1,154,250
5.375%, 10/01/2022   1,910,000 1,955,363
6.875%, 03/01/2021   1,110,000 1,243,200
Quicksilver Resources, Inc.      
11.000%, 07/01/2021   2,540,000 2,209,800
Regency Energy Partners LP      
4.500%, 11/01/2023   1,880,000 1,894,100
5.000%, 10/01/2022   1,790,000 1,850,413
Rice Energy, Inc.      
6.250%, 05/01/2022 (S)   3,300,000 3,374,250
Rockies Express Pipeline LLC      
5.625%, 04/15/2020 (S)   1,440,000 1,519,200
6.875%, 04/15/2040 (S)   300,000 318,000

 

The accompanying notes are an integral part of the financial statements. 109

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Rose Rock Midstream LP      
5.625%, 07/15/2022 (S) $ 1,520,000 $ 1,550,400
Samson Investment Company      
9.750%, 02/15/2020   5,260,000 5,365,200
Sanchez Energy Corp.      
7.750%, 06/15/2021   5,000,000 5,550,000
Shelf Drilling Holdings, Ltd.      
8.625%, 11/01/2018 (S)   1,700,000 1,810,500
Sidewinder Drilling, Inc.      
9.750%, 11/15/2019 (S)   2,331,000 2,331,000
Summit Midstream Holdings LLC      
5.500%, 08/15/2022   3,410,000 3,478,200
7.500%, 07/01/2021   1,430,000 1,573,000
Targa Resources Partners LP      
4.250%, 11/15/2023   280,000 279,300
5.250%, 05/01/2023   1,220,000 1,284,050
6.375%, 08/01/2022   1,492,000 1,618,820
Triangle USA Petroleum Corp.      
6.750%, 07/15/2022 (S)   1,090,000 1,114,525
Trionista TopCo GmbH      
6.875%, 04/30/2021 (S) EUR 250,000 351,482
Ultra Petroleum Corp.      
5.750%, 12/15/2018 (S) $ 1,800,000 1,858,500
Westmoreland Coal Company      
10.750%, 02/01/2018 (S)   1,540,000 1,642,025
 
      177,044,940
Financials - 7.8%      
Ally Financial, Inc.      
8.000%, 03/15/2020 to 11/01/2031   3,030,000 3,764,138
Banco Espirito Santo SA      
4.000%, 01/21/2019 EUR 200,000 258,510
4.750%, 01/15/2018   700,000 922,887
5.875%, 11/09/2015   1,100,000 1,458,943
Bank of America Corp. (5.200% to      
06/01/2023, then 3 month      
LIBOR + 3.135%)      
06/01/2023 (Q) $ 2,490,000 2,399,738
Barclays Bank PLC      
7.625%, 11/21/2022   1,190,000 1,336,519
CIT Group, Inc.      
5.000%, 08/15/2022 to 08/01/2023   5,580,000 5,846,530
Citigroup, Inc. (6.300% to 05/15/2024,      
then 3 month LIBOR + 3.423%)      
05/15/2024 (Q)   4,790,000 4,873,825
Co-operative Group Holdings 2011, Ltd.      
6.875%, 07/08/2020 GBP 387,000 685,846
7.500%, 07/08/2026   720,000 1,281,968
Compiler Finance Sub, Inc.      
7.000%, 05/01/2021 (S) $ 2,745,000 2,621,475
Credit Agricole SA (8.375% to      
10/13/2019, then 3 month      
LIBOR + 6.982%)      
10/13/2019 (Q)(S)   1,560,000 1,811,550
CTR Partnership LP      
5.875%, 06/01/2021 (S)   3,700,000 3,755,500
Fidelity & Guaranty Life Holdings, Inc.      
6.375%, 04/01/2021 (S)   1,190,000 1,273,300
First Cash Financial Services, Inc.      
6.750%, 04/01/2021 (S)   1,500,000 1,582,500
Globe Luxembourg SCA      
9.625%, 05/01/2018 (S)   4,400,000 4,840,000

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
ING Groep NV (5.140% to 03/17/2016,      
then 3 month LIBOR + 1.620%)      
03/17/2016 (Q) GBP 970,000 $ 1,616,320
JPMorgan Chase & Company (5.150% to      
05/01/2023, then 3 month      
LIBOR + 3.250%)      
05/01/2023 (Q) $ 1,240,000 1,207,450
Liberty Mutual Group, Inc.      
7.800%, 03/15/2037 (S)   1,740,000 2,053,200
M&T Bank Corp.      
6.875%, 06/15/2016 (Q)   2,900,000 2,960,480
Navient LLC      
8.450%, 06/15/2018   2,090,000 2,432,133
Rabobank Nederland NV (11.000% to      
06/30/2019, then 3 month      
LIBOR + 10.868%)      
06/30/2019 (Q)(S)   980,000 1,298,500
Swiss Reinsurance Company (5.252% to      
05/25/2016, then 6 month      
EURIBOR + 2.090%)      
05/25/2016 (Q) EUR 850,000 1,178,285
The Howard Hughes Corp.      
6.875%, 10/01/2021 (S) $ 3,430,000 3,631,513
The Royal Bank of Scotland Group PLC      
6.000%, 12/19/2023   1,200,000 1,304,662
The Royal Bank of Scotland Group PLC      
(7.648% to 09/30/2031, then 3 month      
LIBOR + 2.500%)      
09/30/2031 (Q)   4,650,000 5,487,000
The Royal Bank of Scotland NV      
7.750%, 05/15/2023   820,000 954,323
The Royal Bank of Scotland PLC      
(13.125% to 03/19/2017, then 5 year      
Australian Dollar Swap Rate + 8.750%)      
03/19/2022 AUD 5,160,000 5,714,404
TMX Finance LLC      
8.500%, 09/15/2018 (S) $ 1,600,000 1,692,000
Wells Fargo & Company (5.900% to      
06/15/2024, then 3 month      
LIBOR + 3.110%)      
06/15/2024 (Q)   3,850,000 4,032,875
 
      74,276,374
Health Care - 4.1%      
Acadia Healthcare Company, Inc.      
6.125%, 03/15/2021   2,050,000 2,162,750
12.875%, 11/01/2018   1,469,000 1,715,058
Alere, Inc.      
6.500%, 06/15/2020   3,000,000 3,033,750
Centene Corp.      
4.750%, 05/15/2022   1,250,000 1,268,750
DJO Finance LLC      
9.875%, 04/15/2018   3,230,000 3,452,063
ExamWorks Group, Inc.      
9.000%, 07/15/2019   3,996,000 4,315,680
Fresenius Medical Care      
US Finance II, Inc.      
5.875%, 01/31/2022 (S)   3,500,000 3,850,000
Grifols Worldwide Operations, Ltd.      
5.250%, 04/01/2022 (S)   500,000 513,750
HCA, Inc.      
5.000%, 03/15/2024   3,110,000 3,168,313
IASIS Healthcare LLC      
8.375%, 05/15/2019   5,430,000 5,755,800

 

The accompanying notes are an integral part of the financial statements. 110

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Health Care (continued)      
JLL/Delta Dutch Newco BV      
7.500%, 02/01/2022 (S) $ 3,000,000 $ 3,060,000
Labco SAS      
8.500%, 01/15/2018 (S) EUR 299,000 416,443
Ontex IV SA      
9.000%, 04/15/2019 (S)   370,000 521,763
9.000%, 04/15/2019   480,000 676,882
Salix Pharmaceuticals, Ltd.      
6.000%, 01/15/2021 (S) $ 2,400,000 2,604,000
Universal Hospital Services, Inc.      
7.625%, 08/15/2020   2,130,000 2,130,000
 
      38,645,002
Industrials - 17.2%      
AerCap Ireland Capital, Ltd.      
4.500%, 05/15/2021 (S)   40,000 40,848
Air Canada 2013-1 Class C Pass      
Through Trust      
6.625%, 05/15/2018 (S)   1,150,000 1,196,633
Alliant Techsystems, Inc.      
5.250%, 10/01/2021 (S)   2,300,000 2,346,000
American Airlines 2013-1 Class B Pass      
Through Trust      
5.625%, 01/15/2021   1,432,226 1,489,515
American Airlines 2013-1 Class C Pass      
Through Trust      
6.125%, 07/15/2018   3,240,000 3,369,600
American Airlines 2013-2 Class B Pass      
Through Trust      
5.600%, 07/15/2020   2,786,712 2,891,214
American Builders & Contractors Supply      
Company, Inc.      
5.625%, 04/15/2021 (S)   2,510,000 2,553,925
Ashtead Capital, Inc.      
6.500%, 07/15/2022 (S)   1,500,000 1,631,250
Ashton Woods USA LLC      
6.875%, 02/15/2021 (S)   3,720,000 3,673,500
Astaldi SpA      
7.125%, 12/01/2020 (S) EUR 1,470,000 2,078,340
7.125%, 12/01/2020   300,000 424,151
Ausdrill Finance Pty, Ltd.      
6.875%, 11/01/2019 (S) $ 3,000,000 2,745,000
CBC Ammo LLC      
7.250%, 11/15/2021 (S)   4,860,000 4,872,150
CMA CGM SA      
8.875%, 04/15/2019 (S) EUR 900,000 1,256,465
Continental Airlines 2000-1 Class B Pass      
Through Trust      
8.388%, 11/01/2020 $ 340,115 355,420
Continental Airlines 2007-1 Class B Pass      
Through Trust      
6.903%, 04/19/2022   365,198 394,889
Continental Airlines 2009-2 Class B Pass      
Through Trust      
9.250%, 05/10/2017   38,568 42,811
Delta Air Lines 2007-1 Class B Pass      
Through Trust      
8.021%, 08/10/2022   1,214,080 1,412,947
Delta Air Lines 2009-1 Series B Pass      
Through Trust      
9.750%, 12/17/2016   1,387,105 1,569,162
Delta Air Lines 2012-1 Class B Pass      
Through Trust      
6.875%, 05/07/2019 (S)   645,860 720,134

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
DH Services Luxembourg Sarl      
7.750%, 12/15/2020 (S) $ 6,530,000 $ 6,954,450
Ducommun, Inc.      
9.750%, 07/15/2018   2,914,000 3,183,545
Empresas ICA SAB de CV      
8.875%, 05/29/2024 (S)   4,610,000 4,782,875
Erickson, Inc.      
8.250%, 05/01/2020 (L)   5,018,000 4,980,365
Europcar Groupe SA      
9.375%, 04/15/2018 (S) EUR 140,000 195,005
11.500%, 05/15/2017 (S)   1,480,000 2,240,718
11.500%, 05/15/2017   400,000 605,600
Flexi-Van Leasing, Inc.      
7.875%, 08/15/2018 (S) $ 2,350,000 2,479,250
Florida East Coast Holdings Corp.      
6.750%, 05/01/2019 (S)   1,270,000 1,339,850
9.750%, 05/01/2020 (S)   1,270,000 1,343,025
Garda World Security Corp.      
7.250%, 11/15/2021 (S)   840,000 859,950
Griffon Corp.      
5.250%, 03/01/2022   4,060,000 4,019,400
H&E Equipment Services, Inc.      
7.000%, 09/01/2022   2,000,000 2,185,000
Hapag-Lloyd AG      
9.750%, 10/15/2017 (S)   2,660,000 2,793,000
Horizon Lines LLC      
11.000%, 10/15/2016   2,030,000 2,032,538
Horizon Lines LLC, PIK      
13.000%, 10/15/2016   1,924,140 1,770,209
International Lease Finance Corp.      
3.875%, 04/15/2018   290,000 294,713
4.625%, 04/15/2021   960,000 982,848
8.250%, 12/15/2020   2,620,000 3,202,950
8.625%, 01/15/2022   3,230,000 4,053,650
8.750%, 03/15/2017   910,000 1,041,950
International Wire Group Holdings, Inc.      
8.500%, 10/15/2017 (S)   1,700,000 1,831,750
Jack Cooper Holdings Corp.      
9.250%, 06/01/2020 (S)   5,550,000 6,035,625
JM Huber Corp.      
9.875%, 11/01/2019 (S)   1,540,000 1,732,500
Jurassic Holdings III, Inc.      
6.875%, 02/15/2021 (S)   1,500,000 1,533,750
KION Finance SA      
6.750%, 02/15/2020 (S) EUR 3,817,000 5,464,220
KP Germany Erste GmbH      
11.625%, 07/15/2017 (S)   870,000 1,266,207
11.625%, 07/15/2017   630,000 916,908
KraussMaffei Group GmbH      
8.750%, 12/15/2020 (S)   870,000 1,278,027
8.750%, 12/15/2020   825,000 1,211,922
LMI Aerospace, Inc.      
7.375%, 07/15/2019 (S) $ 1,620,000 1,640,250
Michael Baker Holdings LLC, PIK      
8.875%, 04/15/2019 (S)   4,990,000 4,940,100
Michael Baker International LLC      
8.250%, 10/15/2018 (S)   3,000,000 3,090,000
Navios Maritime Acquisition Corp.      
8.125%, 11/15/2021 (S)   3,180,000 3,307,200
Neovia Logistics Intermediate      
Holdings LLC, PIK      
10.000%, 02/15/2018 (S)   3,000,000 3,082,500

 

The accompanying notes are an integral part of the financial statements. 111

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
NES Rentals Holdings, Inc.      
7.875%, 05/01/2018 (S) $ 1,780,000 $ 1,882,350
Rearden G Holdings EINS GmbH      
7.875%, 03/30/2020 (S)   3,185,000 3,363,360
SPL Logistics Escrow LLC      
8.875%, 08/01/2020 (S)   1,800,000 1,993,500
syncreon Group BV      
8.625%, 11/01/2021 (S)   3,660,000 3,623,400
Techem GmbH      
6.125%, 10/01/2019 (S) EUR 800,000 1,133,676
Trionista Holdco GmbH      
5.000%, 04/30/2020 (S)   200,000 272,520
Triumph Group, Inc.      
5.250%, 06/01/2022 (S) $ 1,410,000 1,406,475
Ultrapetrol Bahamas, Ltd.      
8.875%, 06/15/2021   2,900,000 3,092,125
United Airlines 2013-1 Class B Pass      
Through Trust      
5.375%, 08/15/2021   2,800,000 2,912,000
United Airlines 2014-1 Class B Pass      
Through Trust      
4.750%, 04/11/2022   840,000 848,400
United Airlines 2014-2 Class B Pass      
Through Trust      
4.625%, 09/03/2022   2,390,000 2,390,000
United Rentals North America, Inc.      
5.750%, 11/15/2024   1,510,000 1,581,725
7.625%, 04/15/2022   2,500,000 2,806,250
US Airways 2012-2 Class B Pass      
Through Trust      
6.750%, 06/03/2021   1,621,382 1,763,253
US Airways 2013-1 Class B Pass      
Through Trust      
5.375%, 11/15/2021   1,100,000 1,135,750
Watco Companies LLC      
6.375%, 04/01/2023 (S)   2,280,000 2,331,300
WESCO Distribution, Inc.      
5.375%, 12/15/2021   1,930,000 1,954,125
West Corp.      
5.375%, 07/15/2022 (S)   3,500,000 3,403,750
XPO Logistics, Inc.      
7.875%, 09/01/2019 (S)   1,930,000 2,007,200
 
      163,636,963
Information Technology - 2.4%      
Activision Blizzard, Inc.      
5.625%, 09/15/2021 (S)   1,700,000 1,838,125
6.125%, 09/15/2023 (S)   1,400,000 1,540,000
Alliance Data Systems Corp.      
5.375%, 08/01/2022 (S)   2,560,000 2,572,800
Ancestry.com, Inc.      
11.000%, 12/15/2020   1,000,000 1,152,500
Ancestry.com, Inc., PIK      
9.625%, 10/15/2018 (S)   1,460,000 1,492,850
Belden, Inc.      
5.500%, 09/01/2022 (S)   1,820,000 1,888,250
Cerved Group SpA      
6.375%, 01/15/2020 (S) EUR 250,000 350,660
8.000%, 01/15/2021 (S)   350,000 508,630
8.000%, 01/15/2021   350,000 508,630
First Data Corp.      
11.750%, 08/15/2021 $ 2,418,000 2,859,285
12.625%, 01/15/2021   4,350,000 5,317,875

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Information Technology (continued)      
Interface Security Systems Holdings, Inc.      
9.250%, 01/15/2018 $ 2,340,000 $ 2,410,200
 
      22,439,805
Materials - 8.9%      
AngloGold Ashanti Holdings PLC      
8.500%, 07/30/2020 (L)   1,100,000 1,234,750
Appvion, Inc.      
9.000%, 06/01/2020 (S)   5,630,000 5,038,850
Ardagh Finance Holdings SA, PIK      
8.625%, 06/15/2019 (S)   2,050,000 2,124,313
Ardagh Packaging Finance PLC      
3.232%, 12/15/2019 (P)(S)   3,320,000 3,303,400
6.750%, 01/31/2021 (S)   710,000 724,200
9.125%, 10/15/2020 (S)   4,130,000 4,501,700
9.250%, 10/15/2020 (S) EUR 830,000 1,193,365
AuRico Gold, Inc.      
7.750%, 04/01/2020 (S) $ 1,770,000 1,818,675
Axiall Corp.      
4.875%, 05/15/2023   1,650,000 1,652,063
Barminco Finance Pty, Ltd.      
9.000%, 06/01/2018 (S)   2,400,000 2,169,000
BWAY Holding Company      
9.125%, 08/15/2021 (S)   2,970,000 3,044,250
Cemex SAB de CV      
9.000%, 01/11/2018   800,000 852,000
Coeur Mining, Inc.      
7.875%, 02/01/2021   3,620,000 3,626,788
Coveris Holdings SA      
7.875%, 11/01/2019 (S)   3,500,000 3,718,750
Eagle Spinco, Inc.      
4.625%, 02/15/2021   1,000,000 1,002,500
Essar Steel Minnesota LLC      
11.500%, 05/15/2020 (S)   2,660,000 2,726,500
Evraz Group SA      
6.750%, 04/27/2018 (S)   5,200,000 4,862,000
FMG Resources August 2006 Pty, Ltd.      
6.875%, 04/01/2022 (S)   3,700,000 4,030,688
Global Brass & Copper, Inc.      
9.500%, 06/01/2019   1,800,000 2,022,750
Hardwoods Acquisition, Inc.      
7.500%, 08/01/2021 (S)   2,490,000 2,533,575
Hexion US Finance Corp.      
8.875%, 02/01/2018   1,862,000 1,931,825
HIG BBC Intermediate Holdings LLC,      
PIK      
10.500%, 09/15/2018 (S)   1,600,000 1,628,000
Kerling PLC      
10.625%, 02/01/2017 (S) EUR 1,261,000 1,743,878
Midwest Vanadium Pty, Ltd.      
11.500%, 02/15/2018 (H)(S) $ 3,270,000 621,300
Molycorp, Inc.      
10.000%, 06/01/2020 (L)   710,000 591,075
Momentive Performance Materials, Inc.      
8.875%, 10/15/2020 (H)   630,000 590,625
Prince Mineral Holding Corp.      
12.000%, 12/15/2019 (S)   850,000 952,000
Resolute Forest Products, Inc.      
5.875%, 05/15/2023   4,070,000 3,917,375
Ryerson, Inc.      
9.000%, 10/15/2017   3,190,000 3,397,350
St. Barbara, Ltd.      
8.875%, 04/15/2018 (S)   3,690,000 3,007,350

 

The accompanying notes are an integral part of the financial statements. 112

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Materials (continued)      
SunCoke Energy Partners LP      
7.375%, 02/01/2020 (S) $ 830,000 $ 888,100
Thompson Creek Metals Company, Inc.      
9.750%, 12/01/2017   1,000,000 1,123,750
12.500%, 05/01/2019   2,600,000 2,938,000
Vedanta Resources PLC      
6.000%, 01/31/2019 (S)   3,940,000 4,097,600
Verso Paper Holdings LLC      
11.750%, 01/15/2019 (L)   2,600,000 2,730,000
Walter Energy, Inc.      
9.500%, 10/15/2019 (S)   1,420,000 1,416,450
West China Cement, Ltd.      
7.500%, 01/25/2016 (S)   600,000 618,000
 
      84,372,795
Telecommunication Services - 6.6%      
Axtel SAB de CV (8.000% until      
01/31/2015, then 9.000% thereafter)      
01/31/2020 (S)   2,329,000 2,398,870
CenturyLink, Inc.      
6.450%, 06/15/2021   2,150,000 2,354,250
6.750%, 12/01/2023 (L)   2,260,000 2,501,538
Cogent Communications Holdings, Inc.      
8.375%, 02/15/2018 (S)   3,000,000 3,165,000
Intelsat Jackson Holdings SA      
5.500%, 08/01/2023   3,530,000 3,516,763
Level 3 Escrow II, Inc.      
5.375%, 08/15/2022 (S)   500,000 502,500
Level 3 Financing, Inc.      
7.000%, 06/01/2020   2,000,000 2,155,000
8.625%, 07/15/2020   2,000,000 2,215,000
Matterhorn Midco & CY SCA      
7.750%, 02/15/2020 (S) EUR 1,710,000 2,373,892
Phones4u Finance PLC      
9.500%, 04/01/2018 (S) GBP 630,000 1,069,428
Sprint Capital Corp.      
6.875%, 11/15/2028 $ 5,780,000 5,635,500
8.750%, 03/15/2032   15,510,000 17,293,650
Sprint Corp.      
7.875%, 09/15/2023 (S)   2,000,000 2,145,000
tw telecom holdings, Inc.      
6.375%, 09/01/2023   2,800,000 3,164,000
UPCB Finance V, Ltd.      
7.250%, 11/15/2021 (S)   2,000,000 2,190,000
Vimpel Communications      
6.493%, 02/02/2016 (S)   610,000 609,018
Vimpel Communications OJSC      
8.250%, 05/23/2016   1,920,000 1,989,600
VimpelCom Holdings BV      
7.504%, 03/01/2022 (S)   2,800,000 2,768,612
Windstream Corp.      
6.375%, 08/01/2023   840,000 842,100
7.500%, 04/01/2023   4,000,000 4,260,000
 
      63,149,721
Utilities - 2.3%      
Calpine Corp.      
6.000%, 01/15/2022 (S)   4,171,000 4,494,253
Midwest Generation LLC, Series B      
8.560%, 01/02/2016   590,946 605,720
Miran Mid-Atlantic Series C Pass      
Through Trust      
10.060%, 12/30/2028   2,538,037 2,852,119

 

High Yield Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Utilities (continued)      
NGL Energy Partners LP      
5.125%, 07/15/2019 (S) $ 3,720,000 $ 3,771,150
NRG REMA LLC      
9.237%, 07/02/2017   3,064,761 3,271,632
9.681%, 07/02/2026   4,585,000 4,997,650
Red Oak Power LLC      
9.200%, 11/30/2029   720,000 795,600
Suburban Propane Partners LP      
7.375%, 03/15/2020   1,000,000 1,050,000
 
      21,838,124
TOTAL CORPORATE BONDS (Cost $819,598,238) $ 836,324,380
 
CAPITAL PREFERRED SECURITIES - 0.2%    
Financials - 0.1%      
Deutsche Postbank Funding Trust IV      
(5.983% to 06/29/2017, then 3 month      
EURIBOR + 2.070%)      
06/29/2017 (Q) EUR 1,050,000 1,463,806
Materials - 0.1%      
Hercules, Inc.      
6.500%, 06/30/2029 $ 790,000 725,852
TOTAL CAPITAL PREFERRED      
SECURITIES (Cost $2,054,166)   $ 2,189,658
 
CONVERTIBLE BONDS - 0.3%      
Materials - 0.2%      
Mirabela Nickel, Ltd.      
9.500%, 06/20/2019 (S)   1,993,000 1,993,000
Telecommunication Services - 0.1%      
Axtel SAB de CV (8.000% to 01/31/2015,      
then 9.000% thereafter)      
01/31/2020 (S) MXN 2,655,000 365,458
TOTAL CONVERTIBLE BONDS (Cost $2,407,542) $ 2,358,458
 
TERM LOANS (M) - 3.2%      
Consumer Discretionary - 1.3%      
AP NMT Acquisition BV      
10.000%, 07/31/2022 $ 3,220,000 2,962,400
CWGS Group LLC      
5.750%, 02/20/2020   3,397,000 3,407,616
Equinox Holdings, Inc.      
9.750%, 07/31/2020   2,340,000 2,363,400
Stockbridge      
13.000%, 05/02/2017   2,705,000 2,955,213
The Gymboree Corp.      
5.000%, 02/23/2018   1,170,000 931,613
 
      12,620,242
Consumer Staples - 0.1%      
AdvancePierre Foods, Inc.      
9.500%, 10/10/2017   970,000 944,133
Health Care - 0.9%      
CRC Health Corp.      
9.000%, 09/28/2021   2,210,000 2,217,366
Immucor, Inc.      
5.000%, 08/17/2018   1,176,997 1,176,016
Physiotherapy Associates Holdings, Inc.      
11.000%, 10/10/2016   2,450,000 2,413,250

 

The accompanying notes are an integral part of the financial statements. 113

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

High Yield Fund (continued)      
  Shares or   
  Principal   
  Amount  Value
 
TERM LOANS (M) (continued)      
Health Care (continued)      
Radnet Management, Inc.      
8.000%, 03/25/2021 $ 2,840,000  $ 2,854,200
      8,660,832
Industrials - 0.3%      
Intelligrated, Inc.      
4.500%, 07/30/2018 2,780,000 2,757,413
Information Technology - 0.2%      
Kronos, Inc.      
9.750%, 04/30/2020 1,810,000 1,855,250
Utilities - 0.4%      
Energy Future Intermediate Holding      
Company LLC      
4.250%, 06/19/2016 3,751,107 3,762,049
TOTAL TERM LOANS (Cost $30,163,911)   $ 30,599,919
 
COMMON STOCKS - 2.8%      
Consumer Discretionary - 0.2%      
Bossier Casino Venture Holdco, Inc. (I)(S)   163,507 $ 0
Ford Motor Company   124,503 2,167,597
 
      2,167,597
Financials - 1.8%      
Citigroup, Inc.   119,793 6,187,308
JPMorgan Chase & Company   48,826 2,902,706
KCAD Holdings I, Ltd. (I) 752,218,031 6,341,199
Realogy Holdings Corp. (I)   28,496 1,161,782
 
      16,592,995
Health Care - 0.1%      
Physiotherapy      
Associates Holdings, Inc. (I)   33,100 1,290,569
Industrials - 0.5%      
DeepOcean Group Holdings AS (I)   151,066 4,424,723
Horizon Lines, Inc., Class A (I) 1,563,813 625,525
 
      5,050,248
Materials - 0.2%      
LyondellBasell Industries NV, Class A   7,952 909,311
Mirabela Nickel, Ltd. (I) 5,975,613 504,633
 
      1,413,944
TOTAL COMMON STOCKS (Cost $28,540,984)   $ 26,515,353
 
PREFERRED SECURITIES - 1.6%      
Energy - 0.1%      
Rex Energy Corp., 6.000%   12,400 $ 1,350,546
Financials - 1.5%      
Citigroup Capital XIII (7.875% to      
10/30/2015, then      
3 month LIBOR + 6.370%)   48,350 1,317,054
GMAC Capital Trust I (8.125% to      
02/15/2016, then      
3 month LIBOR + 5.785%)   394,500 10,604,160
Santander Finance Preferred SAU      
(10.500% to 09/29/2014, then      
3 month LIBOR + 7.673%)   1,790 1,908,588
 
      13,829,802
TOTAL PREFERRED SECURITIES (Cost $14,371,272) $ 15,180,348

 

High Yield Fund (continued)      
    Shares or    
    Principal    
    Amount   Value
 
ESCROW CERTIFICATES - 0.0%        
Dynegy Roseton LLC        
7.670%, 08/11/2016 (I)   1,820,000  $ 0
TOTAL ESCROW CERTIFICATES (Cost $903,859)   $ 0
 
WARRANTS - 0.0%        
Jack Cooper Holdings Corp. (Expiration        
Date: 05/16/2018; Strike        
Price: $27.33) (I)(S)   2,163   324,450
TOTAL WARRANTS (Cost $118,257)     $ 324,450
 
SECURITIES LENDING COLLATERAL - 1.1%      
John Hancock Collateral        
Investment Trust, 0.0970% (W)(Y)   1,030,619  $ 10,313,511
TOTAL SECURITIES LENDING        
COLLATERAL (Cost $10,313,574)     $ 10,313,511
 
SHORT-TERM INVESTMENTS - 0.5%        
Money Market Funds - 0.5%        
State Street Institutional Liquid Reserves        
Fund, 0.0747% (Y) $ 4,478,637  $ 4,478,637
TOTAL SHORT-TERM INVESTMENTS (Cost $4,478,637) $ 4,478,637
Total Investments (High Yield Fund)        
(Cost $925,189,548) - 99.0%     $ 939,119,834
Other assets and liabilities, net - 1.0%       9,788,029
TOTAL NET ASSETS - 100.0%     $ 948,907,863
 
 
 
International Growth Opportunities Fund  
    Shares or    
    Principal    
    Amount   Value
 
 
COMMON STOCKS - 97.6%        
Argentina - 1.2%        
MercadoLibre, Inc.   87,600  $ 10,068,744
Australia - 1.7%        
Cochlear, Ltd.   49,453   3,352,700
Fortescue Metals Group, Ltd.   2,774,780   10,838,728
 
        14,191,428
Brazil - 1.3%        
BM&F Bovespa SA   790,100   4,764,954
Itau Unibanco Holding SA, ADR   45,529   819,522
Vale SA (Preference A Shares), ADR   494,900   5,765,585
 
        11,350,061
Chile - 0.4%        
Sociedad Quimica y Minera de Chile SA, ADR 137,100   3,753,798
China - 12.5%        
Baidu, Inc., ADR (I)   215,800   46,293,416
JD.com, Inc., ADR (I)   135,300   4,318,776
New Oriental Education & Technology        
Group, ADR   255,700   5,832,517
Tencent Holdings, Ltd.   2,850,200   46,389,498
Youku Tudou, Inc., ADR (I)   153,856   3,046,349
 
        105,880,556
Denmark - 3.6%        
Chr. Hansen Holding A/S   113,514   4,614,235
Novo Nordisk A/S, B Shares   339,394   15,566,572

 

The accompanying notes are an integral part of the financial statements. 114

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

International Growth Opportunities  
Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Denmark (continued)    
Novozymes A/S, B Shares 216,123 $ 10,045,491
    30,226,298
France - 4.5%    
Essilor International SA 41,465 4,399,542
Kering 81,793 17,340,018
L’Oreal SA 100,678 16,674,718
 
    38,414,278
Germany - 2.1%    
Aixtron SE NA (I) 219,639 2,879,995
HeidelbergCement AG 67,780 5,130,878
SMA Solar Technology AG (I) 58,021 1,863,851
Volkswagen AG 34,104 7,662,462
 
    17,537,186
Hong Kong - 4.3%    
AIA Group, Ltd. 4,951,200 26,999,770
Belle International Holdings, Ltd. 1,653,000 2,113,429
Hong Kong Exchanges & Clearing, Ltd. 323,328 7,427,719
 
    36,540,918
Ireland - 0.6%    
James Hardie Industries PLC 415,008 4,973,913
Italy - 6.3%    
Exor SpA 21,359 850,646
Fiat SpA (I) 2,816,114 27,541,706
UniCredit SpA 3,270,843 25,367,002
 
    53,759,354
Japan - 10.8%    
Gree, Inc. 253,600 1,989,409
M3, Inc. 312,100 5,460,366
Rakuten, Inc. 1,434,900 18,588,149
Sanrio Company, Ltd. 120,400 3,440,722
SBI Holdings, Inc. 396,000 4,697,118
SMC Corp. 59,300 15,525,790
SoftBank Corp. 510,400 36,879,016
Yaskawa Electric Corp. 365,000 4,700,547
 
    91,281,117
Norway - 0.8%    
Schibsted ASA 137,392 7,007,292
Peru - 1.5%    
Credicorp, Ltd., ADR 84,413 13,089,924
Portugal - 0.4%    
Jeronimo Martins SGPS SA 244,193 3,312,016
Russia - 0.9%    
Magnit OJSC, GDR (I) 92,625 5,394,705
Mail.ru Group, Ltd., GDR 89,691 2,411,069
 
    7,805,774
Singapore - 0.4%    
Singapore Exchange, Ltd. 626,000 3,647,145
South Korea - 2.4%    
Celltrion, Inc. (I) 118,025 4,852,008
NAVER Corp. 20,332 15,438,999
 
    20,291,007
Spain - 9.2%    
Banco Popular Espanol SA 4,442,196 27,749,296
Banco Santander SA 1,448,584 14,432,323
Distribuidora Internacional de Alimentacion SA 943,416 7,936,374

 

International Growth Opportunities    
Fund (continued)      
  Shares or    
  Principal    
  Amount   Value
 
 
COMMON STOCKS (continued)      
Spain (continued)      
Inditex SA 958,195 $ 27,759,231
 
      77,877,224
Sweden - 10.5%      
Alfa Laval AB 372,847   8,527,473
Atlas Copco AB, A Shares 767,573   22,396,502
Elekta AB, B Shares 605,195   6,918,282
Investment AB Kinnevik, B Shares 592,824   24,056,851
Sandvik AB 563,657   7,036,539
Svenska Handelsbanken AB, A Shares 315,094   14,794,616
Volvo AB, B Shares 448,118   5,357,711
 
      89,087,974
Switzerland - 6.0%      
ABB, Ltd. (I) 220,793   5,021,808
Cie Financiere Richemont SA 194,009   18,533,396
Geberit AG 25,913   8,801,945
Syngenta AG 39,483   14,180,864
The Swatch Group AG, BR Shares 7,511   4,077,139
 
      50,615,152
Taiwan - 0.8%      
Taiwan Semiconductor      
Manufacturing Company, Ltd. 1,567,000   6,548,928
Turkey - 2.1%      
BIM Birlesik Magazalar AS 271,080   6,369,536
Turkiye Garanti Bankasi AS 2,982,283   11,680,128
 
      18,049,664
United Kingdom - 13.3%      
Aggreko PLC 520,546   14,720,102
ARM Holdings PLC 1,316,513   21,275,644
ASOS PLC (I) 84,174   3,968,683
British American Tobacco PLC 91,514   5,410,609
Meggitt PLC 1,060,979   8,303,367
Ocado Group PLC (I) 773,905   4,220,415
Prudential PLC 932,328   22,473,783
Rolls-Royce Holdings PLC (I) 1,072,669   18,201,867
Standard Chartered PLC 711,172   14,334,678
 
      112,909,148
TOTAL COMMON STOCKS (Cost $652,323,562)   $ 828,218,899
 
PREFERRED SECURITIES - 1.0%      
Germany - 1.0%      
Porsche Automobil Holding SE 89,849   8,200,012
TOTAL PREFERRED SECURITIES (Cost $5,177,674) $ 8,200,012
 
SHORT-TERM INVESTMENTS - 1.4%      
Money Market Funds - 1.4%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y) 12,244,442   12,244,442
TOTAL SHORT-TERM INVESTMENTS (Cost $12,244,442) $ 12,244,442
Total Investments (International Growth Opportunities Fund)    
(Cost $669,745,678) - 100.0%   $ 848,663,353
Other assets and liabilities, net - 0.0%     (384,915)
 
TOTAL NET ASSETS - 100.0%   $ 848,278,438

 

The accompanying notes are an integral part of the financial statements. 115

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

International Growth Stock Fund  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 94.1%    
Australia - 3.6%    
Amcor, Ltd. 1,185,604 $ 12,658,586
Brambles, Ltd. 848,416 7,536,778
CSL, Ltd. 71,573 4,942,729
 
    25,138,093
Belgium - 1.5%    
Anheuser-Busch InBev NV 92,559 10,325,230
Brazil - 4.6%    
Banco Bradesco SA, ADR 638,763 11,651,037
BM&F Bovespa SA 2,280,100 13,750,882
BRF SA 233,589 6,250,606
 
    31,652,525
Canada - 8.9%    
Agrium, Inc. 60,411 5,712,737
Canadian National Railway Company 94,335 6,775,150
Cenovus Energy, Inc. 186,407 5,945,548
CGI Group, Inc., Class A (I) 295,432 10,455,462
Encana Corp. 428,452 9,878,867
Fairfax Financial Holdings, Ltd. 14,006 6,453,735
Suncor Energy, Inc. 393,439 16,149,345
 
    61,370,844
China - 4.4%    
Baidu, Inc., ADR (I) 56,844 12,194,175
CNOOC, Ltd. 2,011,907 4,032,348
Great Wall Motor Company, Ltd., H Shares 1,762,500 7,473,143
Industrial & Commercial Bank of China, Ltd.,    
H Shares 9,763,539 6,461,344
 
    30,161,010
Denmark - 2.5%    
Carlsberg A/S, B Shares 104,161 9,523,231
Novo Nordisk A/S, B Shares 165,676 7,598,860
 
    17,122,091
France - 3.7%    
Publicis Groupe SA 148,014 11,032,555
Schneider Electric SE 93,316 7,894,397
Total SA 104,516 6,896,854
 
    25,823,806
Germany - 7.8%    
adidas AG 78,146 5,876,074
Allianz SE 61,034 10,422,986
Deutsche Boerse AG 143,922 10,246,346
Deutsche Post AG 222,470 7,293,914
ProSiebenSat.1 Media AG 121,864 4,886,726
SAP SE 194,400 15,152,369
 
    53,878,415
Hong Kong - 3.3%    
Galaxy Entertainment Group, Ltd. 1,753,910 13,194,516
Hutchison Whampoa, Ltd. 713,410 9,311,958
 
    22,506,474
Ireland - 1.8%    
Shire PLC 151,687 12,359,051
Israel - 2.0%    
Teva Pharmaceutical Industries, Ltd., ADR 269,647 14,161,860
Japan - 6.5%    
Denso Corp. 99,253 4,311,869
FANUC Corp. 40,188 6,736,365
Japan Tobacco, Inc. 239,500 8,206,121
Keyence Corp. 14,373 6,155,226

 

International Growth Stock Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Japan (continued)    
Komatsu, Ltd. 352,017 $ 7,945,381
Toyota Motor Corp. 196,270 11,198,967
 
    44,553,929
Mexico - 1.9%    
Fomento Economico Mexicano SAB    
de CV, ADR 35,508 3,441,080
Grupo Televisa SA, ADR 262,748 9,740,068
 
    13,181,148
Netherlands - 2.7%    
Royal Dutch Shell PLC, B Shares 256,461 10,832,661
Unilever NV 181,505 7,547,925
 
    18,380,586
Singapore - 4.4%    
Avago Technologies, Ltd. 127,735 10,485,766
Keppel Corp., Ltd. 969,135 8,451,821
United Overseas Bank, Ltd. 622,834 11,424,832
 
    30,362,419
South Korea - 3.0%    
Hyundai Mobis 34,781 10,089,629
Samsung Electronics Company, Ltd. 8,619 10,494,416
 
    20,584,045
Spain - 1.0%    
Amadeus IT Holding SA, A Shares 178,737 6,650,304
Sweden - 2.2%    
Ericsson LM, B Shares 577,606 7,197,855
Investor AB, B Shares 225,416 8,371,338
 
    15,569,193
Switzerland - 7.7%    
ABB, Ltd. (I) 359,475 8,176,049
Julius Baer Group, Ltd. (I) 145,888 6,640,231
Novartis AG 85,389 7,671,894
Roche Holding AG 45,876 13,398,449
Syngenta AG 23,941 8,598,740
UBS AG (I) 474,205 8,510,465
 
    52,995,828
Taiwan - 1.7%    
Taiwan Semiconductor    
Manufacturing Company, Ltd. 2,852,000 11,919,300
Thailand - 1.2%    
Kasikornbank PCL, NVDR 1,173,400 8,265,157
Turkey - 1.2%    
Akbank T.A.S. 2,147,697 8,187,675
United Kingdom - 16.5%    
Aberdeen Asset Management PLC 932,632 6,744,405
British American Tobacco PLC 257,748 15,238,911
British Sky Broadcasting Group PLC 1,100,052 15,948,689
Centrica PLC 1,045,573 5,550,033
Compass Group PLC 707,275 11,511,381
Informa PLC 603,096 5,172,031
Kingfisher PLC 937,381 4,732,147
Next PLC 55,589 6,550,181
Reed Elsevier PLC 1,186,600 19,365,853
Smith & Nephew PLC 540,799 9,361,531
WPP PLC 665,558 13,967,376
 
    114,142,538
TOTAL COMMON STOCKS (Cost $486,278,889) $ 649,291,521

 

The accompanying notes are an integral part of the financial statements. 116

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

International Growth Stock Fund (continued)
  Shares or   
  Principal   
  Amount  Value
 
 
SHORT-TERM INVESTMENTS - 6.2%      
Money Market Funds - 6.2%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y) 42,487,817 42,487,817
TOTAL SHORT-TERM INVESTMENTS (Cost $42,487,817) $ 42,487,817
Total Investments (International Growth Stock Fund)    
(Cost $528,766,706) - 100.3%   $ 691,779,338
Other assets and liabilities, net - (0.3%)     (2,076,306)
TOTAL NET ASSETS - 100.0%   $ 689,703,032
 
 
 
International Small Cap Fund      
  Shares or   
  Principal   
  Amount  Value
 
COMMON STOCKS - 92.3%      
Austria - 0.7%      
Wienerberger AG   $ 4,895,606
Bahamas - 1.0%   327,045  
Steiner Leisure, Ltd. (I) 170,760 7,260,715
Belgium - 1.0%      
Barco NV (L) 99,780 7,073,056
Brazil - 0.6%      
Cia de Saneamento de Minas Gerais-COPASA 206,900 3,697,119
Grendene SA 105,500 765,859
 
      4,462,978
Canada - 8.7%      
AGF Management, Ltd., Class B (L) 471,000 5,388,798
Canaccord Genuity Group, Inc. (L) 542,706 6,019,529
Dorel Industries, Inc., Class B 239,000 8,078,037
Enerflex, Ltd. 327,300 6,315,418
Ensign Energy Services, Inc. 325,500 4,882,650
Genworth MI Canada, Inc. (L) 194,900 6,901,177
HudBay Minerals, Inc. 1,152,770 11,662,347
Mullen Group, Ltd. (L) 262,070 6,994,639
Trican Well Service, Ltd. 276,900 4,000,827
 
      60,243,422
China - 3.3%      
China ZhengTong Auto      
Services Holdings, Ltd. 9,414,000 5,027,000
Daphne International Holdings, Ltd. (L) 2,263,600 1,158,991
Kingdee International Software      
Group Company, Ltd. (I)(L) 27,712,000 8,946,627
Shenguan Holdings Group, Ltd. 11,708,000 4,261,429
SinoMedia Holding, Ltd. 5,053,000 3,578,927
 
      22,972,974
Finland - 3.9%      
Amer Sports OYJ 681,168 13,623,468
Huhtamaki OYJ 494,076 13,261,656
 
      26,885,124
France - 1.7%      
Beneteau SA (I) 250,390 4,262,914
Ipsos 252,300 7,540,314
 
      11,803,228
Germany - 5.3%      
DMG MORI SEIKI AG 290,770 8,380,730
Gerresheimer AG 180,950 13,078,602

 

International Small Cap Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Germany (continued)    
Kloeckner & Company SE (I) 661,785 $ 9,063,363
Leoni AG 102,150 6,315,999
 
    36,838,694
Greece - 0.5%    
JUMBO SA (I) 231,285 3,419,278
Hong Kong - 7.2%    
Dah Sing Financial Holdings, Ltd. 723,974 4,249,589
Digital China Holdings, Ltd. 2,661,000 2,574,272
Luk Fook Holdings International, Ltd. 1,717,000 5,383,015
MIE Holdings Corp. 3,348,700 561,838
Sitoy Group Holdings, Ltd. 5,991,000 4,251,820
Stella International Holdings, Ltd. 2,553,000 6,987,025
Techtronic Industries Company 4,380,000 13,387,351
Value Partners Group, Ltd. 6,461,000 4,990,969
Yingde Gases Group Company, Ltd. 6,902,500 7,382,396
 
    49,768,275
India - 0.9%    
Jain Irrigation Systems, Ltd. 4,023,453 5,928,423
Italy - 2.7%    
Amplifon SpA 614,675 3,547,869
Azimut Holding SpA 185,710 4,839,450
MARR SpA 300,246 4,696,056
Sorin SpA (I) 2,270,327 5,733,311
 
    18,816,686
Japan - 13.9%    
Aderans Company, Ltd. 328,800 4,865,342
Asahi Company, Ltd. (L) 248,800 3,111,872
Asics Corp. 627,000 12,843,250
Capcom Company, Ltd. 125,800 2,312,149
Descente, Ltd. 863,860 7,461,569
en-japan, Inc. 84,400 1,814,222
Keihin Corp. 435,600 6,158,393
Kobayashi Pharmaceutical Company, Ltd. 205,300 13,173,066
Meitec Corp. 335,611 10,814,732
Nissin Kogyo Company, Ltd. 217,710 3,933,762
Seria Company, Ltd. 86,500 3,554,165
Shinko Plantech Company, Ltd. 529,700 4,111,198
Square Enix Holdings Company, Ltd. 304,100 6,998,709
Tokai Rika Company, Ltd. 202,700 4,029,971
Tsumura & Company 301,400 7,707,298
Unipres Corp. 180,400 3,569,763
 
    96,459,461
Luxembourg - 1.2%    
Grand City Properties SA (I)(L) 423,140 5,421,567
Oriflame Cosmetics SA (L) 149,210 2,852,399
 
    8,273,966
Netherlands - 4.6%    
Aalberts Industries NV 362,111 10,049,707
Accell Group 195,391 3,519,943
Arcadis NV 320,790 10,605,355
Beter Bed Holding NV (L) 218,830 4,831,837
USG People NV 258,294 3,331,296
 
    32,338,138
Norway - 2.4%    
Ekornes ASA 341,120 4,422,738
Fred Olsen Energy ASA 186,730 4,387,527
Tomra Systems ASA 967,050 8,174,916
 
    16,985,181

 

The accompanying notes are an integral part of the financial statements. 117

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

International Small Cap Fund (continued)  
Shares or   
Principal   
Amount  Value
 
COMMON STOCKS (continued)    
Russia - 0.6%    
X5 Retail Group NV, GDR (I) 226,510 $ 4,290,099
Singapore - 0.2%    
Sakari Resources, Ltd. (I) 1,380,000 1,602,018
South Korea - 10.5%    
Binggrae Company, Ltd. 67,606 6,062,225
BS Financial Group, Inc. 733,448 12,157,407
Daum Communications Corp. 45,413 7,404,818
DGB Financial Group, Inc. 538,430 9,404,066
Hyundai Mipo Dockyard 55,794 7,106,673
KIWOOM Securities Company, Ltd. 60,289 3,111,699
Korea Investment Holdings Company, Ltd. 93,950 4,719,324
Mirae Asset Securities Company, Ltd. 88,667 4,242,469
Sindoh Company, Ltd. 127,171 8,531,144
Youngone Corp. 185,810 10,374,540
 
    73,114,365
Spain - 2.1%    
Construcciones y Auxiliar    
de Ferrocarriles SA (L) 21,113 8,344,556
Melia Hotels International SA (L) 249,458 2,773,259
Tecnicas Reunidas SA 65,138 3,564,975
 
    14,682,790
Sweden - 0.7%    
Duni AB (I) 337,670 4,498,600
Switzerland - 4.4%    
Logitech International SA (L) 778,790 10,716,150
Nobel Biocare Holding AG (I) 472,420 8,620,907
Panalpina Welttransport Holding AG (L) 33,800 4,804,022
Vontobel Holding AG 179,020 6,629,366
 
    30,770,445
Taiwan - 5.0%    
D-Link Corp. 7,271,668 5,234,878
Giant Manufacturing Company, Ltd. 1,461,746 12,163,593
Simplo Technology Company, Ltd. 1,890,300 10,617,872
Tripod Technology Corp. 3,448,000 7,008,649
 
    35,024,992
Thailand - 1.3%    
Glow Energy PCL 1,085,288 2,973,159
Hana Microelectronics PCL 5,091,800 6,177,434
 
    9,150,593
United Kingdom - 7.9%    
African Minerals, Ltd. (L) 1,926,080 984,980
Bellway PLC (I) 177,346 4,704,773
Bovis Homes Group PLC 252,440 3,539,915
Debenhams PLC 4,016,050 4,430,766
Devro PLC 872,350 3,535,383
Dignity PLC 142,591 3,391,707
Greggs PLC 1,227,780 11,158,207
HomeServe PLC 1,014,900 5,443,915
Laird PLC 1,377,390 6,669,586
Man Group PLC 4,338,558 8,535,224
UBM PLC 255,680 2,688,896
 
    55,083,352
TOTAL COMMON STOCKS (Cost $485,328,880) $ 642,642,459
 
PREFERRED SECURITIES - 0.7%    
Germany - 0.7%    
Draegerwerk AG & Company KGaA (L) 54,800 5,195,423
TOTAL PREFERRED SECURITIES (Cost $7,123,702) $ 5,195,423

 

International Small Cap Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
EXCHANGE-TRADED FUNDS - 1.5%      
iShares MSCI EAFE Small Cap Index Fund 200,600 $ 10,284,762
TOTAL EXCHANGE-TRADED FUNDS (Cost $10,142,873) $ 10,284,762
 
SECURITIES LENDING COLLATERAL - 6.6%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 4,569,689 45,729,339
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $45,727,427)   $ 45,729,339
 
SHORT-TERM INVESTMENTS - 4.4%      
Time Deposits - 4.4%      
Bank of Montreal      
0.050%, 09/02/2014* $  18,000,000 $ 18,000,000
Royal Bank of Canada      
0.060%, 09/02/2014* 13,000,000 13,000,000
 
      31,000,000
TOTAL SHORT-TERM INVESTMENTS (Cost $31,000,000) $ 31,000,000
Total Investments (International Small Cap Fund)      
(Cost $579,322,882) - 105.5%   $ 734,851,983
Other assets and liabilities, net - (5.5%)     (38,255,535)
TOTAL NET ASSETS - 100.0%   $ 696,596,448
 
 
 
International Value Fund      
  Shares or   
   Principal  
  Amount  Value
 
COMMON STOCKS - 97.6%      
Belgium - 0.6%      
UCB SA 131,360 $ 12,715,757
Brazil - 1.2%      
BM&FBovespa SA 1,789,400 10,791,557
Petroleo Brasileiro SA, ADR 419,870 8,737,491
Vale SA, ADR (L) 397,902 4,635,558
 
      24,164,606
Canada - 6.2%      
AGF Management, Ltd., Class B (L) 352,600 4,034,162
Ensign Energy Services, Inc. 1,134,100 17,012,022
HudBay Minerals, Inc. 2,002,800 20,261,933
Suncor Energy, Inc. 843,200 34,610,518
Talisman Energy, Inc. 2,398,340 24,109,129
Trican Well Service, Ltd. 1,914,900 27,667,690
 
      127,695,454
China - 5.6%      
China Life Insurance Company, Ltd., H Shares 4,005,000 11,498,453
China Shenhua Energy Company, Ltd.,      
H Shares 5,310,500 15,347,731
China Telecom Corp., Ltd., H Shares 43,461,589 26,702,673
Shanghai Electric Group Company, Ltd.,      
H Shares 17,898,000 7,853,114
Shanghai Pharmaceuticals Holding      
Company, Ltd., H Shares 6,236,600 12,808,167
Sinopec Engineering Group Company, Ltd.,      
H Shares 8,026,300 9,110,203
Sinopharm Group Company, Ltd., H Shares 2,436,800 8,516,053
Springland International Holdings, Ltd. 16,519,300 6,498,312
Trina Solar, Ltd., ADR (I)(L) 1,413,515 17,711,343
 
      116,046,049

 

The accompanying notes are an integral part of the financial statements. 118

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

International Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Denmark - 0.4%    
FLSmidth & Company A/S (L) 154,140 $ 8,251,367
France - 11.4%    
AXA SA 1,704,657 42,298,935
BNP Paribas SA 696,180 47,043,013
Cie de Saint-Gobain 293,120 14,891,839
Cie Generale des Etablissements Michelin 177,320 19,616,290
Ipsen SA 224,632 10,728,876
Sanofi 363,266 39,811,185
Societe Generale SA 247,335 12,545,001
Technip SA 148,910 13,787,788
Total SA 551,022 36,361,113
 
    237,084,040
Germany - 7.7%    
Bayer AG 155,170 20,855,297
Deutsche Boerse AG 227,520 16,198,000
Deutsche Lufthansa AG 789,450 13,718,877
Gerresheimer AG 166,670 12,046,480
Kloeckner & Company SE (I) 685,220 9,384,313
Merck KGaA 189,728 16,555,095
Metro AG (I) 397,190 13,990,613
MorphoSys AG (I) 93,200 8,609,499
Muenchener Rueckversicherungs AG 67,826 13,617,700
SAP SE 67,040 5,225,385
Siemens AG 233,559 29,279,174
 
    159,480,433
Hong Kong - 4.0%    
China Mobile, Ltd. 2,104,500 26,135,893
Digital China Holdings, Ltd. 7,056,000 6,826,028
First Pacific Company, Ltd. 3,525,000 4,085,755
GCL-Poly Energy Holdings, Ltd. (I) 52,896,000 18,961,544
Kingboard Chemical Holdings, Ltd. 8,926,800 18,421,405
Kunlun Energy Company, Ltd. 3,598,000 5,920,482
Noble Group, Ltd. 2,056,600 2,235,764
Value Partners Group, Ltd. 889,500 687,118
 
    83,273,989
India - 0.6%    
Jain Irrigation Systems, Ltd. 3,087,748 4,549,693
LIC Housing Finance, Ltd. 1,022,980 5,119,572
Power Grid Corp. of India, Ltd. 1,794,737 3,817,657
 
    13,486,922
Ireland - 0.7%    
CRH PLC 645,950 14,887,650
Israel - 1.3%    
Teva Pharmaceutical Industries, Ltd., ADR 532,715 27,978,192
Italy - 3.1%    
Eni SpA 1,031,766 25,764,245
Saipem SpA (I) 223,075 5,297,176
UniCredit SpA 4,290,952 33,278,451
 
    64,339,872
Japan - 6.8%    
Canon, Inc. 207,900 6,784,519
Capcom Company, Ltd. 611,100 11,231,750
ITOCHU Corp. 2,801,500 35,648,962
Namco Bandai Holdings, Inc. 888,500 24,880,872
Nikon Corp. 470,100 6,833,390
Nissan Motor Company, Ltd. 2,111,400 20,281,100
Suntory Beverage & Food, Ltd. 305,100 11,189,085
Toyota Motor Corp. 434,700 24,803,542
 
    141,653,220

 

International Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Netherlands - 6.2%    
Aegon NV 3,267,370 $ 25,837,155
Akzo Nobel NV 292,480 20,679,944
ING Groep NV (I) 1,875,298 25,809,441
QIAGEN NV (I) 641,390 15,553,769
Royal Dutch Shell PLC, B Shares 950,393 40,143,666
 
    128,023,975
Norway - 2.0%    
Statoil ASA 924,030 25,992,759
Telenor ASA 700,201 16,084,414
 
    42,077,173
Russia - 1.1%    
Lukoil OAO, ADR 117,991 6,549,680
MMC Norilsk Nickel OJSC, ADR 549,682 10,757,277
Mobile Telesystems OJSC, ADR (L) 251,265 4,635,839
 
    21,942,796
Singapore - 0.6%    
United Overseas Bank, Ltd. 726,000 13,317,237
South Korea - 12.6%    
Daewoo International Corp. 73,800 2,711,950
Hana Financial Group, Inc. 1,370,039 57,539,067
Hyundai Mobis 80,743 23,422,757
Hyundai Motor Company 28,502 6,552,022
KB Financial Group, Inc., ADR 1,186,132 48,263,711
KIWOOM Securities Company, Ltd. 115,721 5,972,714
Korea Investment Holdings Company, Ltd. 279,015 14,015,563
POSCO 100,687 33,290,328
Samsung Electronics Company, Ltd., GDR (S) 71,000 43,239,000
Samsung Electronics Company, Ltd., GDR 42,064 25,629,093
 
    260,636,205
Spain - 1.4%    
Telefonica SA 1,787,790 28,362,900
Sweden - 0.5%    
Getinge AB, B Shares 433,391 11,332,041
Switzerland - 8.2%    
ABB, Ltd. (I) 652,320 14,836,638
Basilea Pharmaceutica (I) 46,810 5,261,590
Credit Suisse Group AG (I) 1,497,171 42,238,026
GAM Holding AG (I) 503,750 9,807,515
Lonza Group AG (I) 102,400 11,742,770
Meyer Burger Technology AG (I)(L) 383,047 4,175,042
Nobel Biocare Holding AG (I) 751,431 13,712,410
Novartis AG 240,380 21,597,278
Roche Holding AG 136,060 39,737,400
Swiss Re AG (I) 94,603 7,756,515
 
    170,865,184
Thailand - 0.5%    
Bangkok Bank PCL 1,471,800 9,446,119
United Arab Emirates - 0.3%    
Dragon Oil PLC 573,830 5,726,434
United Kingdom - 13.6%    
African Minerals, Ltd. (I)(L) 679,220 347,347
Aviva PLC 2,433,700 21,063,288
BAE Systems PLC 3,275,790 24,240,987
Barclays PLC 2,136,720 7,969,600
BP PLC 4,398,322 35,085,679
Carillion PLC 1,897,950 10,614,120
GlaxoSmithKline PLC 1,208,045 29,524,293
HSBC Holdings PLC 2,349,650 25,397,811

 

The accompanying notes are an integral part of the financial statements. 119

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

International Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)      
United Kingdom (continued)      
Kingfisher PLC 4,059,900 $ 20,495,447
Marks & Spencer Group PLC 2,644,960 18,892,788
Noble Corp. PLC 537,840 15,306,926
Rexam PLC 1,373,160 11,569,163
Serco Group PLC 912,021 4,711,744
Tesco PLC 9,779,970 37,383,319
Vodafone Group PLC 5,401,316 18,563,676
 
      281,166,188
United States - 1.0%      
Flextronics International, Ltd. (I) 1,772,670 19,570,277
Paragon Offshore PLC (I) 179,280 1,670,888
 
      21,241,165
TOTAL COMMON STOCKS (Cost $1,697,326,077)   $ 2,025,194,968
 
SECURITIES LENDING COLLATERAL - 1.7%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 3,560,683 35,632,114
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $35,628,584)   $ 35,632,114
 
SHORT-TERM INVESTMENTS - 2.3%      
Time Deposits - 2.3%      
Bank of Montreal      
0.050%, 09/02/2014* $  25,000,000 $ 25,000,000
Royal Bank of Canada      
0.060%, 09/02/2014* 23,000,000 23,000,000
 
      48,000,000
TOTAL SHORT-TERM INVESTMENTS (Cost $48,000,000) $ 48,000,000
Total Investments (International Value Fund)      
(Cost $1,780,954,661) - 101.6%   $ 2,108,827,082
Other assets and liabilities, net - (1.6%)     (34,002,870)
TOTAL NET ASSETS - 100.0%   $ 2,074,824,212
 
 
 
Investment Quality Bond Fund      
  Shares or   
  Principal  
  Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 36.7%      
U.S. Government - 16.0%      
Treasury Inflation Protected Securities      
0.125%, 04/15/2018 to 04/15/2019 $  45,735,827 $ 46,605,309
0.250%, 07/15/2024 (C) 4,642,205 4,599,046
0.625%, 01/15/2024 9,550,277 9,884,537
1.375%, 02/15/2044 2,607,656 2,978,840
U.S. Treasury Bonds      
3.375%, 05/15/2044 4,100,000 4,340,875
3.750%, 11/15/2043 1,525,000 1,727,300
U.S. Treasury Notes      
0.375%, 08/31/2015 7,000 7,018
0.875%, 09/15/2016 353,300 355,646
 
      70,498,571
U.S. Government Agency - 20.7%      
Federal Home Loan Mortgage Corp.      
3.000%, TBA (C) 5,000,000 4,975,391
3.500%, TBA (C) 5,600,000 5,752,443

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal Home Loan Mortgage Corp. (continued)    
4.000%, TBA (C) $ 3,500,000 $ 3,700,318
4.500%, TBA (C)   5,300,000 5,721,043
5.000%, TBA (C)   2,900,000 3,192,627
5.000%, 03/01/2019 to 12/01/2019   106,302 113,616
6.500%, 04/01/2029 to 08/01/2034   5,913 6,771
7.500%, 08/01/2025 to 05/01/2028   2,206 2,573
Federal National Mortgage Association      
2.500%, TBA (C)   2,300,000 2,286,753
2.500%, 12/01/2042 to 03/01/2043   1,912,816 1,838,470
3.000%, TBA (C)   14,300,000 14,397,163
3.500%, TBA (C)   2,200,000 2,264,529
4.000%, TBA (C)   8,600,000 9,111,021
4.500%, TBA (C)   8,600,000 9,285,889
4.860%, 01/01/2015   2,430,125 2,462,773
5.000%, TBA (C)   2,500,000 2,756,952
5.000%, 03/15/2016 to 06/01/2019   2,218,693 2,372,697
5.500%, 08/01/2035 to 11/01/2035   132,902 148,560
6.500%, 09/01/2031   6 7
Government National      
Mortgage Association      
4.000%, TBA (C)   10,200,000 10,865,064
4.000%, 09/15/2040 to 02/15/2042   573,414 612,367
4.500%, TBA (C)   8,600,000 9,348,436
6.000%, 08/15/2032 to 04/15/2035   15,830 18,103
6.500%, 06/15/2028 to 08/15/2034   13,851 15,937
7.000%, 11/15/2031 to 11/15/2033   51,070 59,752
8.000%, 07/15/2030   1,028 1,242
 
      91,310,497
TOTAL U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (Cost $160,535,992)   $ 161,809,068
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 1.3%      
Brazil - 0.5%      
Federative Republic of Brazil      
4.250%, 01/07/2025   210,000 218,400
5.875%, 01/15/2019   725,000 831,213
6.000%, 05/15/2045 BRL 1,010,000 1,212,006
 
      2,261,619
Mexico - 0.4%      
Government of Mexico      
4.750%, 03/08/2044 $ 1,504,000 1,577,696
Russia - 0.1%      
Government of Russia 7.500%, 02/27/2019 RUB 24,850,000 619,676
South Africa - 0.2%      
Republic of South Africa      
7.750%, 02/28/2023 ZAR 9,275,000 868,957
Uruguay - 0.1%      
Republic of Uruguay 4.250%, 04/05/2027 UYU 11,224,758 519,775
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $5,570,979)   $ 5,847,723
 
CORPORATE BONDS - 32.7%      
Consumer Discretionary - 3.9%      
21st Century Fox America, Inc.      
6.150%, 02/15/2041 $ 175,000 215,884
6.200%, 12/15/2034   400,000 495,596
7.750%, 01/20/2024   453,000 580,100

 

The accompanying notes are an integral part of the financial statements. 120

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Arcelik AS      
5.000%, 04/03/2023 (S) $ 340,000 $ 325,550
AutoZone, Inc.      
3.700%, 04/15/2022   450,000 466,662
4.000%, 11/15/2020   265,000 280,287
British Sky Broadcasting Group PLC      
5.625%, 10/15/2015 (S)   131,000 138,137
Buffalo Thunder Development Authority      
9.375%, 12/15/2014 (H)(S)   20,000 8,300
CCO Holdings LLC      
5.125%, 02/15/2023   10,000 9,950
5.250%, 09/30/2022   10,000 10,150
5.750%, 09/01/2023   45,000 46,238
Comcast Corp.      
4.250%, 01/15/2033   415,000 431,584
Cox Communications, Inc.      
2.950%, 06/30/2023 (S)   560,000 537,064
5.875%, 12/01/2016 (S)   750,000 823,877
6.250%, 06/01/2018 (S)   500,000 570,915
Daimler Finance North America LLC      
1.375%, 08/01/2017 (S)   435,000 434,638
DIRECTV Holdings LLC      
3.125%, 02/15/2016   1,225,000 1,265,532
DISH DBS Corp.      
5.875%, 07/15/2022   50,000 53,060
6.750%, 06/01/2021   355,000 397,139
7.875%, 09/01/2019   150,000 174,000
Ford Motor Credit Company LLC      
3.875%, 01/15/2015   1,000,000 1,012,486
5.000%, 05/15/2018   310,000 342,238
Gannett Company, Inc.      
5.125%, 10/15/2019 (S)   310,000 317,750
5.125%, 07/15/2020   275,000 281,188
General Motors Financial Company, Inc.      
3.500%, 07/10/2019   870,000 876,227
4.750%, 08/15/2017   1,020,000 1,072,530
NBCUniversal Enterprise, Inc.      
5.250%, 03/19/2021 (Q)(S)   100,000 104,250
Sotheby’s      
5.250%, 10/01/2022 (S)   160,000 156,000
TCI Communications, Inc.      
7.875%, 02/15/2026   150,000 209,328
8.750%, 08/01/2015   183,000 196,849
The William Carter Company      
5.250%, 08/15/2021   295,000 308,275
Time Warner Cable, Inc.      
5.000%, 02/01/2020   755,000 846,937
5.875%, 11/15/2040   500,000 604,523
6.750%, 07/01/2018   775,000 910,716
Time Warner, Inc.      
2.100%, 06/01/2019   765,000 758,722
6.100%, 07/15/2040   290,000 349,307
7.625%, 04/15/2031   500,000 692,838
7.700%, 05/01/2032   302,000 426,617
Viacom, Inc.      
4.375%, 03/15/2043   147,000 137,739
5.625%, 09/15/2019   400,000 458,878
 
      17,328,061
Consumer Staples - 1.3%      
Altria Group, Inc.      
9.250%, 08/06/2019   165,000 217,054
9.700%, 11/10/2018   191,000 247,838

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Staples (continued)      
Coca-Cola Enterprises, Inc.      
2.125%, 09/15/2015 $ 1,300,000 $ 1,319,995
CVS Health Corp.      
4.750%, 05/18/2020   500,000 563,333
CVS Pass-Through Trust      
5.880%, 01/10/2028   274,546 312,427
6.943%, 01/10/2030   41,960 51,716
Grupo Bimbo SAB de CV      
4.875%, 06/27/2044 (S)   1,100,000 1,117,336
Molson Coors Brewing Company      
3.500%, 05/01/2022   225,000 231,272
Wal-Mart Stores, Inc.      
4.300%, 04/22/2044   1,050,000 1,101,664
5.250%, 09/01/2035   300,000 358,076
 
      5,520,711
Energy - 2.6%      
Anadarko Petroleum Corp.      
5.950%, 09/15/2016   400,000 439,144
6.375%, 09/15/2017   60,000 68,405
Cenovus Energy, Inc.      
5.200%, 09/15/2043   1,100,000 1,239,180
CenterPoint Energy Resources Corp.      
6.125%, 11/01/2017   125,000 142,711
CNPC General Capital, Ltd.      
1.950%, 04/16/2018 (S)   845,000 833,533
Denbury Resources, Inc.      
5.500%, 05/01/2022   100,000 102,500
EDC Finance, Ltd.      
4.875%, 04/17/2020 (S)   385,000 349,869
Energy Transfer Equity LP      
7.500%, 10/15/2020   450,000 520,875
Energy Transfer Partners LP      
3.600%, 02/01/2023   955,000 948,602
5.950%, 10/01/2043   800,000 902,087
Harvest Operations Corp.      
6.875%, 10/01/2017   215,000 229,513
Hess Corp.      
1.300%, 06/15/2017   445,000 444,585
Kinder Morgan Energy Partners LP      
5.500%, 03/01/2044   405,000 427,365
Kinder Morgan Finance Company LLC      
6.000%, 01/15/2018 (S)   5,000 5,569
Kinder Morgan, Inc.      
7.000%, 06/15/2017   400,000 452,000
Lukoil International Finance BV      
3.416%, 04/24/2018 (S)   1,055,000 997,186
Newfield Exploration Company      
5.625%, 07/01/2024   71,000 78,185
5.750%, 01/30/2022   70,000 77,350
6.875%, 02/01/2020   135,000 141,750
Nexen Energy ULC      
6.200%, 07/30/2019   285,000 332,519
7.500%, 07/30/2039   40,000 56,546
Peabody Energy Corp.      
6.500%, 09/15/2020 (L)   280,000 281,750
Petrobras International Finance Company      
5.375%, 01/27/2021   530,000 558,779
Plains All American Pipeline LP      
3.850%, 10/15/2023   295,000 305,016
Williams Partners LP      
3.900%, 01/15/2025   750,000 757,093

 

The accompanying notes are an integral part of the financial statements. 121

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Williams Partners LP (continued)      
4.300%, 03/04/2024 $ 610,000 $ 638,150
      11,330,262
Financials - 17.2%      
AIG SunAmerica Global Financing X      
6.900%, 03/15/2032 (S)   100,000 136,736
American International Group, Inc.      
4.500%, 07/16/2044   215,000 221,748
6.400%, 12/15/2020   500,000 602,598
Asian Development Bank      
6.350%, 08/17/2016 INR 26,000,000 427,963
AXA Equitable Life Insurance Company      
7.700%, 12/01/2015 (S) $ 250,000 269,587
AXA Financial, Inc.      
7.000%, 04/01/2028   235,000 295,750
Banco Bilbao Vizcaya Argentaria SA      
(7.000% to 02/19/2019, then 5 Year      
Euro Swap Rate + 6.155%)      
02/19/2019 (Q) EUR 800,000 1,103,718
Banco Bilbao Vizcaya Argentaria SA      
(9.000% to 05/19/2018, then 5 Year      
U.S. Swap Rate + 8.262%)      
05/19/2018 (Q) $ 400,000 444,000
Banco Santander SA (6.250% to      
03/12/2019, then 5 Year Euro Swap      
Rate + 5.410%)      
03/12/2019 (Q) EUR 1,100,000 1,483,285
Bank of America Corp.      
4.000%, 04/01/2024 $ 665,000 685,655
4.100%, 07/24/2023   400,000 417,779
4.200%, 08/26/2024   425,000 431,475
5.625%, 07/01/2020   1,185,000 1,358,008
6.400%, 08/28/2017   80,000 90,876
7.750%, 05/14/2038   1,210,000 1,696,201
Bank of Ireland      
10.000%, 07/30/2016 EUR 365,000 522,515
Barclays Bank PLC      
6.050%, 12/04/2017 (S) $ 2,145,000 2,411,851
Barclays Bank PLC (7.750% to      
04/10/2018, then 5 Year U.S. Swap      
Rate + 6.833%)      
04/10/2023   200,000 222,500
Barclays PLC (8.000% to 12/15/2020, then      
5 Year Euro Swap Rate + 6.750%)      
12/15/2020 (Q) EUR 300,000 425,765
Barclays PLC (8.250% to 12/15/2018, then      
5 Year U.S. Swap Rate + 6.705%)      
12/15/2018 (Q) $ 330,000 349,529
BPCE SA      
2.500%, 12/10/2018   755,000 763,852
5.150%, 07/21/2024 (S)   540,000 578,207
5.700%, 10/22/2023 (S)   785,000 869,238
Brandywine Operating Partnership LP      
4.950%, 04/15/2018   425,000 460,400
5.700%, 05/01/2017   835,000 913,822
Capital One Financial Corp.      
6.150%, 09/01/2016   1,300,000 1,427,102
CIT Group, Inc.      
3.875%, 02/19/2019   100,000 101,250
5.000%, 05/15/2017   15,000 15,844
5.250%, 03/15/2018   165,000 176,138
5.375%, 05/15/2020   20,000 21,650
5.500%, 02/15/2019 (S)   490,000 528,588

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Citigroup, Inc.      
5.500%, 09/13/2025 $ 790,000 $ 885,211
6.125%, 08/25/2036   1,550,000 1,821,853
6.675%, 09/13/2043   250,000 318,252
8.500%, 05/22/2019   565,000 715,682
Credit Agricole SA (6.500% to      
06/23/2021, then 5 Year U.S. Swap      
Rate + 5.120%)      
06/23/2021 (Q) EUR 300,000 415,865
Credit Agricole SA (8.125% to      
09/19/2018, then 5 Year U.S. Swap      
Rate + 6.283%)      
09/19/2033 (S) $ 200,000 228,500
Credit Suisse AG (5.750% to 09/18/2020,      
then 5 Year Euro Swap Rate + 4.000%)      
09/18/2025 EUR 240,000 352,401
Credit Suisse Group AG (6.250% to      
12/18/2024, then 5 Year U.S. Swap      
Rate + 3.455%)      
12/18/2024 (Q)(S) $ 780,000 776,100
Credit Suisse Group Guernsey I, Ltd.      
(7.875% to 08/24/2016, then 5 Year      
U.S. Swap Rate + 5.220%)      
02/24/2041   200,000 214,000
Discover Financial Services      
6.450%, 06/12/2017   950,000 1,069,921
Duke Realty LP      
6.750%, 03/15/2020   430,000 512,012
Equity One, Inc.      
6.000%, 09/15/2017   235,000 261,159
ERP Operating LP      
5.250%, 09/15/2014   975,000 976,434
Everest Reinsurance Holdings, Inc.      
(6.600% to 05/15/2017, then 3 month      
LIBOR + 2.385%)      
05/15/2037   495,000 520,369
General Electric Capital Corp.      
4.650%, 10/17/2021   1,225,000 1,372,587
5.875%, 01/14/2038   685,000 851,571
General Electric Capital Corp. (6.250% to      
12/15/2022, then 3 month      
LIBOR + 4.704%)      
12/15/2022 (Q)   400,000 446,500
Hartford Financial Services Group, Inc.      
(8.125% to 06/15/2018, then 3 month      
LIBOR + 4.6025%)      
06/15/2038   250,000 294,375
HCP, Inc.      
4.200%, 03/01/2024   160,000 165,125
6.000%, 03/01/2015 to 01/30/2017   655,000 712,856
7.072%, 06/08/2015   67,000 70,260
Health Care REIT, Inc.      
4.500%, 01/15/2024   575,000 606,865
5.250%, 01/15/2022   885,000 994,318
HSBC Holdings PLC      
5.250%, 03/14/2044   240,000 264,564
6.500%, 09/15/2037   220,000 278,183
6.800%, 06/01/2038   445,000 583,796
HSBC USA, Inc.      
2.375%, 02/13/2015   520,000 524,742
Intesa Sanpaolo SpA      
2.375%, 01/13/2017   775,000 785,161

 

The accompanying notes are an integral part of the financial statements. 122

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
JPMorgan Chase & Company      
3.375%, 05/01/2023 $ 210,000 $ 206,842
3.625%, 05/13/2024   240,000 244,755
4.250%, 10/15/2020   325,000 351,622
5.625%, 08/16/2043   1,205,000 1,408,422
6.000%, 01/15/2018   1,275,000 1,448,688
6.300%, 04/23/2019   300,000 351,874
KBC Groep NV (5.625% to 03/19/2019,      
then 5 Year Euro Swap Rate + 4.759%)      
03/19/2019 (Q) EUR 160,000 209,181
Kimco Realty Corp.      
4.300%, 02/01/2018 $ 600,000 649,231
5.584%, 11/23/2015   425,000 448,956
6.875%, 10/01/2019   300,000 359,443
Liberty Property LP      
3.375%, 06/15/2023   260,000 255,372
4.125%, 06/15/2022   210,000 220,282
6.625%, 10/01/2017   100,000 113,904
Lloyds Banking Group PLC (6.375% to      
06/27/2020, then 5 Year Euro Swap      
Rate + 5.290%)      
06/27/2020 (Q) EUR 600,000 831,740
Lloyds Banking Group PLC (7.000% to      
06/27/2019, then 5 Year British Pound      
Swap Rate + 5.060%)      
06/27/2019 (Q) GBP 250,000 422,695
Marsh & McLennan Companies, Inc.      
2.550%, 10/15/2018 $ 380,000 388,302
Massachusetts Mutual Life      
Insurance Company      
5.375%, 12/01/2041 (S)   80,000 92,292
8.875%, 06/01/2039 (S)   550,000 886,909
Metropolitan Life Global Funding I      
3.125%, 01/11/2016 (S)   1,825,000 1,885,092
Morgan Stanley      
4.875%, 11/01/2022   455,000 491,563
5.550%, 04/27/2017   350,000 386,222
6.625%, 04/01/2018   1,450,000 1,678,975
Nationwide Building Society (6.875% to      
06/20/2019, then 5 Year British Pound      
Swap Rate + 4.880%)      
06/20/2019 (Q) GBP 600,000 1,006,051
Nationwide Mutual Insurance Company      
8.250%, 12/01/2031 (S) $ 260,000 361,633
9.375%, 08/15/2039 (S)   475,000 751,140
Navient LLC      
5.500%, 01/15/2019   165,000 175,313
6.000%, 01/25/2017   105,000 112,875
6.250%, 01/25/2016   35,000 37,100
7.250%, 01/25/2022   65,000 72,556
8.000%, 03/25/2020   11,000 12,705
8.450%, 06/15/2018   289,000 336,309
PNC Funding Corp.      
5.625%, 02/01/2017   1,200,000 1,313,855
Principal Life Global Funding I      
6.125%, 10/15/2033 (S)   108,000 136,515
Prologis LP      
3.350%, 02/01/2021   850,000 862,914
4.500%, 08/15/2017   920,000 989,661
Prudential Financial, Inc.      
4.600%, 05/15/2044   1,550,000 1,608,404
Realty Income Corp.      
3.250%, 10/15/2022   81,000 80,809

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Realty Income Corp. (continued)      
5.750%, 01/15/2021 $ 600,000 $ 692,165
6.750%, 08/15/2019   450,000 535,782
Royal Bank of Scotland Group PLC      
2.550%, 09/18/2015   645,000 656,354
5.125%, 05/28/2024   815,000 831,334
Santander Bank NA      
8.750%, 05/30/2018   250,000 302,207
Societe Generale SA (6.000% to      
01/27/2020, then 5 Year U.S. Swap      
Rate + 4.067%)      
01/27/2020 (Q)(S)   565,000 539,575
Societe Generale SA (6.750% to      
04/07/2021, then 5 Year U.S. Swap      
Rate + 5.538%)      
04/07/2021 (Q) EUR 400,000 540,033
Societe Generale SA (8.250% to      
11/29/2018, then 5 Year U.S. Swap      
Rate + 6.394%)      
11/29/2018 (Q) $ 860,000 920,544
Sumitomo Mitsui Financial Group, Inc.      
4.436%, 04/02/2024 (S)   1,075,000 1,129,806
Sun Canada Financial Company      
7.250%, 12/15/2015 (S)   229,000 247,088
SunTrust Banks, Inc.      
3.600%, 04/15/2016   820,000 855,385
Swiss Re Treasury U.S. Corp.      
2.875%, 12/06/2022 (S)   185,000 179,838
The Bear Stearns Companies LLC      
6.400%, 10/02/2017   605,000 690,411
7.250%, 02/01/2018   321,000 378,053
The Goldman Sachs Group, Inc.      
4.000%, 03/03/2024   395,000 407,515
4.800%, 07/08/2044   225,000 235,477
5.750%, 01/24/2022   1,550,000 1,799,009
6.750%, 10/01/2037   1,145,000 1,413,511
UDR, Inc.      
3.700%, 10/01/2020   215,000 224,768
UniCredit SpA (8.000% to 06/03/2024,      
then 5 Year U.S. Swap Rate + 5.180%)      
06/03/2024 (Q)   200,000 209,300
Ventas Realty LP      
2.700%, 04/01/2020   430,000 428,599
4.750%, 06/01/2021   661,000 728,642
Voya Financial, Inc. (5.650% to      
05/15/2023, then 3 month      
LIBOR + 3.580%)      
05/15/2053   150,000 152,625
Wachovia Corp.      
5.750%, 06/15/2017   385,000 431,358
Wells Fargo & Company      
3.450%, 02/13/2023   445,000 448,142
4.100%, 06/03/2026   740,000 758,506
4.125%, 08/15/2023   1,340,000 1,408,526
5.375%, 11/02/2043   225,000 256,311
5.606%, 01/15/2044   275,000 324,182
5.625%, 12/11/2017   150,000 169,593
 
      75,557,133
Health Care - 1.5%      
Actavis Funding SCS      
3.850%, 06/15/2024 (S)   1,350,000 1,365,815
Amgen, Inc.      
5.150%, 11/15/2041   130,000 143,977

 

The accompanying notes are an integral part of the financial statements. 123

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Health Care (continued)      
Amgen, Inc. (continued)      
6.900%, 06/01/2038 $ 260,000 $ 353,476
Community Health Systems, Inc.      
5.125%, 08/01/2021 (S)   95,000 97,375
Express Scripts Holding Company      
2.100%, 02/12/2015   1,875,000 1,888,052
3.125%, 05/15/2016   301,000 312,485
HCA, Inc.      
5.875%, 03/15/2022   140,000 152,250
6.500%, 02/15/2020   255,000 285,281
7.250%, 09/15/2020   155,000 164,688
Tenet Healthcare Corp.      
6.000%, 10/01/2020   505,000 547,925
WellCare Health Plans, Inc.      
5.750%, 11/15/2020   110,000 113,988
WellPoint, Inc.      
2.300%, 07/15/2018   40,000 40,543
5.100%, 01/15/2044   175,000 191,648
7.000%, 02/15/2019   720,000 856,449
 
      6,513,952
Industrials - 1.6%      
AerCap Ireland Capital, Ltd.      
4.500%, 05/15/2021 (S)   305,000 311,466
Air Lease Corp.      
4.500%, 01/15/2016   925,000 956,219
Canadian Pacific Railway Company      
9.450%, 08/01/2021   275,000 378,491
Clean Harbors, Inc.      
5.125%, 06/01/2021   20,000 20,300
5.250%, 08/01/2020   126,000 129,465
ERAC USA Finance LLC      
5.600%, 05/01/2015 (S)   500,000 516,379
Huntington Ingalls Industries, Inc.      
6.875%, 03/15/2018   15,000 15,844
7.125%, 03/15/2021   225,000 244,688
Hutchison Whampoa International 11, Ltd.      
3.500%, 01/13/2017 (S)   1,336,000 1,403,862
International Lease Finance Corp.      
6.750%, 09/01/2016 (S)   100,000 109,375
7.125%, 09/01/2018 (S)   135,000 154,913
Penske Truck Leasing Company LP      
4.250%, 01/17/2023 (S)   1,225,000 1,289,017
4.875%, 07/11/2022 (S)   251,000 275,898
Ryder System, Inc.      
2.550%, 06/01/2019   305,000 307,967
Southwest Airlines Company 2007-1 Pass      
Through Trust      
6.150%, 08/01/2022   172,499 200,098
The ADT Corp.      
6.250%, 10/15/2021 (L)   430,000 454,725
Waste Management, Inc.      
6.375%, 03/11/2015   340,000 350,389
 
      7,119,096
Information Technology - 0.5%      
Activision Blizzard, Inc.      
5.625%, 09/15/2021 (S)   435,000 470,344
Cardtronics, Inc.      
5.125%, 08/01/2022 (S)   120,000 121,500
NCR Corp.      
4.625%, 02/15/2021   255,000 255,638
5.000%, 07/15/2022   20,000 20,100

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Information Technology (continued)      
TSMC Global, Ltd.      
1.625%, 04/03/2018 (S) $ 1,200,000 $ 1,185,616
 
      2,053,198
Materials - 0.5%      
Barrick Gold Corp.      
4.100%, 05/01/2023   300,000 304,292
CF Industries, Inc.      
5.150%, 03/15/2034   875,000 954,735
Clearwater Paper Corp.      
5.375%, 02/01/2025 (S)   115,000 116,150
FMG Resources August 2006 Pty, Ltd.      
6.875%, 04/01/2022 (S)   70,000 76,256
Glencore Funding LLC      
1.700%, 05/27/2016 (S)   535,000 539,791
United States Steel Corp.      
7.375%, 04/01/2020 (L)   125,000 140,313
Vale Canada, Ltd.      
5.700%, 10/15/2015   233,000 245,143
 
      2,376,680
Telecommunication Services - 2.5%      
Ameritech Capital Funding Corp.      
6.450%, 01/15/2018   148,000 168,524
AT&T, Inc.      
4.450%, 05/15/2021   25,000 27,707
4.800%, 06/15/2044   680,000 711,877
Deutsche Telekom International      
Finance BV      
8.750%, 06/15/2030   475,000 711,645
SBA Tower Trust      
2.933%, 12/15/2017 (S)   595,000 606,043
3.598%, 04/15/2018 (S)   940,000 944,046
Sprint Communications, Inc.      
7.000%, 03/01/2020 (S)   185,000 206,275
9.000%, 11/15/2018 (S)   100,000 118,875
Sprint Corp.      
7.125%, 06/15/2024 (S)   265,000 270,300
T-Mobile USA, Inc.      
6.125%, 01/15/2022   20,000 20,725
6.464%, 04/28/2019   210,000 218,925
6.500%, 01/15/2024   30,000 31,200
6.633%, 04/28/2021   80,000 84,200
6.731%, 04/28/2022   225,000 237,375
6.836%, 04/28/2023   30,000 31,838
Verizon Communications, Inc.      
2.625%, 02/21/2020 (S)   810,000 812,398
5.012%, 08/21/2054 (S)   730,000 762,486
5.150%, 09/15/2023   1,465,000 1,658,874
6.400%, 02/15/2038   415,000 519,265
6.550%, 09/15/2043   2,030,000 2,616,997
VimpelCom Holdings BV      
5.950%, 02/13/2023 (S)   460,000 413,356
 
      11,172,931
Utilities - 1.1%      
AES Corp.      
8.000%, 06/01/2020   265,000 314,025
Berkshire Hathaway Energy Company      
6.125%, 04/01/2036   250,000 319,008
Calpine Corp.      
5.875%, 01/15/2024 (S)   50,000 53,500
CenterPoint Energy, Inc.      
6.500%, 05/01/2018   560,000 649,904

 

The accompanying notes are an integral part of the financial statements. 124

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities (continued)      
DPL, Inc.      
7.250%, 10/15/2021 $ 305,000 $ 323,300
Edison International      
3.750%, 09/15/2017   475,000 505,194
Nevada Power Company      
7.125%, 03/15/2019   25,000 30,403
NiSource Finance Corp.      
6.400%, 03/15/2018   200,000 230,419
Oncor Electric Delivery Company LLC      
7.500%, 09/01/2038   205,000 305,622
Pacific Gas & Electric Company      
3.750%, 02/15/2024   340,000 353,361
PacifiCorp      
6.350%, 07/15/2038   110,000 150,232
Progress Energy, Inc.      
7.000%, 10/30/2031   341,000 459,147
PSEG Power LLC      
8.625%, 04/15/2031   154,000 225,167
Puget Sound Energy, Inc.      
5.757%, 10/01/2039   15,000 18,811
7.000%, 03/09/2029   54,000 69,531
Sierra Pacific Power Company      
6.000%, 05/15/2016   225,000 244,860
Wisconsin Energy Corp.      
6.200%, 04/01/2033   138,000 174,895
Xcel Energy, Inc.      
6.500%, 07/01/2036   375,000 500,348
 
      4,927,727
TOTAL CORPORATE BONDS (Cost $136,483,717) $ 143,899,751
 
CAPITAL PREFERRED SECURITIES - 0.1%    
Financials - 0.1%      
ACE Capital Trust II      
9.700%, 04/01/2030   248,000 364,560
TOTAL CAPITAL PREFERRED SECURITIES (Cost $332,225) $ 364,560
 
MUNICIPAL BONDS - 2.0%      
Chicago O’Hare International Airport      
(Illinois) 6.845%, 01/01/2038   500,000 563,900
Los Angeles Unified School District      
(California) 5.750%, 07/01/2034   75,000 94,038
New Jersey State Turnpike Authority      
7.414%, 01/01/2040   630,000 935,002
New York City Transitional Finance      
Authority Future Tax Secured Revenue      
5.000%, 05/01/2042   185,000 208,245
New York State Thruway Authority      
5.883%, 04/01/2030   590,000 724,119
Port Authority of New York & New Jersey      
(New York) 6.040%, 12/01/2029   180,000 227,545
Puerto Rico Commonwealth Government      
Employees Retirement System, Series A      
6.150%, 07/01/2038   650,000 355,089
6.200%, 07/01/2039   675,000 368,780
Puerto Rico Commonwealth Government      
Employees Retirement System, Series B      
6.550%, 07/01/2058   245,000 133,836
Puerto Rico Commonwealth Government      
Employees Retirement System, Series C      
6.300%, 07/01/2043   925,000 505,337
State of California      
7.300%, 10/01/2039   725,000 1,048,169

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
MUNICIPAL BONDS (continued)      
State of California (continued)      
7.550%, 04/01/2039 $ 420,000 $ 634,423
7.600%, 11/01/2040   110,000 168,324
State of Illinois, GO 5.665%, 03/01/2018   1,035,000 1,152,804
University of California      
5.000%, 05/15/2038   860,000 977,536
4.601%, 05/15/2031   660,000 730,996
5.770%, 05/15/2043   15,000 19,113
TOTAL MUNICIPAL BONDS (Cost $7,599,220) $ 8,847,256
 
TERM LOANS (M) - 4.0%      
Consumer Discretionary - 1.4%      
24 Hour Fitness Worldwide, Inc.      
4.750%, 05/28/2021   110,000 110,110
99 Cents Only Stores      
4.500%, 01/11/2019   238,200 237,555
Acosta, Inc.      
TBD 07/31/2021 (T)   100,000 100,042
4.250%, 03/02/2018   569,253 570,320
BJ’s Wholesale Club, Inc.      
4.500%, 09/26/2019   685,802 681,638
Caesars Growth Properties Holdings LLC      
6.250%, 05/08/2021   100,000 97,625
Charter Communications Operating LLC      
TBD 07/24/2021 (T)   100,000 100,578
CityCenter Holdings LLC      
4.250%, 10/16/2020   286,418 285,917
Delta 2 Lux SARL      
TBD 07/31/2022 (T)   110,000 110,550
4.750%, 07/30/2021   175,000 173,852
Hilton Worldwide Finance LLC      
3.500%, 10/26/2020   497,368 493,707
Interactive Data Corp.      
4.750%, 05/02/2021   115,000 115,201
Ion Media Networks, Inc.      
5.000%, 12/18/2020   243,775 244,080
Neiman Marcus Group, Ltd. LLC      
4.250%, 10/25/2020   605,433 600,589
Serta Simmons Holdings LLC      
4.250%, 10/01/2019   337,344 337,028
SRAM LLC      
4.017%, 04/10/2020   376,715 371,064
The ServiceMaster Company LLC      
4.250%, 07/01/2021   621,835 616,783
Town Sports International LLC      
4.500%, 11/16/2020   407,950 347,777
Tribune Media Company      
4.000%, 12/27/2020   764,325 763,131
 
      6,357,547
Consumer Staples - 0.0%      
Albertson’s Holdings LLC      
TBD 08/25/2021 (T)   110,000 110,023
Energy - 0.3%      
Arch Coal, Inc.      
6.250%, 05/16/2018   173,674 168,867
Sandy Creek Energy Associates LP      
5.000%, 11/06/2020   606,012 608,916
Seadrill Operating LP      
4.000%, 02/21/2021   149,624 147,130
Western Refining, Inc.      
4.250%, 11/12/2020   203,975 203,635
 
      1,128,548

 

The accompanying notes are an integral part of the financial statements. 125

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
TERM LOANS (M) (continued)      
Financials - 0.5%      
ARG IH Corp.      
5.000%, 11/15/2020 $ 154,225 $ 154,416
Asurion LLC      
4.250%, 07/08/2020   297,121 296,113
8.500%, 03/03/2021   195,000 201,094
Gardner Denver, Inc.      
4.250%, 07/30/2020   545,875 544,056
Nuveen Investments, Inc.      
4.157%, 05/15/2017   550,000 548,854
6.500%, 02/28/2019   135,000 135,068
The Brickman Group, Ltd. LLC      
4.000%, 12/18/2020   328,350 322,399
 
      2,202,000
Health Care - 0.5%      
Brand Energy & Infrastructure      
Services, Inc.      
4.750%, 11/26/2020   323,375 323,375
Community Health Systems, Inc.      
4.250%, 01/27/2021   149,250 149,600
DaVita HealthCare Partners, Inc.      
3.500%, 06/24/2021   110,000 109,666
Medpace Holdings, Inc.      
4.750%, 04/01/2021   123,868 123,816
Opal Acquisition, Inc.      
5.000%, 11/27/2020   671,625 671,485
PRA Holdings, Inc.      
4.500%, 09/23/2020   357,300 356,258
Salix Pharmaceuticals, Ltd.      
4.250%, 01/02/2020   385,125 385,286
 
      2,119,486
Industrials - 0.3%      
AFGlobal Corp.      
5.000%, 12/19/2019   158,802 159,199
Filtration Group, Inc.      
4.500%, 11/21/2020   194,025 194,268
Fly Funding II SARL      
4.500%, 08/09/2019   211,750 212,456
Gates Global LLC      
4.250%, 07/05/2021   155,000 153,676
Pro Mach, Inc.      
4.500%, 07/06/2017   189,133 189,133
RBS Global, Inc.      
4.000%, 08/21/2020   545,875 542,171
 
      1,450,903
Information Technology - 0.3%      
Avago Technologies Cayman, Ltd.      
3.750%, 05/06/2021   200,000 199,714
Freescale Semiconductor, Inc.      
4.250%, 02/28/2020   421,812 420,231
Kronos, Inc.      
4.500%, 10/30/2019   113,824 113,895
Zayo Group LLC      
4.000%, 07/02/2019   410,845 408,727
 
      1,142,567
Materials - 0.4%      
Berry Plastics Group, Inc.      
3.750%, 01/06/2021   807,975 795,567
Coveris Holdings SA      
5.250%, 05/08/2019   308,450 310,763

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
TERM LOANS (M) (continued)      
Materials (continued)      
FMG Resources August 2006 Pty, Ltd.      
3.750%, 06/30/2019 $ 676,283 $ 673,371
 
      1,779,701
Telecommunication Services - 0.3%      
Intelsat Jackson Holdings SA      
3.750%, 06/30/2019   880,000 873,675
Level 3 Financing, Inc.      
4.000%, 01/15/2020   395,000 393,420
 
      1,267,095
TOTAL TERM LOANS (Cost $17,608,378)   $ 17,557,870
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 15.1%      
Commercial & Residential - 15.1%      
Alternative Loan Trust      
Series 2005-56, Class 5A1,      
0.475%, 11/25/2035 (P)   251,941 204,799
Series 2006-9T1, Class A1,      
5.750%, 05/25/2036   328,606 281,000
Series 2007-19, Class 2A1,      
6.500%, 08/25/2037   483,522 351,815
Series 2007-9T1, Class 2A1,      
6.000%, 05/25/2037   144,008 117,963
American Home Mortgage Assets Trust,      
Series 2006-3, Class 2A11      
1.057%, 10/25/2046 (P)   204,081 148,920
Banc of America Commercial      
Mortgage Trust, Series 2007-4,      
Class A4 5.948%, 02/10/2051 (P)   918,165 1,013,386
Banc of America Funding Trust,      
Series 2006-H, Class 6A1      
0.346%, 10/20/2036 (P)   242,045 174,297
BB-UBS Trust, Series 2012, Class A      
3.430%, 11/05/2036 (S)   485,000 482,294
BBCMS Trust, Series 2013-TYSN,      
Class A2 3.756%, 09/05/2032 (S)   435,000 458,965
BCAP LLC Trust      
Series 2006-AA2, Class A1,      
0.325%, 01/25/2037 (P)   384,609 291,405
Series 2007-AA2, Class 12A1,      
0.365%, 05/25/2047 (P)   284,304 212,453
Bear Stearns Alt-A Trust      
Series 2005-10, Class 11A1,      
0.655%, 01/25/2036 (P)   243,548 190,321
Series 2006-3, Class 1A1,      
0.535%, 05/25/2036 (P)   176,406 129,146
Bear Stearns Commercial      
Mortgage Securities Trust      
Series 2007-PW16, Class A4,      
5.897%, 06/11/2040 (P)   400,000 439,070
Series 2007-T26, Class A4,      
5.471%, 01/12/2045 (P)   431,004 469,577
Chase Mortgage Finance Trust,      
Series 2005-S3, Class A10      
5.500%, 11/25/2035   385,000 383,566
CHL Mortgage Pass-Through Trust      
Series 2007-12, Class A9,      
5.750%, 08/25/2037   297,001 284,779
Series 2007-HY1, Class 1A1,      
2.657%, 04/25/2037 (P)   38,597 32,506
Series 2007-HY4, Class 1A1,      
2.636%, 09/25/2047 (P)   468,172 418,423

 

The accompanying notes are an integral part of the financial statements. 126

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Citigroup Commercial Mortgage Trust      
Series 2008-C7, Class A4,      
6.339%, 12/10/2049 (P) $ 360,143 $ 399,076
Series 2013-GC15, Class A4,      
4.371%, 09/10/2046 (P)   1,040,046 1,135,306
Series 2013-GC17, Class A4,      
4.131%, 11/10/2046   1,060,000 1,136,247
Series 2014-GC19, Class A4,      
4.023%, 03/10/2047   1,030,000 1,093,899
Series 2014-GC21, Class A5,      
3.855%, 05/10/2047   1,040,000 1,089,432
Series 2014-GC23, Class A4,      
3.622%, 07/10/2047   385,000 396,002
Citigroup/Deutsche Bank      
Commercial Mortgage Trust      
Series 2006-CD2, Class A4,      
5.480%, 01/15/2046 (P)   630,000 658,810
Series 2007-CD4, Class A4,      
5.322%, 12/11/2049   1,135,000 1,223,714
Commercial Mortgage Loan Trust,      
Series 2008-LS1, Class A4B      
6.212%, 12/10/2049 (P)   881,444 958,712
Commercial Mortgage Pass      
Through Certificates      
Series 2006-C7, Class A4,      
5.945%, 06/10/2046 (P)   384,710 409,522
Series 2013-300P, Class A1,      
4.353%, 08/10/2030 (S)   355,000 386,164
Series 2013-CR12, Class A4,      
4.046%, 10/10/2046   1,065,000 1,136,264
Series 2013-CR8, Class A5,      
3.612%, 06/10/2046 (P)   685,000 711,517
Series 2013-CR9, Class A4,      
4.378%, 07/10/2045 (P)   825,110 899,192
Series 2013-WWP, Class A2,      
3.424%, 03/10/2031 (S)   1,340,000 1,364,113
Series 2014-CR16, Class A4,      
4.051%, 04/10/2047   640,000 680,339
Series 2014-CR17, Class A5,      
3.977%, 05/10/2047   1,120,000 1,183,522
Series 2014-CR18, Class A5,      
3.828%, 07/15/2047   840,000 875,638
Series 2014-LC15, Class A4,      
4.006%, 04/10/2047   850,000 901,390
Series 2014-UBS2, Class A5,      
3.961%, 03/10/2047   1,075,000 1,133,591
Series 2014-UBS4, Class A5,      
3.694%, 08/10/2047   1,005,000 1,032,415
Credit Suisse First Boston Mortgage      
Securities Corp., Series 2005-C3,      
Class AJ 4.771%, 07/15/2037   340,000 346,409
Credit Suisse Mortgage Capital      
Certificates Trust, Series 2006-C4,      
Class A3 5.467%, 09/15/2039   372,407 397,573
Deutsche Alt-A Securities Mortgage      
Loan Trust, Series 2007-AR2, Class A1      
0.305%, 03/25/2037 (P)   197,437 136,163
First Horizon Alternative      
Mortgage Securities Trust      
Series 2005-AA7, Class 2A1,      
2.239%, 09/25/2035 (P)   173,573 152,770

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
First Horizon Alternative Mortgage      
Securities Trust (continued)      
Series 2005-AA9, Class 3A1,      
2.223%, 11/25/2035 (P) $ 439,956 $ 366,930
Series 2006-AA1, Class 2A1,      
2.210%, 04/25/2036 (P)   30,289 25,531
FREMF Mortgage Trust      
Series 2010-K8, Class B,      
5.405%, 09/25/2043 (P)(S)   690,000 760,254
Series 2012-K706, Class B,      
4.163%, 11/25/2044 (P)(S)   500,000 520,694
General Electric Capital Assurance      
Company, Series 2003-1, Class A5      
5.743%, 05/12/2035 (P)(S)   89,275 100,845
GMACM Mortgage Loan Trust      
Series 2005-AR5, Class 4A1,      
2.937%, 09/19/2035 (P)   130,552 122,664
Series 2006-AR1, Class 1A1,      
2.955%, 04/19/2036 (P)   654,397 578,420
GS Mortgage Securities Trust      
Series 2005-ROCK, Class A,      
5.366%, 05/03/2032 (S)   285,445 337,670
Series 2012-ALOH, Class A,      
3.551%, 04/10/2034 (S)   830,000 860,312
Series 2013-GC14, Class A5,      
4.243%, 08/10/2046   550,000 595,418
Series 2014-GC20, Class A5,      
3.862%, 06/10/2047   860,000 901,070
Series 2014-GC20, Class A5,      
3.998%, 04/10/2047   1,005,000 1,065,106
GSR Mortgage Loan Trust,      
Series 2006-AR1, Class 2A1      
2.710%, 01/25/2036 (P)   33,458 31,505
HarborView Mortgage Loan Trust      
Series 2004-11, Class 1A,      
0.506%, 01/19/2035 (P)   34,559 25,766
Series 2005-8, Class 1A2A,      
0.486%, 09/19/2035 (P)   125,117 95,277
Series 2006-12, Class 2A13,      
0.396%, 12/19/2036 (P)   819,701 587,680
Series 2006-12, Class 2A2A,      
0.346%, 01/19/2038 (P)   106,660 92,323
Hilton USA Trust, Series 2013-HLT,      
Class AFX 2.662%, 11/05/2030 (S)   1,315,000 1,325,943
IndyMac INDA Mortgage Loan Trust,      
Series 2006-AR3, Class 1A1      
2.614%, 12/25/2036 (P)   638,175 560,737
IndyMac INDX Mortgage Loan Trust      
Series 2005-AR13, Class 1A1,      
2.455%, 08/25/2035 (P)   150,571 118,363
Series 2005-AR14, Class 1A1A,      
0.435%, 07/25/2035 (P)   75,029 64,823
JPMBB Commercial      
Mortgage Securities Trust      
Series 2014-C19, Class A4,      
3.997%, 04/15/2047   1,010,000 1,069,633
Series 2014-C21, Class A5,      
3.775%, 08/15/2047   1,090,000 1,132,175
Series 2014-C22, Class A4,      
3.801%, 09/15/2047   870,000 902,997
Series 2013-C17, Class A4,      
4.199%, 01/15/2047   340,000 366,038

 

The accompanying notes are an integral part of the financial statements. 127

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
JPMorgan Chase Commercial      
Mortgage Securities Corp.      
Series 2004-CBX, Class A6,      
4.899%, 01/12/2037 $ 188,156 $ 188,225
Series 2007-CB19, Class A4,      
5.892%, 02/12/2049 (P)   795,000 868,449
Series 2012-WLDN, Class A,      
3.905%, 05/05/2030 (S)   630,000 654,080
Series 2006-LDP9, Class A3,      
5.336%, 05/15/2047   1,194,951 1,285,139
JPMorgan Chase Commercial      
Mortgage Securities Trust      
Series 2013-C16, Class A4,      
4.166%, 12/15/2046   700,000 753,035
Series 2014-C20, Class A5,      
3.805%, 07/15/2047   1,015,000 1,058,185
JPMorgan Mortgage Trust,      
Series 2006-A3, Class 3A2      
2.613%, 05/25/2036 (P)   61,449 54,838
LB-UBS Commercial Mortgage Trust      
Series 2007-C6, Class A4,      
5.858%, 07/15/2040 (P)   772,227 821,340
Series 2006-C4, Class A4,      
6.029%, 06/15/2038 (P)   1,286,102 1,376,113
Series 2007-C2, Class A3,      
5.430%, 02/15/2040   405,395 441,441
Lehman XS Trust, Series 2006-16N,      
Class A4A 0.345%, 11/25/2046 (P)   438,835 364,803
Luminent Mortgage Trust, Series 2006-2,      
Class A1A 0.355%, 02/25/2046 (P)   468,214 354,076
Merrill Lynch Mortgage Investors Trust,      
Series 2005-A4, Class 1A      
2.499%, 07/25/2035 (P)   518,696 439,502
Merrill Lynch Mortgage Trust,      
Series 2006-C1, Class A4      
5.862%, 05/12/2039 (P)   820,000 869,079
Merrill Lynch/Countrywide      
Commercial Mortgage Trust      
Series 2007-5, Class A4,      
5.378%, 08/12/2048   1,029,768 1,102,664
Series 2007-7, Class A4,      
5.810%, 06/12/2050 (P)   780,000 852,524
Series 2007-9, Class A4,      
5.700%, 09/12/2049   595,000 654,778
Morgan Stanley Bank of America      
Merrill Lynch Trust      
3.892%, 06/15/2047   830,000 868,107
Series 2014-C14, Class A5,      
4.064%, 02/15/2047   190,000 201,861
Series 2014-C17, Class A5,      
3.741%, 08/15/2047   1,095,000 1,134,469
Morgan Stanley Capital I Trust      
Series 2005-T17, Class A5,      
4.780%, 12/13/2041   257,747 258,446
Series 2006-IQ12, Class A4,      
5.332%, 12/15/2043   1,156,943 1,241,439
Series 2007-IQ14, Class A4,      
5.692%, 04/15/2049 (P)   810,045 884,945
Series 2007-IQ16, Class A4,      
5.809%, 12/12/2049   569,030 624,685
Series 2007-T27, Class A4,      
5.831%, 06/11/2042 (P)   190,000 209,478

 

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
OBP Depositor LLC Trust,      
Series 2010-OBP, Class A      
4.646%, 07/15/2045 (S) $ 417,000 $ 462,987
RALI Series Trust      
Series 06-QO7, Class 1A1,      
0.917%, 09/25/2046 (P)   458,283 311,946
Series 2007-QH9, Class A1,      
1.415%, 11/25/2037 (P)   240,636 158,218
RFMSI Series Trust, Series 2007-SA2,      
Class 2A1 3.045%, 04/25/2037 (P)   67,266 58,953
Sequoia Mortgage Trust, Series 2007-3,      
Class 2AA1 2.425%, 07/20/2037 (P)   45,639 37,595
Springleaf Mortgage Loan Trust,      
Series 2013-2A, Class M1      
3.520%, 12/25/2065 (P)(S)   785,171 801,532
Structured Adjustable Rate Mortgage      
Loan Trust, Series 2004-13, Class A2      
0.455%, 09/25/2034 (P)   52,848 47,194
Structured Asset Mortgage      
Investments II Trust, Series 2005-AR8,      
Class A1A 0.435%, 02/25/2036 (P)   42,808 35,622
UBS Commercial Mortgage Trust,      
Series 2012-C1, Class A3      
3.400%, 05/10/2045   845,000 868,381
UBS-Barclays Commercial      
Mortgage Trust, Series 2013-C5,      
Class A4 3.185%, 03/10/2046   1,125,000 1,129,158
Wachovia Bank Commercial      
Mortgage Trust, Series 2006-C23,      
Class A4 5.418%, 01/15/2045 (P)   493,178 513,602
Wells Fargo Mortgage      
Backed Securities Trust      
Series 2005-AR16, Class 4A8,      
2.611%, 10/25/2035 (P)   325,000 305,705
Series 2014-LC16, Class A5,      
3.817%, 08/15/2050   870,000 904,931
Wells Fargo Mortgage Backed      
Securities Trust, Series 2006-AR16,      
Class A1 2.556%, 10/25/2036 (P)   393,913 368,849
WF-RBS Commercial Mortgage Trust      
Series 2013-C15, Class A4,      
4.153%, 08/15/2046 (P)   430,000 462,265
Series 2014-C19, Class A5,      
4.101%, 03/15/2047   945,000 1,008,007
Series 2014-C20, Class A5,      
3.995%, 05/15/2047   1,080,000 1,142,200
Series 2014-C21, Class A5,      
3.678%, 08/15/2047   630,000 649,054
Series 2014-LC14, Class A5,      
4.045%, 03/15/2047   1,035,000 1,097,110
 
      66,455,649
U.S. Government Agency - 0.0%      
Federal Home Loan Mortgage Corp.,      
Series 2895, Class EK      
4.000%, 11/15/2019   48,473 50,920
Government National Mortgage      
Association, Series 2006-38, Class XS      
IO 7.095%, 09/16/2035   27,248 5,364
 
      56,284
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $66,291,556)   $ 66,511,933

 

The accompanying notes are an integral part of the financial statements. 128

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES - 2.7%      
Ally Master Owner Trust, Series 2011-4,      
Class A2 1.540%, 09/15/2016 $ 580,000 $ 580,285
American Credit Acceptance      
Receivables Trust, Series 2013-1,      
Class A 1.450%, 04/16/2018 (S)   115,405 115,855
CAL Funding II, Ltd., Series 2012-1A,      
Class A 3.470%, 10/25/2027 (S)   191,917 192,670
CPS Auto Trust      
Series 2012-C, Class A,      
1.820%, 12/16/2019 (S)   201,397 203,448
Series 2013-D, Class A,      
1.540%, 07/16/2018 (S)   311,073 312,421
Credit Acceptance Auto Loan Trust      
Series 2012-1A, Class B,      
3.120%, 03/16/2020 (S)   585,000 591,437
Series 2013-1A, Class A,      
1.210%, 10/15/2020 (S)   655,000 656,017
Series 2013-2A, Class A,      
1.500%, 04/15/2021 (S)   590,000 593,217
Series 2014-1A, Class A,      
1.550%, 10/15/2021 (S)   590,000 590,581
First Investors Auto Owner Trust      
Series 2012-1A, Class A2,      
1.960%, 11/15/2017 (S)   28,650 28,678
Series 2013-1A, Class B,      
1.810%, 10/15/2018 (S)   165,000 166,329
Series 2013-3A, Class A3,      
1.440%, 10/15/2019 (S)   470,000 471,614
Series 2014-1A, Class A3,      
1.490%, 01/15/2020 (S)   325,000 325,980
Flagship Credit Auto Trust, Series 2014-1,      
Class A 1.210%, 04/15/2019 (S)   328,022 327,775
Ford Credit Floorplan Master      
Owner Trust A, Series 2014-1, Class B      
1.400%, 02/15/2019   190,000 189,517
GSAA Home Equity Trust      
Series 2006-15, Class AF6,      
5.876%, 09/25/2036   805,554 463,357
Series 2006-20, Class 2A1A,      
0.205%, 12/25/2046 (P)   734,210 506,764
Series 2006-10, Class AF3,      
5.985%, 06/25/2036 (P)   301,135 179,099
GSAA Trust      
Series 2005-7, Class AF4,      
5.058%, 05/25/2035   430,000 384,740
Series 2007-3, Class 1A2,      
0.325%, 03/25/2047 (P)   1,135,455 622,548
GSAMP Trust, Series 2007-FM2,      
Class A2B 0.245%, 01/25/2037 (P)   630,491 387,214
Huntington Auto Trust, Series 2012-1,      
Class B 1.710%, 08/15/2017   376,000 381,159
Morgan Stanley ABS Capital I,      
Series 2006-HE4, Class A3      
0.305%, 06/25/2036 (P)   202,012 150,674
Newcastle Mortgage Securities Trust,      
Series 2007-1, Class 2A3      
0.385%, 04/25/2037 (P)   650,000 406,249
Prestige Auto Receivables Trust,      
Series 2012-1, Class B      
2.490%, 04/16/2018 (S)   440,000 447,436
Santander Drive Auto Receivables Trust      
Series 2010-2, Class C,      
3.890%, 07/17/2017   354,710 356,077
Series 2012-5, Class B,      
1.560%, 08/15/2018   635,000 638,842

 

Investment Quality Bond Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
 
ASSET BACKED SECURITIES (continued)      
Santander Drive Auto      
Receivables Trust (continued)      
Series 2014-1, Class C,      
2.360%, 04/15/2020 $ 495,000  $ 499,634
Securitized Asset Backed      
Receivables LLC Trust,      
Series 2006-HE1, Class A2B      
0.245%, 07/25/2036 (P) 257,083 125,208
Soundview Home Loan Trust,      
Series 2007-OPT2, Class 2A3      
0.335%, 07/25/2037 (P) 55,000 35,094
Springleaf Funding Trust, Series 2014-AA,      
Class A 2.410%, 12/15/2022 (S) 945,000 944,364
Volvo Financial Equipment LLC,      
Series 2012-1A, Class B      
1.510%, 08/15/2017 (S) 230,000 231,585
TOTAL ASSET BACKED SECURITIES (Cost $11,842,644) $ 12,105,868
 
PREFERRED SECURITIES - 0.2%      
Financials - 0.2%      
Citigroup Capital XIII (7.875% to      
10/30/2015, then      
3 month LIBOR + 6.370%) 32,500 885,300
TOTAL PREFERRED SECURITIES (Cost $910,000)   $ 885,300
 
PURCHASED OPTIONS - 0.0%      
Put Options - 0.0%      
Over the Counter on 10 Year Interest Rate      
Swap. Receive a fixed rate of 3.500%      
and pay a floating rate based on 1-year      
LIBOR (Expiration Date: 04/29/2015;      
Strike Rate: 3.500%; Counterparty:      
Goldman Sachs & Company) (I) 6,260,000 22,089
Over the Counter on Italian Government      
Bond (Expiration Date: 10/13/2014;      
Strike Price: EUR 106.60; Counterparty:      
JPMorgan Chase Bank) (I) 1,432,861 681
Over the Counter on Italian Government      
Bond (Expiration Date: 10/13/2014;      
Strike Price: EUR 106.70; Counterparty:      
Morgan Stanley & Company, Inc.) (I) 1,485,592 774
Over the Counter on Italian Government      
Bond (Expiration Date: 10/14/2014;      
Strike Price: EUR 106.75; Counterparty:      
Morgan Stanley & Company, Inc.) (I) 1,485,591 864
Over the Counter on Italian Government      
Bond (Expiration Date: 10/14/2014;      
Strike Price: EUR 106.75; Counterparty:      
Morgan Stanley & Company, Inc.) (I) 1,485,592 864
 
      25,272
TOTAL PURCHASED OPTIONS (Cost $209,325)   $ 25,272
 
SECURITIES LENDING COLLATERAL - 0.2%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 68,913 689,620
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $689,617)   $ 689,620

 

The accompanying notes are an integral part of the financial statements. 129

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Investment Quality Bond Fund (continued)  
    Shares or    
    Principal    
    Amount   Value
 
 
SHORT-TERM INVESTMENTS - 23.5%        
Repurchase Agreement - 23.5%        
BNP Paribas Tri-Party Repurchase        
Agreement dated 08/29/2014 at 0.060%        
to be repurchased at $103,700,691 on        
09/02/2014, collateralized by $6,497,355        
Government National Mortgage        
Association, 4.000% - 4.500% due        
11/20/2043 - 06/20/2044 (valued at        
$7,052,151, including interest),        
$65,103,198 Federal National Mortgage        
Association, 2.500% - 7.000% due        
04/01/2016 - 07/01/2044 (valued at        
$69,781,241, including interest) and        
$27,274,948 Federal Home Loan        
Mortgage Corp., 2.500% - 6.500% due        
09/01/2021 - 06/01/2044 (valued at        
$28,940,609, including interest) $ 103,700,000  $ 103,700,000
TOTAL SHORT-TERM INVESTMENTS (Cost $103,700,000) $ 103,700,000
Total Investments (Investment Quality Bond Fund)    
(Cost $511,773,653) - 118.5%     $ 522,244,221
Other assets and liabilities, net - (18.5%)       (81,670,758)
TOTAL NET ASSETS - 100.0%     $ 440,573,463
 

 

Lifestyle II Aggressive Portfolio  
  Shares or  
  Principal  
  Amount Value
 
 
AFFILIATED INVESTMENT COMPANIES (G) - 67.0%  
Equity - 67.0%    
Strategic Equity Allocation, Class NAV    
(John Hancock) (A)(1) 232,720 $ 3,248,768
TOTAL AFFILIATED INVESTMENT    
COMPANIES (Cost $3,170,692) $ 3,248,768
 
UNAFFILIATED INVESTMENT COMPANIES - 32.9%  
Exchange-Traded Funds - 32.9%    
Financial Select Sector SPDR Fund 3,274 76,481
Vanguard Consumer Staples ETF 1,239 145,124
Vanguard Dividend Appreciation ETF 5,756 449,658
Vanguard Energy ETF 514 73,127
Vanguard FTSE Emerging Markets ETF 4,922 223,459
Vanguard Health Care ETF 726 85,094
Vanguard Information Technology ETF 1,435 145,552
Vanguard Materials ETF 214 24,287
Vanguard Mid-Cap ETF 1,296 157,036
Vanguard MSCI EAFE ETF 2,287 95,345
Vanguard REIT ETF 631 48,701
Vanguard Small-Cap ETF 627 73,277
TOTAL UNAFFILIATED INVESTMENT    
COMPANIES (Cost $1,557,819) $ 1,597,141
Total Investments (Lifestyle II Aggressive Portfolio)  
(Cost $4,728,511) - 99.9% $ 4,845,909
Other assets and liabilities, net - 0.1%   3,869
TOTAL NET ASSETS - 100.0% $ 4,849,778

 

Lifestyle II Balanced Portfolio    
  Shares or  
  Principal  
  Amount Value
 
 
AFFILIATED INVESTMENT COMPANIES (G) - 40.5%  
Equity - 40.5%    
Strategic Equity Allocation, Class NAV    
(John Hancock) (A)(1) 258,273 $ 3,605,496
TOTAL AFFILIATED INVESTMENT    
COMPANIES (Cost $3,546,672) $ 3,605,496
 
UNAFFILIATED INVESTMENT COMPANIES - 59.4%  
Exchange-Traded Funds - 59.4%    
Financial Select Sector SPDR Fund 3,813 89,072
iShares iBoxx Investment Grade Corporate    
Bond ETF 2,748 331,354
iShares JPMorgan USD Emerging Markets    
Bond ETF 383 44,286
iShares TIPS Bond ETF 768 88,512
PowerShares Senior Loan Portfolio 24,384 603,016
SPDR Barclays Capital High Yield Bond ETF 18,343 758,850
Vanguard Consumer Staples ETF 1,137 133,177
Vanguard Dividend Appreciation ETF 8,148 636,522
Vanguard Energy ETF 668 95,036
Vanguard FTSE Emerging Markets ETF 3,554 161,352
Vanguard Health Care ETF 950 111,350
Vanguard Information Technology ETF 1,758 178,314
Vanguard Intermediate-Term Bond ETF 3,180 271,190
Vanguard Intermediate-Term Corporate    
Bond ETF 8,875 773,456
Vanguard Materials ETF 278 31,550
Vanguard Mid-Cap ETF 1,106 134,014
Vanguard MSCI EAFE ETF 1,262 52,613
Vanguard REIT ETF 1,443 111,371
Vanguard Small-Cap ETF 354 41,372
Vanguard Total Bond Market ETF 7,657 632,315
TOTAL UNAFFILIATED INVESTMENT    
COMPANIES (Cost $5,230,421) $ 5,278,722
Total Investments (Lifestyle II Balanced Portfolio)    
(Cost $8,777,093) - 99.9% $ 8,884,218
Other assets and liabilities, net - 0.1%   11,226
 
TOTAL NET ASSETS - 100.0% $ 8,895,444

 

Lifestyle II Conservative Portfolio  
  Shares or  
  Principal  
  Amount Value
 
 
AFFILIATED INVESTMENT COMPANIES (G) - 13.4%  
Equity - 13.4%    
Strategic Equity Allocation, Class NAV    
(John Hancock) (A)(1) 22,664 $ 316,386
TOTAL AFFILIATED INVESTMENT    
COMPANIES (Cost $308,116) $ 316,386
 
UNAFFILIATED INVESTMENT COMPANIES - 92.1%  
Exchange-Traded Funds - 92.1%    
iShares iBoxx Investment Grade Corporate    
Bond ETF 1,832 220,903
iShares JPMorgan USD Emerging Markets    
Bond ETF 217 25,092
iShares TIPS Bond ETF 580 66,845
PowerShares Senior Loan Portfolio 11,168 276,185
SPDR Barclays Capital High Yield Bond ETF 7,299 301,960
Vanguard Consumer Staples ETF 161 18,858

 

The accompanying notes are an integral part of the financial statements. 130

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Lifestyle II Conservative Portfolio (continued)
  Shares or  
  Principal  
  Amount Value
 
 
UNAFFILIATED INVESTMENT COMPANIES (continued)  
Exchange-Traded Funds (continued)    
Vanguard Dividend Appreciation ETF 1,341 $ 104,759
Vanguard Energy ETF 66 9,390
Vanguard Intermediate-Term Bond ETF 2,120 180,794
Vanguard Intermediate-Term Corporate    
Bond ETF 5,917 515,665
Vanguard Materials ETF 27 3,064
Vanguard Mid-Cap ETF 38 4,604
Vanguard REIT ETF 327 25,238
Vanguard Total Bond Market ETF 5,105 421,571
TOTAL UNAFFILIATED INVESTMENT    
COMPANIES (Cost $2,159,050) $ 2,174,928
Total Investments (Lifestyle II Conservative Portfolio)  
(Cost $2,467,166) - 105.5% $ 2,491,314
Other assets and liabilities, net - (5.5%)   (130,568)
TOTAL NET ASSETS - 100.0% $ 2,360,746
 
 
 
Lifestyle II Growth Portfolio    
  Shares or  
  Principal  
  Amount Value
 
 
AFFILIATED INVESTMENT COMPANIES (G) - 54.5%  
Equity - 54.5%    
Strategic Equity Allocation, Class NAV    
(John Hancock) (A)(1) 398,398 $ 5,561,636
TOTAL AFFILIATED INVESTMENT    
COMPANIES (Cost $5,442,903) $ 5,561,636
 
UNAFFILIATED INVESTMENT COMPANIES - 45.4%  
Exchange-Traded Funds - 45.4%    
Financial Select Sector SPDR Fund 5,645 131,869
iShares iBoxx Investment Grade Corporate    
Bond ETF 1,374 165,677
iShares JPMorgan USD Emerging Markets    
Bond ETF 329 38,042
iShares TIPS Bond ETF 441 50,825
PowerShares Senior Loan Portfolio 15,430 381,584
SPDR Barclays Capital High Yield Bond ETF 10,243 423,753
Vanguard Consumer Staples ETF 2,392 280,175
Vanguard Dividend Appreciation ETF 11,845 925,331
Vanguard Energy ETF 809 115,096
Vanguard FTSE Emerging Markets ETF 7,159 325,019
Vanguard Health Care ETF 1,308 153,311
Vanguard Information Technology ETF 2,522 255,806
Vanguard Intermediate-Term Bond ETF 1,590 135,595
Vanguard Intermediate-Term Corporate    
Bond ETF 4,438 386,772
Vanguard Materials ETF 337 38,246
Vanguard Mid-Cap ETF 2,255 273,238
Vanguard MSCI EAFE ETF 1,663 69,330
Vanguard REIT ETF 1,457 112,451
Vanguard Small-Cap ETF 499 58,318

 

Lifestyle II Growth Portfolio (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
UNAFFILIATED INVESTMENT COMPANIES (continued)  
Exchange-Traded Funds (continued)    
Vanguard Total Bond Market ETF 3,829 $ 316,199
TOTAL UNAFFILIATED INVESTMENT    
COMPANIES (Cost $4,571,483) $ 4,636,637
Total Investments (Lifestyle II Growth Portfolio)    
(Cost $10,014,386) - 99.9% $ 10,198,273
Other assets and liabilities, net - 0.1%   7,261
TOTAL NET ASSETS - 100.0% $ 10,205,534
 
 
 
Lifestyle II Moderate Portfolio    
  Shares or  
  Principal  
  Amount Value
 
 
AFFILIATED INVESTMENT COMPANIES (G) - 26.8%  
Equity - 26.8%    
Strategic Equity Allocation, Class NAV    
(John Hancock) (A)(1) 41,011 $ 572,517
TOTAL AFFILIATED INVESTMENT    
COMPANIES (Cost $561,163) $ 572,517
 
UNAFFILIATED INVESTMENT COMPANIES - 69.4%  
Exchange-Traded Funds - 69.4%    
iShares iBoxx Investment Grade Corporate    
Bond ETF 1,027 123,836
iShares JPMorgan USD Emerging Markets    
Bond ETF 131 15,148
iShares TIPS Bond ETF 233 26,853
PowerShares Senior Loan Portfolio 7,851 194,155
SPDR Barclays Capital High Yield Bond ETF 5,490 227,121
Vanguard Consumer Staples ETF 389 45,564
Vanguard Dividend Appreciation ETF 1,798 140,460
Vanguard Energy ETF 107 15,223
Vanguard FTSE Emerging Markets ETF 272 12,349
Vanguard Intermediate-Term Bond ETF 1,189 101,398
Vanguard Intermediate-Term Corporate    
Bond ETF 3,318 289,164
Vanguard Materials ETF 44 4,994
Vanguard Mid-Cap ETF 167 20,235
Vanguard MSCI EAFE ETF 134 5,586
Vanguard REIT ETF 263 20,298
Vanguard Small-Cap ETF 22 2,571
Vanguard Total Bond Market ETF 2,863 236,425
TOTAL UNAFFILIATED INVESTMENT    
COMPANIES (Cost $1,468,734) $ 1,481,380
Total Investments (Lifestyle II Moderate Portfolio)  
(Cost $2,029,897) - 96.2% $ 2,053,897
Other assets and liabilities, net - 3.8%   81,942
TOTAL NET ASSETS - 100.0% $ 2,135,839

 

The accompanying notes are an integral part of the financial statements. 131

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Mid Cap Stock Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 93.8%    
Consumer Discretionary - 22.8%    
Auto Components - 0.6%    
Tenneco, Inc. (I) 162,597 $ 10,419,216
Automobiles - 1.4%    
Harley-Davidson, Inc. 374,239 23,786,631
Diversified Consumer Services - 0.1%    
The Honest Company, Inc. (I) 52,540 1,421,591
Hotels, Restaurants & Leisure - 7.8%    
Bloomin’ Brands, Inc. (I) 608,582 10,126,804
Buffalo Wild Wings, Inc. (I) 126,066 18,626,252
Chipotle Mexican Grill, Inc. (I) 29,993 20,354,749
Diamond Resorts International, Inc. (I) 817,594 20,456,202
Panera Bread Company, Class A (I) 136,941 20,532,934
Starwood Hotels & Resorts Worldwide, Inc. 283,752 23,988,394
Wyndham Worldwide Corp. 217,183 17,578,792
 
    131,664,127
Household Durables - 3.7%    
Harman International Industries, Inc. 149,399 17,192,837
Lennar Corp., Class A 392,524 15,379,090
Whirlpool Corp. 188,572 28,855,287
 
    61,427,214
Internet & Catalog Retail - 2.1%    
Netflix, Inc. (I) 74,822 35,737,979
Media - 0.9%    
IMAX Corp. (I)(L) 566,778 15,711,086
Specialty Retail - 3.3%    
Advance Auto Parts, Inc. 156,099 21,295,026
Ross Stores, Inc. 208,618 15,733,970
Signet Jewelers, Ltd. 158,417 18,672,612
 
    55,701,608
Textiles, Apparel & Luxury Goods - 2.9%    
Kate Spade & Company (I) 527,475 17,058,542
Samsonite International SA 5,573,100 19,239,753
Vince Holding Corp. (I) 351,848 12,772,082
 
    49,070,377
    384,939,829
Consumer Staples - 5.5%    
Beverages - 0.9%    
Monster Beverage Corp. (I) 172,000 15,206,520
Food & Staples Retailing - 0.9%    
Sprouts Farmers Market, Inc. (I)(L) 500,420 15,482,995
Food Products - 2.1%    
Keurig Green Mountain, Inc. 193,785 25,835,416
The WhiteWave Foods Company, Class A (I) 265,402 9,294,378
 
    35,129,794
Household Products - 1.0%    
Spectrum Brands Holdings, Inc. 194,426 16,837,292
Personal Products - 0.6%    
Coty, Inc., Class A (L) 552,026 9,489,327
 
    92,145,928
Energy - 4.0%    
Oil, Gas & Consumable Fuels - 4.0%    
Diamondback Energy, Inc. (I) 250,349 21,617,636
Energen Corp. 258,786 20,827,097

 

Mid Cap Stock Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels (continued)    
Pioneer Natural Resources Company 121,854 $ 25,424,837
 
    67,869,570
 
    67,869,570
Financials - 3.8%    
Capital Markets - 1.2%    
Julius Baer Group, Ltd. (I) 436,108 19,849,870
Diversified Financial Services - 0.5%    
Nomad Holdings, Ltd. (I) 678,100 7,306,406
Insurance - 1.1%    
Assured Guaranty, Ltd. 775,719 18,733,614
Real Estate Management & Development - 1.0%    
CBRE Group, Inc., Class A (I) 547,233 17,391,065
 
    63,280,955
Health Care - 15.5%    
Biotechnology - 2.5%    
Alnylam Pharmaceuticals, Inc. (I) 77,057 5,368,561
Cubist Pharmaceuticals, Inc. (I) 100,642 6,947,317
Incyte Corp. (I) 152,707 8,276,719
NPS Pharmaceuticals, Inc. (I) 206,610 6,235,490
Regeneron Pharmaceuticals, Inc. (I) 46,567 16,322,665
 
    43,150,752
Health Care Equipment & Supplies - 4.1%    
DexCom, Inc. (I) 690,408 30,516,034
HeartWare International, Inc. (I) 220,502 17,882,712
Insulet Corp. (I) 568,473 20,527,560
 
    68,926,306
Health Care Providers & Services - 1.2%    
Envision Healthcare Holdings, Inc. (I) 541,874 19,810,913
Health Care Technology - 2.2%    
Cerner Corp. (I) 243,031 14,013,167
Veeva Systems, Inc., Class A (I)(L) 751,260 22,515,262
 
    36,528,429
Life Sciences Tools & Services - 1.0%    
Covance, Inc. (I) 206,236 17,096,964
Pharmaceuticals - 4.5%    
Actavis PLC (I) 134,529 30,535,392
Ono Pharmaceutical Company, Ltd. 265,560 23,745,113
Salix Pharmaceuticals, Ltd. (I) 138,473 22,032,439
 
    76,312,944
 
    261,826,308
Industrials - 18.3%    
Aerospace & Defense - 2.2%    
DigitalGlobe, Inc. (I) 620,036 18,830,493
Textron, Inc. 495,655 18,834,890
 
    37,665,383
Airlines - 0.8%    
Spirit Airlines, Inc. (I) 180,148 12,680,618
Commercial Services & Supplies - 1.2%    
Clean Harbors, Inc. (I) 334,562 20,254,383
Construction & Engineering - 1.7%    
AECOM Technology Corp. (I) 763,918 28,906,657
Electrical Equipment - 1.7%    
Acuity Brands, Inc. 175,935 21,794,828

 

The accompanying notes are an integral part of the financial statements. 132

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Mid Cap Stock Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electrical Equipment (continued)    
Generac Holdings, Inc. (I)(L) 134,816 $ 6,271,640
    28,066,468
Machinery - 2.0%    
Pall Corp. 204,205 17,228,776
Pentair PLC 241,855 16,463,070
 
    33,691,846
Professional Services - 4.4%    
IHS, Inc., Class A (I) 230,842 32,888,060
ManpowerGroup, Inc. 270,636 20,995,941
Nielsen Holdings NV (L) 432,642 20,329,848
 
    74,213,849
Road & Rail - 2.0%    
Kansas City Southern 146,239 16,870,131
Landstar System, Inc. 254,539 17,274,289
 
    34,144,420
Trading Companies & Distributors - 2.3%    
HD Supply Holdings, Inc. (I) 890,024 24,715,966
WESCO International, Inc. (I)(L) 171,470 14,401,765
 
    39,117,731
    308,741,355
Information Technology - 20.8%    
Communications Equipment - 2.4%    
F5 Networks, Inc. (I) 214,311 26,615,283
Ubiquiti Networks, Inc. (I)(L) 294,357 13,352,034
 
    39,967,317
Electronic Equipment, Instruments & Components - 2.1%  
Cognex Corp. (I) 453,675 19,045,277
TE Connectivity, Ltd. 265,395 16,634,959
 
    35,680,236
Internet Software & Services - 4.7%    
Akamai Technologies, Inc. (I) 411,853 24,884,158
CoStar Group, Inc. (I) 88,947 12,875,078
Equinix, Inc. (I) 21,700 4,736,242
Shutterstock, Inc. (I)(L) 194,459 13,767,697
Yelp, Inc. (I)(L) 274,291 22,607,064
 
    78,870,239
Semiconductors & Semiconductor Equipment - 2.9%  
First Solar, Inc. (I) 169,969 11,843,440
NXP Semiconductor NV (I) 372,953 25,554,740
SunEdison, Inc. (I) 560,197 12,341,140
 
    49,739,320
Software - 7.7%    
Activision Blizzard, Inc. 1,021,301 24,041,426
Cadence Design Systems, Inc. (I)(L) 1,177,167 20,765,226
Concur Technologies, Inc. (I)(L) 334,514 33,578,515
FactSet Research Systems, Inc. (L) 133,713 17,035,036
FleetMatics Group PLC (I)(L) 171,473 5,627,744
ServiceNow, Inc. (I) 44,512 2,721,019
Solera Holdings, Inc. 242,666 14,792,919
Tyler Technologies, Inc. (I) 129,811 11,560,968
 
    130,122,853
Technology Hardware, Storage & Peripherals - 1.0%  
SanDisk Corp. 178,333 17,469,501
 
    351,849,466

 

Mid Cap Stock Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Materials - 3.1%    
Chemicals - 1.3%    
Platform Specialty Products Corp. (I) 817,889 $ 22,336,549
Construction Materials - 1.8%    
Eagle Materials, Inc. 177,125 18,050,809
Martin Marietta Materials, Inc. 95,486 12,504,847
 
    30,555,656
 
    52,892,205
TOTAL COMMON STOCKS (Cost $1,298,483,267) $ 1,583,545,616
 
PREFERRED SECURITIES - 4.5%    
Consumer Discretionary - 0.2%    
The Honest Company, Inc. (I)(R) 122,593 3,317,036
Health Care - 0.2%    
ConforMIS, Inc. (I)(R) 372,231 2,977,848
Industrials - 0.3%    
Lithium Technology Corp. (I)(R) 1,161,748 5,662,360
Information Technology - 3.8%    
Apigee Corp., Series H (I)(R) 1,877,800 5,464,398
Datalogix Holdings, Inc. (I)(R) 644,570 6,639,071
DocuSign, Inc., Series B (I)(R) 10,938 138,584
DocuSign, Inc., Series B1 (I)(R) 3,276 41,507
DocuSign, Inc., Series D (I)(R) 7,860 99,586
DocuSign, Inc., Series E (I)(R) 203,275 2,575,494
Essence Group Holdings Corp. (I)(R) 2,576,993 4,074,999
Lookout, Inc., Series F (I)(R) 341,649 3,902,691
New Relic, Inc., Series F (I)(R) 88,435 2,558,778
Nutanix, Inc. (I)(R) 273,945 3,669,904
One Kings Lane, Inc. (I)(R) 529,764 8,073,603
Pure Storage, Inc., Series F (I)(R) 368,950 5,802,071
Uber Technologies, Inc. (I)(R) 264,847 16,434,339
Veracode, Inc. (I)(R) 254,658 4,702,489
 
    64,177,514
TOTAL PREFERRED SECURITIES (Cost $76,332,730) $ 76,134,758
 
WARRANTS - 0.0%    
Nomad Holdings, Ltd. (Expiration Date:    
04/10/2017; Strike Price: $11.50) (I) 678,100 363,631
TOTAL WARRANTS (Cost $6,781) $ 363,631
 
SECURITIES LENDING COLLATERAL - 9.2%    
John Hancock Collateral    
Investment Trust, 0.0970% (W)(Y) 15,459,856 154,708,322
TOTAL SECURITIES LENDING    
COLLATERAL (Cost $154,699,566) $ 154,708,322

 

The accompanying notes are an integral part of the financial statements. 133

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Mid Cap Stock Fund (continued)    
  Shares or   
  Principal   
  Amount  Value
 
 
SHORT-TERM INVESTMENTS - 1.8%      
Repurchase Agreement - 1.8%      
Deutsche Bank Tri-Party Repurchase      
Agreement dated 08/29/2014 at 0.060% to      
be repurchased at $30,100,050 on      
09/02/2014, collateralized by $30,152,725      
Federal National Mortgage Association,      
2.500% due 08/01/2028 (valued at      
$30,702,000, including interest) $ 30,100,000  $ 30,100,000
TOTAL SHORT-TERM INVESTMENTS (Cost $30,100,000) $ 30,100,000
Total Investments (Mid Cap Stock Fund)      
(Cost $1,559,622,344) - 109.3%   $ 1,844,852,327
Other assets and liabilities, net - (9.3%)     (156,399,024)
TOTAL NET ASSETS - 100.0%   $ 1,688,453,303
 
 
 
Mid Value Fund      
  Shares or   
  Principal   
  Amount  Value
 
COMMON STOCKS - 94.5%      
Consumer Discretionary - 10.8%      
Auto Components - 0.7%      
Visteon Corp. (I) 77,300 $ 7,821,987
Diversified Consumer Services - 1.7%      
Graham Holdings Company, Class B 9,300 6,684,840
Houghton Mifflin Harcourt Company (I) 197,600 3,793,920
Strayer Education, Inc. (I) 121,300 7,365,333
 
      17,844,093
Leisure Products - 1.1%      
Hasbro, Inc. 53,100 2,795,981
Mattel, Inc. 212,200 7,318,778
Sankyo Company, Ltd. 57,300 2,197,057
 
      12,311,816
Media - 3.2%      
Cablevision Systems Corp., Class A (L) 672,500 12,447,975
DreamWorks Animation      
SKG, Inc., Class A (I) (L) 136,300 2,976,111
News Corp., Class A (I) 647,600 11,413,950
Scholastic Corp. 135,900 4,761,936
Tribune Company (I) 37,400 2,853,620
 
      34,453,592
Multiline Retail - 1.3%      
Kohl’s Corp. 235,400 13,839,166
Specialty Retail - 2.1%      
Abercrombie & Fitch Company, Class A (L) 170,100 7,110,180
American Eagle Outfitters, Inc. (L) 315,200 4,438,016
CarMax, Inc. (I) 87,100 4,564,040
The Gap, Inc. 151,700 7,000,955
 
      23,113,191
Textiles, Apparel & Luxury Goods - 0.7%      
Coach, Inc. 214,600 7,903,718
 
      117,287,563
Consumer Staples - 8.3%      
Food & Staples Retailing - 2.7%      
Sysco Corp. (L) 479,600 18,143,268

 

Mid Value Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Food & Staples Retailing (continued)    
The Kroger Company 222,400 $ 11,337,952
 
    29,481,220
Food Products - 4.2%    
Archer-Daniels-Midland Company 202,200 10,081,692
Bunge, Ltd. 219,000 18,538,350
Dean Foods Company (L) 314,700 5,091,846
Flowers Foods, Inc. 278,300 5,449,114
McCormick & Company, Inc. 77,900 5,428,851
Tootsie Roll Industries, Inc. 32,330 913,323
 
    45,503,176
Household Products - 0.4%    
The Clorox Company (L) 47,700 4,226,220
Personal Products - 1.0%    
Avon Products, Inc. 815,200 11,445,408
 
    90,656,024
Energy - 9.7%    
Energy Equipment & Services - 2.1%    
Exterran Holdings, Inc. 443,600 20,685,068
SEACOR Holdings, Inc. (I) 23,900 1,950,240
 
    22,635,308
Oil, Gas & Consumable Fuels - 7.6%    
Cameco Corp. 550,400 10,771,328
Chesapeake Energy Corp. 124,100 3,375,520
CONSOL Energy, Inc. 240,400 9,683,312
Forest Oil Corp. (I) 331,100 539,693
Hess Corp. 146,000 14,760,600
PBF Energy, Inc., Class A 119,100 3,383,631
Talisman Energy, Inc. 1,820,600 18,301,442
WPX Energy, Inc. (I) 838,000 22,307,560
 
    83,123,086
 
    105,758,394
Financials - 26.3%    
Banks - 5.1%    
CIT Group, Inc. 408,900 19,610,844
Commerce Bancshares, Inc. 85,984 3,966,442
First Horizon National Corp. 1,024,458 12,457,409
First Niagara Financial Group, Inc. 783,500 6,816,450
SunTrust Banks, Inc. 197,100 7,505,568
WestAmerica Bancorp. (L) 103,300 4,996,621
 
    55,353,334
Capital Markets - 7.5%    
E*TRADE Financial Corp. (I) 896,210 19,949,635
Lazard, Ltd., Class A 465,000 25,416,900
Legg Mason, Inc. 214,000 10,554,480
Northern Trust Corp. 367,600 25,493,060
 
    81,414,075
Consumer Finance - 0.6%    
Ally Financial, Inc. (I) 279,010 6,863,646
Diversified Financial Services - 1.2%    
FNFV Group (I) 180,014 2,696,610
Groupe Bruxelles Lambert SA 14,621 1,437,911
PHH Corp. (I) (L) 378,000 9,056,880
 
    13,191,401
Insurance - 7.9%    
CNA Financial Corp. 267,400 10,367,098
Enstar Group, Ltd. (I) 10,500 1,489,950

 

The accompanying notes are an integral part of the financial statements. 134

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Mid Value Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Insurance (continued)    
First American Financial Corp. 481,000 $ 13,636,350
FNF Group 327,287 9,265,495
Kemper Corp. 223,800 8,135,130
Loews Corp. 49,400 2,160,756
Marsh & McLennan Companies, Inc. 346,800 18,415,080
OneBeacon Insurance Group, Ltd., Class A 111,500 1,787,345
The Progressive Corp. 252,700 6,322,554
White Mountains Insurance Group, Ltd. 22,200 14,080,128
 
    85,659,886
Real Estate Investment Trusts - 2.9%    
AvalonBay Communities, Inc. 23,300 3,590,530
Rayonier, Inc. 184,100 6,309,107
Vornado Realty Trust 12,500 1,323,375
Washington Real Estate Investment Trust 172,900 4,803,162
Weingarten Realty Investors 103,100 3,528,082
Weyerhaeuser Company 341,897 11,607,403
 
    31,161,659
Real Estate Management & Development - 0.5%    
The St. Joe Company (I) (L) 221,500 4,797,690
Thrifts & Mortgage Finance - 0.6%    
Capitol Federal Financial, Inc. 554,912 6,853,163
 
    285,294,854
Health Care - 8.5%    
Health Care Equipment & Supplies - 1.3%    
Haemonetics Corp. (I) 54,100 1,930,829
Hologic, Inc. (I) 418,600 10,410,582
Thoratec Corp. (I) 63,900 1,597,500
 
    13,938,911
Health Care Providers & Services - 3.9%    
HealthSouth Corp. 170,500 6,715,995
Humana, Inc. 46,200 5,947,788
Kindred Healthcare, Inc. 105,200 2,172,380
Quest Diagnostics, Inc. 156,100 9,867,081
Select Medical Holdings Corp. 666,400 9,342,928
Tenet Healthcare Corp. (I) 125,825 7,697,974
 
    41,744,146
Pharmaceuticals - 3.3%    
Hospira, Inc. (I) 406,400 21,839,936
Mallinckrodt PLC (I) 45,700 3,724,093
Zoetis, Inc. 302,600 10,724,144
 
    36,288,173
    91,971,230
Industrials - 10.8%    
Aerospace & Defense - 2.4%    
Textron, Inc. 679,700 25,828,600
Air Freight & Logistics - 2.0%    
C.H. Robinson Worldwide, Inc. (L) 243,000 16,587,180
Expeditors International of Washington, Inc. 123,600 5,104,680
 
    21,691,860
Airlines - 2.0%    
Southwest Airlines Company 684,300 21,904,443
Commercial Services & Supplies - 1.2%    
Cintas Corp. 193,600 12,804,704
Construction & Engineering - 0.7%    
KBR, Inc. 356,400 7,847,928

 

Mid Value Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Machinery - 1.5%    
Harsco Corp. 368,300 $ 8,912,860
Ingersoll-Rand PLC 34,100 2,052,820
Xylem, Inc. 149,300 5,562,918
 
    16,528,598
Professional Services - 1.0%    
ManpowerGroup, Inc. 137,500 10,667,250
 
    117,273,383
Information Technology - 3.9%    
Communications Equipment - 0.5%    
ADTRAN, Inc. 226,600 5,229,928
Electronic Equipment, Instruments & Components - 0.3%  
AVX Corp. 196,400 2,706,392
Dolby Laboratories, Inc., Class A (I) 7,765 361,694
 
    3,068,086
Semiconductors & Semiconductor Equipment - 2.8%  
Applied Materials, Inc. 686,800 15,868,514
ASML Holding NV 36,476 3,506,073
Broadcom Corp., Class A 200,400 7,891,752
Marvell Technology Group, Ltd. 119,400 1,660,854
ON Semiconductor Corp. (I) 150,700 1,470,832
 
    30,398,025
Software - 0.3%    
FactSet Research Systems, Inc. (L) 11,300 1,439,620
TIBCO Software, Inc. (I) 83,400 1,738,056
 
    3,177,676
 
    41,873,715
Materials - 7.6%    
Chemicals - 1.4%    
Celanese Corp., Series A 25,300 1,582,262
International Flavors & Fragrances, Inc. 39,800 4,043,282
The Scotts Miracle-Gro Company, Class A 164,900 9,519,677
 
    15,145,221
Construction Materials - 1.3%    
Vulcan Materials Company 217,500 13,785,150
Containers & Packaging - 2.0%    
MeadWestvaco Corp. 238,800 10,268,400
Packaging Corp. of America 167,000 11,354,330
 
    21,622,730
Metals & Mining - 2.5%    
Compania de Minas Buenaventura SA, ADR 141,700 2,063,152
Franco-Nevada Corp. 156,800 8,834,331
Lonmin PLC (I) 1,196,628 4,570,781
Newmont Mining Corp. 453,800 12,293,442
 
    27,761,706
Paper & Forest Products - 0.4%    
Louisiana-Pacific Corp. (I) 295,300 4,213,931
 
    82,528,738
Telecommunication Services - 0.7%    
Wireless Telecommunication Services - 0.7%    
Telephone & Data Systems, Inc. 295,256 7,777,043
Utilities - 7.9%    
Electric Utilities - 3.4%    
American Electric Power Company, Inc. 148,000 7,947,600
Duke Energy Corp. 36,399 2,693,162
FirstEnergy Corp. 668,854 22,901,561

 

The accompanying notes are an integral part of the financial statements. 135

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Mid Value Fund (continued)      
  Shares or   
  Principal   
  Amount  Value
COMMON STOCKS (continued)      
Electric Utilities (continued)      
PPL Corp. 92,000 $ 3,185,960
 
      36,728,283
Independent Power and Renewable Electricity      
Producers - 3.9%      
Calpine Corp. (I) 377,600 8,975,552
Dynegy, Inc. (I) 420,500 13,741,940
NRG Energy, Inc. 651,219 20,044,521
 
      42,762,013
Multi-Utilities - 0.6%      
NiSource, Inc. 152,400 6,045,708
 
      85,536,004
TOTAL COMMON STOCKS (Cost $751,029,540)   $ 1,025,956,948
PREFERRED SECURITIES - 0.3%      
Energy - 0.3%      
Energy Equipment & Services - 0.3%      
McDermott International, Inc., 6.250% 98,100 2,510,379
Financials - 0.0%      
Real Estate Investment Trusts - 0.0%      
Weyerhaeuser Company, 6.375% 5,350 309,016
TOTAL PREFERRED SECURITIES (Cost $2,730,132) $ 2,819,395
CONVERTIBLE BONDS - 0.4%      
Financials - 0.1%      
Radian Group, Inc. 2.250%, 03/01/2019 $  534,000 $ 781,643
Industrials - 0.3%      
UTi Worldwide, Inc. 4.500%, 03/01/2019 (S) 3,830,000 3,897,025
TOTAL CONVERTIBLE BONDS (Cost $4,377,480)   $ 4,678,668
SECURITIES LENDING COLLATERAL - 5.4%      
John Hancock Collateral      
Investment Trust, 0.0970% (W) (Y) 5,798,218 58,023,347
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $58,020,922)   $ 58,023,347
SHORT-TERM INVESTMENTS - 4.7%      
Money Market Funds - 4.7%      
State Street Institutional U.S. Government      
Money Market Fund, 0.0000% (Y) 1,079,994 1,079,994
T. Rowe Price Reserve Investment      
Fund, 0.0575% (Y) 50,293,563 50,293,563
 
      51,373,557
TOTAL SHORT-TERM INVESTMENTS (Cost $51,373,557) $ 51,373,557
Total Investments (Mid Value Fund)      
(Cost $867,531,631) - 105.3%   $ 1,142,851,915
Other assets and liabilities, net - (5.3%)     (57,688,418)
TOTAL NET ASSETS - 100.0%   $ 1,085,163,497

 

Real Estate Equity Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 94.6%    
Consumer Discretionary - 3.5%    
Hotels, Restaurants & Leisure - 3.5%    
Hilton Worldwide Holdings, Inc. (I) 159,726 $ 4,044,264
Starwood Hotels & Resorts Worldwide, Inc. 59,100 4,996,314
 
    9,040,578
 
    9,040,578
Financials - 91.1%    
Real Estate Investment Trusts - 90.8%    
Diversified REITs - 4.9%    
PS Business Parks, Inc. 40,300 3,286,062
Vornado Realty Trust 88,374 9,356,155
 
    12,642,217
Industrial REITs - 8.3%    
DCT Industrial Trust, Inc. 644,400 5,122,980
EastGroup Properties, Inc. 48,000 3,112,320
Prologis, Inc. 281,344 11,518,223
Terreno Realty Corp. 89,200 1,805,408
 
    21,558,931
Office REITs - 15.2%    
Alexandria Real Estate Equities, Inc. 39,700 3,138,682
Boston Properties, Inc. 72,950 8,857,589
Douglas Emmett, Inc. 233,100 6,659,667
Highwoods Properties, Inc. 120,600 5,131,530
Kilroy Realty Corp. 101,700 6,432,525
SL Green Realty Corp. 83,500 9,130,725
 
    39,350,718
Residential REITs - 18.2%    
American Campus Communities, Inc. 45,800 1,809,558
AvalonBay Communities, Inc. 91,816 14,148,846
Camden Property Trust 97,800 7,319,352
Equity Residential 165,450 10,997,462
Essex Property Trust, Inc. 62,307 12,053,289
Post Properties, Inc. 16,600 913,332
 
    47,241,839
Retail REITs - 32.5%    
Acadia Realty Trust 135,400 3,902,228
CBL & Associates Properties, Inc. 117,514 2,232,766
Equity One, Inc. 67,200 1,585,920
Federal Realty Investment Trust 76,380 9,530,696
General Growth Properties, Inc. 432,294 10,621,464
Kimco Realty Corp. 279,600 6,567,804
Regency Centers Corp. 127,950 7,311,063
Simon Property Group, Inc. 143,200 24,348,296
Taubman Centers, Inc. 45,300 3,450,501
The Macerich Company 137,512 8,978,158
Weingarten Realty Investors 168,100 5,752,382
 
    84,281,278
Specialized REITs - 11.7%    
Healthcare Realty Trust, Inc. 161,900 4,041,024
Host Hotels & Resorts, Inc. 270,662 6,176,507
Pebblebrook Hotel Trust 102,000 3,951,480
Plum Creek Timber Company, Inc. 70,700 2,872,541
Public Storage 65,000 11,386,700
RLJ Lodging Trust 67,800 2,021,118
 
    30,449,370
 
    235,524,353

 

The accompanying notes are an integral part of the financial statements. 136

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Real Estate Equity Fund (continued)    
  Shares or   
  Principal   
  Amount  Value
 
 
COMMON STOCKS (continued)      
Real Estate Management & Development - 0.3%      
Alexander & Baldwin, Inc. 21,400 $ 875,260
      236,399,613
TOTAL COMMON STOCKS (Cost $109,248,698)   $ 245,440,191
 
CONVERTIBLE BONDS - 1.0%      
Financials - 1.0%      
Real Estate Operating Companies - 1.0%      
Forest City Enterprises, Inc.      
4.250%, 08/15/2018 $  2,258,000 $ 2,574,120
TOTAL CONVERTIBLE BONDS (Cost $2,226,376)   $ 2,574,120
 
SHORT-TERM INVESTMENTS - 4.6%      
Money Market Funds - 4.6%      
State Street Institutional U.S. Government      
Money Market Fund, 0.0000% (Y) 500,732 500,732
T. Rowe Price Reserve Investment      
Fund, 0.0575% (Y) 11,552,369 11,552,369
 
      12,053,101
TOTAL SHORT-TERM INVESTMENTS (Cost $12,053,101) $ 12,053,101
Total Investments (Real Estate Equity Fund)      
(Cost $123,528,175) - 100.2%   $ 260,067,412
Other assets and liabilities, net - (0.2%)     (545,338)
TOTAL NET ASSETS - 100.0%   $ 259,522,074
 
 
 
Real Estate Securities Fund      
  Shares or   
  Principal   
  Amount  Value
 
COMMON STOCKS - 98.8%      
Financials - 98.8%      
Real Estate Investment Trusts - 98.8%      
Diversified REITs - 11.3%      
American Realty Capital Properties, Inc. 428,620 $ 5,640,639
Duke Realty Corp. 776,050 14,434,530
Lexington Realty Trust 1,061,363 11,547,629
Spirit Realty Capital, Inc. 1,333,088 15,743,769
Vornado Realty Trust 157,674 16,692,946
 
      64,059,513
Industrial REITs - 4.1%      
First Industrial Realty Trust, Inc. 54,698 995,504
Prologis, Inc. 548,477 22,454,648
 
      23,450,152
Office REITs - 14.8%      
Alexandria Real Estate Equities, Inc. 142,654 11,278,225
Boston Properties, Inc. 182,283 22,132,802
Brandywine Realty Trust 414,970 6,647,819
Digital Realty Trust, Inc. 126,123 8,229,526
Douglas Emmett, Inc. 500,024 14,285,685
Hudson Pacific Properties, Inc. 197,785 5,310,527
Mack-Cali Realty Corp. 81,923 1,731,852
SL Green Realty Corp. 128,189 14,017,467
 
      83,633,903
Residential REITs - 17.0%      
American Campus Communities, Inc. 184,777 7,300,539

 

Real Estate Securities Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
COMMON STOCKS (continued)      
Residential REITs (continued)      
American Residential Properties, Inc. (I) 122,411 $ 2,323,361
Apartment Investment & Management      
Company, Class A 310,094 10,626,921
AvalonBay Communities, Inc. 156,051 24,047,459
Equity Residential 394,463 26,219,956
Essex Property Trust, Inc. 81,460 15,758,437
Home Properties, Inc. 51,538 3,309,770
Post Properties, Inc. 125,392 6,899,068
 
      96,485,511
Retail REITs - 25.4%      
Acadia Realty Trust 142,962 4,120,165
DDR Corp. 483,392 8,807,402
Federal Realty Investment Trust 114,056 14,231,908
General Growth Properties, Inc. 836,833 20,560,987
Glimcher Realty Trust 364,520 4,093,560
National Retail Properties, Inc. 373,049 13,855,040
Regency Centers Corp. 187,268 10,700,494
Retail Properties of America, Inc., Class A 280,470 4,437,035
Simon Property Group, Inc. 333,070 56,631,892
The Macerich Company 97,461 6,363,229
 
      143,801,712
Specialized REITs - 26.2%      
Chesapeake Lodging Trust 195,806 6,032,783
CubeSmart 507,622 9,441,769
DiamondRock Hospitality Company 513,661 6,841,965
Extra Space Storage, Inc. 199,215 10,498,631
HCP, Inc. 609,778 26,421,681
Health Care REIT, Inc. 364,584 24,638,587
Healthcare Realty Trust, Inc. 198,411 4,952,339
Host Hotels & Resorts, Inc. 552,663 12,611,770
Pebblebrook Hotel Trust 120,587 4,671,540
Public Storage 80,357 14,076,939
RLJ Lodging Trust 244,423 7,286,250
Senior Housing Properties Trust 318,498 7,430,558
Strategic Hotels & Resorts, Inc. (I) 529,911 6,295,343
Ventas, Inc. 113,233 7,448,467
 
      148,648,622
TOTAL COMMON STOCKS (Cost $446,887,063)   $ 560,079,413
 
SHORT-TERM INVESTMENTS - 1.3%      
Repurchase Agreement - 1.3%      
Repurchase Agreement with State Street Corp.      
dated 08/29/2014 at 0.000% to be      
repurchased at $7,412,000 on 09/02/2014,      
collateralized by $7,670,000 U.S. Treasury      
Notes, 0.625% due 11/30/2017 (valued at      
$7,562,543, including interest) $  7,412,000 $ 7,412,000
TOTAL SHORT-TERM INVESTMENTS (Cost $7,412,000) $ 7,412,000
Total Investments (Real Estate Securities Fund)      
(Cost $454,299,063) - 100.1%   $ 567,491,413
Other assets and liabilities, net - (0.1%)     (791,764)
 
TOTAL NET ASSETS - 100.0%   $ 566,699,649

 

The accompanying notes are an integral part of the financial statements. 137

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Real Return Bond Fund      
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 97.7%      
U.S. Government - 97.7%      
Treasury Inflation Protected Securities      
0.125%, 04/15/2016 to 01/15/2023 $ 138,679,563 $ 139,182,428
0.250%, 07/15/2024 (C)   17,865,443 17,699,348
0.375%, 07/15/2023   18,841,416 19,171,141
0.500%, 04/15/2015   12,865,554 12,923,848
0.625%, 07/15/2021 to 02/15/2043   41,739,126 42,697,100
1.125%, 01/15/2021   20,044,224 21,495,867
1.250%, 07/15/2020   22,946,490 24,868,259
1.375%, 01/15/2020 to 02/15/2044   26,366,526 29,464,881
1.625%, 01/15/2015 to 01/15/2018   18,783,557 19,003,966
1.750%, 01/15/2028   18,086,091 21,057,581
1.875%, 07/15/2015 to 07/15/2019   23,133,089 25,549,322
2.000%, 01/15/2016 to 01/15/2026   29,176,047 32,704,495
2.125%, 02/15/2040   2,094,807 2,742,888
2.375%, 01/15/2025 to 01/15/2027   38,632,734 47,195,572
2.500%, 01/15/2029   13,541,024 17,295,490
2.625%, 07/15/2017   11,842,924 13,056,824
3.375%, 04/15/2032   7,249,716 10,610,641
3.875%, 04/15/2029   26,896,771 39,687,450
U.S. Treasury Bond 3.125%, 08/15/2044   8,100,000 8,174,674
U.S. Treasury Notes      
0.250%, 09/30/2014 to 07/31/2015   1,267,000 1,268,236
 
      545,850,011
U.S. Government Agency - 0.0%      
Federal National Mortgage Association      
1.322%, 10/01/2044 (P)   34,069 35,055
TOTAL U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (Cost $549,566,119)   $ 545,885,066
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 11.7%      
Australia - 1.2%      
Commonwealth of Australia      
5.250%, 03/15/2019 AUD 1,900,000 1,956,019
New South Wales Treasury Corp.      
2.500%, 11/20/2035   300,000 383,915
2.750%, 11/20/2025   3,300,000 4,281,163
 
      6,621,097
Colombia - 0.1%      
Republic of Colombia      
3.000%, 03/25/2033 COP 1,281,980,400 591,836
France - 0.9%      
Government of France      
0.250%, 07/25/2018 EUR 2,085,420 2,838,832
0.700%, 07/25/2030   100,543 142,875
1.600%, 07/25/2015   959,104 1,282,694
2.250%, 05/25/2024   500,000 723,001
 
      4,987,402
Germany - 2.3%      
Federal Republic of Germany, Inflation      
Linked Bond      
0.750%, 04/15/2018   7,565,476 10,387,887
1.500%, 04/15/2016   1,747,920 2,346,311
 
      12,734,198
Greece - 0.2%      
Republic of Greece      
3.800%, 08/08/2017 JPY 100,000,000 927,520

 

Real Return Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Italy - 2.4%      
Republic of Italy      
1.700%, 09/15/2018 EUR 1,520,430 $ 2,111,662
2.100%, 09/15/2016 to 09/15/2021   1,306,261 1,841,128
2.250%, 04/22/2017   3,204,800 4,385,067
2.350%, 09/15/2024 (S)   1,712,920 2,477,943
2.550%, 10/22/2016   1,402,100 1,918,468
3.100%, 09/15/2026   106,329 163,916
5.500%, 11/01/2022   200,000 329,754
 
      13,227,938
New Zealand - 0.3%      
Dominion of New Zealand      
2.000%, 09/20/2025 NZD 2,200,000 1,846,409
Slovenia - 0.2%      
Republic of Slovenia      
4.700%, 11/01/2016 (S) EUR 1,000,000 1,416,438
Spain - 3.3%      
Autonomous Community of Catalonia      
4.950%, 02/11/2020   300,000 445,938
Kingdom of Spain      
3.800%, 04/30/2024 (S)   3,300,000 4,966,928
5.400%, 01/31/2023 (S)   7,700,000 12,877,142
 
      18,290,008
United Kingdom - 0.8%      
Government of United Kingdom, Inflation      
Linked Bond      
0.375%, 03/22/2062 GBP 108,664 247,290
1.250%, 11/22/2055   266,662 756,440
2.500%, 07/26/2016   600,000 3,332,699
 
      4,336,429
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $64,589,541)   $ 64,979,275
 
CORPORATE BONDS - 1.9%      
Energy - 0.7%      
Petrobras Global Finance BV      
2.592%, 03/17/2017 (P) $ 3,900,000 3,949,140
Financials - 0.6%      
BNP Paribas SA      
0.547%, 11/07/2015 (P)   400,000 399,907
GMAC International Finance BV      
7.500%, 04/21/2015 EUR 100,000 136,444
Intesa Sanpaolo SpA      
3.125%, 01/15/2016 $ 600,000 615,529
6.500%, 02/24/2021 (S)   600,000 703,999
LBG Capital No.2 PLC      
15.000%, 12/21/2019 GBP 100,000 238,232
Lehman Brothers Holdings, Inc.      
5.316%, 04/05/2011 (H) EUR 36,000 9,224
7.000%, 09/27/2027 (H) $ 300,000 60,000
Navient LLC      
6.250%, 01/25/2016   1,200,000 1,272,000
 
      3,435,335
Industrials - 0.3%      
GATX Financial Corp.      
5.800%, 03/01/2016   1,000,000 1,069,844
Hellenic Railways Organization SA      
4.028%, 03/17/2017 EUR 600,000 773,564
 
      1,843,408

 

The accompanying notes are an integral part of the financial statements. 138

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Real Return Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities - 0.3%      
Electricite de France SA      
0.694%, 01/20/2017 (P)(S) $ 1,100,000 $ 1,102,905
1.150%, 01/20/2017 (S)   300,000 300,391
 
      1,403,296
TOTAL CORPORATE BONDS (Cost $6,651,304) $ 10,631,179
 
MUNICIPAL BONDS - 0.1%      
Tobacco Settlement Finance Authority      
(West Virginia) 7.467%, 06/01/2047   630,000 543,148
TOTAL MUNICIPAL BONDS (Cost $602,287) $ 543,148
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 2.3%      
Commercial & Residential - 2.0%      
Banc of America Mortgage      
Securities, Inc., Series 2005-A,      
Class 2A2 3.070%, 02/25/2035 (P)   404,712 406,077
Bear Stearns Adjustable      
Rate Mortgage Trust      
Series 2003-3, Class 3A2,      
2.498%, 05/25/2033 (P)   62,653 63,235
Series 2005-2, Class A1,      
2.580%, 03/25/2035 (P)   502,281 509,417
Series 2005-2, Class A2,      
2.528%, 03/25/2035 (P)   126,500 128,013
Series 2005-5, Class A1,      
2.160%, 08/25/2035 (P)   156,040 158,154
Series 2005-5, Class A2,      
2.260%, 08/25/2035 (P)   274,826 278,750
Citicorp Mortgage Securities Trust,      
Series 2007-3, Class 3A1      
5.500%, 04/25/2037   325,825 334,399
Citigroup Mortgage Loan Trust, Inc.      
Series 2005-11, Class 1A1,      
2.510%, 05/25/2035 (P)   41,177 40,284
Series 2005-6, Class A1,      
2.200%, 09/25/2035 (P)   197,224 198,432
Series 2005-6, Class A2,      
2.280%, 09/25/2035 (P)   208,931 209,928
Series 2005-6, Class A3,      
1.930%, 09/25/2035 (P)   43,172 43,328
HarborView Mortgage Loan Trust,      
Series 2004-1, Class 2A      
2.386%, 04/19/2034 (P)   5,200,714 5,226,348
JPMorgan Mortgage Trust,      
Series 2007-A1, Class 4A2      
2.490%, 07/25/2035 (P)   332,521 337,247
MASTR Alternative Loans Trust,      
Series 2006-2, Class 2A1      
0.555%, 03/25/2036 (P)   609,432 178,641
New York Mortgage Trust, Inc.,      
Series 2006-1, Class 2A3      
2.634%, 05/25/2036 (P)   1,083,249 985,471
Residential Accredit Loans, Inc.,      
Series 2006-QO6, Class A1      
0.335%, 06/25/2046 (P)   963,489 441,611
Swan Trust, Series 2010-1, Class A      
3.905%, 04/25/2041 (P) AUD 845,403 799,227
WaMu Mortgage Pass-Through      
Certificates, Series 2007-HY3,      
Class 4A1 2.359%, 03/25/2037 (P) $ 671,229 637,758

 

Real Return Bond Fund (continued)    
    Shares or    
    Principal    
    Amount   Value
 
 
COLLATERALIZED MORTGAGE        
OBLIGATIONS (continued)        
Commercial & Residential (continued)        
Washington Mutual Alternative Mortgage        
Pass-Through Certificates,        
Series 2006-5, Class 3A6        
6.268%, 07/25/2036 $ 691,309 $ 386,608
U.S. Government Agency - 0.3%        
Federal National Mortgage Association        
Series 2003-34, Class A1,        
6.000%, 04/25/2043   11,645   12,913
Series 2004-T3, Class 1A1,        
6.000%, 02/25/2044   14,220   16,141
Series 2004-W12, Class 1A1,        
6.000%, 07/25/2044   82,033   92,386
Series 2007-63, Class FC,        
0.505%, 07/25/2037 (P)   1,498,362   1,496,807
TOTAL COLLATERALIZED MORTGAGE        
OBLIGATIONS (Cost $16,439,378)     $ 12,981,175
 
ASSET BACKED SECURITIES - 1.7%        
Argent Securities, Inc., Series 2005-W2,        
Class A2B1        
0.355%, 10/25/2035 (P)   39,028   38,887
Citigroup Mortgage Loan Trust,        
Series 2007-OPX1, Class A5A        
5.764%, 01/25/2037   626,720   442,688
Magi Funding PLC, Series 2010-1A,        
Class A        
0.677%, 04/11/2021 (P)(S) EUR 214,240   279,919
SLM Student Loan Trust, Series 2008-9,        
Class A        
1.734%, 04/25/2023 (P) $ 8,202,828   8,508,596
Wood Street CLO BV, Series II-A,        
Class A1        
0.666%, 03/29/2021 (P)(S) EUR 159,565   208,229
TOTAL ASSET BACKED SECURITIES (Cost $9,217,797) $ 9,478,319
 
COMMON STOCKS - 0.0%        
Financials - 0.0%        
Rescap Liquidating Trust (I)   1,029   19,911
TOTAL COMMON STOCKS (Cost $6,843)     $ 19,911
 
PURCHASED OPTIONS - 0.0%        
Put Options - 0.0%        
Over the Counter Option on 5 Year        
Interest Rate Swap. Receive a fixed rate        
of 1.000% and pay a floating rate based        
on 3-month LIBOR (Expiration Date:        
11/10/2014; Strike Rate: 1.000%;        
Counterparty: Goldman Sachs Capital        
Markets LP) (I)   6,900,000   1,024
TOTAL PURCHASED OPTIONS (Cost $96,003)   $ 1,024
 
SHORT-TERM INVESTMENTS - 1.1%        
Foreign Government - 1.0%        
Republic of Greece        
2.126%, 12/12/2014* EUR 4,100,000   5,368,340
U.S. Government - 0.1%        
U.S. Treasury Bills        
0.045%, 10/30/2014 * $ 75,000   74,997
0.047%, 02/12/2015 *   290,000   289,944
0.051%, 10/16/2014 *   127,000   126,997

 

The accompanying notes are an integral part of the financial statements. 139

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Real Return Bond Fund (continued)    
  Shares or   
  Principal   
  Amount  Value
 
SHORT-TERM INVESTMENTS (continued)      
U.S. Government (continued)      
U.S. Treasury Bills (continued)      
0.056%, 10/09/2014 * $ 240,000 $ 239,994
0.926%, 10/23/2014 * 47,000 46,999
 
      778,931
TOTAL SHORT-TERM INVESTMENTS (Cost $6,299,366) $ 6,147,271
Total Investments (Real Return Bond Fund)      
(Cost $653,468,638) - 116.5%   $ 650,666,368
Other assets and liabilities, net - (16.5%)     (91,996,015)
 
TOTAL NET ASSETS - 100.0%   $ 558,670,353
 
 
 
 
Science & Technology Fund      
  Shares or   
  Principal   
  Amount  Value
COMMON STOCKS - 95.9%      
Consumer Discretionary - 12.8%      
Auto Components - 0.1%      
Mobileye NV (I)(L) 18,900 $ 816,854
Automobiles - 2.2%      
Tesla Motors, Inc. (I) 82,784 22,326,845
Household Durables - 0.9%      
Harman International Industries, Inc. 50,305 5,789,099
iRobot Corp. (I)(L) 114,200 3,703,506
 
      9,492,605
Internet & Catalog Retail - 8.4%      
Amazon.com, Inc. (I) 127,505 43,229,295
Coupons.com, Inc. (I)(L) 75,500 1,153,640
Ctrip.com International, Ltd., ADR (I)(L) 108,900 6,988,113
HomeAway, Inc. (I) 212,300 7,048,360
JD.com, Inc., ADR (I)(L) 34,954 1,115,732
Netflix, Inc. (I) 15,060 7,193,258
The Priceline Group, Inc. (I) 13,385 16,655,089
Vipshop Holdings, Ltd., ADR (I)(L) 13,105 2,576,836
 
      85,960,323
Media - 1.2%      
Liberty Global PLC, Series C (I) 214,100 8,977,213
Twenty-First Century Fox, Inc., Class A 106,200 3,761,604
 
      12,738,817
      131,335,444
Financials - 0.3%      
Real Estate Investment Trusts - 0.3%      
American Tower Corp. 24,900 2,455,140
Health Care - 3.5%      
Health Care Equipment & Supplies - 1.4%      
Intuitive Surgical, Inc. (I) 22,700 10,669,227
Stryker Corp. 44,820 3,733,954
 
      14,403,181
Health Care Technology - 0.9%      
Veeva Systems, Inc., Class A (I)(L) 290,000 8,691,300
Life Sciences Tools & Services - 0.6%      
Agilent Technologies, Inc. 110,900 6,339,044

 

Science & Technology Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Pharmaceuticals - 0.6%    
Hospira, Inc. (I) 120,840 $ 6,493,942
 
    35,927,467
Industrials - 1.5%    
Aerospace & Defense - 0.6%    
The Boeing Company 47,500 6,023,000
Construction & Engineering - 0.5%    
Quanta Services, Inc. (I) 144,960 5,267,846
Electrical Equipment - 0.4%    
Nidec Corp. 63,500 4,058,573
 
    15,349,419
Information Technology - 75.4%    
Communications Equipment - 3.5%    
Aruba Networks, Inc. (I) 200,100 4,272,135
Cisco Systems, Inc. 482,695 12,062,548
F5 Networks, Inc. (I) 64,685 8,033,230
JDS Uniphase Corp. (I) 243,400 2,811,270
Palo Alto Networks, Inc. (I) 44,445 3,777,381
QUALCOMM, Inc. 63,190 4,808,759
 
    35,765,323
Electronic Equipment, Instruments & Components - 3.1%  
Arrow Electronics, Inc. (I) 58,825 3,661,856
CDW Corp. 161,965 5,351,324
Flextronics International, Ltd. (I) 233,245 2,575,025
IPG Photonics Corp. (I)(L) 90,130 6,190,128
Keyence Corp. 1,200 513,899
Murata Manufacturing Company, Ltd. 17,800 1,701,806
National Instruments Corp. 162,200 5,376,930
Omron Corp. 13,300 577,413
RealD, Inc. (I)(L) 408,900 3,806,859
Trimble Navigation, Ltd. (I) 55,300 1,839,278
 
    31,594,518
Internet Software & Services - 17.4%    
Akamai Technologies, Inc. (I) 67,960 4,106,143
Angie’s List, Inc. (I)(L) 312,700 2,398,409
Baidu, Inc., ADR (I) 95,330 20,450,192
Facebook, Inc., Class A (I) 361,440 27,042,941
Google, Inc., Class A (I) 42,605 24,811,448
Google, Inc., Class C (I) 43,520 24,876,032
GrubHub, Inc. (I) 22,547 854,209
GrubHub, Inc. (I)(L) 8,800 338,272
LinkedIn Corp., Class A (I) 71,900 16,231,425
MercadoLibre, Inc. (L) 24,600 2,827,524
NAVER Corp. 5,300 4,024,527
NetEase.com, Inc., ADR 39,245 3,455,130
OPOWER, Inc. (I)(L) 6,500 101,660
Qihoo 360 Technology    
Company, Ltd., ADR (I)(L) 30,355 2,666,080
Rackspace Hosting, Inc. (I) 362,000 12,525,200
RealNetworks, Inc. (I) 31,100 239,470
Renren, Inc., ADR (I)(L) 445 1,486
SINA Corp. (I) 107,800 4,978,204
Tencent Holdings, Ltd. 248,500 4,044,555
Twitter, Inc. (I) 72,350 3,599,413
VeriSign, Inc. (I)(L) 172,600 9,851,145
Yahoo!, Inc. (I) 68,485 2,637,357
Yandex NV, Class A (I)(L) 147,200 4,184,896
Yelp, Inc. (I)(L) 23,145 1,907,611
 
    178,153,329

 

The accompanying notes are an integral part of the financial statements. 140

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Science & Technology Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
IT Services - 3.5%    
Accenture PLC, Class A 72,230 $ 5,854,964
Alliance Data Systems Corp. (I) 11,425 3,023,512
AtoS 19,081 1,457,133
Computer Sciences Corp. 64,680 3,867,217
Fiserv, Inc. (I) 49,520 3,192,554
MasterCard, Inc., Class A 61,490 4,661,557
Visa, Inc., Class A 63,955 13,591,717
 
    35,648,654
Semiconductors & Semiconductor Equipment - 14.8%  
Altera Corp. 456,400 16,129,176
Applied Materials, Inc. 159,900 3,694,490
ARM Holdings PLC, ADR 163,000 7,910,390
ASML Holding NV (L) 190,400 18,301,248
Atmel Corp. (I) 662,000 5,865,320
Avago Technologies, Ltd. 166,410 13,660,597
Broadcom Corp., Class A 84,945 3,345,134
First Solar, Inc. (I) 24,700 1,721,096
Freescale Semiconductor, Ltd. (I) 112,595 2,370,125
Intel Corp. 6,870 239,900
Lam Research Corp. 158,905 11,426,859
MediaTek, Inc. 447,000 7,470,607
Mellanox Technologies, Ltd. (I)(L) 73,800 3,084,102
Micron Technology, Inc. (I) 609,005 19,853,563
NXP Semiconductor NV (I) 54,520 3,735,710
ON Semiconductor Corp. (I) 351,400 3,429,664
Semtech Corp. (I) 169,100 4,405,901
SK Hynix, Inc. (I) 141,985 6,365,341
Skyworks Solutions, Inc. 176,410 9,995,391
STR Holdings, Inc. (I) 485,166 693,787
SunPower Corp. (I)(L) 120,445 4,603,408
Taiwan Semiconductor    
Manufacturing Company, Ltd. 92,000 384,494
Texas Instruments, Inc. 72,390 3,487,750
 
    152,174,053
Software - 16.8%    
Activision Blizzard, Inc. 306,620 7,217,835
Adobe Systems, Inc. (I) 82,740 5,949,006
Aspen Technology, Inc. (I) 149,185 6,130,012
Atlassian, Inc. (I)(R) 5,959 95,344
Atlassian, Inc., Class A (I)(R) 4,105 65,680
Atlassian, Inc., Class A Ordinary (I)(R) 21,437 342,992
Atlassian, Inc., Series 1 (I)(R) 10,460 167,360
Atlassian, Inc., Series 2 (I)(R) 28,006 448,096
Atlassian, Inc., Series A (I)(R) 20,711 331,376
Autodesk, Inc. (I) 295,230 15,836,137
Check Point Software Technologies, Ltd. (I)(L) 110,900 7,876,118
Concur Technologies, Inc. (I)(L) 16,100 1,616,118
FireEye, Inc. (I) 98,245 3,059,349
FleetMatics Group PLC (I)(L) 55,500 1,821,510
Informatica Corp. (I) 15,375 523,596
Interactive Intelligence Group, Inc. (I) 50,200 2,149,062
Intuit, Inc. 74,375 6,186,513
Microsoft Corp. 1,279,185 58,113,375
NetSuite, Inc. (I)(L) 32,600 2,857,064
Nintendo Company, Ltd. 7,700 858,287
Oracle Corp. 276,270 11,473,493
Red Hat, Inc. (I) 353,300 21,523,036
Salesforce.com, Inc. (I) 58,505 3,457,060
ServiceNow, Inc. (I) 238,035 14,551,080
 
    172,649,499

 

Science & Technology Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
 
COMMON STOCKS (continued)      
Technology Hardware, Storage & Peripherals - 16.3%    
Apple, Inc. 503,775 $ 51,636,938
Dell, Inc. 992,200 14,314,307
EMC Corp. 259,040 7,649,451
Hewlett-Packard Company 458,300 17,415,400
Lenovo Group, Ltd. 946,000 1,444,567
NEC Corp. 36,000 128,233
SanDisk Corp. 190,095 18,621,706
Seagate Technology PLC 185,205 11,590,129
Stratasys, Ltd. (I)(L) 99,500 11,936,020
Western Digital Corp. 317,960 32,753,060
 
      167,489,811
 
      773,475,187
Telecommunication Services - 2.4%      
Diversified Telecommunication Services - 0.3%      
China Unicom Hong Kong, Ltd. 1,930,000 3,430,501
Wireless Telecommunication Services - 2.1%      
SBA Communications Corp., Class A (I) 13,480 1,486,709
SoftBank Corp. 150,300 10,859,945
T-Mobile US, Inc. (I) 306,800 9,228,544
 
      21,575,198
 
      25,005,699
TOTAL COMMON STOCKS (Cost $792,076,567)   $ 983,548,356
 
PREFERRED SECURITIES - 0.1%      
Information Technology - 0.1%      
Software - 0.1%      
Cloudera, Inc., Series F (I)(R) 45,681 1,271,211
TOTAL PREFERRED SECURITIES (Cost $665,115)   $ 1,271,211
 
SECURITIES LENDING COLLATERAL - 8.4%      
Securities Lending Collateral - 8.4%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 8,594,180 86,002,821
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $86,000,020)   $ 86,002,821
 
SHORT-TERM INVESTMENTS - 3.9%      
Money Market Funds - 3.7%      
State Street Institutional U.S. Government      
Money Market Fund, 0.0000% (Y) $  1,999,687 $ 1,999,687
T. Rowe Price Prime Reserve Investment      
Fund, 0.0575% (Y) 36,062,640 36,062,640
 
      38,062,327
Repurchase Agreement - 0.2%      
Repurchase Agreement with State Street Corp.      
dated 08/29/2014 at 0.000% to be      
repurchased at $2,146,000 on 09/02/2014,      
collateralized by $2,225,000 U.S. Treasury      
Notes, 0.625% due 11/30/2017 (valued at      
$2,193,827, including interest) 2,146,000 2,146,000
TOTAL SHORT-TERM INVESTMENTS (Cost $40,208,327) $ 40,208,327
Total Investments (Science & Technology Fund)      
(Cost $918,950,029) - 108.3%   $ 1,111,030,715
Other assets and liabilities, net - (8.3%)     (85,340,803)
 
TOTAL NET ASSETS - 100.0%   $ 1,025,689,912

 

The accompanying notes are an integral part of the financial statements. 141

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Short Term Government Income Fund  
    Shares or  
    Principal  
    Amount Value
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 95.8%      
U.S. Government - 19.8%      
U.S. Treasury Notes      
0.625%, 08/31/2017 to 04/30/2018 $ 6,645,000 $ 6,530,920
0.750%, 06/30/2017 to 03/31/2018   12,065,000 11,970,703
0.875%, 02/28/2017 to 01/31/2018   26,120,000 26,066,198
1.250%, 10/31/2018   1,465,000 1,453,555
 
      46,021,376
U.S. Government Agency - 76.0%      
Federal Agricultural Mortgage Corp.      
2.000%, 07/27/2016   12,531,000 12,878,623
5.125%, 04/19/2017 (S)   23,068,000 25,507,233
Federal Farm Credit Bank      
0.570%, 08/11/2016   6,170,000 6,170,086
0.900%, 12/26/2017   2,075,000 2,064,696
0.970%, 09/05/2017   2,695,000 2,690,858
1.030%, 03/12/2018   3,700,000 3,678,485
1.100%, 06/20/2017   2,830,000 2,830,076
1.240%, 11/13/2018   6,825,000 6,721,840
4.875%, 01/17/2017   1,500,000 1,643,051
Federal Home Loan Bank      
1.000%, 09/18/2017 to 10/16/2017   10,790,000 10,727,249
1.130%, 03/27/2018   4,750,000 4,686,716
1.150%, 07/25/2018   5,245,000 5,164,736
2.125%, 06/10/2016   1,245,000 1,278,993
Federal Home Loan Mortgage Corp.      
1.050%, 06/30/2017   2,000,000 1,998,962
1.100%, 06/30/2017 to 05/07/2018   6,780,000 6,698,733
1.200%, 03/20/2018   2,330,000 2,327,227
1.250%, 08/21/2017   2,120,000 2,120,931
2.218%, 09/01/2042 (P)   1,610,149 1,654,586
2.632%, 01/01/2044 (P)   1,803,039 1,857,068
3.036%, 03/01/2044 (P)   1,146,808 1,189,215
4.331%, 09/01/2039 (P)   560,307 600,754
5.500%, 07/01/2037 to 07/01/2040   3,566,749 3,981,288
6.000%, 12/01/2037   263,180 296,062
6.500%, 09/01/2039   205,378 230,281
Federal National Mortgage Association      
0.520%, 05/20/2016   6,675,000 6,670,768
0.625%, 11/14/2016   1,780,000 1,775,744
0.900%, 11/27/2017   3,000,000 2,968,524
1.000%, 12/12/2017 to 12/28/2017   5,370,000 5,337,454
1.050%, 11/15/2017 to 05/15/2018   3,365,000 3,353,531
1.906%, 08/01/2042 (P)   1,393,068 1,431,365
2.353%, 09/01/2041 (P)   1,793,997 1,864,123
2.402%, 04/01/2042 (P)   1,094,455 1,137,667
2.487%, 02/01/2042 (P)   1,622,020 1,687,748
2.500%, 10/01/2027   2,086,961 2,119,324
2.910%, 03/01/2044 (P)   1,013,603 1,048,940
3.500%, 12/01/2025 to 12/01/2026   1,658,733 1,754,014
5.500%, 05/01/2034 to 08/01/2040   3,406,275 3,806,017
6.000%, 12/01/2036 to 09/01/2037   3,766,379 4,255,257
6.500%, 01/01/2039   1,571,445 1,780,834
Government National Mortgage Association      
2.500%, 01/20/2042 (P)   2,019,200 2,092,914
Tennessee Valley Authority      
1.750%, 10/15/2018   3,515,000 3,536,136
4.500%, 04/01/2018   5,470,000 6,049,322
4.875%, 12/15/2016   7,764,000 8,476,696
5.500%, 07/18/2017   4,221,000 4,750,491

 

Short Term Government Income Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Tennessee Valley Authority (continued)      
6.250%, 12/15/2017 $ 1,613,000 $ 1,871,816
 
      176,766,434
TOTAL U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (Cost $222,698,334)   $ 222,787,810
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 1.9%      
U.S. Government Agency - 1.9%      
Federal Home Loan Mortgage Corp.      
Series K026, Class X1 IO,      
1.174%, 11/25/2022   3,197,441 219,837
Series K715, Class X1 IO,      
1.315%, 01/25/2021   15,956,040 993,407
Series K038, Class X1 IO,      
1.357%, 03/25/2024   5,008,660 450,424
Series K022, Class X1 IO,      
1.427%, 07/25/2022   4,132,736 335,053
Series K017, Class X1 IO,      
1.586%, 12/25/2021   2,124,652 175,851
Series K018, Class X1 IO,      
1.593%, 01/25/2022   2,657,964 222,171
Series K709, Class X1 IO,      
1.670%, 03/25/2019   2,176,780 131,197
Series K707, Class X1 IO,      
1.688%, 12/25/2018   1,469,324 85,156
Series K706, Class X1 IO,      
1.724%, 10/25/2018   4,196,836 241,238
Series K711, Class X1 IO,      
1.830%, 07/25/2019   5,659,144 393,769
Series K710, Class X1 IO,      
1.911%, 05/25/2019   1,588,256 113,027
Series K704, Class X1 IO,      
2.155%, 08/25/2018   10,825,404 735,164
Series 3499, Class PA, 4.500%, 08/15/2036 167,642 174,611
Government National Mortgage Association,    
Series 2012-114, Class IO      
1.038%, 01/16/2053   1,299,301 113,286
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $4,337,630)   $ 4,384,191
 
SHORT-TERM INVESTMENTS - 1.6%      
Repurchase Agreement - 1.6%      
Barclays Tri-Party Repurchase Agreement      
dated 08/29/2014 at 0.030% to be      
repurchased at $3,058,003 on 09/02/2014,      
collateralized by $2,904,200 Treasury      
Inflation Indexed Notes, 0.125% due      
04/15/2017 (valued at $3,119,171,      
including interest)   3,058,000 3,058,000

 

The accompanying notes are an integral part of the financial statements. 142

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Short Term Government Income Fund (continued)
  Shares or   
  Principal   
  Amount  Value
 
SHORT-TERM INVESTMENTS (continued)      
Repurchase Agreement (continued)      
Repurchase Agreement with State Street Corp.      
dated 08/29/2014 at 0.000% to be      
repurchased at $574,000 on 09/02/2014,      
collateralized by $595,000 U.S. Treasury      
Notes, 0.625% due 11/30/2017 (valued at      
$586,664, including interest) $  574,000 $ 574,000
      3,632,000
TOTAL SHORT-TERM INVESTMENTS (Cost $3,632,000) $ 3,632,000
Total Investments (Short Term Government Income Fund)    
(Cost $230,667,964) - 99.3%   $ 230,804,001
Other assets and liabilities, net - 0.7%     1,634,914
TOTAL NET ASSETS - 100.0%   $ 232,438,915
 
 
 
Small Cap Growth Fund      
  Shares or   
  Principal   
  Amount  Value
 
COMMON STOCKS - 93.7%      
Consumer Discretionary - 13.1%      
Auto Components - 1.7%      
Gentherm, Inc. (I)  26,174 $ 1,278,598
Tenneco, Inc. (I) 43,780 2,805,422
 
      4,084,020
Hotels, Restaurants & Leisure - 4.7%      
Bloomin’ Brands, Inc. (I) 108,444 1,804,508
Buffalo Wild Wings, Inc. (I) 18,073 2,670,286
Diamond Resorts International, Inc. (I) 115,614 2,892,662
Panera Bread Company, Class A (I) 12,141 1,820,422
Red Robin Gourmet Burgers, Inc. (I) 37,089 1,969,426
 
      11,157,304
Household Durables - 1.7%      
Standard Pacific Corp. (I) 296,330 2,480,282
Taylor Morrison Home Corp., Class A (I) 83,493 1,656,501
 
      4,136,783
Internet & Catalog Retail - 1.1%      
HSN, Inc. 44,609 2,702,859
Media - 1.0%      
IMAX Corp. (I)(L) 88,547 2,454,523
Multiline Retail - 0.7%      
Tuesday Morning Corp. (I) 92,820 1,631,776
Textiles, Apparel & Luxury Goods - 2.2%      
Kate Spade & Company (I) 33,183 1,073,138
Skechers U.S.A., Inc., Class A (I) 29,096 1,698,334
Vince Holding Corp. (I) 69,168 2,510,798
 
      5,282,270
      31,449,535
Consumer Staples - 0.7%      
Household Products - 0.7%      
Spectrum Brands Holdings, Inc. 19,849 1,718,923
Energy - 4.1%      
Oil, Gas & Consumable Fuels - 4.1%      
Athlon Energy, Inc. (I) 62,321 2,900,419
Diamondback Energy, Inc. (I) 32,941 2,844,455

 

Small Cap Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels (continued)    
Laredo Petroleum, Inc. (I)(L) 94,095 $ 2,224,406
RSP Permian, Inc. (I) 69,095 1,976,117
 
    9,945,397
 
    9,945,397
Financials - 7.3%    
Banks - 1.1%    
PacWest Bancorp 63,755 2,673,885
Capital Markets - 2.8%    
Financial Engines, Inc. 22,899 821,387
HFF, Inc., Class A 79,236 2,377,080
Virtus Investment Partners, Inc. 10,554 2,360,824
WisdomTree Investments, Inc. (I)(L) 97,646 1,155,152
 
    6,714,443
Diversified Financial Services - 0.3%    
WL Ross Holding Corp. (I) 73,000 793,510
Insurance - 0.7%    
Assured Guaranty, Ltd. 74,000 1,787,100
Real Estate Investment Trusts - 1.2%    
Douglas Emmett, Inc. 54,090 1,545,351
Pebblebrook Hotel Trust 32,493 1,258,779
 
    2,804,130
Real Estate Management & Development - 1.2%    
Kennedy-Wilson Holdings, Inc. 105,991 2,768,485
 
    17,541,553
Health Care - 19.4%    
Biotechnology - 6.5%    
Alnylam Pharmaceuticals, Inc. (I) 20,797 1,448,927
Anacor Pharmaceuticals, Inc. (I) 48,144 1,121,274
BioCryst Pharmaceuticals, Inc. (I) 86,880 1,172,880
Cubist Pharmaceuticals, Inc. (I) 31,282 2,159,396
Hyperion Therapeutics, Inc. (I) 44,015 1,138,228
Ironwood Pharmaceuticals, Inc. (I) 51,046 660,535
NPS Pharmaceuticals, Inc. (I) 49,984 1,508,517
Portola Pharmaceuticals, Inc. (I) 65,535 1,827,771
PTC Therapeutics, Inc. (I) 29,717 940,840
Seattle Genetics, Inc. (I)(L) 42,552 1,872,714
TESARO, Inc. (I) 55,927 1,653,202
 
    15,504,284
Health Care Equipment & Supplies - 3.5%    
DexCom, Inc. (I) 71,828 3,174,798
HeartWare International, Inc. (I) 31,247 2,534,132
Insulet Corp. (I) 74,816 2,701,606
 
    8,410,536
Health Care Providers & Services - 4.2%    
Acadia Healthcare Company, Inc. (I) 61,408 3,144,704
Envision Healthcare Holdings, Inc. (I) 71,495 2,613,857
ExamWorks Group, Inc. (I) 70,595 2,326,105
Team Health Holdings, Inc. (I) 33,870 1,982,072
 
    10,066,738
Health Care Technology - 1.4%    
Veeva Systems, Inc., Class A (I) 116,098 3,479,457
Life Sciences Tools & Services - 1.2%    
Covance, Inc. (I) 33,795 2,801,606
Pharmaceuticals - 2.6%    
Aerie Pharmaceuticals, Inc. (I) 31,900 522,522
Intersect ENT, Inc. (I) 23,800 385,560

 

The accompanying notes are an integral part of the financial statements. 143

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Pharmaceuticals (continued)    
Pacira Pharmaceuticals, Inc. (I) 16,089 $ 1,741,795
Salix Pharmaceuticals, Ltd. (I) 15,808 2,515,211
The Medicines Company (I) 42,403 1,085,941
 
    6,251,029
    46,513,650
Industrials - 20.9%    
Aerospace & Defense - 4.1%    
Astronics Corp. (I) 25,216 1,582,052
DigitalGlobe, Inc. (I) 83,732 2,542,941
Moog, Inc., Class A (I) 22,314 1,582,063
Orbital Sciences Corp. (I) 89,831 2,404,776
Teledyne Technologies, Inc. (I) 18,534 1,799,095
 
    9,910,927
Airlines - 1.0%    
Spirit Airlines, Inc. (I) 33,442 2,353,982
Commercial Services & Supplies - 0.9%    
Clean Harbors, Inc. (I) 36,945 2,236,650
Construction & Engineering - 1.5%    
AECOM Technology Corp. (I) 96,052 3,634,608
Electrical Equipment - 2.4%    
Acuity Brands, Inc. 27,920 3,458,730
Generac Holdings, Inc. (I)(L) 50,387 2,344,003
 
    5,802,733
Machinery - 2.4%    
Altra Industrial Motion Corp. 100,169 3,331,621
Watts Water Technologies, Inc., Class A 37,079 2,346,730
 
    5,678,351
Professional Services - 1.8%    
TrueBlue, Inc. (I) 106,320 2,885,525
WageWorks, Inc. (I) 34,776 1,434,858
 
    4,320,383
Road & Rail - 3.1%    
Landstar System, Inc. 43,201 2,931,836
Old Dominion Freight Line, Inc. (I) 32,252 2,150,241
Swift Transportation Company (I) 116,646 2,470,562
 
    7,552,639
Trading Companies & Distributors - 3.7%    
Applied Industrial Technologies, Inc. 62,349 3,037,020
HD Supply Holdings, Inc. (I) 119,481 3,317,987
WESCO International, Inc. (I)(L) 29,350 2,465,107
 
    8,820,114
    50,310,387
Information Technology - 25.7%    
Communications Equipment - 0.9%    
Ubiquiti Networks, Inc. (I)(L) 46,869 2,125,978
Electronic Equipment, Instruments & Components - 1.2%  
Cognex Corp. (I) 68,113 2,859,384
Internet Software & Services - 7.9%    
Bankrate, Inc. (I) 45,590 640,084
Constant Contact, Inc. (I) 85,906 2,677,690
CoStar Group, Inc. (I) 13,411 1,941,242
Dealertrack Technologies, Inc. (I) 36,397 1,629,130
Demandware, Inc. (I) 17,248 916,731
Envestnet, Inc. (I) 28,098 1,292,789
Marketo, Inc. (I) 59,042 1,728,750
Shutterstock, Inc. (I)(L) 29,747 2,106,088

 

Small Cap Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Internet Software & Services (continued)    
Web.com Group, Inc. (I) 104,711 $ 1,984,273
Xoom Corp. (I) 74,394 1,700,647
Yelp, Inc. (I) 28,455 2,345,261
 
    18,962,685
IT Services - 5.1%    
Heartland Payment Systems, Inc. (L) 60,347 2,882,776
MAXIMUS, Inc. 36,756 1,514,347
Virtusa Corp. (I) 75,256 2,562,467
WEX, Inc. (I) 25,955 2,949,786
WNS Holdings, Ltd., ADR (I) 120,441 2,484,698
 
    12,394,074
Semiconductors & Semiconductor Equipment - 4.4%  
Freescale Semiconductor, Ltd. (I) 77,322 1,627,628
Lattice Semiconductor Corp. (I) 161,869 1,215,636
Power Integrations, Inc. 36,927 2,207,496
Silicon Laboratories, Inc. (I) 47,139 2,136,811
SunEdison, Inc. (I) 88,863 1,957,652
SunPower Corp. (I)(L) 38,700 1,479,114
 
    10,624,337
Software - 5.7%    
Concur Technologies, Inc. (I)(L) 38,538 3,868,444
FleetMatics Group PLC (I)(L) 65,394 2,146,231
PTC, Inc. (I) 48,184 1,864,239
Telogis, Inc. (I)(R) 162,887 229,671
Tyler Technologies, Inc. (I) 28,914 2,575,081
Verint Systems, Inc. (I) 59,494 2,982,434
 
    13,666,100
Technology Hardware, Storage & Peripherals - 0.5%  
Nimble Storage, Inc. (I)(L) 45,014 1,217,179
 
    61,849,737
Materials - 2.5%    
Chemicals - 1.3%    
Platform Specialty Products Corp. (I) 117,204 3,200,841
Construction Materials - 0.8%    
Headwaters, Inc. (I) 137,537 1,786,606
Paper & Forest Products - 0.4%    
KapStone Paper and Packaging Corp. (I) 30,238 929,516
 
    5,916,963
TOTAL COMMON STOCKS (Cost $181,307,235) $ 225,246,145
 
PREFERRED SECURITIES - 3.8%    
Consumer Discretionary - 2.0%    
Auto Components - 2.0%    
Mobileye (I) 123,285 4,990,239
Information Technology - 1.8%    
Internet Software & Services - 0.4%    
DocuSign, Inc., Series B (I)(R) 1,234 15,635
DocuSign, Inc., Series B1 (I)(R) 370 4,688
DocuSign, Inc., Series D (I)(R) 887 11,238
DocuSign, Inc., Series E (I)(R) 22,933 290,561
Pure Storage, Inc., Series F (I)(R) 36,727 577,565
 
    899,687
IT Services - 0.2%    
Veracode, Inc. (I)(R) 30,455 562,379
Software - 1.0%    
Apigee Corp., Series H (I)(R) 260,625 758,419

 

The accompanying notes are an integral part of the financial statements. 144

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Growth Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
PREFERRED SECURITIES (continued)      
Software (continued)      
Cloudera, Inc., Series F (I)(R) 33,122 $ 921,719
Telogis, Inc. (I)(R) 221,826 616,676
 
      2,296,814
Technology Hardware, Storage & Peripherals - 0.2%      
Nutanix, Inc. (I)(R) 39,570 530,100
 
      4,288,980
TOTAL PREFERRED SECURITIES (Cost $4,593,408)   $ 9,279,219
 
SECURITIES LENDING COLLATERAL - 10.2%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 2,456,631 24,583,751
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $24,582,783)   $ 24,583,751
 
SHORT-TERM INVESTMENTS - 2.9%      
Repurchase Agreement - 2.9%      
Deutsche Bank Tri-Party Repurchase      
Agreement dated 08/29/2014 at 0.060% to      
be repurchased at $6,900,012 on      
09/02/2014, collateralized by $6,525,904      
Government National Mortgage Association,      
3.500% - 5.200% due 12/20/2026 to      
08/15/2055 (valued at $7,038,000,      
including interest) $  6,900,000 $ 6,900,000
TOTAL SHORT-TERM INVESTMENTS (Cost $6,900,000) $ 6,900,000
Total Investments (Small Cap Growth Fund)      
(Cost $217,383,426) - 110.6%   $ 266,009,115
Other assets and liabilities, net - (10.6%)     (25,530,333)
TOTAL NET ASSETS - 100.0%   $ 240,478,782
 
 
 
Small Cap Opportunities Fund      
  Shares or   
  Principal   
  Amount  Value
 
COMMON STOCKS - 95.8%      
Consumer Discretionary - 11.6%      
Auto Components - 0.8%      
Cooper Tire & Rubber Company   1,892 $ 58,330
Lear Corp.   2,401 242,813
Modine Manufacturing Company (I)   4,677 66,507
Motorcar Parts of America, Inc. (I)   1,197 36,293
Shiloh Industries, Inc. (I)   1,546 25,834
Spartan Motors, Inc.   4,866 25,401
Standard Motor Products, Inc.   3,228 121,405
Stoneridge, Inc. (I)   2,033 25,331
Superior Industries International, Inc.   4,830 93,944
Sypris Solutions, Inc.   819 3,579
TRW Automotive Holdings Corp. (I) 10,749 1,035,014
Visteon Corp. (I)   278 28,131
 
      1,762,582
Automobiles - 0.5%      
Thor Industries, Inc. 18,951 1,017,858
Distributors - 0.1%      
Core-Mark Holding Company, Inc.   4,380 210,941
VOXX International Corp. (I)   2,806 27,779

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Distributors (continued)    
Weyco Group, Inc. 494 $ 13,323
 
    252,043
Diversified Consumer Services - 0.7%    
Apollo Education Group, Inc. (I) 888 24,660
Ascent Capital Group, Inc., Class A (I) 2,709 169,069
Bridgepoint Education, Inc. (I) 561 7,052
Bright Horizons Family Solutions, Inc. (I) 432 17,569
Cambium Learning Group, Inc. (I) 3,781 6,239
Career Education Corp. (I) 6,866 37,694
Carriage Services, Inc. 1,315 24,512
DeVry Education Group, Inc. 4,000 171,720
Education Management Corp. (I) 262 338
Graham Holdings Company, Class B 1,176 845,309
Matthews International Corp., Class A 911 42,043
Regis Corp. 8,066 121,877
Service Corp. International 4,373 96,949
Steiner Leisure, Ltd. (I) 148 6,293
 
    1,571,324
Hotels, Restaurants & Leisure - 2.9%    
Ambassadors Group, Inc. (I) 202 820
Ark Restaurants Corp. 197 4,360
Belmond, Ltd., Class A (I) 11,800 150,804
Biglari Holdings, Inc. (I)(L) 267 95,946
BJ’s Restaurants, Inc. (I) 1,783 66,452
Bob Evans Farms, Inc. (L) 2,266 98,390
Boyd Gaming Corp. (I) 13,073 139,227
Canterbury Park Holding Corp. (I) 100 1,019
Churchill Downs, Inc. 1,871 176,192
Cracker Barrel Old Country Store, Inc. (L) 8,907 894,352
Darden Restaurants, Inc. (L) 5,341 252,736
DineEquity, Inc. 11,719 975,021
Dover Downs Gaming & Entertainment, Inc. (I) 2,392 2,559
Frisch’s Restaurants, Inc. 301 7,657
Full House Resorts, Inc. (I) 632 676
Gaming Partners International Corp. (I) 400 3,296
International Speedway Corp., Class A 5,732 191,965
Isle of Capri Casinos, Inc. (I) 5,896 48,760
Life Time Fitness, Inc. (I)(L) 759 34,990
Luby’s, Inc. (I) 6,723 36,909
Marriott Vacations Worldwide Corp. (I) 1,875 111,731
Monarch Casino & Resort, Inc. (I) 2,300 29,256
MTR Gaming Group, Inc. (I) 4,201 18,947
Papa John’s International, Inc. 26,632 1,054,627
Pinnacle Entertainment, Inc. (I)(L) 8,929 223,136
RCI Hospitality Holdings, Inc. (I) 2,292 27,344
Red Robin Gourmet Burgers, Inc. (I) 16,259 863,353
Ruby Tuesday, Inc. (I) 8,325 51,365
Speedway Motorsports, Inc. 6,730 125,178
The Marcus Corp. 3,767 68,597
The Wendy’s Company 47,925 390,589
 
    6,146,254
Household Durables - 1.3%    
Bassett Furniture Industries, Inc. 1,320 20,011
Beazer Homes USA, Inc. (I) 47,280 891,228
Cavco Industries, Inc. (I) 648 46,287
Cobra Electronics Corp. (I) 400 1,712
CSS Industries, Inc. 926 23,409
Emerson Radio Corp. (I) 6,514 14,201
Ethan Allen Interiors, Inc. 500 12,615
Flexsteel Industries, Inc. 431 15,102
Helen of Troy, Ltd. (I) 4,589 267,172

 

The accompanying notes are an integral part of the financial statements. 145

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Household Durables (continued)    
Hooker Furniture Corp. 2,845 $ 42,504
La-Z-Boy, Inc. 45,559 972,229
Lennar Corp., Class B 865 27,455
Lifetime Brands, Inc. 962 16,546
M/I Homes, Inc. (I) 2,518 57,310
MDC Holdings, Inc. (L) 1,223 35,479
Meritage Homes Corp. (I) 1,171 48,327
NACCO Industries, Inc., Class A 500 26,000
PulteGroup, Inc. 6,615 127,140
Skyline Corp. (I) 705 2,559
Stanley Furniture Company, Inc. (I) 2,115 5,753
The Ryland Group, Inc. 2,668 98,983
Universal Electronics, Inc. (I) 557 30,451
 
    2,782,473
Internet & Catalog Retail - 0.1%    
1-800-Flowers.com, Inc., Class A (I) 5,490 28,274
FTD Companies, Inc. (I)(L) 1,516 50,210
Gaiam, Inc., Class A (I) 3,280 24,338
Liberty Tripadvisor Holdings, Inc. (I) 1,134 40,563
Liberty Ventures, Series A (I) 1,134 43,194
 
    186,579
Leisure Products - 0.0%    
Callaway Golf Company 10,513 80,004
JAKKS Pacific, Inc. (I)(L) 3,041 20,618
Johnson Outdoors, Inc., Class A 200 5,298
 
    105,920
Media - 0.9%    
AH Belo Corp., Class A 4,621 53,234
Ballantyne Strong, Inc. (I) 1,790 8,234
Beasley Broadcasting Group, Inc., Class A 447 2,704
Central European Media    
Enterprises, Ltd., Class A (I)(L) 2,003 4,967
Cumulus Media, Inc., Class A (I) 2,304 10,575
Gannett Company, Inc. 6,624 223,626
Gray Television, Inc. (I) 8,117 80,602
Harte-Hanks, Inc. 9,457 66,294
John Wiley & Sons, Inc., Class A 205 12,290
Journal Communications, Inc., Class A (I) 8,168 81,027
Martha Stewart Living    
Omnimedia, Inc., Class A (I) 1,808 7,792
Media General, Inc. (I) 5,000 77,050
Meredith Corp. 2,988 139,181
Nexstar Broadcasting Group, Inc., Class A (L) 18,965 865,563
Radio One, Inc., Class D (I)(L) 4,508 13,569
Salem Communications Corp., Class A 1,200 9,948
The EW Scripps Company, Class A (I) 6,860 130,066
The McClatchy Company, Class A (I)(L) 8,210 37,027
 
    1,823,749
Multiline Retail - 0.3%    
Big Lots, Inc. 977 45,284
Dillard’s, Inc., Class A 4,408 503,923
Fred’s, Inc., Class A 6,736 95,853
 
    645,060
Specialty Retail - 3.0%    
Aaron’s, Inc. 2,104 53,904
America’s Car-Mart, Inc. (I)(L) 601 25,458
Barnes & Noble, Inc. (I)(L) 9,129 217,818
bebe stores, Inc. 11,334 37,402
Big 5 Sporting Goods Corp. 498 5,080
Books-A-Million, Inc. (I) 2,241 4,504

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Specialty Retail (continued)    
Brown Shoe Company, Inc. 6,262 $ 186,858
Build-A-Bear Workshop, Inc. (I) 3,247 42,341
Cabela’s, Inc. (I)(L) 1,460 89,089
Chico’s FAS, Inc. 5,562 87,880
Christopher & Banks Corp. (I) 2,906 27,810
Citi Trends, Inc. (I) 353 8,211
Conn’s, Inc. (I)(L) 6,068 272,028
Foot Locker, Inc. 2,303 129,221
GameStop Corp., Class A (L) 16,216 684,315
Genesco, Inc. (I) 1,182 93,733
GNC Holdings, Inc., Class A 18,276 693,574
Group 1 Automotive, Inc. (L) 3,300 264,528
Haverty Furniture Companies, Inc. 3,731 86,820
hhgregg, Inc. (I)(L) 1,994 14,257
Lithia Motors, Inc., Class A 661 57,785
MarineMax, Inc. (I) 4,389 75,754
New York & Company, Inc. (I) 2,900 9,860
Office Depot, Inc. (I) 19,586 100,280
Pacific Sunwear of California, Inc. (I) 6,498 13,516
Penske Automotive Group, Inc. 24,563 1,178,287
Perfumania Holdings, Inc. (I) 1,016 6,604
Pier 1 Imports, Inc. 35,431 558,393
RadioShack Corp. (I)(L) 2,661 4,258
Rent-A-Center, Inc. (L) 12,800 356,608
Shoe Carnival, Inc. 2,916 62,781
Signet Jewelers, Ltd. 1,145 134,961
Sonic Automotive, Inc., Class A 1,607 39,693
Stage Stores, Inc. 5,947 103,894
Stein Mart, Inc. 5,406 67,305
Systemax, Inc. (I) 4,305 62,767
The Children’s Place Retail Stores, Inc. 241 12,956
The Finish Line, Inc., Class A 2,185 64,742
The Men’s Wearhouse, Inc. 7,700 416,031
The Pep Boys - Manny, Moe & Jack (I) 9,800 108,976
The Wet Seal, Inc., Class A (I)(L) 10,900 11,118
West Marine, Inc. (I) 4,685 51,394
 
    6,522,794
Textiles, Apparel & Luxury Goods - 1.0%    
Charles & Colvard, Ltd. (I) 775 1,643
Columbia Sportswear Company 14,217 1,082,767
Crocs, Inc. (I) 916 14,152
Culp, Inc. 709 12,968
Delta Apparel, Inc. (I) 522 4,933
G-III Apparel Group, Ltd. (I) 981 80,972
Iconix Brand Group, Inc. (I)(L) 6,481 269,804
Lakeland Industries, Inc. (I) 700 4,291
Movado Group, Inc. 3,584 133,074
Perry Ellis International, Inc. (I)(L) 2,224 44,636
RG Barry Corp. 1,273 24,149
Rocky Brands, Inc. 1,126 16,755
Skechers U.S.A., Inc., Class A (I) 5,025 293,309
Unifi, Inc. (I) 3,710 105,772
 
    2,089,225
    24,905,861
Consumer Staples - 2.2%    
Beverages - 0.0%    
Craft Brew Alliance, Inc. (I) 2,766 36,511
MGP Ingredients, Inc. 2,626 31,302
 
    67,813
Food & Staples Retailing - 0.7%    
Casey’s General Stores, Inc. 752 53,911

 

The accompanying notes are an integral part of the financial statements. 146

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Food & Staples Retailing (continued)    
Ingles Markets, Inc., Class A 2,701 $ 68,173
SpartanNash Company 6,634 142,565
The Andersons, Inc. 3,477 239,113
The Pantry, Inc. (I) 4,883 103,373
United Natural Foods, Inc. (I) 12,321 792,117
Village Super Market, Inc., Class A 313 7,177
Weis Markets, Inc. 2,061 88,520
 
    1,494,949
Food Products - 1.0%    
Alico, Inc. 490 19,130
Boulder Brands, Inc. (I)(L) 5,763 77,570
Cal-Maine Foods, Inc. 700 55,377
Chiquita Brands International, Inc. (I) 5,723 79,550
Dean Foods Company (L) 8,806 142,481
Fresh Del Monte Produce, Inc. 9,985 318,921
Ingredion, Inc. 768 61,256
Omega Protein Corp. (I) 4,810 72,487
Post Holdings, Inc. (I) 3,298 121,927
Sanderson Farms, Inc. (L) 876 81,748
Seaboard Corp. (I) 47 136,265
Seneca Foods Corp., Class A (I) 2,016 60,823
Snyder’s-Lance, Inc. 1,625 44,298
TreeHouse Foods, Inc. (I) 11,283 931,073
 
    2,202,906
Household Products - 0.3%    
Central Garden & Pet Company (I) 2,475 21,805
Central Garden & Pet Company, Class A (I) 6,231 56,141
Oil-Dri Corp. of America 855 25,599
Orchids Paper Products Company 625 17,388
Spectrum Brands Holdings, Inc. 4,543 393,424
 
    514,357
Personal Products - 0.1%    
CCA Industries, Inc. (I) 400 1,236
Inter Parfums, Inc. 1,654 50,381
Mannatech, Inc. (I) 83 1,101
Nutraceutical International Corp. (I) 2,391 57,958
 
    110,676
Tobacco - 0.1%    
Alliance One International, Inc. (I) 16,283 36,148
Universal Corp. (L) 3,700 195,212
 
    231,360
    4,622,061
Energy - 9.0%    
Energy Equipment & Services - 4.8%    
Atwood Oceanics, Inc. (I) 2,698 133,308
Basic Energy Services, Inc. (I) 5,693 137,828
Bolt Technology Corp. 1,048 17,606
Bristow Group, Inc. 6,352 463,569
C&J Energy Services, Inc. (I) 1,831 52,531
Cal Dive International, Inc. (I)(L) 8,437 6,686
Dawson Geophysical Company 1,649 37,300
Diamond Offshore Drilling, Inc. 2,735 120,176
Dresser-Rand Group, Inc. (I) 12,209 846,084
ENGlobal Corp. (I) 267 753
Era Group, Inc. (I) 2,519 64,512
Exterran Holdings, Inc. 9,219 429,882
Forum Energy Technologies, Inc. (I) 30,184 1,027,765
Gulf Island Fabrication, Inc. 3,360 70,795
Gulfmark Offshore, Inc., Class A 5,420 217,938

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Energy Equipment & Services (continued)    
Helix Energy Solutions Group, Inc. (I) 51,825 $ 1,415,859
Hercules Offshore, Inc. (I)(L) 20,463 68,960
Hornbeck Offshore Services, Inc. (I)(L) 5,800 253,228
ION Geophysical Corp. (I) 4,459 15,384
Key Energy Services, Inc. (I) 1,619 10,200
Matrix Service Company (I) 3,185 89,849
Mitcham Industries, Inc. (I) 2,445 32,176
Nabors Industries, Ltd. 16,347 444,802
Natural Gas Services Group, Inc. (I) 2,736 81,204
Newpark Resources, Inc. (I) 14,056 173,310
Noble Corp. PLC 3,946 112,303
Parker Drilling Company (I) 16,317 102,471
Patterson-UTI Energy, Inc. 10,321 356,487
PHI, Inc. (I) 2,700 115,452
Pioneer Energy Services Corp. (I) 13,710 210,860
Precision Drilling Corp. 91,688 1,165,354
Rowan Companies PLC, Class A 13,921 422,085
SEACOR Holdings, Inc. (I) 2,930 239,088
Superior Energy Services, Inc. 7,255 260,019
Tesco Corp. 139 2,950
TETRA Technologies, Inc. (I) 7,049 83,178
Tidewater, Inc. 5,452 277,343
Unit Corp. (I) 10,500 691,005
Willbros Group, Inc. (I) 11,697 127,965
 
    10,378,265
Oil, Gas & Consumable Fuels - 4.2%    
Adams Resources & Energy, Inc. 139 9,117
Alon USA Energy, Inc. 8,155 135,618
Alpha Natural Resources, Inc. (I)(L) 13,589 53,677
Approach Resources, Inc. (I)(L) 1,893 33,847
Bill Barrett Corp. (I)(L) 4,159 94,700
BioFuel Energy Corp. (I) 240 3,026
BPZ Resources, Inc. (I)(L) 7,809 19,132
Callon Petroleum Company (I) 3,702 39,722
Carrizo Oil & Gas, Inc. (I) 2,015 126,381
Clayton Williams Energy, Inc. (I) 372 44,060
Cloud Peak Energy, Inc. (I) 1,335 20,973
Comstock Resources, Inc. (L) 5,496 133,992
Contango Oil & Gas Company (I) 1,292 51,189
Delek US Holdings, Inc. 5,562 194,559
Denbury Resources, Inc. 19,666 338,649
DHT Holdings, Inc. 1,910 13,370
Endeavour International Corp. (I)(L) 3,363 3,003
Energen Corp. 5,747 462,519
Energy XXI Bermuda, Ltd. (L) 4,472 73,788
Escalera Resources Company (I) 1,718 3,539
Gastar Exploration, Inc. (I) 1,921 15,099
Green Plains Renewable Energy, Inc. 7,707 344,426
Harvest Natural Resources, Inc. (I)(L) 6,322 31,294
Kodiak Oil & Gas Corp. (I) 1,458 23,722
Magnum Hunter Resources Corp. (I)(L) 2,084 14,400
Matador Resources Company (I) 289 7,907
Newfield Exploration Company (I) 8,087 362,459
Nordic American Tankers, Ltd. 459 4,159
Northern Oil and Gas, Inc. (I)(L) 1,346 22,680
Oasis Petroleum, Inc. (I) 1,846 90,805
Overseas Shipholding Group, Inc. (I) 4,418 14,615
PDC Energy, Inc. (I) 3,910 234,952
Peabody Energy Corp. (L) 11,221 178,189
Penn Virginia Corp. (I)(L) 5,500 82,610
QEP Resources, Inc. 9,409 334,678
Renewable Energy Group, Inc. (I)(L) 1,366 16,611
Rex Energy Corp. (I) 5,913 90,351

 

The accompanying notes are an integral part of the financial statements. 147

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels (continued)    
Rosetta Resources, Inc. (I) 16,586 $ 829,300
SandRidge Energy, Inc. (I)(L) 1,913 10,024
Scorpio Tankers, Inc. 110,245 1,053,942
SemGroup Corp., Class A 14,046 1,232,256
Ship Finance International, Ltd. (L) 1,579 31,248
SM Energy Company 1,014 90,287
Stone Energy Corp. (I) 3,805 133,898
Swift Energy Company (I)(L) 5,863 66,545
Tesoro Corp. 2,402 155,505
Triangle Petroleum Corp. (I)(L) 5,316 63,739
Ultra Petroleum Corp. (I)(L) 42,848 1,136,757
VAALCO Energy, Inc. (I) 4,771 43,655
W&T Offshore, Inc. 672 10,026
Warren Resources, Inc. (I) 7,110 45,860
Western Refining, Inc. 5,265 244,980
WPX Energy, Inc. (I) 5,899 157,031
 
    9,028,871
    19,407,136
Financials - 21.0%    
Banks - 7.2%    
1st Source Corp. 3,680 110,437
1st United Bancorp, Inc. 1,670 14,529
Access National Corp. 359 6,035
American National Bankshares, Inc. 539 11,933
Ameris Bancorp 2,259 51,709
Associated Banc-Corp. 20,485 372,417
Banc of California, Inc. 935 11,239
BancFirst Corp. 601 38,248
BancorpSouth, Inc. 47,562 1,006,888
Bank of Florida Corp. (I) 2,087 0
Bank of Kentucky Financial Corp. 89 3,272
Banner Corp. 2,395 94,315
Bar Harbor Bankshares 348 9,824
BBCN Bancorp, Inc. 8,740 127,604
Boston Private Financial Holdings, Inc. 12,512 151,896
Bridge Capital Holdings (I) 535 11,968
Bryn Mawr Bank Corp. 454 13,357
C&F Financial Corp. 63 2,170
Camden National Corp. 211 7,714
Capital Bank Financial Corp., Class A (I) 392 9,592
Capital City Bank Group, Inc. 2,956 41,443
Cardinal Financial Corp. 4,374 78,163
Cathay General Bancorp 10,181 265,113
Centerstate Banks, Inc. 2,800 29,260
Century Bancorp, Inc., Class A 108 3,886
Chemical Financial Corp. 2,894 82,103
City Holding Company 378 16,148
CoBiz Financial, Inc. 5,644 65,188
Columbia Banking System, Inc. 2,641 68,692
Community Bank Systems, Inc. 2,500 88,350
Community Trust Bancorp, Inc. 1,464 52,001
ConnectOne Bancorp, Inc. 1,133 21,958
CVB Financial Corp. 65,661 1,020,372
East West Bancorp, Inc. 29,264 1,019,558
Enterprise Bancorp, Inc. 204 4,045
Enterprise Financial Services Corp. 3,205 55,895
Fidelity Southern Corp. 824 11,429
Financial Institutions, Inc. 1,228 29,497
First Bancorp North Carolina 3,981 70,742
First BanCorp Puerto Rico (I) 1,207 6,288
First Bancorp, Inc. 642 10,837
First Busey Corp. 6,309 36,277

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
First Citizens BancShares, Inc., Class A 103 $ 23,668
First Commonwealth Financial Corp. 18,527 164,149
First Community Bancshares, Inc. 2,119 34,582
First Financial Bancorp 2,582 42,887
First Financial Corp. 1,254 40,529
First Interstate Bancsystem, Inc. 1,557 41,292
First Merchants Corp. 5,413 110,479
First Midwest Bancorp, Inc. 7,964 134,193
First Niagara Financial Group, Inc. 15,783 137,312
First South Bancorp, Inc. 777 5,828
FirstMerit Corp. 1,290 22,233
Flushing Financial Corp. 4,011 77,412
FNB Corp. 4,854 59,995
Fulton Financial Corp. 3,233 37,293
German American Bancorp, Inc. 343 9,292
Glacier Bancorp, Inc. 40,100 1,091,522
Great Southern Bancorp, Inc. 1,203 38,099
Hancock Holding Company 688 22,869
Hanmi Financial Corp. 1,541 31,668
Heartland Financial USA, Inc. 1,587 37,961
Heritage Commerce Corp. 2,067 17,197
Heritage Financial Corp. 1,170 19,141
Horizon Bancorp 400 8,860
Hudson Valley Holding Corp. 598 10,626
Iberiabank Corp. 17,809 1,162,037
Independent Bank Corp. 2,687 98,908
Independent Bank Corp. (MI) 2,100 25,494
International Bancshares Corp. 12,100 318,956
Intervest Bancshares Corp. 2,237 21,430
Lakeland Bancorp, Inc. 3,520 36,362
Lakeland Financial Corp. 1,305 50,817
Macatawa Bank Corp. 800 4,088
MainSource Financial Group, Inc. 4,787 82,576
MB Financial, Inc. 9,198 260,221
MBT Financial Corp. (I) 1,105 5,669
Mercantile Bank Corp. 1,058 20,049
Merchants Bancshares, Inc. 540 15,973
Metro Bancorp, Inc. (I) 1,942 45,171
MidSouth Bancorp, Inc. 729 13,931
MidWestOne Financial Group, Inc. 305 7,253
National Penn Bancshares, Inc. 11,091 110,910
NBT Bancorp, Inc. 1,585 38,056
NewBridge Bancorp (I) 2,100 15,687
North Valley Bancorp (I) 43 903
Northrim BanCorp, Inc. 492 12,015
OFG Bancorp (L) 4,139 65,810
Old National Bancorp 2,903 38,000
Old Second Bancorp, Inc. (I) 1,554 7,382
OmniAmerican Bancorp, Inc. 1,661 43,120
Pacific Continental Corp. 2,139 28,834
Pacific Mercantile Bancorp (I) 1,399 9,793
Pacific Premier Bancorp, Inc. (I) 659 9,786
PacWest Bancorp 28,483 1,194,577
Park National Corp. (L) 266 20,705
Park Sterling Corp. 3,302 22,553
Peapack Gladstone Financial Corp. 772 14,483
Peoples Bancorp, Inc. 2,601 62,346
Pinnacle Financial Partners, Inc. 6,390 229,145
Popular, Inc. (I) 4,748 146,998
Porter Bancorp, Inc. (I) 735 706
Preferred Bank (I) 1,111 26,686
Premier Financial Bancorp, Inc. 658 10,041
PrivateBancorp, Inc. 2,635 77,759

 

The accompanying notes are an integral part of the financial statements. 148

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
Renasant Corp. 5,254 $ 151,998
Republic Bancorp, Inc., Class A 822 18,709
Republic First Bancorp, Inc. (I) 1,501 6,709
S&T Bancorp, Inc. 2,700 67,338
Sandy Spring Bancorp, Inc. 2,665 64,413
Seacoast Banking Corp. of Florida (I) 529 5,549
Shore Bancshares, Inc. (I) 600 5,382
Sierra Bancorp 1,564 27,167
Simmons First National Corp., Class A 1,519 60,638
South State Corp. 16 937
Southern Community Financial Corp. (I) 1,600 352
Southside Bancshares, Inc. (L) 489 16,797
Southwest Bancorp, Inc. 3,030 50,086
Sterling Bancorp 5,718 72,447
Suffolk Bancorp 2,043 42,556
Sun Bancorp, Inc. (I) 272 5,097
Susquehanna Bancshares, Inc. 16,670 172,034
Synovus Financial Corp. 1,574 38,012
TCF Financial Corp. 5,697 90,013
The Bancorp, Inc. (I) 5,997 58,231
Tompkins Financial Corp. 325 14,882
TowneBank (L) 2,665 39,069
Trico Bancshares (L) 1,451 32,430
Trustmark Corp. 2,664 63,230
Union Bankshares Corp. 5,438 128,500
United Bankshares, Inc. (L) 3,086 101,684
United Community Banks, Inc. 300 5,088
Univest Corp. of Pennsylvania 1,917 36,615
ViewPoint Financial Group, Inc. 1,516 39,492
Washington Trust Bancorp, Inc. 2,092 73,597
Webster Financial Corp. 4,232 124,844
WesBanco, Inc. 4,767 148,015
West Bancorp, Inc. 1,494 22,485
Western Alliance Bancorp (I) 43,479 1,026,539
Wilshire Bancorp, Inc. 3,138 30,627
Wintrust Financial Corp. 5,711 265,961
Yadkin Financial Corp. (I) 538 10,104
Zions Bancorporation 20,446 595,796
 
    15,420,132
Capital Markets - 2.8%    
American Capital, Ltd. (I) 6,316 97,835
Artisan Partners Asset    
Management, Inc., Class A 16,717 927,459
Calamos Asset Management, Inc., Class A 923 11,897
Capital Southwest Corp. 2,788 102,041
Cowen Group, Inc., Class A (I) 25,390 103,845
E*TRADE Financial Corp. (I) 71,484 1,591,234
Evercore Partners, Inc., Class A 18,786 962,407
GFI Group, Inc. 7,774 35,138
Harris & Harris Group, Inc. (I) 4,423 14,684
ICG Group, Inc. (I) 1,991 34,544
INTL. FCStone, Inc. (I) 199 3,817
Investment Technology Group, Inc. (I) 6,101 103,900
Janus Capital Group, Inc. 100,190 1,217,309
JMP Group, Inc. 3,000 20,580
Legg Mason, Inc. 14,190 699,851
MCG Capital Corp. (L) 13,908 55,076
Medallion Financial Corp. (L) 3,535 42,774
Oppenheimer Holdings, Inc., Class A 1,506 36,385
Piper Jaffray Companies (I) 300 16,008
Safeguard Scientifics, Inc. (I) 1,932 37,867

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Capital Markets (continued)    
SWS Group, Inc. (I)(L) 4,200 $ 31,374
 
    6,146,025
Consumer Finance - 0.2%    
Asta Funding, Inc. 2,466 20,739
Cash America International, Inc. 1,700 75,888
Encore Capital Group, Inc. (I) 425 18,866
Nelnet, Inc., Class A 4,940 217,212
Nicholas Financial, Inc. 75 962
SLM Corp. 4,062 35,989
The First Marblehead Corp. (I) 462 2,162
 
    371,818
Diversified Financial Services - 0.6%    
Interactive Brokers Group, Inc., Class A 1,767 41,418
Marlin Business Services Corp. 2,737 54,138
MicroFinancial, Inc. 1,317 10,444
NewStar Financial, Inc. (I) 7,164 82,601
PHH Corp. (I) 7,810 187,128
PICO Holdings, Inc. (I) 1,866 41,239
Resource America, Inc., Class A 3,296 31,048
The NASDAQ OMX Group, Inc. 18,489 803,717
 
    1,251,733
Insurance - 6.7%    
Alleghany Corp. (I) 702 302,653
Allied World Assurance Company Holdings AG 15,300 565,947
Ambac Financial Group, Inc. (I) 1,199 29,016
American Equity Investment Life    
Holding Company 9,942 245,965
American Financial Group, Inc. 31,115 1,865,967
American National Insurance Company 493 56,123
AMERISAFE, Inc. 2,787 105,154
Arch Capital Group, Ltd. (I) 392 21,787
Argo Group International Holdings, Ltd. 5,017 264,095
Aspen Insurance Holdings, Ltd. 8,155 346,751
Assurant, Inc. 9,808 654,684
Assured Guaranty, Ltd. 18,410 444,602
Axis Capital Holdings, Ltd. 10,224 493,001
CNO Financial Group, Inc. 42,875 765,319
Donegal Group, Inc., Class A 2,470 38,903
EMC Insurance Group, Inc. 570 17,465
Employers Holdings, Inc. 1,300 27,833
Endurance Specialty Holdings, Ltd. (L) 5,786 335,993
Enstar Group, Ltd. (I) 47 6,669
Everest Re Group, Ltd. 617 101,089
FBL Financial Group, Inc., Class A 4,767 223,239
Federated National Holding Company 1,233 30,455
First Acceptance Corp. (I) 4,470 10,907
First American Financial Corp. 5,937 168,314
Genworth Financial, Inc., Class A (I) 30,736 436,144
Global Indemnity PLC (I) 2,416 65,329
Greenlight Capital Re, Ltd., Class A (I) 2,000 68,420
Hallmark Financial Services, Inc. (I) 3,571 34,103
HCC Insurance Holdings, Inc. 435 21,811
Hilltop Holdings, Inc. (I)(L) 3,474 73,545
Horace Mann Educators Corp. 6,503 193,789
Independence Holding Company 2,816 39,283
Investors Title Company 98 7,075
Kemper Corp. 10,242 372,297
Maiden Holdings, Ltd. 9,561 116,262
MBIA, Inc. (I) 19,947 208,047
Meadowbrook Insurance Group, Inc. 6,598 40,842
Mercury General Corp. 572 29,304

 

The accompanying notes are an integral part of the financial statements. 149

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Insurance (continued)    
Montpelier Re Holdings, Ltd. 9,927 $ 312,204
National Interstate Corp. 809 22,652
National Western Life Insurance    
Company, Class A 59 14,986
Old Republic International Corp. 13,332 204,646
OneBeacon Insurance Group, Ltd., Class A 2,629 42,143
PartnerRe, Ltd. 5,456 609,381
Platinum Underwriters Holdings, Ltd. 4,109 256,689
Primerica, Inc. 1,896 95,426
Protective Life Corp. 10,342 717,735
Reinsurance Group of America, Inc. 4,295 356,399
RenaissanceRe Holdings, Ltd. 603 61,741
Safety Insurance Group, Inc. 1,576 86,995
Selective Insurance Group, Inc. 3,326 79,724
StanCorp Financial Group, Inc. 20,266 1,327,828
State Auto Financial Corp. 4,956 107,545
Stewart Information Services Corp. 3,868 124,627
Symetra Financial Corp. 8,400 204,456
The Hanover Insurance Group, Inc. 4,623 293,329
The Navigators Group, Inc. (I) 1,843 118,413
The Phoenix Companies, Inc. (I) 1,311 80,613
Tower Group International, Ltd. 9,158 18,408
United Fire Group, Inc. 1,493 43,775
Universal Insurance Holdings, Inc. 2,633 36,493
Validus Holdings, Ltd. 6,714 262,585
 
    14,306,975
Real Estate Investment Trusts - 1.3%    
Cousins Properties, Inc. 80,400 1,020,276
Douglas Emmett, Inc. 17,600 502,832
LaSalle Hotel Properties 33,520 1,225,156
The Geo Group, Inc. 1,224 45,802
 
    2,794,066
Real Estate Management & Development - 1.2%    
Alexander & Baldwin, Inc. 3,790 155,011
AV Homes, Inc. (I) 2,810 44,763
Consolidated-Tomoka Land Company 236 13,806
Forestar Group, Inc. (I) 663 13,260
Griffin Land & Nurseries, Inc. 68 1,968
Jones Lang LaSalle, Inc. 9,562 1,277,579
Kennedy-Wilson Holdings, Inc. 40,521 1,058,409
 
    2,564,796
Thrifts & Mortgage Finance - 1.0%    
Astoria Financial Corp. 10,259 134,085
Bank Mutual Corp. 7,055 46,492
BankFinancial Corp. 4,921 53,196
BBX Capital Corp., Class A (I) 1,405 26,330
Beneficial Mutual Bancorp, Inc. (I) 2,325 31,922
Berkshire Hills Bancorp, Inc. 2,695 66,378
Brookline Bancorp, Inc. 6,990 63,959
Cape Bancorp, Inc. 443 4,563
Capitol Federal Financial, Inc. 5,326 65,776
Dime Community Bancshares, Inc. 2,812 43,417
Doral Financial Corp. (I) 382 2,563
ESB Financial Corp. 529 6,692
ESSA Bancorp, Inc. 2,103 23,806
EverBank Financial Corp. 1,147 21,655
Federal Agricultural Mortgage Corp., Class C 1,732 57,017
First Defiance Financial Corp. 1,313 36,633
First Financial Northwest, Inc. 2,932 31,754
Flagstar Bancorp, Inc. (I) 2,116 36,882
Hampden Bancorp, Inc. 942 16,033

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Thrifts & Mortgage Finance (continued)    
HF Financial Corp. 155 $ 2,077
Hingham Institution for Savings 82 6,767
Home Bancorp, Inc. (I) 1,531 34,203
Hudson City Bancorp, Inc. 20,492 202,256
Kearny Financial Corp. (I) 378 5,916
Louisiana Bancorp, Inc. 100 2,014
Meridian Bancorp, Inc. (I) 215 2,275
MGIC Investment Corp. (I) 2,160 18,209
New York Community Bancorp, Inc. (L) 11,790 188,051
Northfield Bancorp, Inc. 84 1,101
Northwest Bancshares, Inc. 6,987 88,106
OceanFirst Financial Corp. 1,640 26,929
Oritani Financial Corp. 267 4,005
People’s United Financial, Inc. (L) 19,579 292,706
Provident Financial Holdings, Inc. 768 11,244
Provident Financial Services, Inc. 7,468 127,031
Pulaski Financial Corp. 282 3,240
SI Financial Group, Inc. 835 9,060
Simplicity Bancorp, Inc. 627 10,189
Territorial Bancorp, Inc. 952 19,573
TierOne Corp. (I) 1,301 1
Tree.com, Inc. (I) 490 15,675
TrustCo Bank Corp. 4,173 29,294
United Financial Bancorp, Inc. 3,577 44,319
Walker & Dunlop, Inc. (I) 1,711 24,279
Washington Federal, Inc. 9,364 203,667
Waterstone Financial, Inc. 787 8,995
Westfield Financial, Inc. 5,678 41,222
WSFS Financial Corp. 256 19,098
 
    2,210,655
    45,066,200
Health Care - 10.6%    
Biotechnology - 0.5%    
Cubist Pharmaceuticals, Inc. (I) 13,620 940,189
Emergent Biosolutions, Inc. (I) 1,607 40,014
Harvard    
Apparatus Regenerative Technology, Inc. (I) 1,705 14,970
Repligen Corp. (I) 1,800 34,308
 
    1,029,481
Health Care Equipment & Supplies - 2.4%    
Alere, Inc. (I) 37,111 1,315,585
Alphatec Holdings, Inc. (I) 11,650 18,174
Analogic Corp. 900 64,980
AngioDynamics, Inc. (I) 4,853 68,476
Anika Therapeutics, Inc. (I) 2,936 123,312
Baxano Surgical, Inc. (I) 2,684 986
CONMED Corp. 2,832 111,864
CryoLife, Inc. 2,939 29,508
Cutera, Inc. (I) 900 8,730
Cynosure, Inc., Class A (I) 1,025 23,093
Digirad Corp. 3,687 14,490
Exactech, Inc. (I) 1,030 24,596
Globus Medical, Inc., Class A (I) 42,117 764,002
Greatbatch, Inc. (I) 4,338 197,683
Haemonetics Corp. (I) 18,341 654,590
Hill-Rom Holdings, Inc. 867 37,983
Hologic, Inc. (I) 6,309 156,905
Integra LifeSciences Holdings Corp. (I) 300 14,997
Invacare Corp. 5,104 78,295
Kewaunee Scientific Corp. 80 1,442
LeMaitre Vascular, Inc. 786 5,738

 

The accompanying notes are an integral part of the financial statements. 150

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Health Care Equipment & Supplies (continued)    
Medical Action Industries, Inc. (I) 1,100 $ 15,136
Merit Medical Systems, Inc. (I) 300 3,753
Natus Medical, Inc. (I) 3,589 100,887
NuVasive, Inc. (I) 35 1,229
RTI Surgical, Inc. (I) 10,804 57,369
STERIS Corp. 280 15,761
Symmetry Medical, Inc. (I) 5,526 50,950
Teleflex, Inc. 2,923 320,010
Wright Medical Group, Inc. (I) 32,376 966,100
 
    5,246,624
Health Care Providers & Services - 4.5%    
Addus HomeCare Corp. (I) 1,215 26,609
Almost Family, Inc. (I) 179 5,008
Amedisys, Inc. (I) 4,462 93,345
Amsurg Corp. (I) 4,986 268,197
BioScrip, Inc. (I) 7,228 61,149
BioTelemetry, Inc. (I) 2,470 18,080
Capital Senior Living Corp. (I) 1,785 40,823
Community Health Systems, Inc. (I) 27,553 1,495,577
Cross Country Healthcare, Inc. (I) 4,185 33,396
Five Star Quality Care, Inc. (I) 5,481 25,432
Hanger, Inc. (I)(L) 2,169 48,586
Health Net, Inc. (I) 1,893 89,350
Healthways, Inc. (I)(L) 5,459 95,314
IPC The Hospitalist Company, Inc. (I) 480 23,203
Kindred Healthcare, Inc. 47,497 980,813
LHC Group, Inc. (I) 753 19,382
LifePoint Hospitals, Inc. (I) 23,400 1,750,320
Magellan Health Services, Inc. (I) 3,500 195,510
Medcath Corp. (I) 4,104 5,622
Molina Healthcare, Inc. (I) 5,724 273,836
National Healthcare Corp. 1,717 98,384
Omnicare, Inc. 14,366 916,120
Owens & Minor, Inc. (L) 2,093 71,999
PharMerica Corp. (I) 40,133 998,910
Premier, Inc., Class A (I) 19,668 621,115
Select Medical Holdings Corp. 6,990 98,000
Team Health Holdings, Inc. (I) 18,266 1,068,926
The Providence Service Corp. (I) 913 41,569
Triple-S Management Corp., Class B (I) 4,238 81,115
Universal American Corp. 14,368 122,846
 
    9,668,536
Health Care Technology - 0.6%    
HMS Holdings Corp. (I) 47,387 1,083,267
MedAssets, Inc. (I) 3,864 88,872
Omnicell, Inc. (I) 4,692 132,080
 
    1,304,219
Life Sciences Tools & Services - 1.5%    
Affymetrix, Inc. (I)(L) 6,907 59,884
Albany Molecular Research, Inc. (I) 1,696 33,581
Charles River    
Laboratories International, Inc. (I) 16,517 976,155
Enzo Biochem, Inc. (I) 2,322 13,816
Harvard Bioscience, Inc. (I) 6,820 30,826
ICON PLC (I) 19,893 985,499
Techne Corp. 11,061 1,056,547
 
    3,156,308
Pharmaceuticals - 1.1%    
Cumberland Pharmaceuticals, Inc. (I) 631 3,231
Endo International PLC (I) 14,272 909,269
Impax Laboratories, Inc. (I) 41,281 1,017,164

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Pharmaceuticals (continued)    
Lannett Company, Inc. (I) 2,218 $ 87,345
POZEN, Inc. (I) 2,103 17,455
Prestige Brands Holdings, Inc. (I) 9,492 328,518
SciClone Pharmaceuticals, Inc. (I) 6,347 43,540
 
    2,406,522
    22,811,690
Industrials - 17.2%    
Aerospace & Defense - 0.7%    
AAR Corp. 5,432 150,466
Aerovironment, Inc. (I) 2,462 77,651
Alliant Techsystems, Inc. 422 53,172
American Science & Engineering, Inc. 267 15,459
CPI Aerostructures, Inc. (I) 1,142 12,848
Cubic Corp. 437 19,508
Curtiss-Wright Corp. 6,943 498,785
DigitalGlobe, Inc. (I) 3,281 99,644
Ducommun, Inc. (I) 1,656 51,435
Engility Holdings, Inc. (I) 432 15,180
Esterline Technologies Corp. (I) 1,293 151,578
Exelis, Inc. 1,504 25,854
Kratos Defense & Security Solutions, Inc. (I) 3,577 26,935
LMI Aerospace, Inc. (I)(L) 2,716 41,310
Moog, Inc., Class A (I) 11 780
Orbital Sciences Corp. (I) 6,320 169,186
SIFCO Industries, Inc. 400 10,836
Sparton Corp. (I) 2,225 63,991
Triumph Group, Inc. 1,114 77,278
 
    1,561,896
Air Freight & Logistics - 0.2%    
Air Transport Services Group, Inc. (I) 9,088 74,249
Atlas Air Worldwide Holdings, Inc. (I) 4,477 149,756
Hub Group, Inc., Class A (I) 3,916 170,307
UTi Worldwide, Inc. (I) 2,767 25,401
 
    419,713
Airlines - 0.5%    
Alaska Air Group, Inc. 5,568 258,021
Hawaiian Holdings, Inc. (I)(L) 10,259 160,040
JetBlue Airways Corp. (I)(L) 39,044 477,508
Republic Airways Holdings, Inc. (I) 6,356 64,513
SkyWest, Inc. 6,640 59,561
 
    1,019,643
Building Products - 1.7%    
Apogee Enterprises, Inc. 34,176 1,247,766
Gibraltar Industries, Inc. (I) 4,938 78,564
Griffon Corp. 12,674 158,045
Insteel Industries, Inc. 3,280 77,014
Owens Corning 12,149 437,364
Quanex Building Products Corp. 3,300 59,598
Simpson Manufacturing Company, Inc. 3,200 103,424
Trex Company, Inc. (I) 35,492 1,334,499
Universal Forest Products, Inc. 3,700 175,195
 
    3,671,469
Commercial Services & Supplies - 2.4%    
ABM Industries, Inc. 6,805 181,013
ACCO Brands Corp. (I) 1,411 10,907
Acme United Corp. 300 5,055
AMREP Corp. (I) 120 720
ARC Document Solutions, Inc. (I) 6,377 51,781
Brady Corp., Class A 3,912 104,137

 

The accompanying notes are an integral part of the financial statements. 151

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Commercial Services & Supplies (continued)    
Ceco Environmental Corp. 301 $ 4,232
Clean Harbors, Inc. (I) 65 3,935
Courier Corp. 1,247 16,810
Covanta Holding Corp. 1,541 32,346
Ennis, Inc. 4,732 68,283
Fuel Tech, Inc. (I) 2,200 10,054
G&K Services, Inc., Class A 2,091 116,866
Interface, Inc. 55,200 940,056
Intersections, Inc. 1,826 6,391
Kimball International, Inc., Class B 4,815 76,462
McGrath RentCorp. 2,470 91,390
Metalico, Inc. (I) 6,103 7,385
Mobile Mini, Inc. 8,178 320,332
Multi-Color Corp. 1,848 85,710
NL Industries, Inc. 3,500 30,765
Quad/Graphics, Inc. 615 13,782
Team, Inc. (I) 22,954 916,094
Tetra Tech, Inc. 3,753 95,702
The ADT Corp. 5,875 216,553
The Brink’s Company 365 9,994
UniFirst Corp. 1,824 176,837
United Stationers, Inc. 3,084 125,365
Versar, Inc. (I) 2,653 8,675
Viad Corp. 4,281 93,925
Virco Manufacturing Corp. (I) 700 1,988
Waste Connections, Inc. 24,975 1,225,274
 
    5,048,819
Construction & Engineering - 1.8%    
AECOM Technology Corp. (I) 4,165 157,604
Aegion Corp. (I) 4,700 115,902
Argan, Inc. 207 8,290
Comfort Systems USA, Inc. 3,590 54,568
Dycom Industries, Inc. (I) 36,692 1,145,157
Furmanite Corp. (I) 1,419 12,899
Granite Construction, Inc. 3,612 127,395
Great Lakes Dredge & Dock Corp. (I) 13,165 100,317
Integrated Electrical Services, Inc. (I) 518 3,947
Jacobs Engineering Group, Inc. (I) 1,070 57,684
Layne Christensen Company (I)(L) 3,684 41,924
MasTec, Inc. (I) 1,281 39,071
MYR Group, Inc. (I) 1,600 37,408
Northwest Pipe Company (I) 1,838 67,932
Orion Marine Group, Inc. (I) 67 677
Pike Corp. (I) 6,752 80,484
Primoris Services Corp. 36,053 1,046,979
Quanta Services, Inc. (I) 3,038 110,401
Sterling Construction Company, Inc. (I) 1,987 16,929
Tutor Perini Corp. (I) 6,145 183,613
URS Corp. 7,479 453,078
 
    3,862,259
Electrical Equipment - 0.9%    
Allied Motion Technologies, Inc. 124 2,027
American Superconductor Corp. (I) 923 1,638
AZZ, Inc. 4 185
Encore Wire Corp. 4,977 211,274
EnerSys 19,999 1,285,736
General Cable Corp. 4,843 103,979
Global Power Equipment Group, Inc. 468 7,886
GrafTech International, Ltd. (I)(L) 7,641 66,706
LSI Industries, Inc. 3,751 26,370
Ocean Power Technologies, Inc. (I) 1,713 2,244
Orion Energy Systems, Inc. (I) 2,343 11,176

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electrical Equipment (continued)    
Powell Industries, Inc. 1,041 $ 54,850
PowerSecure International, Inc. (I) 2,424 26,809
Preformed Line Products Company 162 9,218
Regal-Beloit Corp. 1,655 117,621
SL Industries, Inc. 300 13,731
Ultralife Corp. (I) 4,215 14,331
 
    1,955,781
Machinery - 3.7%    
Actuant Corp., Class A 2,898 97,750
AGCO Corp. 5,377 262,613
Alamo Group, Inc. 2,190 106,763
Albany International Corp., Class A 32,167 1,208,514
Altra Industrial Motion Corp. 2,923 97,219
American Railcar Industries, Inc. (L) 3,956 315,293
Astec Industries, Inc. 2,885 119,843
Barnes Group, Inc. 8,981 307,509
Briggs & Stratton Corp. 6,217 125,210
CIRCOR International, Inc. 732 52,111
Columbus McKinnon Corp. 2,364 59,242
Douglas Dynamics, Inc. 2,248 44,825
Dynamic Materials Corp. 1,001 19,980
EnPro Industries, Inc. (I) 2,654 180,207
ESCO Technologies, Inc. 2,184 78,624
Federal Signal Corp. 10,549 155,281
FreightCar America, Inc. 2,000 59,580
Gencor Industries, Inc. (I) 604 6,100
Hardinge, Inc. 3,300 37,290
Hurco Companies, Inc. 1,523 50,472
Hyster-Yale Materials Handling, Inc. 1,000 77,090
Joy Global, Inc. (L) 2,943 185,850
Key Technology, Inc. (I) 105 1,382
LB Foster Company, Class A 667 34,991
Lydall, Inc. (I) 2,591 71,771
MFRI, Inc. (I) 780 9,937
Miller Industries, Inc. 2,259 42,740
Mueller Industries, Inc. 780 22,807
NN, Inc. 3,619 105,602
Oshkosh Corp. 665 33,037
Standex International Corp. 1,398 104,333
Tecumseh Products Company (I) 100 524
The Eastern Company 366 5,768
The Greenbrier Companies, Inc. (L) 4,947 353,809
TriMas Corp. (I) 28,395 900,122
Trinity Industries, Inc. 23,400 1,132,092
Valmont Industries, Inc. 574 80,791
Watts Water Technologies, Inc., Class A 21,861 1,383,583
 
    7,930,655
Marine - 0.1%    
Baltic Trading, Ltd. (L) 2,200 12,914
International Shipholding Corp. 569 11,625
Kirby Corp. (I) 738 88,036
Knightsbridge Tankers, Ltd. 2,275 27,892
Matson, Inc. 3,567 96,273
 
    236,740
Professional Services - 0.5%    
CBIZ, Inc. (I) 6,213 53,432
CDI Corp. 3,498 53,065
CRA International, Inc. (I) 1,820 48,976
Franklin Covey Company (I) 2,733 52,118
FTI Consulting, Inc. (I) 2,655 98,501
GP Strategies Corp. (I) 2,590 65,320

 

The accompanying notes are an integral part of the financial statements. 152

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Professional Services (continued)    
Heidrick & Struggles International, Inc. 2,646 $ 57,312
Hill International, Inc. (I) 4,471 19,672
Hudson Global, Inc. (I) 1,907 7,361
Huron Consulting Group, Inc. (I) 878 53,101
ICF International, Inc. (I) 3,295 111,305
Kelly Services, Inc., Class A 6,524 109,016
Korn/Ferry International (I) 3,605 109,051
Mistras Group, Inc. (I) 285 6,116
Navigant Consulting, Inc. (I) 2,981 48,560
On Assignment, Inc. (I) 3,213 94,976
RCM Technologies, Inc. (I) 100 744
Resources Connection, Inc. 3,010 46,083
Volt Information Sciences, Inc. (I) 1,319 12,333
VSE Corp. 212 12,578
 
    1,059,620
Road & Rail - 3.6%    
AMERCO 1,050 291,701
ArcBest Corp. 3,920 140,728
Avis Budget Group, Inc. (I) 15,595 1,052,818
Celadon Group, Inc. 47,932 1,003,696
Con-way, Inc. 2,403 123,154
Covenant Transportation    
Group, Inc., Class A (I) 1,250 17,375
Heartland Express, Inc. 48,766 1,143,563
Knight Transportation, Inc. 1,390 35,237
Landstar System, Inc. 17,339 1,176,711
Marten Transport, Ltd. 6,033 119,453
Old Dominion Freight Line, Inc. (I) 23,524 1,568,345
P.A.M. Transportation Services, Inc. (I) 2,022 74,248
Patriot Transportation Holding, Inc. (I) 67 2,324
Roadrunner Transportation Systems, Inc. (I) 903 22,738
Ryder Systems, Inc. 7,200 650,448
Saia, Inc. (I) 4,755 225,720
USA Truck, Inc. (I)(L) 1,624 30,515
Werner Enterprises, Inc. 1,012 25,199
 
    7,703,973
Trading Companies & Distributors - 1.1%    
Aceto Corp. 4,311 82,857
Air Lease Corp. 1,276 48,360
Applied Industrial Technologies, Inc. 321 15,636
Beacon Roofing Supply, Inc. (I) 2,936 83,735
CAI International, Inc. (I) 4,100 79,499
GATX Corp. 9,384 621,878
H&E Equipment Services, Inc. 2,860 117,003
Houston Wire & Cable Company 3,139 40,870
Kaman Corp. 343 13,946
Lawson Products, Inc. (I) 1,776 31,613
MRC Global, Inc. (I) 27,604 685,131
Rush Enterprises, Inc., Class A (I) 2,066 75,760
Rush Enterprises, Inc., Class B (I) 7,405 240,440
TAL International Group, Inc. (I)(L) 4,188 185,110
Titan Machinery, Inc. (I) 2,247 27,661
Willis Lease Finance Corp. (I) 281 5,952
 
    2,355,451
Transportation Infrastructure - 0.0%    
Wesco Aircraft Holdings, Inc. (I) 1,351 24,777
 
    36,850,796
Information Technology - 16.5%    
Communications Equipment - 1.8%    
ADTRAN, Inc. 269 6,209

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Communications Equipment (continued)    
ARRIS Group, Inc. (I) 52,581 $ 1,609,504
Aviat Networks, Inc. (I) 7,700 12,089
Bel Fuse, Inc., Class B 2,040 48,022
Black Box Corp. 2,323 54,939
Calix, Inc. (I) 3,061 32,141
Communications Systems, Inc. 1,201 13,559
Comtech Telecommunications Corp. 2,593 98,638
Digi International, Inc. (I) 4,754 39,648
EchoStar Corp., Class A (I) 4,314 217,555
Emulex Corp. (I) 11,777 64,538
Extreme Networks, Inc. (I) 5,451 29,054
Finisar Corp. (I)(L) 41,474 842,337
Harmonic, Inc. (I) 11,465 75,325
JDS Uniphase Corp. (I) 48,392 558,928
KVH Industries, Inc. (I) 1,348 16,756
NETGEAR, Inc. (I) 8 266
Novatel Wireless, Inc. (I) 6,924 15,579
Oclaro, Inc. (I)(L) 4,713 8,248
Oplink Communications, Inc. 1,681 32,477
Optical Cable Corp. 100 426
Polycom, Inc. (I) 6,233 82,587
Relm Wireless Corp. (I) 877 4,227
Tessco Technologies, Inc. 1,768 56,947
Westell Technologies, Inc., Class A (I) 7,150 13,728
 
    3,933,727
Electronic Equipment, Instruments & Components - 4.6%  
ADDvantage Technologies Group, Inc. (I) 471 1,121
Aeroflex Holding Corp. (I)(L) 2,965 31,310
Agilysys, Inc. (I) 791 9,872
Arrow Electronics, Inc. (I) 13,183 820,642
Avnet, Inc. 13,498 600,796
AVX Corp. 11,811 162,756
Belden, Inc. 13,589 992,948
Benchmark Electronics, Inc. (I) 4,167 102,633
Checkpoint Systems, Inc. (I) 4,538 62,851
Coherent, Inc. (I) 14,503 935,008
CTS Corp. 4,190 74,289
Daktronics, Inc. 3,426 45,086
Electro Rent Corp. 4,395 66,496
Electro Scientific Industries, Inc. 2,403 17,830
Fabrinet (I) 607 9,827
FEI Company 8,558 719,214
GSI Group, Inc. (I) 1,206 15,461
Identive Group, Inc. (I) 105 1,794
IEC Electronics Corp. (I) 558 2,600
II-VI, Inc. (I) 640 8,934
Ingram Micro, Inc., Class A (I) 8,419 242,720
Insight Enterprises, Inc. (I) 5,138 134,821
IntriCon Corp. (I) 80 530
Itron, Inc. (I) 2,072 87,480
Jabil Circuit, Inc. 2,382 51,404
KEMET Corp. (I) 5,859 29,529
Key Tronic Corp. (I) 1,300 14,261
Knowles Corp. (I) 343 11,292
Measurement Specialties, Inc. (I) 971 83,331
Mercury Systems, Inc. (I) 2,241 25,032
Methode Electronics, Inc. 4,403 148,469
Multi-Fineline Electronix, Inc. (I) 3,338 33,814
NAPCO Security Technologies, Inc. (I) 868 4,314
Newport Corp. (I) 5,333 100,634
OSI Systems, Inc. (I) 400 27,904
PAR Technology Corp. (I) 1,700 7,259
Park Electrochemical Corp. 1,480 41,647

 

The accompanying notes are an integral part of the financial statements. 153

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electronic Equipment, Instruments &    
Components (continued)    
PC Connection, Inc. 4,089 $ 92,739
PCM, Inc. (I) 2,932 30,610
Perceptron, Inc. 1,146 12,606
Planar Systems, Inc. (I) 1,700 8,483
Plexus Corp. (I) 875 36,041
Radisys Corp. (I) 3,312 10,201
Richardson Electronics, Ltd. 1,362 13,879
Rofin-Sinar Technologies, Inc. (I) 1,000 23,960
Rogers Corp. (I) 1,608 96,769
Sanmina Corp. (I) 60,813 1,427,889
ScanSource, Inc. (I) 1,905 73,457
SMTC Corp. (I) 363 679
SYNNEX Corp. (I) 5,765 402,051
Tech Data Corp. (I) 21,281 1,436,468
TTM Technologies, Inc. (I) 10,402 79,575
Viasystems Group, Inc. (I) 2,572 27,392
Vicon Industries, Inc. 102 375
Vishay Intertechnology, Inc. 19,790 316,640
Vishay Precision Group, Inc. (I) 1,509 23,088
 
    9,838,811
Internet Software & Services - 1.1%    
AOL, Inc. (I) 3,987 172,318
Bankrate, Inc. (I) 3,774 52,987
Blucora, Inc. (I) 7,765 120,979
Conversant, Inc. (I)(L) 39,811 1,096,395
Digital River, Inc. (I) 2,732 41,718
Earthlink Holdings Corp. 12,905 53,298
InterActiveCorp 1,988 138,345
Internap Network Services Corp. (I) 8,481 58,010
IntraLinks Holdings, Inc. (I) 1,345 10,572
Limelight Networks, Inc. (I) 1,035 2,453
Marchex, Inc., Class B 3,061 26,263
Monster Worldwide, Inc. (I) 4,505 25,994
Perficient, Inc. (I) 2,874 49,490
RealNetworks, Inc. (I) 4,503 34,673
Reis, Inc. 300 7,116
SciQuest, Inc. (I)(L) 24,098 384,845
support.com, Inc. (I) 4,301 10,365
TheStreet, Inc. 6,959 16,423
United Online, Inc. 2,373 30,303
XO Group, Inc. (I) 3,587 42,004
 
    2,374,551
IT Services - 1.5%    
Acxiom Corp. (I) 7,534 139,718
CACI International, Inc., Class A (I) 18,386 1,325,998
CIBER, Inc. (I) 13,088 49,996
Convergys Corp. 10,572 202,982
CoreLogic, Inc. (I) 624 17,640
CSG Systems International, Inc. 1,163 32,238
DST Systems, Inc. 735 68,215
Euronet Worldwide, Inc. (I) 238 12,685
Global Cash Access Holdings, Inc. (I) 70 547
Jack Henry & Associates, Inc. 18,961 1,096,135
ManTech International Corp., Class A 3,611 104,647
ModusLink Global Solutions, Inc. (I)(L) 9,124 37,317
StarTek, Inc. (I) 2,139 15,508
Sykes Enterprises, Inc. (I) 2,752 57,627
The Hackett Group, Inc. 9,407 58,982
VeriFone Systems, Inc. (I) 950 33,174
 
    3,253,409

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Semiconductors & Semiconductor Equipment - 4.3%  
Advanced Energy Industries, Inc. (I) 3,654 $ 70,340
Alpha & Omega Semiconductor, Ltd. (I) 999 9,211
Amkor Technology, Inc. (I) 7,144 74,298
Amtech Systems, Inc. (I) 1,027 10,927
ANADIGICS, Inc. (I)(L) 8,400 5,263
Axcelis Technologies, Inc. (I) 3,500 7,070
AXT, Inc. (I) 3,200 7,776
Brooks Automation, Inc. 6,288 71,306
BTU International, Inc. (I) 682 2,346
Cascade Microtech, Inc. (I) 1,613 17,743
Cirrus Logic, Inc. (I) 500 12,090
Cohu, Inc. 4,766 58,622
Diodes, Inc. (I) 918 23,363
DSP Group, Inc. (I) 4,257 38,228
Entegris, Inc. (I) 79,032 959,448
Entropic Communications, Inc. (I) 2,167 5,699
Exar Corp. (I) 6,953 69,321
Fairchild Semiconductor International, Inc. (I) 69,341 1,216,935
First Solar, Inc. (I) 6,114 426,024
FormFactor, Inc. (I) 6,280 44,211
GSI Technology, Inc. (I) 2,286 12,939
Integrated Device Technology, Inc. (I) 91,337 1,502,494
Integrated Silicon Solution, Inc. 4,650 68,960
International Rectifier Corp. (I) 10,474 412,676
Intersil Corp., Class A 11,558 173,890
IXYS Corp. 3,730 44,723
Kulicke & Soffa Industries, Inc. (I) 5,373 78,929
Lattice Semiconductor Corp. (I) 12,328 92,583
Magnachip Semiconductor Corp. (I) 145 1,788
Marvell Technology Group, Ltd. 33,063 459,906
MKS Instruments, Inc. 7,441 252,548
NeoPhotonics Corp. (I) 1,108 2,969
OmniVision Technologies, Inc. (I) 5,547 150,379
ON Semiconductor Corp. (I) 4,491 43,832
Pericom Semiconductor Corp. (I) 5,042 49,311
Photronics, Inc. (I) 13,324 117,651
PMC-Sierra, Inc. (I) 12,080 89,150
Power Integrations, Inc. 16,918 1,011,358
RF Micro Devices, Inc. (I)(L) 1,793 22,359
Rudolph Technologies, Inc. (I) 4,412 42,664
Sigma Designs, Inc. (I) 4,474 21,654
Spansion, Inc., Class A (I) 2,249 50,153
SunEdison, Inc. (I) 9,085 200,143
SunPower Corp. (I)(L) 1,752 66,961
TriQuint Semiconductor, Inc. (I) 13,646 281,995
Ultra Clean Holdings, Inc. (I) 429 4,140
Veeco Instruments, Inc. (I)(L) 20,146 712,564
 
    9,098,940
Software - 2.2%    
Aware, Inc. 3,300 13,596
Bottomline Technologies, Inc. (I) 30,010 845,082
Cadence Design Systems, Inc. (I) 62,616 1,104,546
Compuware Corp. 1,817 16,989
EnerNOC, Inc. (I) 1,705 33,486
Epiq Systems, Inc. 4,064 59,131
ePlus, Inc. (I) 1,505 87,997
GSE Systems, Inc. (I) 2,016 3,347
Mentor Graphics Corp. 5,813 126,782
MicroStrategy, Inc., Class A (I) 7,706 1,070,595
Progress Software Corp. (I)(L) 1,038 24,040
Rovi Corp. (I) 2,674 61,850
Seachange International, Inc. (I) 4,794 36,386
SS&C Technologies Holdings, Inc. (I) 23,204 1,050,213

 

The accompanying notes are an integral part of the financial statements. 154

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Software (continued)    
Take-Two Interactive Software, Inc. (I) 4,227 $ 99,377
TeleCommunication Systems, Inc., Class A (I) 7,193 21,435
Telenav, Inc. (I) 366 2,522
 
    4,657,374
Technology Hardware, Storage & Peripherals - 1.0%  
Avid Technology, Inc. (I) 5,478 46,289
Concurrent Computer Corp. 526 3,945
Cray, Inc. (I)(L) 49,923 1,408,328
Electronics For Imaging, Inc. (I) 7,309 321,888
Hutchinson Technology, Inc. (I) 3,000 13,470
Imation Corp. (I) 7,779 26,060
Intevac, Inc. (I) 3,303 23,550
Lexmark International, Inc., Class A 5,606 283,439
QLogic Corp. (I) 2,153 19,485
Qumu Corp. (I) 1,101 14,302
Super Micro Computer, Inc. (I) 2,508 61,421
 
    2,222,177
    35,378,989
Materials - 6.2%    
Chemicals - 1.8%    
A. Schulman, Inc. 3,906 151,670
Axiall Corp. 7,244 301,206
Cabot Corp. 1,500 82,170
Chase Corp. 1,432 50,836
Chemtura Corp. (I) 5,600 138,264
FMC Corp. 13,258 876,884
FutureFuel Corp. 1,723 23,984
HB Fuller Company 1,429 67,220
Huntsman Corp. 4,564 122,726
Innophos Holdings, Inc. 400 23,260
Innospec, Inc. 1,269 53,526
Intrepid Potash, Inc. (I) 384 5,887
KMG Chemicals, Inc. 709 12,018
Kraton Performance Polymers, Inc. (I) 264 5,367
Landec Corp. (I) 4,944 64,915
LSB Industries, Inc. (I) 141 5,647
Minerals Technologies, Inc. 20,731 1,298,175
Olin Corp. 6,768 184,699
OM Group, Inc. 5,098 135,607
OMNOVA Solutions, Inc. (I) 2,908 24,398
Penford Corp. (I) 2,346 31,953
PolyOne Corp. 1,919 75,263
Sensient Technologies Corp. 1,703 95,555
Stepan Company 31 1,497
Trecora Resources (I) 745 9,789
Tronox, Ltd., Class A 2,953 89,653
 
    3,932,169
Construction Materials - 0.7%    
Eagle Materials, Inc. 12,760 1,300,372
Headwaters, Inc. (I) 3,529 45,842
Martin Marietta Materials, Inc. 589 77,135
United States Lime & Minerals, Inc. 169 10,532
 
    1,433,881
Containers & Packaging - 1.3%    
Bemis Company, Inc. 1,771 72,151
Graphic Packaging Holding Company (I) 140,571 1,797,903
MeadWestvaco Corp. 10,431 448,533
Myers Industries, Inc. 5,702 112,386
Rock-Tenn Company, Class A 6,086 299,188

 

Small Cap Opportunities Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Containers & Packaging (continued)    
Sonoco Products Company 2,409 $ 99,154
 
    2,829,315
Metals & Mining - 1.8%    
Allegheny Technologies, Inc. 1,778 74,978
AM Castle & Company (I)(L) 3,851 37,740
Ampco-Pittsburgh Corp. 1,873 39,783
Century Aluminum Company (I) 11,480 286,770
Cliffs Natural Resources, Inc. (L) 6,208 93,555
Coeur Mining, Inc. (I) 10,706 84,792
Commercial Metals Company 7,594 131,224
Friedman Industries, Inc. 1,405 11,563
General Moly, Inc. (I) 45 42
Haynes International, Inc. 20,413 1,012,077
Hecla Mining Company (L) 2,428 7,940
Horsehead Holding Corp. (I)(L) 4,541 91,683
Kaiser Aluminum Corp. 3,426 275,964
Materion Corp. 2,527 82,456
McEwen Mining, Inc. (I) 2,908 8,055
Noranda Aluminum Holding Corp. 2,332 9,491
Olympic Steel, Inc. 2,178 52,359
Reliance Steel & Aluminum Company 7,959 556,493
RTI International Metals, Inc. (I) 5,200 150,852
Schnitzer Steel Industries, Inc., Class A 1,338 37,049
Steel Dynamics, Inc. 12,645 293,870
Stillwater Mining Company (I)(L) 7,138 132,481
SunCoke Energy, Inc. (I) 2,919 70,085
Synalloy Corp. 380 6,783
United States Steel Corp. 7,971 308,079
Universal Stainless & Alloy Products, Inc. (I) 1,778 56,949
 
    3,913,113
Paper & Forest Products - 0.6%    
Boise Cascade Company (I) 1,639 49,268
Clearwater Paper Corp. (I) 1,598 110,582
Domtar Corp. 10,000 372,900
KapStone Paper and Packaging Corp. (I) 7,261 223,203
Louisiana-Pacific Corp. (I)(L) 16,381 233,757
Mercer International, Inc. (I) 6,255 62,800
Neenah Paper, Inc. 159 8,693
PH Glatfelter Company 5,514 137,464
Resolute Forest Products, Inc. (I) 698 11,999
 
    1,210,666
    13,319,144
Telecommunication Services - 0.7%    
Diversified Telecommunication Services - 0.4%    
Atlantic Tele-Network, Inc. 381 22,342
Enventis Corp. 57 1,014
Frontier Communications Corp. (L) 55,220 375,496
General Communication, Inc., Class A (I) 4,737 53,244
Hawaiian Telcom Holdco, Inc. (I) 53 1,458
Inteliquent, Inc. 3,011 36,734
Iridium Communications, Inc. (I)(L) 10,611 99,743
ORBCOMM, Inc. (I) 6,308 39,299
Premiere Global Services, Inc. (I) 7,824 103,042
Vonage Holdings Corp. (I) 2,425 8,366
Windstream Holdings, Inc. (L) 13,524 152,821
 
    893,559
Wireless Telecommunication Services - 0.3%    
Leap Wireless International, Inc. (I) 3,505 8,833
Shenandoah Telecommunications Company 411 11,352
Spok Holdings, Inc. 3,600 53,280

 

The accompanying notes are an integral part of the financial statements. 155

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Cap Opportunities Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
COMMON STOCKS (continued)      
Wireless Telecommunication Services (continued)      
Telephone & Data Systems, Inc. 11,252 $ 296,378
United States Cellular Corp.   4,446 167,703
 
      537,546
      1,431,105
Utilities - 0.8%      
Electric Utilities - 0.0%      
Genie Energy, Ltd., B Shares (I)   1,746 14,597
Gas Utilities - 0.7%      
UGI Corp. 28,962 1,534,407
Independent Power and Renewable Electricity      
Producers - 0.1%      
Dynegy, Inc. (I)   2,495 81,537
Ormat Technologies, Inc. (L)   2,376 65,411
 
      146,948
Water Utilities - 0.0%      
Consolidated Water Company, Ltd. (L)   1,250 15,200
SJW Corp.   118 3,226
 
      18,426
      1,714,378
TOTAL COMMON STOCKS (Cost $141,311,790)   $ 205,507,360
WARRANTS - 0.0%      
Magnum Hunter Resources Corp. (Expiration      
Date: 04/15/2016) (I)(N)   208 261
TOTAL WARRANTS (Cost $0)   $ 261
SECURITIES LENDING COLLATERAL - 7.0%      
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y) 1,493,701 14,947,617
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $14,945,095)   $ 14,947,617
SHORT-TERM INVESTMENTS - 4.0%      
Money Market Funds - 4.0%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y) 8,511,344 8,511,344
TOTAL SHORT-TERM INVESTMENTS (Cost $8,511,344) $ 8,511,344
Total Investments (Small Cap Opportunities Fund)    
(Cost $164,768,229) - 106.8%   $ 228,966,582
Other assets and liabilities, net - (6.8%)     (14,549,617)
TOTAL NET ASSETS - 100.0%   $ 214,416,965

 

Small Company Growth Fund    
  Shares or  
  Principal  
  Amount Value
 
COMMON STOCKS - 98.2%    
Consumer Discretionary - 12.1%    
Auto Components - 0.9%    
Tenneco, Inc. (I) 27,393 $ 1,755,343
Distributors - 0.7%    
Pool Corp. 26,377 1,494,521

 

Small Company Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Hotels, Restaurants & Leisure - 3.4%    
Choice Hotels International, Inc. 27,302 $ 1,478,673
Domino’s Pizza, Inc. 21,536 1,624,891
Jack in the Box, Inc. 40,531 2,409,569
The Cheesecake Factory, Inc. 31,345 1,408,958
 
    6,922,091
Household Durables - 0.8%    
Standard Pacific Corp. (I) 185,538 1,552,953
Internet & Catalog Retail - 0.7%    
HomeAway, Inc. (I) 45,594 1,513,721
Leisure Products - 0.7%    
Brunswick Corp. 33,051 1,421,193
Media - 0.7%    
Sinclair Broadcast Group, Inc., Class A (L) 49,577 1,440,212
Specialty Retail - 2.5%    
DSW, Inc., Class A 41,542 1,285,309
Group 1 Automotive, Inc. 20,589 1,650,414
Monro Muffler Brake, Inc. 26,919 1,393,058
Vitamin Shoppe, Inc. (I) 19,497 764,087
 
    5,092,868
Textiles, Apparel & Luxury Goods - 1.7%    
G-III Apparel Group, Ltd. (I) 21,839 1,802,591
Steven Madden, Ltd. (I) 48,191 1,638,012
 
    3,440,603
    24,633,505
Consumer Staples - 2.0%    
Food Products - 2.0%    
Annie’s, Inc. (I) 39,312 1,253,660
B&G Foods, Inc. 38,624 1,166,445
Lancaster Colony Corp. 18,922 1,672,894
 
    4,092,999
    4,092,999
Energy - 7.2%    
Energy Equipment & Services - 3.2%    
Atwood Oceanics, Inc. (I) 23,572 1,164,693
Dresser-Rand Group, Inc. (I) 22,627 1,568,051
Dril-Quip, Inc. (I) 17,161 1,741,327
Patterson-UTI Energy, Inc. 61,415 2,121,274
 
    6,595,345
Oil, Gas & Consumable Fuels - 4.0%    
Energen Corp. 22,108 1,779,252
Laredo Petroleum, Inc. (I)(L) 53,263 1,259,137
Oasis Petroleum, Inc. (I) 39,807 1,958,106
Resolute Energy Corp. (I)(L) 75,420 605,623
SemGroup Corp., Class A 9,503 833,698
Ultra Petroleum Corp. (I)(L) 63,897 1,695,187
 
    8,131,003
    14,726,348
Financials - 9.9%    
Banks - 3.8%    
Hancock Holding Company 43,362 1,441,353
Home BancShares, Inc. 45,567 1,355,618
Prosperity Bancshares, Inc. 25,919 1,565,508
SVB Financial Group (I) 16,676 1,856,372
UMB Financial Corp. 26,895 1,553,186
 
    7,772,037

 

The accompanying notes are an integral part of the financial statements. 156

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Company Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Capital Markets - 3.0%    
Affiliated Managers Group, Inc. (I) 7,606 $ 1,606,007
Greenhill & Company, Inc. (L) 20,851 1,022,116
Janus Capital Group, Inc. (L) 120,195 1,460,369
Stifel Financial Corp. (I) 45,161 2,162,309
 
    6,250,801
Insurance - 1.9%    
American Equity Investment Life    
Holding Company 67,418 1,667,921
Protective Life Corp. 30,794 2,137,104
 
    3,805,025
Real Estate Investment Trusts - 1.2%    
Corrections Corp. of America 49,769 1,773,767
Gaming and Leisure Properties, Inc. 19,725 656,843
 
    2,430,610
    20,258,473
Health Care - 18.9%    
Biotechnology - 5.9%    
Alnylam Pharmaceuticals, Inc. (I) 18,431 1,284,088
Exact Sciences Corp. (I)(L) 97,087 2,024,264
Incyte Corp. (I) 32,048 1,737,002
InterMune, Inc. (I) 53,327 3,916,868
NPS Pharmaceuticals, Inc. (I) 49,669 1,499,010
Seattle Genetics, Inc. (I)(L) 34,113 1,501,313
 
    11,962,545
Health Care Equipment & Supplies - 3.6%    
Insulet Corp. (I) 37,170 1,342,209
NuVasive, Inc. (I) 45,506 1,597,261
Sirona Dental Systems, Inc. (I) 19,826 1,616,017
STERIS Corp. 33,978 1,912,622
Thoratec Corp. (I) 33,935 848,375
 
    7,316,484
Health Care Providers & Services - 4.8%    
Chemed Corp. (L) 19,982 2,110,299
Community Health Systems, Inc. (I) 38,273 2,077,458
HealthSouth Corp. 45,042 1,774,204
Select Medical Holdings Corp. 110,532 1,549,659
VCA Antech, Inc. (I) 54,293 2,212,440
 
    9,724,060
Health Care Technology - 0.3%    
HMS Holdings Corp. (I) 31,094 710,809
Life Sciences Tools & Services - 2.4%    
PAREXEL International Corp. (I) 31,898 1,800,323
PerkinElmer, Inc. 33,916 1,521,133
Techne Corp. 17,222 1,645,045
 
    4,966,501
Pharmaceuticals - 1.9%    
Jazz Pharmaceuticals PLC (I) 9,791 1,595,150
Salix Pharmaceuticals, Ltd. (I) 14,430 2,295,957
 
    3,891,107
    38,571,506
Industrials - 17.1%    
Aerospace & Defense - 1.5%    
Hexcel Corp. (I) 36,044 1,484,652
TransDigm Group, Inc. 8,534 1,604,307
 
    3,088,959

 

Small Company Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Air Freight & Logistics - 0.8%    
Forward Air Corp. 35,906 $ 1,662,089
Building Products - 1.1%    
AO Smith Corp. 44,710 2,194,367
Commercial Services & Supplies - 2.5%    
Pitney Bowes, Inc. 80,575 2,180,360
Steelcase, Inc., Class A 98,623 1,548,381
Tetra Tech, Inc. 49,633 1,265,642
 
    4,994,383
Construction & Engineering - 0.7%    
MasTec, Inc. (I) 45,557 1,389,489
Electrical Equipment - 0.9%    
Acuity Brands, Inc. 15,615 1,934,386
Machinery - 5.2%    
Crane Company 23,309 1,622,073
ITT Corp. 46,746 2,237,264
Lincoln Electric Holdings, Inc. 29,197 2,075,907
WABCO Holdings, Inc. (I) 18,799 1,940,057
Wabtec Corp. 32,788 2,733,208
 
    10,608,509
Marine - 1.1%    
Kirby Corp. (I) 19,602 2,338,323
Road & Rail - 1.7%    
Knight Transportation, Inc. 72,083 1,827,304
Swift Transportation Company (I) 77,058 1,632,088
 
    3,459,392
Trading Companies & Distributors - 1.6%    
Watsco, Inc. 16,776 1,551,612
WESCO International, Inc. (I)(L) 19,465 1,634,865
 
    3,186,477
    34,856,374
Information Technology - 24.6%    
Communications Equipment - 1.7%    
ARRIS Group, Inc. (I) 72,808 2,228,653
Finisar Corp. (I)(L) 56,671 1,150,988
 
    3,379,641
Electronic Equipment, Instruments & Components - 4.3%  
Cognex Corp. (I) 54,146 2,273,049
IPG Photonics Corp. (I) 15,250 1,047,370
Littelfuse, Inc. 20,748 1,906,949
National Instruments Corp. 41,577 1,378,278
SYNNEX Corp. (I) 29,848 2,081,600
 
    8,687,246
Internet Software & Services - 3.0%    
Conversant, Inc. (I)(L) 75,278 2,073,156
CoStar Group, Inc. (I) 16,711 2,418,917
Dealertrack Technologies, Inc. (I) 37,985 1,700,209
 
    6,192,282
IT Services - 0.7%    
EPAM Systems, Inc. (I) 38,105 1,434,653
Semiconductors & Semiconductor Equipment - 3.9%  
Cavium, Inc. (I) 30,573 1,717,591
MKS Instruments, Inc. 36,198 1,228,560
Power Integrations, Inc. 31,775 1,899,510
Silicon Laboratories, Inc. (I) 31,766 1,439,953
Teradyne, Inc. (L) 81,445 1,676,953
 
    7,962,567

 

The accompanying notes are an integral part of the financial statements. 157

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Company Growth Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Software - 10.2%    
Aspen Technology, Inc. (I) 43,487 $ 1,786,881
Cadence Design Systems, Inc. (I)(L) 92,147 1,625,473
CommVault Systems, Inc. (I) 19,222 1,059,901
Guidewire Software, Inc. (I) 23,960 1,091,378
Interactive Intelligence Group, Inc. (I) 27,646 1,183,525
Manhattan Associates, Inc. (I) 121,733 3,515,649
Mentor Graphics Corp. 70,079 1,528,423
MicroStrategy, Inc., Class A (I) 11,309 1,571,159
NetScout Systems, Inc. (I) 43,330 1,996,213
Qlik Technologies, Inc. (I) 56,461 1,593,894
Qualys, Inc. (I) 41,934 1,018,996
SolarWinds, Inc. (I) 27,602 1,181,090
The Ultimate Software Group, Inc. (I) 11,542 1,696,559
 
    20,849,141
Technology Hardware, Storage & Peripherals - 0.8%  
Cray, Inc. (I)(L) 61,087 1,723,264
 
    50,228,794
Materials - 4.0%    
Chemicals - 1.8%    
PolyOne Corp. 51,737 2,029,125
Rockwood Holdings, Inc. 20,050 1,623,649
 
    3,652,774
Construction Materials - 0.8%    
Martin Marietta Materials, Inc. 12,569 1,646,036
Containers & Packaging - 0.8%    
Berry Plastics Group, Inc. (I) 63,359 1,527,585
Metals & Mining - 0.6%    
Carpenter Technology Corp. 22,327 1,221,957
 
    8,048,352
Telecommunication Services - 1.5%    
Wireless Telecommunication Services - 1.5%    
SBA Communications Corp., Class A (I) 27,342 3,015,549
Utilities - 0.9%    
Electric Utilities - 0.9%    
ITC Holdings Corp. 46,883 1,751,080
TOTAL COMMON STOCKS (Cost $138,174,115) $ 200,182,980
 
RIGHTS - 0.0%    
Community Health Systems, Inc. (Expiration    
Date: 01/04/2016) (I)(N) 92,945 3,625
TOTAL RIGHTS (Cost $6,041) $ 3,625
 
SECURITIES LENDING COLLATERAL - 9.4%    
John Hancock Collateral    
Investment Trust, 0.0970% (W)(Y) 1,904,846 19,061,985
TOTAL SECURITIES LENDING    
COLLATERAL (Cost $19,061,417) $ 19,061,985

 

Small Company Growth Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
SHORT-TERM INVESTMENTS - 5.2%      
Money Market Funds - 5.2%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y) 10,670,594 10,670,594
TOTAL SHORT-TERM INVESTMENTS (Cost $10,670,594) $ 10,670,594
Total Investments (Small Company Growth Fund)      
(Cost $167,912,167) - 112.8%   $ 229,919,184
Other assets and liabilities, net - (12.8%)     (26,018,679)
TOTAL NET ASSETS - 100.0%   $ 203,900,505
 
 
 
Small Company Value Fund      
  Shares or   
  Principal   
  Amount  Value
 
 
COMMON STOCKS - 98.4%      
Consumer Discretionary - 13.7%      
Auto Components - 1.6%      
Drew Industries, Inc.  94,700 $ 4,203,732
Modine Manufacturing Company (I) 147,700 2,100,294
 
      6,304,026
Automobiles - 0.8%      
Winnebago Industries, Inc. (I) 121,200 2,997,276
Distributors - 1.1%      
Pool Corp. 76,600 4,340,156
Diversified Consumer Services - 1.8%      
American Public Education, Inc. (I) 40,400 1,226,544
Ascent Capital Group, Inc., Class A (I) 32,300 2,015,843
Matthews International Corp., Class A 82,000 3,784,300
 
      7,026,687
Hotels, Restaurants & Leisure - 0.8%      
Belmond, Ltd., Class A (I) 161,200 2,060,136
Red Robin Gourmet Burgers, Inc. (I) 18,400 977,040
 
      3,037,176
Household Durables - 2.0%      
CSS Industries, Inc. 63,300 1,600,224
Ethan Allen Interiors, Inc. (L) 62,500 1,576,875
M/I Homes, Inc. (I) 54,900 1,249,524
Meritage Homes Corp. (I) 85,200 3,516,204
 
      7,942,827
Leisure Products - 0.5%      
Brunswick Corp. 41,200 1,771,600
Media - 0.5%      
Saga Communications, Inc., Class A 52,400 1,992,772
Multiline Retail - 0.3%      
Fred’s, Inc., Class A 72,000 1,024,560
Specialty Retail - 3.4%      
Aaron’s, Inc. 228,400 5,851,608
Haverty Furniture Companies, Inc. 105,600 2,457,312
MarineMax, Inc. (I) 48,000 828,480
Pier 1 Imports, Inc. (L) 112,650 1,775,364
Sportsman’s Warehouse Holdings, Inc. (I) 35,200 211,552
Stein Mart, Inc. 180,300 2,244,735
 
      13,369,051
Textiles, Apparel & Luxury Goods - 0.9%      
Crocs, Inc. (I) 65,400 1,010,430

 

The accompanying notes are an integral part of the financial statements. 158

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Company Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Textiles, Apparel & Luxury Goods (continued)    
Culp, Inc. 78,600 $ 1,437,594
Kate Spade & Company (I) 39,400 1,274,196
 
    3,722,220
    53,528,351
Consumer Staples - 0.7%    
Food & Staples Retailing - 0.6%    
SpartanNash Company 100,600 2,161,894
Tobacco - 0.1%    
Alliance One International, Inc. (I) 210,800 467,976
 
    2,629,870
Energy - 6.8%    
Energy Equipment & Services - 2.2%    
Atwood Oceanics, Inc. (I) 33,500 1,655,235
C&J Energy Services, Inc. (I) 47,400 1,359,906
CARBO Ceramics, Inc. (L) 21,100 2,270,149
Hercules Offshore, Inc. (I)(L) 112,800 380,136
Tesco Corp. 60,700 1,288,054
TETRA Technologies, Inc. (I) 147,200 1,736,960
 
    8,690,440
Oil, Gas & Consumable Fuels - 4.6%    
Bonanza Creek Energy, Inc. (I) 7,000 429,870
Cloud Peak Energy, Inc. (I) 115,600 1,816,076
Energy XXI Bermuda, Ltd. (L) 34,421 567,947
GasLog, Ltd. (L) 116,100 2,938,491
Magnum Hunter Resources Corp. (I)(L) 128,400 887,244
Matador Resources Company (I) 74,800 2,046,528
Northern Oil and Gas, Inc. (I)(L) 142,000 2,392,700
Oasis Petroleum, Inc. (I) 75,900 3,733,521
PDC Energy, Inc. (I) 31,000 1,862,790
Teekay Tankers, Ltd., Class A (L) 262,500 1,118,250
 
    17,793,417
    26,483,857
Financials - 23.4%    
Banks - 8.3%    
BBCN Bancorp, Inc. 106,700 1,557,820
Columbia Banking System, Inc. 92,500 2,405,925
East West Bancorp, Inc. 182,495 6,358,126
Glacier Bancorp, Inc. 143,300 3,900,626
Home BancShares, Inc. 182,200 5,420,450
Signature Bank (I) 28,200 3,340,572
SVB Financial Group (I) 49,400 5,499,208
Wintrust Financial Corp. 88,700 4,130,759
 
    32,613,486
Capital Markets - 2.7%    
Ares Capital Corp. 163,600 2,805,740
Hercules Technology Growth Capital, Inc. (L) 187,200 2,862,288
JMP Group, Inc. 75,600 518,616
KCAP Financial, Inc. (L) 64,840 535,578
Main Street Capital Corp. (L) 30,600 996,336
Piper Jaffray Companies (I) 26,600 1,419,376
Safeguard Scientifics, Inc. (I) 63,800 1,250,480
 
    10,388,414
Diversified Financial Services - 0.5%    
Compass Diversified Holdings 105,000 1,928,850
Insurance - 3.8%    
Assured Guaranty, Ltd. 64,802 1,564,968
Employers Holdings, Inc. 101,850 2,180,609

 

Small Company Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Insurance (continued)    
Markel Corp. (I) 545 $ 359,591
Meadowbrook Insurance Group, Inc. 226,100 1,399,559
National Interstate Corp. 78,000 2,184,000
ProAssurance Corp. 151,700 7,008,540
 
    14,697,267
Real Estate Investment Trusts - 7.6%    
Acadia Realty Trust 105,600 3,043,392
Catchmark Timber Trust, Inc., Class A 22,790 273,708
CBL & Associates Properties, Inc. 143,600 2,728,400
Cedar Realty Trust, Inc. 220,100 1,424,047
First Potomac Realty Trust 176,900 2,342,156
Hatteras Financial Corp. 60,300 1,199,970
Kilroy Realty Corp. 53,000 3,352,250
Kite Realty Group Trust 61,700 1,586,924
LaSalle Hotel Properties 97,200 3,552,660
Potlatch Corp. 65,400 2,791,272
PS Business Parks, Inc. 11,700 954,018
Redwood Trust, Inc. 138,300 2,678,871
Saul Centers, Inc. 41,800 2,083,730
Washington Real Estate Investment Trust 62,000 1,722,360
 
    29,733,758
Real Estate Management & Development - 0.1%    
Forestar Group, Inc. (I) 22,200 444,000
Thrifts & Mortgage Finance - 0.4%    
Radian Group, Inc. (L) 121,000 1,761,760
 
    91,567,535
Health Care - 3.7%    
Biotechnology - 0.3%    
Momenta Pharmaceuticals, Inc. (I) 90,900 1,071,711
Health Care Equipment & Supplies - 2.2%    
Analogic Corp. 24,700 1,783,340
Atrion Corp. 500 160,000
Quidel Corp. (I)(L) 74,000 1,746,400
West Pharmaceutical Services, Inc. 112,700 4,894,561
 
    8,584,301
Health Care Providers & Services - 1.2%    
Landauer, Inc. 24,200 881,364
National Healthcare Corp. 47,000 2,693,100
Triple-S Management Corp., Class B (I) 63,830 1,221,706
 
    4,796,170
 
    14,452,182
Industrials - 25.3%    
Aerospace & Defense - 0.3%    
Kratos Defense & Security Solutions, Inc. (I) 164,100 1,235,673
Air Freight & Logistics - 0.7%    
Hub Group, Inc., Class A (I) 59,800 2,600,702
Airlines - 1.7%    
Alaska Air Group, Inc. 138,900 6,436,626
Building Products - 1.5%    
Gibraltar Industries, Inc. (I) 126,700 2,015,797
Quanex Building Products Corp. 71,600 1,293,096
Universal Forest Products, Inc. 52,800 2,500,080
 
    5,808,973
Commercial Services & Supplies - 3.7%    
G&K Services, Inc., Class A 63,800 3,565,782
McGrath RentCorp. 129,900 4,806,300
MSA Safety, Inc. 63,900 3,537,504

 

The accompanying notes are an integral part of the financial statements. 159

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Company Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Commercial Services & Supplies (continued)    
US Ecology, Inc. 58,600 $ 2,504,564
    14,414,150
Construction & Engineering - 1.4%    
Aegion Corp. (I) 104,900 2,586,834
Comfort Systems USA, Inc. 111,700 1,697,840
Pike Corp. (I) 109,100 1,300,472
 
    5,585,146
Electrical Equipment - 0.6%    
Franklin Electric Company, Inc. 61,200 2,323,152
Machinery - 5.5%    
Astec Industries, Inc. 51,300 2,131,002
CIRCOR International, Inc. 45,300 3,224,907
ESCO Technologies, Inc. 82,300 2,962,800
IDEX Corp. 17,400 1,338,756
Luxfer Holdings PLC, ADR 52,800 997,920
Nordson Corp. 57,100 4,628,526
RBC Bearings, Inc. 18,500 1,143,670
Sun Hydraulics Corp. 41,600 1,665,248
Woodward, Inc. 67,060 3,502,544
 
    21,595,373
Marine - 1.8%    
Kirby Corp. (I) 59,000 7,038,110
Professional Services - 1.8%    
FTI Consulting, Inc. (I) 52,200 1,936,620
Navigant Consulting, Inc. (I) 136,300 2,220,327
On Assignment, Inc. (I) 103,000 3,044,680
 
    7,201,627
Road & Rail - 4.4%    
Genesee & Wyoming, Inc., Class A (I) 73,200 7,197,756
Landstar System, Inc. 122,900 8,340,609
Universal Truckload Services, Inc. 67,300 1,675,097
 
    17,213,462
Trading Companies & Distributors - 1.9%    
Beacon Roofing Supply, Inc. (I) 167,200 4,768,544
Kaman Corp. 65,200 2,651,032
 
    7,419,576
    98,872,570
Information Technology - 10.5%    
Communications Equipment - 0.7%    
IXIA (I) 162,900 1,567,098
Sonus Networks, Inc. (I) 349,600 1,317,992
 
    2,885,090
Electronic Equipment, Instruments & Components - 6.3%  
Badger Meter, Inc. 4,000 208,320
Belden, Inc. 65,300 4,771,471
Cognex Corp. (I) 52,400 2,199,752
Electro Rent Corp. 152,000 2,299,760
Electro Scientific Industries, Inc. 141,500 1,049,930
Fabrinet (I) 105,600 1,709,664
Littelfuse, Inc. 48,900 4,494,399
Methode Electronics, Inc. 56,900 1,918,668
Newport Corp. (I) 66,900 1,262,403
SYNNEX Corp. (I) 66,200 4,616,788
 
    24,531,155
Semiconductors & Semiconductor Equipment - 2.8%  
Advanced Energy Industries, Inc. (I) 121,500 2,338,875
Brooks Automation, Inc. 105,700 1,198,638

 

Small Company Value Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Semiconductors & Semiconductor Equipment (continued)  
Cabot Microelectronics Corp. (I) 71,800 $ 3,080,220
Entegris, Inc. (I) 147,100 1,785,794
Teradyne, Inc. (L) 130,400 2,684,936
 
    11,088,463
Software - 0.7%    
Progress Software Corp. (I) 117,400 2,718,984
 
    41,223,692
Materials - 9.7%    
Chemicals - 2.6%    
American Vanguard Corp. (L) 94,700 1,272,768
Innospec, Inc. 128,500 5,420,130
Minerals Technologies, Inc. 58,100 3,638,222
 
    10,331,120
Containers & Packaging - 2.0%    
AptarGroup, Inc. 80,700 5,176,905
Myers Industries, Inc. 136,200 2,684,502
 
    7,861,407
Metals & Mining - 2.9%    
Carpenter Technology Corp. 58,100 3,179,813
Royal Gold, Inc. 27,600 2,145,900
Sandstorm Gold, Ltd. (I)(L) 408,300 2,425,302
Schnitzer Steel Industries, Inc., Class A 47,500 1,315,275
Stillwater Mining Company (I)(L) 116,100 2,154,816
 
    11,221,106
Paper & Forest Products - 2.2%    
Clearwater Paper Corp. (I) 61,200 4,235,040
Deltic Timber Corp. 43,000 2,848,320
Wausau Paper Corp. 161,500 1,472,880
 
    8,556,240
 
    37,969,873
Telecommunication Services - 0.4%    
Diversified Telecommunication Services - 0.4%    
Premiere Global Services, Inc. (I) 110,760 1,458,709
Utilities - 4.2%    
Electric Utilities - 2.4%    
Cleco Corp. 80,400 4,536,168
El Paso Electric Company 73,600 2,895,424
PNM Resources, Inc. 67,300 1,763,933
 
    9,195,525
Gas Utilities - 0.7%    
Southwest Gas Corp. 55,400 2,892,434
Multi-Utilities - 1.1%    
Black Hills Corp. 37,600 2,020,248
NorthWestern Corp. 49,300 2,380,204
 
    4,400,452
 
    16,488,411
TOTAL COMMON STOCKS (Cost $211,473,094) $ 384,675,050
 
SECURITIES LENDING COLLATERAL - 5.8%    
John Hancock Collateral    
Investment Trust, 0.0970% (W)(Y) 2,261,730 22,633,360
TOTAL SECURITIES LENDING    
COLLATERAL (Cost $22,621,835) $ 22,633,360

 

The accompanying notes are an integral part of the financial statements. 160

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Small Company Value Fund (continued)  
  Shares or   
  Principal   
  Amount  Value
 
SHORT-TERM INVESTMENTS - 0.7%      
Money Market Funds - 0.7%      
State Street Institutional U.S. Government      
Money Market Fund, 0.0000% (Y) 505,346 505,346
T. Rowe Price Reserve Investment      
Fund, 0.0575% (Y) 2,276,242 2,276,242
 
      2,781,588
TOTAL SHORT-TERM INVESTMENTS (Cost $2,781,588) $ 2,781,588
Total Investments (Small Company Value Fund)      
(Cost $236,876,517) - 104.9%   $ 410,089,998
Other assets and liabilities, net - (4.9%)     (19,011,337)
TOTAL NET ASSETS - 100.0%   $ 391,078,661
 
 
 
Spectrum Income Fund      
  Shares or   
  Principal   
  Amount  Value
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 23.3%      
U.S. Government - 6.1%      
Treasury Inflation Protected Securities      
0.125%, 04/15/2017 4,092,270 $ 4,186,264
0.375%, 07/15/2023 133,134 135,464
0.500%, 04/15/2015 582,868 585,508
0.625%, 01/15/2024 to 02/15/2043 5,105,638 5,262,139
1.625%, 01/15/2015 1,248,150 1,253,611
1.875%, 07/15/2015 1,899,184 1,950,967
U.S. Treasury Bonds      
2.750%, 08/15/2042 to 11/15/2042 2,460,000 2,308,615
3.000%, 05/15/2042 2,695,000 2,667,209
3.125%, 02/15/2043 to 08/15/2044 6,695,000 6,764,946
3.375%, 05/15/2044 810,000 857,588
3.500%, 02/15/2039 690,000 751,453
3.625%, 08/15/2043 to 02/15/2044 1,670,000 1,849,881
4.375%, 05/15/2041 2,300,000 2,886,859
4.500%, 08/15/2039 680,000 863,175
4.625%, 02/15/2040 180,000 233,156
5.375%, 02/15/2031 1,810,000 2,441,802
6.125%, 08/15/2029 380,000 542,213
7.625%, 02/15/2025 205,000 305,802
U.S. Treasury Notes      
0.500%, 07/31/2017 1,120,000 1,105,651
0.625%, 11/30/2017 3,925,000 3,864,900
0.750%, 01/15/2017 1,865,000 1,867,331
1.250%, 10/31/2018 11,955,000 11,861,608
1.500%, 05/31/2019 3,690,000 3,673,568
U.S. Treasury Strips 3.465%, 05/15/2021 540,000 469,505
 
      58,689,215
U.S. Government Agency - 17.2%      
Federal Home Loan Banks      
0.500%, 11/20/2015 545,000 546,530
0.625%, 12/28/2016 270,000 269,501
Federal Home Loan Mortgage Corp.      
0.875%, 10/14/2016 1,360,000 1,365,626
2.136%, 06/01/2038 (P) 35,326 37,526
2.208%, 09/01/2035 (P) 22,055 23,356
2.225%, 07/01/2035 (P) 19,014 20,239
2.226%, 07/01/2035 (P) 30,418 32,379
2.335%, 05/01/2037 (P) 24,249 25,912
2.348%, 01/01/2036 (P) 1,184 1,261

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal Home Loan Mortgage Corp. (continued)    
2.358%, 02/01/2037 (P) $ 41,829 $ 44,638
2.381%, 03/01/2036 (P)   12,005 12,872
2.410%, 09/01/2032 (P)   1,293 1,386
2.419%, 02/01/2037 (P)   22,170 23,770
2.432%, 01/01/2037 (P)   7,558 8,090
2.500%, 05/01/2028   682,253 692,086
2.525%, 11/01/2035 (P)   3,490 3,738
2.774%, 02/01/2037 (P)   32,470 34,813
3.000%, 12/01/2042 to 06/01/2043   2,824,838 2,818,462
3.500%, 09/01/2042 to 11/01/2042   1,124,689 1,156,623
4.000%, 01/01/2025 to 12/01/2041   1,436,117 1,522,174
4.500%, 11/01/2018 to 04/01/2041   1,812,498 1,960,370
5.000%, 10/01/2018 to 04/01/2040   562,822 613,838
5.500%, 03/01/2018 to 12/01/2039   705,697 778,830
5.859%, 12/01/2036 (P)   10,208 10,944
5.954%, 10/01/2036 (P)   47,839 51,354
6.000%, 04/01/2017 to 12/01/2033   135,230 150,341
6.064%, 11/01/2036 (P)   20,841 22,460
6.500%, 05/01/2017 to 11/01/2033   35,715 39,850
7.000%, 02/01/2024 to 06/01/2032   116,947 136,367
7.500%, 05/01/2024 to 06/01/2024   1,262 1,457
10.500%, 05/01/2019   16 17
Federal National Mortgage Association      
0.375%, 07/05/2016   270,000 269,390
0.625%, 08/26/2016   890,000 890,507
1.736%, 10/01/2033 (P)   35,664 36,961
1.950%, 06/01/2037 (P)   36,966 38,770
1.987%, 12/01/2035 (P)   7,558 7,995
2.055%, 07/01/2035 (P)   25,897 27,380
2.067%, 07/01/2027 (P)   449 460
2.189%, 08/01/2037 (P)   41,998 45,030
2.196%, 12/01/2035 (P)   7,338 7,776
2.206%, 08/01/2036 (P)   74,251 79,080
2.232%, 09/01/2035 (P)   93,835 99,685
2.235%, 11/01/2035 (P)   65,215 69,201
2.250%, 09/01/2037 (P)   21,142 22,668
2.343%, 05/01/2038 (P)   19,450 20,853
2.498%, 01/01/2037 (P)   43,615 46,726
2.500%, 10/01/2027 to 03/01/2043   2,396,432 2,407,082
2.517%, 12/01/2035 (P)   2,904 3,111
2.520%, 12/01/2035 (P)   3,476 3,727
2.665%, 12/01/2036 (P)   81,065 86,917
3.000%, TBA (C)   3,080,000 3,069,248
3.000%, 10/01/2026 to 11/01/2043   11,661,135 11,714,114
3.500%, 01/01/2026 to 12/01/2043   6,517,230 6,747,451
4.000%, 03/01/2025 to 06/01/2042   7,183,337 7,633,981
4.500%, 05/01/2019 to 04/01/2042   6,871,634 7,410,750
5.000%, 05/01/2018 to 06/01/2040   4,967,917 5,479,444
5.500%, 05/01/2016 to 03/01/2040   3,738,840 4,167,254
5.542%, 01/01/2019 (P)   286 306
5.990%, 09/01/2036 (P)   5,122 5,511
6.000%, 03/01/2021 to 04/01/2040   2,818,992 3,177,470
6.500%, 11/01/2015 to 05/01/2040   742,324 848,725
7.000%, 12/01/2029 to 04/01/2037   11,007 12,622
7.125%, 01/15/2030   365,000 543,181
Government National      
Mortgage Association      
2.500%, 07/20/2027 to 06/20/2043   2,603,487 2,539,617
3.000%, 06/20/2027 to 04/20/2043   10,232,684 10,390,909
3.500%, TBA (C)   4,500,000 4,679,100
3.500%, 09/15/2041 to 07/20/2044   21,734,597 22,617,708

 

The accompanying notes are an integral part of the financial statements. 161

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Government National Mortgage      
Association (continued)      
4.000%, TBA (C) $ 1,205,000 $ 1,283,569
4.000%, 08/20/2039 to 04/20/2043   14,192,520 15,151,485
4.500%, TBA (C)   710,000 771,840
4.500%, 08/15/2039 to 03/20/2041   15,757,767 17,220,315
5.000%, 02/15/2018 to 09/20/2041   9,867,695 10,909,658
5.500%, 02/15/2029 to 10/20/2040   4,701,251 5,259,586
6.000%, 02/15/2016 to 06/20/2044   4,936,908 5,606,842
6.500%, 12/15/2014 to 05/15/2040   1,387,137 1,594,087
7.000%, 04/15/2017 to 12/15/2034   602,515 706,920
9.250%, 02/15/2017 to 12/15/2019   1,395 1,601
9.750%, 07/15/2017 to 02/15/2021   1,599 1,888
10.250%, 11/15/2020   1,483 1,773
 
      166,117,084
TOTAL U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (Cost $222,148,933)   $ 224,806,299
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 14.2%      
Angola - 0.0%      
Republic of Angola      
7.000%, 08/16/2019   300,000 328,680
Argentina - 0.3%      
Republic of Argentina      
2.260%, 12/31/2038 (I) EUR 520,000 321,129
7.000%, 10/03/2015 to 04/17/2017 $ 1,050,000 922,950
8.280%, 12/31/2033 (H)   224,326 179,461
8.750%, 06/02/2017 (I)   120,000 101,220
8.750%, 05/07/2024   1,152,414 958,232
 
      2,482,992
Armenia - 0.0%      
Republic of Armenia      
6.000%, 09/30/2020 (S)   300,000 312,000
Australia - 0.2%      
New South Wales Treasury Corp.      
4.000%, 04/20/2023 AUD 678,000 653,239
6.000%, 03/01/2022   706,000 769,790
 
      1,423,029
Austria - 0.1%      
Republic of Austria      
3.150%, 06/20/2044 (S) EUR 122,000 206,789
3.400%, 11/22/2022 (S)   133,000 210,365
3.900%, 07/15/2020 (S)   520,000 820,725
 
      1,237,879
Barbados - 0.0%      
Government of Barbados      
6.625%, 12/05/2035 $ 200,000 162,000
Belgium - 0.2%      
Kingdom of Belgium      
3.250%, 09/28/2016 (S) EUR 148,000 207,385
4.000%, 03/28/2018 (S)   293,000 437,808
4.000%, 03/28/2022   111,000 180,228
4.250%, 09/28/2021 (S)   65,000 106,348
5.000%, 03/28/2035 (S)   251,000 492,288
 
      1,424,057

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Bermuda - 0.1%      
Government of Bermuda      
4.138%, 01/03/2023 (S) $ 200,000 $ 199,000
4.854%, 02/06/2024 (S)   685,000 714,113
5.603%, 07/20/2020 (S)   200,000 221,000
 
      1,134,113
Brazil - 1.2%      
Federative Republic of Brazil      
2.625%, 01/05/2023   490,000 461,825
2.875%, 04/01/2021 EUR 100,000 136,007
4.250%, 01/07/2025 $ 360,000 374,400
5.625%, 01/07/2041   1,710,000 1,923,750
6.000%, 05/15/2017 to 08/15/2024 BRL 4,834,000 5,521,327
10.000%, 01/01/2017 to 01/01/2023   7,741,000 3,417,313
 
      11,834,622
Bulgaria - 0.0%      
Republic of Bulgaria      
2.950%, 09/03/2024 EUR 100,000 131,888
Canada - 0.4%      
Government of Canada      
2.750%, 06/01/2022 CAD 45,000 44,255
3.500%, 06/01/2020   401,000 407,974
Province of British Columbia      
3.700%, 12/18/2020   1,066,000 1,073,559
Province of Manitoba      
1.300%, 04/03/2017 $ 380,000 383,098
3.050%, 05/14/2024   60,000 61,108
Province of Ontario      
1.200%, 02/14/2018   125,000 123,979
1.600%, 09/21/2016   475,000 483,427
2.850%, 06/02/2023 CAD 470,000 437,204
3.500%, 06/02/2043   99,000 91,160
Province of Quebec      
5.000%, 12/01/2038   200,000 226,631
 
      3,332,395
China - 0.1%      
Republic of China      
1.940%, 08/18/2018 CNY 6,000,000 942,193
3.090%, 11/22/2018   500,000 81,925
 
      1,024,118
Colombia - 0.1%      
Republic of Colombia      
2.625%, 03/15/2023 $ 255,000 242,123
6.125%, 01/18/2041   875,000 1,080,625
 
      1,322,748
Congo - 0.0%      
Republic of Congo      
3.500%, 06/30/2029   58,045 53,603
Croatia - 0.1%      
Republic of Croatia      
6.000%, 01/26/2024 (S)   200,000 215,000
6.375%, 03/24/2021   200,000 220,000
 
      435,000
Czech Republic - 0.1%      
Czech Republic International      
3.625%, 04/14/2021 EUR 562,000 861,626
3.875%, 05/24/2022   180,000 284,144
 
      1,145,770

 

The accompanying notes are an integral part of the financial statements. 162

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Denmark - 0.1%      
Kingdom of Denmark      
3.000%, 11/15/2021 DKK 2,585,000 $ 533,990
7.000%, 11/10/2024   364,000 102,484
 
      636,474
Dominican Republic - 0.0%      
Government of Dominican Republic      
6.600%, 01/28/2024 (S) $ 100,000 109,500
Finland - 0.0%      
Government of Finland      
3.375%, 04/15/2020 (S) EUR 204,000 311,851
France - 0.4%      
Caisse d’Amortissement de la Dette      
Sociale      
2.500%, 10/25/2022   302,000 445,257
Government of France      
1.000%, 07/25/2017   1,001,000 1,351,341
2.250%, 05/25/2024   84,000 121,464
3.750%, 04/25/2021   789,000 1,250,330
4.000%, 10/25/2038   434,000 773,265
5.750%, 10/25/2032   102,000 213,696
 
      4,155,353
Gabon - 0.0%      
Republic of Gabon      
6.375%, 12/12/2024 $ 200,000 218,500
Germany - 0.1%      
Federal Republic of Germany      
1.500%, 02/15/2023 EUR 136,000 190,455
2.500%, 07/04/2044   278,000 430,330
 
      620,785
Greece - 0.1%      
Republic of Greece      
2.000%, 02/24/2027   655,000 652,432
4.750%, 04/17/2019 (S)   310,000 417,553
 
      1,069,985
Grenada - 0.0%      
Government of Grenada      
6.000%, 09/15/2025 (H) $ 98,000 32,438
Hungary - 0.0%      
Republic of Hungary      
5.375%, 03/25/2024   200,000 215,500
5.750%, 11/22/2023   90,000 99,000
 
      314,500
Iceland - 0.2%      
Republic of Iceland      
4.875%, 06/16/2016   125,000 130,506
4.875%, 06/16/2016 (S)   700,000 730,832
5.875%, 05/11/2022 (S)   663,000 754,581
5.875%, 05/11/2022   442,000 503,054
 
      2,118,973
Indonesia - 0.8%      
Indonesia Retail Bond      
8.500%, 10/15/2016 IDR 2,035,000,000 176,752
Perusahaan Penerbit SBSN Indonesia      
3.300%, 11/21/2022 $ 1,020,000 963,900
Republic of Indonesia      
2.875%, 07/08/2021 (S) EUR 130,000 173,803
3.750%, 04/25/2022 (S) $ 1,575,000 1,555,313

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Indonesia (continued)      
Republic of Indonesia (continued)      
4.625%, 04/15/2043 $ 820,000 $ 765,675
4.875%, 05/05/2021   1,000,000 1,068,750
4.875%, 05/05/2021 (S)   420,000 448,875
5.250%, 01/17/2042   300,000 304,125
5.625%, 05/15/2023 IDR 2,156,000,000 156,666
6.125%, 05/15/2028   4,671,000,000 322,448
7.000%, 05/15/2022 to 05/15/2027   4,558,000,000 355,390
7.750%, 01/17/2038 $ 450,000 594,563
8.250%, 07/15/2021 to 06/15/2032 IDR 3,307,000,000 279,795
8.375%, 03/15/2024   9,536,000,000 829,483
 
      7,995,538
Iraq - 0.1%      
Republic of Iraq      
5.800%, 01/15/2028 $ 457,000 405,016
Ireland - 0.2%      
Republic of Ireland      
4.500%, 10/18/2018 to 04/18/2020 EUR 711,000 1,101,734
5.400%, 03/13/2025   171,000 297,367
 
      1,399,101
Israel - 0.1%      
Government of Israel      
4.250%, 03/31/2023 ILS 1,283,000 420,668
Italy - 0.8%      
Republic of Italy      
3.500%, 11/01/2017 to 12/01/2018 EUR 987,000 1,427,076
3.750%, 03/01/2021   363,000 541,020
4.250%, 09/01/2019 to 03/01/2020   431,000 651,968
4.500%, 02/01/2018 to 08/01/2018   1,417,000 2,117,056
4.750%, 09/01/2044 (S)   605,000 958,451
5.500%, 09/01/2022   852,000 1,403,275
5.750%, 02/01/2033   40,000 71,007
 
      7,169,853
Ivory Coast - 0.1%      
Republic of Ivory Coast      
5.750%, 12/31/2032 $ 585,000 583,175
Jamaica - 0.1%      
Government of Jamaica      
7.625%, 07/09/2025   440,000 468,600
8.000%, 06/24/2019   220,000 237,600
8.500%, 11/16/2021   71,428 74,643
10.625%, 06/20/2017   205,000 234,709
 
      1,015,552
Japan - 1.1%      
Government of Japan      
0.100%, 09/10/2023 to 03/10/2024 JPY 386,176,800 4,002,810
0.400%, 03/20/2018   157,850,000 1,532,514
1.400%, 03/20/2018 to 03/20/2020   127,350,000 1,297,030
1.500%, 06/20/2034   10,250,000 101,177
1.700%, 06/20/2032   88,350,000 919,649
2.200%, 06/22/2020   192,100,000 2,059,405
2.300%, 06/20/2028   31,950,000 365,612
 
      10,278,197
Latvia - 0.0%      
Republic of Latvia      
2.875%, 04/30/2024 EUR 135,000 188,136

 

The accompanying notes are an integral part of the financial statements. 163

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Lithuania - 0.1%      
Republic of Lithuania      
4.850%, 02/07/2018 EUR 457,000 $ 679,287
Malaysia - 0.3%      
Government of Malaysia      
3.418%, 08/15/2022 MYR 293,000 89,605
3.492%, 03/31/2020   2,805,000 876,821
3.889%, 07/31/2020   2,789,000 888,504
4.160%, 07/15/2021   189,000 61,125
4.232%, 06/30/2031   190,000 59,888
4.378%, 11/29/2019   1,170,000 382,292
4.498%, 04/15/2030   471,000 153,714
4.646%, 07/06/2021 $ 250,000 278,575
 
      2,790,524
Mexico - 1.1%      
Government of Mexico      
2.500%, 12/10/2020 MXN 4,851,431 385,204
4.000%, 06/13/2019   2,784,030 239,020
4.000%, 10/02/2023 $ 220,000 233,200
4.750%, 03/08/2044   1,370,000 1,437,130
5.550%, 01/21/2045   116,000 136,126
5.750%, 10/12/2110   100,000 111,250
6.050%, 01/11/2040   324,000 405,000
6.500%, 06/10/2021 to 06/09/2022 MXN 10,240,000 831,727
7.750%, 11/13/2042   43,204,000 3,772,759
8.000%, 06/11/2020   9,250,000 809,877
8.500%, 11/18/2038   11,124,000 1,044,560
9.500%, 12/18/2014   14,930,000 1,163,222
10.000%, 11/20/2036   1,629,000 173,923
United Mexican States      
3.625%, 04/09/2029 EUR 100,000 143,812
 
      10,886,810
Mongolia - 0.0%      
Government of Mongolia      
4.125%, 01/05/2018 (S) $ 200,000 188,500
5.125%, 12/05/2022   200,000 174,000
 
      362,500
Morocco - 0.1%      
Kingdom of Morocco      
4.250%, 12/11/2022 (S)   600,000 603,000
Namibia - 0.0%      
Namibia International Bonds      
5.500%, 11/03/2021   200,000 216,500
Netherlands - 0.1%      
Kingdom of Netherlands      
5.500%, 01/15/2028 EUR 581,000 1,153,586
Norway - 0.0%      
Government of Norway      
4.250%, 05/19/2017 NOK 1,304,000 225,688
Pakistan - 0.0%      
Islamic Republic of Pakistan      
7.250%, 04/15/2019 (S) $ 200,000 203,000
Peru - 0.0%      
Republic of Peru      
5.625%, 11/18/2050   290,000 342,200
Philippines - 0.1%      
Republic of Philippines      
4.200%, 01/21/2024   200,000 214,500

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Philippines (continued)      
Republic of Philippines (continued)      
6.375%, 10/23/2034 $ 440,000 $ 572,000
 
      786,500
Poland - 0.0%      
Republic of Poland      
3.750%, 01/19/2023 EUR 224,000 345,096
Romania - 0.2%      
Government of Romania      
4.375%, 08/22/2023 (S) $ 378,000 394,538
4.625%, 09/18/2020 EUR 410,000 614,410
4.875%, 11/07/2019   294,000 441,967
5.250%, 06/17/2016   255,000 360,354
6.750%, 02/07/2022 $ 120,000 144,750
 
      1,956,019
Russia - 0.7%      
Government of Russia      
4.500%, 04/04/2022   800,000 781,200
7.500%, 03/15/2018 RUB 8,772,000 222,181
7.500%, 03/31/2030 $ 4,973,785 5,533,336
 
      6,536,717
Serbia - 0.3%      
Republic of Serbia      
4.875%, 02/25/2020   600,000 610,500
5.250%, 11/21/2017   460,000 478,975
5.250%, 11/21/2017 (S)   200,000 208,250
5.875%, 12/03/2018 (S)   320,000 339,600
6.750%, 11/01/2024   281,157 283,618
7.250%, 09/28/2021   900,000 1,037,250
 
      2,958,193
Singapore - 0.0%      
Republic of Singapore      
3.125%, 09/01/2022 SGD 276,000 239,508
Slovenia - 0.2%      
Republic of Slovenia      
3.000%, 04/08/2021 EUR 70,000 97,734
4.125%, 02/18/2019 (S) $ 400,000 423,000
4.125%, 01/26/2020 EUR 65,000 96,011
4.750%, 05/10/2018 $ 302,000 325,405
5.250%, 02/18/2024 (S)   200,000 217,000
5.850%, 05/10/2023   629,000 711,399
 
      1,870,549
South Africa - 0.8%      
Republic of South Africa      
4.665%, 01/17/2024   850,000 881,875
5.500%, 03/09/2020   110,000 120,588
5.875%, 05/30/2022 to 09/16/2025   1,800,000 2,035,875
6.250%, 03/08/2041   100,000 117,000
6.500%, 02/28/2041 ZAR 536,000 39,108
6.750%, 03/31/2021   13,911,000 1,253,956
6.875%, 05/27/2019 $ 125,000 144,375
7.750%, 02/28/2023 ZAR 19,360,000 1,813,800
8.000%, 12/21/2018   5,854,000 567,456
8.250%, 09/15/2017   2,495,000 243,279
10.500%, 12/21/2026   6,053,000 675,995
 
      7,893,307
South Korea - 0.2%      
Republic of Korea      
2.299%, 09/11/2014 (Z) KRW 764,690,000 753,786

 

The accompanying notes are an integral part of the financial statements. 164

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
South Korea (continued)      
Republic of Korea (continued)      
2.470%, 04/02/2015 KRW 41,040,000 $ 40,508
4.500%, 03/10/2015   1,158,890,000 1,155,641
 
      1,949,935
Spain - 0.2%      
Instituto de Credito Oficial      
6.000%, 03/08/2021 EUR 209,000 351,030
Kingdom of Spain      
3.800%, 01/31/2017   100,000 142,127
4.100%, 07/30/2018   96,000 142,358
4.250%, 10/31/2016   96,000 136,650
4.500%, 01/31/2018   152,000 225,424
5.500%, 07/30/2017   389,000 583,860
5.750%, 07/30/2032   72,000 131,229
 
      1,712,678
Sri Lanka - 0.1%      
Republic of Sri Lanka      
5.875%, 07/25/2022 $ 300,000 313,125
6.000%, 01/14/2019 (S)   200,000 211,500
6.250%, 07/27/2021   350,000 374,500
 
      899,125
Sweden - 0.1%      
Kingdom of Sweden      
1.500%, 11/13/2023 SEK 115,000 16,766
3.500%, 06/01/2022   1,730,000 291,393
3.750%, 08/12/2017   3,590,000 564,705
Svensk Exportkredit AB      
5.125%, 03/01/2017 $ 425,000 467,951
 
      1,340,815
United Republic of Tanzania - 0.0%      
United Republic of Tanzania      
6.332%, 03/09/2020 (P)   300,000 322,500
Thailand - 0.0%      
Kingdom of Thailand      
3.250%, 06/16/2017 THB 10,084,000 321,568
3.450%, 03/08/2019   1,628,000 51,760
 
      373,328
Turkey - 0.8%      
Hazine Mustesarligi Varlik Kiralama AS      
4.557%, 10/10/2018 (S) $ 475,000 498,750
Republic of Turkey      
3.250%, 03/23/2023   300,000 280,575
4.875%, 04/16/2043   800,000 776,000
5.125%, 03/25/2022   800,000 851,200
6.000%, 01/14/2041   715,000 790,075
6.250%, 09/26/2022   600,000 684,000
6.750%, 05/30/2040   250,000 300,375
6.875%, 03/17/2036   360,000 438,408
7.000%, 03/11/2019 to 06/05/2020   1,879,000 2,180,676
7.500%, 11/07/2019   200,000 236,520
8.300%, 10/07/2015 TRY 114,000 52,464
8.500%, 09/14/2022   498,000 224,290
 
      7,313,333
Ukraine - 0.3%      
Republic of Ukraine      
6.250%, 06/17/2016 (S) $ 400,000 354,080
6.580%, 11/21/2016   2,475,000 2,190,375
 
      2,544,455

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
United Kingdom - 1.0%      
Government of United Kingdom      
1.250%, 07/22/2018 GBP 1,105,000 $ 1,817,017
1.750%, 07/22/2019   1,990,000 3,309,283
2.250%, 09/07/2023   348,000 577,449
4.250%, 09/07/2039 to 12/07/2046   987,000 2,037,975
4.500%, 12/07/2042   979,000 2,118,692
 
      9,860,416
Venezuela - 0.4%      
Republic of Venezuela      
7.650%, 04/21/2025 $ 800,000 558,000
8.250%, 10/13/2024   700,000 504,000
9.250%, 05/07/2028   635,100 482,676
11.950%, 08/05/2031   2,315,300 2,043,252
12.750%, 08/23/2022   500,000 477,500
 
      4,065,428
Zambia - 0.0%      
Republic of Zambia      
8.500%, 04/14/2024 (S)   200,000 232,000
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $135,033,213)   $ 137,491,486
 
CORPORATE BONDS - 38.5%      
Consumer Discretionary - 6.4%      
21st Century Fox America, Inc.      
5.300%, 12/15/2014   210,000 212,958
6.150%, 02/15/2041   370,000 456,439
6.400%, 12/15/2035   205,000 261,197
8.250%, 08/10/2018   145,000 178,475
24 Hour Holdings III LLC      
8.000%, 06/01/2022 (S)   300,000 291,000
99 Cents Only Stores      
11.000%, 12/15/2019   300,000 330,000
Affinia Group, Inc.      
7.750%, 05/01/2021   75,000 77,250
Altice SA      
7.250%, 05/15/2022 (S) EUR 100,000 139,322
7.750%, 05/15/2022 (S) $ 650,000 690,625
AMC Networks, Inc.      
4.750%, 12/15/2022   225,000 227,813
American Axle & Manufacturing, Inc.      
5.125%, 02/15/2019   100,000 103,000
6.250%, 03/15/2021   200,000 212,000
6.625%, 10/15/2022   225,000 241,875
Arcelik AS      
5.000%, 04/03/2023   300,000 287,250
Arqiva Broadcast Finance PLC      
9.500%, 03/31/2020 GBP 100,000 185,729
AutoZone, Inc.      
1.300%, 01/13/2017 $ 140,000 140,343
5.500%, 11/15/2015   45,000 47,573
5.750%, 01/15/2015   35,000 35,651
BMW UK Capital PLC      
5.000%, 10/02/2017 GBP 10,000 18,196
Boardriders SA      
8.875%, 12/15/2017 (S) EUR 175,000 229,941
Bormioli Rocco Holdings SA      
10.000%, 08/01/2018   100,000 139,476
Boyd Gaming Corp.      
9.000%, 07/01/2020 $ 75,000 80,625
Brinker International, Inc.      
2.600%, 05/15/2018   75,000 75,333

 

The accompanying notes are an integral part of the financial statements. 165

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
British Sky Broadcasting Group PLC      
9.500%, 11/15/2018 (S) $ 130,000 $ 165,898
Caesars Entertainment Operating      
Company, Inc.      
11.250%, 06/01/2017   200,000 164,500
Caesars Entertainment Resort      
Properties LLC      
11.000%, 10/01/2021 (S)   325,000 329,469
Carnival Corp.      
1.200%, 02/05/2016   90,000 90,462
CCO Holdings LLC      
5.125%, 02/15/2023   1,015,000 1,009,850
5.250%, 03/15/2021 to 09/30/2022   125,000 127,438
5.750%, 09/01/2023   200,000 205,500
6.625%, 01/31/2022   975,000 1,046,858
Cedar Fair LP      
5.250%, 03/15/2021   300,000 304,500
Cequel Communications Escrow I LLC      
6.375%, 09/15/2020 (S)   250,000 262,500
Cequel Communications Holdings I LLC      
5.125%, 12/15/2021 (S)   325,000 322,156
Chester Downs & Marina LLC      
9.250%, 02/01/2020 (S)   425,000 408,000
Cirsa Funding Luxembourg SA      
8.750%, 05/15/2018 (S) EUR 375,000 509,977
8.750%, 05/15/2018   90,000 122,394
Clear Channel Communications, Inc.      
9.000%, 12/15/2019 $ 475,000 491,625
Clear Channel Worldwide Holdings, Inc.      
6.500%, 11/15/2022   675,000 722,250
7.625%, 03/15/2020   150,000 160,500
Comcast Corp.      
3.125%, 07/15/2022   165,000 168,957
6.400%, 03/01/2040   30,000 39,445
6.950%, 08/15/2037   670,000 923,461
Cox Communications, Inc.      
3.250%, 12/15/2022 (S)   245,000 240,741
5.450%, 12/15/2014   46,000 46,639
CSC Holdings LLC      
6.750%, 11/15/2021   200,000 220,000
Daimler Finance North America LLC      
1.100%, 08/01/2018 (P) (S)   170,000 172,896
1.125%, 03/10/2017 (S)   355,000 354,393
Daimler International Finance BV      
3.500%, 06/06/2019 GBP 10,000 17,423
Dana Holding Corp.      
5.375%, 09/15/2021 $ 400,000 415,000
DBP Holding Corp.      
7.750%, 10/15/2020 (S)   250,000 236,250
Delphi Corp.      
4.150%, 03/15/2024   120,000 124,756
5.000%, 02/15/2023   50,000 53,688
6.125%, 05/15/2021   215,000 237,575
Dex Media, Inc., PIK      
14.000%, 01/29/2017   397,181 274,055
DIRECTV Holdings LLC      
1.750%, 01/15/2018   145,000 145,190
2.400%, 03/15/2017   415,000 426,703
DISH DBS Corp.      
5.125%, 05/01/2020   350,000 358,750
5.875%, 07/15/2022   450,000 477,540
6.750%, 06/01/2021   125,000 139,838

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Dollar General Corp.      
4.125%, 07/15/2017 $ 240,000 $ 251,970
Downstream Development Authority of      
the Quapaw Tribe of Oklahoma      
10.500%, 07/01/2019 (S)   350,000 371,000
DreamWorks Animation SKG, Inc.      
6.875%, 08/15/2020 (S)   300,000 318,000
Expedia, Inc.      
4.500%, 08/15/2024   140,000 141,194
Ferrellgas LP      
6.750%, 01/15/2022   300,000 310,500
Ford Credit Canada, Ltd.      
3.700%, 08/02/2018 CAD 50,000 48,053
Ford Motor Company      
4.750%, 01/15/2043 $ 245,000 256,689
Ford Motor Credit Company LLC      
2.750%, 05/15/2015   270,000 274,076
3.000%, 06/12/2017   250,000 259,249
3.875%, 01/15/2015   230,000 232,872
5.750%, 02/01/2021   815,000 945,114
Gajah Tunggal Tbk PT      
7.750%, 02/06/2018   250,000 257,500
Gannett Company, Inc.      
5.125%, 10/15/2019 (S)   200,000 205,000
6.375%, 10/15/2023 (S)   150,000 159,375
General Motors Company      
3.500%, 10/02/2018   160,000 163,400
6.250%, 10/02/2043   350,000 410,375
General Motors Financial Company, Inc.      
2.625%, 07/10/2017   200,000 200,877
3.500%, 07/10/2019   200,000 201,432
Gestamp Funding Luxembourg SA      
5.625%, 05/31/2020 (S)   325,000 328,250
GKN Holdings PLC      
6.750%, 10/28/2019 GBP 13,000 25,073
GLP Capital LP      
4.375%, 11/01/2018 $ 325,000 337,188
Graton Economic Development Authority      
9.625%, 09/01/2019 (S)   550,000 616,000
Great Canadian Gaming Corp.      
6.625%, 07/25/2022 (S) CAD 200,000 193,139
Group 1 Automotive, Inc.      
5.000%, 06/01/2022 (S) $ 125,000 124,063
Harley-Davidson Financial Services, Inc.      
1.150%, 09/15/2015 (S)   235,000 236,468
Hyatt Hotels Corp.      
3.875%, 08/15/2016   300,000 314,943
Hyundai Capital America      
1.450%, 02/06/2017 (S)   85,000 85,072
1.625%, 10/02/2015 (S)   150,000 151,136
1.875%, 08/09/2016 (S)   205,000 207,808
2.550%, 02/06/2019 (S)   500,000 506,617
2.875%, 08/09/2018 (S)   225,000 232,089
Hyundai Capital Services, Inc.      
3.500%, 09/13/2017 (S)   200,000 209,579
4.375%, 07/27/2016 (S)   255,000 269,520
Icahn Enterprises LP      
6.000%, 08/01/2020   500,000 533,750
Igloo Holdings Corp., PIK      
8.250%, 12/15/2017 (S)   200,000 205,000
InterContinental Hotels Group PLC      
6.000%, 12/09/2016 GBP 50,000 90,387

 

The accompanying notes are an integral part of the financial statements. 166

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Intralot Finance Luxembourg SA      
9.750%, 08/15/2018 (S) EUR 125,000 186,006
Jaguar Holding Company I, PIK      
9.375%, 10/15/2017 (S) $ 225,000 $ 231,469
Jaguar Land Rover Automotive PLC      
5.625%, 02/01/2023 (S)   750,000 791,250
KB Home      
7.000%, 12/15/2021   400,000 432,000
Kingfisher PLC      
5.625%, 12/15/2014 GBP 20,000 33,554
Lamar Media Corp.      
5.875%, 02/01/2022 $ 225,000 236,250
Laureate Education, Inc.      
9.250%, 09/01/2019 (S)   650,000 666,250
Levi Strauss & Company      
6.875%, 05/01/2022   275,000 299,063
Magnolia BC SA      
9.000%, 08/01/2020 (S) EUR 175,000 231,680
Marks & Spencer PLC      
4.750%, 06/12/2025 GBP 100,000 176,366
MDC Partners, Inc.      
6.750%, 04/01/2020 (S) $ 550,000 574,750
MGM Resorts International      
6.625%, 12/15/2021   125,000 139,063
6.750%, 10/01/2020   625,000 692,188
Michaels Stores, Inc.      
5.875%, 12/15/2020 (S)   200,000 203,000
Mohawk Industries, Inc.      
3.850%, 02/01/2023   450,000 453,600
MU Finance PLC      
8.375%, 02/01/2017 (S)   205,481 212,673
National CineMedia LLC      
6.000%, 04/15/2022   750,000 780,000
NBCUniversal Enterprise, Inc.      
0.919%, 04/15/2018 (P) (S)   115,000 116,174
NBCUniversal Media LLC      
2.875%, 01/15/2023   225,000 224,695
4.450%, 01/15/2043   135,000 141,435
Netflix, Inc.      
5.375%, 02/01/2021   600,000 628,500
5.750%, 03/01/2024 (S)   200,000 209,500
New Look Bondco I PLC      
8.375%, 05/14/2018 (S)   800,000 848,000
Newell Rubbermaid, Inc.      
2.000%, 06/15/2015   40,000 40,425
2.050%, 12/01/2017   155,000 156,296
Next PLC      
5.875%, 10/12/2016 GBP 50,000 90,229
Nissan Motor Acceptance Corp.      
1.950%, 09/12/2017 (S) $ 230,000 232,413
Numericable Group SA      
6.250%, 05/15/2024 (S)   500,000 515,625
NVR, Inc.      
3.950%, 09/15/2022   220,000 224,994
O’Reilly Automotive, Inc.      
3.800%, 09/01/2022   25,000 25,878
3.850%, 06/15/2023   85,000 87,984
4.875%, 01/14/2021   435,000 479,394
Omnicom Group, Inc.      
5.900%, 04/15/2016   260,000 280,581
Outerwall, Inc.      
6.000%, 03/15/2019   550,000 561,000

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
PC Nextco Holdings LLC, PIK      
8.750%, 08/15/2019 (S) $ 375,000 $ 385,313
Peninsula Gaming LLC      
8.375%, 02/15/2018 (S)   250,000 263,750
Penske Automotive Group, Inc.      
5.750%, 10/01/2022   275,000 284,625
PF Chang’s China Bistro, Inc.      
10.250%, 06/30/2020 (S)   375,000 384,375
Pinnacle Entertainment, Inc.      
6.375%, 08/01/2021   350,000 363,125
7.500%, 04/15/2021   400,000 429,000
Pittsburgh Glass Works LLC      
8.000%, 11/15/2018 (S)   175,000 186,813
Playa Resorts Holding BV      
8.000%, 08/15/2020 (S)   300,000 317,250
Polish Television Holding BV, PIK      
11.000%, 01/15/2021 (S) EUR 425,000 668,998
PortAventura Entertainment Barcelona BV      
7.250%, 12/01/2020 (S)   100,000 137,636
ProSiebenSat.1 Media AG      
2.625%, 04/15/2021   100,000 134,645
Quiksilver, Inc.      
10.000%, 08/01/2020 $ 325,000 258,375
QVC, Inc.      
3.125%, 04/01/2019   400,000 404,282
4.375%, 03/15/2023   545,000 549,324
Regal Entertainment Group      
5.750%, 03/15/2022   350,000 358,750
RSI Home Products, Inc.      
6.875%, 03/01/2018 (S)   200,000 210,000
Schaeffler Holding Finance BV, PIK      
6.875%, 08/15/2018 (S)   275,000 289,781
Sears Holdings Corp.      
6.625%, 10/15/2018   225,000 204,750
SES Global Americas Holdings GP      
2.500%, 03/25/2019 (S)   110,000 110,836
SES SA      
3.600%, 04/04/2023 (S)   240,000 244,758
Sinclair Television Group, Inc.      
6.125%, 10/01/2022   375,000 393,750
Sirius XM Radio, Inc.      
5.250%, 08/15/2022 (S)   660,000 702,900
5.750%, 08/01/2021 (S)   1,275,000 1,326,000
Six Flags Entertainment Corp.      
5.250%, 01/15/2021 (S)   400,000 405,000
Sonic Automotive, Inc.      
5.000%, 05/15/2023   175,000 172,813
7.000%, 07/15/2022   225,000 245,813
Springs Industries, Inc.      
6.250%, 06/01/2021   150,000 150,750
Standard Pacific Corp.      
8.375%, 05/15/2018   100,000 116,000
Starz LLC      
5.000%, 09/15/2019   275,000 283,250
Studio City Finance, Ltd.      
8.500%, 12/01/2020 (S)   250,000 275,000
TCM Sub LLC      
3.550%, 01/15/2015 (S)   200,000 202,088
Tempur Sealy International, Inc.      
6.875%, 12/15/2020   200,000 216,500
The Goodyear Tire & Rubber Company      
6.500%, 03/01/2021   175,000 187,688
8.750%, 08/15/2020   125,000 148,750

 

The accompanying notes are an integral part of the financial statements. 167

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
The Interpublic Group of Companies, Inc.      
2.250%, 11/15/2017 $ 260,000 $ 263,673
3.750%, 02/15/2023   65,000 65,453
4.000%, 03/15/2022   125,000 128,830
The Men’s Wearhouse, Inc.      
7.000%, 07/01/2022 (S)   175,000 183,313
The William Carter Company      
5.250%, 08/15/2021   550,000 574,750
Thomson Reuters Corp.      
0.875%, 05/23/2016   345,000 344,763
1.300%, 02/23/2017   120,000 120,104
Time Warner Cable, Inc.      
6.550%, 05/01/2037   310,000 397,496
8.250%, 04/01/2019   1,015,000 1,276,900
8.750%, 02/14/2019   210,000 267,592
Time, Inc.      
5.750%, 04/15/2022 (S)   300,000 299,250
Toll Brothers Finance Corp.      
4.375%, 04/15/2023   215,000 209,088
Townsquare Radio LLC      
9.000%, 04/01/2019 (S)   200,000 217,500
Travelport LLC, PIK      
13.875%, 03/01/2016 (S)   256,042 257,322
Tupperware Brands Corp.      
4.750%, 06/01/2021   160,000 172,360
TVN Finance Corp. III AB      
7.375%, 12/15/2020 (S) EUR 150,000 218,280
Univision Communications, Inc.      
5.125%, 05/15/2023 (S) $ 975,000 1,021,313
6.750%, 09/15/2022 (S)   565,000 620,088
8.500%, 05/15/2021 (S)   675,000 739,125
Viacom, Inc.      
2.500%, 09/01/2018   40,000 40,705
Videotron, Ltd.      
6.375%, 12/15/2015   50,000 50,125
6.875%, 07/15/2021 (S) CAD 475,000 481,640
Virgin Media Finance PLC      
7.000%, 04/15/2023 (S) GBP 375,000 673,295
Volkswagen Group of America      
Finance LLC      
1.250%, 05/23/2017 (S) $ 400,000 399,303
Volkswagen International Finance NV      
4.625%, 03/24/2026 (P) (Q) EUR 96,000 136,481
Vougeot Bidco PLC      
7.875%, 07/15/2020 (S) GBP 100,000 173,492
VTR Finance BV      
6.875%, 01/15/2024 (S) $ 825,000 884,813
Whirlpool Corp.      
1.350%, 03/01/2017   60,000 59,974
4.700%, 06/01/2022   250,000 273,498
WideOpenWest Finance LLC      
10.250%, 07/15/2019   525,000 585,375
13.375%, 10/15/2019   450,000 519,750
William Lyon Homes, Inc.      
8.500%, 11/15/2020   450,000 497,250
WLH PNW Finance Corp.      
7.000%, 08/15/2022 (S)   325,000 333,125
WMG Acquisition Corp.      
6.000%, 01/15/2021 (S)   158,000 164,320
Wolverine World Wide, Inc.      
6.125%, 10/15/2020   125,000 132,969
WPP Finance 2010      
3.625%, 09/07/2022   275,000 281,964

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
WPP Finance 2010 (continued)      
4.750%, 11/21/2021 $ 320,000 $ 354,034
WPP Finance UK      
8.000%, 09/15/2014   65,000 65,147
WPP PLC      
6.000%, 04/04/2017 GBP 50,000 91,417
Ziggo Bond Company BV      
8.000%, 05/15/2018 (S) EUR 325,000 463,865
 
      62,106,721
Consumer Staples - 1.8%      
Ahold Finance USA, Inc.      
6.500%, 03/14/2017 GBP 35,000 64,576
Altria Group, Inc.      
4.750%, 05/05/2021 $ 800,000 891,286
9.250%, 08/06/2019   175,000 230,208
Anheuser-Busch InBev NV      
6.500%, 06/23/2017 GBP 25,000 46,791
Aramark Services, Inc.      
5.750%, 03/15/2020 $ 200,000 209,500
Avon Products, Inc.      
2.375%, 03/15/2016   80,000 80,915
4.600%, 03/15/2020   395,000 405,698
5.000%, 03/15/2023   515,000 518,437
BAT International Finance PLC      
6.375%, 12/12/2019 GBP 30,000 58,771
BI-LO LLC, PIK      
8.625%, 09/15/2018 (S) $ 275,000 270,875
Brakes Capital      
7.125%, 12/15/2018 (S) GBP 175,000 294,187
Bunge, Ltd. Finance Corp.      
3.200%, 06/15/2017 $ 295,000 306,571
4.100%, 03/15/2016   115,000 120,140
Carlsberg Breweries A/S      
7.250%, 11/28/2016 GBP 50,000 92,499
Ceridian Corp.      
8.875%, 07/15/2019 (S) $ 200,000 224,000
Coca-Cola Amatil, Ltd.      
3.250%, 11/02/2014 (S)   360,000 361,576
Coca-Cola Femsa SAB de CV      
4.625%, 02/15/2020   135,000 147,980
ConAgra Foods, Inc.      
3.200%, 01/25/2023   236,000 232,606
4.950%, 08/15/2020   160,000 177,122
Controladora Mabe SA de CV      
7.875%, 10/28/2019 (S)   350,000 392,000
7.875%, 10/28/2019   100,000 112,000
Cott Beverages, Inc.      
5.375%, 07/01/2022 (S)   375,000 373,125
Darling International, Inc.      
5.375%, 01/15/2022 (S)   200,000 207,500
Delhaize Group SA      
6.500%, 06/15/2017   135,000 151,603
Elior Finance & Company SCA      
6.500%, 05/01/2020 (S) EUR 65,000 93,739
ESAL GmbH      
6.250%, 02/05/2023 (S) $ 555,000 556,388
Harbinger Group, Inc.      
7.750%, 01/15/2022   225,000 229,500
7.875%, 07/15/2019   475,000 515,375
Heineken NV      
1.400%, 10/01/2017 (S)   135,000 134,498
7.250%, 03/10/2015 GBP 40,000 68,475

 

The accompanying notes are an integral part of the financial statements. 168

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Staples (continued)      
Imperial Tobacco Finance PLC      
2.050%, 02/11/2018 (S) $ 315,000 $ 315,536
3.500%, 02/11/2023 (S)   570,000 566,979
6.250%, 12/04/2018 GBP 40,000 75,951
JBS Investments GmbH      
7.750%, 10/28/2020 (S) $ 200,000 216,000
JBS USA LLC      
5.875%, 07/15/2024 (S)   550,000 550,000
Marfrig Holding Europe BV      
6.875%, 06/24/2019 (S)   300,000 305,160
MHP SA      
8.250%, 04/02/2020 (S)   460,000 386,400
Minerva Luxembourg SA      
7.750%, 01/31/2023   200,000 212,000
12.250%, 02/10/2022 (S)   200,000 231,000
Mondelez International, Inc.      
7.250%, 07/18/2018 GBP 50,000 98,224
Mriya Agro Holding PLC      
9.450%, 04/19/2018 (I) (S) $ 300,000 112,500
9.450%, 04/19/2018 (I)   200,000 75,000
Philip Morris International, Inc.      
4.375%, 11/15/2041   145,000 147,150
Post Holdings, Inc.      
6.000%, 12/15/2022 (S)   175,000 172,375
6.750%, 12/01/2021 (S)   75,000 76,406
7.375%, 02/15/2022   250,000 262,500
Premier Foods Finance PLC      
6.500%, 03/15/2021 (S) GBP 100,000 162,695
Premier Foods PLC      
6.500%, 03/15/2021   100,000 162,695
Red de Carreteras de Occidente SAPIB      
de CV      
9.000%, 06/10/2028 (S) MXN 2,000,000 147,891
Reynolds American, Inc.      
1.050%, 10/30/2015 $ 50,000 50,043
3.250%, 11/01/2022   450,000 440,556
Reynolds Group Issuer, Inc.      
5.750%, 10/15/2020   125,000 130,625
7.125%, 04/15/2019   100,000 103,875
9.875%, 08/15/2019   250,000 277,188
Rite Aid Corp.      
6.750%, 06/15/2021   935,000 992,269
7.700%, 02/15/2027   425,000 471,750
SABMiller Holdings, Inc.      
0.930%, 08/01/2018 (P) (S)   200,000 201,552
Safeway, Ltd.      
6.125%, 12/17/2018 GBP 12,000 22,146
Spectrum Brands, Inc.      
6.375%, 11/15/2020 $ 125,000 134,375
6.625%, 11/15/2022   125,000 135,313
Stretford 79 PLC      
6.250%, 07/15/2021 (S) GBP 225,000 371,666
Tesco PLC      
6.125%, 02/24/2022   50,000 96,468
The Kroger Company      
1.200%, 10/17/2016 $ 75,000 75,148
3.300%, 01/15/2021   220,000 226,140
The Pantry, Inc.      
8.375%, 08/01/2020   225,000 240,750
Tyson Foods, Inc.      
2.650%, 08/15/2019   115,000 116,560
4.500%, 06/15/2022   410,000 443,046

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Staples (continued)      
UKRLANDFARMING PLC      
10.875%, 03/26/2018 $ 200,000 $ 153,040
WM Morrison Supermarkets PLC      
2.250%, 06/19/2020 EUR 100,000 133,404
Wm Wrigley Jr. Company      
1.400%, 10/21/2016 (S) $ 45,000 45,307
2.000%, 10/20/2017 (S)   220,000 222,903
2.400%, 10/21/2018 (S)   140,000 142,313
Yasar Holdings SA      
9.625%, 10/07/2015   400,000 409,000
 
      17,479,840
Energy - 6.8%      
Adaro Indonesia PT      
7.625%, 10/22/2019 (S)   200,000 208,000
7.625%, 10/22/2019   250,000 260,000
Alpha Natural Resources, Inc.      
7.500%, 08/01/2020 (S)   325,000 313,625
American Energy-Permian Basin LLC      
6.741%, 08/01/2019 (P) (S)   525,000 513,188
7.375%, 11/01/2021 (S)   25,000 24,375
Anadarko Petroleum Corp.      
5.950%, 09/15/2016   185,000 203,104
6.375%, 09/15/2017   380,000 433,234
Antero Resources Corp.      
5.125%, 12/01/2022 (S)   125,000 126,875
Antero Resources Finance Corp.      
5.375%, 11/01/2021   425,000 437,750
Athlon Holdings LP      
6.000%, 05/01/2022 (S)   300,000 309,000
7.375%, 04/15/2021   625,000 678,125
Atlas Pipeline Partners LP      
5.875%, 08/01/2023   25,000 25,375
Atwood Oceanics, Inc.      
6.500%, 02/01/2020   200,000 212,000
BG Energy Capital PLC      
2.875%, 10/15/2016 (S)   305,000 316,180
Bill Barrett Corp.      
7.000%, 10/15/2022   175,000 180,250
7.625%, 10/01/2019   450,000 474,750
Bonanza Creek Energy, Inc.      
5.750%, 02/01/2023   450,000 454,500
Cameron International Corp.      
1.150%, 12/15/2016   35,000 35,019
1.400%, 06/15/2017   125,000 125,155
Canadian Natural Resources, Ltd.      
1.450%, 11/14/2014   135,000 135,277
5.700%, 05/15/2017   200,000 222,664
CGG SA      
6.875%, 01/15/2022 (S)   475,000 448,875
Chesapeake Energy Corp.      
5.375%, 06/15/2021   200,000 211,500
5.750%, 03/15/2023   450,000 502,313
Cimarex Energy Company      
4.375%, 06/01/2024   250,000 260,313
Citgo Petroleum Corp.      
6.250%, 08/15/2022 (S)   150,000 157,625
CNOOC Curtis Funding No. 1 Pty, Ltd.      
2.750%, 10/03/2020 EUR 100,000 141,294
CNOOC Finance 2013, Ltd.      
1.125%, 05/09/2016 $ 200,000 200,022
CNOOC Nexen Finance 2014 ULC      
1.625%, 04/30/2017   200,000 200,626

 

The accompanying notes are an integral part of the financial statements. 169

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Compressco Partners LP      
7.250%, 08/15/2022 (S) $ 200,000 $ 202,000
Concho Resources, Inc.      
5.500%, 04/01/2023   525,000 560,438
CONSOL Energy, Inc.      
5.875%, 04/15/2022 (S)   700,000 731,500
Continental Resources, Inc.      
5.000%, 09/15/2022   495,000 533,981
7.125%, 04/01/2021   215,000 241,067
DCP Midstream LLC      
5.375%, 10/15/2015 (S)   150,000 155,977
DCP Midstream Operating LP      
2.500%, 12/01/2017   350,000 358,632
2.700%, 04/01/2019   50,000 50,682
3.250%, 10/01/2015   310,000 318,432
3.875%, 03/15/2023   210,000 214,858
5.600%, 04/01/2044   30,000 34,044
Delek & Avner Tamar Bond, Ltd.      
2.803%, 12/30/2016 (S)   70,000 69,319
5.412%, 12/30/2025 (S)   60,000 61,279
Denbury Resources, Inc.      
5.500%, 05/01/2022   400,000 410,000
Ecopetrol SA      
4.250%, 09/18/2018   265,000 284,213
5.875%, 05/28/2045   90,000 97,061
El Paso Corp.      
6.500%, 09/15/2020   75,000 87,345
Enbridge Energy Partners LP      
5.500%, 09/15/2040   110,000 122,599
5.875%, 12/15/2016   175,000 193,116
Enbridge, Inc.      
0.684%, 06/02/2017 (P)   220,000 220,899
Energy Transfer Partners LP      
3.600%, 02/01/2023   615,000 610,880
5.200%, 02/01/2022   550,000 606,816
5.950%, 02/01/2015   215,000 219,729
6.700%, 07/01/2018   85,000 99,131
Eni Finance International SA      
5.000%, 01/27/2019 GBP 12,000 22,047
EnLink Midstream Partners LP      
2.700%, 04/01/2019 $ 35,000 35,470
4.400%, 04/01/2024   160,000 169,244
Ensco PLC      
3.250%, 03/15/2016   345,000 357,214
Enterprise Products Operating LLC      
1.250%, 08/13/2015   180,000 181,115
5.600%, 10/15/2014   90,000 90,544
5.950%, 02/01/2041   445,000 543,948
7.550%, 04/15/2038   210,000 297,801
EQT Corp.      
4.875%, 11/15/2021   325,000 358,787
EQT Midstream Partners LP      
4.000%, 08/01/2024   395,000 397,425
Exterran Partners LP      
6.000%, 04/01/2021   100,000 101,000
6.000%, 10/01/2022 (S)   375,000 375,938
Foresight Energy LLC      
7.875%, 08/15/2021 (S)   400,000 425,000
KazMunayGas National Company      
9.125%, 07/02/2018   1,200,000 1,444,500
Kinder Morgan Energy Partners LP      
3.500%, 03/01/2016   95,000 98,435
5.125%, 11/15/2014   90,000 90,815

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Kinder Morgan, Inc.      
5.625%, 11/15/2023 (S) $ 525,000 $ 578,813
Laredo Petroleum, Inc.      
7.375%, 05/01/2022   425,000 465,375
Lukoil International Finance BV      
4.563%, 04/24/2023   200,000 179,800
Marathon Oil Corp.      
0.900%, 11/01/2015   275,000 275,680
MarkWest Energy Partners LP      
4.500%, 07/15/2023   1,025,000 1,041,656
McDermott International, Inc.      
8.000%, 05/01/2021 (S)   175,000 181,125
Memorial Production Partners LP      
6.875%, 08/01/2022 (S)   275,000 272,250
Memorial Resource Development Corp.      
5.875%, 07/01/2022 (S)   350,000 355,250
Murphy Oil Corp.      
2.500%, 12/01/2017   380,000 388,842
4.000%, 06/01/2022   640,000 655,282
Murray Energy Corp.      
8.625%, 06/15/2021 (S)   425,000 450,500
9.500%, 12/05/2020 (S)   75,000 82,500
Nabors Industries, Inc.      
2.350%, 09/15/2016   95,000 97,619
4.625%, 09/15/2021   305,000 333,712
Newfield Exploration Company      
5.750%, 01/30/2022   350,000 386,750
Niska Gas Storage Canada ULC      
6.500%, 04/01/2019 (S)   675,000 653,063
Noble Energy, Inc.      
4.150%, 12/15/2021   450,000 483,815
6.000%, 03/01/2041   285,000 344,651
Noble Holding International, Ltd.      
2.500%, 03/15/2017   35,000 35,784
3.450%, 08/01/2015   85,000 87,094
NuStar Logistics LP      
4.800%, 09/01/2020   40,000 40,500
6.750%, 02/01/2021   275,000 305,250
ONEOK Partners LP      
3.200%, 09/15/2018   40,000 41,734
3.250%, 02/01/2016   260,000 268,733
Origin Energy Finance, Ltd.      
2.875%, 10/11/2019 EUR 100,000 141,342
3.500%, 10/09/2018 (S) $ 770,000 793,965
Paragon Offshore PLC      
6.750%, 07/15/2022 (S)   400,000 364,000
Parker Drilling Company      
6.750%, 07/15/2022 (S)   400,000 415,000
Parsley Energy LLC      
7.500%, 02/15/2022 (S)   450,000 477,000
PDC Energy, Inc.      
7.750%, 10/15/2022   925,000 1,012,875
Pemex Project Funding Master Trust      
5.500%, 02/24/2025 EUR 301,000 495,362
Penn Virginia Corp.      
7.250%, 04/15/2019 $ 200,000 207,500
8.500%, 05/01/2020   450,000 495,000
Penn Virginia Resource Partners LP      
8.375%, 06/01/2020   195,000 216,938
Pertamina Persero PT      
5.625%, 05/20/2043   650,000 628,063
6.000%, 05/03/2042 (S)   257,000 258,928
6.450%, 05/30/2044 (S)   200,000 213,000

 

The accompanying notes are an integral part of the financial statements. 170

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Petrobras Global Finance BV      
2.000%, 05/20/2016 $ 165,000 $ 165,355
3.000%, 01/15/2019   128,000 126,127
3.250%, 03/17/2017   225,000 229,550
3.750%, 01/14/2021 EUR 100,000 139,279
4.250%, 10/02/2023   100,000 140,200
4.375%, 05/20/2023 $ 470,000 463,740
4.875%, 03/17/2020   515,000 534,508
5.625%, 05/20/2043   113,000 109,599
6.250%, 03/17/2024   160,000 175,714
Petrobras International Finance Company      
5.375%, 01/27/2021   375,000 395,363
5.750%, 01/20/2020   215,000 231,759
5.875%, 03/01/2018   205,000 224,080
6.875%, 01/20/2040   200,000 225,100
7.875%, 03/15/2019   115,000 133,737
Petroleos de Venezuela SA      
5.000%, 10/28/2015   1,268,989 1,180,160
5.125%, 10/28/2016   1,518,734 1,290,924
5.250%, 04/12/2017   737,300 587,628
5.375%, 04/12/2027   215,000 118,573
8.500%, 11/02/2017   4,701,200 4,212,275
8.500%, 11/02/2017 (S)   475,000 425,600
9.750%, 05/17/2035   190,000 140,790
Petroleos Mexicanos      
3.125%, 01/23/2019 (S)   65,000 67,561
3.125%, 11/27/2020 EUR 100,000 143,313
3.500%, 07/18/2018 $ 375,000 391,875
4.875%, 01/24/2022   795,000 863,768
5.500%, 01/21/2021 to 06/27/2044   1,730,000 1,886,881
6.375%, 01/23/2045 (S)   235,000 284,350
6.500%, 06/02/2041   1,250,000 1,525,000
6.625%, 06/15/2035   85,000 104,763
7.190%, 09/12/2024 MXN 1,000,000 78,842
Petroleum Company of Trinidad &      
Tobago, Ltd.      
9.750%, 08/14/2019 (S) $ 200,000 251,600
Phillips 66      
1.950%, 03/05/2015   185,000 186,353
4.300%, 04/01/2022   365,000 395,565
Pioneer Natural Resources Company      
5.875%, 07/15/2016   325,000 352,852
Plains All American Pipeline LP      
3.950%, 09/15/2015   425,000 438,837
Plains Exploration & Production Company      
6.125%, 06/15/2019   45,000 49,669
6.500%, 11/15/2020   45,000 49,838
Power Sector Assets & Liabilities      
Management Corp.      
7.390%, 12/02/2024   650,000 834,438
Precision Drilling Corp.      
6.500%, 12/15/2021   75,000 79,688
6.625%, 11/15/2020   425,000 450,500
Range Resources Corp.      
5.000%, 08/15/2022 to 03/15/2023   360,000 382,657
Regency Energy Partners LP      
5.875%, 03/01/2022   275,000 295,625
Reliance Holdings USA, Inc.      
5.400%, 02/14/2022 (S)   250,000 275,837
Rosetta Resources, Inc.      
5.875%, 06/01/2024   500,000 508,750
Rowan Companies, Inc.      
4.750%, 01/15/2024   80,000 84,400

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Rowan Companies, Inc. (continued)      
4.875%, 06/01/2022 $ 200,000 $ 214,668
5.000%, 09/01/2017   195,000 211,822
7.875%, 08/01/2019   230,000 282,840
Sabine Pass Liquefaction LLC      
5.625%, 04/15/2023   225,000 234,000
Sabine Pass LNG LP      
6.500%, 11/01/2020   175,000 185,719
Samson Investment Company      
9.750%, 02/15/2020   375,000 382,500
SESI LLC      
6.375%, 05/01/2019   215,000 226,288
7.125%, 12/15/2021   215,000 242,413
Seven Generations Energy, Ltd.      
8.250%, 05/15/2020 (S)   225,000 247,500
Seventy Seven Energy, Inc.      
6.500%, 07/15/2022 (S)   675,000 695,250
Sibur Securities, Ltd.      
3.914%, 01/31/2018 (S)   290,000 263,900
SM Energy Company      
5.000%, 01/15/2024   450,000 454,500
6.500%, 11/15/2021 to 01/01/2023   500,000 542,500
Southeast Supply Header LLC      
4.250%, 06/15/2024 (S)   155,000 159,993
Spectra Energy Capital LLC      
3.300%, 03/15/2023   355,000 342,597
Spectra Energy Partners LP      
2.950%, 09/25/2018   75,000 77,729
Talisman Energy, Inc.      
5.125%, 05/15/2015   175,000 180,468
Targa Resources Partners LP      
4.250%, 11/15/2023   925,000 922,688
5.250%, 05/01/2023   50,000 52,625
Tennessee Gas Pipeline Company      
8.000%, 02/01/2016   225,000 247,051
The Williams Companies, Inc.      
4.550%, 06/24/2024   485,000 488,481
TransCanada PipeLines, Ltd.      
0.914%, 06/30/2016 (P)   265,000 267,271
Transocean, Inc.      
2.500%, 10/15/2017   225,000 227,634
4.950%, 11/15/2015   130,000 135,974
5.050%, 12/15/2016   80,000 86,295
Western Gas Partners LP      
4.000%, 07/01/2022   530,000 553,886
Western Refining, Inc.      
6.250%, 04/01/2021   350,000 364,000
Westmoreland Coal Company      
10.750%, 02/01/2018 (S)   200,000 213,250
Williams Companies, Inc.      
3.700%, 01/15/2023   375,000 359,750
Williams Partners LP      
3.350%, 08/15/2022   215,000 214,802
3.800%, 02/15/2015   370,000 374,971
4.125%, 11/15/2020   135,000 143,658
6.300%, 04/15/2040   400,000 481,151
Woodside Finance, Ltd.      
4.500%, 11/10/2014 (S)   175,000 176,366
WPX Energy, Inc.      
6.000%, 01/15/2022   800,000 858,000
YPF SA      
8.750%, 04/04/2024 (S)   380,000 395,200

 

The accompanying notes are an integral part of the financial statements. 171

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
YPF SA (continued)      
8.875%, 12/19/2018 $ 100,000 $ 106,000
      65,855,809
Financials - 9.0%      
A-S Co-Issuer Subsidiary, Inc.      
7.875%, 12/15/2020 (S)   150,000 159,750
Abbey National Treasury Services PLC      
2.625%, 07/16/2020 EUR 100,000 142,525
ABN AMRO Bank NV      
6.250%, 04/27/2022 $ 410,000 470,311
6.375%, 04/27/2021 EUR 100,000 163,565
ACE INA Holdings, Inc.      
5.600%, 05/15/2015 $ 225,000 232,674
Aflac, Inc.      
3.625%, 06/15/2023   665,000 684,248
AIA Group, Ltd.      
2.250%, 03/11/2019 (S)   200,000 199,957
AIB Mortgage Bank      
4.875%, 06/29/2017 EUR 262,000 385,284
Akbank TAS      
7.500%, 02/05/2018 TRY 300,000 125,607
Alexandria Real Estate Equities, Inc.      
3.900%, 06/15/2023 $ 115,000 115,575
Allianz Finance II BV (5.750% to      
07/08/2021, then 3 month      
EURIBOR + 3.349%)      
07/08/2041 EUR 100,000 156,181
Alpha Star Holding, Ltd.      
4.970%, 04/09/2019 $ 200,000 195,732
American Campus Communities      
Operating Partnership LP      
3.750%, 04/15/2023   180,000 180,474
4.125%, 07/01/2024   170,000 173,532
American Capital, Ltd.      
6.500%, 09/15/2018 (S)   375,000 393,750
American Express Company      
0.825%, 05/22/2018 (P)   320,000 322,470
American International Group, Inc.      
4.125%, 02/15/2024   375,000 398,580
6.400%, 12/15/2020   24,000 28,925
American Tower Corp.      
4.625%, 04/01/2015   435,000 444,684
7.250%, 05/15/2019   240,000 288,055
Ameriprise Financial, Inc.      
7.300%, 06/28/2019   190,000 233,820
ANZ National International, Ltd.      
1.850%, 10/15/2015 (S)   325,000 329,306
Arqiva Broadcast Finance PLC      
9.500%, 03/31/2020 (S) GBP 475,000 882,214
Assicurazioni Generali SpA      
5.125%, 09/16/2024 EUR 50,000 81,846
Aston Escrow Corp.      
9.500%, 08/15/2021 (S) $ 225,000 224,438
Aviv Healthcare Properties LP      
7.750%, 02/15/2019   150,000 158,625
Aviva PLC      
9.500%, 06/20/2016 GBP 15,000 28,310
Aviva PLC (6.875% to 05/22/2018, then      
3 month EURIBOR + 3.350%)      
05/22/2038 EUR 50,000 76,499
AXA SA (5.250% to 04/16/2020, then      
3 month EURIBOR + 3.050%)      
04/16/2040   50,000 74,343

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Banca Monte dei Paschi di Siena SpA      
3.500%, 03/20/2017 EUR 200,000 $ 278,321
Banco do Estado do Rio Grande do Sul      
7.375%, 02/02/2022 (S) $ 500,000 530,250
Banco Santander Chile      
3.875%, 09/20/2022 (S)   150,000 149,607
Banco Santander SA      
4.000%, 04/07/2020 EUR 300,000 462,217
Bank of America Corp.      
1.250%, 01/11/2016 $ 210,000 211,084
1.500%, 10/09/2015   35,000 35,323
1.700%, 08/25/2017   230,000 230,205
3.300%, 01/11/2023   365,000 362,012
4.200%, 08/26/2024   405,000 411,171
4.750%, 04/03/2017 EUR 100,000 145,135
5.150%, 05/30/2017 CAD 100,000 98,837
5.500%, 12/04/2019 GBP 40,000 75,184
5.625%, 07/01/2020 $ 725,000 830,854
6.110%, 01/29/2037   615,000 730,309
6.400%, 08/28/2017   90,000 102,236
6.875%, 04/25/2018   140,000 163,243
7.750%, 05/14/2038   165,000 231,300
Bank of Georgia      
7.750%, 07/05/2017 (S)   200,000 210,000
Bank of Montreal      
6.170%, 03/28/2023 (P) CAD 40,000 41,806
Bank of Nova Scotia      
2.740%, 12/01/2016   30,000 28,185
Bank of Tokyo-Mitsubishi UFJ, Ltd.      
1.550%, 09/09/2016 (S) $ 270,000 272,654
Banque du Liban      
10.000%, 04/25/2015   100,000 104,500
Banque Federative du Credit Mutuel SA      
1.700%, 01/20/2017 (S)   235,000 236,333
2.500%, 10/29/2018 (S)   225,000 227,901
Barclays Bank PLC      
4.000%, 10/07/2019 EUR 250,000 385,802
5.000%, 09/22/2016 $ 125,000 134,947
5.140%, 10/14/2020   675,000 736,832
6.050%, 12/04/2017 (S)   305,000 342,999
BB&T Corp.      
1.091%, 06/15/2018 (P)   195,000 198,500
5.200%, 12/23/2015   105,000 110,854
BBVA Bancomer SA      
4.375%, 04/10/2024 (S)   615,000 631,913
6.500%, 03/10/2021   200,000 225,000
BBVA Subordinated Capital SAU      
3.500%, 04/11/2024 (P) EUR 200,000 274,092
Berkshire Hathaway Finance Corp.      
4.300%, 05/15/2043 $ 215,000 221,033
BNP Paribas Home Loan SFH      
3.750%, 01/11/2021 EUR 200,000 312,920
BNP Paribas SA      
2.875%, 11/27/2017   50,000 70,378
BNP Paribas SA (2.875% to 03/20/2021,      
then 5 Year Euro Swap Rate + 1.650%)      
03/20/2026   200,000 274,254
BPCE SA      
2.500%, 12/10/2018 $ 250,000 252,931
5.150%, 07/21/2024 (S)   800,000 856,603
BR Malls International Finance, Ltd.      
8.500%, 01/26/2016 (Q) (S)   160,000 167,600

 

The accompanying notes are an integral part of the financial statements. 172

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
BR Properties SA      
9.000%, 10/07/2015 (Q) (S) $ 200,000 $ 207,500
Branch Banking & Trust Company      
1.050%, 12/01/2016   265,000 265,393
Camden Property Trust      
2.950%, 12/15/2022   120,000 117,034
4.250%, 01/15/2024   125,000 132,333
Canadian Imperial Bank of Commerce      
2.650%, 11/08/2016 CAD 30,000 28,128
Cantor Commercial Real Estate      
Company LP      
7.750%, 02/15/2018 (S) $ 300,000 321,750
Capital One Bank USA NA      
1.150%, 11/21/2016   250,000 250,445
Capital One Financial Corp.      
2.150%, 03/23/2015   160,000 161,520
CBRE Services, Inc.      
5.000%, 03/15/2023   650,000 658,970
CDP Financial, Inc.      
3.500%, 06/23/2020 EUR 350,000 524,905
CIFI Holdings Group Company, Ltd.      
12.250%, 04/15/2018 $ 200,000 225,500
Citigroup, Inc.      
0.809%, 05/31/2017 (P) EUR 50,000 65,054
1.250%, 01/15/2016 $ 315,000 316,596
1.300%, 11/15/2016   105,000 105,315
1.550%, 08/14/2017   300,000 299,663
1.605%, 02/10/2019 (P) EUR 20,000 26,230
3.500%, 08/05/2015   50,000 67,590
5.500%, 09/13/2025 $ 210,000 235,309
6.250%, 09/02/2019 GBP 45,000 87,715
Citycon OYJ      
3.750%, 06/24/2020 EUR 200,000 290,159
Cloverie PLC (7.500% until 07/24/2019,      
then 3 month EURIBOR + 5.850%)      
07/24/2039   50,000 81,481
CNA Financial Corp.      
3.950%, 05/15/2024 $ 290,000 300,463
5.875%, 08/15/2020   330,000 382,425
6.500%, 08/15/2016   205,000 226,245
CNH Capital LLC      
6.250%, 11/01/2016   75,000 80,438
CNO Financial Group, Inc.      
6.375%, 10/01/2020 (S)   535,000 572,450
Co-Operative Bank PLC      
2.375%, 10/23/2015 EUR 100,000 128,439
Commonwealth Bank of Australia      
5.150%, 04/09/2020 CAD 150,000 155,870
Corp Financiera de Desarrollo SA      
5.250%, 07/15/2029 (P) (S) $ 200,000 204,300
Corrections Corp. of America      
4.625%, 05/01/2023   75,000 74,344
Credit Agricole SA      
2.500%, 04/15/2019 (S)   350,000 353,147
Credit Suisse AG      
5.125%, 09/18/2017 EUR 75,000 111,882
6.500%, 08/08/2023 (S) $ 375,000 412,490
Credit Suisse New York      
1.375%, 05/26/2017   325,000 324,962
Crown Castle Towers LLC      
6.113%, 01/15/2020 (S)   240,000 280,677

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Danske Bank A/S (3.875% to 10/04/2018,      
then 5 Year Euro Swap Rate + 2.625%)      
10/04/2023 EUR 100,000 $ 142,084
Discover Financial Services      
10.250%, 07/15/2019 $ 245,000 317,811
DNB Bank ASA      
3.200%, 04/03/2017 (S)   380,000 398,715
DNB Boligkreditt AS      
3.375%, 01/20/2017 EUR 244,000 344,518
DuPont Fabros Technology LP      
5.875%, 09/15/2021 $ 300,000 313,500
E*TRADE Financial Corp.      
6.375%, 11/15/2019   220,000 235,950
Equity One, Inc.      
3.750%, 11/15/2022   345,000 346,579
Erste Group Bank AG      
7.125%, 10/10/2022 EUR 100,000 156,017
Essex Portfolio LP      
3.250%, 05/01/2023 $ 110,000 108,582
EUROFIMA      
4.000%, 10/27/2021 EUR 91,000 144,756
European Investment Bank      
8.750%, 08/25/2017 GBP 360,000 724,431
Export-Import Bank of India      
4.000%, 08/07/2017 to 01/14/2023 $ 535,000 546,646
Export-Import Bank of Korea      
2.000%, 04/30/2020 EUR 100,000 136,526
4.625%, 02/20/2017   194,000 275,997
FCE Bank PLC      
1.750%, 05/21/2018   100,000 135,163
3.250%, 11/19/2020 GBP 150,000 252,646
FGA Capital Ireland PLC      
4.000%, 10/17/2018 EUR 100,000 142,348
Fidelity National Financial, Inc.      
6.600%, 05/15/2017 $ 175,000 196,358
Fifth Third Bancorp      
3.625%, 01/25/2016   125,000 130,045
4.300%, 01/16/2024   225,000 236,550
8.250%, 03/01/2038   60,000 90,195
Fifth Third Bank      
1.150%, 11/18/2016   200,000 200,891
Gardner Denver, Inc.      
6.875%, 08/15/2021 (S)   350,000 370,125
GE Capital European Funding      
5.250%, 05/18/2015 EUR 50,000 67,987
GE Capital UK Funding Company      
4.375%, 07/31/2019 GBP 20,000 36,072
5.625%, 12/12/2014 to 04/25/2019   80,000 140,819
General Electric Capital Corp.      
0.941%, 04/02/2018 (P) $ 375,000 379,794
5.250%, 12/07/2028 GBP 10,000 19,692
5.300%, 02/11/2021 $ 655,000 751,971
5.875%, 01/14/2038   395,000 491,052
GTB Finance B.V.      
7.500%, 05/19/2016 (S)   200,000 208,500
Harland Clarke Holdings Corp.      
6.875%, 03/01/2020 (S)   150,000 156,188
Hastings Insurance Group Finance PLC      
8.000%, 10/21/2020 GBP 100,000 176,266
HBOS PLC      
6.750%, 05/21/2018 (S) $ 305,000 349,481
Healthcare Realty Trust, Inc.      
3.750%, 04/15/2023   150,000 148,007

 

The accompanying notes are an integral part of the financial statements. 173

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Healthcare Realty Trust, Inc. (continued)      
5.750%, 01/15/2021 $ 150,000 $ 169,528
Highwoods Realty LP      
3.625%, 01/15/2023   165,000 164,312
Host Hotels & Resorts LP      
3.750%, 10/15/2023   90,000 90,249
HSBC Bank Canada      
3.558%, 10/04/2017 CAD 50,000 48,127
HSBC Bank PLC      
0.874%, 05/15/2018 (P) (S) $ 215,000 216,901
HSBC Covered Bonds France      
3.375%, 01/20/2017 EUR 250,000 352,931
HSBC Holdings PLC      
5.100%, 04/05/2021 $ 200,000 229,130
5.750%, 12/20/2027 GBP 55,000 103,459
HSBC Holdings PLC (3.375% to      
01/10/2019, then 5 Year Euro Swap      
Rate + 1.950%)      
01/10/2024 EUR 100,000 140,180
Hypo Alpe-Adria-Bank International AG      
2.375%, 12/13/2022   400,000 548,380
ICICI Bank, Ltd. (6.375% to 04/30/2017,      
then 6 month LIBOR + 2.28%)      
04/30/2022 $ 250,000 261,250
IFC Development Corporate      
Treasury, Ltd.      
2.375%, 05/21/2019   660,000 649,688
ING Bank NV      
3.625%, 02/25/2026 (P) EUR 100,000 140,359
Inter-American Development Bank      
4.400%, 01/26/2026 CAD 410,000 426,290
IntercontinentalExchange Group, Inc.      
2.500%, 10/15/2018 $ 75,000 76,643
Intesa Sanpaolo SpA      
3.625%, 12/05/2022 EUR 200,000 305,522
5.017%, 06/26/2024 (S) $ 625,000 630,934
IPIC GMTN, Ltd.      
5.875%, 03/14/2021 EUR 100,000 166,534
iStar Financial, Inc.      
5.000%, 07/01/2019 $ 450,000 450,000
7.125%, 02/15/2018   125,000 135,625
Itau Unibanco Holding SA      
5.650%, 03/19/2022   200,000 208,250
Jafz Sukuk, Ltd.      
7.000%, 06/19/2019   200,000 230,400
Jefferies Group LLC      
8.500%, 07/15/2019   80,000 99,860
Jefferies Group, Inc.      
3.875%, 11/09/2015   75,000 77,534
Jefferies LoanCore LLC      
6.875%, 06/01/2020 (S)   600,000 597,000
JPMorgan Chase & Company      
0.855%, 02/26/2016 (P)   190,000 191,061
2.000%, 08/15/2017   450,000 457,321
4.500%, 01/24/2022   1,040,000 1,139,558
JPMorgan Chase & Company (4.375% to      
11/12/2014, then 3 month      
EURIBOR + 1.500%)      
11/12/2019 EUR 50,000 66,108
JPMorgan Chase & Company (6.750% to      
02/01/2024, then 3 month      
LIBOR + 3.780%)      
02/01/2024 (Q) $ 220,000 236,225

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Kaisa Group Holdings, Ltd.      
10.250%, 01/08/2020 $ 450,000 $ 479,250
KBC Bank NV      
1.250%, 05/28/2020 EUR 100,000 135,856
KBC Internationale      
Financieringsmaatschappij NV      
3.875%, 03/31/2015   70,000 93,844
KeyCorp      
3.750%, 08/13/2015 $ 215,000 221,404
KFW      
0.500%, 04/19/2016   453,000 453,190
4.375%, 07/04/2018 EUR 377,000 574,727
4.700%, 06/02/2037 CAD 204,000 209,049
5.500%, 12/07/2015 GBP 410,000 720,519
5.550%, 06/07/2021   100,000 201,090
6.000%, 08/20/2020 AUD 439,000 464,080
Kilroy Realty LP      
4.800%, 07/15/2018 $ 215,000 232,968
5.000%, 11/03/2015   260,000 272,135
6.625%, 06/01/2020   295,000 349,237
KWG Property Holding, Ltd.      
8.625%, 02/05/2020   261,000 267,525
Ladder Capital Finance Holdings LLLP      
5.875%, 08/01/2021 (S)   150,000 152,250
Legg Mason, Inc.      
2.700%, 07/15/2019   35,000 35,296
Liberty Mutual Group, Inc.      
4.250%, 06/15/2023 (S)   90,000 93,658
4.850%, 08/01/2044 (S)   620,000 627,676
Lloyds Bank PLC      
2.300%, 11/27/2018   200,000 202,393
6.500%, 03/24/2020 EUR 50,000 80,799
6.500%, 09/14/2020 (S) $ 685,000 799,717
7.625%, 04/22/2025 GBP 30,000 63,537
Longfor Properties Company, Ltd.      
6.875%, 10/18/2019 $ 200,000 207,000
Manufacturers & Traders Trust Company      
1.250%, 01/30/2017   325,000 326,009
Marsh & McLennan Companies, Inc.      
2.550%, 10/15/2018   95,000 97,076
3.500%, 06/03/2024   485,000 491,934
MetLife, Inc.      
5.250%, 06/29/2020 GBP 50,000 93,565
Metropolitan Life Global Funding I      
1.300%, 04/10/2017 (S) $ 325,000 325,306
1.500%, 01/10/2018 (S)   160,000 159,462
Morgan Stanley      
1.083%, 01/24/2019 (P)   675,000 680,815
1.514%, 04/25/2018 (P)   255,000 261,978
2.125%, 04/25/2018   855,000 860,129
3.750%, 02/25/2023   1,815,000 1,863,027
4.900%, 02/23/2017 CAD 45,000 44,182
5.000%, 05/02/2019 EUR 50,000 77,365
5.000%, 11/24/2025 $ 755,000 810,795
5.125%, 11/30/2015 GBP 100,000 173,462
5.375%, 08/10/2020 EUR 100,000 161,841
5.500%, 07/24/2020 to 07/28/2021 $ 500,000 572,494
MPT Operating Partnership LP      
6.375%, 02/15/2022   200,000 215,000
6.875%, 05/01/2021   350,000 376,250
MUFG Union Bank NA      
2.125%, 06/16/2017   255,000 259,682

 

The accompanying notes are an integral part of the financial statements. 174

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
National Australia Bank, Ltd.      
5.375%, 12/08/2014 GBP 50,000 $ 83,981
National Bank of Canada      
1.450%, 11/07/2017 $ 380,000 379,728
Nationstar Mortgage LLC      
6.500%, 07/01/2021 to 06/01/2022   875,000 857,500
Nationwide Building Society      
3.750%, 01/20/2015 EUR 50,000 66,557
4.375%, 02/28/2022   250,000 412,159
5.625%, 09/09/2019 GBP 50,000 94,788
6.750%, 07/22/2020 EUR 75,000 122,509
Neuberger Berman Group LLC      
5.875%, 03/15/2022 (S) $ 335,000 359,288
New York Life Funding      
5.125%, 02/03/2015 GBP 50,000 84,499
Nordea Bank AB      
0.875%, 05/13/2016 (S) $ 460,000 460,414
4.875%, 05/13/2021 (S)   650,000 710,855
Nordea Hypotek AB      
3.500%, 01/18/2017 EUR 294,000 416,475
Ocwen Financial Corp.      
6.625%, 05/15/2019 (S) $ 250,000 242,500
Odebrecht Finance, Ltd.      
7.125%, 06/26/2042   200,000 220,500
Omega Healthcare Investors, Inc.      
5.875%, 03/15/2024   375,000 393,750
Pacific Life Funding LLC      
5.125%, 01/20/2015 GBP 50,000 84,162
Patriot Merger Corp.      
9.000%, 07/15/2021 (S) $ 300,000 327,000
Popular, Inc.      
7.000%, 07/01/2019   160,000 160,800
Pricoa Global Funding I      
1.150%, 11/25/2016 (S)   480,000 481,312
Principal Financial Global      
Funding II LLC      
4.500%, 01/26/2017 EUR 50,000 71,017
Principal Financial Group, Inc.      
1.850%, 11/15/2017 $ 60,000 60,254
6.050%, 10/15/2036   25,000 31,112
Principal Life Global Funding II      
1.000%, 12/11/2015 (S)   90,000 90,441
Prologis LP      
4.500%, 08/15/2017   180,000 193,629
Provident Companies, Inc.      
7.000%, 07/15/2018   380,000 440,719
Provident Funding Associates LP      
6.750%, 06/15/2021 (S)   300,000 301,875
10.125%, 02/15/2019 (S)   125,000 134,531
Prudential Financial, Inc.      
5.625%, 06/15/2043 (P)   45,000 48,263
RCI Banque SA      
3.250%, 04/25/2018 GBP 20,000 34,231
3.500%, 04/03/2018 (S) $ 95,000 99,060
4.250%, 04/27/2017 EUR 50,000 71,408
4.375%, 01/27/2015   25,000 33,327
4.600%, 04/12/2016 (S) $ 135,000 142,400
Realogy Group LLC      
9.000%, 01/15/2020 (S)   100,000 111,750
Regency Centers LP      
3.750%, 06/15/2024   120,000 121,893
5.875%, 06/15/2017   35,000 38,953
6.000%, 06/15/2020   65,000 75,939

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Regions Bank      
7.500%, 05/15/2018 $ 250,000 $ 294,997
Regions Financial Corp.      
5.750%, 06/15/2015   175,000 181,766
Reinsurance Group of America, Inc.      
5.000%, 06/01/2021   240,000 266,262
5.625%, 03/15/2017   150,000 164,392
6.450%, 11/15/2019   375,000 440,792
Royal Bank of Canada      
1.250%, 10/29/2018 (S) EUR 400,000 543,155
Royal Bank of Scotland Group PLC      
2.550%, 09/18/2015 $ 160,000 162,816
Santander International Debt SAU      
4.000%, 03/27/2017 EUR 100,000 142,435
Santander UK PLC      
5.000%, 11/07/2023 (S) $ 480,000 517,526
Sberbank of Russia      
5.125%, 10/29/2022   200,000 172,000
5.125%, 10/29/2022 (S)   325,000 279,500
5.500%, 02/26/2024 (P) (S)   200,000 174,500
5.500%, 02/26/2024 (P)   300,000 261,750
5.717%, 06/16/2021   200,000 192,750
Scotiabank Peru SA      
4.500%, 12/13/2027 (P) (S)   250,000 241,288
4.500%, 12/13/2027 (P)   30,000 28,955
Shimao Property Holdings, Ltd.      
6.625%, 01/14/2020   200,000 202,000
Simon Property Group LP      
4.200%, 02/01/2015   250,000 251,434
Societe Generale SA      
5.400%, 01/30/2018 GBP 25,000 44,930
Standard Chartered Bank      
7.750%, 04/03/2018   50,000 96,391
Sumitomo Mitsui Trust Bank, Ltd.      
1.800%, 03/28/2018 (S) $ 285,000 284,983
Sun Hung Kai Properties      
Capital Market, Ltd.      
3.625%, 01/16/2023   370,000 370,788
4.500%, 02/14/2022   200,000 213,209
Sun Life Financial, Inc.      
4.570%, 08/23/2021 CAD 25,000 25,570
SunTrust Banks, Inc.      
2.350%, 11/01/2018 $ 105,000 106,136
Swedbank AB      
1.750%, 03/12/2018 (S)   435,000 435,284
Synovus Financial Corp.      
7.875%, 02/15/2019   300,000 339,000
TC Ziraat Bankasi AS      
4.250%, 07/03/2019 (S)   200,000 199,240
The Goldman Sachs Group, Inc.      
1.600%, 11/23/2015   222,000 224,271
2.375%, 01/22/2018   150,000 152,405
2.900%, 07/19/2018   755,000 776,410
3.625%, 01/22/2023   690,000 700,060
4.500%, 01/30/2017 EUR 50,000 71,721
5.000%, 05/03/2018 CAD 100,000 100,217
5.250%, 12/15/2015 GBP 10,000 17,383
5.500%, 10/12/2021   15,000 27,454
5.750%, 01/24/2022 $ 325,000 377,212
6.125%, 02/14/2017 GBP 16,000 29,243
6.150%, 04/01/2018 $ 310,000 353,210
6.250%, 09/01/2017 to 02/01/2041   528,000 617,550
6.375%, 05/02/2018 EUR 35,000 55,206

 

The accompanying notes are an integral part of the financial statements. 175

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
The Goldman Sachs Group, Inc. (continued)    
7.500%, 02/15/2019 $ 140,000 $ 169,209
The Howard Hughes Corp.      
6.875%, 10/01/2021 (S)   675,000 714,656
The Royal Bank of Scotland PLC      
5.375%, 09/30/2019 EUR 50,000 78,974
6.125%, 01/11/2021 $ 420,000 497,174
The Toronto-Dominion Bank      
0.786%, 04/30/2018 (P)   205,000 206,722
5.828%, 07/09/2023 (P) CAD 50,000 52,091
Towergate Finance PLC      
8.500%, 02/15/2018 (S) GBP 125,000 205,444
10.500%, 02/15/2019 (S)   275,000 421,159
Trust F/1401      
5.250%, 12/15/2024 (S) $ 400,000 424,000
Turkiye Garanti Bankasi A/S      
6.250%, 04/20/2021 (S)   400,000 428,500
Turkiye Halk Bankasi A/S      
3.875%, 02/05/2020 (S)   200,000 191,940
4.875%, 07/19/2017 (S)   310,000 320,075
Turkiye Halk Bankasi AS      
3.875%, 02/05/2020   300,000 287,910
4.750%, 06/04/2019 (S)   200,000 201,680
Turkiye Is Bankasi      
6.000%, 10/24/2022   300,000 298,560
7.850%, 12/10/2023 (S)   200,000 220,720
U.S. Bancorp      
3.442%, 02/01/2016   185,000 191,631
UBS AG      
6.375%, 07/20/2016 GBP 25,000 45,269
UniCredit SpA      
2.625%, 10/31/2020 EUR 250,000 357,994
3.625%, 01/24/2019   100,000 145,274
Unum Group      
4.000%, 03/15/2024 $ 345,000 359,355
5.625%, 09/15/2020   115,000 131,721
5.750%, 08/15/2042   80,000 95,782
UnumProvident Finance Company PLC      
6.850%, 11/15/2015 (S)   26,000 27,726
USI, Inc.      
7.750%, 01/15/2021 (S)   250,000 257,500
Ventas Realty LP      
1.250%, 04/17/2017   55,000 54,923
1.550%, 09/26/2016   80,000 80,854
2.000%, 02/15/2018   75,000 75,517
3.125%, 11/30/2015   255,000 262,436
Verisure Holding AB      
8.750%, 09/01/2018 (S) EUR 400,000 559,764
Voya Financial, Inc.      
2.900%, 02/15/2018 $ 110,000 113,827
Wachovia Bank NA      
4.875%, 02/01/2015   55,000 56,009
Walter Investment Management Corp.      
7.875%, 12/15/2021 (S)   975,000 992,063
Weingarten Realty Investors      
3.500%, 04/15/2023   75,000 74,431
Wells Fargo & Company (5.900% to      
06/15/2024, then 3 month      
LIBOR + 3.110%)      
06/15/2024 (Q)   125,000 130,938
Westpac Banking Corp.      
0.976%, 07/30/2018 (P)   175,000 177,099

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
XLIT, Ltd.      
2.300%, 12/15/2018 $ 120,000 $ 120,862
5.250%, 12/15/2043   105,000 118,384
 
      86,406,463
Health Care - 1.5%      
AbbVie, Inc.      
1.200%, 11/06/2015   255,000 256,380
Actavis, Inc.      
1.875%, 10/01/2017   250,000 251,049
Aetna, Inc.      
1.500%, 11/15/2017   295,000 295,948
Agilent Technologies, Inc.      
3.200%, 10/01/2022   80,000 78,638
5.000%, 07/15/2020   145,000 159,298
6.500%, 11/01/2017   210,000 240,275
Amsurg Corp.      
5.625%, 07/15/2022 (S)   150,000 153,375
Catholic Health Initiatives      
1.600%, 11/01/2017   25,000 25,005
2.600%, 08/01/2018   120,000 120,566
2.950%, 11/01/2022   215,000 209,908
Celgene Corp.      
1.900%, 08/15/2017   45,000 45,472
4.625%, 05/15/2044   210,000 216,594
5.250%, 08/15/2043   215,000 241,629
Community Health Systems, Inc.      
6.875%, 02/01/2022 (S)   925,000 982,813
7.125%, 07/15/2020   475,000 514,188
8.000%, 11/15/2019   595,000 647,063
Express Scripts Holding Company      
1.250%, 06/02/2017   150,000 149,600
2.750%, 11/21/2014   170,000 170,845
3.125%, 05/15/2016   210,000 218,013
Fresenius Medical      
Care US Finance II, Inc.      
5.625%, 07/31/2019 (S)   375,000 404,063
5.875%, 01/31/2022 (S)   150,000 165,000
Gilead Sciences, Inc.      
2.400%, 12/01/2014   150,000 150,719
4.800%, 04/01/2044   265,000 291,927
HCA Holdings, Inc.      
6.250%, 02/15/2021   300,000 326,250
Holding Medi-Partenaires SAS      
7.000%, 05/15/2020 (S) EUR 350,000 485,176
HomeVi SAS      
6.875%, 08/15/2021 (S)   100,000 135,337
Humana, Inc.      
3.150%, 12/01/2022 $ 350,000 349,659
6.450%, 06/01/2016   105,000 114,820
Jaguar Holdings Company II      
9.500%, 12/01/2019 (S)   500,000 543,750
JLL/Delta Dutch Newco BV      
7.500%, 02/01/2022 (S)   150,000 153,000
Kaiser Foundation Hospitals      
3.500%, 04/01/2022   200,000 204,236
Kinetic Concepts, Inc.      
10.500%, 11/01/2018   350,000 390,688
12.500%, 11/01/2019   150,000 170,813
Life Technologies Corp.      
3.500%, 01/15/2016   410,000 424,327
6.000%, 03/01/2020   250,000 291,939
McKesson Corp.      
1.292%, 03/10/2017   155,000 154,762

 

The accompanying notes are an integral part of the financial statements. 176

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Health Care (continued)      
McKesson Corp. (continued)      
4.883%, 03/15/2044 $ 130,000 $ 140,193
MedAssets, Inc.      
8.000%, 11/15/2018   300,000 314,625
Opal Acquisition, Inc.      
8.875%, 12/15/2021 (S)   375,000 395,625
Par Pharmaceutical Companies, Inc.      
7.375%, 10/15/2020   150,000 159,000
Perrigo Company PLC      
1.300%, 11/08/2016 (S)   200,000 199,771
2.300%, 11/08/2018 (S)   200,000 199,655
Select Medical Corp.      
6.375%, 06/01/2021   675,000 701,578
Tenet Healthcare Corp.      
4.500%, 04/01/2021   300,000 300,750
6.000%, 10/01/2020   300,000 325,500
Thermo Fisher Scientific, Inc.      
1.300%, 02/01/2017   150,000 150,127
2.400%, 02/01/2019   105,000 106,083
4.150%, 02/01/2024   250,000 264,094
Truven Health Analytics, Inc.      
10.625%, 06/01/2020   175,000 188,125
UnitedHealth Group, Inc.      
0.850%, 10/15/2015   80,000 80,292
4.625%, 11/15/2041   145,000 154,058
Universal Hospital Services, Inc.      
7.625%, 08/15/2020   350,000 350,000
WellCare Health Plans, Inc.      
5.750%, 11/15/2020   300,000 310,875
WellPoint, Inc.      
1.250%, 09/10/2015   115,000 115,715
3.500%, 08/15/2024   360,000 360,201
5.250%, 01/15/2016   195,000 207,365
 
      14,756,757
Industrials - 3.3%      
Accudyne Industries Borrower      
7.750%, 12/15/2020 (S)   250,000 267,500
Adecco International Financial      
Services BV      
2.750%, 11/15/2019 EUR 100,000 140,807
Air Jamaica, Ltd.      
9.375%, 07/08/2015 $ 16,429 16,716
Aircastle, Ltd.      
6.250%, 12/01/2019   400,000 433,000
7.625%, 04/15/2020   25,000 28,695
Alfa SAB de CV      
6.875%, 03/25/2044 (S)   200,000 225,500
Allegiant Travel Company      
5.500%, 07/15/2019   175,000 181,563
American Airlines 2013-1 Class A Pass      
Through Trust      
4.000%, 07/15/2025   422,182 431,681
American Airlines 2013-1 Class B Pass      
Through Trust      
5.625%, 01/15/2021   80,092 83,295
American Airlines 2013-1 Class C Pass      
Through Trust      
6.125%, 07/15/2018   200,000 208,000
American Airlines 2013-2 Class A Pass      
Through Trust      
4.950%, 01/15/2023   415,346 447,535

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
American Builders & Contractors Supply      
Company, Inc.      
5.625%, 04/15/2021 (S) $ 500,000 $ 508,750
Ashtead Capital, Inc.      
6.500%, 07/15/2022 (S)   375,000 407,813
Associated Materials LLC      
9.125%, 11/01/2017   425,000 426,063
Atlantia SpA      
4.500%, 02/08/2019 EUR 100,000 150,987
6.250%, 06/09/2022 GBP 20,000 39,751
BAE Systems PLC      
4.125%, 06/08/2022   100,000 174,772
BC Mountain LLC      
7.000%, 02/01/2021 (S) $ 425,000 401,625
BlueLine Rental Finance Corp.      
7.000%, 02/01/2019 (S)   250,000 264,375
Brunswick Rail Finance, Ltd.      
6.500%, 11/01/2017   250,000 235,000
Builders FirstSource, Inc.      
7.625%, 06/01/2021 (S)   250,000 261,250
Burlington Northern Santa Fe LLC      
5.050%, 03/01/2041   100,000 111,082
5.150%, 09/01/2043   475,000 532,380
5.400%, 06/01/2041   235,000 274,096
Case New Holland Industrial, Inc.      
7.875%, 12/01/2017   50,000 57,125
CDW LLC      
6.000%, 08/15/2022   375,000 395,156
Clean Harbors, Inc.      
5.125%, 06/01/2021   175,000 177,625
5.250%, 08/01/2020   175,000 179,813
CNH Industrial Finance Europe SA      
6.250%, 03/09/2018 EUR 425,000 631,320
Columbus McKinnon Corp.      
7.875%, 02/01/2019 $ 150,000 158,625
Continental Airlines 2009-1 Pass      
Through Trust      
9.000%, 07/08/2016   141,808 159,535
Continental Airlines 2009-2 Class A Pass      
Through Trust      
7.250%, 11/10/2019   28,024 32,823
Continental Airlines 2010-1 Class A Pass      
Through Trust      
4.750%, 01/12/2021   112,020 120,982
Continental Airlines 2012-1 Class A Pass      
Through Trust      
4.150%, 04/11/2024   361,297 373,942
Continental Airlines 2012-3 Class C Pass      
Through Trust      
6.125%, 04/29/2018   375,000 397,500
CRCC Yupeng, Ltd.      
3.950%, 08/01/2019 (P) (Q)   200,000 203,240
Delta Air Lines 2007-1 Class A Pass      
Through Trust      
6.821%, 08/10/2022   88,066 103,372
Delta Air Lines 2009-1 Class A Pass      
Through Trust      
7.750%, 12/17/2019   45,993 53,869
Delta Air Lines 2010-2 Class A Pass      
Through Trust      
4.950%, 05/23/2019   87,012 93,538

 

The accompanying notes are an integral part of the financial statements. 177

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
Delta Air Lines 2011-1 Class A Pass      
Through Trust      
5.300%, 04/15/2019 $ 61,351 $ 67,179
DP World, Ltd.      
6.850%, 07/02/2037   200,000 228,500
Ducommun, Inc.      
9.750%, 07/15/2018   300,000 327,750
Dycom Investments, Inc.      
7.125%, 01/15/2021   375,000 401,250
Eaton Corp.      
1.500%, 11/02/2017   105,000 105,018
ERAC USA Finance LLC      
1.400%, 04/15/2016 (S)   75,000 75,635
2.750%, 03/15/2017 (S)   110,000 113,699
2.800%, 11/01/2018 (S)   20,000 20,592
3.300%, 10/15/2022 (S)   25,000 25,103
3.850%, 11/15/2024 (S)   125,000 127,771
5.250%, 10/01/2020 (S)   150,000 170,536
5.600%, 05/01/2015 (S)   55,000 56,802
6.375%, 10/15/2017 (S)   100,000 114,272
Euramax International, Inc.      
9.500%, 04/01/2016   375,000 366,563
Europcar Groupe SA      
11.500%, 05/15/2017 (S) EUR 250,000 378,500
Ferreycorp SAA      
4.875%, 04/26/2020 (S) $ 200,000 200,000
FTI Consulting, Inc.      
6.000%, 11/15/2022   275,000 284,281
G4S International Finance PLC      
2.625%, 12/06/2018 EUR 100,000 138,898
G4S PLC      
7.750%, 05/13/2019 GBP 50,000 99,286
Gategroup Finance Luxembourg SA      
6.750%, 03/01/2019 (S) EUR 100,000 138,766
GATX Corp.      
1.250%, 03/04/2017 $ 100,000 99,427
2.375%, 07/30/2018   45,000 45,523
2.500%, 03/15/2019 to 07/30/2019   420,000 420,318
3.500%, 07/15/2016   440,000 459,370
4.850%, 06/01/2021   410,000 453,240
General Electric Company      
4.500%, 03/11/2044   180,000 196,107
Greater Toronto Airports Authority      
6.470%, 02/02/2034 (S) CAD 30,000 37,598
Heathrow Funding, Ltd.      
2.500%, 06/25/2015 (S) $ 245,000 248,098
4.600%, 02/15/2018 EUR 50,000 74,143
4.875%, 07/15/2021 (S) $ 595,000 654,159
5.225%, 02/15/2023 GBP 50,000 94,086
Interline Brands, Inc., PIK      
10.000%, 11/15/2018 $ 175,000 185,063
International Lease Finance Corp.      
2.181%, 06/15/2016 (P)   160,000 161,000
JB Hunt Transport Services, Inc.      
2.400%, 03/15/2019   45,000 45,375
Kansas City Southern de      
Mexico SA de CV      
2.350%, 05/15/2020   100,000 96,496
3.000%, 05/15/2023   355,000 345,339
Kratos Defense & Security Solutions, Inc.      
7.000%, 05/15/2019 (S)   125,000 129,063
KraussMaffei Group GmbH      
8.750%, 12/15/2020 (S) EUR 275,000 403,974

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
Loxam SAS      
7.000%, 07/23/2022 (S) EUR 225,000 $ 289,726
Manpowergroup, Inc.      
4.500%, 06/22/2018   100,000 147,269
Masonite International Corp.      
8.250%, 04/15/2021 (S) $ 125,000 135,625
Matalan Finance PLC      
6.875%, 06/01/2019 (S) GBP 225,000 369,799
Mersin Uluslararasi Liman Isletmeciligi      
AS      
5.875%, 08/12/2020 $ 270,000 287,577
Metropolitan Light International, Ltd.      
5.250%, 01/17/2018   600,000 612,750
Milacron LLC      
7.750%, 02/15/2021 (S)   350,000 377,125
MPL 2 Acquisition Canco, Inc.      
9.875%, 08/15/2018 (S)   300,000 320,250
National Express Group PLC      
6.250%, 01/13/2017 GBP 50,000 90,431
Navistar International Corp.      
8.250%, 11/01/2021 $ 250,000 259,375
Norcell Sweden Holding 2 AB      
10.750%, 09/29/2019 (S) EUR 165,341 244,515
Nortek, Inc.      
8.500%, 04/15/2021 $ 375,000 407,813
Odebrecht Drilling Norbe VIII/IX, Ltd.      
6.350%, 06/30/2021 (S)   87,500 94,019
Odebrecht Finance, Ltd.      
5.250%, 06/27/2029 (S)   205,000 207,819
7.125%, 06/26/2042 (S)   200,000 220,500
Odebrecht Offshore Drilling Finance, Ltd.      
6.750%, 10/01/2022 (S)   192,840 207,303
6.750%, 10/01/2022   192,840 207,303
Penske Truck Leasing Company LP      
2.500%, 03/15/2016 to 06/15/2019 (S)   440,000 446,142
2.875%, 07/17/2018 (S)   65,000 66,927
3.125%, 05/11/2015 (S)   60,000 60,996
Prosegur Cia de Seguridad SA      
2.750%, 04/02/2018 EUR 100,000 138,362
Rentokil Initial PLC      
5.750%, 03/31/2016 GBP 50,000 88,028
Republic Services, Inc.      
5.700%, 05/15/2041 $ 155,000 186,591
Rolls-Royce PLC      
7.375%, 06/14/2016 GBP 25,000 45,919
Roper Industries, Inc.      
1.850%, 11/15/2017 $ 40,000 40,257
2.050%, 10/01/2018   105,000 104,864
Safway Group Holding LLC      
7.000%, 05/15/2018 (S)   300,000 315,750
Southwest Airlines Company      
5.250%, 10/01/2014   190,000 190,629
5.750%, 12/15/2016   90,000 98,775
Summit Materials LLC      
10.500%, 01/31/2020   475,000 527,250
Tervita Corp.      
8.000%, 11/15/2018 (S)   375,000 389,063
10.875%, 02/15/2018 (S)   400,000 415,000
Textron, Inc.      
3.650%, 03/01/2021   165,000 170,623
4.300%, 03/01/2024   175,000 183,262

 

The accompanying notes are an integral part of the financial statements. 178

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Industrials (continued)      
The Kansas City Southern Railway      
Company      
4.300%, 05/15/2043 $ 705,000 $ 700,018
The Manitowoc Company, Inc.      
5.875%, 10/15/2022   275,000 294,938
8.500%, 11/01/2020   175,000 191,625
TransDigm, Inc.      
6.500%, 07/15/2024 (S)   200,000 205,000
TransUnion Holding Company, Inc.      
8.125%, 06/15/2018   175,000 182,000
Travelport LLC      
11.875%, 09/01/2016   150,000 150,000
Trinseo Materials Operating SCA      
8.750%, 02/01/2019   540,000 579,150
Turkiye Sise ve Cam Fabrikalari A/S      
4.250%, 05/09/2020 (S)   200,000 191,250
United Airlines 2013-1 Class A Pass      
Through Trust      
4.300%, 08/15/2025   240,000 246,000
United Airlines 2014-2 Class A Pass      
Through Trust      
3.750%, 09/03/2026   455,000 456,138
United Airlines 2014-2 Class B Pass      
Through Trust      
4.625%, 09/03/2022   65,000 65,000
United Continental Holdings, Inc.      
6.000%, 12/01/2020 to 07/15/2028   850,000 848,860
6.375%, 06/01/2018   325,000 342,875
United Technologies Corp.      
4.500%, 06/01/2042   150,000 161,654
US Airways 2010-1 Class A Pass      
Through Trust      
6.250%, 04/22/2023   84,664 95,670
US Airways 2012-2 Class A Pass      
Through Trust      
4.625%, 06/03/2025   363,245 384,132
US Airways 2012-2 Class B Pass      
Through Trust      
6.750%, 06/03/2021   38,376 41,734
US Airways 2013-1 Class A Pass      
Through Trust      
3.950%, 11/15/2025   245,000 249,288
USG Corp.      
5.875%, 11/01/2021 (S)   100,000 104,500
Valmont Industries, Inc.      
6.625%, 04/20/2020   140,000 166,381
Verisk Analytics, Inc.      
5.800%, 05/01/2021   115,000 130,268
Votorantim Cimentos SA      
3.250%, 04/25/2021 (S) EUR 100,000 134,517
Waste Management, Inc.      
2.600%, 09/01/2016 $ 110,000 113,494
6.375%, 03/11/2015   65,000 66,986
Watco Companies LLC      
6.375%, 04/01/2023 (S)   175,000 178,938
West Corp.      
7.875%, 01/15/2019   120,000 125,850
Xella Holdco Finance SA, PIK      
9.125%, 09/15/2018 EUR 100,000 139,279
 
      31,472,663
Information Technology - 1.8%      
ACI Worldwide, Inc.      
6.375%, 08/15/2020 (S) $ 150,000 156,750

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Information Technology (continued)      
Activision Blizzard, Inc.      
5.625%, 09/15/2021 (S) $ 750,000 $ 810,938
6.125%, 09/15/2023 (S)   200,000 220,000
Adria Bidco BV      
7.875%, 11/15/2020 (S) EUR 300,000 421,482
Alcatel-Lucent USA, Inc.      
6.750%, 11/15/2020 (S) $ 575,000 608,063
8.875%, 01/01/2020 (S)   225,000 250,313
Alliance Data Systems Corp.      
5.375%, 08/01/2022 (S)   250,000 251,250
6.375%, 04/01/2020 (S)   425,000 448,109
Altice Financing SA      
6.500%, 01/15/2022 (S)   725,000 763,063
8.000%, 12/15/2019 (S) EUR 100,000 144,173
Altice Finco SA      
8.125%, 01/15/2024 (S) $ 400,000 435,000
Ancestry.com, Inc., PIK      
9.625%, 10/15/2018 (S)   400,000 409,000
Anstock II, Ltd.      
2.125%, 07/24/2017   200,000 198,602
Arrow Electronics, Inc.      
3.000%, 03/01/2018   30,000 30,932
3.375%, 11/01/2015   105,000 107,962
4.500%, 03/01/2023   185,000 193,323
Avnet, Inc.      
4.875%, 12/01/2022   425,000 453,853
6.625%, 09/15/2016   45,000 49,801
Baidu, Inc.      
2.750%, 06/09/2019   650,000 652,155
BCP Singapore VI Cayman Financing      
Company, Ltd.      
8.000%, 04/15/2021 (S)   200,000 206,500
BMC Software Finance, Inc.      
8.125%, 07/15/2021 (S)   375,000 378,750
Cerved Group SpA      
6.375%, 01/15/2020 (S) EUR 100,000 140,264
Corelogic, Inc.      
7.250%, 06/01/2021 $ 525,000 556,500
Dell, Inc.      
4.625%, 04/01/2021   100,000 97,250
5.650%, 04/15/2018   200,000 210,500
5.875%, 06/15/2019   300,000 318,000
Eagle Midco, Inc.      
9.000%, 06/15/2018 (S)   450,000 462,375
EarthLink, Inc.      
7.375%, 06/01/2020   175,000 184,188
Epicor Software Corp.      
8.625%, 05/01/2019   325,000 348,563
Equinix, Inc.      
5.375%, 04/01/2023   325,000 331,500
Fidelity National      
Information Services, Inc.      
1.450%, 06/05/2017   70,000 69,954
3.500%, 04/15/2023   210,000 209,637
3.875%, 06/05/2024   335,000 341,188
First Data Corp.      
6.750%, 11/01/2020 (S)   358,000 387,535
12.625%, 01/15/2021   1,650,000 2,017,125
First Data Holdings, Inc., PIK      
14.500%, 09/24/2019 (S)   57,853 65,519
Fiserv, Inc.      
3.125%, 06/15/2016   330,000 342,328
3.500%, 10/01/2022   320,000 324,763

 

The accompanying notes are an integral part of the financial statements. 179

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Information Technology (continued)      
Fiserv, Inc. (continued)      
6.800%, 11/20/2017 $ 40,000 $ 46,025
Hewlett-Packard Company      
2.350%, 03/15/2015   140,000 141,413
2.625%, 12/09/2014   150,000 150,787
Infor Software Parent LLC, PIK      
7.125%, 05/01/2021 (S)   425,000 432,438
Infor US, Inc.      
9.375%, 04/01/2019   350,000 385,000
InterXion Holding NV      
6.000%, 07/15/2020 (S) EUR 100,000 139,055
Juniper Networks Inc.      
3.100%, 03/15/2016 $ 35,000 35,867
Lender Processing Services, Inc.      
5.750%, 04/15/2023   305,000 325,588
NXP BV      
5.750%, 02/15/2021 to 03/15/2023 (S)   475,000 499,438
Oracle Corp.      
0.814%, 01/15/2019 (P)   320,000 322,770
SunGard Data Systems, Inc.      
6.625%, 11/01/2019   235,000 246,163
Tencent Holdings, Ltd.      
2.000%, 05/02/2017 (S)   200,000 200,947
3.375%, 05/02/2019 (S)   315,000 321,750
Xerox Business Services LLC      
5.200%, 06/01/2015   130,000 134,419
Xerox Corp.      
2.950%, 03/15/2017   45,000 46,815
 
      17,025,683
Materials - 2.8%      
ABJA Investment Company Pte, Ltd.      
5.950%, 07/31/2024   200,000 203,250
AEP Industries, Inc.      
8.250%, 04/15/2019   250,000 260,000
Ainsworth Lumber Company, Ltd.      
7.500%, 12/15/2017 (S)   112,000 117,040
AK Steel Corp.      
8.375%, 04/01/2022   775,000 817,625
Aleris International, Inc.      
7.625%, 02/15/2018   150,000 155,625
7.875%, 11/01/2020   375,000 390,000
ALROSA Finance SA      
7.750%, 11/03/2020   200,000 206,594
Anglo American Capital PLC      
1.184%, 04/15/2016 (P) (S)   200,000 201,186
4.125%, 04/15/2021 (S)   200,000 206,474
ArcelorMittal      
5.750%, 08/05/2020   75,000 80,250
6.000%, 03/01/2021   325,000 350,188
6.125%, 06/01/2018   460,000 500,825
6.750%, 02/25/2022   425,000 474,385
10.350%, 06/01/2019   300,000 378,000
Ardagh Finance Holdings SA, PIK      
8.625%, 06/15/2019 (S)   200,000 207,250
Ardagh Packaging Finance PLC      
6.250%, 01/31/2019 (S)   200,000 202,000
7.000%, 11/15/2020 (S)   348,529 354,629
Beverage Packaging Holdings      
Luxembourg II SA      
6.000%, 06/15/2017 (S)   275,000 279,125
BlueScope Steel, Ltd.      
7.125%, 05/01/2018 (S)   375,000 393,750

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Materials (continued)      
Braskem Finance, Ltd.      
6.450%, 02/03/2024 $ 400,000 $ 430,600
Building Materials Corp. of America      
6.750%, 05/01/2021 (S)   325,000 348,563
Building Materials Holding Corp.      
9.000%, 09/15/2018 (S)   375,000 405,000
Carpenter Technology Corp.      
4.450%, 03/01/2023   75,000 77,709
5.200%, 07/15/2021   195,000 212,702
Celulosa Arauco y Constitucion SA      
4.500%, 08/01/2024 (S)   200,000 199,764
Cemex Finance LLC      
9.375%, 10/12/2022 (S)   540,000 637,200
Cemex SAB de CV      
5.234%, 09/30/2015 (P) (S)   230,000 236,762
7.250%, 01/15/2021 (S)   625,000 686,719
Ciech Group Financing AB      
9.500%, 11/30/2019 (S) EUR 275,000 409,213
Corp. Nacional del Cobre de Chile      
3.750%, 11/04/2020 (S) $ 315,000 328,082
5.625%, 10/18/2043 (S)   200,000 231,286
Eastman Chemical Company      
2.400%, 06/01/2017   140,000 143,393
Eldorado Gold Corp.      
6.125%, 12/15/2020 (S)   525,000 542,063
EuroChem Mineral & Chemical      
Company OJSC      
5.125%, 12/12/2017 (S)   200,000 192,000
5.125%, 12/12/2017   200,000 192,000
Evraz Group SA      
6.500%, 04/22/2020 (S)   200,000 178,000
6.500%, 04/22/2020   200,000 178,000
Exopack Holding Corp.      
10.000%, 06/01/2018 (S)   250,000 269,063
Ferrexpo Finance PLC      
7.875%, 04/07/2016   200,000 184,500
First Quantum Minerals, Ltd.      
7.250%, 05/15/2022 (S)   550,000 580,250
Fresnillo PLC      
5.500%, 11/13/2023 (S)   400,000 427,000
Goldcorp, Inc.      
2.125%, 03/15/2018   215,000 216,449
3.625%, 06/09/2021   250,000 256,838
3.700%, 03/15/2023   120,000 120,321
Grupo Cementos de Chihuahua SAB      
de CV      
8.125%, 02/08/2020 (S)   200,000 220,000
GTL Trade Finance, Inc.      
7.250%, 04/16/2044 (S)   200,000 211,250
Hexion US Finance Corp.      
6.625%, 04/15/2020   300,000 315,750
Holcim GB Finance, Ltd.      
8.750%, 04/24/2017 GBP 50,000 96,994
Holcim US Finance Sarl & Cie SCS      
5.150%, 09/12/2023 (S) $ 230,000 254,581
6.000%, 12/30/2019 (S)   495,000 576,435
Imperial Metals Corp.      
7.000%, 03/15/2019 (S)   350,000 329,875
INEOS Group Holdings SA      
6.125%, 08/15/2018 (S)   200,000 206,500
International Paper Company      
3.650%, 06/15/2024   245,000 244,927

 

The accompanying notes are an integral part of the financial statements. 180

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Materials (continued)      
JMC Steel Group      
8.250%, 03/15/2018 (S) $ 400,000 $ 405,000
Kerling PLC      
10.625%, 02/01/2017 (S) EUR 225,000 311,160
Lafarge SA      
4.750%, 09/30/2020   100,000 151,088
LYB International Finance BV      
4.000%, 07/15/2023 $ 320,000 338,520
Magnetation LLC      
11.000%, 05/15/2018 (S)   350,000 379,750
Martin Marietta Materials, Inc.      
1.331%, 06/30/2017 (P) (S)   130,000 130,397
4.250%, 07/02/2024 (S)   260,000 266,312
Momentive Performance Materials, Inc.      
8.875%, 10/15/2020 (H)   225,000 210,938
Novelis, Inc.      
8.750%, 12/15/2020   475,000 525,469
Packaging Corp. of America      
4.500%, 11/01/2023   170,000 183,412
Pfleiderer GmbH      
7.875%, 08/01/2019 (S) EUR 100,000 130,410
PolyOne Corp.      
5.250%, 03/15/2023 $ 250,000 258,125
7.375%, 09/15/2020   200,000 215,500
Rayonier AM Products, Inc.      
5.500%, 06/01/2024 (S)   250,000 245,000
Rio Tinto Finance USA PLC      
1.375%, 06/17/2016   385,000 388,880
Rock-Tenn Company      
3.500%, 03/01/2020   185,000 191,328
Ryerson, Inc.      
9.000%, 10/15/2017   450,000 479,250
11.250%, 10/15/2018   650,000 721,500
Samarco Mineracao SA      
4.125%, 11/01/2022 (S)   265,000 254,930
Sappi Papier Holding GmbH      
6.625%, 04/15/2021 (S)   400,000 420,000
8.375%, 06/15/2019 (S)   200,000 218,500
Southern Copper Corp.      
5.250%, 11/08/2042   265,000 257,265
Steel Dynamics, Inc.      
6.125%, 08/15/2019   225,000 240,750
SunCoke Energy Partners LP      
7.375%, 02/01/2020 (S)   150,000 160,500
Tekni-Plex, Inc.      
9.750%, 06/01/2019 (S)   171,000 187,673
The Dow Chemical Company      
2.500%, 02/15/2016   265,000 271,758
4.250%, 11/15/2020   35,000 38,152
8.550%, 05/15/2019   140,000 178,358
United States Steel Corp.      
6.875%, 04/01/2021   300,000 322,875
US Coatings Acquisition, Inc.      
5.750%, 02/01/2021 (S) EUR 100,000 139,279
7.375%, 05/01/2021 (S) $ 175,000 190,750
Vale Overseas, Ltd.      
4.375%, 01/11/2022   210,000 219,118
6.250%, 01/23/2017   95,000 105,759
6.875%, 11/10/2039   100,000 119,230
Vale SA      
3.750%, 01/10/2023 EUR 100,000 145,027
Vedanta Resources PLC      
6.000%, 01/31/2019 (S) $ 300,000 312,000

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Materials (continued)      
Vedanta Resources PLC (continued)      
7.125%, 05/31/2023 (S) $ 400,000 $ 423,000
7.125%, 05/31/2023   400,000 423,000
8.250%, 06/07/2021 (S)   350,000 393,750
Votorantim Cimentos SA      
7.250%, 04/05/2041 (S)   640,000 688,384
Vulcan Materials Company      
7.500%, 06/15/2021   110,000 130,625
 
      27,290,707
Telecommunication Services - 3.3%      
Altice Finco SA      
9.000%, 06/15/2023 (S) EUR 400,000 603,103
9.875%, 12/15/2020 $ 200,000 226,866
9.875%, 12/15/2020 (S)   400,000 453,732
America Movil SAB de CV      
2.375%, 09/08/2016   200,000 204,860
3.625%, 03/30/2015   150,000 152,427
8.460%, 12/18/2036 MXN 1,000,000 76,303
AT&T, Inc.      
5.875%, 04/28/2017 GBP 50,000 91,529
B Communications, Ltd.      
7.375%, 02/15/2021 (S) $ 300,000 318,750
Banglalink Digital Communications, Ltd.      
8.625%, 05/06/2019 (S)   200,000 210,000
Bell Canada      
4.950%, 05/19/2021 CAD 125,000 129,093
Bharti Airtel International Netherlands BV      
4.000%, 12/10/2018 EUR 100,000 142,871
5.125%, 03/11/2023 (S) $ 215,000 227,416
5.125%, 03/11/2023   600,000 634,650
British Telecommunications PLC      
8.625%, 03/26/2020 GBP 30,000 64,693
Cable Communications Systems NV      
7.500%, 11/01/2020 (S) EUR 550,000 776,873
CC Holdings GS V LLC      
2.381%, 12/15/2017 $ 645,000 658,680
3.849%, 04/15/2023   945,000 959,248
CenturyLink, Inc.      
5.625%, 04/01/2020   375,000 396,563
Deutsche Telekom      
International Finance BV      
6.500%, 04/08/2022 GBP 10,000 20,322
7.375%, 12/04/2019   10,000 20,448
Digicel Group, Ltd.      
7.125%, 04/01/2022 (S) $ 275,000 285,313
Digicel, Ltd.      
6.000%, 04/15/2021 (S)   200,000 206,000
Eileme 2 AB      
11.625%, 01/31/2020 (S)   250,000 291,275
Eutelsat SA      
4.125%, 03/27/2017 EUR 50,000 71,190
GCX, Ltd.      
7.000%, 08/01/2019 (S) $ 200,000 207,868
Goodman Networks, Inc.      
12.125%, 07/01/2018   400,000 434,000
Grain Spectrum Funding LLC      
4.000%, 10/10/2018 (S)   505,000 509,232
GTP Acquisition Partners I LLC      
2.364%, 05/15/2018 (S)   610,000 604,230
4.347%, 06/15/2016 (S)   275,000 281,411
Intelsat Jackson Holdings SA      
5.500%, 08/01/2023   725,000 722,281
6.625%, 12/15/2022   550,000 574,750

 

The accompanying notes are an integral part of the financial statements. 181

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Telecommunication Services (continued)      
Intelsat Luxembourg SA      
7.750%, 06/01/2021 $ 700,000 $ 738,500
8.125%, 06/01/2023   300,000 324,750
Koninklijke KPN NV      
3.250%, 02/01/2021 EUR 100,000 144,090
Level 3 Financing, Inc.      
7.000%, 06/01/2020 $ 200,000 215,500
Matterhorn Financing & CY SCA, PIK      
9.000%, 04/15/2019 (S) EUR 350,000 470,230
9.000%, 04/15/2019   100,000 134,351
Matterhorn Midco & CY SCA      
7.750%, 02/15/2020 (S)   375,000 520,590
Mediacom Broadband LLC      
6.375%, 04/01/2023 $ 325,000 336,781
Millicom International Cellular SA      
6.625%, 10/15/2021 (S)   400,000 436,000
NII International Telecom SCA      
11.375%, 08/15/2019 (H) (S)   250,000 166,250
Orange SA      
8.000%, 12/20/2017 GBP 15,000 29,516
PCCW Capital No. 4, Ltd.      
5.750%, 04/17/2022 $ 200,000 217,168
Play Topco SA      
7.750%, 02/28/2020 (S) EUR 200,000 266,732
Qwest Corp.      
7.500%, 10/01/2014 $ 175,000 175,876
Rogers Communications, Inc.      
4.000%, 06/06/2022 CAD 75,000 72,414
6.750%, 03/15/2015 $ 165,000 170,407
Sable International Finance, Ltd.      
8.750%, 02/01/2020 (S)   200,000 220,000
SBA Tower Trust      
2.240%, 04/16/2018 (S)   125,000 123,730
2.933%, 12/15/2017 (S)   630,000 641,692
3.598%, 04/15/2018 (S)   570,000 572,453
Sistema JSFC      
6.950%, 05/17/2019   250,000 247,500
Sprint Communications, Inc.      
9.000%, 11/15/2018 (S)   295,000 350,681
11.500%, 11/15/2021   650,000 848,250
Sprint Corp.      
7.125%, 06/15/2024 (S)   2,125,000 2,167,500
T-Mobile USA, Inc.      
6.250%, 04/01/2021   475,000 492,813
6.633%, 04/28/2021   475,000 499,938
6.731%, 04/28/2022   900,000 949,500
Telecom Italia Capital SA      
5.250%, 10/01/2015   175,000 182,000
Telecom Italia SpA      
5.250%, 02/10/2022 EUR 50,000 73,575
5.303%, 05/30/2024 (S) $ 230,000 234,025
5.625%, 12/29/2015 GBP 50,000 86,517
6.375%, 06/24/2019   400,000 721,354
Telefonica Emisiones SAU      
4.693%, 11/11/2019 EUR 50,000 76,948
4.710%, 01/20/2020   100,000 154,657
5.375%, 02/02/2018 GBP 50,000 90,679
TELUS Corp.      
3.350%, 03/15/2023 CAD 65,000 60,014
UPC Holding BV      
6.750%, 03/15/2023 (S) EUR 200,000 288,520
6.750%, 03/15/2023 (S) CHF 175,000 209,703

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Telecommunication Services (continued)      
Verizon Communications, Inc.      
1.350%, 06/09/2017 $ 185,000 $ 185,028
2.625%, 02/21/2020 (S)   253,000 253,749
4.500%, 09/15/2020   670,000 736,179
5.050%, 03/15/2034   555,000 606,390
5.150%, 09/15/2023   345,000 390,656
6.400%, 09/15/2033   1,995,000 2,520,062
Vimpel Communications      
7.748%, 02/02/2021 (S)   200,000 201,000
7.748%, 02/02/2021   400,000 402,000
VimpelCom Holdings BV      
5.200%, 02/13/2019 (S)   200,000 189,332
7.504%, 03/01/2022 (S)   600,000 593,274
WaveDivision Escrow LLC      
8.125%, 09/01/2020 (S)   125,000 136,250
Wind Acquisition Finance SA      
4.750%, 07/15/2020 (S)   400,000 401,000
6.500%, 04/30/2020 (S)   275,000 294,250
7.000%, 04/23/2021 (S) EUR 100,000 140,658
7.375%, 04/23/2021 (S) $ 825,000 870,375
 
      32,187,384
Utilities - 1.8%      
AES Corp.      
5.500%, 03/15/2024   450,000 457,875
AmeriGas Finance LLC      
7.000%, 05/20/2022   375,000 406,875
Appalachian Power Company      
6.375%, 04/01/2036   115,000 150,353
Calpine Corp.      
5.375%, 01/15/2023   375,000 378,750
Centrica PLC      
5.125%, 12/10/2014 GBP 50,000 83,878
CMS Energy Corp.      
4.250%, 09/30/2015 $ 340,000 352,480
5.050%, 03/15/2022   200,000 226,974
Comision Federal de Electricidad      
4.875%, 01/15/2024 (S)   400,000 430,000
Constellation Energy Group, Inc.      
5.150%, 12/01/2020   80,000 89,705
Duke Energy Corp.      
1.625%, 08/15/2017   85,000 85,589
E.CL SA      
5.625%, 01/15/2021 (S)   100,000 109,510
Eastern Power Networks PLC      
5.750%, 03/08/2024 GBP 30,000 58,533
Electricite de France      
4.600%, 01/27/2020 (S) $ 300,000 333,960
Electricite de France SA      
1.150%, 01/20/2017 (S)   230,000 230,300
Enable Oklahoma Intrastate      
Transmission LLC      
6.250%, 03/15/2020 (S)   175,000 192,371
Enel Finance International NV      
3.875%, 10/07/2014 (S)   250,000 250,736
5.125%, 10/07/2019 (S)   220,000 244,774
5.625%, 08/14/2024 GBP 50,000 95,553
Enel SpA (5.000% to 01/15/2020, then      
5 Year Euro Swap Rate + 3.648%)      
01/15/2075 EUR 100,000 139,279
Energy Future Intermediate      
Holding Company LLC      
10.000%, 12/01/2020 $ 975,000 279
11.750%, 03/01/2022 (H) (S)   725,000 821,063

 

The accompanying notes are an integral part of the financial statements. 182

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Utilities (continued)      
ENN Energy Holdings, Ltd.      
6.000%, 05/13/2021 (S) $ 200,000 $ 224,726
6.000%, 05/13/2021   200,000 224,726
ESB Finance, Ltd.      
6.500%, 03/05/2020 GBP 50,000 96,835
Exelon Generation Company LLC      
6.250%, 10/01/2039 $ 335,000 399,217
FirstEnergy Corp.      
2.750%, 03/15/2018   180,000 182,039
4.250%, 03/15/2023   370,000 373,079
FirstEnergy Transmission LLC      
4.350%, 01/15/2025 (S)   465,000 476,135
Florida Gas Transmission Company LLC      
4.000%, 07/15/2015 (S)   75,000 77,045
Gas Natural Capital Markets SA      
4.500%, 01/27/2020 EUR 50,000 77,056
GDF Suez      
6.125%, 02/11/2021 GBP 50,000 99,424
GenOn Energy, Inc.      
9.500%, 10/15/2018 $ 525,000 557,813
Georgia Power Company      
0.551%, 03/15/2016 (P)   90,000 89,933
GNL Quintero SA      
4.634%, 07/31/2029 (S)   200,000 204,781
Iberdrola Finance Ireland, Ltd.      
3.800%, 09/11/2014 (S)   605,000 605,364
Infinis PLC      
7.000%, 02/15/2019 (S) GBP 200,000 349,462
IPALCO Enterprises, Inc.      
5.000%, 05/01/2018 $ 85,000 90,100
Israel Electric Corp., Ltd.      
6.875%, 06/21/2023 (S)   650,000 748,007
7.250%, 01/15/2019   200,000 225,100
Korea Hydro & Nuclear Power      
Company, Ltd.      
3.125%, 09/16/2015 (S)   200,000 204,357
Majapahit Holding BV      
7.750%, 01/20/2020   1,050,000 1,237,688
Mississippi Power Company      
2.350%, 10/15/2016   80,000 82,278
Monongahela Power Company      
5.700%, 03/15/2017 (S)   70,000 77,104
National Grid Gas PLC      
6.000%, 06/07/2017 GBP 30,000 55,590
NextEra Energy Capital Holdings, Inc.      
1.200%, 06/01/2015 $ 70,000 70,324
NGL Energy Partners LP      
5.125%, 07/15/2019 (S)   275,000 278,781
NiSource Finance Corp.      
6.250%, 12/15/2040   95,000 117,350
10.750%, 03/15/2016   115,000 129,446
Northumbrian Water Finance PLC      
6.000%, 10/11/2017 GBP 16,000 29,720
NRG Energy, Inc.      
6.250%, 07/15/2022 to 05/01/2024 (S) $ 525,000 547,313
6.625%, 03/15/2023   350,000 371,000
NRG Yield Operating LLC      
5.375%, 08/15/2024 (S)   275,000 284,625
Pennsylvania Electric Company      
6.150%, 10/01/2038   240,000 290,944
Perusahaan Gas Negara Persero Tbk PT      
5.125%, 05/16/2024 (S)   745,000 769,213

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Utilities (continued)      
Perusahaan Listrik Negara PT      
5.250%, 10/24/2042 $ 200,000 $ 182,250
PPL Capital Funding, Inc.      
1.900%, 06/01/2018   55,000 55,033
3.400%, 06/01/2023   215,000 217,055
3.500%, 12/01/2022   275,000 280,664
PPL WEM Holdings PLC      
3.900%, 05/01/2016 (S)   430,000 448,528
Public Service Company of Oklahoma      
5.150%, 12/01/2019   35,000 39,368
Ruwais Power Company PJSC      
6.000%, 08/31/2036 (S)   200,000 225,884
RWE Finance BV      
6.500%, 04/20/2021 GBP 20,000 39,575
Scottish Power UK PLC      
6.750%, 05/29/2023   6,000 12,314
8.375%, 02/20/2017   20,000 38,223
Severn Trent Utilities Finance PLC      
6.125%, 02/26/2024   20,000 40,293
Snam SpA      
5.000%, 01/18/2019 EUR 100,000 153,715
Southern Company      
1.950%, 09/01/2016 $ 115,000 117,584
Talent Yield Investments, Ltd.      
4.500%, 04/25/2022 (S)   200,000 209,900
TECO Finance, Inc.      
5.150%, 03/15/2020   190,000 213,926
6.572%, 11/01/2017   37,000 42,471
 
      17,102,195
TOTAL CORPORATE BONDS (Cost $356,822,730) $ 371,684,222
 
CAPITAL PREFERRED SECURITIES - 0.0%    
Financials - 0.0%      
GE Capital Trust IV (4.625% to      
09/15/2016, then month EURIBOR      
+1.600%)      
09/15/2066 EUR 50,000 68,490
The PNC Financial Services Group, Inc.      
(6.750% to 08/01/2021, then 3 month      
LIBOR + 3.678%)      
08/01/2021 (Q) $ 190,000 213,275
 
      281,765
TOTAL CAPITAL PREFERRED SECURITIES (Cost $256,314) $ 281,765
 
CONVERTIBLE BONDS - 0.1%      
Consumer Discretionary - 0.1%      
Central European Media Enterprises, Ltd.      
5.000%, 11/15/2015   600,000 585,000
TOTAL CONVERTIBLE BONDS (Cost $591,783) $ 585,000
 
MUNICIPAL BONDS - 0.6%      
Chicago Metropolitan Water Reclamation      
District (Illinois)      
5.720%, 12/01/2038   165,000 201,445
City of Chicago (Illinois)      
6.395%, 01/01/2040   150,000 195,581
City of New York (New York)      
6.271%, 12/01/2037   115,000 151,774
Commonwealth of Massachusetts      
4.500%, 08/01/2031   190,000 211,594

 

The accompanying notes are an integral part of the financial statements. 183

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
MUNICIPAL BONDS (continued)      
Commonwealth of Puerto Rico      
8.000%, 07/01/2035 $ 595,000 $ 545,151
Denver City & County School District      
No. 1 (Colorado)      
4.242%, 12/15/2037   130,000 130,720
District of Columbia      
5.591%, 12/01/2034   40,000 49,129
East Bay Municipal Utility District      
(California)      
5.874%, 06/01/2040   135,000 174,192
Florida Hurricane Catastrophe Fund      
Finance Corp., Series A      
1.298%, 07/01/2016   475,000 480,092
2.995%, 07/01/2020   265,000 269,407
Government Development Bank for      
Puerto Rico      
3.448%, 02/01/2015   70,000 67,141
3.800%, 08/01/2015   150,000 131,354
5.000%, 12/01/2015   310,000 290,442
Guam Power Authority      
7.500%, 10/01/2015   75,000 75,629
JobsOhio Beverage System      
4.532%, 01/01/2035   125,000 132,371
Los Angeles Department of Airports      
(California)      
7.053%, 05/15/2040   185,000 253,713
Maryland State Transportation Authority      
5.888%, 07/01/2043   125,000 160,455
Metropolitan Transportation Authority      
(New York)      
7.336%, 11/15/2039   55,000 83,796
New York City Municipal Water Finance      
Authority (New York)      
5.952%, 06/15/2042   95,000 126,322
Philadelphia Authority for Industrial      
Development (Pennsylvania)      
3.964%, 04/15/2026   555,000 557,470
Port Authority of New York & New Jersey      
4.458%, 10/01/2062   340,000 357,462
South Carolina State Public Service      
Authority      
4.322%, 12/01/2027   260,000 273,265
State of Oregon      
5.892%, 06/01/2027   60,000 73,675
University of California      
0.656%, 07/01/2041 (P)   85,000 85,376
Utility Debt Securitization Authority (New      
York)      
2.042%, 06/15/2021   170,000 170,765
Virginia Commonwealth Transportation      
Board      
5.350%, 05/15/2035   35,000 41,108
TOTAL MUNICIPAL BONDS (Cost $4,946,361) $ 5,289,429
 
TERM LOANS (M) - 1.4%      
Consumer Discretionary - 0.5%      
CityCenter Holdings LLC      
4.250%, 10/16/2020   525,000 524,081
Delta 2 Lux SARL      
4.750%, 07/30/2021   977,650 971,234
TBD 07/15/2022 (T)   175,000 175,875
Hilton Worldwide Finance LLC      
3.500%, 10/26/2020   71,053 70,530

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
TERM LOANS (M) (continued)      
Consumer Discretionary (continued)      
JC Penney Corp., Inc.      
6.000%, 05/22/2018 $ 893,057 $ 896,853
Las Vegas Sands LLC      
3.250%, 12/19/2020   218,900 218,250
McGraw-Hill Global Education      
Holdings LLC      
5.750%, 03/22/2019   169,009 169,854
MGM Resorts International      
3.500%, 12/20/2019   98,500 97,843
Station Casinos LLC      
4.250%, 03/02/2020   645,514 642,892
Univision Communications, Inc.      
4.000%, 03/01/2020   707,828 702,962
4.000%, 03/02/2020   246,875 245,156
Village Roadshow, Ltd.      
4.750%, 11/21/2017   66,938 67,440
Weight Watchers International, Inc.      
4.000%, 04/02/2020   447,733 351,750
 
      5,134,720
Consumer Staples - 0.1%      
HJ Heinz Company      
3.500%, 06/05/2020   198,000 197,728
PF Chang’s China Bistro, Inc.      
4.250%, 07/02/2019   696,446 680,196
 
      877,924
Energy - 0.1%      
Foresight Energy LLC      
5.500%, 08/19/2020   158,500 159,586
MEG Energy Corp.      
3.750%, 03/31/2020   123,107 122,777
Murray Energy Corp.      
5.250%, 12/05/2019   174,563 175,559
Philadelphia Energy Solutions Refining      
and Marketing LLC      
6.250%, 04/04/2018   472,295 443,957
TGGT Holdings LLC      
6.500%, 11/15/2018   292,500 294,877
 
      1,196,756
Financials - 0.2%      
Asurion LLC      
5.000%, 05/24/2019   647,686 649,189
8.500%, 03/03/2021   625,000 644,531
CeramTec Acquisition Corp.      
4.250%, 08/28/2020   6,967 6,959
Gardner Denver, Inc.      
4.250%, 07/30/2020   198,500 197,838
Nuveen Investments, Inc.      
4.157%, 05/15/2017   325,399 324,721
6.500%, 02/28/2019   200,000 200,100
Vantiv LLC      
3.750%, 05/12/2021   275,000 274,141
 
      2,297,479
Health Care - 0.1%      
Biomet, Inc.      
3.663%, 07/25/2017   181,220 180,909
Community Health Systems, Inc.      
4.250%, 01/27/2021   273,625 274,266
HCA, Inc.      
2.984%, 05/01/2018   350,632 349,682
Ortho-Clinical Diagnostics, Inc.      
4.750%, 06/30/2021   250,000 249,722

 

The accompanying notes are an integral part of the financial statements. 184

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
TERM LOANS (M) (continued)      
Health Care (continued)      
Surgery Center Holdings, Inc.      
TBD 07/09/2020 (T) $ 175,000 $ 174,781
      1,229,360
Industrials - 0.1%      
CeramTec GmbH      
4.250%, 08/28/2020   21,154 21,127
CeramTec Service GmbH      
4.250%, 08/31/2020   70,270 70,182
Husky Injection Molding Systems, Ltd.      
4.250%, 06/30/2021   150,000 149,562
Navistar, Inc.      
5.750%, 08/17/2017   150,000 151,125
Tervita Corp.      
6.250%, 05/15/2018   249,367 249,523
 
      641,519
Information Technology - 0.1%      
Activision Blizzard, Inc.      
3.250%, 10/12/2020   190,688 190,608
Dell International LLC      
4.500%, 04/29/2020   172,693 173,052
First Data Corp.      
4.155%, 03/24/2021   237,724 236,981
 
      600,641
Materials - 0.1%      
Eagle Spinco, Inc.      
3.500%, 01/27/2017   97,908 97,663
Univar, Inc.      
5.000%, 06/30/2017   296,170 296,232
 
      393,895
Telecommunication Services - 0.0%      
Intelsat Jackson Holdings SA      
3.750%, 06/30/2019   263,704 261,809
Utilities - 0.1%      
Equipower Resources Holdings LLC      
4.250%, 12/21/2018   560,155 559,980
4.250%, 12/31/2019   693,003 692,569
 
      1,252,549
TOTAL TERM LOANS (Cost $13,860,761)   $ 13,886,652
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 3.2%      
Commercial & Residential - 2.6%      
Adjustable Rate Mortgage Trust,      
Series 2005-8, Class 7A-31      
0.395%, 11/25/2035 (P)   4,192 4,147
Alternative Loan Trust, Series 2004-33,      
Class 4A1 2.542%, 12/25/2034 (P)   143,004 137,511
Banc of America      
Commercial Mortgage Trust, Inc.      
Series 2006-1, Class A4,      
5.372%, 09/10/2045 (P)   225,000 235,380
Series 2006-2, Class A4,      
5.920%, 05/10/2045 (P)   210,000 223,145
Series 2006-3, Class AM,      
6.047%, 07/10/2044 (P)   300,000 315,370
Series 2006-4, Class A4,      
5.634%, 07/10/2046   251,457 266,749
Series 2006-5, Class AM,      
5.448%, 09/10/2047   435,000 464,109

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Banc of America Commercial      
Mortgage Trust, Inc. (continued)      
Series 2007-4, Class A4,      
5.948%, 02/10/2051 (P) $ 113,765 $ 125,564
Series 2007-4, Class AM,      
6.015%, 02/10/2051 (P)   220,000 243,572
Banc of America Funding Corp.,      
Series 2005-A, Class 5A1      
0.456%, 02/20/2035 (P)   6,432 6,245
Banc of America Merrill Lynch      
Commercial Mortgage, Inc.      
Series 2005-3, Class A4,      
4.668%, 07/10/2043   305,000 311,429
Series 2007-1, Class AAB,      
5.422%, 01/15/2049   126,615 126,596
Series 2007-5, Class A4,      
5.492%, 02/10/2051   960,000 1,037,069
Banc of America Mortgage Securities      
Series 2005-B, Class 2A1,      
3.246%, 03/25/2035 (P)   105,566 97,495
Series 2004-A, Class 2A2,      
2.679%, 02/25/2034 (P)   44,668 44,715
Series 2004-D, Class 2A2,      
2.635%, 05/25/2034 (P)   21,908 22,074
Series 2004-H, Class 2A2,      
2.681%, 09/25/2034 (P)   59,633 59,720
Series 2004-I, Class 3A2,      
2.706%, 10/25/2034 (P)   13,030 13,026
Series 2005-J, Class 3A1,      
2.806%, 11/25/2035 (P)   96,099 90,853
Bear Stearns Alt-A Trust, Series 2006-1,      
Class 11A1 0.635%, 02/25/2036 (P)   166,651 138,714
Bear Stearns Commercial      
Mortgage Securities      
Series 2005-PWR7, Class A3,      
5.116%, 02/11/2041 (P)   351,839 355,086
Series 2006-PW14, Class A4,      
5.201%, 12/11/2038   95,000 102,277
Series 2006-PW3, Class A4,      
5.540%, 09/11/2041   602,932 643,727
Series 2005-PWR8, Class A4,      
4.674%, 06/11/2041   276,962 281,669
Series 2006-T24, Class A4,      
5.537%, 10/12/2041   105,593 113,835
Capital Auto Receivables Asset Trust,      
Series 2014-3, Class A3      
1.480%, 11/20/2018   115,000 114,981
Citigroup Commercial Mortgage Trust      
Series 2013-GC17, Class A1,      
1.102%, 11/10/2046   104,668 104,557
Series 2014-GC21, Class A1,      
1.242%, 05/10/2047   115,786 115,431
Series 2014-GC21, Class AS,      
4.026%, 05/10/2047   615,000 638,573
Citigroup/Deutsche Bank Commercial      
Mortgage Trust, Series 2007-CD4,      
Class AMFX 5.366%, 12/11/2049 (P)   590,000 619,763
COBALT CMBS Commercial      
Mortgage Trust, Series 2007-C3,      
Class AM 5.969%, 05/15/2046 (P)   150,000 163,611

 

The accompanying notes are an integral part of the financial statements. 185

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Commercial Mortgage Pass      
Through Certificates      
Series 2005-C6, Class A5B,      
5.167%, 06/10/2044 (P) $ 45,000 $ 46,562
Series 2012-LC4, Class A1,      
1.156%, 12/10/2044   28,851 29,021
Series 2013-CR13, Class C,      
4.915%, 12/10/2023 (P)   165,000 172,426
Series 2014-CR15, Class A1,      
1.218%, 02/10/2047   314,278 312,911
Series 2014-CR15, Class C,      
4.921%, 02/10/2047 (P)   145,000 151,963
Series 2014-CR17, Class A1,      
1.275%, 05/10/2047   87,012 86,661
Series 2014-CR18, Class A1,      
1.442%, 07/15/2047   78,519 78,255
Series 2014-TWC, Class A,      
1.006%, 02/13/2032 (P) (S)   280,000 280,107
Series 2014-UBS2, Class A1,      
1.298%, 03/10/2047   75,786 75,374
Series 2014-UBS4, Class A1,      
1.309%, 08/10/2047   19,760 19,722
Commercial Mortgage Trust      
Series 2007-GG9, Class AM,      
5.475%, 03/10/2039   305,000 324,996
Series 2007-GG9, Class AMFX,      
5.475%, 03/10/2039   400,000 427,124
Credit Suisse Mortgage Capital      
Certificates, Series 2008-C1, Class A3      
6.173%, 02/15/2041 (P)   145,000 161,305
CSMC, Series 2014-ICE, Class A      
1.050%, 04/15/2027 (P) (S)   200,000 200,271
Deutsche Alt-A Securities, Inc. Mortgage      
Loan Trust, Series 2005-2, Class 1A1      
0.555%, 04/25/2035 (P)   107,117 95,419
DSLA Mortgage Loan Trust      
Series 2004-AR1, Class A1A,      
0.996%, 09/19/2044 (P)   110,561 106,534
Series 2004-AR4, Class 2A1A,      
0.516%, 01/19/2045 (P)   469,711 416,309
Fosse Master Issuer PLC      
Series 2011-1A, Class A5,      
3.234%, 10/18/2054 (P) (S)   200,000 202,923
Series 2012-1A, Class 3A1,      
1.731%, 10/18/2054 (P) (S)   210,000 215,894
GMAC Mortgage Corp. Loan Trust,      
Series 2005-AR3, Class 5A1      
5.062%, 06/19/2035 (P)   30,142 30,371
GreenPoint MTA Trust, Seres 2005-AR1,      
Class A1 0.395%, 06/25/2045 (P)   194,369 156,044
GS Mortgage Securities Corp. II      
Series 2006-GG6, Class A4,      
5.553%, 04/10/2038 (P)   215,000 224,632
Series 2014-GC20, Class B,      
4.529%, 04/10/2047 (P)   180,000 188,817
GS Mortgage Securities Corp. Trust,      
Series 2014-GC20, Class A1      
1.343%, 04/10/2047   61,876 61,742
GS Mortgage Securities Trust      
Series 2013-GC13, Class A1,      
1.206%, 07/10/2046   91,308 91,619

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
GS Mortgage Securities Trust (continued)      
Series 2014-GC22, Class A1,      
1.290%, 06/10/2047 $ 83,026 $ 82,651
HarborView Mortgage Loan Trust      
Series 2005-2, Class 2A1A,      
0.376%, 05/19/2035 (P)   55,055 48,564
Series 2006-9, Class 2A1A,      
0.366%, 11/19/2036 (P)   588,412 439,237
Holmes Master Issuer PLC      
Series 2012-1A, Class A2,      
1.884%, 10/15/2054 (P) (S)   506,834 510,563
Series 2012-3A, Class B1,      
2.434%, 10/15/2054 (P) (S)   250,000 259,551
HomeBanc Mortgage Trust      
Series 2005-4, Class A1,      
0.425%, 10/25/2035 (P)   162,720 146,142
Series 2005-4, Class A2,      
0.485%, 10/25/2035 (P)   111,768 100,800
IndyMac INDX Mortgage Loan Trust,      
Series 2005-AR18, Class 2A1B      
0.935%, 10/25/2036 (P)   234,286 184,588
JPMBB Commercial      
Mortgage Securities Trust      
1.266%, 04/15/2047   96,633 96,346
4.243%, 04/15/2047 (P)   200,000 211,560
Series 2014-C21, Class A1,      
1.322%, 08/15/2047   59,308 59,110
Series 2014-C22, Class A1,      
1.451%, 09/15/2047   35,000 34,947
JPMorgan Alternative Loan Trust,      
Series 2007-A2, Class 12A3      
0.345%, 06/25/2037 (P)   77,313 72,631
JPMorgan Chase Commercial      
Mortgage Securities Corp.      
Series 2004-CBX, Class A6,      
4.899%, 01/12/2037   71,678 71,705
Series 2006-LDP8, Class AJ,      
5.480%, 05/15/2045 (P)   75,000 78,878
Series 2007-CB19, Class A4,      
5.892%, 02/12/2049 (P)   735,000 802,906
Series 2007-LD12, Class A4,      
5.882%, 02/15/2051 (P)   340,000 371,959
Series 2012-C6, Class A1,      
1.031%, 05/15/2045   11,490 11,518
Series 2013-C16, Class A1,      
1.223%, 12/15/2046   155,981 155,710
Series 2006-LDP9, Class A3,      
5.336%, 05/15/2047   878,931 945,268
JPMorgan Chase Commercial      
Mortgage Securities Trust      
Series 2007-CB18, Class A4,      
5.440%, 06/12/2047   899,671 972,974
Series 2007-CB19, Class AM,      
5.892%, 02/12/2049 (P)   740,000 796,899
Series 2007-LD11, Class AM,      
5.985%, 06/15/2049 (P)   80,000 84,424
Series 2007-LD12, Class AM,      
6.217%, 02/15/2051 (P)   270,000 299,067
Series 2014-C20, Class A1,      
1.268%, 07/15/2047   72,827 72,510
Series 2005-LDP4, Class ASB,      
4.824%, 10/15/2042 (P)   38,013 38,177

 

The accompanying notes are an integral part of the financial statements. 186

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
JPMorgan Mortgage Trust,      
Series 2005-ALT1, Class 1A1      
0.455%, 10/25/2035 (P) $ 184,599 $ 141,029
LB-UBS Commercial Mortgage Trust      
Series 2004-C1, Class A4,      
4.568%, 01/15/2031   5,770 5,935
Series 2005-C5, Class A4,      
4.954%, 09/15/2030   34,100 34,838
Series 2005-C7, Class A4,      
5.197%, 11/15/2030 (P)   60,000 61,391
Series 2006-C6, Class A4,      
5.372%, 09/15/2039   110,000 118,075
Series 2007-C1, Class A4,      
5.424%, 02/15/2040   133,405 144,530
Series 2007-C2, Class AM,      
5.493%, 02/15/2040 (P)   225,000 240,007
Series 2007-C6, Class AM,      
6.114%, 07/15/2040 (P)   175,000 192,237
Series 2008-C1, Class A2,      
6.320%, 04/15/2041 (P)   630,000 709,648
Series 2008-C1, Class AM,      
6.320%, 04/15/2041 (P)   65,000 72,971
Series 2006-C7, Class A3,      
5.347%, 11/15/2038   311,000 336,098
Merrill Lynch Mortgage Investors Trust,      
Series 2005-A9, Class 2A1C      
2.504%, 12/25/2035 (P)   125,000 121,252
Merrill Lynch Mortgage Trust      
Series 2006-C2, Class AM,      
5.782%, 08/12/2043 (P)   295,000 317,771
Series 2008-C1, Class A4,      
5.690%, 02/12/2051   292,495 323,914
Morgan Stanley Bank of America      
Merrill Lynch Trust      
Series 2013-C11, Class A1,      
1.308%, 08/15/2046   153,264 153,843
Series 2013-C12, Class A1,      
1.313%, 10/15/2046   182,675 183,060
Series 2014-C14, Class A1,      
1.250%, 02/15/2047   70,486 70,194
Series 2014-C15, Class B,      
4.565%, 04/15/2047 (P)   135,000 141,693
Series 2014-C16, Class A1,      
1.294%, 06/15/2047   63,567 63,191
Series 2014-C17, Class A1,      
1.551%, 08/15/2047   50,000 49,987
Morgan Stanley Capital I Trust      
Series 2005-T17, Class A5,      
4.780%, 12/13/2041   36,085 36,182
Series 2006-HQ9, Class A4,      
5.731%, 07/12/2044 (P)   210,040 223,622
Series 2007-IQ14, Class AM,      
5.869%, 04/15/2049 (P)   105,000 111,152
Series 2007-IQ14, Class AMFX,      
5.869%, 04/15/2049 (P)   340,000 359,484
Sequoia Mortgage Trust      
Series 2010-H1, Class A1,      
3.189%, 02/25/2040 (P)   3,622 3,552
Series 2013-6, Class A1,      
2.500%, 05/25/2043 (P)   341,214 322,394
Series 2013-7, Class A2,      
3.000%, 06/25/2043 (P)   170,023 165,686

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
STARM Mortgage Loan Trust,      
Series 2007-2, Class 5A1      
5.568%, 04/25/2037 (P) $ 114,974 $ 105,608
Vendee Mortgage Trust, Series 1996-3,      
Class 4 9.580%, 03/15/2025 (P)   2,401 2,623
Wachovia Bank Commercial      
Mortgage Trust, Series 2007-C34,      
Class A3 5.678%, 05/15/2046   100,000 109,264
WaMu Mortgage Pass      
Through Certificates      
Series 2005-AR11, Class A1C3,      
0.665%, 08/25/2045 (P)   123,959 109,978
Series 2005-AR12, Class 2A1,      
2.426%, 09/25/2035 (P)   28,330 28,831
Series 2005-AR13, Class A1A1,      
0.445%, 10/25/2045 (P)   29,628 28,247
Wells Fargo Mortgage      
Backed Securities Trust      
Series 2004-G, Class A3,      
2.608%, 06/25/2034 (P)   32,896 33,101
Series 2006-2, Class 2A1,      
0.855%, 03/25/2036 (P)   113,595 92,254
Series 2003-O, Class 5A1,      
2.515%, 01/25/2034 (P)   50,402 50,498
WF-RBS Commercial Mortgage Trust      
Series 2011-C2, 1.283%, 05/15/2047   163,083 162,728
Series 2011-C2, 4.176%, 05/15/2047   325,000 342,012
Series 2013-C13, Class A4,      
3.001%, 05/15/2045   275,000 272,556
Series 2013-C16, Class A1,      
1.406%, 09/15/2046   83,974 84,197
Series 2014-C19, Class AS,      
4.271%, 03/15/2047   280,000 297,118
Series 2014-C19, Class B,      
4.723%, 03/15/2047 (P)   85,000 90,343
Series 2014-C21, Class A1,      
1.413%, 08/15/2047   135,000 134,852
Series 2014-LC14, Class A1,      
1.193%, 03/15/2047   106,121 105,738
 
      25,076,364
U.S. Government Agency - 0.6%      
Federal Home Loan Mortgage Corp.      
Series 199, Class PO,      
0.801%, 08/01/2028 (Z)   2,121 1,969
Series 2003-2627, Class IE IO,      
4.500%, 04/15/2018   266 1
Series 2014-DN3, Class M2,      
2.557%, 08/25/2024 (P)   250,000 254,136
Series 3153, Class UG,      
0.605%, 05/15/2036 (P)   37,106 37,235
Series 3913, Class FA,      
0.655%, 08/15/2041 (P)   203,136 204,828
Series 4077, Class MF,      
0.655%, 07/15/2042 (P)   345,219 344,317
Series K025, Class A1,      
1.875%, 04/25/2022   221,723 220,832
Series K502, Class A2,      
1.426%, 08/25/2017   400,000 402,399
Series K712, Class A1,      
1.369%, 05/25/2019   309,599 310,713

 

The accompanying notes are an integral part of the financial statements. 187

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Federal National Mortgage Association      
Series 2012-79, Class FM,      
0.605%, 07/25/2042 (P) $ 121,406 $ 121,788
Series 319, Class 2 IO,      
6.500%, 02/25/2032   6,338 1,222
Government National      
Mortgage Association      
4.750%, 07/16/2038   275,000 308,323
Series 1998-6, Class EA PO,      
0.311%, 03/16/2028 (Z)   10,852 10,329
Series 2004-43, Class D,      
4.994%, 03/16/2030 (P)   12,486 12,644
Series 2004-47, Class QV,      
6.000%, 09/16/2020   394,567 415,376
Series 2009-75, Class G,      
4.500%, 07/20/2030   6,227 6,312
Series 2010-103, Class IN IO,      
4.500%, 02/20/2039   193,927 21,053
Series 2010-109, Class CI IO,      
4.500%, 12/20/2037   1,000,583 113,860
Series 2010-127, Class JI IO,      
4.000%, 02/20/2039   786,894 90,706
Series 2010-127, Class PI IO,      
4.000%, 05/20/2033   57,791 1,764
Series 2010-128, Class JC,      
4.000%, 06/20/2039   60,000 65,022
Series 2010-144, Class BC,      
4.000%, 09/16/2039   285,000 307,701
Series 2010-164, Class VD,      
4.000%, 12/20/2030   400,000 436,094
Series 2010-165, Class IP IO,      
4.000%, 04/20/2038   2,271,923 281,209
Series 2010-42, Class PI IO,      
4.500%, 09/20/2037   2,432,692 255,167
Series 2010-84, Class NI IO,      
4.500%, 12/20/2036   691,308 35,441
Series 2010-87, Class HI, IO,      
4.500%, 11/20/2038   1,753,717 227,345
Series 2010-92, Class PI IO,      
4.500%, 11/20/2037   318,820 36,084
Series 2010-98, Class PI IO,      
4.500%, 10/20/2037   288,627 31,543
Series 2011-123, Class MA,      
4.000%, 07/20/2041   485,000 524,299
Series 2011-2, Class HI IO,      
4.000%, 12/20/2035   145,628 8,279
Series 2011-41 Class AI IO,      
4.500%, 12/20/2039   479,372 71,448
Series 2011-51, Class NX,      
4.000%, 10/20/2038   450,000 484,568
Series 2011-88, Class EI IO,      
4.500%, 11/20/2039   84,019 12,423
Series 2013-24, Class OI IO,      
4.000%, 02/20/2043   226,123 43,972
 
      5,700,402
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $30,517,462)   $ 30,776,766
 
ASSET BACKED SECURITIES - 3.3%      
Ally Auto Receivables Trust      
Series 2012-A, Class D,      
3.150%, 10/15/2018 (S)   195,000 201,085

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Ally Auto Receivables Trust (continued)      
Series 2012-A, Class C,      
2.400%, 11/15/2017 (S) $ 100,000 $ 102,563
Series 2014-SN1, Class A3,      
0.750%, 02/21/2017   160,000 159,831
Ally Master Owner Trust      
Series 2012-1, Class A1,      
0.955%, 02/15/2017 (P)   345,000 345,955
Series 2012-5, Class A,      
1.540%, 09/15/2019   535,000 533,659
Series 2013-1, Class A2,      
1.000%, 02/15/2018   200,000 200,415
Series 2014-1, Class A2,      
1.290%, 01/15/2019   125,000 125,239
American Express Credit      
Account Master Trust      
Series 2011-1, Class A,      
0.325%, 04/17/2017 (P)   215,000 215,009
Series 2012-5, Class C,      
1.070%, 05/15/2018 (S)   200,000 200,838
Series 2014-1, Class A,      
0.525%, 12/15/2021 (P)   365,000 365,250
Series 2014-2, Class A,      
1.260%, 01/15/2020   195,000 194,881
AmeriCredit      
Automobile Receivables Trust      
Series 2011-1, Class C,      
2.850%, 08/08/2016   58,916 59,272
Series 2011-5, Class A3,      
1.550%, 07/08/2016   17,540 17,545
Series 2012-1, Class A3,      
1.230%, 09/08/2016   13,962 13,968
Series 2012-1, Class B,      
1.730%, 02/08/2017   80,000 80,339
Series 2012-1, Class C,      
2.670%, 01/08/2018   30,000 30,486
Series 2012-5, Class C,      
1.690%, 11/08/2018   100,000 100,580
Series 2013-4, Class A3,      
0.960%, 04/09/2018   60,000 60,153
Series 2013-5, Class B,      
1.520%, 01/08/2019   140,000 139,732
Series 2014-2, Class B,      
1.600%, 07/08/2019   130,000 129,223
Series 2012-4, Class C,      
1.930%, 08/08/2018   140,000 141,615
ARI Fleet Lease Trust, Series 2014-A,      
Class A2      
0.810%, 11/15/2022 (S)   200,000 200,134
Avis Budget Rental Car      
Funding AESOP LLC      
Series 2013-1A, Class A,      
1.920%, 09/20/2019 (S)   410,000 408,302
Series 2013-2A, Class A,      
2.970%, 02/20/2020 (S)   300,000 307,380
Series 2014-1A, Class A,      
2.460%, 07/20/2020 (S)   585,000 588,400
BA Credit Card Trust, Series 2014-A2,      
Class A      
0.425%, 09/16/2019 (P)   475,000 475,505
BankBoston Home Equity Loan Trust,      
Series 1998-2, Class A6      
6.640%, 12/25/2028 (P)   12,882 12,911

 

The accompanying notes are an integral part of the financial statements. 188

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Barclays Dryrock Issuance Trust,      
Series 2014-2, Class A      
0.495%, 03/16/2020 (P) $ 215,000 $ 215,000
BMW Vehicle Lease Trust, Series 2013-1,      
Class A3      
0.540%, 09/21/2015   102,616 102,676
BMW Vehicle Owner Trust,      
Series 2011-A, Class A3      
0.760%, 08/25/2015   119 119
Cabela’s Master Credit Card Trust      
0.505%, 03/16/2020 (P)   75,000 74,944
Capital Auto Receivables Asset Trust      
Series 2013-1, Class A3,      
0.790%, 06/20/2017   220,000 220,340
Series 2013-1, Class B,      
1.290%, 04/20/2018   30,000 30,005
Series 2013-1, Class C,      
1.740%, 10/22/2018   30,000 29,978
Series 2013-2, Class A3,      
1.240%, 10/20/2017   175,000 176,110
Series 2013-4, Class A3,      
1.090%, 03/20/2018   840,000 841,577
Series 2014-1, Class A3,      
1.320%, 06/20/2018   135,000 135,681
Series 2014-1, Class B,      
2.220%, 01/22/2019   40,000 40,308
Series 2014-1, Class C,      
2.840%, 04/22/2019   55,000 55,736
Series 2014-2, Class A3,      
1.260%, 05/21/2018   270,000 270,138
Series 2014-2, Class B,      
2.030%, 12/20/2018   85,000 84,856
Series 2014-2, Class C,      
2.410%, 05/20/2019   75,000 74,892
CarMax Auto Owner Trust      
Series 2012-1, Class A3,      
0.890%, 09/15/2016   26,945 26,995
Series 2012-3, Class D,      
2.290%, 04/15/2019   150,000 151,822
Series 2013-3, Class A3,      
0.970%, 04/16/2018   325,000 326,368
Series 2014-1, Class B,      
1.690%, 08/15/2019   20,000 19,902
Series 2014-1, Class C,      
1.930%, 11/15/2019   30,000 29,846
Series 2014-1, Class D,      
2.430%, 08/17/2020   295,000 294,272
CCG Receivables Trust, Series 2014-1,      
Class A2      
1.060%, 11/15/2021 (S)   400,000 399,851
Chase Funding Mortgage Loan Asset-      
Backed Certificates      
Series 2002-2, Class 1M1,      
5.599%, 09/25/2031   10,331 10,109
Series 2002-4, Class 2A1,      
0.895%, 10/25/2032 (P)   5,416 5,092
Chase Issuance Trust      
Series 2013-A8, Class A8,      
1.010%, 10/15/2018   455,000 455,111
Series 2014-A5, Class A5,      
0.525%, 04/15/2021 (P)   370,000 370,572
CIT Equipment Collateral,      
Series 2012-VT1, Class A3      
1.100%, 08/22/2016 (S)   22,522 22,537

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Citibank Credit Card Issuance Trust      
Series 2013-A6, Class A6,      
1.320%, 09/07/2018 $ 150,000 $ 151,136
Series 2014-A2, Class A2,      
1.020%, 02/22/2019   310,000 309,330
CKE Restaurant Holdings, Inc.,      
Series 2013-1A, Class A2      
4.474%, 03/20/2043 (S)   642,719 656,676
CNH Equipment Trust      
Series 2012-A, Class A3,      
0.940%, 05/15/2017   112,977 113,143
Series 2012-D, Class B,      
1.270%, 05/15/2020   290,000 289,961
Series 2013-C, Class A3,      
1.020%, 08/15/2018   195,000 195,857
Series 2013-D, Class A3,      
0.770%, 10/15/2018   535,000 534,535
Series 2014-A, Class A3,      
0.840%, 05/15/2019   135,000 134,997
CNH Wholesale Master Note Trust,      
Series 2013-2A, Class A      
0.755%, 08/15/2019 (P) (S)   410,000 411,055
Countrywide Asset-Backed Certificates,      
Series 2004-BC1, Class M2      
1.760%, 01/25/2034 (P)   80,531 75,237
Diamond Resorts Owner Trust,      
Series 2013-2, Class A      
2.270%, 05/20/2026 (S)   351,052 353,990
Dominos Pizza Master Issuer LLC,      
Series 2012-1A, Class A2      
5.216%, 01/25/2042 (S)   657,050 697,365
Dryrock Issuance Trust, Series 2013-1,      
Class A      
0.495%, 07/16/2018 (P)   200,000 200,191
Enterprise Fleet Financing LLC      
Series 2013-1, Class A2,      
0.680%, 09/20/2018 (S)   135,038 135,059
Series 2013-2, Class A2,      
1.060%, 03/20/2019 (S)   438,464 439,997
Series 2014-1, Class A2,      
0.870%, 09/20/2019 (S)   200,000 200,046
Series 2014-2, Class A2,      
1.050%, 03/20/2020 (S)   435,000 435,239
Exeter Automobile Receivables Trust,      
Series 2014-2A, Class A      
1.060%, 08/15/2018 (S)   144,811 144,872
Ford Credit Auto Lease Trust      
Series 2012-B, Class B,      
1.100%, 12/15/2015 (S)   200,000 200,595
Series 2012-B, Class C,      
1.500%, 03/15/2017 (S)   200,000 200,897
Series 2013-B, Class B,      
1.230%, 11/15/2016   115,000 114,548
Series 2013-B, Class C,      
1.510%, 08/15/2017   80,000 80,193
Series 2014-B, Class A4,      
1.100%, 11/15/2017   105,000 105,025
Ford Credit Auto Owner Trust      
Series 2013-D, Class A3,      
0.670%, 04/15/2018   120,000 119,955
Series 2014-1, Class A,      
2.260%, 11/15/2025 (S)   225,000 227,021

 

The accompanying notes are an integral part of the financial statements. 189

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Ford Credit Floorplan Master Owner Trust      
Series 2010-3, Class A1,      
4.200%, 02/15/2017 (S) $ 205,000 $ 208,565
Series 2010-3, Class C,      
4.990%, 02/15/2017 (S)   630,000 642,768
Series 2014-4, Class A1,      
1.400%, 08/15/2019   155,000 154,640
GE Capital Credit Card Master Note Trust      
Series 2009-4, Class C,      
7.820%, 11/15/2017 (S)   100,000 101,508
Series 2010-1, Class C,      
5.750%, 03/15/2018 (S)   200,000 205,403
Series 2011-2, Class A,      
0.635%, 05/15/2019 (P)   190,000 190,439
Series 2012-2, Class A,      
2.220%, 01/15/2022   480,000 479,796
Series 2012-A, Class A,      
1.030%, 01/15/2018   195,000 195,409
GE Dealer Floorplan Master Note Trust      
Series 2012-4, Class A,      
0.596%, 10/20/2017 (P)   250,000 250,362
Series 2013-1, Class A,      
0.556%, 04/20/2018 (P)   205,000 205,593
Series 2014-1, Class A,      
0.536%, 07/20/2019 (P)   205,000 205,048
GE Equipment Small Ticket LLC      
Series 2013-1A, Class A3,      
1.020%, 02/24/2017 (S)   300,000 301,652
Series 2014-1A, Class A3,      
0.950%, 09/25/2017 (S)   285,000 285,364
GE Equipment Transportation LLC      
Series 2012-1, Class A3,      
0.990%, 11/23/2015   7,129 7,133
Series 2013-2, Class A3,      
0.920%, 09/25/2017   190,000 190,509
Series 2014-1, Class A4,      
1.480%, 08/23/2022   75,000 74,954
GreatAmerica Leasing Receivables      
Series 2014-1, Class A3,      
0.890%, 07/15/2017 (S)   165,000 164,907
Series 2014-1, Class A4,      
1.470%, 08/15/2020 (S)   135,000 134,503
GSAA Home Equity Trust      
Series 2005-11, Class 2A1,      
0.435%, 10/25/2035 (P)   55,620 51,869
Series 2005-14, Class 2A3,      
0.505%, 12/25/2035 (P)   81,527 67,891
Series 2005-MTR1, Class A4,      
0.525%, 10/25/2035 (P)   363,120 346,773
Series 2007-7, Class 2A1,      
0.200%, 07/25/2037 (P)   244,833 215,470
GSAA Trust, Series 2005-8, Class A3      
0.585%, 06/25/2035 (P)   229,041 218,881
Hilton Grand Vacations Trust,      
Series 2014-AA, Class A      
1.770%, 11/25/2026 (S)   467,848 467,184
Honda Auto Receivables Owner Trust      
Series 2013-4, Class A3,      
0.690%, 09/18/2017   320,000 320,231
Series 2013-4, Class A4,      
1.040%, 02/18/2020   125,000 125,022
HSI Asset Securitization Corp. Trust,      
Series 2007-WF1, Class 2A3      
0.325%, 05/25/2037 (P)   134,515 125,400

 

Spectrum Income Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Huntington Auto Trust      
Series 2011-1A, Class A3,      
1.010%, 01/15/2016 (S) $ 10,193 $ 10,199
Series 2011-1A, Class C,      
2.530%, 03/15/2017 (S)   175,000 177,802
Series 2012-1, Class A3,      
0.810%, 09/15/2016   143,779 144,010
Hyundai Auto Lease Securitization Trust,      
Series 2014-B, Class A4      
1.260%, 09/17/2018 (S)   135,000 135,082
Hyundai Auto Receivables Trust      
Series 2011-B, Class D,      
3.510%, 11/15/2017   130,000 133,992
Series 2012-A, Class A3,      
0.720%, 03/15/2016   20,595 20,602
Series 2013-A, Class A4,      
0.750%, 09/17/2018   175,000 174,774
Invitation Homes Trust      
Series 2013-SFR1, Class A,      
1.400%, 12/17/2030 (P) (S)   103,797 103,810
Series 2014-SFR1, Class A,      
1.155%, 06/17/2031 (P) (S)   260,000 258,317
John Deere Owner Trust, Series 2013-A,      
Class A3      
0.600%, 03/15/2017   185,000 185,341
Kubota Credit Owner Trust      
Series 2014-1A, Class A2,      
0.580%, 02/15/2017 (S)   175,000 174,984
Series 2014-1A, Class A4,      
1.670%, 07/15/2020 (S)   540,000 537,924
Mercedes-Benz Auto Lease Trust      
Series 2013-B, Class A3,      
0.620%, 07/15/2016   240,000 240,177
Series 2013-B, Class A4,      
0.760%, 07/15/2019   270,000 270,463
Mercedes-Benz Master Owner Trust,      
Series 2012-AA, Class A      
0.790%, 11/15/2017 (S)   185,000 185,308
MMAF Equipment Finance LLC,      
Series 2014-AA, Class A3      
0.870%, 01/08/2019 (S)   345,000 344,165
Motor PLC      
Series 2013-1A, Classs A1,      
0.655%, 02/25/2021 (P) (S)   135,417 135,474
Series 2014-1A, Class A1,      
0.635%, 08/25/2021 (P) (S)   205,067 204,974
Series 2012-A, Class A1C,      
1.286%, 02/25/2020 (S)   170,000 170,099
MVW Owner Trust      
2.150%, 04/22/2030 (S)   152,550 153,790
Navistar Financial      
Dealer Note Master Trust      
0.835%, 09/25/2018 (P) (S)   140,000 140,349
Series 2013-1, Class A,      
0.825%, 01/25/2018 (P) (S)   220,000 220,201
Nissan Auto Lease Trust, Series 2013-B,      
Class A3      
0.750%, 06/15/2016   140,000 139,953
Nissan Auto Receivables Owner Trust      
Series 2013-C, Class A3,      
0.670%, 08/15/2018   360,000 359,345
Series 2014-A, Class A3,      
0.720%, 08/15/2018   235,000 234,743

 

The accompanying notes are an integral part of the financial statements. 190

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
ASSET BACKED SECURITIES (continued)    
Nordstrom Private Label Credit Card      
Master Note Trust, Series 2011-1A,      
Class A      
2.280%, 11/15/2019 (S) $ 470,000 $ 479,478
Residential Asset Mortgage Products, Inc.,      
Series 2003-RZ2, Class A1      
4.100%, 04/25/2033 (P)   8,690 8,438
Sierra Timeshare      
Receivables Funding LLC      
Series 2013-1A, Class A,      
1.590%, 11/20/2029 (S)   161,191 161,816
Series 2013-2A, Class A,      
2.280%, 11/20/2025 (S)   197,870 200,465
Series 2013-3A, Class A,      
2.200%, 10/20/2030 (S)   248,326 249,821
Series 2014-1A, Class A,      
2.070%, 03/20/2030 (S)   444,373 445,445
Series 2014-2A, Class A,      
2.050%, 06/20/2031 (S)   118,415 118,152
SLM Student Loan Trust, Series 2008-4,      
Class A2      
1.284%, 07/25/2016 (P)   62,788 63,022
SMART Trust      
Series 2012-2USA, Class A4A,      
2.060%, 03/14/2018 (S)   480,000 484,836
Series 2012-4US, Class A3A,      
0.970%, 03/14/2017   208,679 209,159
Series 2012-4US, Class A4A,      
1.250%, 08/14/2018   190,000 190,145
Series 2013-1US, Class A3A,      
0.840%, 09/14/2016   85,162 85,245
Series 2013-1US, Class A4A,      
1.050%, 10/14/2018   105,000 104,592
Series 2013-2US, Class A4A,      
1.180%, 02/14/2019   235,000 234,272
Series 2014-1US, Class A3A,      
0.950%, 02/14/2018   225,000 224,308
Terwin Mortgage Trust,      
Series 2005-14HE, Class AF2      
4.849%, 08/25/2036 (P)   33,037 34,102
Toyota Auto Receivables Owner Trust,      
Series 2012-A, Class A3      
0.750%, 02/16/2016   29,290 29,329
Volkswagen Auto Lease Trust,      
Series 2014-A, Class A3      
0.800%, 04/20/2017   140,000 140,013
Volvo Financial Equipment LLC,      
Series 2014-1A, Class A3      
0.820%, 04/16/2018 (S)   105,000 104,870
Wheels SPV LLC      
Series 2012-1, Class A2,      
1.190%, 03/20/2021 (S)   33,043 33,076
Series 2014-1A, Class A2,      
0.840%, 03/20/2023 (S)   200,000 199,853
Series 2014-1A, Class A3,      
1.460%, 03/20/2023 (S)   200,000 199,392
World Omni Master Owner Trust,      
Series 2013-1, Class A      
0.505%, 02/15/2018 (P) (S)   115,000 115,119
TOTAL ASSET BACKED SECURITIES (Cost $31,190,494) $ 31,310,127
 
COMMON STOCKS - 12.6%      
Consumer Discretionary - 1.5%      
Altice SA (I)   2,822 $ 179,875

 

Spectrum Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Consumer Discretionary (continued)    
Cablevision Systems Corp., Class A (L) 31,500 $ 583,065
Carnival Corp. 28,200 1,068,216
Coach, Inc. 10,000 368,300
Comcast Corp., Class A 11,800 645,814
Ford Motor Company 42,600 741,666
General Motors Company 24,699 859,525
Genuine Parts Company 8,500 745,790
Johnson Controls, Inc. 17,100 834,651
Kohl’s Corp. 23,500 1,381,565
Liberty Global PLC, Series C (I) 2,100 88,053
Macy’s, Inc. 15,900 990,411
Mattel, Inc. 38,000 1,310,620
News Corp., Class A (I) 3,200 56,400
Pearson PLC 19,189 354,091
Staples, Inc. 61,800 721,824
The Madison Square    
Garden, Inc., Class A (I) 6,025 402,832
The New York Times Company, Class A 28,500 352,830
The Walt Disney Company 8,100 728,028
Tiffany & Company 900 90,846
Time Warner, Inc. 19,233 1,481,518
Whirlpool Corp. 900 137,718
 
    14,123,638
Consumer Staples - 0.6%    
Archer-Daniels-Midland Company 28,700 1,430,982
Avon Products, Inc. 45,100 633,204
Bunge, Ltd. 1,900 160,835
Campbell Soup Company (L) 24,300 1,089,126
ConAgra Foods, Inc. 3,200 103,040
McCormick & Company, Inc. 7,100 494,799
PepsiCo, Inc. 11,700 1,082,133
Procter & Gamble Company 2,200 182,842
The Clorox Company (L) 12,300 1,089,780
 
    6,266,741
Energy - 2.0%    
Anadarko Petroleum Corp. 9,400 1,059,286
Apache Corp. 26,000 2,647,580
BP PLC, ADR 13,900 664,976
Chevron Corp. 22,200 2,873,790
ConocoPhillips 7,100 576,662
CONSOL Energy, Inc. 23,500 946,580
Diamond Offshore Drilling, Inc. (L) 16,000 703,040
Exxon Mobil Corp. 24,100 2,396,986
Hess Corp. 17,300 1,749,030
Murphy Oil Corp. 21,300 1,330,611
Parsley Energy, Inc. (I) 6,500 142,480
Petroleo Brasileiro SA, ADR 25,800 504,906
Royal Dutch Shell PLC, ADR (L) 25,000 2,024,250
Schlumberger, Ltd. 10,900 1,195,076
Talisman Energy, Inc. 41,400 416,898
 
    19,232,151
Financials - 2.5%    
American Express Company 14,500 1,298,475
Bank of America Corp. 126,585 2,036,753
Digital Realty Trust, Inc. 9,600 626,400
JPMorgan Chase & Company 55,400 3,293,530
Legg Mason, Inc. 18,800 927,216
Loews Corp. 11,900 520,506
Marsh & McLennan Companies, Inc. 32,800 1,741,680
MetLife, Inc. 14,100 771,834
Northern Trust Corp. 19,500 1,352,325

 

The accompanying notes are an integral part of the financial statements. 191

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Financials (continued)    
Regions Financial Corp. 44,800 $ 454,720
Sun Life Financial, Inc. 14,100 524,379
SunTrust Banks, Inc. 32,600 1,241,408
The Allstate Corp. 6,300 387,387
The Bank of New York Mellon Corp. 1,000 39,180
The Chubb Corp. 6,300 579,285
The PNC Financial Services Group, Inc. 21,500 1,822,125
U.S. Bancorp 52,700 2,228,156
Wells Fargo & Company 53,700 2,762,328
Weyerhaeuser Company 31,389 1,065,657
Willis Group Holdings PLC 7,700 323,169
 
    23,996,513
Health Care - 0.8%    
Bristol-Myers Squibb Company 26,700 1,352,355
GlaxoSmithKline PLC 25,586 625,315
Johnson & Johnson 20,100 2,084,973
Merck & Company, Inc. 28,300 1,701,113
Pfizer, Inc. 54,406 1,598,992
Quest Diagnostics, Inc. 12,800 809,088
 
    8,171,836
Industrials - 1.8%    
Deere & Company 9,500 798,855
Eaton Corp. PLC 9,368 653,980
Emerson Electric Company 22,000 1,408,440
General Electric Company 136,700 3,551,466
Honeywell International, Inc. 15,800 1,504,634
Illinois Tool Works, Inc. 21,600 1,905,336
Joy Global, Inc. 13,900 877,785
Masco Corp. 30,700 720,529
Stanley Black & Decker, Inc. 11,700 1,070,550
The Boeing Company 10,600 1,344,080
United Continental Holdings, Inc. (I) 20,900 995,049
United Parcel Service, Inc., Class B 13,400 1,304,222
USG Corp. (I) (L) 16,800 486,696
Xylem, Inc. 22,100 823,446
 
    17,445,068
Information Technology - 1.4%    
Analog Devices, Inc. 17,600 899,712
Apple, Inc. 11,900 1,219,750
Applied Materials, Inc. 53,900 1,245,360
CA, Inc. 10,700 302,168
Cisco Systems, Inc. 45,800 1,144,542
Computer Sciences Corp. 9,900 591,921
Corning, Inc. 53,100 1,107,666
Dell, Inc. 93,900 1,354,680
Harris Corp. 17,500 1,249,325
International Business Machines Corp. 3,200 615,360
Microsoft Corp. 30,700 1,394,701
QUALCOMM, Inc. 15,200 1,156,720
Texas Instruments, Inc. 20,400 982,872
The Western Union Company (L) 27,100 473,437
 
    13,738,214
Materials - 0.7%    
E.I. du Pont de Nemours & Company 11,200 740,432
International Paper Company 32,900 1,594,005
MeadWestvaco Corp. 17,000 731,000
Newmont Mining Corp. 22,400 606,816
Nucor Corp. 21,400 1,162,448
Potash Corp. of Saskatchewan, Inc. 16,000 562,560

 

Spectrum Income Fund (continued)  
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Materials (continued)    
Vulcan Materials Company 15,100 $ 957,038
 
    6,354,299
Telecommunication Services - 0.5%    
AT&T, Inc. 52,835 1,847,112
CenturyLink, Inc. 18,975 777,785
T-Mobile US, Inc. (I) 5,700 171,456
Telefonica SA 24,867 394,510
Verizon Communications, Inc. 22,400 1,115,968
Verizon Communications, Inc. 3,991 198,964
Vodafone Group PLC 72,809 250,236
 
    4,756,031
Utilities - 0.8%    
AES Corp. 33,000 500,940
Duke Energy Corp. 20,043 1,482,982
Entergy Corp. 16,900 1,308,229
Exelon Corp. 30,200 1,009,284
FirstEnergy Corp. 23,000 787,520
NiSource, Inc. 41,100 1,630,437
Xcel Energy, Inc. 25,000 801,250
 
    7,520,642
TOTAL COMMON STOCKS (Cost $86,716,356) $ 121,605,133
 
PREFERRED SECURITIES - 0.1%    
Energy - 0.0%    
Penn Virginia Corp., 6.000% (S) 2,126 232,064
Financials - 0.1%    
Ally Financial, Inc., 7.000% (S) 750 754,055
American Tower Corp., 5.250% 1,249 141,437
Crown Castle International Corp., 4.500% 2,250 234,540
 
    1,130,032
TOTAL PREFERRED SECURITIES (Cost $1,175,611) $ 1,362,096
 
PURCHASED OPTIONS - 0.0%    
Call Options - 0.0%    
Over the Counter on 10 year    
U.S. Treasury Notes (Expiration Date:    
10/24/2014; Strike Price: $122.50;    
Counterparty: Goldman Sachs    
& Company) (I) 12,000 1,125
Over the Counter on the GBP vs. USD    
(Expiration Date: 01/05/2015; Strike    
Price: $1.70; Counterparty:    
JPMorgan Securities) (I) 1,100,000 29,279
Over the Counter on the GBP vs. USD    
(Expiration Date: 01/05/2015; Strike    
Price: $1.73; Counterparty:    
JPMorgan Securities) (I) 1,100,000 1,584
 
    31,988
TOTAL PURCHASED OPTIONS (Cost $33,883) $ 31,988
 
SECURITIES LENDING COLLATERAL - 0.5%    
John Hancock Collateral    
Investment Trust, 0.0970% (W) (Y) 460,468 4,607,945
TOTAL SECURITIES LENDING    
COLLATERAL (Cost $4,607,951) $ 4,607,945
 
SHORT-TERM INVESTMENTS - 3.1%    
U.S. Government - 0.0%    
U.S. Treasury Bill 0.020%, 01/08/2015 * $ 350,000 $ 349,975

 

The accompanying notes are an integral part of the financial statements. 192

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Spectrum Income Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
 
SHORT-TERM INVESTMENTS (continued)    
Money Market Funds - 2.9%      
T. Rowe Price Investment Reserve      
Fund, 0.0575% (Y)   27,898,098 $ 27,898,098
Repurchase Agreement - 0.2%      
Repurchase Agreement with State      
Street Corp. dated 08/29/2014 at      
0.000% to be repurchased at $1,984,000      
on 09/02/2014, collateralized by      
$2,055,000 U.S. Treasury Notes,      
0.625% due 11/30/2017 (valued at      
$2,026,209, including interest) $ 1,984,000 $ 1,984,000
TOTAL SHORT-TERM INVESTMENTS (Cost $30,232,034) $ 30,232,073
Total Investments (Spectrum Income Fund)    
(Cost $918,133,886) - 100.9%   $ 973,950,981
Other assets and liabilities, net - (0.9%)     (8,474,984)
TOTAL NET ASSETS - 100.0%   $ 965,475,997
 
SALE COMMITMENTS OUTSTANDING - (0.1)%    
U.S. Government Agency - (0.1)%      
Government National Mortgage      
Association 4.500%, TBA (C)   (935,000) (1,016,437)
TOTAL SALE COMMITMENTS      
OUTSTANDING (Cost $(1,015,205))   $ (1,016,437)
 
 
 
Strategic Equity Allocation Fund    
    Shares or  
    Principal  
    Amount Value
 
 
COMMON STOCKS - 94.3%      
Consumer Discretionary - 11.2%      
Auto Components - 0.6%      
Aisin Seiki Company, Ltd.   17,800 $ 658,818
American Axle &      
Manufacturing Holdings, Inc. (I)   8,259 149,488
BorgWarner, Inc.   45,069 2,802,841
Bridgestone Corp.   60,000 2,060,749
Cheng Shin Rubber Industry Company, Ltd. 175,516 405,164
Cie Generale des Etablissements Michelin   15,249 1,686,943
Continental AG   9,594 2,053,309
Cooper Tire & Rubber Company   7,662 236,219
Cooper-Standard Holding, Inc. (I)   1,684 110,319
Dana Holding Corp.   18,994 441,231
Delphi Automotive PLC   54,478 3,790,579
Denso Corp.   44,900 1,950,552
Dorman Products, Inc. (I)(L)   3,264 146,325
Drew Industries, Inc.   2,847 126,378
Federal-Mogul Holdings Corp. (I)   3,449 58,874
Fox Factory Holding Corp. (I)   1,361 20,714
Gentex Corp.   36,798 1,087,381
Gentherm, Inc. (I)   4,279 209,029
GKN PLC   152,207 887,530
Halla Visteon Climate Control Corp.   2,884 153,360
Hankook Tire Company, Ltd.   5,737 297,779
Hyundai Mobis   5,185 1,504,118
Hyundai Wia Corp.   1,192 262,309
Johnson Controls, Inc.   130,993 6,393,768
Koito Manufacturing Company, Ltd.   9,000 246,100
Magna International, Inc.   2,365 268,148
Modine Manufacturing Company (I)   5,895 83,827

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Auto Components (continued)    
Motorcar Parts of America, Inc. (I) 1,952 $ 59,185
NGK Spark Plug Company, Ltd. 16,500 481,779
NHK Spring Company, Ltd. 14,700 140,762
NOK Corp. 8,900 192,340
Nokian Renkaat OYJ 10,162 324,818
Pirelli & C. SpA 19,175 293,065
Remy International, Inc. 1,697 37,504
Shiloh Industries, Inc. (I) 1,134 18,949
Spartan Motors, Inc. 4,889 25,521
Standard Motor Products, Inc. 2,391 89,926
Stanley Electric Company, Ltd. 13,300 315,134
Stoneridge, Inc. (I) 3,813 47,510
Strattec Security Corp. 491 39,398
Sumitomo Electric Industries, Ltd. 69,100 1,013,012
Sumitomo Rubber Industries, Ltd. 15,900 227,400
Superior Industries International, Inc. 2,861 55,646
Tenneco, Inc. (I) 7,353 471,180
The Goodyear Tire & Rubber Company 54,730 1,421,338
The Yokohama Rubber Company, Ltd. 19,000 168,968
Tower International, Inc. (I) 2,474 82,953
Toyoda Gosei Company, Ltd. 6,000 114,363
Toyota Industries Corp. 15,100 725,856
Valeo SA 6,229 753,060
 
    35,191,519
Automobiles - 1.3%    
Astra International Tbk PT 2,443,108 1,581,834
Bayerische Motoren Werke AG 28,858 3,367,941
Brilliance China Automotive Holdings, Ltd. 254,000 468,662
Byd Company, Ltd., H Shares 53,494 379,788
China Motor Corp. 60,000 57,407
Chongqing Changan Automobile    
Company, Ltd., Class B 74,600 154,020
Daihatsu Motor Company, Ltd. 17,900 307,355
Daimler AG 83,974 6,888,772
Dongfeng Motor Group Company, Ltd.,    
H Shares 228,780 424,270
Fiat SpA (I) 70,728 691,723
Ford Motor Company 779,967 13,579,225
Ford Otomotiv Sanayi AS (I) 3,309 43,655
Fuji Heavy Industries, Ltd. 54,100 1,540,782
Geely Automobile Holdings, Ltd. 420,000 161,343
General Motors Company 259,341 9,025,067
Great Wall Motor Company, Ltd., H Shares 86,250 365,707
Guangzhou Automobile Group Company, Ltd.,    
H Shares 179,219 186,511
Harley-Davidson, Inc. 43,037 2,735,432
Honda Motor Company, Ltd. 150,900 5,122,485
Hyundai Motor Company 11,713 2,692,577
Isuzu Motors, Ltd. 110,000 761,276
Kia Motors Corp. 20,045 1,210,474
Mahindra & Mahindra, Ltd., ADR 1,434 33,412
Mahindra & Mahindra, Ltd., GDR 21,771 508,190
Mazda Motor Corp. 49,600 1,173,540
Mitsubishi Motors Corp. 60,000 683,265
Nissan Motor Company, Ltd. 231,000 2,218,876
Peugeot SA (I) 31,639 445,128
Renault SA 15,778 1,236,423
Suzuki Motor Corp. 33,400 1,086,593
Tata Motors, Ltd., ADR (L) 9,836 473,997
Thor Industries, Inc. 11,293 606,547
Tofas Turk Otomobil Fabrikasi AS 5,899 36,310
Toyota Motor Corp. 255,100 14,555,748
UMW Holdings BHD 30,600 120,022

 

The accompanying notes are an integral part of the financial statements. 193

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Automobiles (continued)    
Volkswagen AG 2,585 $ 580,796
Winnebago Industries, Inc. (I) 3,309 81,832
Yamaha Motor Company, Ltd. 24,400 452,032
Yulon Motor Company, Ltd. 94,000 151,025
 
    76,190,042
Distributors - 0.1%    
Core-Mark Holding Company, Inc. 2,819 135,763
Genuine Parts Company 30,257 2,654,749
Imperial Holdings, Ltd. 14,967 267,638
Jardine Cycle and Carriage, Ltd. 12,254 441,507
LKQ Corp. (I) 76,129 2,162,064
Pool Corp. 5,568 315,483
VOXX International Corp. (I) 2,269 22,463
 
    5,999,667
Diversified Consumer Services - 0.2%    
American Public Education, Inc. (I) 2,148 65,213
Apollo Education Group, Inc. (I) 25,009 694,500
Ascent Capital Group, Inc., Class A (I) 1,749 109,155
Benesse Holdings, Inc. 6,200 219,668
Bridgepoint Education, Inc. (I) 2,071 26,032
Bright Horizons Family Solutions, Inc. (I) 3,683 149,788
Capella Education Company 1,335 86,922
Career Education Corp. (I) 8,494 46,632
Carriage Services, Inc. 2,079 38,753
Chegg, Inc. (I)(L) 8,992 62,135
DeVry Education Group, Inc. 14,412 618,707
Estacio Participacoes SA 24,875 330,370
Graham Holdings Company, Class B 865 621,762
Grand Canyon Education, Inc. (I) 5,663 244,868
H&R Block, Inc. 54,127 1,814,878
Houghton Mifflin Harcourt Company (I) 13,217 253,766
ITT Educational Services, Inc. (I)(L) 2,885 24,321
K12, Inc. (I)(L) 4,157 78,276
Kroton Educacional SA 28,870 864,746
LifeLock, Inc. (I)(L) 9,831 145,695
Matthews International Corp., Class A 3,654 168,632
Regis Corp. 5,335 80,612
Service Corp. International 53,852 1,193,899
Sotheby’s (L) 24,768 1,010,782
Steiner Leisure, Ltd. (I) 1,848 78,577
Strayer Education, Inc. (I) 1,322 80,272
Universal Technical Institute, Inc. 2,953 32,985
Weight Watchers International, Inc. (L) 3,469 85,650
 
    9,227,596
Hotels, Restaurants & Leisure - 1.4%    
Accor SA 14,144 687,621
Bally Technologies, Inc. (I) 9,905 785,367
Belmond, Ltd., Class A (I) 11,677 149,232
Berjaya Sports Toto BHD 35,412 42,242
Biglari Holdings, Inc. (I)(L) 174 62,527
BJ’s Restaurants, Inc. (I) 2,930 109,201
Bloomin’ Brands, Inc. (I) 9,407 156,532
Bob Evans Farms, Inc. (L) 3,006 130,521
Boyd Gaming Corp. (I) 9,522 101,409
Bravo Brio Restaurant Group, Inc. (I) 2,627 37,934
Brinker International, Inc. 16,380 800,982
Buffalo Wild Wings, Inc. (I) 2,307 340,859
Caesars Acquisition Company, Class A (I)(L) 5,474 59,667
Caesars Entertainment Corp. (I)(L) 6,366 85,559
Carnival Corp. 86,470 3,275,484
Carnival PLC 17,053 638,746

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Hotels, Restaurants & Leisure (continued)    
Carrols Restaurant Group, Inc. (I) 6,154 $ 44,863
Chipotle Mexican Grill, Inc. (I) 6,127 4,158,089
Churchill Downs, Inc. 1,707 160,748
Chuy’s Holdings, Inc. (I) 2,060 54,178
Clubcorp Holdings, Inc. 2,898 53,787
Compass Group PLC 156,203 2,542,310
Cracker Barrel Old Country Store, Inc. (L) 2,279 228,834
Crown Resorts, Ltd. 32,272 476,688
Darden Restaurants, Inc. (L) 26,316 1,245,273
Del Frisco’s Restaurant Group, Inc. (I) 2,840 62,849
Denny’s Corp. (I) 10,794 73,723
Diamond Resorts International, Inc. (I) 4,394 109,938
DineEquity, Inc. 2,021 168,147
Domino’s Pizza, Inc. 14,029 1,058,488
Einstein Noah Restaurant Group, Inc. 2,529 35,988
Fiesta Restaurant Group, Inc. (I) 3,266 160,328
Flight Centre Travel Group, Ltd. 4,901 214,839
Formosa International Hotels Corp. 4,851 54,487
Galaxy Entertainment Group, Ltd. 195,000 1,466,968
Genting BHD 103,000 313,016
Genting Malaysia BHD 155,560 222,566
Genting Singapore PLC 683,400 667,004
Hotel Shilla Company, Ltd. 2,575 302,290
InterContinental Hotels Group PLC 22,153 849,171
International Game Technology 62,293 1,050,260
International Speedway Corp., Class A 10,576 354,190
Interval Leisure Group, Inc. 5,012 108,359
Isle of Capri Casinos, Inc. (I) 3,335 27,580
Jack in the Box, Inc. 4,897 291,127
Jamba, Inc. (I) 2,465 36,014
Kangwon Land, Inc. 9,082 323,161
Krispy Kreme Doughnuts, Inc. (I) 7,957 135,349
La Quinta Holdings, Inc. (I) 5,437 107,381
Life Time Fitness, Inc. (I)(L) 14,425 664,993
Marriott International, Inc., Class A 43,295 3,004,673
Marriott Vacations Worldwide Corp. (I) 3,406 202,964
McDonald’s Corp. 194,937 18,269,496
McDonald’s Holdings    
Company Japan, Ltd. (L) 6,200 152,818
MGM China Holdings, Ltd. 77,600 257,630
Minor International PCL 86,500 95,465
Minor International PCL, Foreign Shares 110,500 121,951
Morgans Hotel Group Company (I) 4,838 36,575
Multimedia Games Holding Company, Inc. (I) 3,750 104,288
Noodles & Company (I) 1,281 25,069
OPAP SA 16,897 270,608
Oriental Land Company, Ltd. 4,600 895,262
Panera Bread Company, Class A (I) 6,581 986,755
Papa John’s International, Inc. 3,736 147,946
Paradise Company, Ltd. 2,808 108,939
Penn National Gaming, Inc. (I) 9,475 106,973
Pinnacle Entertainment, Inc. (I)(L) 7,301 182,452
Popeyes Louisiana Kitchen, Inc. (I) 2,890 115,889
Potbelly Corp. (I)(L) 1,826 22,095
Red Robin Gourmet Burgers, Inc. (I) 1,748 92,819
Ruby Tuesday, Inc. (I) 7,502 46,287
Ruth’s Hospitality Group, Inc. 4,453 49,651
Sands China, Ltd. 202,452 1,318,021
Scientific Games Corp., Class A (I)(L) 6,254 63,478
Shangri-La Asia, Ltd. 112,500 174,177
SJM Holdings, Ltd. 161,384 406,666
Sodexo 7,774 766,775
Sonic Corp. (I) 6,605 139,432

 

The accompanying notes are an integral part of the financial statements. 194

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Hotels, Restaurants & Leisure (continued)    
Speedway Motorsports, Inc. 1,640 $ 30,504
Starbucks Corp. 148,472 11,552,606
Starwood Hotels & Resorts Worldwide, Inc. 37,840 3,198,994
Tabcorp Holdings, Ltd. 66,836 224,139
Tatts Group, Ltd. 125,573 389,675
Texas Roadhouse, Inc. 8,510 226,281
The Cheesecake Factory, Inc. 17,725 796,739
The Marcus Corp. 2,273 41,391
The Wendy’s Company 66,607 542,847
Tim Hortons, Inc. 1,534 123,307
TUI Travel PLC 46,692 288,870
Vail Resorts, Inc. 4,422 351,505
Whitbread PLC 16,840 1,227,970
William Hill PLC 80,493 468,101
Wyndham Worldwide Corp. 25,135 2,034,427
Wynn Macau, Ltd. 130,350 497,485
Wynn Resorts, Ltd. 15,976 3,081,451
Yum! Brands, Inc. 87,018 6,302,714
Zoe’s Kitchen, Inc. (I)(L) 768 22,403
 
    84,853,432
Household Durables - 0.6%    
Arcelik AS 11,245 67,370
Beazer Homes USA, Inc. (I) 3,333 62,827
Casio Computer Company, Ltd. (L) 19,400 338,615
Cavco Industries, Inc. (I) 1,109 79,216
Coway Company, Ltd. 4,167 349,716
CSS Industries, Inc. 1,116 28,212
Cyrela Brazil Realty SA Empreendimentos    
e Participacoes 22,761 144,283
D.R. Horton, Inc. 56,943 1,234,524
Electrolux AB 15,786 401,361
Ethan Allen Interiors, Inc. 3,129 78,945
Flexsteel Industries, Inc. 644 22,566
Garmin, Ltd. (L) 24,423 1,326,902
Haier Electronics Group Company, Ltd. 85,000 244,093
Harman International Industries, Inc. 13,527 1,556,687
Helen of Troy, Ltd. (I) 3,478 202,489
Hovnanian Enterprises, Inc., Class A (I)(L) 14,603 61,333
Husqvarna AB, B Shares 26,743 202,720
Iida Group Holdings Company, Ltd. 15,000 215,076
iRobot Corp. (I)(L) 3,586 116,294
Jarden Corp. (I) 30,260 1,809,245
KB Home (L) 32,864 583,336
La-Z-Boy, Inc. 6,351 135,530
Leggett & Platt, Inc. 26,976 946,588
Lennar Corp., Class A 34,942 1,369,028
LG Electronics, Inc. 8,010 597,535
LGI Homes, Inc. (I)(L) 1,941 37,112
Libbey, Inc. (I) 2,740 75,624
Lifetime Brands, Inc. 1,441 24,785
M/I Homes, Inc. (I) 2,971 67,620
MDC Holdings, Inc. (L) 14,577 422,879
Meritage Homes Corp. (I) 4,772 196,940
Mohawk Industries, Inc. (I) 12,106 1,767,718
NACCO Industries, Inc., Class A 643 33,436
Newell Rubbermaid, Inc. 54,816 1,837,432
Nikon Corp. 31,700 460,792
NVR, Inc. (I) 1,026 1,203,693
Panasonic Corp. 204,000 2,494,071
Persimmon PLC (I) 28,279 622,567
PulteGroup, Inc. 66,834 1,284,549
Rinnai Corp. 3,400 301,756
Sekisui Chemical Company, Ltd. 39,000 461,563

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Household Durables (continued)    
Sekisui House, Ltd. 51,100 $ 642,549
Sharp Corp. (I)(L) 142,000 448,286
Skullcandy, Inc. (I) 3,349 27,763
Sony Corp. 95,700 1,823,477
Standard Pacific Corp. (I) 17,499 146,467
Steinhoff International Holdings, Ltd. 172,718 851,592
Techtronic Industries Company 113,500 346,910
Tempur Sealy International, Inc. (I) 15,333 897,287
The Dixie Group, Inc. (I) 2,110 20,362
The Ryland Group, Inc. 5,703 211,581
Toll Brothers, Inc. (I) 40,352 1,436,128
TRI Pointe Homes, Inc. (I) 17,810 263,588
Tupperware Brands Corp. 12,724 932,160
Universal Electronics, Inc. (I) 1,974 107,919
WCI Communities, Inc. (I) 1,514 30,204
Whirlpool Corp. 15,318 2,343,960
William Lyon Homes, Class A (I) 2,138 54,583
 
    34,051,844
Internet & Catalog Retail - 0.8%    
Amazon.com, Inc. (I) 73,526 24,928,255
ASOS PLC (I) 5,033 237,299
B2W Cia Digital (I) 9,615 162,791
Blue Nile, Inc. (I) 1,589 45,128
Coupons.com, Inc. (I)(L) 1,535 23,455
Expedia, Inc. 20,337 1,746,948
FTD Companies, Inc. (I)(L) 2,442 80,879
HSN, Inc. 12,482 756,284
Lands’ End, Inc. (I)(L) 2,042 70,408
Netflix, Inc. (I) 11,823 5,647,138
Nutrisystem, Inc. 3,596 58,687
Orbitz Worldwide, Inc. (I) 6,607 54,177
Overstock.com, Inc. (I)(L) 1,567 27,689
PetMed Express, Inc. (L) 2,763 38,903
Rakuten, Inc. 73,800 956,029
RetailMeNot, Inc. (I)(L) 3,836 71,541
Shutterfly, Inc. (I) 4,752 242,400
The Priceline Group, Inc. (I) 10,342 12,868,654
TripAdvisor, Inc. (I) 21,941 2,174,134
ValueVision Media, Inc., Class A (I) 5,811 27,254
 
    50,218,053
Leisure Products - 0.2%    
Arctic Cat, Inc. 1,664 61,601
Black Diamond, Inc. (I)(L) 3,279 27,806
Brunswick Corp. 34,622 1,488,746
Callaway Golf Company 9,844 74,913
Escalade, Inc. 1,315 19,015
Giant Manufacturing Company, Ltd. 29,000 241,317
Hasbro, Inc. 22,775 1,199,218
JAKKS Pacific, Inc. (I)(L) 2,738 18,564
LeapFrog Enterprises, Inc. (I)(L) 8,355 54,140
Mattel, Inc. 66,810 2,304,277
Merida Industry Company, Ltd. 23,100 170,106
Namco Bandai Holdings, Inc. 16,500 462,053
Nautilus, Inc. (I) 4,112 48,604
Polaris Industries, Inc. 16,617 2,415,779
Sankyo Company, Ltd. 4,500 172,544
Sega Sammy Holdings, Inc. 17,300 330,289
Shimano, Inc. 7,300 871,427
Smith & Wesson Holding Corp. (I)(L) 6,665 73,782
Sturm Ruger & Company, Inc. (L) 2,376 119,774
Yamaha Corp. 15,600 224,207
 
    10,378,162

 

The accompanying notes are an integral part of the financial statements. 195

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Media - 2.7%    
AH Belo Corp., Class A 2,576 $ 29,676
Alibaba Pictures Group, Ltd. (I) 460,000 96,154
Altice SA (I) 4,557 290,465
AMC Entertainment Holdings, Inc., Class A 2,667 63,128
AMC Networks, Inc., Class A (I) 14,906 932,743
Astro Malaysia Holdings BHD 81,700 84,998
Axel Springer AG 3,378 200,698
BEC World PCL 123,700 183,969
British Sky Broadcasting Group PLC 96,421 1,397,924
Cablevision Systems Corp., Class A 41,970 776,865
Carmike Cinemas, Inc. (I) 2,821 95,547
CBS Corp., Class B 104,272 6,182,287
Central European Media    
Enterprises, Ltd., Class A (I)(L) 9,820 24,354
Cheil Worldwide, Inc. (I) 6,215 140,704
Cinedigm Corp., Class A (I) 10,484 19,605
Cinemark Holdings, Inc. 26,259 926,680
Comcast Corp., Class A 512,893 28,070,634
Cumulus Media, Inc., Class A (I) 16,563 76,024
Cyfrowy Polsat SA 13,165 105,297
Dentsu, Inc. 20,100 816,783
Dex Media, Inc. (I)(L) 2,016 23,003
DIRECTV (I) 92,452 7,992,475
Discovery Communications, Inc., Series A (I) 43,007 1,880,266
Discovery Communications, Inc., Series C (I) 43,007 1,848,011
DreamWorks Animation    
SKG, Inc., Class A (I) 18,143 396,152
Entercom Communications Corp., Class A (I) 3,571 32,603
Entravision Communications Corp., Class A 7,791 35,683
Eros International PLC (I) 2,479 40,284
Eutelsat Communications 12,451 415,380
Gannett Company, Inc. 44,364 1,497,729
Global Mediacom Tbk PT 762,900 126,194
Gray Television, Inc. (I) 6,066 60,235
Grupo Televisa SAB 296,700 2,201,979
Hakuhodo DY Holdings, Inc. 21,700 224,557
Harte-Hanks, Inc. 6,303 44,184
ITV PLC 354,908 1,244,317
JCDecaux SA 5,386 190,154
John Wiley & Sons, Inc., Class A 11,810 708,010
Journal Communications, Inc., Class A (I) 5,966 59,183
Kabel Deutschland Holding AG 1,889 267,135
Lagardere SCA 9,537 262,670
Lamar Advertising Company, Class A 16,556 868,859
Lee Enterprises, Inc. (I)(L) 6,776 27,511
Live Nation Entertainment, Inc. (I) 35,892 788,188
Loral Space & Communications, Inc. (I) 1,624 121,670
Martha Stewart Living    
Omnimedia, Inc., Class A (I) 4,422 19,059
MDC Partners, Inc., Class A 5,239 114,734
Media General, Inc. (I) 6,609 101,845
Media Nusantara Citra Tbk PT 595,300 142,751
Meredith Corp. 13,688 637,587
Naspers, Ltd. 32,394 4,131,920
National CineMedia, Inc. 7,449 108,755
New Media Investment Group, Inc. 4,011 70,072
News Corp., Class A (I) 98,356 1,733,525
Nexstar Broadcasting Group, Inc., Class A (L) 3,763 171,743
Omnicom Group, Inc. 50,972 3,670,494
Pearson PLC 76,013 1,402,654
ProSiebenSat.1 Media AG 19,091 765,546
Publicis Groupe SA 14,878 1,108,965
Radio One, Inc., Class D (I)(L) 3,960 11,920

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Media (continued)    
REA Group, Ltd. 4,669 $ 209,237
Reed Elsevier NV 36,590 834,711
Reed Elsevier PLC 107,785 1,759,100
Rentrak Corp. (I)(L) 1,252 63,927
RTLGroup SA 3,444 334,035
Scholastic Corp. 3,326 116,543
Scripps Networks Interactive, Inc., Class A 21,149 1,685,787
SES SA 24,971 924,316
SFX Entertainment, Inc. (I)(L) 5,659 40,009
Shaw Communications, Inc., Class B 4,259 107,288
Sinclair Broadcast Group, Inc., Class A (L) 8,402 244,078
Singapore Press Holdings, Ltd. (L) 179,000 594,504
Sizmek, Inc. (I) 3,184 28,019
Sky Deutschland AG (I) 37,431 331,025
Surya Citra Media Tbk PT 529,700 186,079
Telenet Group Holding NV (I) 4,630 270,619
The EW Scripps Company, Class A (I)(L) 3,816 72,351
The Interpublic Group of Companies, Inc. 83,813 1,636,868
The McClatchy Company, Class A (I)(L) 8,114 36,594
The New York Times Company, Class A 48,607 601,755
The Walt Disney Company 317,742 28,558,651
Thomson Reuters Corp. 4,050 153,463
Time Warner Cable, Inc. 54,972 8,132,008
Time Warner, Inc. 174,003 13,403,451
Time, Inc. (I) 41,471 973,739
Toho Company, Ltd. 10,500 243,148
Twenty-First Century Fox, Inc., Class A 377,748 13,379,834
Viacom, Inc., Class B 77,158 6,261,372
Wolters Kluwer NV 15,838 438,929
World Wrestling    
Entertainment, Inc., Class A (L) 3,573 51,951
WPP PLC 124,880 2,620,727
 
    160,356,655
Multiline Retail - 0.5%    
Big Lots, Inc. 13,990 648,437
Burlington Stores, Inc. (I) 3,544 126,414
Canadian Tire Corp., Ltd. 857 88,530
Dollar General Corp. (I) 59,752 3,823,530
Dollar Tree, Inc. (I) 40,745 2,184,951
Dollarama, Inc. 740 63,002
Don Quijote Company, Ltd. 5,500 291,641
El Puerto de Liverpool SAB de CV 21,600 247,669
Family Dollar Stores, Inc. 18,707 1,493,380
Far Eastern Department Stores Company, Ltd. 109,368 110,187
Fred’s, Inc., Class A 4,409 62,740
Golden Eagle Retail Group, Ltd. 48,000 58,871
Harvey Norman Holding, Ltd. 47,070 156,232
Hyundai Department Store Company, Ltd. 1,174 183,592
Intime Retail Group Company, Ltd. 107,000 97,320
Isetan Mitsukoshi Holdings, Ltd. 31,140 374,552
J Front Retailing Company, Ltd. 22,500 285,334
J.C. Penney Company, Inc. (I)(L) 76,864 830,131
Kohl’s Corp. 38,657 2,272,645
Lojas Americanas SA 13,553 78,709
Lojas Renner SA 10,572 361,861
Lotte Shopping Company, Ltd. 851 278,730
Macy’s, Inc. 71,058 4,426,203
Marks & Spencer Group PLC 151,420 1,081,584
Marui Group Company, Ltd. 22,200 186,744
Matahari Department Store Tbk PT 193,800 269,594
Next PLC 14,388 1,695,371
Nordstrom, Inc. 27,691 1,917,602
Shinsegae Company, Ltd. 532 122,320

 

The accompanying notes are an integral part of the financial statements. 196

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Multiline Retail (continued)    
Takashimaya Company, Ltd. 23,000 $ 196,639
Target Corp. 124,912 7,503,464
The Bon-Ton Stores, Inc. 2,205 23,285
Tuesday Morning Corp. (I)(L) 5,297 93,121
Woolworths Holdings, Ltd. 61,641 459,784
 
    32,094,169
Specialty Retail - 1.9%    
Aaron’s, Inc. 18,216 466,694
ABC-Mart, Inc. 2,400 122,983
Abercrombie & Fitch Company, Class A (L) 18,354 767,197
Advance Auto Parts, Inc. 18,399 2,509,992
Aeropostale, Inc. (I)(L) 9,561 40,061
America’s Car-Mart, Inc. (I)(L) 1,099 46,554
American Eagle Outfitters, Inc. (L) 66,814 940,741
ANN, Inc. (I) 17,503 725,324
Asbury Automotive Group, Inc. (I) 3,712 258,652
Ascena Retail Group, Inc. (I) 32,613 567,140
AutoNation, Inc. (I) 12,678 687,782
AutoZone, Inc. (I) 6,545 3,526,708
Barnes & Noble, Inc. (I)(L) 4,960 118,346
Bed Bath & Beyond, Inc. (I)(L) 40,170 2,581,324
Belle International Holdings, Ltd. 391,888 501,045
Best Buy Company, Inc. 54,529 1,738,930
Big 5 Sporting Goods Corp. 2,521 25,714
Brown Shoe Company, Inc. 5,338 159,286
Build-A-Bear Workshop, Inc. (I) 1,631 21,268
Cabela’s, Inc. (I)(L) 11,822 721,378
CarMax, Inc. (I) 43,558 2,282,439
Carphone Warehouse Group PLC 90,888 521,112
Chico’s FAS, Inc. 38,690 611,302
Christopher & Banks Corp. (I) 4,836 46,281
Citi Trends, Inc. (I) 2,114 49,172
Conn’s, Inc. (I)(L) 3,377 151,391
CST Brands, Inc. 19,071 664,434
Destination Maternity Corp. 1,969 38,061
Destination XL Group, Inc. (I) 5,408 27,040
Dick’s Sporting Goods, Inc. 25,054 1,129,184
Express, Inc. (I) 10,328 179,088
Fast Retailing Company, Ltd. 4,900 1,534,462
FF Group (I) 2,394 99,533
Five Below, Inc. (I)(L) 6,549 265,627
Foot Locker, Inc. 36,773 2,063,333
Francesca’s Holdings Corp. (I) 5,381 75,334
GameStop Corp., Class A (L) 23,010 971,022
Genesco, Inc. (I) 2,914 231,080
GOME Electrical Appliances Holdings, Ltd. 881,695 156,896
Group 1 Automotive, Inc. (L) 2,948 236,312
Guess?, Inc. 22,485 527,048
Haverty Furniture Companies, Inc. 2,454 57,105
Hennes & Mauritz AB, B Shares 62,658 2,670,713
Hibbett Sports, Inc. (I)(L) 3,159 143,513
Hikari Tsushin, Inc. 1,600 99,496
Home Product Center PCL 474,269 155,915
Hotai Motor Company, Ltd. 26,000 365,793
Inditex SA 122,898 3,560,396
JUMBO SA (I) 7,298 107,892
Kingfisher PLC 220,540 1,113,344
Kirkland’s, Inc. (I) 1,986 35,410
L Brands, Inc. 48,334 3,086,126
Lithia Motors, Inc., Class A 2,756 240,930
Lowe’s Companies, Inc. 196,655 10,326,354
Lumber Liquidators Holdings, Inc. (I)(L) 3,327 190,371
MarineMax, Inc. (I) 3,326 57,407

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Specialty Retail (continued)    
Mattress Firm Holding Corp. (I)(L) 1,829 $ 104,783
Monro Muffler Brake, Inc. 3,838 198,617
Mr. Price Group, Ltd. 19,118 367,372
Murphy USA, Inc. (I) 11,202 610,173
Nitori Holdings Company, Ltd. 6,400 384,141
O’Reilly Automotive, Inc. (I) 20,899 3,259,826
Office Depot, Inc. (I) 187,751 961,285
Outerwall, Inc. (I)(L) 2,494 146,971
PetSmart, Inc. (L) 19,646 1,406,064
Pier 1 Imports, Inc. 11,485 181,004
Rent-A-Center, Inc. (L) 19,740 549,956
Restoration Hardware Holdings, Inc. (I)(L) 3,792 318,035
Ross Stores, Inc. 41,846 3,156,025
Sanrio Company, Ltd. (L) 4,600 131,456
Sears Hometown and Outlet Stores, Inc. (I) 1,575 30,209
Select Comfort Corp. (I) 6,666 149,118
Shimamura Company, Ltd. 1,900 171,288
Shoe Carnival, Inc. 2,063 44,416
Signet Jewelers, Ltd. 20,227 2,384,156
Sonic Automotive, Inc., Class A 4,890 120,783
Sports Direct International PLC (I) 24,994 301,189
Stage Stores, Inc. 3,923 68,535
Staples, Inc. 129,041 1,507,199
Stein Mart, Inc. 3,685 45,878
Systemax, Inc. (I) 1,518 22,132
The Buckle, Inc. (L) 3,461 170,212
The Cato Corp., Class A 3,412 118,294
The Children’s Place Retail Stores, Inc. 2,660 143,002
The Container Store Group, Inc. (I)(L) 2,050 43,337
The Finish Line, Inc., Class A 5,933 175,795
The Foschini Group, Ltd. 16,690 180,362
The Gap, Inc. 51,228 2,364,172
The Home Depot, Inc. 269,807 25,226,955
The Men’s Wearhouse, Inc. 5,803 313,536
The Pep Boys - Manny, Moe & Jack (I) 6,594 73,325
The TJX Companies, Inc. 138,097 8,231,962
Tiffany & Company 21,865 2,207,053
Tile Shop Holdings, Inc. (I)(L) 3,560 41,118
Tractor Supply Company 27,423 1,835,970
Truworths International, Ltd. 31,661 221,154
Urban Outfitters, Inc. (I) 20,233 805,071
USS Company, Ltd. 20,400 336,527
Via Varejo SA (I) 10,603 118,416
Vitamin Shoppe, Inc. (I) 3,717 145,669
West Marine, Inc. (I) 3,083 33,821
Williams-Sonoma, Inc. 22,076 1,451,939
Winmark Corp. 346 24,981
Yamada Denki Company, Ltd. (L) 80,800 259,584
Zhongsheng Group Holdings, Ltd. 56,000 62,046
Zumiez, Inc. (I) 2,644 85,533
 
    111,888,480
Textiles, Apparel & Luxury Goods - 0.9%    
adidas AG 18,246 1,371,981
ANTA Sports Products, Ltd. 87,000 167,400
Asics Corp. 14,900 305,206
Burberry Group PLC 41,171 972,572
Carter’s, Inc. 13,540 1,120,841
Christian Dior SA 4,491 799,137
Cie Financiere Richemont SA 41,630 3,976,853
Coach, Inc. 54,314 2,000,385
Columbia Sportswear Company 1,677 127,720
Crocs, Inc. (I) 10,643 164,434
Culp, Inc. 1,366 24,984

 

The accompanying notes are an integral part of the financial statements. 197

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Textiles, Apparel & Luxury Goods (continued)    
Deckers Outdoor Corp. (I) 8,732 $ 805,440
Eclat Textile Company, Ltd. 18,720 156,714
Formosa Taffeta Company, Ltd. 82,000 87,171
Fossil Group, Inc. (I) 9,508 963,065
G-III Apparel Group, Ltd. (I) 2,185 180,350
Gildan Activewear, Inc. (L) 1,300 74,535
Hanesbrands, Inc. 25,113 2,578,603
Hugo Boss AG 2,704 379,426
Iconix Brand Group, Inc. (I) 5,599 233,086
Kate Spade & Company (I) 31,914 1,032,099
Kering 6,219 1,318,421
Li & Fung, Ltd. 491,200 610,111
Luxottica Group SpA 13,502 720,977
LVMH Moet Hennessy Louis Vuitton SA 22,926 3,980,055
Michael Kors Holdings, Ltd. (I) 35,447 2,840,014
Movado Group, Inc. 2,318 86,067
NIKE, Inc., Class B 145,493 11,428,475
Oxford Industries, Inc. 1,789 109,719
Pandora A/S 7,554 566,506
Perry Ellis International, Inc. (I)(L) 1,607 32,252
Pou Chen Corp. 224,000 259,332
PVH Corp. 16,256 1,897,725
Quiksilver, Inc. (I)(L) 16,510 48,044
Ralph Lauren Corp. 11,609 1,964,243
RG Barry Corp. 1,530 29,024
Ruentex Industries, Ltd. 61,000 148,111
Sequential Brands Group, Inc. (I) 2,299 30,692
Shenzhou International Group Holdings, Ltd. 49,000 153,103
Skechers U.S.A., Inc., Class A (I) 4,709 274,864
Steven Madden, Ltd. (I) 7,088 240,921
The Swatch Group AG (Swiss Exchange) 4,011 411,377
The Swatch Group AG, Bearer Shares 2,452 1,331,001
Tumi Holdings, Inc. (I)(L) 6,219 139,803
Under Armour, Inc., Class A (I)(L) 31,932 2,182,872
Unifi, Inc. (I) 1,869 53,285
Vera Bradley, Inc. (I)(L) 2,747 56,368
VF Corp. 67,875 4,352,145
Vince Holding Corp. (I) 1,386 50,312
Wolverine World Wide, Inc. 12,331 327,511
Yue Yuen Industrial Holdings, Ltd. 64,000 197,923
 
    53,363,255
    663,812,874
Consumer Staples - 8.4%    
Beverages - 1.8%    
AMBEV SA 396,005 2,883,574
Anadolu Efes Biracilik Ve Malt Sanayii AS 9,859 130,747
Anheuser-Busch InBev NV 71,688 7,997,008
Arca Continental SAB de CV 46,400 340,635
Asahi Group Holdings, Ltd. 35,900 1,133,005
Brown-Forman Corp., Class B 31,999 2,965,027
Carlsberg A/S, Class B 7,008 640,727
Coca-Cola Amatil, Ltd. 50,749 427,096
Coca-Cola Bottling Company Consolidated 581 43,203
Coca-Cola Company 745,688 31,110,103
Coca-Cola Enterprises, Inc. 46,333 2,213,791
Coca-Cola Femsa SAB de CV, Series L 48,700 530,694
Coca-Cola HBC AG (I) 18,593 436,893
Coca-Cola Icecek AS 3,632 85,634
Constellation Brands, Inc., Class A (I) 33,289 2,899,139
Diageo PLC 233,067 6,877,873
Dr. Pepper Snapple Group, Inc. 38,712 2,435,759
Fomento Economico Mexicano SAB de CV 224,200 2,173,977

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Beverages (continued)    
Heineken Holding NV 5,289 $ 365,257
Heineken NV 12,087 920,233
Hite Jinro Company, Ltd. 2,165 49,358
Kirin Holdings Company, Ltd. 75,100 1,006,897
Molson Coors Brewing Company, Class B 31,324 2,316,410
Monster Beverage Corp. (I) 26,718 2,362,138
National Beverage Corp. (I) 1,491 27,330
PepsiCo, Inc. 299,097 27,663,482
Pernod Ricard SA 17,436 2,057,003
Remy Cointreau SA 1,959 155,759
SABMiller PLC 89,435 4,941,693
Suntory Beverage & Food, Ltd. 12,900 473,088
The Boston Beer    
Company, Inc., Class A (I)(L) 1,016 224,516
Treasury Wine Estates, Ltd. 57,350 274,514
Tsingtao Brewery Company, Ltd., H Shares 30,000 228,259
 
    108,390,822
Food & Staples Retailing - 1.8%    
Aeon Company, Ltd. (L) 59,000 637,994
Alimentation Couche Tard, Inc., Class B 4,564 136,882
BIM Birlesik Magazalar AS 10,128 237,976
Carrefour SA 50,550 1,754,301
Casey’s General Stores, Inc. 4,662 334,219
Casino Guichard Perrachon SA 4,697 560,946
China Resources Enterprises, Ltd. 100,855 271,963
Colruyt SA 6,625 315,917
Controladora Comercial Mexicana SAB de CV 50,900 196,644
Costco Wholesale Corp. 86,445 10,466,761
CP ALL PCL 606,227 901,609
CVS Health Corp. 230,625 18,323,156
Delhaize Group SA 9,138 636,416
Distribuidora Internacional    
de Alimentacion SA 69,736 586,646
E-Mart Company, Ltd. 1,552 373,598
Empire Company, Ltd. 603 41,921
Eurocash SA 6,278 67,620
Fairway Group Holdings Corp. (I)(L) 2,775 12,460
FamilyMart Company, Ltd. 5,400 226,308
George Weston, Ltd. 547 43,350
Grupo Comercial Chedraui SA de CV 38,900 134,161
Ingles Markets, Inc., Class A 1,882 47,502
J Sainsbury PLC 114,739 554,001
Jeronimo Martins SGPS SA 36,363 493,195
Koninklijke Ahold NV 48,812 833,939
Lawson, Inc. 5,900 423,750
Loblaw Companies, Ltd. 2,463 122,776
Massmart Holdings, Ltd. 9,066 111,301
Metcash, Ltd. 78,720 206,669
Metro AG (I) 14,270 502,646
Metro, Inc. 978 63,404
Natural Grocers by    
Vitamin Cottage, Inc. (I)(L) 1,213 22,380
Olam International, Ltd. 55,789 118,318
Pick n Pay Stores, Ltd. 20,063 106,477
President Chain Store Corp. 62,000 469,910
PriceSmart, Inc. 2,288 205,051
Raia Drogasil SA 18,086 176,133
Roundy’s, Inc. 5,239 19,594
Safeway, Inc. 45,668 1,588,333
Seven & I Holdings Company, Ltd. 69,600 2,794,454
Shoprite Holdings, Ltd. 37,114 514,318
SpartanNash Company 4,548 97,737
Sun Art Retail Group, Ltd. (L) 195,000 231,668

 

The accompanying notes are an integral part of the financial statements. 198

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Food & Staples Retailing (continued)    
SUPERVALU, Inc. (I) 74,603 $ 712,459
Sysco Corp. 115,295 4,361,610
Tesco PLC 751,420 2,872,256
The Andersons, Inc. 3,411 234,574
The Chefs’ Warehouse, Inc. (I)(L) 2,222 41,974
The Fresh Market, Inc. (I)(L) 5,232 174,487
The Kroger Company 100,483 5,122,623
The Pantry, Inc. (I) 3,334 70,581
The SPAR Group, Ltd. 13,745 167,875
United Natural Foods, Inc. (I) 18,553 1,192,772
Wal-Mart de Mexico SAB de CV 609,200 1,654,752
Wal-Mart Stores, Inc. 317,933 24,003,942
Walgreen Company 173,162 10,479,764
Weis Markets, Inc. 1,330 57,124
Wesfarmers, Ltd. 100,494 4,068,359
Whole Foods Market, Inc. 72,479 2,836,828
WM Morrison Supermarkets PLC 195,040 575,315
Woolworths, Ltd. 110,298 3,728,118
 
    108,319,817
Food Products - 2.0%    
Ajinomoto Company, Inc. 54,000 878,999
Annie’s, Inc. (I)(L) 2,088 66,586
Archer-Daniels-Midland Company 129,080 6,435,929
Aryzta AG (I) 6,886 629,110
Associated British Foods PLC 33,063 1,572,739
Astra Agro Lestari Tbk PT 47,520 103,590
B&G Foods, Inc. 6,532 197,266
Barry Callebaut AG (I) 177 217,297
Biostime International Holdings, Ltd. 15,500 57,458
Boulder Brands, Inc. (I) 7,507 101,044
BRF SA 55,110 1,474,688
Cal-Maine Foods, Inc. 1,888 149,360
Calavo Growers, Inc. 1,685 65,631
Calbee, Inc. 6,800 234,878
Campbell Soup Company 35,433 1,588,107
Charoen Pokphand Foods PCL 394,709 364,558
Charoen Pokphand Indonesia Tbk PT 891,003 292,992
China Agri-Industries Holdings, Ltd. 182,784 74,519
China Huishan Dairy Holdings Company, Ltd. 502,000 115,844
China Mengniu Dairy Company, Ltd. 116,498 539,304
Chiquita Brands International, Inc. (I) 5,833 81,079
CJ CheilJedang Corp. 607 226,356
ConAgra Foods, Inc. 83,031 2,673,598
Danone SA 46,717 3,262,340
Darling International, Inc. (I) 19,925 384,154
Dean Foods Company (L) 34,907 564,795
Diamond Foods, Inc. (I) 2,639 72,757
Farmer Brothers Company (I) 1,101 25,730
Felda Global Ventures Holdings BHD 66,900 81,048
Flowers Foods, Inc. 44,328 867,942
Fresh Del Monte Produce, Inc. 4,321 138,013
General Mills, Inc. 121,234 6,471,471
Genting Plantations BHD 11,900 37,955
Golden Agri-Resources, Ltd. 788,240 321,786
Gruma SAB de CV, Class B (I) 20,000 228,405
Grupo Bimbo SAB de CV, Series A 189,700 600,286
Grupo Lala SAB de CV 71,300 184,892
Hormel Foods Corp. 26,240 1,329,843
Indofood CBP Sukses Makmur Tbk PT 140,700 126,263
Indofood Sukses Makmur Tbk PT 529,917 311,453
Ingredion, Inc. 18,810 1,500,286
Inventure Foods, Inc. (I) 2,891 35,039
IOI Corp. BHD 151,900 230,251

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Food Products (continued)    
J&J Snack Foods Corp. 1,810 $ 171,425
JBS SA 61,981 280,209
John B. Sanfilippo & Son, Inc. 1,099 33,805
Kellogg Company 50,277 3,266,497
Kerry Group PLC 2,564 192,449
Kerry Group PLC, Class A 11,241 845,724
Keurig Green Mountain, Inc. 25,037 3,337,933
Kikkoman Corp. 13,000 284,950
Kraft Foods Group, Inc. 117,432 6,916,745
Kuala Lumpur Kepong BHD 25,200 176,103
Lancaster Colony Corp. 7,127 630,098
Limoneira Company (L) 1,841 44,607
Lindt & Spruengli AG 82 889,708
Lotte Confectionery Company, Ltd. 55 117,695
M Dias Branco SA 2,834 127,869
McCormick & Company, Inc. 25,769 1,795,842
Mead Johnson Nutrition Company 39,864 3,810,998
MEIJI Holdings Company, Ltd. 5,700 469,850
Mondelez International, Inc., Class A 333,691 12,076,277
Nestle SA 256,345 19,884,251
Nippon Meat Packers, Inc. 16,000 338,877
Nisshin Seifun Group, Inc. 18,000 207,612
Nissin Food Products Company, Ltd. 5,500 315,228
Omega Protein Corp. (I) 2,685 40,463
Orion Corp. 277 238,597
Orkla ASA 67,364 610,205
Post Holdings, Inc. (I) 16,383 605,680
PPB Group BHD 24,900 116,728
Sanderson Farms, Inc. (L) 2,809 262,136
Saputo, Inc. 1,405 85,466
Seaboard Corp. (I) 34 98,575
Seneca Foods Corp., Class A (I) 1,066 32,161
Snyder’s-Lance, Inc. 5,842 159,253
Standard Foods Corp. 35,651 91,547
Tate & Lyle PLC 43,224 485,482
The Hain Celestial Group, Inc. (I) 12,639 1,243,172
The Hershey Company 29,438 2,691,222
The J.M. Smucker Company 20,443 2,097,452
The WhiteWave Foods Company, Class A (I) 43,852 1,535,697
Tiger Brands, Ltd. 13,078 377,438
Tingyi Cayman Islands Holding Corp. 164,000 459,304
Tootsie Roll Industries, Inc. (L) 7,465 210,886
Toyo Suisan Kaisha, Ltd. 8,000 250,433
TreeHouse Foods, Inc. (I) 4,458 367,874
Tyson Foods, Inc., Class A 54,267 2,065,402
Ulker Biskuvi Sanayi AS 7,340 54,295
Uni-President China Holdings, Ltd. 113,000 102,076
Uni-President Enterprises Corp. 503,830 922,297
Unilever NV 85,461 3,553,915
Unilever PLC 119,115 5,254,172
Want Want China Holdings, Ltd. 504,000 623,267
Wilmar International, Ltd. 215,000 543,589
Yakult Honsha Company, Ltd. 8,200 450,479
Yamazaki Baking Company, Ltd. 10,000 131,560
 
    116,891,216
Household Products - 1.4%    
Central Garden & Pet Company, Class A (I) 5,508 49,627
Church & Dwight Company, Inc. 34,276 2,338,994
Colgate-Palmolive Company 171,582 11,106,503
Energizer Holdings, Inc. 15,553 1,890,001
Harbinger Group, Inc. (I) 10,241 132,621
Henkel AG & Company, KGaA 10,206 971,318
Kimberly-Clark Corp. 74,345 8,029,260

 

The accompanying notes are an integral part of the financial statements. 199

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Household Products (continued)    
Kimberly-Clark de Mexico SAB de CV 177,900 $ 477,647
LG Household & Health Care, Ltd. 723 366,016
Orchids Paper Products Company 1,311 36,472
Procter & Gamble Company 533,843 44,367,692
Reckitt Benckiser Group PLC 60,150 5,249,028
Svenska Cellulosa AB SCA, B Shares 38,504 926,295
The Clorox Company (L) 25,360 2,246,896
Unicharm Corp. 11,500 755,464
Unilever Indonesia Tbk PT 184,145 488,548
WD-40 Company 1,834 125,996
 
    79,558,378
Personal Products - 0.2%    
Amorepacific Corp. 240 499,428
AMOREPACIFIC Group 216 225,377
Avon Products, Inc. 84,583 1,187,545
Beiersdorf AG 8,783 774,298
Elizabeth Arden, Inc. (I)(L) 3,195 54,635
Hengan International Group Company, Ltd. 62,500 665,528
Hypermarcas SA 29,279 254,532
IGI Laboratories, Inc. (I) 4,081 28,118
Inter Parfums, Inc. 2,134 65,002
Kao Corp. 47,500 2,049,118
L’Oreal SA 19,741 3,269,588
Medifast, Inc. (I) 1,626 54,634
Natura Cosmeticos SA 14,540 266,377
Nature’s Sunshine Products, Inc. 1,600 26,320
Nutraceutical International Corp. (I) 1,173 28,434
Revlon, Inc., Class A (I) 1,439 48,883
Shiseido Company, Ltd. 33,500 619,034
The Estee Lauder Companies, Inc., Class A 49,844 3,829,515
USANA Health Sciences, Inc. (I)(L) 770 56,233
 
    14,002,599
Tobacco - 1.2%    
Alliance One International, Inc. (I) 12,878 28,589
Altria Group, Inc. 391,876 16,882,018
British American Tobacco Malaysia BHD 6,698 153,027
British American Tobacco PLC 175,088 10,351,779
Gudang Garam Tbk PT 58,082 268,121
Imperial Tobacco Group PLC 89,347 3,899,546
Japan Tobacco, Inc. 101,800 3,488,030
KT&G Corp. 8,313 778,663
Lorillard, Inc. 71,500 4,268,550
Philip Morris International, Inc. 310,296 26,555,132
Reynolds American, Inc. 61,366 3,588,070
Souza Cruz SA 32,144 300,978
Swedish Match AB 13,254 443,249
Universal Corp. (L) 8,669 457,376
Vector Group, Ltd. (L) 8,104 193,605
 
    71,656,733
    498,819,565
Energy - 8.6%    
Energy Equipment & Services - 1.6%    
Aker Solutions ASA 12,454 189,413
AMEC PLC 27,666 516,955
Atwood Oceanics, Inc. (I) 14,592 720,991
Baker Hughes, Inc. 85,968 5,943,828
Basic Energy Services, Inc. (I) 3,861 93,475
Bristow Group, Inc. 4,300 313,814
Bumi Armada BHD 46,100 43,139
C&J Energy Services, Inc. (I) 5,602 160,721
Cameron International Corp. (I) 40,231 2,990,370

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Energy Equipment & Services (continued)    
CARBO Ceramics, Inc. (L) 7,405 $ 796,704
CHC Group, Ltd. (I)(L) 3,956 27,455
China Oilfield Services, Ltd., H Shares 152,000 447,768
Dawson Geophysical Company 1,135 25,674
Diamond Offshore Drilling, Inc. (L) 13,679 601,055
Dresser-Rand Group, Inc. (I) 19,287 1,336,589
Dril-Quip, Inc. (I) 10,260 1,041,082
Ensco PLC, Class A (L) 45,998 2,321,979
Era Group, Inc. (I) 2,588 66,279
Exterran Holdings, Inc. 7,067 329,534
FMC Technologies, Inc. (I) 46,352 2,866,408
Forum Energy Technologies, Inc. (I) 7,254 246,999
Fugro NV 3,894 141,213
Geospace Technologies Corp. (I) 1,608 66,121
Gulf Island Fabrication, Inc. 2,002 42,182
Gulfmark Offshore, Inc., Class A 3,325 133,698
Halliburton Company 166,565 11,261,460
Helix Energy Solutions Group, Inc. (I) 37,606 1,027,396
Helmerich & Payne, Inc. 21,307 2,238,300
Hercules Offshore, Inc. (I)(L) 19,780 66,659
Hornbeck Offshore Services, Inc. (I)(L) 4,394 191,842
ION Geophysical Corp. (I) 15,479 53,403
Key Energy Services, Inc. (I) 15,950 100,485
Matrix Service Company (I) 3,228 91,062
McDermott International, Inc. (I) 28,539 205,481
Mitcham Industries, Inc. (I) 1,593 20,964
Nabors Industries, Ltd. 51,960 1,413,832
National Oilwell Varco, Inc. 84,588 7,310,941
Natural Gas Services Group, Inc. (I) 1,542 45,767
Newpark Resources, Inc. (I) 10,295 126,937
Noble Corp. PLC 50,339 1,432,648
Nordic American Offshore, Ltd. (L) 93 1,813
North Atlantic Drilling, Ltd. (L) 8,508 93,248
Nuverra Environmental Solutions, Inc. (I)(L) 1,857 25,070
Oceaneering International, Inc. 27,238 1,894,675
Oil States International, Inc. (I) 13,381 863,744
Parker Drilling Company (I) 14,653 92,021
Patterson-UTI Energy, Inc. 36,441 1,258,672
Petrofac, Ltd. 24,077 451,310
PHI, Inc. (I) 1,476 63,114
Pioneer Energy Services Corp. (I) 7,654 117,719
RigNet, Inc. (I) 1,487 69,398
Rowan Companies PLC, Class A 31,484 954,595
Saipem SpA (I) 21,412 508,453
Sapurakencana Petroleum BHD 188,389 252,150
Schlumberger, Ltd. 256,870 28,163,227
SEACOR Holdings, Inc. (I) 2,525 206,040
Seadrill, Ltd. (L) 31,023 1,142,398
Subsea 7 SA 23,258 387,712
Superior Energy Services, Inc. 39,494 1,415,465
Technip SA 8,434 780,916
Tenaris SA 38,170 843,407
Tesco Corp. 4,236 89,888
TETRA Technologies, Inc. (I) 9,597 113,245
Tidewater, Inc. 12,495 635,621
Transocean, Ltd. (L) 28,799 1,109,389
Transocean, Ltd. (L) 67,021 2,590,362
Unit Corp. (I) 11,128 732,334
Vantage Drilling Company (I)(L) 25,932 46,159
Willbros Group, Inc. (I) 5,015 54,864
WorleyParsons, Ltd. 18,340 281,947
 
    92,289,579

 

The accompanying notes are an integral part of the financial statements. 200

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels - 7.0%    
Abraxas Petroleum Corp. (I) 10,080 $ 59,573
Adams Resources & Energy, Inc. 321 21,054
Adaro Energy Tbk PT 1,738,945 195,782
Alon USA Energy, Inc. 3,301 54,896
Alpha Natural Resources, Inc. (I)(L) 26,701 105,469
AltaGas, Ltd. 1,351 65,345
American Eagle Energy Corp. (I) 3,916 20,520
Anadarko Petroleum Corp. 99,629 11,227,192
Apache Corp. 76,073 7,746,514
Approach Resources, Inc. (I)(L) 4,816 86,110
ARC Resources, Ltd. 3,442 99,496
Arch Coal, Inc. (L) 26,106 79,623
Ardmore Shipping Corp. (L) 2,388 31,259
Athabasca Oil Corp. (I) 3,490 25,422
Banpu PCL 145,408 146,942
Baytex Energy Corp. (L) 1,403 62,737
BG Group PLC 316,418 6,307,345
Bill Barrett Corp. (I)(L) 18,546 422,292
Bonanza Creek Energy, Inc. (I) 4,031 247,544
BP PLC 1,713,902 13,671,899
BPZ Resources, Inc. (I)(L) 15,120 37,044
Cabot Oil & Gas Corp. 82,303 2,760,443
Callon Petroleum Company (I) 5,069 54,390
Caltex Australia, Ltd. 11,962 318,750
Cameco Corp. 4,332 84,704
Canadian Natural Resources, Ltd. 11,583 504,845
Canadian Oil Sands, Ltd. 5,366 115,581
Carrizo Oil & Gas, Inc. (I) 5,566 349,100
Cenovus Energy, Inc. 8,285 264,254
Chesapeake Energy Corp. 99,836 2,715,539
Chevron Corp. 375,531 48,612,488
China Coal Energy Company, Ltd.,    
H Shares (L) 333,295 202,566
China Petroleum & Chemical Corp., H Shares 2,159,639 2,183,939
China Shenhua Energy Company, Ltd.,    
H Shares 288,000 832,341
Cimarex Energy Company 17,162 2,491,236
Clayton Williams Energy, Inc. (I) 722 85,514
Clean Energy Fuels Corp. (I)(L) 8,749 87,228
Cloud Peak Energy, Inc. (I) 7,340 115,311
CNOOC, Ltd. 1,511,716 3,029,844
Comstock Resources, Inc. 5,783 140,990
ConocoPhillips 242,181 19,669,941
CONSOL Energy, Inc. 45,303 1,824,805
Contango Oil & Gas Company (I) 2,117 83,876
Cosan SA Industria e Comercio 10,294 213,836
Crescent Point Energy Corp. 4,534 187,648
Delek US Holdings, Inc. 7,226 252,765
Denbury Resources, Inc. 69,506 1,196,893
Devon Energy Corp. 75,618 5,703,110
DHT Holdings, Inc. 8,696 60,872
Diamondback Energy, Inc. (I) 4,628 399,628
Dorian LPG, Ltd. (I) 869 17,058
Emerald Oil, Inc. (I)(L) 7,170 61,304
Enbridge, Inc. 9,127 455,217
Encana Corp. 8,135 187,570
Energen Corp. 18,355 1,477,210
Energy Transfer Partners LP 1,621 93,141
Energy XXI Bermuda, Ltd. (L) 11,449 188,909
Enerplus Corp. 2,277 52,124
Eni SpA 205,707 5,136,713
EOG Resources, Inc. 107,807 11,845,833
EQT Corp. 29,932 2,965,064

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels (continued)    
Evolution Petroleum Corp. 2,718 $ 27,262
EXCO Resources, Inc. (L) 18,727 90,451
Exxaro Resources, Ltd. 11,966 169,818
Exxon Mobil Corp. 847,153 84,257,837
Forest Oil Corp. (I)(L) 15,759 25,687
Formosa Petrochemical Corp. 124,000 313,082
Frontline, Ltd. (I)(L) 8,921 18,288
FX Energy, Inc. (I)(L) 6,825 23,342
Galp Energia SGPS SA 55,743 989,469
GasLog, Ltd. 5,128 129,790
Gastar Exploration, Inc. (I) 6,758 53,118
Goodrich Petroleum Corp. (I)(L) 4,239 93,682
Green Plains Renewable Energy, Inc. 4,595 205,351
Grupa Lotos SA (I) 4,907 46,350
GS Holdings Corp. 3,944 167,504
Gulfport Energy Corp. (I) 21,545 1,260,383
Halcon Resources Corp. (I)(L) 31,797 174,884
Harvest Natural Resources, Inc. (I)(L) 5,633 27,883
Hess Corp. 52,045 5,261,750
HollyFrontier Corp. 50,107 2,506,853
Husky Energy, Inc. 3,764 114,585
Idemitsu Kosan Company, Ltd. 8,200 179,977
Imperial Oil, Ltd. 3,232 171,989
Indo Tambangraya Megah Tbk PT 47,828 115,211
Inner Mongolia Yitai Coal Co. 92,500 155,708
Inpex Corp. 80,500 1,154,142
Inter Pipeline Ltd. 3,338 111,379
IRPC PCL 705,000 73,281
IRPC PCL (Bangkok Exchange) 559,300 58,135
Jones Energy, Inc., Class A (I) 1,555 29,887
JX Holdings, Inc. 205,800 1,059,002
Keyera Corp. 878 77,246
Kinder Morgan, Inc. (L) 131,773 5,305,181
Kodiak Oil & Gas Corp. (I) 32,291 525,375
Koninklijke Vopak NV 3,689 189,265
Kunlun Energy Company, Ltd. 272,000 447,574
Lundin Petroleum AB (I) 14,601 271,767
Magnum Hunter Resources Corp. (I)(L) 24,306 167,954
Marathon Oil Corp. 133,306 5,557,527
Marathon Petroleum Corp. 56,913 5,179,652
Matador Resources Company (I) 8,901 243,531
MEG Energy Corp. (I) 1,748 62,264
Midstates Petroleum Company, Inc. (I) 4,812 33,973
Miller Energy Resources, Inc. (I)(L) 3,698 19,156
MOL Hungarian Oil and Gas PLC 3,417 168,412
Murphy Oil Corp. 33,239 2,076,440
Navios Maritime Acquisition Corp. 10,777 37,396
Neste Oil OYJ 11,548 225,844
Newfield Exploration Company (I) 27,212 1,219,642
Noble Energy, Inc. 70,867 5,112,345
Nordic American Tankers, Ltd. (L) 10,819 98,020
Northern Oil and Gas, Inc. (I)(L) 7,487 126,156
Occidental Petroleum Corp. 154,969 16,074,934
ONEOK, Inc. 40,996 2,877,919
Origin Energy, Ltd. 96,424 1,399,563
Pacific Ethanol, Inc. (I) 2,573 59,462
Pacific Rubiales Energy Corp. 3,463 72,076
Panhandle Oil and Gas, Inc., Class A 895 54,747
Parsley Energy, Inc. (I) 6,114 134,019
PDC Energy, Inc. (I) 4,329 260,130
Peabody Energy Corp. (L) 54,007 857,631
Pembina Pipeline Corp. (L) 3,486 160,209
Pengrowth Energy Trust 5,697 36,310

 

The accompanying notes are an integral part of the financial statements. 201

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels (continued)    
Penn Virginia Corp. (I)(L) 7,979 $ 119,845
Penn West Petroleum, Ltd. 5,375 41,772
PetroChina Company, Ltd., H Shares 1,785,739 2,537,458
Petroleo Brasileiro SA 250,507 2,477,652
Petronas Dagangan BHD 13,000 82,938
Petroquest Energy, Inc. (I) 7,271 48,425
Peyto Exploration & Development Corp. (L) 1,640 58,116
Phillips 66 111,610 9,712,302
Pioneer Natural Resources Company 28,218 5,887,686
Polski Koncern Naftowy Orlen SA 23,033 284,301
Polskie Gornictwo    
Naftowe i Gazownictwo SA (L) 124,082 189,508
PTT Exploration & Production PCL 201,775 1,039,146
PTT PCL 119,965 1,205,979
QEP Resources, Inc. 35,160 1,250,641
Quicksilver Resources, Inc. (I)(L) 15,737 20,930
Range Resources Corp. 33,267 2,614,454
Reliance Industries, Ltd., GDR (S) 7,867 261,814
Reliance Industries, Ltd., GDR    
(London Exchange) (S) 6,900 229,587
Renewable Energy Group, Inc. (I)(L) 4,378 53,236
Repsol SA 99,548 2,472,300
Resolute Energy Corp. (I)(L) 9,609 77,160
REX American Resources Corp. (I) 771 82,366
Rex Energy Corp. (I) 5,856 89,480
Ring Energy, Inc. (I) 2,404 41,277
Rosetta Resources, Inc. (I) 23,019 1,150,950
Royal Dutch Shell PLC, B Shares 226,946 9,585,976
Royal Dutch Shell PLC, Class A 361,764 14,641,181
RSP Permian, Inc. (I) 2,691 76,963
S-Oil Corp. 3,475 160,567
Sanchez Energy Corp. (I)(L) 5,568 184,802
Santos, Ltd. (L) 85,015 1,178,870
Sasol, Ltd. 45,349 2,635,583
Scorpio Tankers, Inc. 24,232 231,658
SemGroup Corp., Class A 5,158 452,511
Ship Finance International, Ltd. (L) 7,077 140,054
Showa Shell Sekiyu KK 17,500 187,911
SK Innovation Company, Ltd. 4,487 416,700
SM Energy Company 16,912 1,505,844
Solazyme, Inc. (I)(L) 9,212 86,409
Southwestern Energy Company (I) 69,627 2,867,240
Spectra Energy Corp. 132,311 5,512,076
Statoil ASA 92,230 2,594,409
Stone Energy Corp. (I) 6,816 239,855
Suncor Energy, Inc. 15,861 651,041
Swift Energy Company (I)(L) 5,270 59,815
Synergy Resources Corp. (I)(L) 8,163 109,874
Talisman Energy, Inc. 11,346 114,055
Tambang Batubara Bukit Asam Persero    
Tbk PT 97,490 111,398
Teekay Tankers, Ltd., Class A (L) 8,156 34,745
Tesoro Corp. 25,545 1,653,783
Thai Oil PCL 113,353 183,691
The Williams Companies, Inc. 135,227 8,037,893
TonenGeneral Sekiyu KK 26,000 237,160
Total SA 175,742 11,596,950
Tourmaline Oil Corp. (I) 1,900 96,232
Transatlantic Petroleum, Ltd. (I) 3,079 33,777
TransCanada Corp. 7,730 415,400
Triangle Petroleum Corp. (I)(L) 9,228 110,644
Tullow Oil PLC 84,470 1,024,532
Tupras Turkiye Petrol Rafinerileri AS 5,974 140,267

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Oil, Gas & Consumable Fuels (continued)    
Ultrapar Participacoes SA 30,422 $ 784,027
VAALCO Energy, Inc. (I) 6,312 57,755
Valero Energy Corp. 105,227 5,696,990
Vermilion Energy, Inc. 1,148 74,679
W&T Offshore, Inc. 4,310 64,305
Warren Resources, Inc. (I) 9,085 58,598
Western Refining, Inc. 6,448 300,025
Westmoreland Coal Company (I) 1,688 70,913
Woodside Petroleum, Ltd. 57,952 2,312,713
World Fuel Services Corp. 18,152 805,586
WPX Energy, Inc. (I) 50,982 1,357,141
Yanzhou Coal Mining Company, Ltd.,    
H Shares 161,210 135,491
 
    416,991,850
 
    509,281,429
Financials - 18.4%    
Banks - 7.8%    
1st Source Corp. 2,137 64,131
1st United Bancorp, Inc. 4,150 36,105
Agricultural Bank of China, Ltd., H Shares 1,828,000 846,439
Akbank TAS 85,674 326,615
Alior Bank SA (I) 3,436 81,822
Alliance Financial Group BHD 56,840 87,665
Alpha Bank AE (I) 292,465 258,331
Ameris Bancorp 3,157 72,264
AMMB Holdings BHD 96,000 203,455
Aozora Bank, Ltd. 107,000 365,308
Arrow Financial Corp. (L) 2,170 57,765
Associated Banc-Corp. 40,216 731,127
Australia & New Zealand Banking Group, Ltd. 241,104 7,534,573
Banc of California, Inc. 3,696 44,426
Banca Monte dei Paschi di Siena SpA (I) 351,612 529,526
Banco Bilbao Vizcaya Argentaria SA 664,933 8,049,384
Banco Bradesco SA 53,078 948,931
Banco Comercial Portugues SA (I) 5,096,944 694,512
Banco de Sabadell SA 384,410 1,210,391
Banco do Brasil SA 72,391 1,131,544
Banco Espirito Santo SA (I) 322,715 8,066
Banco Latinoamericano de    
Comercio Exterior SA (L) 3,710 119,128
Banco Popolare SC (I) 29,286 458,189
Banco Popular Espanol SA 197,672 1,234,808
Banco Santander Brasil SA 79,926 552,002
Banco Santander SA 1,358,098 13,530,806
BancorpSouth, Inc. 32,922 696,959
Bangkok Bank PCL 74,700 479,430
Bangkok Bank PCL (Foreign Shares) 74,461 477,835
Bank Central Asia Tbk PT 1,488,430 1,424,730
Bank Danamon Indonesia Tbk PT 404,801 129,726
Bank Handlowy w Warszawie SA 2,469 88,115
Bank Mandiri Persero Tbk PT 1,126,828 1,005,412
Bank Millennium SA 32,091 80,477
Bank Negara Indonesia Persero Tbk PT 900,553 411,946
Bank of America Corp. 2,074,332 33,376,002
Bank of China, Ltd., H Shares 6,726,321 3,114,181
Bank of Communications Company, Ltd.,    
H Shares 742,076 539,919
Bank of East Asia, Ltd. 105,293 448,006
Bank of Hawaii Corp. 11,204 650,392
Bank of Ireland (I) 2,158,287 858,736
Bank of Kentucky Financial Corp. 1,491 54,809
Bank of Marin Bancorp, Class A 903 44,148

 

The accompanying notes are an integral part of the financial statements. 202

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
Bank of Montreal 7,074 $ 544,294
Bank of Queensland, Ltd. 31,881 374,989
Bank of the Ozarks, Inc. 9,732 310,937
Bank Pekao SA 9,660 544,768
Bank Rakyat Indonesia Persero Tbk PT 1,340,477 1,265,704
Bank Zachodni WBK SA 1,994 231,269
Bankia SA (I) 519,320 1,004,592
Banner Corp. 2,382 93,803
Barclays Africa Group, Ltd. 27,370 427,499
Barclays PLC 1,517,488 5,659,970
BB&T Corp. 141,708 5,289,960
BBCN Bancorp, Inc. 9,884 144,306
Bendigo and Adelaide Bank, Ltd. 38,449 447,467
BNC Bancorp 2,570 43,639
BNP Paribas SA 86,907 5,872,572
BOC Hong Kong Holdings, Ltd. 310,500 1,043,701
Boston Private Financial Holdings, Inc. 9,727 118,086
Bridge Bancorp, Inc. 1,606 39,925
Bridge Capital Holdings (I) 1,409 31,519
Bryn Mawr Bank Corp. 1,829 53,809
BS Financial Group, Inc. 14,837 245,934
CaixaBank SA 200,132 1,204,639
Camden National Corp. 1,417 51,806
Canadian Imperial Bank of Commerce 4,333 414,092
Capital Bank Financial Corp., Class A (I) 3,163 77,399
Cardinal Financial Corp. 3,893 69,568
Cathay General Bancorp 28,400 739,536
Centerstate Banks, Inc. 4,431 46,304
Central Pacific Financial Corp. 2,016 35,441
Chang Hwa Commercial Bank 514,201 320,065
Chemical Financial Corp. 3,822 108,430
China CITIC Bank Corp., Ltd., H Shares 690,200 435,210
China Construction Bank Corp., H Shares 6,105,196 4,528,092
China Development Financial Holdings Corp. 1,422,000 480,825
China Everbright Bank Company, Ltd. 239,000 110,984
China Merchants Bank Company, Ltd.,    
H Shares 389,855 743,067
China Minsheng Banking Corp., Ltd.,    
H Shares 528,500 496,274
Chongqing Rural Commercial Bank, H Shares 219,000 108,782
CIMB Group Holdings BHD 251,800 589,554
Citigroup, Inc. 599,235 30,950,488
Citizens & Northern Corp. 1,863 36,738
City Holding Company 2,215 94,625
City National Corp. 12,059 915,037
CNB Financial Corp. 1,937 32,735
CoBiz Financial, Inc. 4,692 54,193
Columbia Banking System, Inc. 6,460 168,025
Comerica, Inc. 35,856 1,804,991
Commerce Bancshares, Inc. 20,404 941,237
Commerzbank AG (I) 84,418 1,281,646
Commonwealth Bank of Australia 141,603 10,764,131
Community Bank Systems, Inc. 4,999 176,665
Community Trust Bancorp, Inc. 1,898 67,417
ConnectOne Bancorp, Inc. 4,002 77,559
Credicorp, Ltd. 16,800 2,605,176
Credit Agricole SA 82,206 1,219,974
CTBC Financial Holding Company, Ltd. 1,415,598 1,030,841
CU Bancorp (I) 1,483 27,747
Customers Bancorp, Inc. (I) 3,225 59,921
CVB Financial Corp. 12,905 200,544
Danske Bank A/S 43,485 1,224,429
DBS Group Holdings, Ltd. 191,272 2,741,806

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
DGB Financial Group, Inc. 10,347 $ 180,718
DNB ASA 80,764 1,511,444
E.Sun Financial Holding Company, Ltd. 644,194 423,801
Eagle Bancorp, Inc. (I) 2,765 92,710
East West Bancorp, Inc. 36,163 1,259,919
Enterprise Financial Services Corp. 2,735 47,698
Eurobank Ergasias SA (I) 614,041 262,365
Fidelity Southern Corp. (L) 3,062 42,470
Fifth Third Bancorp 167,684 3,421,592
Financial Institutions, Inc. 2,286 54,910
First Bancorp North Carolina 2,683 47,677
First BanCorp Puerto Rico (I) 12,920 67,313
First Busey Corp. 9,071 52,158
First Citizens BancShares, Inc., Class A (L) 911 209,339
First Commonwealth Financial Corp. 11,475 101,669
First Community Bancshares, Inc. 2,299 37,520
First Connecticut Bancorp, Inc. 3,204 49,021
First Financial Bancorp 6,989 116,087
First Financial Bankshares, Inc. (L) 7,910 232,475
First Financial Corp. 1,504 48,609
First Financial Holding Company, Ltd. 803,582 497,512
First Horizon National Corp. 59,667 725,551
First Interstate Bancsystem, Inc. 2,193 58,158
First Merchants Corp. 4,394 89,682
First Midwest Bancorp, Inc. 9,309 156,857
First NBC Bank Holding Company (I) 1,871 60,078
First Niagara Financial Group, Inc. 89,267 776,623
FirstMerit Corp. 61,638 1,062,331
Flushing Financial Corp. 3,792 73,186
FNB Corp. 19,957 246,669
Frost Bankers, Inc. 13,364 1,050,410
Fukuoka Financial Group, Inc. 72,000 349,054
Fulton Financial Corp. 47,659 549,747
Getin Noble Bank SA (I) 90,137 73,296
Glacier Bancorp, Inc. 9,068 246,831
Great Southern Bancorp, Inc. 1,801 57,038
Grupo Financiero Banorte SAB    
de CV, Series O 287,700 2,028,261
Grupo Financiero Inbursa SAB    
de CV, Series O 269,000 824,480
Grupo Financiero Santander Mexico    
SAB de CV 210,600 633,729
Guaranty Bancorp 2,099 29,239
Hana Financial Group, Inc. 22,005 924,169
Hancock Holding Company 30,688 1,020,069
Hang Seng Bank, Ltd. 64,300 1,086,553
Hanmi Financial Corp. 3,881 79,755
HDFC Bank, Ltd., ADR 7,626 378,936
Heartland Financial USA, Inc. 1,840 44,013
Heritage Commerce Corp. 3,329 27,697
Heritage Financial Corp. 3,856 63,084
Heritage Oaks Bancorp 3,613 25,688
Hokuhoku Financial Group, Inc. 113,000 224,944
Home BancShares, Inc. 6,592 196,112
HomeTrust Bancshares, Inc. (I) 2,778 41,892
Hong Leong Bank BHD 29,600 135,210
Hong Leong Financial Group BHD 11,000 59,460
HSBC Holdings PLC 1,747,736 18,891,609
Hua Nan Financial Holdings Company, Ltd. 658,027 408,493
Hudson Valley Holding Corp. 2,027 36,020
Huntington Bancshares, Inc. 164,030 1,614,875
Iberiabank Corp. 3,835 250,234
ICICI Bank, Ltd., ADR 7,110 380,385

 

The accompanying notes are an integral part of the financial statements. 203

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
Independent Bank Corp. (MA) 3,126 $ 115,068
Independent Bank Corp. (MI) 3,099 37,622
Independent Bank Group, Inc. 1,099 55,620
Industrial & Commercial Bank of China, Ltd.,    
H Shares 6,244,270 4,132,351
Industrial Bank of Korea 17,057 296,287
ING Groep NV (I) 201,482 2,772,966
International Bancshares Corp. 20,992 553,349
Intesa Sanpaolo RSP 75,486 197,308
Intesa Sanpaolo SpA 940,436 2,800,147
Investors Bancorp, Inc. 43,143 457,747
Irish Bank Resolution Corp., Ltd. (I) 29,183 0
JPMorgan Chase & Company 746,594 44,385,013
Kasikornbank PCL 106,039 746,914
Kasikornbank PCL (Foreign Exchange) 148,100 1,048,056
KB Financial Group, Inc. 29,397 1,200,236
KBC Groep NV (I) 22,328 1,273,061
KeyCorp 174,011 2,368,290
Krung Thai Bank PCL 247,000 181,731
Krung Thai Bank PCL 251,293 184,903
Lakeland Bancorp, Inc. 4,847 50,070
Lakeland Financial Corp. 2,039 79,399
Lloyds Banking Group PLC (I) 5,298,927 6,717,024
M&T Bank Corp. (L) 25,939 3,206,839
MainSource Financial Group, Inc. 2,593 44,729
Malayan Banking BHD 227,433 728,848
MB Financial, Inc. 8,193 231,792
mBank 1,017 147,667
Mega Financial Holding Company, Ltd. 1,062,575 916,841
Mercantile Bank Corp. 2,454 46,503
Metro Bancorp, Inc. (I) 2,426 56,429
MidWestOne Financial Group, Inc. 988 23,495
Mitsubishi UFJ Financial Group, Inc. 1,180,000 6,801,091
Mizuho Financial Group, Inc. 2,130,900 4,064,265
National Australia Bank, Ltd. 206,816 6,806,115
National Bank Holdings Corp., Class A 5,073 103,083
National Bank of Canada 3,597 173,052
National Bank of Greece SA (I) 118,403 407,879
National Bankshares, Inc. (L) 1,178 34,209
National Penn Bancshares, Inc. 14,361 143,610
Natixis 77,147 542,838
NBT Bancorp, Inc. 5,492 131,863
Nedbank Group, Ltd. 16,383 352,583
NewBridge Bancorp (I) 4,758 35,542
Nordea Bank AB 200,459 2,617,599
OFG Bancorp 5,469 86,957
Old National Bancorp 12,883 168,638
OmniAmerican Bancorp, Inc. 1,530 39,719
OTP Bank PLC 19,212 332,272
Oversea-Chinese Banking Corp., Ltd. 287,964 2,304,175
Pacific Continental Corp. 2,628 35,425
Pacific Premier Bancorp, Inc. (I) 2,641 39,219
PacWest Bancorp 24,169 1,013,648
Park National Corp. (L) 1,570 122,209
Park Sterling Corp. 6,245 42,653
Peapack Gladstone Financial Corp. 1,646 30,879
Penns Woods Bancorp, Inc. 1,125 51,165
Peoples Bancorp, Inc. 1,813 43,458
Peoples Financial Services Corp. (L) 999 50,440
Pinnacle Financial Partners, Inc. 4,390 157,425
Piraeus Bank SA (I) 160,689 319,796
Powszechna Kasa Oszczednosci    
Bank Polski SA 64,618 772,669

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
Preferred Bank (I) 2,031 $ 48,785
PrivateBancorp, Inc. 8,718 257,268
Prosperity Bancshares, Inc. 23,453 1,416,561
Public Bank BHD 140,062 856,704
Regions Financial Corp. 271,832 2,759,095
Renasant Corp. 3,762 108,835
Republic Bancorp, Inc., Class A 1,310 29,816
Resona Holdings, Inc. 202,500 1,099,122
RHB Capital BHD 26,716 77,707
Royal Bank of Canada 15,815 1,174,816
Royal Bank of Scotland Group PLC (I) 230,334 1,387,848
S&T Bancorp, Inc. 3,483 86,866
Sandy Spring Bancorp, Inc. 2,937 70,987
Seacoast Banking Corp. of Florida (I) 3,942 41,352
Seven Bank, Ltd. 55,300 224,498
Shinhan Financial Group Company, Ltd. 32,494 1,683,340
Shinsei Bank, Ltd. 153,000 322,503
Siam Commercial Bank PCL 220,261 1,289,635
Sierra Bancorp 1,888 32,795
Signature Bank (I) 12,609 1,493,662
Simmons First National Corp., Class A 2,016 80,479
SinoPac Financial Holdings Company, Ltd. 735,543 336,228
Skandinaviska Enskilda Banken AB, Series A 100,828 1,318,661
Societe Generale SA 59,026 2,993,839
South State Corp. 3,016 176,617
Southside Bancshares, Inc. (L) 2,397 82,337
Southwest Bancorp, Inc. 2,578 42,614
Standard Bank Group, Ltd. 99,911 1,294,345
Standard Chartered PLC 225,280 4,540,837
State Bank Financial Corp. 4,046 67,811
State Bank of India, GDR 5,129 420,101
Sterling Bancorp 10,185 129,044
Stock Yards Bancorp, Inc. 1,963 59,145
Stonegate Bank (L) 1,916 52,000
Suffolk Bancorp 1,670 34,786
Sumitomo Mitsui Financial Group, Inc. 117,900 4,768,945
Sumitomo Mitsui Trust Holdings, Inc. 304,000 1,247,960
SunTrust Banks, Inc. 105,065 4,000,875
Suruga Bank, Ltd. 16,000 304,215
Susquehanna Bancshares, Inc. 22,491 232,107
SVB Financial Group (I) 12,568 1,399,070
Svenska Handelsbanken AB, Class A 33,070 1,552,736
Swedbank AB, Class A 60,020 1,529,799
Synovus Financial Corp. 35,051 846,482
Taishin Financial Holdings Company, Ltd. 855,422 434,935
Taiwan Business Bank (I) 430,876 134,944
Taiwan Cooperative Financial    
Holding Company, Ltd. 637,652 356,379
Talmer Bancorp, Inc., Class A 2,269 33,264
TCF Financial Corp. 42,024 663,979
Texas Capital Bancshares, Inc. (I) 5,234 282,531
The Bancorp, Inc. (I) 4,179 40,578
The Bank of Kyoto, Ltd. 30,000 264,041
The Bank of Nova Scotia 13,174 872,855
The Bank of Yokohama, Ltd. 108,000 596,171
The Chiba Bank, Ltd. 69,000 486,593
The Chugoku Bank, Ltd. 15,600 236,191
The First of Long Island Corp. 1,181 41,181
The Gunma Bank, Ltd. 35,000 206,396
The Hachijuni Bank, Ltd. 39,000 235,665
The Hiroshima Bank, Ltd. 46,000 222,145
The Iyo Bank, Ltd. 22,600 229,392
The Joyo Bank, Ltd. 62,000 322,035

 

The accompanying notes are an integral part of the financial statements. 204

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Banks (continued)    
The PNC Financial Services Group, Inc. 105,366 $ 8,929,769
The Shizuoka Bank, Ltd. 49,000 508,555
The Toronto-Dominion Bank 19,949 1,050,382
TMB Bank PCL 1,844,468 175,552
Tompkins Financial Corp. 1,705 78,072
TowneBank (L) 3,410 49,991
Trico Bancshares (L) 2,734 61,105
TriState Capital Holdings, Inc. (I) 2,927 27,894
Trustmark Corp. 25,139 596,674
Turkiye Garanti Bankasi AS 109,970 430,698
Turkiye Halk Bankasi AS 29,746 218,194
Turkiye Is Bankasi, Class C 74,914 193,451
Turkiye Vakiflar Bankasi Tao, Class D 35,673 82,186
U.S. Bancorp 358,118 15,141,229
UMB Financial Corp. 4,577 264,322
Umpqua Holdings Corp. 63,330 1,106,375
UniCredit SpA 356,923 2,768,114
Union Bankshares Corp. 5,634 133,131
Unione di Banche Italiane SCPA 69,275 541,950
United Bankshares, Inc. (L) 8,381 276,154
United Community Banks, Inc. 6,118 103,761
United Overseas Bank, Ltd. 142,214 2,608,674
Univest Corp. of Pennsylvania 2,823 53,919
Valley National Bancorp (L) 74,106 741,060
ViewPoint Financial Group, Inc. 4,841 126,108
Washington Trust Bancorp, Inc. 1,752 61,635
Webster Financial Corp. 33,645 992,528
Wells Fargo & Company 945,561 48,639,658
WesBanco, Inc. 3,078 95,572
WestAmerica Bancorp. (L) 9,828 475,380
Western Alliance Bancorp (I) 9,117 215,252
Westpac Banking Corp. 273,152 8,953,458
Wilshire Bancorp, Inc. 8,651 84,434
Wintrust Financial Corp. 5,675 264,285
Woori Finance Holdings Company, Ltd. (I) 22,380 303,768
Yadkin Financial Corp. (I) 2,473 46,443
Yamaguchi Financial Group, Inc. 18,000 177,175
Yapi ve Kredi Bankasi AS 41,355 92,061
Zions Bancorporation 36,342 1,059,006
 
    465,861,556
Capital Markets - 1.9%    
3i Group PLC 90,185 589,395
Aberdeen Asset Management PLC 84,997 614,663
Affiliated Managers Group, Inc. (I) 11,120 2,347,988
Ameriprise Financial, Inc. 37,455 4,710,341
Arlington Asset Investment Corp., Class A (L) 2,408 68,435
BGC Partners, Inc., Class A 21,274 161,044
BlackRock, Inc. 24,683 8,158,472
Calamos Asset Management, Inc., Class A 3,098 39,933
CETIP SA - Mercados Organizados 17,536 255,774
China Cinda Asset Management    
Company, Ltd., H Shares (I) 355,000 180,839
China Everbright, Ltd. 73,784 139,869
CI Financial Corp. 2,474 81,185
CITIC Securities Company, Ltd., H Shares 86,500 205,233
Cohen & Steers, Inc. (L) 2,400 104,736
CorEnergy Infrastructure Trust, Inc. 4,513 36,104
Coronation Fund Managers, Ltd. 18,989 178,284
Cowen Group, Inc., Class A (I) 14,776 60,434
Credit Suisse Group AG (I) 120,979 3,413,046
Daewoo Securities Company, Ltd. (I) 13,867 161,521
Daiwa Securities Group, Inc. 154,000 1,254,467
Deutsche Bank AG 120,334 4,125,785

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Capital Markets (continued)    
Diamond Hill Investment Group, Inc. 356 $ 46,700
E*TRADE Financial Corp. (I) 56,361 1,254,596
Eaton Vance Corp. (L) 30,446 1,192,265
Evercore Partners, Inc., Class A 4,036 206,764
FBR & Company (I)(L) 1,293 36,954
Federated Investors, Inc., Class B (L) 23,856 732,141
Financial Engines, Inc. (L) 6,226 223,327
Franklin Resources, Inc. 79,246 4,478,984
FXCM, Inc., Class A (L) 5,575 80,782
GAMCO Investors, Inc., Class A 810 63,431
GFI Group, Inc. 10,209 46,145
Greenhill & Company, Inc. (L) 3,435 168,384
Haitong Securities Company, Ltd., H Shares 108,000 172,133
Hargreaves Lansdown PLC 22,010 410,100
HFF, Inc., Class A 3,999 119,970
ICAP PLC 51,105 322,052
ICG Group, Inc. (I) 5,209 90,376
IGM Financial, Inc. 1,130 53,917
INTL. FCStone, Inc. (I) 2,106 40,393
Invesco, Ltd. 85,316 3,484,305
Investec PLC 50,847 463,537
Investec, Ltd. 20,087 181,300
Investment Technology Group, Inc. (I) 4,379 74,574
Janus Capital Group, Inc. (L) 56,029 680,752
Julius Baer Group, Ltd. (I) 17,750 807,908
KCG Holdings, Inc., Class A (I) 6,494 75,980
Korea Investment Holdings Company, Ltd. 3,011 151,249
Ladenburg Thalmann    
Financial Services, Inc. (I) 13,239 47,396
Legg Mason, Inc. 20,072 989,951
Macquarie Group, Ltd. 25,322 1,380,688
Manning & Napier, Inc. 1,896 35,209
Marcus & Millichap, Inc. (I) 1,063 32,230
Mediobanca SpA (I) 48,798 427,354
Mirae Asset Securities Company, Ltd. 1,779 85,120
Moelis & Company (L) 935 33,931
Morgan Stanley 276,062 9,471,687
Nomura Holdings, Inc. 335,000 2,150,338
Northern Trust Corp. 43,854 3,041,275
Oppenheimer Holdings, Inc., Class A 1,352 32,664
Partners Group Holding AG 1,403 370,285
Piper Jaffray Companies (I) 1,974 105,333
Raymond James Financial, Inc. 31,309 1,710,724
Safeguard Scientifics, Inc. (I) 2,593 50,823
Samsung Securities Company, Ltd. 4,720 230,890
SBI Holdings, Inc. 18,764 222,567
Schroders PLC 11,537 467,251
SEI Investments Company 35,836 1,358,005
State Street Corp. 84,959 6,119,597
Stifel Financial Corp. (I) 7,912 378,827
SWS Group, Inc. (I)(L) 3,771 28,169
T. Rowe Price Group, Inc. 51,838 4,198,619
The Bank of New York Mellon Corp. 224,938 8,813,071
The Charles Schwab Corp. 230,997 6,585,724
The Goldman Sachs Group, Inc. 82,029 14,692,214
UBS AG (I) 291,122 5,224,710
Virtus Investment Partners, Inc. 865 193,492
Waddell & Reed Financial, Inc., Class A 21,494 1,171,423
Walter Investment Management Corp. (I) 4,566 120,314
Westwood Holdings Group, Inc. 968 57,693
WisdomTree Investments, Inc. (I)(L) 13,187 156,002
Woori Investment & Securities Company, Ltd. 9,228 107,943

 

The accompanying notes are an integral part of the financial statements. 205

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Capital Markets (continued)    
Yuanta Financial Holdings Company, Ltd. 906,100 $ 488,118
    113,126,204
Consumer Finance - 0.6%    
Acom Company, Ltd. (I) 37,100 128,544
AEON Credit Service Company, Ltd. 10,500 244,072
American Express Company 179,616 16,084,613
Capital One Financial Corp. 112,745 9,251,855
Cash America International, Inc. 3,406 152,044
Compartamos SAB de CV 123,600 265,976
Consumer Portfolio Services, Inc. (I) 3,026 21,636
Credit Acceptance Corp. (I) 865 106,603
Credit Saison Company, Ltd. 13,800 274,751
Discover Financial Services 91,979 5,736,730
Encore Capital Group, Inc. (I)(L) 3,134 139,118
Ezcorp, Inc., Class A (I)(L) 6,463 68,702
First Cash Financial Services, Inc. (I) 3,550 205,048
Green Dot Corp., Class A (I) 3,814 72,046
Navient Corp. 82,927 1,487,710
Nelnet, Inc., Class A 2,555 112,343
Portfolio Recovery Associates, Inc. (I)(L) 6,069 344,901
Regional Management Corp. (I) 1,348 22,916
Samsung Card Company, Ltd. 2,683 129,034
SLM Corp. 106,626 944,706
Springleaf Holdings, Inc. (I)(L) 3,049 101,471
World Acceptance Corp. (I)(L) 1,019 79,828
 
    35,974,647
Diversified Financial Services - 1.5%    
African Bank Investments, Ltd. 119,121 3,462
ASX, Ltd. 16,700 585,016
Berkshire Hathaway, Inc., Class B (I) 355,209 48,752,435
BM&FBovespa SA 151,865 915,871
CBOE Holdings, Inc. 21,684 1,149,794
Chailease Holding Company, Ltd. 101,470 274,887
CME Group, Inc. 62,265 4,766,386
Deutsche Boerse AG 16,852 1,199,757
Eurazeo 3,048 231,733
Exor SpA 7,963 317,135
Far East Horizon, Ltd. 115,000 92,741
First Pacific Company, Ltd. 190,000 220,225
FirstRand, Ltd. 255,254 1,035,354
Fubon Financial Holding Company, Ltd. 711,736 1,162,421
Gain Capital Holdings, Inc. 3,076 19,410
Groupe Bruxelles Lambert SA 7,211 709,170
HACI Omer Sabanci Holding AS 43,776 202,646
Hong Kong Exchanges & Clearing, Ltd. 92,415 2,123,023
Industrivarden AB, C Shares 8,087 145,920
Intercontinental Exchange Group, Inc. 22,702 4,290,678
Investment AB Kinnevik, B Shares 15,446 626,800
Investor AB, B Shares 30,316 1,125,854
Japan Exchange Group, Inc. 24,200 575,285
Leucadia National Corp. 62,686 1,562,762
London Stock Exchange Group PLC 16,355 555,551
MarketAxess Holdings, Inc. 4,616 271,975
Marlin Business Services Corp. 1,291 25,536
McGraw-Hill Financial, Inc. 53,699 4,356,600
Mitsubishi UFJ Lease &    
Finance Company, Ltd. 45,800 244,805
Moody’s Corp. 37,095 3,470,979
MSCI, Inc. (I) 29,433 1,358,039
NewStar Financial, Inc. (I) 3,391 39,098
Onex Corp. 982 57,179
ORIX Corp. 120,900 1,828,293

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Diversified Financial Services (continued)    
Pargesa Holding SA 2,497 $ 214,904
PHH Corp. (I) 6,927 165,971
PICO Holdings, Inc. (I) 2,906 64,223
Remgro, Ltd. 39,514 902,757
RMB Holdings, Ltd. 56,163 294,985
Singapore Exchange, Ltd. 90,000 524,350
The NASDAQ OMX Group, Inc. 23,423 1,018,198
Wendel SA 2,553 308,270
 
    87,790,478
Insurance - 3.3%    
ACE, Ltd. 66,641 7,085,938
Admiral Group PLC 17,940 398,104
Aegon NV 95,050 751,620
Aflac, Inc. 89,608 5,487,594
Ageas 19,777 663,801
AIA Group, Ltd. 1,008,509 5,499,578
Alleghany Corp. (I) 4,152 1,790,052
Allianz SE 39,825 6,801,052
Ambac Financial Group, Inc. (I) 5,506 133,245
American Equity Investment Life    
Holding Company 9,113 225,456
American Financial Group, Inc. 18,061 1,083,118
American International Group, Inc. 285,367 15,997,674
AMERISAFE, Inc. 2,290 86,402
AMP, Ltd. 259,066 1,423,642
AmTrust Financial Services, Inc. (L) 3,648 160,621
Aon PLC 58,503 5,099,121
Argo Group International Holdings, Ltd. 3,280 172,659
Arthur J. Gallagher & Company 39,619 1,871,205
Aspen Insurance Holdings, Ltd. 16,502 701,665
Assicurazioni Generali SpA 94,363 1,933,436
Assurant, Inc. 14,252 951,321
Atlas Financial Holdings, Inc. (I) 1,750 25,253
Aviva PLC 273,499 2,367,090
AXA SA 148,918 3,695,214
Baldwin & Lyons, Inc., Class B 1,350 34,925
Baloise Holding AG 3,718 485,053
BB Seguridade Participacoes SA 58,908 940,528
Brown & Brown, Inc. 29,981 977,980
Cathay Financial Holdings Company, Ltd. 886,466 1,513,219
China Life Insurance Company, Ltd. 308,805 286,895
China Life Insurance Company, Ltd., H Shares 630,376 1,809,825
China Pacific Insurance Group Company, Ltd.,    
H Shares 223,600 838,478
China Taiping Insurance    
Holdings Company, Ltd. (I) 74,000 179,281
Cincinnati Financial Corp. 29,288 1,408,460
CNO Financial Group, Inc. 26,791 478,219
CNP Assurances 13,870 273,835
Crawford & Company, Class B 3,206 28,886
Delta Lloyd NV 10,412 250,886
Direct Line Insurance Group PLC 139,211 690,916
Discovery, Ltd. 27,190 250,746
Dongbu Insurance Company, Ltd. 3,279 197,981
eHealth, Inc. (I) 2,349 57,644
Employers Holdings, Inc. 3,818 81,743
Enstar Group, Ltd. (I) 1,036 147,008
Everest Re Group, Ltd. 11,628 1,905,132
Fairfax Financial Holdings, Ltd. 233 107,363
FBL Financial Group, Inc., Class A 1,339 62,705
Federated National Holding Company 1,536 37,939
Fidelity & Guaranty Life 1,585 35,758
First American Financial Corp. 40,037 1,135,049

 

The accompanying notes are an integral part of the financial statements. 206

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Insurance (continued)    
Friends Life Group, Ltd. 131,611 $ 670,989
Genworth Financial, Inc., Class A (I) 98,156 1,392,834
Gjensidige Forsikring ASA 16,529 343,977
Global Indemnity PLC (I) 1,166 31,529
Great-West Lifeco, Inc. 3,337 97,658
Greenlight Capital Re, Ltd., Class A (I) 3,430 117,340
Hannover Rueckversicherung AG 5,326 443,015
Hanwha Life Insurance Company, Ltd. 16,756 115,014
HCC Insurance Holdings, Inc. 25,194 1,263,227
HCI Group, Inc. (L) 1,146 48,258
Hilltop Holdings, Inc. (I)(L) 8,319 176,113
Horace Mann Educators Corp. 4,950 147,510
Hyundai Marine & Fire    
Insurance Company, Ltd. 4,830 148,406
Industrial Alliance Insurance and    
Financial Services, Inc. 1,097 47,359
Infinity Property & Casualty Corp. 1,388 94,911
Insurance Australia Group, Ltd. 204,864 1,238,523
Intact Financial Corp. 1,461 99,313
Kemper Corp. 18,554 674,438
Legal & General Group PLC 549,174 2,205,334
Liberty Holdings, Ltd. 9,562 117,104
Lincoln National Corp. 51,983 2,861,144
Loews Corp. 60,167 2,631,705
Maiden Holdings, Ltd. 6,251 76,012
Mapfre SA 104,909 393,457
Marsh & McLennan Companies, Inc. 108,443 5,758,323
Meadowbrook Insurance Group, Inc. 6,233 38,582
Mercury General Corp. 9,151 468,806
MetLife, Inc. 222,045 12,154,743
MMI Holdings, Ltd. 85,228 219,814
Montpelier Re Holdings, Ltd. 4,888 153,728
MS&AD Insurance Group Holdings 46,400 1,047,742
Muenchener Rueckversicherungs AG 15,649 3,141,913
National General Holdings Corp. 4,448 83,311
National Western Life Insurance    
Company, Class A 309 78,486
New China Life Insurance Company, Ltd.,    
H Shares 67,900 242,768
NKSJ Holdings, Inc. 30,300 733,097
Old Mutual PLC 454,512 1,502,401
Old Republic International Corp. 61,110 938,039
OneBeacon Insurance Group, Ltd., Class A 2,933 47,016
People’s Insurance Company Group of    
China, Ltd., H Shares 535,000 222,980
PICC Property & Casualty Company, Ltd.,    
H Shares 264,780 438,822
Ping An Insurance Group Company, H Shares 172,355 1,403,297
Platinum Underwriters Holdings, Ltd. 3,269 204,214
Porto Seguro SA 9,523 141,154
Power Corp. of Canada 4,093 120,610
Power Financial Corp. 2,751 88,934
Powszechny Zaklad Ubezpieczen SA 4,140 607,052
Primerica, Inc. 20,721 1,042,888
Principal Financial Group, Inc. 53,946 2,928,728
Protective Life Corp. 19,886 1,380,088
Prudential Financial, Inc. 91,120 8,173,464
Prudential PLC 237,643 5,728,389
QBE Insurance Group, Ltd. 109,128 1,175,689
Rand Merchant Insurance Holdings, Ltd. 55,841 176,909
Reinsurance Group of America, Inc. 17,422 1,445,678
RenaissanceRe Holdings, Ltd. 10,226 1,047,040
RLI Corp. 5,237 234,094

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Insurance (continued)    
RSA Insurance Group PLC 93,978 $ 714,868
Safety Insurance Group, Inc. 1,571 86,719
Sampo OYJ, Class A 40,217 1,980,539
Samsung Fire & Marine    
Insurance Company, Ltd. 2,505 685,909
Samsung Life Insurance Company, Ltd. 4,486 471,059
Sanlam, Ltd. 146,587 908,209
SCOR SE 12,888 394,638
Selective Insurance Group, Inc. 6,952 166,639
Shin Kong Financial Holding Company, Ltd. 809,560 264,272
Sony Financial Holdings, Inc. 16,200 259,590
StanCorp Financial Group, Inc. 11,031 722,751
Standard Life PLC 241,537 1,543,165
State Auto Financial Corp. 1,921 41,686
Stewart Information Services Corp. 2,589 83,418
Sul America SA 11,479 79,330
Sun Life Financial, Inc. 6,731 250,284
Suncorp Group, Ltd. 112,915 1,522,863
Swiss Life Holding AG (I) 2,534 639,272
Swiss Re AG (I) 28,121 2,305,645
Symetra Financial Corp. 9,579 233,153
T&D Holdings, Inc. 53,800 668,456
The Allstate Corp. 85,631 5,265,450
The Chubb Corp. 48,250 4,436,588
The Dai-ichi Life Insurance Company, Ltd. 98,000 1,406,895
The Hanover Insurance Group, Inc. 11,111 704,993
The Hartford Financial Services Group, Inc. 88,680 3,285,594
The Navigators Group, Inc. (I) 1,267 81,405
The Phoenix Companies, Inc. (I) 740 45,503
The Progressive Corp. 107,453 2,688,474
The Travelers Companies, Inc. 68,552 6,492,560
Third Point Reinsurance, Ltd. (I) 6,955 106,551
Tokio Marine Holdings, Inc. 64,400 1,965,314
Torchmark Corp. 25,776 1,406,081
Tryg A/S 1,406 139,877
UnipolSai SpA 72,820 229,252
United Fire Group, Inc. 2,583 75,734
United Insurance Holdings Corp. 2,103 33,942
Universal Insurance Holdings, Inc. 3,912 54,220
Unum Group 50,847 1,844,221
W.R. Berkley Corp. 26,080 1,260,968
XL Group PLC 53,063 1,813,693
Zurich Insurance Group AG (I) 11,885 3,588,106
 
    198,173,170
Real Estate Investment Trusts - 2.6%    
Acadia Realty Trust 7,130 205,487
AG Mortgage Investment Trust, Inc. 3,383 67,559
Agree Realty Corp. 1,987 58,676
Alexander’s, Inc. 258 102,294
Alexandria Real Estate Equities, Inc. 18,070 1,428,614
Altisource Residential Corp., Class B 6,916 169,719
American Assets Trust, Inc. 4,399 154,185
American Campus Communities, Inc. 26,458 1,045,356
American Capital Mortgage Investment Corp. 6,461 132,967
American Realty Capital Healthcare Trust, Inc. 20,441 224,238
American Residential Properties, Inc. (I) 3,914 74,288
American Tower Corp. 78,076 7,698,294
AmREIT, Inc. 3,171 73,884
Anworth Mortgage Asset Corp. 16,510 85,687
Apartment Investment & Management    
Company, Class A 29,118 997,874
Apollo Commercial Real Estate Finance, Inc. 6,001 100,937
Apollo Residential Mortgage, Inc. 3,876 65,311

 

The accompanying notes are an integral part of the financial statements. 207

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Investment Trusts (continued)    
Ares Commercial Real Estate Corp. 3,792 $ 47,741
ARMOUR Residential REIT, Inc. 42,786 180,985
Ascendas Real Estate Investment Trust 228,000 428,648
Ashford Hospitality Prime, Inc. 3,321 53,767
Ashford Hospitality Trust, Inc. 8,553 99,129
Associated Estates Realty Corp. 7,251 134,144
AvalonBay Communities, Inc. 24,013 3,700,403
Aviv REIT, Inc. 2,527 73,940
BGP Holdings PLC (I) 181,302 0
BioMed Realty Trust, Inc. 48,551 1,089,970
Boston Properties, Inc. 30,176 3,663,970
British Land Company PLC 88,900 1,079,550
Camden Property Trust 21,579 1,614,972
Campus Crest Communities, Inc. 7,922 65,119
CapitaCommercial Trust 225,000 305,975
CapitaMall Trust 270,200 432,428
Capstead Mortgage Corp. 11,228 148,434
CaretTust REIIT, Inc. (I) 2,605 45,509
Cedar Realty Trust, Inc. 11,803 76,365
CFS Retail Property Trust Group 187,199 376,297
Chambers Street Properties 29,080 226,533
Chatham Lodging Trust 3,330 76,990
Chesapeake Lodging Trust 6,089 187,602
Colony Financial, Inc. 11,238 251,956
CoreSite Realty Corp. 2,589 90,796
Corio NV 3,610 194,107
Corporate Office Properties Trust 22,094 627,028
Corrections Corp. of America 29,347 1,045,927
Cousins Properties, Inc. 24,066 305,398
Crown Castle International Corp. 65,836 5,234,620
CubeSmart 17,490 325,314
CyrusOne, Inc. 2,415 62,887
CYS Investments, Inc. 19,659 185,384
DCT Industrial Trust, Inc. 39,315 312,554
Dexus Property Group 490,023 551,833
DiamondRock Hospitality Company 23,849 317,669
Duke Realty Corp. 83,097 1,545,604
DuPont Fabros Technology, Inc. 7,711 217,142
Dynex Capital, Inc. 6,977 61,049
EastGroup Properties, Inc. 3,767 244,252
Education Realty Trust, Inc. 13,986 152,308
Emlak Konut Gayrimenkul Yatirim    
Ortakligi AS 90,785 114,062
Empire State Realty Trust, Inc., Class A 11,091 182,336
EPR Properties 6,307 358,931
Equity One, Inc. 23,544 555,638
Equity Residential 66,227 4,402,109
Essex Property Trust, Inc. 12,319 2,383,111
Excel Trust, Inc. 5,993 77,549
Extra Space Storage, Inc. 27,778 1,463,901
Federal Realty Investment Trust 16,965 2,116,893
Federation Centres, Ltd. 126,499 314,611
FelCor Lodging Trust, Inc. 15,117 156,310
Fibra Uno Administracion SA de CV 235,900 849,848
First Industrial Realty Trust, Inc. 13,486 245,445
First Potomac Realty Trust 7,217 95,553
Fonciere Des Regions 2,279 230,711
Franklin Street Properties Corp. 11,110 134,987
Gecina SA 1,778 251,297
General Growth Properties, Inc. 102,813 2,526,115
Getty Realty Corp. 3,922 73,577
Gladstone Commercial Corp. 3,939 72,005
Glimcher Realty Trust 17,637 198,064

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Investment Trusts (continued)    
Goodman Group 150,041 $ 782,777
Government Properties Income Trust 6,753 162,207
Gramercy Property Trust, Inc. 14,465 89,538
Growthpoint Properties, Ltd. 171,678 405,750
H&R Real Estate Investment Trust 1,479 31,463
Hammerson PLC 66,163 667,915
Hannon Armstrong Sustainable    
Infrastructure Capital, Inc. 2,907 42,122
Hatteras Financial Corp. 11,439 227,636
HCP, Inc. 90,260 3,910,966
Health Care REIT, Inc. 60,209 4,068,924
Healthcare Realty Trust, Inc. 11,455 285,917
Hersha Hospitality Trust 24,489 166,280
Highwoods Properties, Inc. 33,538 1,427,042
Home Properties, Inc. 14,408 925,282
Hospitality Properties Trust 37,765 1,111,424
Host Hotels & Resorts, Inc. 149,170 3,404,059
Hudson Pacific Properties, Inc. 6,785 182,177
ICADE 2,987 277,815
Inland Real Estate Corp. 10,888 113,344
Intu Properties PLC 81,342 462,372
Invesco Mortgage Capital, Inc. 14,513 255,719
Investors Real Estate Trust 13,063 111,427
iStar Financial, Inc. (I) 10,249 152,505
Japan Prime Realty Investment Corp. 73 268,445
Japan Real Estate Investment Corp. 110 605,206
Japan Retail Fund Investment Corp. 214 448,871
Kilroy Realty Corp. 20,735 1,311,489
Kimco Realty Corp. 81,120 1,905,509
Kite Realty Group Trust 3,986 102,507
Klepierre 8,059 383,970
Land Securities Group PLC 73,193 1,316,799
LaSalle Hotel Properties 40,891 1,494,566
Lexington Realty Trust 24,598 267,626
Liberty Property Trust 37,249 1,319,360
LTC Properties, Inc. 4,231 173,259
Mack-Cali Realty Corp. 32,995 697,514
Medical Properties Trust, Inc. 20,955 295,256
Mid-America Apartment Communities, Inc. 18,917 1,368,077
Mirvac Group 318,369 546,254
Monmouth Real Estate    
Investment Corp., Class A 8,231 89,059
National Health Investments, Inc. 4,034 260,233
National Retail Properties, Inc. 31,068 1,153,866
New Residential Investment Corp. 34,233 214,641
New York Mortgage Trust, Inc. 11,271 89,943
New York REIT, Inc. 21,164 218,201
Nippon Building Fund, Inc. 126 701,655
Nippon Prologis REIT, Inc. 124 301,027
Omega Healthcare Investors, Inc. 31,787 1,197,416
Owens Realty Mortgage, Inc. 1,665 26,557
Parkway Properties, Inc. 8,711 180,753
Pebblebrook Hotel Trust 7,778 301,320
Pennsylvania Real Estate Investment Trust 8,396 169,263
PennyMac Mortgage Investment Trust 9,031 201,030
Physicians Realty Trust 4,276 63,328
Plum Creek Timber Company, Inc. 35,081 1,425,341
Potlatch Corp. 15,198 648,651
Prologis, Inc. 98,508 4,032,918
PS Business Parks, Inc. 2,317 188,928
Public Storage 28,590 5,008,396
QTS Realty Trust, Inc., Class A 1,425 42,964
RAIT Financial Trust 10,086 81,596

 

The accompanying notes are an integral part of the financial statements. 208

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Investment Trusts (continued)    
Ramco-Gershenson Properties Trust 8,441 $ 143,159
Rayonier, Inc. 31,895 1,093,042
Realty Income Corp. 55,847 2,497,478
Redefine Properties Ltd. 254,199 227,835
Redwood Trust, Inc. 10,036 194,397
Regency Centers Corp. 23,288 1,330,676
Resource Capital Corp. 15,905 85,728
Retail Opportunity Investments Corp. 9,269 146,821
Rexford Industrial Realty, Inc. 3,950 58,223
RioCan Real Estate Investment Trust 1,672 41,658
RLJ Lodging Trust 15,712 468,375
Rouse Properties, Inc. 4,591 80,251
Ryman Hospitality Properties 5,251 261,237
Sabra Health Care REIT, Inc. 5,730 163,190
Saul Centers, Inc. 1,219 60,767
Scentre Group (I) 467,109 1,496,360
Segro PLC 68,883 423,489
Select Income REIT 4,305 120,110
Senior Housing Properties Trust 51,378 1,198,649
Silver Bay Realty Trust Corp. 4,676 77,949
Simon Property Group, Inc. 61,284 10,420,119
SL Green Realty Corp. 24,069 2,631,945
Sovran Self Storage, Inc. 4,002 309,235
STAG Industrial, Inc. 6,454 151,217
Starwood Waypoint Residential Trust (I) 4,692 129,875
Stockland 202,231 803,558
Strategic Hotels & Resorts, Inc. (I) 30,086 357,422
Summit Hotel Properties, Inc. 10,417 114,066
Sun Communities, Inc. 4,996 267,935
Sunstone Hotel Investors, Inc. 22,293 324,809
Taubman Centers, Inc. 15,954 1,215,216
Terreno Realty Corp. 4,210 85,210
The Geo Group, Inc. 8,663 324,169
The GPT Group 149,375 556,922
The Link REIT 193,925 1,151,793
The Macerich Company 27,815 1,816,041
UDR, Inc. 63,410 1,897,227
Unibail-Rodamco SE 7,996 2,148,804
United Urban Investment Corp. 232 374,229
Universal Health Realty Income Trust 1,556 68,729
Urstadt Biddle Properties, Inc., Class A 3,171 67,606
Ventas, Inc. 58,021 3,816,621
Vornado Realty Trust 34,379 3,639,705
Washington Prime Group, Inc. 39,171 764,618
Washington Real Estate Investment Trust 7,830 217,517
Weingarten Realty Investors 28,345 969,966
Western Asset Mortgage Capital Corp. 5,146 78,219
Westfield Corp. (I) 172,730 1,229,268
Weyerhaeuser Company 115,329 3,915,420
Whitestone REIT 4,042 61,438
Winthrop Realty Trust 4,612 70,379
 
    153,837,849
Real Estate Management & Development - 0.6%    
Aeon Mall Company, Ltd. 10,600 231,467
Agile Property Holdings, Ltd. 121,211 94,937
Alexander & Baldwin, Inc. 16,741 684,707
Altisource Asset Management Corp. (I)(L) 172 128,042
Altisource Portfolio Solutions SA (I)(L) 1,772 177,076
AV Homes, Inc. (I) 1,628 25,934
BR Malls Participacoes SA 36,651 381,000
BR Properties SA 14,501 96,522
Brookfield Asset Management, Inc. (L) 5,802 277,213
Bumi Serpong Damai PT 889,500 122,138

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Management & Development (continued)  
CapitaLand, Ltd. 286,500 $ 761,120
CBRE Group, Inc., Class A (I) 55,098 1,751,014
Central Pattana PCL 196,536 297,093
Cheung Kong Holdings, Ltd. 117,000 2,129,817
China Overseas Land & Investment, Ltd. 346,397 973,798
China Resources Land, Ltd. 171,211 391,374
China Vanke Company, Ltd. (I) 107,300 201,030
City Developments, Ltd. 46,000 369,155
Consolidated-Tomoka Land Company 578 33,813
Country Garden Holdings Company, Ltd. 401,467 176,963
Daito Trust Construction Company, Ltd. 6,700 829,386
Daiwa House Industry Company, Ltd. 55,000 1,042,419
Deutsche Wohnen AG 25,106 567,370
Evergrande Real Estate Group, Ltd. 471,000 196,272
Farglory Land Development Company, Ltd. 45,000 62,418
First Capital Realty, Inc. 1,013 18,000
Forestar Group, Inc. (I) 4,263 85,260
Franshion Properties China, Ltd. 320,000 86,661
Global Logistic Properties, Ltd. 346,000 789,382
Guangzhou R&F Properties Company, Ltd.,    
H Shares 88,400 106,530
Hang Lung Properties, Ltd. 188,000 622,370
Henderson Land Development Company, Ltd. 87,158 577,622
Highwealth Construction Corp. 63,000 111,585
Hulic Company, Ltd. 22,100 251,206
Hysan Development Company, Ltd. 52,557 257,737
Immoeast AG (I) 14,582 0
IOI Properties Group BHD (I) 76,433 59,646
Jones Lang LaSalle, Inc. 11,239 1,501,643
Kennedy-Wilson Holdings, Inc. 8,739 228,263
Keppel Land, Ltd. 77,970 216,555
Kerry Properties, Ltd. 51,768 191,989
Lend Lease Corp. 47,350 633,125
Lippo Karawaci Tbk PT 2,370,300 216,928
Longfor Properties Company, Ltd. 118,500 151,279
Mitsubishi Estate Company, Ltd. 115,000 2,659,580
Mitsui Fudosan Company, Ltd. 86,000 2,744,317
Multiplan Empreendimentos Imobiliarios SA 6,767 174,458
New World China Land, Ltd. 226,000 137,058
New World Development Company, Ltd. 433,257 547,836
Nomura Real Estate Holdings, Inc. 11,500 207,908
NTT Urban Development Corp. 10,700 122,697
Poly Property Group Company, Ltd. 175,000 75,673
RE/MAX Holdings, Inc., Class A 1,355 41,084
Ruentex Development Company, Ltd. 78,000 140,380
Shimao Property Holdings, Ltd. 114,000 249,861
Shui On Land, Ltd. 313,459 82,024
Sino Land Company, Ltd. 251,075 441,663
Sino-Ocean Land Holdings, Ltd. 258,858 145,594
SOHO China, Ltd. 161,000 131,218
Sumitomo Realty &    
Development Company, Ltd. 33,000 1,279,597
Sun Hung Kai Properties, Ltd. 136,500 2,072,238
Swire Pacific, Ltd., Class A 53,500 719,810
Swire Properties, Ltd. 96,600 324,087
Swiss Prime Site AG (I) 4,647 371,087
Tejon Ranch Company (I) 1,710 48,085
The St. Joe Company (I)(L) 7,672 166,176
The Wharf Holdings, Ltd. 127,625 999,488
Tokyo Tatemono Company, Ltd. 38,000 325,618
Tokyu Fudosan Holdings Corp. 44,700 343,250
UEM Sunrise BHD 83,255 50,714
UOL Group, Ltd. 52,000 264,152

 

The accompanying notes are an integral part of the financial statements. 209

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Real Estate Management & Development (continued)  
Wheelock and Company, Ltd. 76,000 $ 398,160
Yuexiu Property Company, Ltd. 446,000 95,475
 
    33,467,147
Thrifts & Mortgage Finance - 0.1%    
Astoria Financial Corp. 31,460 411,182
Bank Mutual Corp. 6,096 40,173
BankFinancial Corp. 3,748 40,516
BBX Capital Corp., Class A (I) 1,190 22,301
Beneficial Mutual Bancorp, Inc. (I) 4,166 57,199
Berkshire Hills Bancorp, Inc. 3,069 75,589
BofI Holding, Inc. (I)(L) 1,729 133,116
Brookline Bancorp, Inc. 8,865 81,115
Capitol Federal Financial, Inc. 16,688 206,097
Clifton Bancorp, Inc. 4,261 53,561
Dime Community Bancshares, Inc. 4,854 74,946
ESB Financial Corp. 1,816 22,972
Essent Group, Ltd. (I) 5,046 106,269
EverBank Financial Corp. 10,997 207,623
Federal Agricultural Mortgage Corp., Class C 1,361 44,804
First Defiance Financial Corp. 1,300 36,270
Flagstar Bancorp, Inc. (I) 2,539 44,255
Fox Chase Bancorp, Inc. 1,958 33,462
Franklin Financial Corp. (I) 1,275 25,322
Home Loan Servicing Solutions, Ltd. 8,618 188,734
HomeStreet, Inc. 2,063 37,526
Hudson City Bancorp, Inc. 94,452 932,241
Kearny Financial Corp. (I) 1,809 28,311
Ladder Capital Corp., Class A (I) 1,922 35,749
Meridian Bancorp, Inc. (I) 2,384 25,223
Meta Financial Group, Inc. 885 33,630
MGIC Investment Corp. (I) 41,219 347,476
New York Community Bancorp, Inc. (L) 111,637 1,780,610
NMI Holdings, Inc., Class A (I) 6,372 61,681
Northfield Bancorp, Inc. 7,729 101,327
Northwest Bancshares, Inc. 11,754 148,218
Oritani Financial Corp. 5,760 86,400
PennyMac Financial Services, Inc. (I) 1,852 28,576
People’s United Financial, Inc. (L) 60,412 903,159
Provident Financial Services, Inc. 7,641 129,973
Radian Group, Inc. 23,221 338,098
Stonegate Mortgage Corp. (I)(L) 1,915 27,787
Tree.com, Inc. (I) 915 29,271
TrustCo Bank Corp. 11,816 82,948
United Community Financial Corp. 8,986 41,156
United Financial Bancorp, Inc. 6,605 81,836
Walker & Dunlop, Inc. (I) 2,463 34,950
Washington Federal, Inc. 37,656 819,018
Waterstone Financial, Inc. 4,243 48,497
WSFS Financial Corp. 1,126 84,000
 
    8,173,167
    1,096,404,218
Health Care - 11.3%    
Biotechnology - 2.0%    
ACADIA Pharmaceuticals, Inc. (I)(L) 9,532 228,577
Acceleron Pharma, Inc. (I)(L) 2,057 55,272
Achillion Pharmaceuticals, Inc. (I)(L) 12,201 141,166
Acorda Therapeutics, Inc. (I) 5,092 165,897
Actelion, Ltd. (I) 8,137 999,075
Actinium Pharmaceuticals, Inc. (I)(L) 2,801 17,422
Aegerion Pharmaceuticals, Inc. (I) 3,632 110,958
Agenus, Inc. (I) 8,421 26,442

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Biotechnology (continued)    
Agios Pharmaceuticals, Inc. (I)(L) 1,624 $ 75,061
Akebia Therapeutics, Inc. (I)(L) 1,022 23,005
Alder Biopharmaceuticals, Inc. (I) 1,035 17,636
Alexion Pharmaceuticals, Inc. (I) 39,019 6,605,527
AMAG Pharmaceuticals, Inc. (I)(L) 2,775 62,798
Amgen, Inc. 149,338 20,814,730
Anacor Pharmaceuticals, Inc. (I)(L) 3,952 92,042
Arena Pharmaceuticals, Inc. (I)(L) 26,871 110,709
ARIAD Pharmaceuticals, Inc. (I)(L) 20,252 125,967
Array BioPharma, Inc. (I)(L) 16,107 63,623
Arrowhead Research Corp. (I)(L) 6,228 90,742
Asterias Biotherapeutics, Inc. (I)(L) 789 2,817
Auspex Pharmaceuticals, Inc. (I) 980 22,530
BioCryst Pharmaceuticals, Inc. (I)(L) 8,641 116,654
Biogen Idec, Inc. (I) 46,792 16,051,528
BioTime, Inc. (I) 6,796 21,136
Bluebird Bio, Inc. (I) 2,390 95,624
Celgene Corp. (I) 157,978 15,011,070
Celldex Therapeutics, Inc. (I)(L) 10,866 172,878
Cellular Dynamics International, Inc. (I)(L) 1,424 16,291
Cepheid, Inc. (I) 8,469 339,014
Chelsea Therapeutics International, Ltd. (I)(L) 9,811 785
ChemoCentryx, Inc. (I)(L) 3,991 20,394
Chimerix, Inc. (I)(L) 3,345 85,431
Clovis Oncology, Inc. (I)(L) 2,988 142,109
CSL, Ltd. 42,533 2,937,268
CTI BioPharma Corp. (I)(L) 16,554 42,378
Cubist Pharmaceuticals, Inc. (I) 18,992 1,311,018
Cytokinetics, Inc. (I) 4,842 20,724
Cytori Therapeutics, Inc. (I)(L) 9,751 13,749
CytRx Corp. (I)(L) 7,249 24,067
Dendreon Corp. (I)(L) 21,045 28,621
Durata Therapeutics, Inc. (I)(L) 1,900 29,944
Dyax Corp. (I) 16,613 169,619
Dynavax Technologies Corp. (I) 33,197 47,140
Emergent Biosolutions, Inc. (I) 3,509 87,374
Enanta Pharmaceuticals, Inc. (I)(L) 1,288 54,044
Epizyme, Inc. (I)(L) 1,546 53,322
Exact Sciences Corp. (I)(L) 10,005 208,604
Exelixis, Inc. (I)(L) 24,206 100,213
Five Prime Therapeutics, Inc. (I) 2,100 24,423
Foundation Medicine, Inc. (I)(L) 1,707 39,722
Galectin Therapeutics, Inc. (I)(L) 2,348 14,698
Galena Biopharma, Inc. (I)(L) 14,267 33,670
Genomic Health, Inc. (I)(L) 2,148 63,839
Geron Corp. (I)(L) 18,956 45,115
Gilead Sciences, Inc. (I) 302,936 32,589,855
Grifols SA 16,837 784,326
Halozyme Therapeutics, Inc. (I)(L) 12,563 119,349
Heron Therapeutics, Inc. (I) 2,503 23,503
Hyperion Therapeutics, Inc. (I)(L) 1,723 44,557
Idera Pharmaceuticals, Inc. (I)(L) 7,269 21,007
ImmunoGen, Inc. (I)(L) 10,712 126,616
Immunomedics, Inc. (I)(L) 10,302 34,306
Infinity Pharmaceuticals, Inc. (I) 5,910 66,783
Inovio Pharmaceuticals, Inc. (I)(L) 7,225 76,513
Insmed, Inc. (I) 4,767 66,404
Insys Therapeutics, Inc. (I)(L) 1,259 44,468
InterMune, Inc. (I) 12,022 883,016
Intrexon Corp. (I)(L) 4,293 87,062
Ironwood Pharmaceuticals, Inc. (I) 14,655 189,636
Isis Pharmaceuticals, Inc. (I)(L) 14,300 582,868
Karyopharm Therapeutics, Inc. (I)(L) 1,487 53,532

 

The accompanying notes are an integral part of the financial statements. 210

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Biotechnology (continued)    
Keryx Biopharmaceuticals, Inc. (I)(L) 11,053 $ 201,054
Kindred Biosciences, Inc. (I)(L) 1,287 14,041
Kythera Biopharmaceuticals, Inc. (I)(L) 2,165 81,426
Lexicon Pharmaceuticals, Inc. (I)(L) 28,833 43,826
Ligand Pharmaceuticals, Inc. (I)(L) 2,528 131,557
MacroGenics, Inc. (I) 2,500 53,400
MannKind Corp. (I)(L) 27,807 204,938
Merrimack Pharmaceuticals, Inc. (I)(L) 12,150 84,807
MiMedx Group, Inc. (I)(L) 11,358 79,960
Mirati Therapeutics, Inc. (I) 1,015 20,858
Momenta Pharmaceuticals, Inc. (I) 6,094 71,848
Nanoviricides, Inc. (I)(L) 5,058 19,827
Navidea Biopharmaceuticals, Inc. (I)(L) 19,020 27,199
Neostem, Inc. (I) 3,479 20,004
Neuralstem, Inc. (I)(L) 9,076 36,939
Neurocrine Biosciences, Inc. (I) 9,280 151,357
NewLink Genetics Corp. (I)(L) 2,390 65,988
Northwest Biotherapeutics, Inc. (I)(L) 4,566 26,665
Novavax, Inc. (I)(L) 25,728 120,664
NPS Pharmaceuticals, Inc. (I) 12,941 390,559
Ohr Pharmaceutical, Inc. (I)(L) 2,945 24,208
OncoMed Pharmaceuticals, Inc. (I)(L) 1,607 32,606
Oncothyreon, Inc. (I) 9,514 22,263
Ophthotech Corp. (I) 1,659 64,635
OPKO Health, Inc. (I)(L) 24,061 214,143
Orexigen Therapeutics, Inc. (I)(L) 14,295 81,482
Organovo Holdings, Inc. (I)(L) 7,548 58,723
Osiris Therapeutics, Inc. (I)(L) 2,315 33,081
OvaScience, Inc. (I) 2,280 30,803
PDL BioPharma, Inc. (L) 19,546 197,219
Peregrine Pharmaceuticals, Inc. (I)(L) 22,592 37,277
Portola Pharmaceuticals, Inc. (I) 4,448 124,055
Progenics Pharmaceuticals, Inc. (I)(L) 8,505 46,863
Prothena Corp. PLC (I) 2,652 60,731
PTC Therapeutics, Inc. (I)(L) 2,684 84,975
Puma Biotechnology, Inc. (I) 2,820 734,638
Raptor Pharmaceutical Corp. (I)(L) 7,622 83,994
Receptos, Inc. (I) 1,909 97,645
Regeneron Pharmaceuticals, Inc. (I) 15,721 5,510,525
Repligen Corp. (I) 4,004 76,316
Retrophin, Inc. (I)(L) 2,577 35,253
Rigel Pharmaceuticals, Inc. (I) 10,792 28,059
Sangamo BioSciences, Inc. (I)(L) 8,352 119,434
Sarepta Therapeutics, Inc. (I)(L) 4,911 112,609
Spectrum Pharmaceuticals, Inc. (I)(L) 8,059 65,358
Stemline Therapeutics, Inc. (I)(L) 1,465 16,525
Sunesis Pharmaceuticals, Inc. (I)(L) 6,057 45,367
Synageva BioPharma Corp. (I)(L) 2,610 188,364
Synergy Pharmaceuticals, Inc. (I)(L) 11,553 45,057
Synta Pharmaceuticals Corp. (I)(L) 7,192 28,768
TESARO, Inc. (I) 2,343 69,259
TG Therapeutics, Inc. (I)(L) 3,124 26,492
Threshold Pharmaceuticals, Inc. (I)(L) 7,252 30,168
Trius Therapeutics, Inc. (I)(L) 6,739 741
Ultragenyx Pharmaceutical, Inc. (I)(L) 881 47,010
United Therapeutics Corp. (I) 11,130 1,311,448
Vanda Pharmaceuticals, Inc. (I)(L) 4,106 53,132
Verastem, Inc. (I)(L) 2,972 25,886
Versartis, Inc. (I)(L) 845 19,435
Vertex Pharmaceuticals, Inc. (I) 46,590 4,359,426
Vital Therapies, Inc. (I)(L) 690 16,546
Xencor, Inc. (I) 1,823 19,488
XOMA Corp. (I)(L) 10,168 44,536

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Biotechnology (continued)    
ZIOPHARM Oncology, Inc. (I)(L) 10,733 $ 34,668
 
    119,274,391
Health Care Equipment & Supplies - 1.7%    
Abaxis, Inc. 2,706 129,212
Abbott Laboratories 296,311 12,516,177
ABIOMED, Inc. (I)(L) 4,881 127,150
Accuray, Inc. (I)(L) 9,485 77,208
Align Technology, Inc. (I) 18,118 986,706
Analogic Corp. 1,508 108,878
AngioDynamics, Inc. (I) 3,062 43,205
Anika Therapeutics, Inc. (I) 1,735 72,870
Antares Pharma, Inc. (I)(L) 14,531 34,148
AtriCure, Inc. (I) 3,478 53,979
Atrion Corp. 184 58,880
Baxter International, Inc. 107,052 8,026,759
Becton, Dickinson and Company 38,128 4,467,458
Boston Scientific Corp. (I) 260,918 3,308,440
C.R. Bard, Inc. 15,139 2,247,233
Cantel Medical Corp. 4,148 151,278
Cardiovascular Systems, Inc. (I) 3,372 96,068
CareFusion Corp. (I) 40,882 1,876,893
Cerus Corp. (I)(L) 9,164 34,457
Cochlear, Ltd. 5,056 342,775
Coloplast A/S 7,278 605,347
CONMED Corp. 3,278 129,481
Covidien PLC 88,961 7,724,484
CryoLife, Inc. 3,979 39,949
Cyberonics, Inc. (I) 3,262 187,206
Cynosure, Inc., Class A (I) 2,784 62,724
DENTSPLY International, Inc. 27,615 1,317,374
Derma Sciences, Inc. (I)(L) 3,015 25,537
DexCom, Inc. (I) 9,116 402,927
Edwards Lifesciences Corp. (I) 20,660 2,050,712
Elekta AB, B Shares (L) 24,184 276,459
Endologix, Inc. (I) 7,834 108,188
Essilor International SA 16,757 1,777,961
Exactech, Inc. (I) 1,645 39,283
GenMark Diagnostics, Inc. (I)(L) 5,094 54,761
Getinge AB, B Shares 13,132 343,367
Globus Medical, Inc., Class A (I) 7,951 144,231
Greatbatch, Inc. (I) 3,048 138,897
Haemonetics Corp. (I) 6,306 225,061
HeartWare International, Inc. (I) 2,065 167,472
Hill-Rom Holdings, Inc. 14,431 632,222
Hologic, Inc. (I) 69,687 1,733,116
ICU Medical, Inc. (I) 1,603 100,332
IDEXX Laboratories, Inc. (I) 12,939 1,604,048
Insulet Corp. (I) 6,755 243,923
Integra LifeSciences Holdings Corp. (I)(L) 3,024 151,170
Intuitive Surgical, Inc. (I) 7,575 3,560,326
Invacare Corp. 3,873 59,412
LDR Holding Corp. (I)(L) 2,079 56,279
Masimo Corp. (I) 5,909 132,598
Medtronic, Inc. 197,102 12,584,963
Meridian Bioscience, Inc. (L) 5,049 98,809
Merit Medical Systems, Inc. (I) 5,388 67,404
Natus Medical, Inc. (I) 3,867 108,701
Neogen Corp. (I) 4,485 188,819
NuVasive, Inc. (I) 5,677 199,263
NxStage Medical, Inc. (I) 7,564 99,240
Olympus Corp. (I) 22,300 797,779
OraSure Technologies, Inc. (I) 6,827 56,869
Orthofix International NV (I) 2,237 75,857

 

The accompanying notes are an integral part of the financial statements. 211

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Health Care Equipment & Supplies (continued)    
Oxford Immunotec Global PLC (I)(L) 1,782 $ 25,055
PhotoMedex, Inc. (I) 1,879 15,370
Quidel Corp. (I) 3,497 82,529
ResMed, Inc. (L) 35,391 1,877,493
Rockwell Medical Technologies, Inc. (I) 5,082 48,482
RTI Surgical, Inc. (I) 7,716 40,972
Shandong Weigao Group Medical Polymer    
Company, Ltd., H Shares 164,000 166,297
Sirona Dental Systems, Inc. (I) 13,959 1,137,798
Smith & Nephew PLC 82,953 1,435,963
Sonova Holding AG 4,248 680,056
Spectranetics Corp. (I) 5,086 144,341
St. Jude Medical, Inc. 56,068 3,677,500
STAAR Surgical Company (I)(L) 4,743 54,592
STERIS Corp. 22,016 1,239,281
Stryker Corp. 58,347 4,860,889
SurModics, Inc. (I) 2,198 44,883
Symmetry Medical, Inc. (I) 4,993 46,035
Sysmex Corp. 13,500 523,183
Teleflex, Inc. 10,433 1,142,205
Terumo Corp. 28,200 710,218
The Cooper Companies, Inc. 12,090 1,971,033
Thoratec Corp. (I) 21,221 530,525
Tornier NV (I) 4,350 94,047
Transenterix, Inc. (I) 3,842 15,137
Unilife Corp. (I)(L) 13,840 35,292
Utah Medical Products, Inc. 564 29,379
Varian Medical Systems, Inc. (I) 20,512 1,743,930
Vascular Solutions, Inc. (I) 2,193 52,413
Volcano Corp. (I) 6,329 78,733
West Pharmaceutical Services, Inc. 8,521 370,067
William Demant Holdings A/S (I) 1,485 114,787
Wright Medical Group, Inc. (I) 6,064 180,950
Zeltiq Aesthetics, Inc. (I) 3,650 76,687
Zimmer Holdings, Inc. 33,104 3,287,558
 
    99,666,005
Health Care Providers & Services - 1.7%    
Acadia Healthcare Company, Inc. (I) 4,430 226,860
Aetna, Inc. 70,503 5,790,411
Air Methods Corp. (I)(L) 4,781 280,453
Alfresa Holdings Corp. 4,100 243,550
Almost Family, Inc. (I) 1,120 31,338
Amedisys, Inc. (I) 3,315 69,350
AmerisourceBergen Corp. 44,545 3,447,338
AMN Healthcare Services, Inc. (I) 5,611 84,838
Amsurg Corp. (I) 3,935 211,664
Bangkok Dusit Medical Services PCL 1,972,510 1,204,537
Bio-Reference Labs, Inc. (I) 2,958 85,930
BioScrip, Inc. (I) 8,530 72,164
BioTelemetry, Inc. (I) 3,447 25,232
Brookdale Senior Living, Inc. (I) 4,362 152,452
Bumrungrad Hospital PCL 25,200 106,512
Bumrungrad Hospital PCL, Local Shares 35,843 151,524
Capital Senior Living Corp. (I) 3,558 81,371
Cardinal Health, Inc. 67,112 4,946,154
Catamaran Corp. (I) 2,219 104,552
Celesio AG 4,335 147,406
Chemed Corp. (L) 2,144 226,428
Chindex International, Inc. (I) 1,806 43,181
Cigna Corp. 53,001 5,013,895
Community Health Systems, Inc. (I) 29,069 1,577,865
Corvel Corp. (I) 1,366 55,869
Cross Country Healthcare, Inc. (I) 4,088 32,622

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Health Care Providers & Services (continued)    
DaVita HealthCare Partners, Inc. (I) 35,080 $ 2,619,774
ExamWorks Group, Inc. (I) 4,240 139,708
Express Scripts Holding Company (I) 152,493 11,273,807
Five Star Quality Care, Inc. (I) 5,797 26,898
Fresenius Medical Care AG &    
Company KGaA 18,884 1,330,537
Fresenius SE & Company KGaA 32,964 1,608,159
Gentiva Health Services, Inc. (I) 3,844 69,461
Hanger, Inc. (I)(L) 4,300 96,320
Health Net, Inc. (I) 20,227 954,714
HealthSouth Corp. 10,688 421,000
Healthways, Inc. (I)(L) 3,764 65,719
Henry Schein, Inc. (I) 21,529 2,576,806
Humana, Inc. 30,534 3,930,947
IHH Healthcare BHD 127,909 197,975
IPC The Hospitalist Company, Inc. (I) 2,129 102,916
Kindred Healthcare, Inc. 6,607 136,435
Laboratory Corp. of America Holdings (I) 16,799 1,801,357
Landauer, Inc. 1,210 44,068
LHC Group, Inc. (I) 1,636 42,111
Life Healthcare Group Holdings, Ltd. 74,653 313,430
LifePoint Hospitals, Inc. (I) 11,218 839,106
Magellan Health Services, Inc. (I) 3,426 191,376
McKesson Corp. 45,487 8,871,330
Mediclinic International, Ltd. 29,295 254,034
Medipal Holdings Corp. 12,500 161,869
MEDNAX, Inc. (I) 25,065 1,434,971
Miraca Holdings, Inc. 5,200 242,237
Molina Healthcare, Inc. (I) 3,639 174,090
MWI Veterinary Supply, Inc. (I) 1,558 221,314
National Healthcare Corp. 1,220 69,906
Netcare, Ltd. 80,157 242,769
Odontoprev SA 20,097 87,624
Omnicare, Inc. 24,974 1,592,592
Owens & Minor, Inc. (L) 23,463 807,127
Patterson Companies, Inc. 16,028 645,448
PharMerica Corp. (I) 3,644 90,699
Qualicorp SA (I) 16,784 209,941
Quest Diagnostics, Inc. 28,582 1,806,668
RadNet, Inc. (I) 4,335 28,958
Ramsay Health Care, Ltd. 11,640 565,223
Ryman Healthcare, Ltd. 31,847 214,779
Select Medical Holdings Corp. 9,556 133,975
Shanghai Pharmaceuticals Holding    
Company, Ltd., H Shares 60,000 123,223
Sinopharm Group Company, Ltd., H Shares 81,200 283,775
Skilled Healthcare Group, Inc., Class A (I) 2,998 22,215
Sonic Healthcare, Ltd. 32,833 540,881
Surgical Care Affiliates, Inc. (I) 1,525 45,384
Suzuken Company, Ltd. 6,500 216,552
Team Health Holdings, Inc. (I) 8,496 497,186
Tenet Healthcare Corp. (I) 18,926 1,157,893
The Ensign Group, Inc. 2,448 85,680
The Providence Service Corp. (I) 1,448 65,927
Triple-S Management Corp., Class B (I) 3,054 58,454
UnitedHealth Group, Inc. 193,317 16,756,718
Universal American Corp. 5,214 44,580
Universal Health Services, Inc., Class B 22,671 2,594,469
US Physical Therapy, Inc. 1,531 54,657
VCA Antech, Inc. (I) 22,270 907,503
WellCare Health Plans, Inc. (I) 16,397 1,079,906
WellPoint, Inc. 55,171 6,427,973
 
    102,014,650

 

The accompanying notes are an integral part of the financial statements. 212

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Health Care Technology - 0.1%    
Allscripts Healthcare Solutions, Inc. (I) 40,288 $ 595,255
Castlight Health, Inc., B Shares (I)(L) 1,787 21,283
Cerner Corp. (I) 58,262 3,359,387
Computer Programs & Systems, Inc. 1,431 87,921
HealthStream, Inc. (I) 2,640 68,534
HMS Holdings Corp. (I) 32,818 750,219
M3, Inc. 18,000 314,920
MedAssets, Inc. (I) 7,499 172,477
Medidata Solutions, Inc. (I) 6,587 306,559
Merge Healthcare, Inc. (I) 10,405 27,053
Omnicell, Inc. (I) 4,503 126,759
Quality Systems, Inc. 6,017 94,226
Vocera Communications, Inc. (I) 2,983 26,191
 
    5,950,784
Life Sciences Tools & Services - 0.4%    
Accelerate Diagnostics, Inc. (I)(L) 2,818 57,093
Affymetrix, Inc. (I)(L) 8,918 77,319
Agilent Technologies, Inc. 65,732 3,757,241
Albany Molecular Research, Inc. (I) 2,818 55,796
Bio-Rad Laboratories, Inc., Class A (I) 5,088 611,883
Cambrex Corp. (I) 3,745 82,090
Charles River    
Laboratories International, Inc. (I) 12,198 720,902
Covance, Inc. (I) 14,480 1,200,392
Enzo Biochem, Inc. (I) 4,317 25,686
Fluidigm Corp. (I) 3,454 94,018
Furiex Pharmaceuticals, Inc. (I) 863 8,432
Lonza Group AG (I) 4,142 474,986
Luminex Corp. (I) 4,579 86,314
Mettler-Toledo International, Inc. (I) 7,369 1,993,167
NanoString Technologies, Inc. (I)(L) 1,586 17,668
Pacific Biosciences of California, Inc. (I)(L) 7,306 42,813
PAREXEL International Corp. (I) 6,897 389,267
PerkinElmer, Inc. 22,284 999,437
QIAGEN NV (I) 21,088 511,386
Sequenom, Inc. (I)(L) 15,004 55,665
Techne Corp. 8,397 802,081
Thermo Fisher Scientific, Inc. 78,704 9,461,008
Waters Corp. (I) 16,736 1,731,004
 
    23,255,648
Pharmaceuticals - 5.4%    
AbbVie, Inc. 313,666 17,339,456
AcelRx Pharmaceuticals, Inc. (I)(L) 3,191 22,816
Actavis PLC (I) 50,054 11,361,257
Aerie Pharmaceuticals, Inc. (I) 1,355 22,195
Akorn, Inc. (I) 7,565 295,186
Alimera Sciences, Inc. (I)(L) 3,550 22,330
Allergan, Inc. 58,699 9,607,852
Ampio Pharmaceuticals, Inc. (I)(L) 5,032 23,600
ANI Pharmaceuticals, Inc. (I) 844 24,755
Aratana Therapeutics, Inc. (I) 2,989 34,732
Aspen Pharmacare Holdings, Ltd. 26,151 750,742
Astellas Pharma, Inc. 200,600 2,892,673
AstraZeneca PLC 117,027 8,930,145
Auxilium Pharmaceuticals, Inc. (I)(L) 6,088 113,237
AVANIR Pharmaceuticals, Inc., Class A (I) 19,669 122,341
Bayer AG 72,147 9,696,766
Bio-Path Holdings, Inc. (I)(L) 9,663 22,322
BioDelivery Sciences International, Inc. (I) 5,221 83,536
Bristol-Myers Squibb Company 326,913 16,558,143
Celltrion, Inc. (I) 4,793 197,040
Cempra, Inc. (I)(L) 3,014 31,858

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Pharmaceuticals (continued)    
Chugai Pharmaceutical Company, Ltd. 20,800 $ 658,347
Corcept Therapeutics, Inc. (I) 7,508 20,722
CSPC Pharmaceutical Group, Ltd. 128,000 106,976
Daiichi Sankyo Company, Ltd. 58,500 1,035,202
Dainippon Sumitomo Pharma Company, Ltd. 14,800 201,257
Depomed, Inc. (I) 6,977 107,097
Dr. Reddy’s Laboratories, Ltd., ADR (L) 7,940 389,139
Eisai Company, Ltd. 23,000 960,657
Eli Lilly & Company 194,339 12,352,187
Endo International PLC (I) 35,329 2,250,811
Endocyte, Inc. (I)(L) 4,784 35,210
Genomma Lab Internacional SAB de CV (I) 91,200 244,934
GlaxoSmithKline PLC 450,929 11,020,583
Hisamitsu Pharmaceutical Company, Inc. 5,300 210,454
Horizon Pharma, Inc. (I)(L) 7,994 82,338
Hospira, Inc. (I) 33,031 1,775,086
Impax Laboratories, Inc. (I) 8,484 209,046
Intra-Cellular Therapies, Inc. (I) 2,023 28,767
Johnson & Johnson 558,132 57,895,032
Kalbe Farma Tbk PT 2,551,110 362,110
Kyowa Hakko Kirin Company, Ltd. 20,737 281,469
Lannett Company, Inc. (I) 3,128 123,181
Mallinckrodt PLC (I) 22,277 1,815,353
Merck & Company, Inc. 576,504 34,653,655
Merck KGaA 11,288 984,957
Mitsubishi Tanabe Pharma Corp. 20,900 320,022
Mylan, Inc. (I) 73,718 3,582,695
Nektar Therapeutics (I)(L) 15,441 220,189
Novartis AG 183,440 16,481,424
Novo Nordisk A/S, Class B 131,708 6,040,891
Omeros Corp. (I)(L) 4,143 61,772
Ono Pharmaceutical Company, Ltd. 7,500 670,614
Orion OYJ, Class B 8,951 351,855
Otsuka Holdings Company, Ltd. 35,800 1,302,434
Pacira Pharmaceuticals, Inc. (I) 4,332 468,982
Pain Therapeutics, Inc. (I) 5,014 21,159
Pernix Therapeutics Holdings (I)(L) 4,234 36,793
Perrigo Company PLC 26,391 3,925,397
Pfizer, Inc. 1,258,312 36,981,790
Phibro Animal Health Corp. 2,027 38,797
POZEN, Inc. (I) 3,633 30,154
Prestige Brands Holdings, Inc. (I) 6,317 218,631
Ranbaxy Laboratories, Ltd., GDR (I) 7,001 75,743
Relypsa, Inc. (I)(L) 2,093 52,911
Repros Therapeutics, Inc. (I)(L) 2,929 64,204
Revance Therapeutics, Inc. (I)(L) 872 20,361
Richter Gedeon Nyrt 11,424 183,691
Roche Holding AG 56,023 16,361,961
Sagent Pharmaceuticals, Inc. (I) 2,711 75,420
Salix Pharmaceuticals, Ltd. (I) 15,992 2,544,487
Sanofi 97,884 10,727,340
Santen Pharmaceutical Company, Ltd. 6,900 397,711
SciClone Pharmaceuticals, Inc. (I) 6,990 47,951
ScinoPharm Taiwan, Ltd. 22,464 45,859
Shanghai Fosun Pharmaceutical Group    
Company, Ltd., H Shares 35,000 113,286
Shionogi & Company, Ltd. 27,700 652,550
Shire PLC 54,555 4,444,995
Sihuan Pharmaceutical Holdings Group, Ltd. 337,000 225,559
Sino Biopharmaceutical, Ltd. 244,000 224,651
Supernus Pharmaceuticals, Inc. (I) 3,559 32,227
Taisho Pharmaceutical    
Holdings Company, Ltd. 2,900 220,151

 

The accompanying notes are an integral part of the financial statements. 213

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Pharmaceuticals (continued)    
Takeda Pharmaceutical Company, Ltd. 73,100 $ 3,339,484
Tetraphase Pharmaceuticals, Inc. (I) 2,791 36,534
The Medicines Company (I) 7,885 201,935
TherapeuticsMD, Inc. (I)(L) 12,002 66,611
Theravance Biopharma, Inc. (I) 2,882 84,630
Theravance, Inc. (L) 10,050 236,778
UCB SA 10,099 977,592
Valeant Pharmaceuticals International, Inc. (I) 3,477 407,340
Vivus, Inc. (I)(L) 10,734 46,049
XenoPort, Inc. (I) 7,833 39,792
Yuhan Corp. 603 102,923
Zoetis, Inc. 98,820 3,502,181
Zogenix, Inc. (I)(L) 15,003 20,254
 
    322,284,312
    672,445,790
Industrials - 10.5%    
Aerospace & Defense - 1.9%    
AAR Corp. 4,835 133,930
Aerovironment, Inc. (I) 2,364 74,561
Airbus Group NV 48,253 2,969,152
Alliant Techsystems, Inc. 8,035 1,012,410
American Science & Engineering, Inc. 943 54,600
Astronics Corp. (I) 1,957 122,782
AviChina Industry & Technology    
Company, Ltd., H Shares 184,000 109,618
B/E Aerospace, Inc. (I) 24,952 2,114,432
BAE Systems PLC 295,325 2,185,418
Bombardier, Inc., Class B (L) 15,826 53,272
CAE, Inc. 2,874 35,525
Cobham PLC 105,668 521,523
Cubic Corp. 2,498 111,511
Curtiss-Wright Corp. 5,851 420,336
DigitalGlobe, Inc. (I) 9,189 279,070
Ducommun, Inc. (I) 1,537 47,739
Embraer SA 56,108 546,668
Engility Holdings, Inc. (I) 2,131 74,883
Esterline Technologies Corp. (I) 11,942 1,399,961
Exelis, Inc. 47,807 821,802
Finmeccanica SpA (I) 32,787 307,454
GenCorp, Inc. (I)(L) 7,340 135,276
General Dynamics Corp. 64,248 7,918,566
HEICO Corp. 8,072 418,210
Honeywell International, Inc. 154,485 14,711,607
Huntington Ingalls Industries, Inc. 12,385 1,264,632
Korea Aerospace Industries, Ltd. 3,386 120,120
Kratos Defense & Security Solutions, Inc. (I) 5,829 43,892
L-3 Communications Holdings, Inc. 16,997 1,868,820
Lockheed Martin Corp. 52,596 9,151,704
Meggitt PLC 74,007 579,189
Moog, Inc., Class A (I) 5,405 383,215
National Presto Industries, Inc. (L) 609 39,883
Northrop Grumman Corp. 42,232 5,372,755
Orbital Sciences Corp. (I) 7,390 197,830
Precision Castparts Corp. 28,557 6,969,621
Raytheon Company 61,709 5,945,045
Rockwell Collins, Inc. 26,715 2,056,521
Rolls-Royce Holdings PLC (I) 174,508 2,961,185
Safran SA 22,289 1,461,468
Singapore Technologies Engineering, Ltd. 174,000 509,598
Sparton Corp. (I) 1,279 36,784
Taser International, Inc. (I)(L) 6,671 104,535
Teledyne Technologies, Inc. (I) 4,564 443,027

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Aerospace & Defense (continued)    
Textron, Inc. 55,085 $ 2,093,230
Thales SA 7,482 418,005
The Boeing Company 132,352 16,782,234
The KEYW Holding Corp. (I)(L) 4,289 50,739
Triumph Group, Inc. 13,153 912,424
United Technologies Corp. 166,385 17,966,252
Zodiac Aerospace 15,504 505,974
 
    114,818,988
Air Freight & Logistics - 0.5%    
Air Transport Services Group, Inc. (I) 6,573 53,701
Atlas Air Worldwide Holdings, Inc. (I) 3,114 104,163
Bollore Sa 439 276,917
C.H. Robinson Worldwide, Inc. (L) 29,306 2,000,428
Deutsche Post AG 84,456 2,768,979
Echo Global Logistics, Inc. (I) 2,972 77,153
Expeditors International of Washington, Inc. 39,030 1,611,939
FedEx Corp. 54,770 8,099,388
Forward Air Corp. 3,946 182,660
Hub Group, Inc., Class A (I) 4,471 194,444
Hyundai Glovis Company, Ltd. 1,013 302,329
Park-Ohio Holdings Corp. 1,078 62,567
Royal Mail PLC 60,325 447,782
TNT Express NV 23,143 173,146
Toll Holdings, Ltd. 60,368 336,779
United Parcel Service, Inc., Class B 139,023 13,531,109
UTi Worldwide, Inc. 11,012 101,090
XPO Logistics, Inc. (I)(L) 6,337 196,257
Yamato Transport Company, Ltd. 33,800 699,094
 
    31,219,925
Airlines - 0.3%    
Air China, Ltd., H Shares 159,466 98,322
AirAsia BHD 65,546 50,113
Alaska Air Group, Inc. 34,662 1,606,237
Allegiant Travel Company 1,691 207,756
ANA Holdings, Inc. 108,000 262,645
Cathay Pacific Airways, Ltd. 102,000 189,223
China Airlines, Ltd. (I) 282,000 94,365
Delta Air Lines, Inc. 167,229 6,618,924
Deutsche Lufthansa AG 19,675 341,908
easyJet PLC 14,730 326,574
Eva Airways Corp. (I) 177,000 88,901
Hawaiian Holdings, Inc. (I)(L) 5,411 84,412
International Consolidated    
Airlines Group SA (I) 114,284 684,439
Japan Airlines Company, Ltd. 5,600 314,943
JetBlue Airways Corp. (I)(L) 87,593 1,071,262
Korean Air Lines Company, Ltd. (I) 2,264 81,461
Qantas Airways, Ltd. (I) 95,371 131,108
Republic Airways Holdings, Inc. (I) 6,123 62,148
Ryanair Holdings PLC, ADR (I) 3,108 170,629
Singapore Airlines, Ltd. 60,140 485,829
SkyWest, Inc. 6,334 56,816
Southwest Airlines Company 136,469 4,368,373
Turk Hava Yollari (I) 26,054 82,598
 
    17,478,986
Building Products - 0.3%    
AAON, Inc. 5,193 96,901
Allegion PLC 17,819 916,431
American Woodmark Corp. (I) 1,580 61,968
AO Smith Corp. 19,195 942,091
Apogee Enterprises, Inc. 3,557 129,866

 

The accompanying notes are an integral part of the financial statements. 214

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Building Products (continued)    
Asahi Glass Company, Ltd. 91,000 $ 493,101
Assa Abloy AB, Series B 22,228 1,125,314
Builders FirstSource, Inc. (I) 5,959 41,117
Cie de Saint-Gobain 36,501 1,854,418
Continental Building Products, Inc. (I) 1,569 25,088
Daikin Industries, Ltd. 21,600 1,491,168
Fortune Brands Home & Security, Inc. 41,878 1,809,548
Geberit AG 3,010 1,022,416
Gibraltar Industries, Inc. (I) 3,905 62,129
Griffon Corp. 5,022 62,624
Insteel Industries, Inc. 2,389 56,094
KCC Corp. 365 245,972
Lennox International, Inc. 11,403 955,115
LIXIL Group Corp. 24,700 547,241
Masco Corp. 70,656 1,658,296
Masonite International Corp. (I) 3,548 202,875
NCI Building Systems, Inc. (I) 3,356 66,986
Nortek, Inc. (I) 1,104 91,985
Patrick Industries, Inc. (I) 1,051 43,816
PGT, Inc. (I) 5,898 61,634
Ply Gem Holdings, Inc. (I) 2,711 31,963
Quanex Building Products Corp. 4,494 81,162
Simpson Manufacturing Company, Inc. 5,037 162,796
Taiwan Glass Industrial Corp. 103,395 89,267
TOTO, Ltd. 26,000 316,401
Trex Company, Inc. (I) 4,087 153,671
Universal Forest Products, Inc. 2,461 116,528
 
    15,015,982
Commercial Services & Supplies - 0.6%    
ABM Industries, Inc. 6,788 180,561
ACCO Brands Corp. (I) 14,016 108,344
Aggreko PLC 23,765 672,031
ARC Document Solutions, Inc. (I) 5,846 47,470
Babcock International Group PLC 46,527 866,582
Brady Corp., Class A 5,803 154,476
Brambles, Ltd. 136,645 1,213,865
Casella Waste Systems, Inc., Class A (I) 6,113 27,264
Ceco Environmental Corp. (L) 2,885 40,563
Cenveo, Inc. (I)(L) 8,011 24,353
China Everbright International, Ltd. 204,000 279,243
Cintas Corp. 19,699 1,302,892
Civeo Corp. 38,084 967,714
Clean Harbors, Inc. (I) 13,946 844,291
Copart, Inc. (I) 28,292 974,094
Dai Nippon Printing Company, Ltd. 52,000 545,856
Deluxe Corp. 18,653 1,110,786
Edenred 16,922 501,992
Ennis, Inc. 3,193 46,075
G&K Services, Inc., Class A 2,459 137,434
G4S PLC 143,999 634,131
Healthcare Services Group, Inc. 8,524 232,961
Heritage-Crystal Clean, Inc. (I) 1,373 21,982
Herman Miller, Inc. 22,078 656,158
HNI Corp. 16,821 637,684
InnerWorkings, Inc. (I) 4,901 42,492
Interface, Inc. 8,101 137,960
Iron Mountain, Inc. 33,674 1,211,591
Kimball International, Inc., Class B 4,257 67,601
Knoll, Inc. 5,920 108,277
McGrath RentCorp. 3,114 115,218
Mobile Mini, Inc. 5,673 222,211
MSA Safety, Inc. 11,572 640,626
Multi-Color Corp. 1,617 74,996

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Commercial Services & Supplies (continued)    
Park24 Company, Ltd. 9,200 $ 160,094
Performant Financial Corp. (I) 3,849 37,027
Pitney Bowes, Inc. 39,949 1,081,020
Quad/Graphics, Inc. 3,435 76,978
R.R. Donnelley & Sons Company 50,339 889,490
Republic Services, Inc. 52,890 2,080,164
Rollins, Inc. 16,204 482,069
S1 Corp. 1,467 107,094
Secom Company, Ltd. 19,300 1,179,998
Securitas AB, Series B 20,546 224,802
Societe BIC SA 2,308 313,635
SP Plus Corp. (I) 2,017 43,668
Steelcase, Inc., Class A 9,955 156,294
Stericycle, Inc. (I) 16,706 1,985,508
Team, Inc. (I) 2,474 98,737
Tetra Tech, Inc. 7,929 202,190
The ADT Corp. (L) 34,705 1,279,226
The Brink’s Company 5,849 160,146
Toppan Printing Company, Ltd. 52,000 382,193
Tyco International, Ltd. 90,963 4,058,769
UniFirst Corp. 1,761 170,729
United Stationers, Inc. 4,803 195,242
US Ecology, Inc. 2,633 112,534
Viad Corp. 2,502 54,894
Waste Connections, Inc. 31,260 1,533,616
Waste Management, Inc. 85,309 4,006,964
West Corp. 4,683 138,898
 
    36,061,753
Construction & Engineering - 0.4%    
ACS Actividades de Construccion    
y Servicios SA 20,125 847,701
AECOM Technology Corp. (I) 25,033 947,249
Aegion Corp. (I) 4,644 114,521
Argan, Inc. 1,593 63,800
Bouygues SA 15,891 584,037
China Communications Construction    
Company, Ltd., H Shares 366,965 267,330
China Railway Construction Corp., H Shares 171,800 164,657
China Railway Group, Ltd., H Shares 321,000 165,568
China State Construction    
International Holdings, Ltd. 144,000 232,097
Chiyoda Corp. 14,000 153,368
Comfort Systems USA, Inc. 4,576 69,555
CTCI Corp. 65,000 116,300
Daelim Industrial Company, Ltd. 2,149 185,398
Daewoo Engineering &    
Construction Company, Ltd. (I) 8,019 67,421
Dialog Group BHD 180,012 98,826
Dycom Industries, Inc. (I) 4,134 129,022
EMCOR Group, Inc. 8,204 354,413
Ferrovial SA 46,463 945,709
Fluor Corp. 31,277 2,311,058
Furmanite Corp. (I) 4,680 42,541
Gamuda BHD 90,400 138,521
Granite Construction, Inc. 13,902 490,324
Great Lakes Dredge & Dock Corp. (I) 7,583 57,782
GS Engineering & Construction Corp. (I) 3,645 132,597
Hochtief AG 1,971 156,108
Hyundai Development Company 4,363 177,433
Hyundai Engineering &    
Construction Company, Ltd. 5,341 336,864
IJM Corp. BHD 59,500 122,675
Jacobs Engineering Group, Inc. (I) 26,250 1,415,138

 

The accompanying notes are an integral part of the financial statements. 215

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Construction & Engineering (continued)    
JGC Corp. 19,000 $ 550,463
Kajima Corp. 79,000 404,106
KBR, Inc. 37,123 817,448
Koninklijke Boskalis Westinster NV 4,546 261,905
Larsen & Toubro, Ltd., GDR 21,907 551,675
Layne Christensen Company (I)(L) 2,808 31,955
Leighton Holdings, Ltd. 8,998 188,905
MasTec, Inc. (I) 7,510 229,055
MYR Group, Inc. (I) 2,558 59,806
Northwest Pipe Company (I) 1,289 47,641
Obayashi Corp. 60,000 458,285
OCI NV (I) 4,422 147,919
Orion Marine Group, Inc. (I) 3,664 37,043
Pike Corp. (I) 3,767 44,903
Primoris Services Corp. 4,720 137,069
Promotora y Operadora de Infraestructura    
SAB de CV (I) 30,700 430,329
Quanta Services, Inc. (I) 43,187 1,569,416
Samsung Engineering Company, Ltd. (I) 2,161 136,283
Shimizu Corp. 55,000 454,848
Sinopec Engineering Group Company, Ltd.,    
H Shares 102,000 115,774
Skanska AB, Series B 24,933 515,976
SNC-Lavalin Group, Inc. 1,695 86,800
Sterling Construction Company, Inc. (I) 2,445 20,831
Taisei Corp. 95,000 566,262
Tutor Perini Corp. (I) 4,582 136,910
URS Corp. 17,374 1,052,517
Vinci SA 39,716 2,597,849
 
    22,539,986
Electrical Equipment - 0.7%    
ABB, Ltd. (I) 175,489 3,991,395
Acuity Brands, Inc. 10,898 1,350,044
Alstom SA (I) 17,886 633,578
AMETEK, Inc. 48,366 2,560,496
AZZ, Inc. 3,124 144,766
Capstone Turbine Corp. (I)(L) 41,199 51,499
Doosan Heavy Industries and    
Construction Company, Ltd. 4,506 128,327
Eaton Corp. PLC 94,010 6,562,838
Emerson Electric Company 138,409 8,860,944
Encore Wire Corp. 2,574 109,266
EnerSys 5,623 361,503
Franklin Electric Company, Inc. 5,815 220,737
FuelCell Energy, Inc. (I)(L) 26,604 67,574
Fuji Electric Company, Ltd. 52,000 251,829
Generac Holdings, Inc. (I)(L) 8,314 386,767
General Cable Corp. 5,857 125,750
Global Power Equipment Group, Inc. 2,735 46,085
GrafTech International, Ltd. (I)(L) 14,176 123,756
Hubbell, Inc., Class B 13,581 1,641,943
Legrand SA 21,854 1,208,507
LS Corp. 1,367 94,409
LS Industrial Systems Company, Ltd. 1,158 71,522
LSI Industries, Inc. 3,022 21,245
Mabuchi Motor Company, Ltd. 2,300 195,633
Mitsubishi Electric Corp. 179,000 2,244,697
Neo Holdings Company, Ltd. (I) 229 0
Nidec Corp. 18,700 1,195,202
OSRAM Licht AG (I) 7,594 318,076
Plug Power, Inc. (I)(L) 20,369 113,659
Polypore International, Inc. (I)(L) 5,442 243,965
Powell Industries, Inc. 1,181 62,227

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electrical Equipment (continued)    
Power Solutions International, Inc. (I) 571 $ 39,028
PowerSecure International, Inc. (I) 2,729 30,183
Prysmian SpA 16,504 335,580
Regal-Beloit Corp. 11,381 808,848
Rockwell Automation, Inc. 27,296 3,182,987
Schneider Electric SE (I) 42,825 3,621,513
Shanghai Electric Group Company, Ltd.,    
H Shares 245,136 107,558
Teco Electric & Machinery Company, Ltd. 206,000 259,285
Thermon Group Holdings, Inc. (I) 3,980 108,057
Vestas Wind Systems A/S (I) 14,679 622,152
Walsin Lihwa Corp. (I) 349,000 125,022
Zhuzhou CSR Times Electric Company, Ltd.,    
H Shares 41,500 143,446
 
    42,771,898
Industrial Conglomerates - 1.8%    
3M Company 122,621 17,657,424
Alfa SAB de CV, Class A 326,000 1,052,534
Beijing Enterprises Holdings, Ltd. 42,714 368,033
Bidvest Group, Ltd. 25,898 683,642
Carlisle Companies, Inc. 16,162 1,339,830
CITIC, Ltd. 136,033 263,299
CJ Corp. 1,121 197,970
Danaher Corp. 118,691 9,092,918
Doosan Corp. 564 67,053
Enka Insaat ve Sanayi AS 22,535 56,430
Far Eastern New Century Corp. 327,092 351,041
General Electric Company 1,978,204 51,393,740
Grupo Carso SAB de CV, Series A1 66,200 404,994
Hutchison Whampoa, Ltd. 179,000 2,336,441
Keppel Corp., Ltd. 159,931 1,394,757
KOC Holdings AS 30,375 155,164
Koninklijke Philips NV 50,907 1,554,880
LG Corp. 7,102 496,931
MMC Corp. BHD 39,928 31,301
NWS Holdings, Ltd. 120,230 227,333
Raven Industries, Inc. 4,448 118,584
Roper Industries, Inc. 19,678 2,962,720
Samsung Techwin Company, Ltd. 2,871 120,822
Sembcorp Industries, Ltd. 110,000 450,583
Shanghai Industrial Holdings, Ltd. 42,070 141,151
Siemens AG 69,185 8,673,096
Sime Darby BHD 153,800 461,600
SK Holdings Company, Ltd. 1,993 315,686
Smiths Group PLC 36,604 800,379
Toshiba Corp. 371,000 1,637,583
Turkiye Sise ve Cam Fabrikalari AS 28,885 39,011
 
    104,846,930
Machinery - 2.0%    
Accuride Corp. (I) 5,653 25,778
Actuant Corp., Class A 8,479 285,997
AGCO Corp. 22,030 1,075,945
Alamo Group, Inc. 892 43,485
Albany International Corp., Class A 3,426 128,715
Alfa Laval AB 20,642 472,108
Altra Industrial Motion Corp. 3,263 108,527
Amada Company, Ltd. 33,200 313,325
American Railcar Industries, Inc. (L) 1,152 91,814
Astec Industries, Inc. 2,290 95,127
Atlas Copco AB, Series A 44,575 1,300,624
Atlas Copco AB, Series B 25,605 684,027
Barnes Group, Inc. 6,626 226,874

 

The accompanying notes are an integral part of the financial statements. 216

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Machinery (continued)    
Blount International, Inc. (I) 5,963 $ 95,289
Briggs & Stratton Corp. 5,750 115,805
Caterpillar, Inc. 123,129 13,429,680
Chart Industries, Inc. (I)(L) 3,694 247,092
China International Marine Containers Group    
Company, Ltd., H Shares 43,600 93,699
CIRCOR International, Inc. 2,160 153,770
CLARCOR, Inc. 18,769 1,186,388
CNH Industrial NV 76,371 664,432
Columbus McKinnon Corp. 2,504 62,750
Commercial Vehicle Group, Inc. (I) 3,565 28,591
Crane Company 12,465 867,439
CSR Corp., Ltd., H Shares 176,000 158,845
Cummins, Inc. 33,721 4,893,254
Daewoo Shipbuilding & Marine    
Engineering Company, Ltd. 8,125 199,367
Deere & Company 71,735 6,032,196
Donaldson Company, Inc. 33,169 1,388,454
Doosan Infracore Company, Ltd. (I) 10,406 121,728
Douglas Dynamics, Inc. 2,956 58,943
Dover Corp. 32,856 2,887,057
Dynamic Materials Corp. 2,139 42,694
Energy Recovery, Inc. (I)(L) 5,442 25,795
EnPro Industries, Inc. (I) 2,737 185,842
ESCO Technologies, Inc. 3,253 117,108
FANUC Corp. 17,700 2,966,897
Federal Signal Corp. 7,690 113,197
Flowserve Corp. 27,054 2,053,128
FreightCar America, Inc. 1,609 47,932
GEA Group AG 15,998 726,077
Global Brass & Copper Holdings, Inc. 2,771 42,812
Graco, Inc. 15,287 1,174,959
Graham Corp. 1,385 42,326
Haitian International Holdings, Ltd. 56,000 144,455
Harsco Corp. 30,117 728,831
Hillenbrand, Inc. 7,611 254,512
Hino Motors, Ltd. 24,000 340,665
Hitachi Construction    
Machinery Company, Ltd. 10,000 196,677
Hiwin Technologies Corp. 21,381 208,819
Hurco Companies, Inc. 954 31,616
Hyster-Yale Materials Handling, Inc. 1,265 97,519
Hyundai Heavy Industries Company, Ltd. 3,122 443,858
Hyundai Mipo Dockyard 849 108,140
IDEX Corp. 20,332 1,564,344
IHI Corp. 124,000 585,017
Illinois Tool Works, Inc. 74,861 6,603,489
IMI PLC 25,303 570,127
Ingersoll-Rand PLC 49,474 2,978,335
ITT Corp. 23,126 1,106,810
John Bean Technologies Corp. 3,516 102,140
Joy Global, Inc. (L) 19,647 1,240,708
JTEKT Corp. 19,100 304,226
Kadant, Inc. 1,403 55,615
Kawasaki Heavy Industries, Ltd. 132,000 491,848
Kennametal, Inc. 19,814 887,865
Komatsu, Ltd. 86,100 1,943,364
Kone OYJ 28,146 1,193,152
Kubota Corp. 104,000 1,489,369
Kurita Water Industries, Ltd. 9,400 211,097
LB Foster Company, Class A 1,311 68,775
Lincoln Electric Holdings, Inc. 20,283 1,442,121
Lindsay Corp. 1,537 119,548

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Machinery (continued)    
Lydall, Inc. (I) 2,039 $ 56,480
Makita Corp. 10,800 604,021
MAN SE 3,134 371,709
Manitex International, Inc. (I) 1,793 24,188
Melrose Industries PLC 99,467 450,745
Meritor, Inc. (I) 11,948 162,851
Metso OYJ 10,164 399,300
Miller Industries, Inc. 1,677 31,729
Mitsubishi Heavy Industries, Ltd. 279,000 1,719,236
Mueller Industries, Inc. 6,921 202,370
Mueller Water Products, Inc., Class A 19,440 179,431
Nabtesco Corp. 10,700 246,825
NGK Insulators, Ltd. 24,000 605,793
NN, Inc. 2,242 65,422
Nordson Corp. 15,093 1,223,439
NSK, Ltd. 43,000 572,144
Oshkosh Corp. 21,422 1,064,245
PACCAR, Inc. 69,966 4,394,564
Pall Corp. 21,639 1,825,682
Parker Hannifin Corp. 29,357 3,390,734
Pentair PLC 38,375 2,612,186
Proto Labs, Inc. (I)(L) 2,730 205,405
RBC Bearings, Inc. 2,838 175,445
Rexnord Corp. (I) 9,139 266,950
Samsung Heavy Industries Company, Ltd. 12,473 335,589
Sandvik AB 69,961 873,374
Schindler Holding AG,    
Participation Certificates 3,627 524,800
Schindler Holding AG, Registered Shares 1,719 250,093
SembCorp Marine, Ltd. 93,600 296,712
SKF AB, B Shares 25,981 599,874
SMC Corp. 5,100 1,335,270
Snap-on, Inc. 11,603 1,449,795
SPX Corp. 11,050 1,149,753
Standex International Corp. 1,548 115,527
Stanley Black & Decker, Inc. 30,740 2,812,710
Sulzer AG 1,939 257,741
Sumitomo Heavy Industries, Ltd. 51,000 263,612
Sun Hydraulics Corp. 2,684 107,441
Tennant Company 2,266 157,918
Terex Corp. 27,818 1,040,671
The ExOne Company (I)(L) 1,185 34,685
The Gorman-Rupp Company 2,337 72,517
The Greenbrier Companies, Inc. (L) 3,339 238,805
The Weir Group PLC 19,783 868,614
THK Company, Ltd. 10,600 251,363
Timken Company 19,331 875,501
Titan International, Inc. (L) 5,374 77,923
TriMas Corp. (I) 5,542 175,681
Trinity Industries, Inc. 38,295 1,852,712
Twin Disc, Inc. 1,058 34,226
United Tractors Tbk PT 202,937 384,238
Vallourec SA 8,803 393,393
Valmont Industries, Inc. (L) 6,780 954,285
Volvo AB, Series B 101,526 1,213,848
Wabash National Corp. (I) 8,428 119,172
Wabtec Corp. 24,324 2,027,649
Wartsila OYJ ABP 13,330 670,345
Watts Water Technologies, Inc., Class A 3,425 216,768
WEG SA 23,730 296,718
Weichai Power Company, Ltd., H Shares 41,920 169,702
Woodward, Inc. 22,955 1,198,940
Xerium Technologies, Inc. (I) 1,621 24,234

 

The accompanying notes are an integral part of the financial statements. 217

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Machinery (continued)    
Xylem, Inc. 35,900 $ 1,337,634
Yangzijiang Shipbuilding Holdings, Ltd. 214,000 199,532
Zardoya Otis SA 18,990 275,546
Zoomlion Heavy Industry Science and    
Technology Company, Ltd., H Shares 118,400 73,276
 
    117,048,015
Marine - 0.1%    
A.P. Moeller - Maersk A/S, Series A 180 434,954
A.P. Moeller - Maersk A/S, Series B 440 1,105,362
Baltic Trading, Ltd. (L) 6,299 36,975
China COSCO Holdings Company, Ltd.,    
H Shares (I) 224,879 96,003
China Shipping Container Lines    
Company, Ltd., H Shares (I) 327,076 93,229
Evergreen Marine Corp Taiwan, Ltd. (I) 181,000 110,571
Hyundai Merchant Marine Company, Ltd. (I) 5,225 63,411
Kirby Corp. (I) 14,371 1,714,317
Knightsbridge Tankers, Ltd. 4,007 49,126
Kuehne & Nagel International AG 4,254 574,340
Matson, Inc. 5,429 146,529
MISC BHD 58,500 127,661
Mitsui O.S.K. Lines, Ltd. 101,000 370,102
Navios Maritime Holdings, Inc. (L) 9,661 91,393
Nippon Yusen KK (L) 150,000 441,556
Safe Bulkers, Inc. (L) 4,616 40,482
Scorpio Bulkers, Inc. (I) 16,412 130,968
U-Ming Marine Transport Corp. 47,000 77,447
Yang Ming Marine Transport Corp. (I) 153,000 68,879
 
    5,773,305
Professional Services - 0.4%    
Acacia Research Corp. (L) 6,032 107,309
Adecco SA (I) 13,564 1,028,890
ALS, Ltd. 34,934 243,116
Barrett Business Services, Inc. 900 53,271
Bureau Veritas SA 18,411 437,691
Capita PLC 61,173 1,247,724
CBIZ, Inc. (I) 5,071 43,611
CDI Corp. 1,949 29,566
CRA International, Inc. (I) 1,433 38,562
Equifax, Inc. 24,104 1,898,431
Experian PLC 92,165 1,604,331
Exponent, Inc. 1,577 115,216
Franklin Covey Company (I) 1,492 28,452
FTI Consulting, Inc. (I) 15,266 566,369
GP Strategies Corp. (I) 1,905 48,044
Heidrick & Struggles International, Inc. 2,230 48,302
Hill International, Inc. (I) 3,625 15,950
Huron Consulting Group, Inc. (I) 2,858 172,852
ICF International, Inc. (I) 2,433 82,187
Insperity, Inc. 2,718 80,208
Intertek Group PLC 14,976 696,401
Kelly Services, Inc., Class A 3,316 55,410
Kforce, Inc. 3,284 65,910
Korn/Ferry International (I) 6,044 182,831
ManpowerGroup, Inc. 20,081 1,557,884
Mistras Group, Inc. (I) 2,076 44,551
Navigant Consulting, Inc. (I) 5,976 97,349
Nielsen Holdings NV 59,790 2,809,532
On Assignment, Inc. (I) 6,612 195,451
Paylocity Holding Corp. (I)(L) 1,085 24,662
Pendrell Corp. (I) 18,999 29,258
Randstad Holding NV 6,518 316,688

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Professional Services (continued)    
Resources Connection, Inc. 4,963 $ 75,984
Robert Half International, Inc. 26,896 1,350,448
RPX Corp. (I) 6,515 98,963
Seek, Ltd. 28,652 468,389
SGS SA 436 968,160
The Advisory Board Company (I) 4,458 221,117
The Corporate Executive Board Company 12,635 832,899
The Dun & Bradstreet Corp. 7,308 857,813
Towers Watson & Company, Class A 16,134 1,768,770
Trinet Group, Inc. (I) 1,949 52,253
TrueBlue, Inc. (I) 4,986 135,320
VSE Corp. 561 33,284
WageWorks, Inc. (I) 4,257 175,644
 
    21,005,053
Road & Rail - 0.9%    
ALL - America Latina Logistica SA 37,573 138,475
ArcBest Corp. 3,206 115,095
Asciano, Ltd. 86,432 507,369
Aurizon Holdings, Ltd. 186,146 830,119
BTS Group Holdings PCL 841,185 254,193
Canadian National Railway Company 9,111 654,353
Canadian Pacific Railway, Ltd. 1,871 374,768
Celadon Group, Inc. 2,753 57,648
Central Japan Railway Company, Ltd. 13,300 1,864,832
ComfortDelGro Corp., Ltd. 226,000 454,143
Con-way, Inc. 14,389 737,436
CSX Corp. 198,044 6,121,540
DSV A/S 11,792 362,169
East Japan Railway Company 31,200 2,425,582
Genesee & Wyoming, Inc., Class A (I) 12,864 1,264,917
Hankyu Hanshin Holdings, Inc. 106,000 624,826
Heartland Express, Inc. 6,668 156,365
J.B. Hunt Transport Services, Inc. 23,067 1,742,712
Kansas City Southern 21,751 2,509,195
Keikyu Corp. 42,000 369,718
Keio Corp. 52,000 401,640
Keisei Electric Railway Company, Ltd. 25,000 258,931
Kintetsu Corp. 168,000 589,719
Knight Transportation, Inc. 7,237 183,458
Landstar System, Inc. 11,337 769,386
Localiza Rent a Car SA 12,436 221,387
Marten Transport, Ltd. 2,850 56,430
MTR Corp., Ltd. 121,028 477,732
Nagoya Railroad Company, Ltd. 78,000 322,581
Nippon Express Company, Ltd. 79,000 361,902
Norfolk Southern Corp. 61,064 6,533,848
Odakyu Electric Railway Company, Ltd. 58,000 572,174
Old Dominion Freight Line, Inc. (I) 17,602 1,173,525
Patriot Transportation Holding, Inc. (I) 875 30,354
Quality Distribution, Inc. (I) 3,579 50,249
Roadrunner Transportation Systems, Inc. (I) 3,476 87,526
Ryder Systems, Inc. 10,659 962,934
Saia, Inc. (I) 2,982 141,556
Swift Transportation Company (I) 10,342 219,044
Tobu Railway Company, Ltd. 95,000 497,906
Tokyu Corp. 104,000 722,062
Union Pacific Corp. 178,693 18,811,012
Universal Truckload Services, Inc. 990 24,641
Werner Enterprises, Inc. 17,036 424,196
West Japan Railway Company 15,000 709,697
YRC Worldwide, Inc. (I) 3,863 89,699
 
    56,259,044

 

The accompanying notes are an integral part of the financial statements. 218

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Trading Companies & Distributors - 0.5%    
Aceto Corp. 3,590 $ 69,000
Aircastle, Ltd. 7,664 146,536
Applied Industrial Technologies, Inc. 5,052 246,083
Barloworld, Ltd. 18,339 174,278
Beacon Roofing Supply, Inc. (I) 6,114 174,371
Brenntag AG 13,520 717,501
Bunzl PLC 30,959 846,325
CAI International, Inc. (I) 2,271 44,035
Daewoo International Corp. 3,515 129,167
DXP Enterprises, Inc. (I) 1,593 127,631
Fastenal Company (L) 53,772 2,434,796
Finning International, Inc. 1,913 59,644
GATX Corp. 11,611 769,461
H&E Equipment Services, Inc. 3,817 156,153
Houston Wire & Cable Company 3,315 43,161
ITOCHU Corp. 138,700 1,764,951
Kaman Corp. 3,367 136,902
Marubeni Corp. 151,100 1,091,130
Mitsubishi Corp. 129,900 2,687,707
Mitsui & Company, Ltd. 160,600 2,620,069
MSC Industrial Direct Company, Inc., Class A 11,945 1,076,722
Noble Group, Ltd. 480,773 522,656
NOW, Inc. (I)(L) 27,057 893,693
Rexel SA 21,754 433,334
Rush Enterprises, Inc., Class A (I) 4,196 153,867
Samsung C&T Corp. 9,439 694,970
SK Networks Company, Ltd. (I) 8,619 83,606
Stock Building Supply Holdings, Inc. (I) 1,882 31,994
Sumitomo Corp. 103,400 1,335,850
TAL International Group, Inc. (I)(L) 4,091 180,822
Textainer Group Holdings, Ltd. (L) 2,537 89,505
Titan Machinery, Inc. (I) 2,304 28,362
Toyota Tsusho Corp. 19,700 520,426
Travis Perkins PLC 22,915 663,894
United Rentals, Inc. (I) 24,532 2,886,190
W.W. Grainger, Inc. 12,000 2,954,400
Watsco, Inc. 9,958 921,015
Wolseley PLC 24,671 1,327,798
 
    29,238,005
Transportation Infrastructure - 0.1%    
Abertis Infraestructuras SA 45,705 961,847
Aeroports de Paris 2,399 319,049
Airports of Thailand PCL 62,315 462,444
Atlantia SpA 33,442 850,402
Auckland International Airport, Ltd. 81,275 249,606
Beijing Capital International Airport    
Company, Ltd., H Shares 131,211 102,586
CCR SA 74,315 672,603
China Merchants Holdings    
International Company, Ltd. 96,031 317,109
COSCO Pacific, Ltd. 141,508 198,241
EcoRodovias Infraestrutura e Logistica SA 18,835 120,322
Fraport AG Frankfurt Airport    
Services Worldwide 3,151 214,157
Groupe Eurotunnel SA 38,980 501,734
Grupo Aeroportuario del Pacifico SAB    
de CV, Series B 35,900 250,127
Grupo Aeroportuario del Sureste SAB    
de CV, Class B 24,000 308,499
Hutchison Port Holdings Trust 632,100 455,092
Jasa Marga Tbk PT 247,654 131,211
Jiangsu Expressway Company, Ltd., H Shares 106,855 121,576
Kamigumi Company, Ltd. 20,000 186,237

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Transportation Infrastructure (continued)    
Malaysia Airports Holdings BHD 35,722 $ 87,252
Mitsubishi Logistics Corp. 11,000 165,094
OHL Mexico SAB de CV (I) 80,100 236,746
Sydney Airport 96,230 398,455
TAV Havalimanlari Holding AS 7,846 65,197
Transurban Group 152,732 1,150,576
Wesco Aircraft Holdings, Inc. (I) 6,445 118,201
Zhejiang Expressway Company, Ltd., H Shares 124,282 124,415
 
    8,768,778
 
    622,846,648
Information Technology - 15.1%    
Communications Equipment - 1.2%    
ADTRAN, Inc. 21,068 486,249
Alcatel-Lucent (I) 230,167 795,796
Alliance Fiber Optic Products, Inc. (L) 1,599 23,697
Applied Optoelectronics, Inc. (I) 1,899 40,335
ARRIS Group, Inc. (I) 30,090 921,055
Aruba Networks, Inc. (I) 12,950 276,483
Bel Fuse, Inc., Class B 1,293 30,437
Black Box Corp. 1,856 43,894
CalAmp Corp. (I)(L) 4,408 84,986
Calix, Inc. (I) 5,392 56,616
Ciena Corp. (I) 39,234 811,751
Cisco Systems, Inc. 1,010,471 25,251,670
Clearfield, Inc. (I)(L) 1,527 20,447
Comtech Telecommunications Corp. 1,866 70,983
Digi International, Inc. (I) 3,133 26,129
Emulex Corp. (I) 9,545 52,307
Extreme Networks, Inc. (I) 12,085 64,413
F5 Networks, Inc. (I) 14,995 1,862,229
Finisar Corp. (I)(L) 11,723 238,094
Harmonic, Inc. (I) 11,568 76,002
Harris Corp. 21,088 1,505,472
Infinera Corp. (I) 14,929 157,949
InterDigital, Inc. 15,122 670,963
IXIA (I) 7,289 70,120
JDS Uniphase Corp. (I) 59,194 683,691
Juniper Networks, Inc. 93,393 2,165,784
KVH Industries, Inc. (I) 2,350 29,211
Motorola Solutions, Inc. 44,607 2,649,656
NETGEAR, Inc. (I) 4,464 148,294
Numerex Corp., Class A (I) 2,070 23,712
Oclaro, Inc. (I)(L) 11,494 20,115
Oplink Communications, Inc. 2,403 46,426
Parkervision, Inc. (I)(L) 14,093 17,475
Plantronics, Inc. 15,816 754,898
Polycom, Inc. (I) 51,571 683,316
Procera Networks, Inc. (I)(L) 2,872 29,553
QUALCOMM, Inc. 332,964 25,338,560
Riverbed Technology, Inc. (I) 40,489 762,813
Ruckus Wireless, Inc. (I)(L) 7,969 110,849
ShoreTel, Inc. (I) 7,653 51,275
Sonus Networks, Inc. (I) 30,029 113,209
Telefonaktiebolaget LM Ericsson, B Shares 200,921 2,503,783
Tessco Technologies, Inc. 833 26,831
Ubiquiti Networks, Inc. (I)(L) 3,634 164,838
ViaSat, Inc. (I)(L) 5,023 286,010
ZTE Corp., H Shares 54,896 124,048
 
    70,372,424
Electronic Equipment, Instruments & Components - 1.0%  
AAC Technologies Holdings, Inc. 61,500 400,668

 

The accompanying notes are an integral part of the financial statements. 219

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electronic Equipment, Instruments &    
Components (continued)    
Aeroflex Holding Corp. (I)(L) 2,543 $ 26,854
Agilysys, Inc. (I) 2,018 25,185
Amphenol Corp., Class A 30,991 3,192,383
Anixter International, Inc. 3,254 290,354
Arrow Electronics, Inc. (I) 25,128 1,564,218
AU Optronics Corp. 907,000 451,703
Avnet, Inc. 34,904 1,553,577
Badger Meter, Inc. 1,750 91,140
Belden, Inc. 16,534 1,208,139
Benchmark Electronics, Inc. (I) 6,471 159,381
Checkpoint Systems, Inc. (I) 5,121 70,926
Citizen Holdings Company, Ltd. 24,600 174,877
Cognex Corp. (I) 10,521 441,672
Coherent, Inc. (I) 3,024 194,957
Control4 Corp. (I)(L) 1,396 20,745
Corning, Inc. 258,027 5,382,443
CTS Corp. 4,145 73,491
CUI Global, Inc. (I)(L) 2,783 20,622
Daktronics, Inc. 4,868 64,063
Delta Electronics, Inc. 196,000 1,378,103
DTS, Inc. (I) 2,213 52,869
Electro Rent Corp. 2,123 32,121
Electro Scientific Industries, Inc. 3,397 25,206
Fabrinet (I) 4,272 69,164
FARO Technologies, Inc. (I) 2,112 122,517
FEI Company 15,770 1,325,311
FLIR Systems, Inc. 27,871 941,761
GSI Group, Inc. (I) 3,911 50,139
Hamamatsu Photonics KK 6,600 314,005
Hexagon AB, B Shares 16,695 547,047
Hirose Electric Company, Ltd. 2,800 361,918
Hitachi High-Technologies Corp. 5,800 162,233
Hitachi, Ltd. 447,000 3,387,497
Hon Hai Precision Industry Company, Ltd. 1,339,016 4,580,107
Hoya Corp. 39,900 1,291,824
Ibiden Company, Ltd. 11,200 220,268
II-VI, Inc. (I) 6,410 89,484
Ingram Micro, Inc., Class A (I) 39,143 1,128,493
Innolux Corp. 850,000 432,196
Insight Enterprises, Inc. (I) 4,985 130,806
InvenSense, Inc. (I)(L) 8,658 223,809
Itron, Inc. (I) 14,685 620,001
Jabil Circuit, Inc. 36,367 784,800
Japan Display, Inc. (I) 33,500 169,579
KEMET Corp. (I) 6,008 30,280
Keyence Corp. 4,200 1,798,647
Kingboard Chemical Holdings, Ltd. 58,200 120,102
Knowles Corp. (I) 21,445 705,969
Kyocera Corp. 29,500 1,381,720
Largan Precision Company, Ltd. 11,000 912,912
LG Display Company, Ltd. (I) 17,485 604,508
LG Innotek Company, Ltd. (I) 856 113,653
Littelfuse, Inc. 2,726 250,547
Maxwell Technologies, Inc. (I) 3,660 37,588
Measurement Specialties, Inc. (I) 1,944 166,834
Mercury Systems, Inc. (I) 4,450 49,707
Mesa Laboratories, Inc. 487 34,674
Methode Electronics, Inc. 4,578 154,370
MTS Systems Corp. 1,865 132,564
Murata Manufacturing Company, Ltd. 18,600 1,778,292
National Instruments Corp. 24,814 822,584
Newport Corp. (I) 4,860 91,708

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electronic Equipment, Instruments &    
Components (continued)    
Nippon Electric Glass Company, Ltd. 37,000 $ 186,169
Omron Corp. 18,600 807,509
OSI Systems, Inc. (I) 2,422 168,959
Park Electrochemical Corp. 2,593 72,967
PC Connection, Inc. 1,298 29,439
Plexus Corp. (I) 4,124 169,868
RealD, Inc. (I) 4,933 45,926
Rofin-Sinar Technologies, Inc. (I) 3,362 80,554
Rogers Corp. (I) 2,232 134,322
Samsung Electro-Mechanics Company, Ltd. 4,612 249,887
Samsung SDI Company, Ltd. 4,143 619,639
Sanmina Corp. (I) 9,981 234,354
ScanSource, Inc. (I) 3,383 130,448
Shimadzu Corp. 22,000 192,782
Simplo Technology Company, Ltd. 29,900 167,949
Speed Commerce, Inc. (I) 6,492 21,359
SYNNEX Corp. (I) 3,438 239,766
Synnex Technology International Corp. 138,000 210,615
TDK Corp. 11,400 568,388
TE Connectivity, Ltd. 80,603 5,052,196
Tech Data Corp. (I) 9,644 650,970
TPK Holding Company, Ltd. 26,887 182,750
Trimble Navigation, Ltd. (I) 65,793 2,188,275
TTM Technologies, Inc. (I) 6,644 50,827
Unimicron Technology Corp. 134,000 113,226
Universal Display Corp. (I)(L) 4,895 170,052
Vishay Intertechnology, Inc. 34,212 547,392
Vishay Precision Group, Inc. (I) 1,729 26,454
WPG Holdings Company, Ltd. 153,000 199,394
Yaskawa Electric Corp. 21,100 271,730
Yokogawa Electric Corp. 20,000 231,748
Zebra Technologies Corp., Class A (I) 12,733 993,556
Zhen Ding Technology Holding, Ltd. 32,317 106,923
 
    58,151,708
Internet Software & Services - 2.2%    
Akamai Technologies, Inc. (I) 35,084 2,119,775
Angie’s List, Inc. (I)(L) 5,588 42,860
AOL, Inc. (I) 20,160 871,315
Bankrate, Inc. (I) 8,290 116,392
Bazaarvoice, Inc. (I)(L) 6,560 47,888
Benefitfocus, Inc. (I)(L) 665 21,958
Blucora, Inc. (I) 5,267 82,060
Brightcove, Inc. (I) 4,300 26,144
Carbonite, Inc. (I) 2,625 27,983
ChannelAdvisor Corp. (I)(L) 2,616 42,379
comScore, Inc. (I) 4,257 163,086
Constant Contact, Inc. (I) 3,796 118,321
Conversant, Inc. (I)(L) 24,033 661,869
Cornerstone OnDemand, Inc. (I) 6,535 244,670
Cvent, Inc. (I)(L) 2,323 58,354
Dealertrack Technologies, Inc. (I) 6,508 291,298
Demand Media, Inc. (I) 1,215 10,923
Demandware, Inc. (I)(L) 3,689 196,070
Dena Company, Ltd. (L) 9,800 122,220
Dice Holdings, Inc. (I) 5,097 43,274
Digital River, Inc. (I) 4,265 65,127
E2open, Inc. (I)(L) 2,951 44,560
Earthlink Holdings Corp. 13,381 55,264
eBay, Inc. (I) 224,983 12,486,557
Endurance International    
Group Holdings, Inc. (I)(L) 3,883 52,265
Envestnet, Inc. (I) 4,184 192,506

 

The accompanying notes are an integral part of the financial statements. 220

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Internet Software & Services (continued)    
Equinix, Inc. (I) 12,565 $ 2,742,437
Everyday Health, Inc. (I)(L) 1,032 15,026
Facebook, Inc., Class A (I) 339,181 25,377,522
Global Eagle Entertainment, Inc. (I)(L) 4,937 62,305
Gogo, Inc. (I)(L) 6,783 114,836
Google, Inc., Class A (I) 55,882 32,543,442
Google, Inc., Class C (I) 55,882 31,942,151
Gree, Inc. (L) 9,900 77,662
GrubHub, Inc. (I)(L) 1,170 44,975
GTT Communications, Inc. (I)(L) 1,967 24,076
Internap Network Services Corp. (I) 7,083 48,448
IntraLinks Holdings, Inc. (I) 5,270 41,422
j2 Global, Inc. (L) 5,782 309,048
Kakaku.com, Inc. 13,700 215,006
Limelight Networks, Inc. (I) 8,683 20,579
Liquidity Services, Inc. (I) 3,460 52,730
LivePerson, Inc. (I) 6,977 90,073
LogMeIn, Inc. (I) 2,941 124,345
Marchex, Inc., Class B 4,044 34,698
Marin Software, Inc. (I)(L) 3,643 30,419
Marketo, Inc. (I)(L) 3,226 94,457
Millennial Media, Inc. (I)(L) 9,146 21,767
Monster Worldwide, Inc. (I) 11,362 65,559
Move, Inc. (I) 5,102 81,122
NAVER Corp. 2,134 1,620,442
NIC, Inc. 8,088 151,569
Perficient, Inc. (I) 4,447 76,577
QuinStreet, Inc. (I) 5,010 23,998
Rackspace Hosting, Inc. (I) 29,381 1,016,583
Reis, Inc. 1,286 30,504
Rightside Group, Ltd. (I) 1,215 14,568
Rocket Fuel, Inc. (I)(L) 2,226 36,262
SciQuest, Inc. (I) 3,359 53,643
Shutterstock, Inc. (I)(L) 1,858 131,546
SPS Commerce, Inc. (I) 2,010 112,439
Stamps.com, Inc. (I) 1,839 61,901
Tencent Holdings, Ltd. 433,300 7,052,336
Textura Corp. (I)(L) 2,385 68,736
Tremor Video, Inc. (I)(L) 4,991 14,923
TrueCar, Inc. (I)(L) 1,003 20,732
Trulia, Inc. (I)(L) 4,485 276,411
United Internet AG 10,288 443,899
Unwired Planet, Inc. (I)(L) 13,063 27,432
VeriSign, Inc. (I)(L) 24,531 1,400,107
Vistaprint NV (I)(L) 4,053 195,679
Web.com Group, Inc. (I) 6,354 120,408
WebMD Health Corp. (I)(L) 4,767 230,484
Wix.com, Ltd. (I)(L) 1,840 30,286
XO Group, Inc. (I) 3,554 41,617
Xoom Corp. (I) 3,857 88,171
Yahoo Japan Corp. 133,600 539,001
Yahoo!, Inc. (I) 184,658 7,111,180
Zix Corp. (I) 7,648 29,445
 
    133,400,102
IT Services - 2.4%    
Accenture PLC, Class A 124,890 10,123,583
Acxiom Corp. (I) 28,805 534,189
Alliance Data Systems Corp. (I) 10,692 2,829,531
Amadeus IT Holding SA, A Shares 42,886 1,595,668
AtoS 6,346 484,617
Automatic Data Processing, Inc. 95,138 7,942,120
Blackhawk Network Holdings, Inc. (I) 6,511 179,573
Broadridge Financial Solutions, Inc. 30,433 1,294,620

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
IT Services (continued)    
CACI International, Inc., Class A (I) 2,806 $ 202,369
Cap Gemini SA 11,877 844,992
Cardtronics, Inc. (I) 5,440 193,120
Cass Information Systems, Inc. 1,453 68,175
CGI Group, Inc., Class A (I) 2,401 84,972
CIBER, Inc. (I) 10,673 40,771
Cielo SA 59,566 1,116,547
Cognizant Technology    
Solutions Corp., Class A (I) 120,034 5,489,155
Computer Sciences Corp. 28,603 1,710,173
Computer Task Group, Inc. 2,201 28,129
Computershare, Ltd. 41,892 482,577
Convergys Corp. 37,792 725,606
CoreLogic, Inc. (I) 23,162 654,790
CSG Systems International, Inc. 4,157 115,232
Datalink Corp. (I) 2,739 33,799
DST Systems, Inc. 8,809 817,563
EPAM Systems, Inc. (I) 4,332 163,100
Euronet Worldwide, Inc. (I) 6,193 330,087
EVERTEC, Inc. 7,927 182,559
ExlService Holdings, Inc. (I) 3,940 107,444
Fidelity National Information Services, Inc. 56,769 3,221,641
Fiserv, Inc. (I) 49,174 3,170,248
Forrester Research, Inc. 1,352 52,539
Fujitsu, Ltd. 171,000 1,174,438
Gartner, Inc. (I) 22,754 1,697,221
Global Cash Access Holdings, Inc. (I) 8,185 63,925
Global Payments, Inc. 18,112 1,317,105
Heartland Payment Systems, Inc. (L) 4,334 207,035
iGATE Corp. (I) 4,519 169,101
Information Services Group, Inc. (I) 4,750 20,188
Infosys, Ltd., ADR (L) 31,054 1,847,713
International Business Machines Corp. 187,688 36,092,402
Itochu Techno-Solutions Corp. 2,200 97,942
Jack Henry & Associates, Inc. 21,324 1,232,740
Leidos Holdings, Inc. 16,029 603,492
Lionbridge Technologies, Inc. (I) 8,432 39,124
Luxoft Holding, Inc. (I)(L) 1,031 37,106
ManTech International Corp., Class A 2,872 83,231
MasterCard, Inc., Class A 198,234 15,028,120
MAXIMUS, Inc. 8,181 337,057
ModusLink Global Solutions, Inc. (I)(L) 5,775 23,620
MoneyGram International, Inc. (I) 3,656 51,403
NeuStar, Inc., Class A (I)(L) 22,541 664,734
Nomura Research Institute, Ltd. 10,500 331,881
NTT Data Corp. 11,700 420,236
Otsuka Corp. 4,400 186,596
Paychex, Inc. 63,864 2,659,936
PRGX Global, Inc. (I) 4,414 27,455
Sapient Corp. (I) 13,997 203,096
Science Applications International Corp. 15,390 709,787
ServiceSource International, Inc. (I)(L) 8,302 31,548
SK C&C Company, Ltd. 1,544 323,764
Sykes Enterprises, Inc. (I) 4,740 99,256
Syntel, Inc. (I) 1,896 169,446
TeleTech Holdings, Inc. (I) 2,200 59,070
Teradata Corp. (I) 30,857 1,409,239
The Western Union Company (L) 105,510 1,843,260
Total System Services, Inc. 32,730 1,029,686
Unisys Corp. (I) 6,202 145,189
VeriFone Systems, Inc. (I) 28,176 983,906
Virtusa Corp. (I) 3,133 106,679
Visa, Inc., Class A 99,179 21,077,521

 

The accompanying notes are an integral part of the financial statements. 221

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
IT Services (continued)    
WEX, Inc. (I) 14,458 $ 1,643,152
Wipro, Ltd., ADR (L) 31,697 379,096
Xerox Corp. 215,751 2,979,521
 
    142,426,506
Semiconductors & Semiconductor Equipment - 2.2%  
Advanced Energy Industries, Inc. (I) 4,995 96,154
Advanced Micro Devices, Inc. (I)(L) 163,358 681,203
Advanced Semiconductor Engineering, Inc. 664,095 834,977
Advantest Corp. 14,800 172,079
Alpha & Omega Semiconductor, Ltd. (I) 2,702 24,912
Altera Corp. 61,942 2,189,030
Ambarella, Inc. (I)(L) 3,506 120,081
Amkor Technology, Inc. (I) 10,401 108,170
Analog Devices, Inc. 61,947 3,166,731
Applied Materials, Inc. 240,101 5,547,534
Applied Micro Circuits Corp. (I)(L) 9,517 80,609
ARM Holdings PLC 130,757 2,113,112
ASM Pacific Technology, Ltd. 19,400 201,344
ASML Holding NV 18,753 1,800,044
Atmel Corp. (I) 106,164 940,613
Audience, Inc. (I)(L) 1,968 16,885
Avago Technologies, Ltd. 49,645 4,075,358
Axcelis Technologies, Inc. (I) 15,078 30,458
Broadcom Corp., Class A 109,583 4,315,379
Brooks Automation, Inc. 8,044 91,219
Cabot Microelectronics Corp. (I) 2,954 126,727
Cascade Microtech, Inc. (I) 1,734 19,074
Cavium, Inc. (I) 6,376 358,204
CEVA, Inc. (I) 2,603 39,461
Cirrus Logic, Inc. (I)(L) 7,450 180,141
Cohu, Inc. 3,483 42,841
Cree, Inc. (I)(L) 30,753 1,401,107
Cypress Semiconductor Corp. (I)(L) 55,696 615,441
Diodes, Inc. (I) 4,450 113,253
DSP Group, Inc. (I) 3,212 28,844
Entegris, Inc. (I) 16,886 204,996
Entropic Communications, Inc. (I) 10,896 28,656
Epistar Corp. 91,000 197,936
Exar Corp. (I) 4,898 48,833
Fairchild Semiconductor International, Inc. (I) 46,674 819,129
First Solar, Inc. (I) 14,014 976,496
FormFactor, Inc. (I) 7,088 49,900
GCL-Poly Energy Holdings, Ltd. (I) 832,000 298,246
GT Advanced Technologies, Inc. (I)(L) 16,571 295,130
Hanergy Solar Group, Ltd. (I)(L) 996,000 163,268
Hermes Microvision, Inc. 4,000 171,978
Infineon Technologies AG 98,384 1,146,873
Inotera Memories, Inc. (I) 246,000 402,620
Inphi Corp. (I) 3,748 56,407
Integrated Device Technology, Inc. (I) 50,463 830,116
Integrated Silicon Solution, Inc. 3,812 56,532
Intel Corp. 981,974 34,290,532
International Rectifier Corp. (I) 26,486 1,043,548
Intersil Corp., Class A 48,077 723,318
IXYS Corp. 2,925 35,071
Kinsus Interconnect Technology Corp. 29,000 122,690
KLA-Tencor Corp. 32,683 2,497,635
Kopin Corp. (I) 9,427 37,425
Lam Research Corp. 31,962 2,298,387
Lattice Semiconductor Corp. (I) 14,248 107,002
Linear Technology Corp. 46,636 2,103,750
M/A-COM Technology    
Solutions Holdings, Inc. (I) 1,418 33,578

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Semiconductors & Semiconductor Equipment (continued)  
MaxLinear, Inc., Class A (I) 3,668 $ 34,002
MediaTek, Inc. 151,674 2,534,892
Micrel, Inc. 5,464 68,464
Microchip Technology, Inc. (L) 39,548 1,931,129
Micron Technology, Inc. (I) 211,116 6,882,382
Microsemi Corp. (I) 11,420 304,229
MKS Instruments, Inc. 6,450 218,913
Monolithic Power Systems, Inc. 4,667 222,989
Nanometrics, Inc. (I) 3,082 51,531
Novatek Microelectronics Corp., Ltd. 63,000 323,457
NVE Corp. (I) 842 58,098
NVIDIA Corp. 110,026 2,140,006
OmniVision Technologies, Inc. (I) 6,738 182,667
PDF Solutions, Inc. (I) 3,667 73,230
Peregrine Semiconductor Corp. (I) 3,823 47,596
Pericom Semiconductor Corp. (I) 3,113 30,445
Phison Electronics Corp. 15,000 108,600
Photronics, Inc. (I) 7,427 65,580
PMC-Sierra, Inc. (I) 20,978 154,818
Power Integrations, Inc. 3,692 220,708
Powertech Technology, Inc. (I) 76,000 144,053
QuickLogic Corp. (I)(L) 7,329 24,845
Radiant Opto-Electronics Corp. 47,605 205,627
Rambus, Inc. (I) 13,932 172,896
Realtek Semiconductor Corp. 49,571 180,705
RF Micro Devices, Inc. (I)(L) 106,683 1,330,337
Rohm Company, Ltd. 8,700 556,126
Rubicon Technology, Inc. (I) 3,365 20,998
Rudolph Technologies, Inc. (I) 4,417 42,712
Semtech Corp. (I) 25,131 654,788
Silicon Image, Inc. (I) 9,843 49,806
Silicon Laboratories, Inc. (I) 15,298 693,458
Siliconware Precision Industries Company 321,000 473,299
SK Hynix, Inc. (I) 43,283 1,940,424
Skyworks Solutions, Inc. 47,815 2,709,198
Spansion, Inc., Class A (I) 7,289 162,545
STMicroelectronics NV 51,508 432,672
SunEdison, Inc. (I) 62,067 1,367,336
Synaptics, Inc. (I) 4,374 359,105
Taiwan Semiconductor    
Manufacturing Company, Ltd. 2,639,000 11,029,114
Teradyne, Inc. (L) 48,991 1,008,725
Tessera Technologies, Inc. 6,346 187,651
Texas Instruments, Inc. 212,922 10,258,582
Tokyo Electron, Ltd. 15,900 1,114,166
Transcend Information, Inc. 21,000 70,732
TriQuint Semiconductor, Inc. (I) 20,749 428,778
Ultra Clean Holdings, Inc. (I) 3,868 37,326
Ultratech, Inc. (I) 3,480 89,993
United Microelectronics Corp. 1,275,000 583,440
Vanguard International Semiconductor Corp. 89,000 130,370
Veeco Instruments, Inc. (I)(L) 4,880 172,606
Vitesse Semiconductor Corp. (I) 6,834 22,826
Xcerra Corp. (I) 5,981 62,501
Xilinx, Inc. 52,995 2,239,039
 
    133,181,552
Software - 2.8%    
A10 Networks, Inc. (I) 1,661 19,367
ACI Worldwide, Inc. (I) 42,591 829,247
Actuate Corp. (I) 6,424 28,523
Adobe Systems, Inc. (I) 91,306 6,564,901
Advent Software, Inc. 16,549 534,698
American Software, Inc., Class A 4,570 42,044

 

The accompanying notes are an integral part of the financial statements. 222

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Software (continued)    
ANSYS, Inc. (I) 23,370 $ 1,899,981
Aspen Technology, Inc. (I) 11,147 458,030
Autodesk, Inc. (I) 44,930 2,410,045
AVG Technologies NV (I) 4,137 72,563
Barracuda Networks, Inc. (I) 1,068 26,540
Blackbaud, Inc. 5,654 219,884
Bottomline Technologies, Inc. (I) 4,851 136,604
BroadSoft, Inc. (I) 3,490 83,271
CA, Inc. 63,213 1,785,135
Cadence Design Systems, Inc. (I) 73,016 1,288,002
Callidus Software, Inc. (I) 5,742 65,918
Citrix Systems, Inc. (I) 32,300 2,269,398
CommVault Systems, Inc. (I) 16,929 933,465
Compuware Corp. 81,771 764,559
Comverse, Inc. (I) 2,757 68,070
Concur Technologies, Inc. (I)(L) 12,050 1,209,579
Cyan, Inc. (I) 4,109 15,491
Dassault Systemes SA 10,421 690,637
Digimarc Corp. 911 21,727
Ebix, Inc. (L) 3,719 57,421
Electronic Arts, Inc. (I) 62,023 2,346,950
Ellie Mae, Inc. (I) 3,416 122,293
EnerNOC, Inc. (I) 3,270 64,223
Epiq Systems, Inc. 4,055 59,000
ePlus, Inc. (I) 642 37,538
FactSet Research Systems, Inc. (L) 9,930 1,265,082
Fair Isaac Corp. 12,789 743,936
FleetMatics Group PLC (I)(L) 4,606 151,169
Fortinet, Inc. (I) 34,547 891,658
Gemalto NV (L) 4,156 407,168
Gigamon, Inc. (I)(L) 3,103 33,761
Glu Mobile, Inc. (I)(L) 11,520 59,443
Guidance Software, Inc. (I)(L) 2,714 21,251
Guidewire Software, Inc. (I) 8,256 376,061
Gungho Online Entertainment, Inc. (L) 37,400 199,684
Imperva, Inc. (I)(L) 2,788 81,159
Infoblox, Inc. (I) 6,549 88,084
Informatica Corp. (I) 27,690 942,983
Interactive Intelligence Group, Inc. (I) 2,075 88,831
Intuit, Inc. 55,990 4,657,248
Jive Software, Inc. (I) 5,207 36,345
Kingsoft Corp., Ltd. 52,000 149,180
Kofax Ltd. (I)(L) 9,187 72,853
Konami Corp. 9,300 215,562
Manhattan Associates, Inc. (I) 9,190 265,407
Mavenir Systems, Inc. (I) 1,410 15,848
Mentor Graphics Corp. 36,088 787,079
MICROS Systems, Inc. (I) 18,870 1,282,594
Microsoft Corp. 1,482,826 67,364,785
MicroStrategy, Inc., Class A (I) 1,106 153,657
Model N, Inc. (I) 2,553 23,590
Monotype Imaging Holdings, Inc. 4,775 140,337
NCSoft Corp. 1,185 169,564
NetScout Systems, Inc. (I) 4,456 205,288
Nexon Company, Ltd. 12,200 106,359
Nintendo Company, Ltd. 9,800 1,092,365
Open Text Corp. 1,338 75,163
Oracle Corp. 677,270 28,127,023
Oracle Corp. Japan 3,500 142,729
Pegasystems, Inc. 4,423 98,191
Progress Software Corp. (I) 6,289 145,653
Proofpoint, Inc. (I)(L) 4,521 180,297
PROS Holdings, Inc. (I) 2,919 74,697

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Software (continued)    
PTC, Inc. (I) 29,916 $ 1,157,450
Qlik Technologies, Inc. (I) 10,945 308,977
Qualys, Inc. (I) 2,557 62,135
Rally Software Development Corp. (I)(L) 3,329 38,417
RealPage, Inc. (I)(L) 6,256 100,847
Red Hat, Inc. (I) 37,327 2,273,961
Rosetta Stone, Inc. (I) 2,630 23,013
Rovi Corp. (I) 23,848 551,604
Salesforce.com, Inc. (I) 111,418 6,583,690
SAP SE 80,375 6,264,772
Sapiens International Corp. NV (I)(L) 3,381 27,859
Seachange International, Inc. (I) 4,307 32,690
Silver Spring Networks, Inc. (I)(L) 4,236 44,012
SolarWinds, Inc. (I) 16,542 707,832
Solera Holdings, Inc. 17,352 1,057,778
SS&C Technologies Holdings, Inc. (I) 8,303 375,794
Symantec Corp. 136,352 3,310,627
Synchronoss Technologies, Inc. (I) 4,316 190,638
Synopsys, Inc. (I) 39,026 1,596,163
Take-Two Interactive Software, Inc. (I) 11,966 281,321
Tangoe, Inc. (I) 4,819 67,080
TeleCommunication Systems, Inc., Class A (I) 6,827 20,344
Telenav, Inc. (I) 3,555 24,494
The Sage Group PLC 101,855 666,165
The Ultimate Software Group, Inc. (I)(L) 10,739 1,578,526
TIBCO Software, Inc. (I) 38,580 804,007
TiVo, Inc. (I) 14,023 197,584
Totvs SA 10,326 188,484
Trend Micro, Inc. 9,800 315,811
Tyler Technologies, Inc. (I) 4,018 357,843
Varonis Systems, Inc. (I)(L) 713 16,969
VASCO Data Security International, Inc. (I) 3,726 55,033
Verint Systems, Inc. (I) 6,542 327,950
VirnetX Holding Corp. (I)(L) 5,124 75,579
Vringo, Inc. (I) 8,695 8,782
Xero, Ltd. (I) 5,445 114,997
Zendesk, Inc. (I)(L) 1,436 39,045
 
    165,905,461
Technology Hardware, Storage & Peripherals - 3.3%  
3D Systems Corp. (I)(L) 25,781 1,379,541
Acer, Inc. (I) 277,000 229,298
Advantech Company, Ltd. 31,000 291,180
Apple, Inc. 1,189,432 121,916,780
Asustek Computer, Inc. 75,000 784,849
BlackBerry, Ltd. (I) 5,445 55,336
Brother Industries, Ltd. 21,900 425,058
Canon, Inc. 104,800 3,419,998
Catcher Technology Company, Ltd. 69,000 699,906
Chicony Electronics Company, Ltd. 52,169 170,986
Clevo Company 49,000 92,773
Compal Electronics, Inc. 455,000 404,422
Cray, Inc. (I)(L) 4,962 139,978
Diebold, Inc. 16,290 618,531
Dot Hill Systems Corp. (I) 7,748 28,203
Eastman Kodak Company (I)(L) 2,263 52,343
Electronics For Imaging, Inc. (I) 5,628 247,857
EMC Corp. 403,793 11,924,007
Foxconn Technology Company, Ltd. 96,306 241,773
FUJIFILM Holdings Corp. 42,500 1,283,253
Hewlett-Packard Company 369,107 14,026,066
HTC Corp. (I) 73,000 336,101
Immersion Corp. (I) 3,601 37,738
Intevac, Inc. (I) 3,220 22,959

 

The accompanying notes are an integral part of the financial statements. 223

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Technology Hardware, Storage & Peripherals (continued)  
Inventec Corp. 252,695 $ 198,797
Konica Minolta, Inc. 44,500 489,860
Lenovo Group, Ltd. 528,564 807,131
Lexmark International, Inc., Class A 15,703 793,944
Lite-On Technology Corp. 228,240 378,531
NCR Corp. (I) 42,344 1,446,471
NEC Corp. 242,000 862,010
NetApp, Inc. 65,302 2,753,132
Nimble Storage, Inc. (I) 1,143 30,907
Nokia OYJ 336,862 2,829,112
Pegatron Corp. 176,000 373,200
QLogic Corp. (I) 10,431 94,401
Quanta Computer, Inc. 288,000 813,353
Quantum Corp. (I)(L) 30,169 37,711
Ricoh Company, Ltd. 65,800 714,227
Samsung Electronics Company, Ltd. 8,418 10,249,680
SanDisk Corp. 44,611 4,370,094
Seagate Technology PLC 64,391 4,029,589
Seiko Epson Corp. 12,100 614,755
Silicon Graphics International Corp. (I)(L) 4,523 44,325
Super Micro Computer, Inc. (I) 4,191 102,638
Violin Memory, Inc. (I)(L) 9,680 40,850
Western Digital Corp. 41,252 4,249,369
Wistron Corp. 250,252 293,231
Ya Hsin Industrial Company, Ltd. (I) 18,000 0
 
    195,446,254
    898,884,007
Materials - 4.8%    
Chemicals - 2.6%    
A. Schulman, Inc. 3,561 138,274
Advanced Emissions Solutions, Inc. (I) 2,686 58,528
Agrium, Inc. 1,425 134,754
Air Liquide SA 28,253 3,611,623
Air Products & Chemicals, Inc. 41,863 5,576,570
Air Water, Inc. 14,000 220,217
Airgas, Inc. 13,288 1,466,729
Akzo Nobel NV 12,581 889,546
Albemarle Corp. (L) 20,061 1,275,478
American Vanguard Corp. (L) 3,520 47,309
Arkema SA 4,566 342,902
Asahi Kasei Corp. 117,000 938,859
Ashland, Inc. 18,279 1,959,874
Axiall Corp. 8,475 352,391
Balchem Corp. 3,683 189,454
BASF SE 80,112 8,259,018
Cabot Corp. 15,125 828,548
Calgon Carbon Corp. (I) 6,441 136,807
CF Industries Holdings, Inc. 10,261 2,643,952
Chase Corp. 857 30,424
Chemtura Corp. (I) 11,625 287,021
China BlueChemical, Ltd., H Shares 154,000 75,493
Croda International PLC 12,602 456,572
Cytec Industries, Inc. 9,043 931,791
Daicel Corp. 25,000 277,427
E.I. du Pont de Nemours & Company 181,138 11,975,033
Eastman Chemical Company 29,605 2,441,524
Ecolab, Inc. 53,294 6,119,217
EMS-Chemie Holding AG 662 287,846
Ferro Corp. (I) 8,699 117,263
Flotek Industries, Inc. (I)(L) 6,598 183,424
FMC Corp. 26,298 1,739,350
Formosa Chemicals & Fibre Corp. 344,100 856,942

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Chemicals (continued)    
Formosa Plastics Corp. 442,040 $ 1,146,585
FutureFuel Corp. 2,672 37,194
Givaudan SA (I) 737 1,225,366
Grupa Azoty SA 3,748 87,784
Hanwha Chemical Corp. 8,124 131,467
Hanwha Corp. 3,471 103,604
Hawkins, Inc. 1,672 61,530
HB Fuller Company 6,070 285,533
Hitachi Chemical Company, Ltd. 9,700 180,589
Hyosung Corp. 1,762 136,300
Incitec Pivot, Ltd. 145,759 422,481
Indorama Ventures PCL 227,555 192,384
Innophos Holdings, Inc. 2,715 157,877
Innospec, Inc. 2,979 125,654
International Flavors & Fragrances, Inc. 16,101 1,635,701
Intrepid Potash, Inc. (I) 6,809 104,382
Johnson Matthey PLC 19,018 997,800
JSR Corp. 16,600 288,605
K&S AG 15,168 471,944
Kaneka Corp. 26,000 153,893
Kansai Paint Company, Ltd. 21,000 333,741
KMG Chemicals, Inc. 1,147 19,442
Koninklijke DSM NV 9,042 604,110
Koppers Holdings, Inc. 2,507 93,035
Kraton Performance Polymers, Inc. (I) 4,019 81,706
Kronos Worldwide, Inc. (L) 2,631 41,596
Kumho Petrochemical Company, Ltd. 1,058 84,905
Kuraray Company, Ltd. 32,000 398,680
Landec Corp. (I) 3,424 44,957
Lanxess AG 8,053 498,464
LG Chem, Ltd. 3,523 937,182
Linde AG 16,190 3,208,469
Lotte Chemical Corp. 1,190 192,078
LSB Industries, Inc. (I) 2,383 95,439
LyondellBasell Industries NV, Class A 82,155 9,394,424
Methanex Corp. 1,078 72,078
Mexichem SAB de CV 108,800 472,083
Minerals Technologies, Inc. 12,873 806,107
Mitsubishi Chemical Holdings Corp. 126,000 628,968
Mitsubishi Gas & Chemicals Company, Inc. 36,000 233,054
Mitsui Chemicals, Inc. 76,000 224,495
Monsanto Company 103,394 11,957,516
Nan Ya Plastics Corp. 509,210 1,201,795
NewMarket Corp. 2,791 1,135,630
Nippon Paint Company, Ltd. 16,000 396,733
Nitto Denko Corp. 14,500 760,413
Novozymes A/S, B Shares 16,005 743,919
OCI Company, Ltd. (I) 1,288 184,951
Olin Corp. 29,449 803,663
OM Group, Inc. 3,907 103,926
OMNOVA Solutions, Inc. (I) 6,078 50,994
Orica, Ltd. 32,073 614,665
Petronas Chemicals Group BHD 139,445 278,685
PolyOne Corp. 35,162 1,379,054
Potash Corp. of Saskatchewan, Inc. 9,392 329,882
PPG Industries, Inc. 27,267 5,613,185
Praxair, Inc. 57,781 7,601,091
PTT Global Chemical PCL 228,967 444,535
Quaker Chemical Corp. 1,610 125,580
Rayonier Advanced Materials, Inc. (L) 10,630 353,033
Rentech, Inc. (I) 27,731 62,117
RPM International, Inc. 33,604 1,583,757
Senomyx, Inc. (I)(L) 5,173 42,056

 

The accompanying notes are an integral part of the financial statements. 224

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Chemicals (continued)    
Sensient Technologies Corp. 18,474 $ 1,036,576
Shin-Etsu Chemical Company, Ltd. 37,900 2,354,224
Sigma-Aldrich Corp. 23,431 2,436,824
Sika AG 170 643,783
Sinopec Shanghai Petrochemical    
Company, Ltd., H Shares 304,099 101,606
Solvay SA 5,277 830,311
Stepan Company 2,377 114,785
Sumitomo Chemical Company, Ltd. 138,000 495,427
Syngenta AG 7,426 2,667,150
Synthos SA 39,995 57,563
Taiwan Fertilizer Company, Ltd. 85,000 161,251
Taiyo Nippon Sanso Corp. (L) 22,000 198,180
Taminco Corp. (I) 3,425 82,029
Teijin, Ltd. 87,000 213,287
The Dow Chemical Company 237,494 12,717,804
The Mosaic Company 63,761 3,045,225
The Scotts Miracle-Gro Company, Class A 10,973 633,471
The Sherwin-Williams Company 16,702 3,642,873
Toray Industries, Inc. 136,000 928,368
Trecora Resources (I) 2,718 35,715
Tredegar Corp. 3,093 64,365
Tronox, Ltd., Class A 7,424 225,393
TSRC Corp. 63,140 88,389
Umicore SA 9,602 464,120
Valspar Corp. 19,586 1,581,765
Yara International ASA 14,960 750,065
Yingde Gases Group Company, Ltd. 95,500 102,140
Zep, Inc. 2,953 46,894
 
    152,748,609
Construction Materials - 0.3%    
Anhui Conch Cement Company, Ltd.,    
H Shares 103,710 375,071
Asia Cement Corp. 236,796 324,907
BBMG Corp., H Shares 102,000 75,636
Boral, Ltd. 69,007 355,519
Cemex SAB de CV (I) 1,353,642 1,793,918
China National Building Material    
Company, Ltd., H Shares 234,000 214,773
China Resources Cement Holdings, Ltd. 170,000 116,865
CRH PLC 65,851 1,517,713
Eagle Materials, Inc. 12,622 1,286,308
Fletcher Building, Ltd. 58,704 452,035
Headwaters, Inc. (I) 9,036 117,378
HeidelbergCement AG 12,307 931,628
Holcim, Ltd. (I) 18,289 1,455,651
Imerys SA 2,772 221,725
Indocement Tunggal Prakarsa Tbk PT 177,920 368,680
James Hardie Industries, Ltd. 39,303 471,050
Lafarge Malayan Cement BHD 22,266 72,053
Lafarge SA 15,348 1,176,936
Martin Marietta Materials, Inc. 12,946 1,695,408
PPC, Ltd. 45,504 141,858
Semen Gresik Persero Tbk PT 358,192 496,937
Siam Cement PCL 19,154 263,901
Siam Cement PCL (Foreign Registered Shares) 37,900 522,172
Taiheiyo Cement Corp. 109,000 455,917
Taiwan Cement Corp. 351,000 558,340
Titan Cement Company SA 3,306 88,483
U.S. Concrete, Inc. (I)(L) 1,789 45,423
Ultratech Cement, Ltd., GDR (L) 2,420 101,700

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Construction Materials (continued)    
Vulcan Materials Company 25,891 $ 1,640,972
 
    17,338,957
Containers & Packaging - 0.3%    
AEP Industries, Inc. (I) 655 27,739
Amcor, Ltd. 105,334 1,124,642
AptarGroup, Inc. 16,507 1,058,924
Avery Dennison Corp. 19,037 916,251
Ball Corp. 27,636 1,771,468
Bemis Company, Inc. 19,568 797,200
Berry Plastics Group, Inc. (I) 10,876 262,220
Graphic Packaging Holding Company (I) 39,334 503,082
Greif, Inc., Class A 7,695 368,514
Klabin SA 38,779 196,970
MeadWestvaco Corp. 33,084 1,422,612
Myers Industries, Inc. 3,421 67,428
Nampak, Ltd. 49,734 198,991
Owens-Illinois, Inc. (I) 32,367 996,580
Packaging Corp. of America 24,796 1,685,880
Rexam PLC 65,334 550,453
Rock-Tenn Company, Class A 36,202 1,779,690
Sealed Air Corp. 38,279 1,381,872
Silgan Holdings, Inc. 11,059 556,821
Sonoco Products Company 25,738 1,059,376
Toyo Seikan Kaisha, Ltd. 15,200 208,040
 
    16,934,753
Metals & Mining - 1.5%    
African Rainbow Minerals, Ltd. 9,040 154,331
Agnico-Eagle Mines, Ltd. 2,250 86,043
AK Steel Holding Corp. (I)(L) 16,427 179,383
Alcoa, Inc. 231,130 3,839,069
Allegheny Technologies, Inc. 21,796 919,137
Allied Nevada Gold Corp. (I)(L) 12,654 48,338
Alumina, Ltd. (I) 223,786 324,462
Aluminum Corp. of China, Ltd.,    
H Shares (I)(L) 342,780 146,020
AM Castle & Company (I)(L) 2,831 27,744
Ampco-Pittsburgh Corp. 1,081 22,960
Anglo American Platinum, Ltd. (I) 4,505 187,846
Anglo American PLC 129,399 3,285,607
AngloGold Ashanti, Ltd. (I) 32,771 557,663
Antofagasta PLC 36,598 477,927
ArcelorMittal 82,152 1,194,054
Assore, Ltd. 2,915 86,026
Barrick Gold Corp. 12,811 235,530
BHP Billiton PLC 196,016 6,178,683
BHP Billiton, Ltd. 282,094 9,727,958
Boliden AB 17,946 284,755
Carpenter Technology Corp. 13,390 732,835
Century Aluminum Company (I) 6,151 153,652
China Steel Corp. 1,279,958 1,105,366
Cia Siderurgica Nacional SA 61,366 269,204
Cliffs Natural Resources, Inc. (L) 38,633 582,199
Coeur Mining, Inc. (I) 12,648 100,172
Commercial Metals Company 43,818 757,175
Compania de Minas Buenaventura SA, ADR 47,200 687,232
Compass Minerals International, Inc. 8,457 753,265
Daido Steel Company, Ltd. 26,000 114,299
Eldorado Gold Corp. 7,869 65,062
Eregli Demir ve Celik Fabrikalari TAS 67,108 130,466
Fortescue Metals Group, Ltd. 137,956 538,878
Fosun International, Ltd. 171,000 209,828
Franco-Nevada Corp. 1,590 89,583

 

The accompanying notes are an integral part of the financial statements. 225

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Metals & Mining (continued)    
Freeport-McMoRan Copper & Gold, Inc. 204,831 $ 7,449,703
Fresnillo PLC 20,517 328,239
Glencore Xstrata PLC (I) 985,867 5,936,356
Globe Specialty Metals, Inc. 7,824 160,705
Gold Fields, Ltd. 64,359 306,986
Gold Resource Corp. (L) 4,951 30,696
Goldcorp, Inc. 8,978 252,091
Grupo Mexico SAB de CV, Series B 439,600 1,601,846
Harmony Gold Mining Company, Ltd. (I) 32,754 99,640
Haynes International, Inc. 1,509 74,816
Hecla Mining Company (L) 41,260 134,920
Hitachi Metals, Ltd. 20,000 341,520
Horsehead Holding Corp. (I)(L) 6,253 126,248
Hyundai Steel Company 5,199 388,450
Iluka Resources, Ltd. 37,101 308,643
Impala Platinum Holdings, Ltd. 43,387 392,724
Industrias Penoles SAB de CV 16,065 409,096
Jastrzebska Spolka Weglowa SA (I) 3,993 41,796
JFE Holdings, Inc. 45,000 911,010
Jiangxi Copper Company, Ltd., H Shares 106,925 189,422
Kaiser Aluminum Corp. 2,195 176,807
KGHM Polska Miedz SA 10,221 421,255
Kinross Gold Corp. (I) 12,562 49,680
Kobe Steel, Ltd. 283,000 460,375
Korea Zinc Company, Ltd. 655 271,751
Koza Altin Isletmeleri AS 2,218 23,819
Kumba Iron Ore, Ltd. 5,381 161,307
lFirst Quantum Minerals, Ltd. 6,484 145,566
Maruichi Steel Tube, Ltd. 4,400 117,003
Materion Corp. 2,494 81,379
Minera Frisco SAB de CV, Class A1 (I) 73,300 148,038
Mitsubishi Materials Corp. 104,000 351,102
Molycorp, Inc. (I)(L) 21,586 38,639
New Gold, Inc (I) 5,556 35,923
Newcrest Mining, Ltd. (I) 66,480 707,318
Newmont Mining Corp. 98,284 2,662,514
Nippon Steel & Sumitomo Metal Corp. 701,002 1,985,242
Noranda Aluminum Holding Corp. 6,569 26,736
Norsk Hydro ASA 111,142 654,762
Northam Platinum, Ltd. (I) 29,885 119,753
Nucor Corp. 62,710 3,406,407
Olympic Steel, Inc. 1,205 28,968
POSCO 4,980 1,646,547
Randgold Resources, Ltd. 8,160 688,267
Reliance Steel & Aluminum Company 19,599 1,370,362
Rio Tinto PLC 118,055 6,312,424
Rio Tinto, Ltd. 38,293 2,246,471
Royal Gold, Inc. 16,386 1,274,012
RTI International Metals, Inc. (I) 3,696 107,221
Schnitzer Steel Industries, Inc., Class A 3,196 88,497
Sesa Sterlite, Ltd., ADR 20,968 385,602
Silver Wheaton Corp. 3,941 98,443
Southern Copper Corp. 41,200 1,351,772
Steel Dynamics, Inc. 56,335 1,309,225
Stillwater Mining Company (I)(L) 14,519 269,473
Sumitomo Metal Mining Company, Ltd. 48,000 728,898
SunCoke Energy, Inc. (I) 8,501 204,109
Teck Resources, Ltd. 6,215 141,128
ThyssenKrupp AG (I) 39,541 1,100,738
Timkensteel Corp. 9,665 461,794
Turquoise Hill Resources, Ltd. (I) 8,820 29,689
U.S. Silica Holdings, Inc. (L) 6,529 468,847
United States Steel Corp. 37,287 1,441,143

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Metals & Mining (continued)    
Universal Stainless & Alloy Products, Inc. (I) 996 $ 31,902
Vale SA 109,672 1,426,691
Walter Energy, Inc. (L) 7,967 44,536
Worthington Industries, Inc. 19,344 782,271
Yamana Gold, Inc. 9,522 81,094
Yamato Kogyo Company, Ltd. 3,600 119,249
Zijin Mining Group Company, Ltd., H Shares 523,529 134,864
 
    90,157,272
Paper & Forest Products - 0.1%    
Boise Cascade Company (I) 4,779 143,657
Clearwater Paper Corp. (I) 2,454 169,817
Deltic Timber Corp. 1,393 92,272
Domtar Corp. 16,386 611,034
Duratex SA 25,195 113,341
Fibria Celulose SA (I) 20,956 217,939
International Paper Company 85,367 4,136,031
KapStone Paper and Packaging Corp. (I) 10,228 314,409
Lee & Man Paper Manufacturing, Ltd. 123,000 72,068
Louisiana-Pacific Corp. (I)(L) 52,670 751,601
Neenah Paper, Inc. 2,035 111,253
Nine Dragons Paper Holdings, Ltd. 142,000 110,330
Oji Holdings Corp. 74,000 300,971
PH Glatfelter Company 5,275 131,506
Resolute Forest Products, Inc. (I)(L) 7,893 135,681
Sappi, Ltd. (I) 45,220 186,926
Schweitzer-Mauduit International, Inc. 3,677 157,523
Stora Enso OYJ, Series R 49,553 432,489
UPM-Kymmene OYJ 47,647 717,183
Wausau Paper Corp. 5,467 49,859
 
    8,955,890
 
    286,135,481
Telecommunication Services - 2.9%    
Diversified Telecommunication Services - 2.2%    
8x8, Inc. (I) 10,757 83,582
Asia Pacific Telecom Company, Ltd. 203,000 131,165
AT&T, Inc. 1,023,764 35,790,789
Atlantic Tele-Network, Inc. 1,153 67,612
BCE, Inc. 2,784 125,335
Belgacom SA 13,537 482,561
Bell Aliant, Inc. 830 23,550
BT Group PLC 734,165 4,720,208
CenturyLink, Inc. 112,914 4,628,345
China Communications Services Corp., Ltd.,    
H Shares 208,400 100,273
China Telecom Corp., Ltd., H Shares 1,176,396 722,774
China Unicom Hong Kong, Ltd. 402,416 715,279
Chunghwa Telecom Company, Ltd. 406,000 1,264,832
Cincinnati Bell, Inc. (I) 25,711 94,359
CITIC 21CN Company, Ltd. (I) 214,000 168,420
Cogent Communications Group, Inc. 5,676 196,730
Consolidated    
Communications Holdings, Inc. (L) 4,753 115,878
Deutsche Telekom AG 271,763 4,072,955
Elisa OYJ, Class A 12,780 348,391
Enventis Corp. 1,981 35,242
FairPoint Communications, Inc. (I)(L) 2,723 44,004
Frontier Communications Corp. (L) 196,129 1,333,677
General Communication, Inc., Class A (I) 4,556 51,209
Globalstar, Inc. (I)(L) 33,379 132,848
Hawaiian Telcom Holdco, Inc. (I)(L) 1,373 37,758

 

The accompanying notes are an integral part of the financial statements. 226

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Diversified Telecommunication Services (continued)  
Hellenic    
Telecommunications Organization SA (I) 18,623 $ 267,336
HKT Trust and HKT, Ltd. 217,000 256,492
IDT Corp., Class B 2,155 33,855
Iliad SA 2,171 477,221
inContact, Inc. (I) 7,397 67,757
Inmarsat PLC 39,525 460,463
Inteliquent, Inc. 4,228 51,582
Intelsat SA (I)(L) 3,273 57,408
Iridium Communications, Inc. (I)(L) 9,833 92,430
Koninklijke KPN NV (I) 168,023 560,869
KT Corp. 5,039 174,120
LG Uplus Corp. 16,511 178,422
Lumos Networks Corp. 2,411 35,273
magicJack VocalTec, Ltd. (I)(L) 2,185 27,400
Nippon Telegraph & Telephone Corp. 34,700 2,330,809
Orange Polska SA 49,594 166,497
Orange SA 152,248 2,304,576
ORBCOMM, Inc. (I) 5,910 36,819
PCCW, Ltd. 321,000 205,732
Premiere Global Services, Inc. (I) 5,896 77,650
Singapore Telecommunications, Ltd. 888,000 2,759,594
Swisscom AG 1,859 1,079,982
TDC A/S 53,196 455,956
Telecom Corp. of New Zealand, Ltd. 155,694 382,174
Telecom Italia RSP 487,281 448,725
Telecom Italia SpA (I) 813,399 938,320
Telefonica Deutschland Holding AG (I) 23,833 181,690
Telefonica SA 461,591 7,323,041
Telekom Malaysia BHD 56,218 113,489
Telekomunikasi Indonesia Persero Tbk PT 6,084,100 1,390,642
Telenor ASA 62,668 1,439,555
TeliaSonera AB 158,325 1,156,380
Telstra Corp., Ltd. 382,796 1,989,498
TELUS Corp. 2,218 80,883
TPG Telecom, Ltd. 24,618 138,870
True Corp. PCL (I) 1,041,507 375,215
Turk Telekomunikasyon AS 24,756 71,695
tw telecom, inc. (I) 34,785 1,427,402
Verizon Communications, Inc. 816,889 40,697,410
Vivendi SA (I) 98,979 2,577,327
Vonage Holdings Corp. (I) 21,080 72,726
Windstream Holdings, Inc. (L) 120,532 1,362,012
XL Axiata Tbk PT 360,351 183,351
Ziggo NV 7,869 374,496
 
    130,370,920
Wireless Telecommunication Services - 0.7%    
Advanced Info Service PCL 145,200 950,424
America Movil SAB de CV, Series L 3,953,000 4,857,836
Axiata Group BHD 134,253 295,277
Boingo Wireless, Inc. (I) 3,614 25,153
China Mobile, Ltd. 511,470 6,351,972
DiGi.Com BHD 163,020 296,479
Far EasTone    
Telecommunications Company, Ltd. 173,000 368,473
KDDI Corp. 53,900 3,114,624
Leap Wireless International, Inc. (I) 7,912 19,938
Maxis BHD 98,360 204,436
Millicom International Cellular SA 4,339 389,226
MTN Group, Ltd. 138,200 3,126,142
NTELOS Holdings Corp. 2,374 31,313
NTT DOCOMO, Inc. 142,000 2,459,035
RingCentral, Inc., Class A (I)(L) 3,571 47,959

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Wireless Telecommunication Services (continued)    
Rogers Communications, Inc., Class B 3,971 $ 161,864
Shenandoah Telecommunications Company 3,066 84,683
SK Telecom Company, Ltd. 748 202,131
SoftBank Corp. 88,800 6,416,255
Spok Holdings, Inc. 2,733 40,448
StarHub, Ltd. 67,000 222,494
Taiwan Mobile Company, Ltd. 177,000 564,074
Tele2 AB, B Shares 20,934 260,752
Telephone & Data Systems, Inc. 24,958 657,394
Tim Participacoes SA 71,189 399,116
Tower Bersama Infrastructure Tbk PT 231,600 155,912
Turkcell Iletisim Hizmetleri AS (I) 41,825 245,403
Vodacom Group, Ltd. (L) 29,802 359,424
Vodafone Group PLC 2,453,666 8,432,956
 
    40,741,193
 
    171,112,113
Utilities - 3.1%    
Electric Utilities - 1.6%    
ALLETE, Inc. 5,161 251,186
American Electric Power Company, Inc. 96,305 5,171,579
AusNet Services 150,050 198,577
Centrais Eletricas Brasileiras SA 22,831 83,124
Cheung Kong Infrastructure Holdings, Ltd. 51,000 368,123
Chubu Electric Power Company, Inc. (I) 59,900 692,114
Cleco Corp. 22,468 1,267,645
CLP Holdings, Ltd. 159,000 1,346,277
Contact Energy, Ltd. 31,294 145,256
CPFL Energia SA 20,208 203,931
Duke Energy Corp. 139,561 10,326,118
Edison International 64,299 3,802,643
EDP - Energias de Portugal SA 335,090 1,623,604
EDP - Energias do Brasil SA 20,032 101,122
El Paso Electric Company 4,961 195,166
Electricite de France SA 20,009 650,492
Enea SA 16,682 78,217
Enel SpA 532,434 2,820,127
Energa SA 15,257 99,394
Entergy Corp. 35,368 2,737,837
Exelon Corp. 169,392 5,661,081
FirstEnergy Corp. 82,791 2,834,764
Fortis, Inc. (L) 2,335 71,985
Fortum OYJ 40,007 1,005,045
Great Plains Energy, Inc. 38,774 995,329
Hawaiian Electric Industries, Inc. (L) 25,593 649,806
Hokuriku Electric Power Company 15,600 201,989
Iberdrola SA 586,925 4,312,407
IDACORP, Inc. 18,702 1,060,777
Korea Electric Power Corp. 19,460 813,983
Kyushu Electric Power Company, Inc. (I) 39,700 403,199
MGE Energy, Inc. 4,360 175,403
NextEra Energy, Inc. 86,072 8,473,788
Northeast Utilities 62,345 2,861,012
NRG Yield, Inc., Class A (L) 2,440 132,712
OGE Energy Corp. 50,222 1,884,329
Otter Tail Corp. 4,463 127,151
Pepco Holdings, Inc. 48,930 1,348,511
PGE SA (L) 54,362 370,242
Pinnacle West Capital Corp. 21,533 1,226,304
PNM Resources, Inc. 29,748 779,695
Portland General Electric Company 9,141 315,090
Power Assets Holdings, Ltd. 116,500 1,061,253
PPL Corp. 124,652 4,316,699

 

The accompanying notes are an integral part of the financial statements. 227

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Electric Utilities (continued)    
Public Power Corp. SA (I) 8,296 $ 120,838
Red Electrica Corp. SA 12,215 1,028,217
Reliance Infrastructure, Ltd., GDR (S) 1,952 67,487
Shikoku Electric Power Company, Inc. (I) 16,600 203,959
SSE PLC 89,682 2,261,899
Tauron Polska Energia SA 79,468 124,118
Tenaga Nasional BHD 143,936 565,445
Terna Rete Elettrica Nazionale SpA 122,013 629,296
The Chugoku Electric Power Company, Inc. 27,600 364,015
The Empire District Electric Company 5,376 138,970
The Kansai Electric Power Company, Ltd. (I) 65,400 598,459
The Southern Company 175,780 7,804,632
Tohoku Electric Power Company, Inc. 42,100 464,744
Tokyo Electric Power Company, Inc. (I) 134,400 485,267
Transmissora Alianca de Energia Eletrica SA 7,855 81,901
UIL Holdings Corp. 6,846 255,014
Unitil Corp. 2,262 73,719
Westar Energy, Inc. 32,507 1,200,484
Xcel Energy, Inc. 99,025 3,173,751
 
    92,887,301
Gas Utilities - 0.3%    
AGL Resources, Inc. 23,835 1,270,644
APA Group, Ltd. 71,931 521,049
Atmos Energy Corp. 25,267 1,277,500
Chesapeake Utilities Corp. 1,170 80,695
China Gas Holdings, Ltd. 166,000 295,554
China Resources Gas Group, Ltd. 74,000 215,925
Enagas SA 22,904 763,939
ENN Energy Holdings, Ltd. 64,000 451,655
GAIL India, Ltd., GDR 2,997 132,755
GAIL India, Ltd., GDR (Turquoise Exchange) 500 22,155
Gas Natural SDG SA 39,525 1,211,887
Hong Kong & China Gas Company, Ltd. 529,719 1,201,760
Korea Gas Corp. (I) 2,138 119,016
National Fuel Gas Company 21,187 1,619,534
New Jersey Resources Corp. 5,082 265,433
Northwest Natural Gas Company (L) 3,218 146,290
ONE Gas, Inc. 19,312 722,848
Osaka Gas Company, Ltd. 174,000 715,626
Perusahaan Gas Negara Persero Tbk PT 1,318,169 653,614
Petronas Gas BHD 36,299 262,458
Piedmont Natural Gas Company, Inc. (L) 9,206 344,304
Questar Corp. 44,170 1,038,437
Snam SpA 164,158 955,026
South Jersey Industries, Inc. 4,020 232,959
Southwest Gas Corp. 5,550 289,766
The Laclede Group, Inc. 3,866 191,174
Toho Gas Company, Ltd. 38,000 218,724
Tokyo Gas Company, Ltd. 219,000 1,243,629
UGI Corp. 29,023 1,537,639
WGL Holdings, Inc. 19,263 837,748
 
    18,839,743
Independent Power and Renewable Electricity    
Producers - 0.1%    
AES Corp. 130,176 1,976,072
Atlantic Power Corp. (L) 14,661 58,058
China Longyuan Power Group Corp., H Shares 248,000 268,026
China Resources Power    
Holdings Company, Ltd. 160,532 486,859
Datang International Power Generation    
Company, Ltd., H Shares 231,136 127,634
Dynegy, Inc. (I) 12,179 398,010

 

Strategic Equity Allocation Fund (continued)
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Independent Power and Renewable Electricity    
Producers (continued)    
Electric Power Development Company, Ltd. 10,800 $ 353,812
Enel Green Power SpA 141,771 391,635
Glow Energy PCL 71,600 196,320
Huaneng Power International, Inc., H Shares 264,564 319,144
NRG Energy, Inc. 66,515 2,047,332
Ormat Technologies, Inc. (L) 2,163 59,547
Pattern Energy Group, Inc. 4,801 154,760
Tractebel Energia SA 13,747 230,355
TransAlta Corp. 2,943 33,942
 
    7,101,506
Multi-Utilities - 1.0%    
AGL Energy, Ltd. 48,372 637,514
Alliant Energy Corp. 27,978 1,636,433
Ameren Corp. 47,872 1,914,401
ATCO, Ltd. 827 35,588
Avista Corp. 7,251 235,367
Black Hills Corp. 16,631 893,584
Canadian Utilities, Ltd., Class A 1,319 47,481
CenterPoint Energy, Inc. 84,678 2,103,402
Centrica PLC 471,296 2,501,698
CMS Energy Corp. 53,347 1,629,217
Consolidated Edison, Inc. 57,760 3,343,726
Dominion Resources, Inc. 114,779 8,059,781
DTE Energy Company 34,931 2,733,351
E.ON SE 174,615 3,178,003
GDF Suez 118,934 2,931,543
Integrys Energy Group, Inc. 15,770 1,070,625
MDU Resources Group, Inc. 48,323 1,512,993
National Grid PLC 346,204 5,173,675
NiSource, Inc. 62,060 2,461,920
NorthWestern Corp. 4,733 228,509
PG&E Corp. 91,701 4,262,262
Public Service Enterprise Group, Inc. 99,807 3,731,784
RWE AG 42,720 1,675,200
SCANA Corp. 28,074 1,458,164
Sempra Energy 44,980 4,766,531
Suez Environnement Company 22,678 418,272
TECO Energy, Inc. 40,090 725,629
Vectren Corp. 20,797 857,460
Veolia Environnement SA 34,151 627,389
Wisconsin Energy Corp. (L) 44,455 2,015,145
YTL Corp. BHD 225,117 115,709
YTL Power International BHD 75,163 35,533
 
    63,017,889
Water Utilities - 0.1%    
American States Water Company 4,752 153,490
Aqua America, Inc. 44,655 1,116,822
Beijing Enterprises Water Group, Ltd. (I) 354,000 240,637
California Water Service Group 5,769 140,533
Cia de Saneamento Basico do Estado de    
Sao Paulo 28,740 274,625
Cia de Saneamento de Minas Gerais-COPASA 5,055 90,328
Connecticut Water Service, Inc. 1,957 64,483
Guangdong Investment, Ltd. 204,780 247,225
Middlesex Water Company 2,963 60,830
Severn Trent PLC 22,175 716,497
SJW Corp. 2,002 54,735
United Utilities Group PLC 63,284 922,666

 

The accompanying notes are an integral part of the financial statements. 228

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Strategic Equity Allocation Fund (continued)
Shares or  
Principal  
Amount Value
 
COMMON STOCKS (continued)    
Water Utilities (continued)    
York Water Company 2,247 $ 45,344
    4,128,215
    185,974,654
TOTAL COMMON STOCKS (Cost $4,306,524,519) $ 5,605,716,779
 
PREFERRED SECURITIES - 0.5%    
Consumer Discretionary - 0.1%    
Bayerische Motoren Werke AG 4,788 458,797
Hyundai Motor Company, Ltd. 1,841 272,467
Hyundai Motor Company, Ltd., 2nd Preferred 2,903 449,660
Lojas Americanas SA 42,805 302,895
Porsche Automobil Holding SE 13,349 1,218,288
Volkswagen AG 14,164 3,192,352
 
    5,894,459
Consumer Staples - 0.0%    
Cia Brasileira de Distribuicao Grupo Pao    
de Acucar 11,856 603,366
Henkel AG & Company KGaA, 0.800% 15,529 1,630,076
 
    2,233,442
Energy - 0.1%    
Petroleo Brasileiro SA 353,561 3,688,027
Financials - 0.2%    
Banco Bradesco SA 176,995 3,229,161
Banco do Estado do Rio Grande do Sul SA,    
B Shares 15,227 105,096
Itau Unibanco Holding SA 232,313 4,188,587
Itausa - Investimentos Itau SA 268,765 1,308,706
 
    8,831,550
Information Technology - 0.0%    
Samsung Electronics Company, Ltd. 1,566 1,576,974
Materials - 0.1%    
Bradespar SA 19,100 174,490
Braskem SA, A Shares 13,057 88,952
Fuchs Petrolub AG 6,058 249,324
Gerdau SA 72,383 419,068
LG Chem, Ltd. 589 102,619
Metalurgica Gerdau SA 23,176 164,204
Suzano Papel e Celulose SA, A Shares 27,809 110,689
Usinas Siderurgicas de Minas Gerais SA,    
A Shares (I) 32,086 115,816
Vale SA 159,666 1,852,368
 
    3,277,530
Telecommunication Services - 0.0%    
Oi SA 230,665 149,414
Telefonica Brasil SA 25,054 535,552
 
    684,966
Utilities - 0.0%    
AES Tiete SA 8,525 76,624
Centrais Eletricas Brasileiras SA, B Shares 19,004 104,847
Cia Energetica de Minas Gerais 63,448 543,071
Cia Energetica de Sao Paulo, B Shares 15,883 224,852
Cia Paranaense de Energia, B Shares 8,637 153,024
 
    1,102,418
TOTAL PREFERRED SECURITIES (Cost $23,547,834) $ 27,289,366
 
EXCHANGE-TRADED FUNDS - 0.4%    
iShares MSCI India ETF (L) 577,285 17,892,949

 

Strategic Equity Allocation Fund (continued)
    Shares or  
    Principal  
    Amount Value
 
EXCHANGE-TRADED FUNDS (continued)    
iShares MSCI Russia Capped ETF (L)   451,372 $ 8,260,108
TOTAL EXCHANGE-TRADED FUNDS (Cost $24,195,808) $ 26,153,057
 
RIGHTS - 0.0%      
AGL Energy Ltd. (I)(N)   9,674 24,757
Biglari Holdings, Inc. (I)(L)(N)   174 3,838
Bumi Resources Tbk PT (Expiration Date:      
09/01/2014; Strike Price: IDR 250.00) (I) 558,215 48
Community Health Systems, Inc. (Expiration    
Date: 01/27/2016) (I)(N)   70,775 2,760
Cubist Pharmaceuticals, Inc. (Expiration Date:    
12/31/2016; Strike Price: $10.75) (I)   6,850 582
Forest Laboratories, Inc. (I)(N)   891 0
Groupe Fnac (I)(N)   4,898 22,139
Oversea-Chinese Banking Corp. Ltd. (I)(N) 35,996 67,723
TOTAL RIGHTS (Cost $36,993)   $ 121,847
 
WARRANTS - 0.0%      
Indorama Ventures PCL (Expiration Date:      
08/24/2017; Strike Price: THB 36.00) (I)   15,200 2,293
Indorama Ventures PCL (Expiration Date:      
08/24/2018; Strike Price: THB 43.00) (I)   11,692 1,708
Kinross Gold Corp. (Expiration Date:      
09/17/2014; Strike Price: $21.30) (I)   638 3
Magnum Hunter Resources Corp. (Expiration    
Date: 04/15/2016; Strike Price: $8.50) (I)(L) 2,958 3,714
Sun Hung Kai Properties, Ltd. (Expiration      
Date: 04/22/2016; Strike Price:      
HKD 98.60) (I)   12,375 30,498
TOTAL WARRANTS (Cost $447)   $ 38,216
 
SECURITIES LENDING COLLATERAL - 1.9%    
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y)   11,366,765 113,748,357
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $113,744,661)   $ 113,748,357
 
SHORT-TERM INVESTMENTS - 4.2%      
Repurchase Agreement - 4.2%      
Repurchase Agreement with State Street Corp.    
dated 08/29/2014 at 0.000% to be      
repurchased at $247,544,000 on 09/02/2014,    
collateralized by $221,120,000      
U.S. Treasury Bonds, 3.750% due      
11/15/2043 (valued at $252,502,260,      
including interest) $ 247,544,000 $ 247,544,000
TOTAL SHORT-TERM INVESTMENTS (Cost $247,544,000) $ 247,544,000
Total Investments (Strategic Equity Allocation Fund)    
(Cost $4,715,594,262) - 101.3%   $ 6,020,611,622
Other assets and liabilities, net - (1.3%)     (78,420,410)
 
TOTAL NET ASSETS - 100.0%   $ 5,942,191,212

 

The accompanying notes are an integral part of the financial statements. 229

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund      
    Shares or  
    Principal  
    Amount Value
 
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS - 31.1%      
U.S. Government - 9.5%      
Treasury Inflation Protected Securities      
0.125%, 01/15/2022 to 01/15/2023 $ 67,441,396 $ 67,385,098
0.375%, 07/15/2023   12,596,553 12,816,993
0.625%, 07/15/2021   2,326,346 2,429,941
1.125%, 01/15/2021   4,140,062 4,439,894
1.250%, 07/15/2020   5,573,382 6,040,153
1.750%, 01/15/2028   29,919,669 34,835,381
2.000%, 01/15/2026   22,214,615 26,284,399
2.375%, 01/15/2025 to 01/15/2027   41,804,320 51,263,747
2.500%, 01/15/2029   12,765,690 16,305,182
3.625%, 04/15/2028   442,059 626,239
3.875%, 04/15/2029   2,609,550 3,850,514
U.S. Treasury Bonds 3.375%, 05/15/2044   200,000 211,750
U.S. Treasury Notes 2.000%, 08/31/2021   11,900,000 11,864,669
 
      238,353,960
U.S. Government Agency - 21.6%      
Federal Home Loan Mortgage Corp.      
0.875%, 03/07/2018   900,000 885,721
1.000%, 03/08/2017 to 09/29/2017   26,000,000 25,972,525
1.250%, 08/01/2019 to 10/02/2019   30,100,000 29,301,762
1.750%, 05/30/2019   1,100,000 1,103,574
2.375%, 01/13/2022   1,400,000 1,407,458
3.750%, 03/27/2019   700,000 764,226
4.000%, TBA (C)   34,000,000 35,945,942
4.000%, 05/01/2029 to 09/01/2030   821,233 879,463
4.289%, 11/01/2035 (P)   93,393 99,413
4.500%, TBA (C)   13,000,000 13,995,168
5.500%, 12/01/2036 to 01/01/2040   1,828,736 2,033,073
6.000%, 08/01/2022 to 05/01/2040   31,964,437 35,957,707
Federal National Mortgage Association      
0.875%, 08/28/2017 to 05/21/2018   14,100,000 13,972,964
1.250%, 01/30/2017   4,600,000 4,648,944
1.875%, 09/18/2018   900,000 912,475
1.967%, 11/01/2034 (P)   151,404 159,757
1.971%, 05/01/2035 (P)   235,849 248,274
1.979%, 11/01/2035 (P)   145,784 152,595
2.193%, 01/01/2035 (P)   115,957 123,749
2.277%, 07/01/2034 (P)   115,285 123,607
2.300%, 03/01/2035 (P)   58,727 62,353
2.310%, 08/01/2022   2,700,000 2,635,628
2.341%, 06/01/2035 (P)   387,435 415,403
2.870%, 09/01/2027   2,000,000 1,900,245
3.000%, 10/01/2027 to 07/01/2029   26,657,632 27,664,656
3.330%, 11/01/2021   95,290 100,567
3.500%, TBA (C)   29,000,000 30,618,688
4.000%, TBA (C)   5,000,000 5,284,204
4.000%, 08/01/2018 to 01/01/2032   12,680,216 13,506,074
4.500%, TBA (C)   46,000,000 49,668,707
4.500%, 01/01/2018 to 08/01/2042   44,776,707 48,400,588
4.522%, 09/01/2035 (P)   56,380 60,450
5.000%, TBA (C)   42,000,000 46,234,759
5.000%, 05/11/2017 to 07/01/2041   11,291,005 12,503,507
5.375%, 06/12/2017   4,500,000 5,041,359
5.500%, 06/01/2018 to 09/01/2041   78,626,517 87,517,817
6.000%, TBA (C)   9,000,000 10,152,935
6.000%, 10/01/2026 to 12/01/2038   7,669,469 8,650,367
Government National      
Mortgage Association      
5.000%, TBA (C)   1,000,000 1,098,093

 

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
U.S. GOVERNMENT & AGENCY      
OBLIGATIONS (continued)      
U.S. Government Agency (continued)      
Government National Mortgage      
Association (continued)      
5.000%, 10/15/2033 to 09/15/2040 $ 17,355,646 $ 19,125,357
 
      539,330,154
TOTAL U.S. GOVERNMENT & AGENCY    
OBLIGATIONS (Cost $779,423,738)   $ 777,684,114
 
FOREIGN GOVERNMENT      
OBLIGATIONS - 16.4%      
Brazil - 2.2%      
Banco Nacional de Desenvolvimento      
Economico e Social      
3.375%, 09/26/2016 (S)   800,000 822,400
4.125%, 09/15/2017 (S) EUR 600,000 836,066
Federative Republic of Brazil      
9.044%, 01/01/2017 (Z) BRL 6,000,000 2,083,473
9.847%, 07/01/2015 (Z)   20,000,000 8,183,346
9.859%, 01/01/2016 (Z)   74,000,000 28,616,727
9.874%, 10/01/2015 (Z)   5,000,000 1,988,260
10.112%, 04/01/2015 (Z)   27,000,000 11,339,288
 
      53,869,560
Canada - 0.7%      
Province of Ontario      
1.000%, 07/22/2016 $ 1,100,000 1,107,131
1.600%, 09/21/2016   1,100,000 1,119,514
1.650%, 09/27/2019   1,800,000 1,771,254
3.000%, 07/16/2018   1,100,000 1,157,343
3.150%, 06/02/2022 CAD 1,400,000 1,342,728
4.000%, 06/02/2021   3,900,000 3,954,269
4.200%, 06/02/2020   1,200,000 1,225,042
4.400%, 06/02/2019   1,900,000 1,942,376
4.400%, 04/14/2020 $ 200,000 223,294
5.500%, 06/02/2018 CAD 700,000 732,035
Province of Quebec      
3.500%, 07/29/2020 $ 700,000 751,202
3.500%, 12/01/2022 CAD 600,000 585,818
4.250%, 12/01/2021   2,800,000 2,874,011
 
      18,786,017
Italy - 7.2%      
Republic of Italy      
0.830%, 04/29/2016 (Z) EUR 8,900,000 11,616,622
0.913%, 12/31/2015 (Z)   3,700,000 4,837,404
1.150%, 05/15/2017   15,000,000 19,985,376
2.250%, 05/15/2016   15,100,000 20,482,052
2.750%, 12/01/2015   1,100,000 1,488,984
3.000%, 11/01/2015   10,600,000 14,358,241
3.750%, 08/01/2015 to 08/01/2016   51,400,000 71,232,473
4.500%, 07/15/2015   9,700,000 13,207,358
4.750%, 09/15/2016 to 06/01/2017   16,000,000 23,059,371
 
      180,267,881
Mexico - 1.2%      
Government of Mexico      
9.500%, 12/18/2014 MXN 372,160,000 28,995,623
 
      28,995,623
South Korea - 0.0%      
Korea Housing Finance Corp.      
4.125%, 12/15/2015 (S) $ 700,000 727,043

 

The accompanying notes are an integral part of the financial statements. 230

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
FOREIGN GOVERNMENT      
OBLIGATIONS (continued)      
Spain - 5.1%      
Kingdom of Spain      
2.100%, 04/30/2017 EUR 11,500,000 $ 15,749,595
3.150%, 01/31/2016   7,900,000 10,805,793
3.250%, 04/30/2016   600,000 827,473
3.300%, 07/30/2016   40,400,000 56,105,732
3.750%, 10/31/2015   6,800,000 9,300,295
3.800%, 01/31/2017   8,100,000 11,512,325
4.250%, 10/31/2016   9,300,000 13,238,005
5.500%, 07/30/2017   6,100,000 9,155,643
 
      126,694,861
TOTAL FOREIGN GOVERNMENT      
OBLIGATIONS (Cost $423,821,449)   $ 409,340,985
 
CORPORATE BONDS - 29.8%      
Consumer Discretionary - 3.8%      
Banque PSA Finance SA      
4.000%, 06/24/2015   1,400,000 1,883,367
Daimler Finance North America LLC      
0.920%, 08/01/2016 (P)(S) $ 1,500,000 1,514,358
DISH DBS Corp.      
6.625%, 10/01/2014   10,000,000 10,037,500
7.750%, 05/31/2015   23,500,000 24,616,250
Ford Motor Company      
1.000%, 03/02/2015   14,000,000 13,956,474
Ford Motor Credit Company LLC      
0.684%, 11/08/2016 (P)   8,300,000 8,296,257
3.984%, 06/15/2016   300,000 315,181
6.625%, 08/15/2017   2,200,000 2,512,257
7.000%, 04/15/2015   5,200,000 5,406,440
8.000%, 12/15/2016   1,000,000 1,146,247
8.700%, 10/01/2014   1,000,000 1,006,138
12.000%, 05/15/2015   7,660,000 8,261,433
Lennar Corp.      
5.500%, 09/01/2014   8,900,000 8,900,000
President and Fellows of Harvard College      
6.500%, 01/15/2039 (S)   3,800,000 5,403,923
Volkswagen International Finance NV      
2.875%, 04/01/2016 (S)   2,100,000 2,168,830
 
      95,424,655
Consumer Staples - 0.0%      
CVS Pass-Through Trust      
6.943%, 01/10/2030   251,756 310,291
Energy - 1.6%      
Eni SpA      
1.000%, 05/15/2015   20,400,000 20,335,569
Gazprom OAO Via Gaz Capital SA      
4.950%, 05/23/2016   7,000,000 7,115,990
Indian Oil Corp., Ltd.      
4.750%, 01/22/2015   4,600,000 4,658,848
Petrobras International Finance Company      
2.875%, 02/06/2015   221,000 222,680
3.875%, 01/27/2016   5,900,000 6,064,498
Petroleos Mexicanos      
8.000%, 05/03/2019   1,500,000 1,856,250
 
      40,253,835
Financials - 18.4%      
AIG Life Holdings, Inc.      
7.570%, 12/01/2045 (S)   3,700,000 4,952,572
Ally Financial, Inc.      
2.434%, 12/01/2014 (P)   3,100,000 3,100,257

 

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Financials (continued)      
Ally Financial, Inc. (continued)      
3.500%, 07/18/2016 $ 345,000 $ 353,625
4.625%, 06/26/2015   1,200,000 1,231,500
5.500%, 02/15/2017   5,500,000 5,871,250
6.750%, 12/01/2014   11,100,000 11,252,625
7.500%, 09/15/2020   1,200,000 1,435,500
8.300%, 02/12/2015   6,500,000 6,695,000
American Express Credit Corp.      
5.375%, 10/01/2014 GBP 8,100,000 13,491,031
American International Group, Inc.      
6.250%, 03/15/2037 $ 1,100,000 1,241,345
Banco Bilbao Vizcaya Argentaria SA      
1.000%, 05/16/2016   5,500,000 5,497,998
Banco Santander Brasil SA      
4.250%, 01/14/2016 (S)   2,500,000 2,593,825
4.500%, 04/06/2015 (S)   400,000 408,400
Bank of America Corp.      
3.700%, 09/01/2015   900,000 926,491
6.400%, 08/28/2017   3,100,000 3,521,451
6.500%, 08/01/2016   7,900,000 8,682,700
6.875%, 04/25/2018   11,400,000 13,292,674
Bank of America NA      
0.654%, 05/08/2017 (P)   1,700,000 1,699,057
0.703%, 11/14/2016 (P)   9,700,000 9,725,530
6.000%, 10/15/2036   2,700,000 3,358,832
Bank of Montreal      
2.850%, 06/09/2015 (S)   1,400,000 1,426,811
Bank of New York Mellon Corp.      
0.463%, 10/23/2015 (P)   7,500,000 7,512,765
Bank of Nova Scotia      
0.544%, 04/11/2017 (P)   20,400,000 20,410,486
1.000%, 02/10/2015 CAD 19,400,000 17,739,768
1.650%, 10/29/2015 (S) $ 1,100,000 1,115,347
1.950%, 01/30/2017 (S)   1,100,000 1,124,554
Barclays Bank PLC      
1.000%, 05/01/2015   45,700,000 45,690,951
BBVA Bancomer SA      
4.500%, 03/10/2016 (S)   900,000 943,650
6.500%, 03/10/2021 (S)   1,900,000 2,137,500
BPCE SA      
0.801%, 11/18/2016 (P)   15,900,000 15,965,778
Citigroup, Inc.      
0.760%, 05/01/2017 (P)   11,700,000 11,712,262
2.250%, 08/07/2015   4,200,000 4,263,718
3.953%, 06/15/2016   10,600,000 11,142,179
4.450%, 01/10/2017   400,000 428,830
5.500%, 10/15/2014   5,109,000 5,139,955
Credit Suisse AG (5.750% to 09/18/2020,      
then 5 Year Euro Swap Rate + 4.000%)      
09/18/2025 EUR 1,400,000 2,055,675
HSBC Finance Corp.      
5.500%, 01/19/2016 $ 4,295,000 4,560,345
ICICI Bank, Ltd.      
4.750%, 11/25/2016 (S)   10,400,000 10,966,582
JPMorgan Chase & Company      
0.784%, 04/25/2018 (P)   4,200,000 4,219,627
3.150%, 07/05/2016   500,000 519,829
3.700%, 01/20/2015   9,600,000 9,719,923
Morgan Stanley      
1.514%, 04/25/2018 (P)   18,000,000 18,492,534
6.000%, 04/28/2015   700,000 724,751
Morgan Stanley Company      
5.375%, 10/15/2015   4,600,000 4,835,230

 

The accompanying notes are an integral part of the financial statements. 231

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Financials (continued)      
Murray Street Investment Trust I      
4.647%, 03/09/2017 (P) $ 3,800,000 $ 4,087,170
National Australia Bank, Ltd.      
0.515%, 06/30/2017 (P)(S)   11,600,000 11,603,298
National Bank of Canada      
2.200%, 10/19/2016 (S)   300,000 308,376
Navient LLC      
5.050%, 11/14/2014   10,000,000 10,075,000
6.000%, 01/25/2017   1,100,000 1,182,500
6.250%, 01/25/2016   5,100,000 5,406,000
Northern Rock Asset Management PLC      
5.625%, 06/22/2017 (S)   15,300,000 17,015,283
Principal Life Income Funding Trusts      
5.550%, 04/27/2015   3,500,000 3,617,464
Rabobank Nederland NV      
0.565%, 04/28/2017 (P)   6,100,000 6,096,761
RCI Banque SA      
4.600%, 04/12/2016 (S)   6,220,000 6,560,937
Royal Bank of Canada      
1.370%, 05/07/2015 CAD 23,800,000 21,903,092
Royal Bank of Scotland Group PLC      
(6.990% to 10/05/2017, then 3 month      
LIBOR + 2.670%)      
10/05/2017 (Q)(S) $ 6,800,000 7,803,000
Royal Bank of Scotland Group PLC      
(7.648% to 09/30/2031, then 3 month      
LIBOR + 2.500%)      
09/30/2031 (Q)   5,000,000 5,900,000
Springleaf Finance Corp.      
6.900%, 12/15/2017   18,800,000 20,539,000
State Bank of India      
4.500%, 07/27/2015 (S)   1,700,000 1,746,079
The Bear Stearns Companies LLC      
5.300%, 10/30/2015   19,900,000 20,947,874
7.250%, 02/01/2018   7,000,000 8,244,152
The Blackstone Group LP      
2.324%, 03/18/2019   1,100,000 1,104,171
Turkiye Garanti Bankasi AS      
2.734%, 04/20/2016 (P)(S)   900,000 899,100
US Bank NA      
0.352%, 04/22/2016 (P)   2,200,000 2,200,255
 
      459,420,225
Health Care - 1.5%      
AbbVie, Inc.      
0.997%, 11/06/2015 (P)   4,965,000 5,002,535
HCA, Inc.      
6.375%, 01/15/2015   13,700,000 13,905,500
McKesson Corp.      
0.630%, 09/10/2015 (P)   2,000,000 2,003,662
Thermo Fisher Scientific, Inc.      
1.000%, 09/26/2014   15,600,000 15,595,050
 
      36,506,747
Industrials - 1.5%      
International Lease Finance Corp.      
5.750%, 05/15/2016   600,000 636,000
6.500%, 09/01/2014 (S)   3,000,000 3,000,000
6.750%, 09/01/2016 (S)   1,300,000 1,421,875
John Deere Capital Corp.      
0.362%, 04/12/2016 (P)   20,200,000 20,206,464
Odebrecht Drilling Norbe VIII/IX, Ltd.      
6.350%, 06/30/2021 (S)   10,412,500 11,188,231
 
      36,452,570

 

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Information Technology - 0.0%      
Apple, Inc.      
2.850%, 05/06/2021 $ 1,000,000 $ 1,018,160
 
      1,018,160
Materials - 0.7%      
AngloGold Ashanti Holdings PLC      
5.375%, 04/15/2020   300,000 302,575
CSN Resources SA      
6.500%, 07/21/2020   1,800,000 1,882,800
GTL Trade Finance, Inc.      
7.250%, 10/20/2017 (S)   10,400,000 11,791,000
7.250%, 10/20/2017   2,300,000 2,607,625
MMC Norilsk Nickel OJSC      
5.550%, 10/28/2020 (S)   400,000 395,000
Rohm & Haas Company      
6.000%, 09/15/2017   431,000 486,702
 
      17,465,702
Telecommunication Services - 2.2%      
Telefonica Emisiones SAU      
0.880%, 06/23/2017 (P)   8,800,000 8,792,678
Verizon Communications, Inc.      
0.631%, 06/09/2017 (P)   11,900,000 11,939,199
1.981%, 09/14/2018 (P)   1,100,000 1,157,709
2.500%, 09/15/2016   1,400,000 1,443,385
3.650%, 09/14/2018   3,600,000 3,839,807
Vodafone Group PLC      
1.000%, 06/29/2015   27,700,000 27,586,087
 
      54,758,865
Utilities - 0.1%      
SteelRiver Transmission Company LLC      
4.710%, 06/30/2017 (S)   1,736,790 1,828,088
TOTAL CORPORATE BONDS (Cost $719,724,650) $ 743,439,138
 
TERM LOANS (M) - 0.3%      
Consumer Discretionary - 0.1%      
Chrysler Group LLC TBD 05/24/2017 (T)   1,800,000 1,796,465
MGM Resorts International      
TBD 12/20/2017 (T)   200,000 199,500
 
      1,995,965
Health Care - 0.2%      
HCA, Inc.      
TBD 02/02/2016 (T)   3,072,883 3,067,121
TBD 03/31/2017 (T)   3,400,000 3,395,750
 
      6,462,871
TOTAL TERM LOANS (Cost $8,475,577)   $ 8,458,836
 
MUNICIPAL BONDS - 6.3%      
American Municipal Power, Inc. (Ohio)      
8.084%, 02/15/2050   1,600,000 2,514,960
California Infrastructure & Economic      
Development Bank 6.486%, 05/15/2049   1,000,000 1,214,600
California State Public Works Board,      
Series G2 8.361%, 10/01/2034   20,000,000 28,904,800
California State University      
6.434%, 11/01/2030   1,200,000 1,430,448
California Statewide Communities      
Development Authority      
7.550%, 05/15/2040   2,700,000 3,769,497
Chicago Transit Authority,      
Series A (Illinois)      
6.300%, 12/01/2021   100,000 110,026

 

The accompanying notes are an integral part of the financial statements. 232

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
MUNICIPAL BONDS (continued)      
Chicago Transit Authority, Series A      
(Illinois) (continued)      
6.899%, 12/01/2040 $ 2,700,000 $ 3,397,761
Chicago Transit Authority, Series B      
(Illinois) 6.899%, 12/01/2040   2,600,000 3,271,918
City of Los Angeles (California)      
5.713%, 06/01/2039   1,000,000 1,208,720
City of San Antonio (Texas)      
6.308%, 02/01/2037   2,600,000 2,952,144
City of San Antonio Water System      
Revenue (Texas) 5.000%, 05/15/2040   21,400,000 22,037,292
County of Clark (Nevada)      
6.820%, 07/01/2045   1,400,000 1,988,784
Dallas Convention Center Hotel      
Development Corp. (Texas)      
7.088%, 01/01/2042   6,900,000 8,880,783
Illinois Municipal Electric Agency      
6.832%, 02/01/2035   200,000 240,772
Iowa Tobacco Settlement Authority,      
Series A 6.500%, 06/01/2023   655,000 632,704
Los Angeles County Public Works      
Financing Authority (California)      
7.618%, 08/01/2040   4,500,000 6,346,260
Los Angeles Unified School District      
(California) 6.758%, 07/01/2034   2,700,000 3,679,695
Mississippi Development Bank      
6.313%, 01/01/2033   700,000 840,231
New Jersey State Turnpike Authority      
7.414%, 01/01/2040   5,500,000 8,162,715
New York City Municipal Water Finance      
Authority (New York)      
5.000%, 06/15/2037   2,600,000 2,677,922
5.000%, 06/15/2037   800,000 850,280
North Carolina Turnpike Authority      
6.700%, 01/01/2039   300,000 339,219
Pennsylvania Economic Development      
Financing Authority      
5.000%, 01/01/2023   4,300,000 4,552,496
San Diego Tobacco Settlement Revenue      
Funding Corp. (California)      
7.125%, 06/01/2032   1,220,000 1,102,965
State of California      
7.500%, 04/01/2034   6,100,000 8,916,187
7.600%, 11/01/2040   1,600,000 2,448,352
7.950%, 03/01/2036   17,300,000 21,336,436
Tobacco Securitization Authority of      
Southern California 5.125%, 06/01/2046   1,500,000 1,139,430
Tobacco Settlement Finance Authority      
(West Virginia) 7.467%, 06/01/2047   2,870,000 2,474,342
Truckee Meadows Water Authority,      
Series A (Nevada) 5.000%, 07/01/2036   200,000 206,016
University of California      
6.270%, 05/15/2031   5,300,000 5,878,760
6.398%, 05/15/2031   2,800,000 3,469,004
TOTAL MUNICIPAL BONDS (Cost $138,645,067) $ 156,975,519
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS - 9.6%      
Commercial & Residential - 9.3%      
American Home Mortgage      
Investment Trust, Series 2004-4,      
Class 4A      
2.332%, 02/25/2045 (P)   106,034 106,900

 

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Arran Residential Mortgages      
Funding PLC, Series 2010-1A,      
Class A2B      
1.598%, 05/16/2047 (P)(S) EUR 1,782,856 $ 2,367,157
Banc of America Commercial      
Mortgage Trust, Series 2006-4,      
Class A1A      
5.617%, 07/10/2046 (P) $ 7,808,455 8,412,478
Banc of America Funding, Ltd.,      
Series 2012-R5, Class A      
0.416%, 10/03/2039 (P)(S)   7,703,775 7,650,793
Banc of America Mortgage Trust,      
Series 2005-F, Class 2A2      
2.634%, 07/25/2035 (P)   2,099,067 1,937,661
BCAP LLC Trust      
Series 2011-RR4, Class 8A1,      
5.250%, 02/26/2036 (S)   1,616,105 1,483,829
Series 2011-RR5, Class 12A1,      
5.333%, 03/26/2037 (P)(S)   336,938 332,277
Series 2011-RR5, Class 5A1,      
5.250%, 08/26/2037 (S)   3,393,371 3,530,630
Series 2012-RR10, Class 8A2,      
4.000%, 03/26/2036 (P)(S)   2,655,432 2,667,023
Bear Stearns Adjustable      
Rate Mortgage Trust      
Series 2004-8, Class 2A1,      
2.656%, 11/25/2034 (P)   1,472,804 1,419,393
Series 2004-9, Class 22A1,      
3.121%, 11/25/2034 (P)   369,388 372,906
Series 2005-1, Class 2A1,      
2.687%, 03/25/2035 (P)   2,958,431 2,896,230
Bear Stearns Alt-A Trust, Series 2005-7,      
Class 22A1      
2.607%, 09/25/2035 (P)   691,548 601,485
Bear Stearns Commercial      
Mortgage Securities Trust      
Series 2007-PW15, Class A4,      
5.331%, 02/11/2044   382,452 409,256
Series 2007-PW16, Class A1A,      
5.897%, 06/11/2040 (P)   11,015,912 12,133,653
Series 2007-PW18, Class A4,      
5.700%, 06/11/2050   3,300,000 3,653,701
Bella Vista Mortgage Trust,      
Series 2005-1, Class 2A      
0.695%, 02/22/2035 (P)   2,848,483 2,481,111
CD Mortgage Trust, Series 2006-CD2,      
Class A1B      
5.481%, 01/15/2046 (P)   10,918,430 11,467,682
Citigroup Commercial Mortgage Trust,      
Series 2006-C5, Class A1A      
5.425%, 10/15/2049   10,923,672 11,773,588
Citigroup Mortgage Loan Trust, Inc.      
Series 2005-11, Class 1A1,      
2.510%, 05/25/2035 (P)   432,354 422,977
Series 2005-11, Class A2A,      
2.510%, 10/25/2035 (P)   4,142,025 4,095,577
Commercial Mortgage Pass Through      
Certificates, Series 2007-C1, Class A3      
5.383%, 02/15/2040   830,682 895,381
Countrywide Alternative Loan Trust      
Series 2005-62, Class 2A1,      
1.117%, 12/25/2035 (P)   5,192,728 4,076,323

 

The accompanying notes are an integral part of the financial statements. 233

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Countrywide Alternative Loan Trust (continued)    
Series 2005-81, Class A1,      
0.435%, 02/25/2037 (P) $ 4,685,914 $ 3,759,138
Countrywide Home Loan Mortgage      
Pass Through Trust      
Series 2004-22, Class A3,      
2.501%, 11/25/2034 (P)   996,448 938,453
Series 2004-HYB9, Class 1A1,      
2.467%, 02/20/2035 (P)   1,616,444 1,603,792
Series 2005-HYB9, Class 3A2A,      
2.313%, 02/20/2036 (P)   249,078 229,605
European Loan Conduit, Series 25X,      
Class A      
0.348%, 05/15/2019 (P) EUR 62,117 79,986
First Horizon Mortgage Pass-      
Through Trust, Series 2004-AR7,      
Class 4A1      
4.832%, 02/25/2035 (P) $ 1,710,660 1,632,562
Granite Master Issuer PLC, Series 2005-1,      
Class A5      
0.269%, 12/20/2054 (P) EUR 1,432,517 1,869,456
Greenwich Capital      
Commercial Funding Corp.      
Series 2005-GG3, Class A4,      
4.799%, 08/10/2042 (P) $ 71,694 72,042
Series 2007-GG9, Class A4,      
5.444%, 03/10/2039   1,400,000 1,514,710
GSR Mortgage Loan Trust,      
Series 2005-AR7, Class 6A1      
5.005%, 11/25/2035 (P)   692,446 687,526
HomeBanc Mortgage Trust, Series 2005-4,      
Class A1      
0.425%, 10/25/2035 (P)   4,076,228 3,660,938
JPMorgan Chase Commercial      
Mortgage Securities Corp.      
Series 2006-LDP9, Class A3,      
5.336%, 05/15/2047   2,962,687 3,186,296
Series 2007-LDPX, Class A3,      
5.420%, 01/15/2049   378,739 409,941
JPMorgan Mortgage Trust      
Series 2005-A1, Class 6T1,      
2.734%, 02/25/2035 (P)   209,276 207,562
Series 2005-S3, Class 1A2,      
5.750%, 01/25/2036   121,144 112,827
Merrill Lynch Mortgage Investors Trust      
Series 2005-1, Class 2A5,      
2.127%, 04/25/2035 (P)   623,544 594,100
Series 2005-2, Class 1A,      
1.572%, 10/25/2035 (P)   4,259,896 4,201,356
Series 2005-2, Class 3A,      
1.155%, 10/25/2035 (P)   355,473 338,595
Series 2005-3, Class 4A,      
0.405%, 11/25/2035 (P)   123,871 117,429
Series 2005-A10, Class A,      
0.365%, 02/25/2036 (P)   708,278 650,042
Merrill Lynch/Countrywide Commercial      
Mortgage Trust, Series 2007-6,      
Class A4      
5.485%, 03/12/2051 (P)   2,000,000 2,172,386
Morgan Stanley Capital I Trust      
Series 2006-IQ12, Class A1A,      
5.319%, 12/15/2043   11,724,258 12,608,420

 

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
Morgan Stanley Capital I Trust (continued)      
Series 2007-IQ14, Class A2FX,      
5.610%, 04/15/2049 $ 613,150 $ 616,388
Morgan Stanley Re-REMIC Trust      
Series 2009-GG10, Class A4A,      
5.991%, 08/12/2045 (P)(S)   870,431 951,532
Series 2010-R4, Class 4B,      
0.459%, 02/26/2037 (P)(S)   8,481,521 5,435,493
MRFC Mortgage Pass Through Trust,      
Series 2000-TBC3, Class A1      
0.595%, 12/15/2030 (P)   1,435,007 1,363,664
Opteum Mortgage Acceptance Corp.,      
Series 2005-5, Class 1A1D      
0.535%, 12/25/2035 (P)   2,000,000 1,687,446
PHH Alternative Mortgage Trust,      
Series 2007-1, Class 1A1      
0.315%, 02/25/2037 (P)   10,789,415 8,869,374
RBSGC Mortgage Loan Trust,      
Series 2005-A, Class 1A      
5.500%, 04/25/2035   3,784,804 3,767,575
RBSSP Resecuritization Trust,      
Series 2011-3, Class 2A1      
0.405%, 02/26/2037 (P)(S)   2,290,413 2,139,330
Structured Adjustable Rate Mortgage      
Loan Trust, Series 2005-1, Class 2A      
2.394%, 02/25/2035 (P)   18,330,191 18,156,714
Structured Asset Mortgage      
Investments II Trust, Series 2005-AR8,      
Class A1A      
0.435%, 02/25/2036 (P)   389,120 323,801
Structured Asset      
Mortgage Investments, Inc.      
Series 2005-AR5, Class A3,      
0.405%, 07/19/2035 (P)   1,263,730 1,224,142
Series 2007-AR2, Class 2A1,      
0.285%, 03/25/2037 (P)   2,015,952 1,556,722
Structured Asset Securities Corp.,      
Series 2006-11, Class A1      
2.612%, 10/28/2035 (P)(S)   303,046 287,471
Structured Asset Securities Corp.      
Mortgage Pass-Through Certificates,      
Series 2004-15, Class 3A5      
0.605%, 09/25/2034 (P)   1,527,177 1,401,038
TBW Mortgage-Backed Trust,      
Series 2006-4, Class A3      
0.355%, 09/25/2036 (P)   8,743,978 8,279,131
Wachovia Bank      
Commercial Mortgage Trust      
Series 2006-C24, Class A1A,      
5.557%, 03/15/2045 (P)   15,027,963 15,906,422
Series 2007-WHL8, Class A1,      
0.235%, 06/15/2020 (P)(S)   1,185,645 1,178,589
WaMu Mortgage Pass-      
Through Certificates      
Series 2001-7, Class A,      
1.318%, 05/25/2041 (P)   43,663 43,677
Series 2002-AR17, Class 1A,      
1.317%, 11/25/2042 (P)   104,496 102,357
Series 2004-CB1, Class 6A,      
6.000%, 06/25/2034   2,909,416 3,062,099
Series 2004-CB4, Class 11A,      
6.000%, 12/25/2034   10,494,862 11,132,309

 

The accompanying notes are an integral part of the financial statements. 234

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
COLLATERALIZED MORTGAGE      
OBLIGATIONS (continued)      
Commercial & Residential (continued)      
WaMu Mortgage Pass-Through      
Certificates (continued)      
Series 2005-AR19, Class A1A1,      
0.425%, 12/25/2045 (P) $ 1,763,992 $ 1,688,609
Wells Fargo Mortgage      
Backed Securities Trust      
Series 2004-CC, Class A1,      
2.615%, 01/25/2035 (P)   778,022 780,651
Series 2005-AR13, Class 1A5,      
5.254%, 05/25/2035 (P)   3,613,996 3,651,560
Series 2005-AR4, Class 1A3,      
2.615%, 04/25/2035 (P)   8,220,399 8,533,062
Series 2006-AR2, Class 2A1,      
2.615%, 03/25/2036 (P)   1,004,409 1,005,657
Series 2006-AR2, Class 2A5,      
2.615%, 03/25/2036 (P)   3,131,393 3,024,600
 
      232,004,586
U.S. Government Agency - 0.3%      
Federal Home Loan Mortgage Corp.      
Series 2637, Class F,      
0.555%, 06/15/2018 (P)   40,908 41,033
Series 3149, Class LF,      
0.455%, 05/15/2036 (P)   697,461 698,293
Series 3335, Class FT,      
0.305%, 08/15/2019 (P)   993,853 994,178
Series T-63, Class 1A1,      
1.322%, 02/25/2045 (P)   103,694 106,131
Federal National Mortgage Association      
Series 2003-W6, Class F,      
0.505%, 09/25/2042 (P)   793,888 786,263
Series 2005-120, Class NF,      
0.255%, 01/25/2021 (P)   627,023 626,758
Series 2005-75, Class FL,      
0.605%, 09/25/2035 (P)   1,620,084 1,623,465
Series 2006-5, Class 3A2,      
2.210%, 05/25/2035 (P)   118,682 122,011
Series 2007-30, Class AF,      
0.465%, 04/25/2037 (P)   655,232 654,073
Series 2007-73, Class A1,      
0.215%, 07/25/2037 (P)   821,870 804,440
 
      6,456,645
TOTAL COLLATERALIZED MORTGAGE      
OBLIGATIONS (Cost $237,519,992)   $ 238,461,231
 
ASSET BACKED SECURITIES - 3.4%      
Access Group, Inc., Series 2008-1,      
Class A      
1.534%, 10/27/2025 (P)   5,425,955 5,462,917
Ally Auto Receivables Trust,      
Series 2014-1, Class A2      
0.480%, 02/15/2017   21,500,000 21,501,204
BNC Mortgage Loan Trust, Series 2007-2,      
Class A2      
0.255%, 05/25/2037 (P)   553,336 527,068
Carrington Mortgage Loan Trust,      
Series 2005-NC5, Class A2      
0.475%, 10/25/2035 (P)   164,062 163,314
GSAMP Trust, Series 2007-FM1,      
Class A2A      
0.225%, 12/25/2036 (P)   281,872 151,980

 

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
ASSET BACKED SECURITIES (continued)    
Hillmark Funding, Series 2006-1A,      
Class A1      
0.484%, 05/21/2021 (P)(S) $ 5,865,100 $ 5,791,921
HSI Asset Loan Obligation,      
Series 2007-WF1, Class A1      
0.215%, 12/25/2036 (P)   430,304 198,415
JPMorgan Mortgage Acquisition Corp.,      
Series 2007-HE1, Class AV1      
0.215%, 03/25/2047 (P)   249,838 242,130
Long Beach Mortgage Loan Trust,      
Series 2004-4, Class 1A1      
0.715%, 10/25/2034 (P)   58,753 53,386
Nissan Auto Lease Trust, Series 2014-A,      
Class A2B      
0.315%, 09/15/2016 (P)   9,300,000 9,297,647
Penta CLO SA, Series 2007-1X, Class A1      
0.614%, 06/04/2024 (P) EUR 968,307 1,253,604
Santander Drive Auto Receivables Trust,      
Series 2014-3, Class A2B      
0.435%, 08/15/2017 (P) $ 23,300,000 23,298,602
Securitized Asset Backed      
Receivables LLC Trust,      
Series 2007-HE1, Class A2A      
0.215%, 12/25/2036 (P)   470,458 172,977
Small Business Administration      
Participation Certificates,      
Series 2007-2OL, Class 1      
5.290%, 12/01/2027   895,227 997,439
Toyota Auto Receivables Owner Trust,      
Series 2014-B, Class A2      
0.400%, 12/15/2016   13,400,000 13,381,776
Wood Street CLO BV, Series I, Class A      
0.657%, 11/22/2021 (P) EUR 1,083,805 1,412,545
TOTAL ASSET BACKED SECURITIES (Cost $84,097,705) $ 83,906,925
 
PREFERRED SECURITIES - 1.6%      
Financials - 1.6%      
Citigroup Capital XIII (7.875% to      
10/30/2015, then      
3 month LIBOR + 6.370%)   900,000 $ 24,516,000
Wells Fargo & Company,      
Series L, 7.500%   13,070 15,892,728
TOTAL PREFERRED SECURITIES (Cost $39,503,975) $ 40,408,728
 
SHORT-TERM INVESTMENTS - 9.0%      
Certificate of Deposit - 0.2%      
Credit Suisse New York 0.464%,      
03/17/2015 * $ 1,600,000 $ 1,599,826
Itau Unibanco Holding SA 1.471%,      
10/31/2014 *   2,100,000 2,096,283
 
      3,696,109
Foreign Government - 3.4%      
Government of Mexico      
2.807%, 11/13/2014 * MXN 263,000,000 1,999,055
2.816%, 12/24/2014 *   2,147,000,000 16,264,119
2.842%, 01/22/2015 *   3,734,000,000 28,215,268
2.864%, 12/11/2014 *   481,000,000 3,647,754
2.918%, 02/19/2015 *   840,810,000 6,341,173
2.924%, 02/05/2015 *   3,872,000,000 29,225,468
 
      85,692,837

 

The accompanying notes are an integral part of the financial statements. 235

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Total Return Fund (continued)    
    Shares or  
    Principal  
    Amount Value
 
SHORT-TERM INVESTMENTS (continued)    
Repurchase Agreement - 5.4%      
Repurchase Agreement with Bank of      
America dated 08/29/2014 at 0.080% to      
be repurchased at $5,200,046 on      
09/02/2014, collateralized by      
$5,220,000 U.S. Treasury Notes,      
2.250% due 04/30/2021 (valued at      
$5,346,706, including interest) $ 5,200,000 $ 5,200,000
Repurchase Agreement with Barclays      
Capital dated 08/29/2014 at 0.060% to      
be repurchased at $20,800,243 on      
09/05/2014, collateralized by      
$20,110,000 Treasury Inflation Index      
Notes, 0.625% due 01/15/2024 (valued      
at $21,338,669, including interest)   20,800,000 20,800,000
Repurchase Agreement with Barclays      
Capital dated 08/29/2014 at 0.060% to      
be repurchased at $46,600,854 on      
09/09/2014, collateralized by      
$37,835,000 Treasury Inflation Index      
Notes, 1.625% due 01/15/2015 (valued      
at $47,584,886, including interest)   46,600,000 46,600,000
Repurchase Agreement with Morgan      
Stanley dated 08/29/2014 at 0.080% to      
be repurchased at $62,700,557 on      
09/02/2014, collateralized by      
$49,341,600 U.S. Treasury Bonds,      
4.625% due 02/15/2040 (valued at      
$64,215,478, including interest)   62,700,000 62,700,000
 
      135,300,000
TOTAL SHORT-TERM INVESTMENTS (Cost $224,580,789) $ 224,688,946
Total Investments (Total Return Fund)      
(Cost $2,655,792,942) - 107.5%   $ 2,683,364,422
Other assets and liabilities, net - (7.5%)     (186,681,726)
TOTAL NET ASSETS - 100.0%   $ 2,496,682,696
 
SALE COMMITMENTS OUTSTANDING - (0.6)%    
 
U.S. GOVERNMENT AGENCY - (0.6)%      
Federal National Mortgage Association      
5.500%, TBA (C)   (14,000,000) (15,571,170)
TOTAL SALE COMMITMENTS      
OUTSTANDING (Cost $(15,525,000))   $ (15,571,170)
 
 
 
U.S. High Yield Bond Fund    
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS - 83.9%      
Consumer Discretionary - 15.6%      
Allison Transmission, Inc.      
7.125%, 05/15/2019 (S) $ 3,155,000 $ 3,336,413
American Greetings Corp.      
7.375%, 12/01/2021   1,460,000 1,551,250
CBS Outdoor Americas Capital LLC      
5.250%, 02/15/2022 (S)   230,000 235,175
5.625%, 02/15/2024 (S)   25,000 25,750
CCM Merger, Inc.      
9.125%, 05/01/2019 (S)   5,192,000 5,529,480

 

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Cinemark USA, Inc.      
5.125%, 12/15/2022 $ 700,000 $ 711,375
7.375%, 06/15/2021   1,775,000 1,930,313
Cooper Tire & Rubber Company      
7.625%, 03/15/2027   2,410,000 2,566,650
CSC Holdings LLC      
5.250%, 06/01/2024 (S)   210,000 207,900
7.875%, 02/15/2018   750,000 856,875
CSC Holdings, Inc.      
7.625%, 07/15/2018   2,350,000 2,684,853
DineEquity, Inc.      
9.500%, 10/30/2018   1,702,000 1,802,588
DISH DBS Corp.      
5.125%, 05/01/2020   375,000 384,375
7.875%, 09/01/2019   1,000,000 1,160,000
DreamWorks Animation SKG, Inc.      
6.875%, 08/15/2020 (S)   1,915,000 2,029,900
General Motors Financial Company, Inc.      
6.750%, 06/01/2018   500,000 561,875
GLP Capital LP      
5.375%, 11/01/2023   975,000 1,031,063
Gray Television, Inc.      
7.500%, 10/01/2020   5,650,000 5,960,750
Greektown Holdings LLC      
8.875%, 03/15/2019 (L)(S)   6,720,000 6,888,000
Group 1 Automotive, Inc.      
5.000%, 06/01/2022 (S)   90,000 89,325
Hilton Worldwide Finance LLC      
5.625%, 10/15/2021 (S)   845,000 895,700
Interactive Data Corp.      
5.875%, 04/15/2019 (S)   2,850,000 2,839,313
Lamar Media Corp.      
5.875%, 02/01/2022   500,000 525,000
Light Tower Rentals Inc      
8.125%, 08/01/2019 (S)   570,000 584,250
LIN Television Corp.      
6.375%, 01/15/2021   350,000 362,250
8.375%, 04/15/2018   2,225,000 2,325,125
Live Nation Entertainment, Inc.      
5.375%, 06/15/2022 (S)   250,000 255,625
7.000%, 09/01/2020 (S)   255,000 274,763
LKQ Corp.      
4.750%, 05/15/2023   2,000,000 1,955,000
NAI Entertainment Holdings      
5.000%, 08/01/2018 (S)   1,625,000 1,669,688
National CineMedia LLC      
6.000%, 04/15/2022   370,000 384,800
7.875%, 07/15/2021   750,000 810,000
Nexstar Broadcasting, Inc.      
6.875%, 11/15/2020   1,275,000 1,351,500
Nielsen Finance LLC      
4.500%, 10/01/2020   1,000,000 1,005,000
Penske Automotive Group, Inc.      
5.750%, 10/01/2022   3,000,000 3,105,000
Pinnacle Entertainment, Inc.      
7.500%, 04/15/2021   4,275,000 4,584,938
Regal Entertainment Group      
5.750%, 03/15/2022   2,000,000 2,050,000
Service Corp. International      
7.000%, 06/15/2017   65,000 71,744
8.000%, 11/15/2021   2,290,000 2,702,200
Sonic Automotive, Inc.      
5.000%, 05/15/2023   1,450,000 1,431,875

 

The accompanying notes are an integral part of the financial statements. 236

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Consumer Discretionary (continued)      
Sotheby’s      
5.250%, 10/01/2022 (S) $ 1,750,000 $ 1,706,250
Speedway Motorsports, Inc.      
6.750%, 02/01/2019   2,588,000 2,710,930
Tempur Sealy International, Inc.      
6.875%, 12/15/2020   125,000 135,313
The Nielsen Company Luxembourg SARL      
5.500%, 10/01/2021 (S)   480,000 496,800
The William Carter Company      
5.250%, 08/15/2021   555,000 579,975
Toys R Us Property Company II LLC      
8.500%, 12/01/2017 (L)   327,000 334,358
Videotron, Ltd.      
6.375%, 12/15/2015   1,195,000 1,197,988
Wolverine World Wide, Inc.      
6.125%, 10/15/2020   125,000 132,969
 
      76,022,264
Consumer Staples - 1.4%      
B&G Foods, Inc.      
4.625%, 06/01/2021   1,000,000 985,000
Century Intermediate Holding Company 2,      
PIK      
9.750%, 02/15/2019 (S)   205,000 218,325
Cott Beverages, Inc.      
5.375%, 07/01/2022 (S)   445,000 442,775
Darling International, Inc.      
5.375%, 01/15/2022 (S)   150,000 155,625
Hearthside Group Holdings LLC      
6.500%, 05/01/2022 (S)   145,000 144,638
Pinnacle Foods Finance LLC      
4.875%, 05/01/2021   925,000 922,688
Prestige Brands, Inc.      
5.375%, 12/15/2021 (S)   1,490,000 1,478,825
Simmons Foods, Inc.      
10.500%, 11/01/2017 (S)   2,040,000 2,167,500
 
      6,515,376
Energy - 16.0%      
Bristow Group, Inc.      
6.250%, 10/15/2022   3,825,000 4,025,813
Compressco Partners LP      
7.250%, 08/15/2022 (S)   1,120,000 1,131,200
Crestwood Midstream Partners LP      
6.000%, 12/15/2020   945,000 980,438
6.125%, 03/01/2022   600,000 621,000
Denbury Resources, Inc.      
5.500%, 05/01/2022   210,000 215,250
6.375%, 08/15/2021   150,000 160,125
Dresser-Rand Group, Inc.      
6.500%, 05/01/2021   1,735,000 1,856,450
El Paso LLC      
6.500%, 09/15/2020   255,000 296,973
Energy Transfer Equity LP      
7.500%, 10/15/2020   600,000 694,500
Era Group, Inc.      
7.750%, 12/15/2022   3,760,000 4,032,600
Exterran Partners LP      
6.000%, 04/01/2021   2,175,000 2,196,750
Forum Energy Technologies, Inc.      
6.250%, 10/01/2021 (S)   250,000 265,000
Gulfmark Offshore, Inc.      
6.375%, 03/15/2022   5,350,000 5,390,125

 

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Energy (continued)      
Hornbeck Offshore Services, Inc.      
5.000%, 03/01/2021 $ 3,310,000 $ 3,235,525
5.875%, 04/01/2020   670,000 683,400
NGPL PipeCo LLC      
7.119%, 12/15/2017 (S)   3,675,000 3,803,625
7.768%, 12/15/2037 (S)   7,150,000 7,418,125
9.625%, 06/01/2019 (S)   510,000 557,175
Northern Tier Energy LLC      
7.125%, 11/15/2020   2,440,000 2,610,800
PHI, Inc.      
5.250%, 03/15/2019   4,675,000 4,733,438
Rockies Express Pipeline LLC      
5.625%, 04/15/2020 (S)   4,325,000 4,562,875
6.875%, 04/15/2040 (S)   4,000,000 4,240,000
7.500%, 07/15/2038 (S)   3,200,000 3,472,000
Rose Rock Midstream LP      
5.625%, 07/15/2022 (S)   215,000 219,300
Sabine Pass Liquefaction LLC      
5.625%, 02/01/2021 to 04/15/2023   1,050,000 1,092,750
5.750%, 05/15/2024 (S)   250,000 260,000
6.250%, 03/15/2022 (S)   2,258,000 2,449,930
Sabine Pass LNG LP      
6.500%, 11/01/2020   2,655,000 2,817,619
7.500%, 11/30/2016   5,225,000 5,675,656
7.500%, 11/30/2016 (S)   1,563,000 1,670,456
SemGroup Corp.      
7.500%, 06/15/2021   2,820,000 3,045,600
Teekay Corp.      
8.500%, 01/15/2020   2,005,000 2,270,663
Ultra Petroleum Corp.      
5.750%, 12/15/2018 (S)   1,120,000 1,156,400
 
      77,841,561
Financials - 13.7%      
Ally Financial, Inc.      
3.500%, 01/27/2019   1,020,000 1,027,650
5.500%, 02/15/2017   1,965,000 2,097,638
7.500%, 09/15/2020   1,550,000 1,854,188
Aviv Healthcare Properties LP      
7.750%, 02/15/2019   2,020,000 2,136,150
CIT Group, Inc.      
4.250%, 08/15/2017   1,800,000 1,867,500
5.000%, 05/15/2017   434,000 458,413
5.250%, 03/15/2018   400,000 427,000
Denali Borrower LLC      
5.625%, 10/15/2020 (S)   3,250,000 3,428,750
DuPont Fabros Technology LP      
5.875%, 09/15/2021   6,650,000 6,949,250
Hockey Merger Sub 2, Inc.      
7.875%, 10/01/2021 (S)   3,995,000 4,204,738
Hub Holdings LLC, PIK      
8.125%, 07/15/2019 (S)   1,885,000 1,906,206
Infinity Acquisition LLC      
7.250%, 08/01/2022 (S)   1,990,000 1,965,125
Jefferies Finance LLC      
6.875%, 04/15/2022 (S)   115,000 115,288
7.375%, 04/01/2020 (S)   350,000 365,750
MPT Operating Partnership LP      
5.500%, 05/01/2024   765,000 795,600
6.375%, 02/15/2022   1,600,000 1,720,000
6.875%, 05/01/2021   2,075,000 2,230,625
Navient Corp.      
6.125%, 03/25/2024   550,000 565,125

 

The accompanying notes are an integral part of the financial statements. 237

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Financials (continued)      
Navient LLC      
7.250%, 01/25/2022 $ 500,000 $ 558,125
8.000%, 03/25/2020   4,500,000 5,197,500
8.450%, 06/15/2018   3,140,000 3,654,018
Neuberger Berman Group LLC      
5.625%, 03/15/2020 (S)   650,000 684,125
5.875%, 03/15/2022 (S)   525,000 563,063
Omega Healthcare Investors, Inc.      
6.750%, 10/15/2022   2,950,000 3,178,625
Sabra Health Care LP      
5.375%, 06/01/2023   125,000 126,563
5.500%, 02/01/2021   750,000 780,938
Sophia Holding Finance LP, PIK      
9.625%, 12/01/2018 (S)   130,000 132,925
Springleaf Finance Corp.      
5.750%, 09/15/2016   1,650,000 1,740,750
6.000%, 06/01/2020   5,100,000 5,342,250
6.500%, 09/15/2017   1,200,000 1,291,500
7.750%, 10/01/2021   1,430,000 1,623,050
The Geo Group, Inc.      
5.875%, 01/15/2022   1,875,000 1,917,188
6.625%, 02/15/2021   2,200,000 2,321,000
USI, Inc.      
7.750%, 01/15/2021 (S)   3,500,000 3,605,000
 
      66,831,616
Health Care - 7.9%      
Aviv Healthcare Properties LP      
6.000%, 10/15/2021   650,000 685,750
Capella Healthcare, Inc.      
9.250%, 07/01/2017   950,000 995,719
Centene Corp.      
5.750%, 06/01/2017   1,225,000 1,310,750
Community Health Systems, Inc.      
6.875%, 02/01/2022 (S)   1,300,000 1,381,250
Crimson Merger Sub, Inc.      
6.625%, 05/15/2022 (S)   2,000,000 1,910,000
DaVita HealthCare Partners, Inc.      
5.750%, 08/15/2022   500,000 533,125
DaVita Healthcare Partners, Inc.      
5.125%, 07/15/2024   845,000 857,147
DaVita HealthCare Partners, Inc.      
6.625%, 11/01/2020   1,750,000 1,846,250
Fresenius Medical Care US Finance II, Inc.      
5.625%, 07/31/2019 (S)   735,000 791,963
Fresenius Medical Care US Finance, Inc.      
5.750%, 02/15/2021 (S)   750,000 813,750
6.500%, 09/15/2018 (S)   1,000,000 1,115,000
HealthSouth Corp.      
5.750%, 11/01/2024   250,000 262,500
7.250%, 10/01/2018   486,000 505,440
8.125%, 02/15/2020   1,065,000 1,128,900
Hologic, Inc.      
6.250%, 08/01/2020   3,050,000 3,217,750
LifePoint Hospitals, Inc.      
5.500%, 12/01/2021 (S)   2,000,000 2,090,000
MPH Acquisition Holdings LLC      
6.625%, 04/01/2022 (S)   400,000 418,500
Par Pharmaceutical Companies, Inc.      
7.375%, 10/15/2020   1,950,000 2,067,000
Pinnacle Merger Sub, Inc.      
9.500%, 10/01/2023 (S)   620,000 680,450
Salix Pharmaceuticals, Ltd.      
6.000%, 01/15/2021 (S)   1,225,000 1,329,125

 

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Health Care (continued)      
Select Medical Corp.      
6.375%, 06/01/2021 $ 5,815,000 $ 6,043,966
Tenet Healthcare Corp.      
4.750%, 06/01/2020   1,400,000 1,424,500
6.000%, 10/01/2020   4,600,000 4,991,000
6.250%, 11/01/2018   775,000 844,750
8.125%, 04/01/2022   300,000 345,375
Valeant Pharmaceuticals International, Inc.      
5.625%, 12/01/2021 (S)   105,000 106,706
7.500%, 07/15/2021 (S)   700,000 763,000
 
      38,459,666
Industrials - 7.5%      
Ahern Rentals, Inc.      
9.500%, 06/15/2018 (L)(S)   1,515,000 1,662,713
American Builders & Contractors Supply      
Company, Inc.      
5.625%, 04/15/2021 (S)   500,000 508,750
Ashtead Capital, Inc.      
6.500%, 07/15/2022 (S)   4,350,000 4,730,625
Aviation Capital Group Corp.      
6.750%, 04/06/2021 (S)   1,643,000 1,856,227
7.125%, 10/15/2020 (S)   1,200,000 1,369,877
Cleaver-Brooks, Inc.      
8.750%, 12/15/2019 (S)   350,000 388,500
Columbus McKinnon Corp.      
7.875%, 02/01/2019   2,375,000 2,511,563
Covanta Holding Corp.      
5.875%, 03/01/2024   945,000 978,075
6.375%, 10/01/2022   1,762,000 1,889,745
7.250%, 12/01/2020   2,081,000 2,247,480
H&E Equipment Services, Inc.      
7.000%, 09/01/2022   3,568,000 3,898,040
Interface, Inc.      
7.625%, 12/01/2018   202,000 212,100
Iron Mountain, Inc.      
5.750%, 08/15/2024   2,675,000 2,748,563
6.000%, 08/15/2023   5,200,000 5,551,000
The ADT Corp.      
4.125%, 04/15/2019 (L)   270,000 270,675
6.250%, 10/15/2021 (L)   2,050,000 2,167,875
TransDigm, Inc.      
5.500%, 10/15/2020   850,000 850,000
United Rentals North America, Inc.      
5.750%, 07/15/2018   1,585,000 1,668,213
Watco Companies LLC      
6.375%, 04/01/2023 (S)   1,030,000 1,053,175
 
      36,563,196
Information Technology - 5.3%      
Activision Blizzard, Inc.      
5.625%, 09/15/2021 (S)   700,000 756,875
6.125%, 09/15/2023 (S)   210,000 231,000
Audatex North America, Inc.      
6.000%, 06/15/2021 (S)   2,500,000 2,650,000
BMC Software Finance, Inc.      
8.125%, 07/15/2021 (S)   1,265,000 1,277,650
Boxer Parent Company, Inc., PIK      
9.000%, 10/15/2019 (S)   1,235,000 1,185,600
Emdeon, Inc.      
11.000%, 12/31/2019   3,300,000 3,729,000
Equinix, Inc.      
4.875%, 04/01/2020   120,000 122,400
7.000%, 07/15/2021   75,000 81,844

 

The accompanying notes are an integral part of the financial statements. 238

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
CORPORATE BONDS (continued)      
Information Technology (continued)      
First Data Corp.      
6.750%, 11/01/2020 (S) $ 1,466,000 $ 1,586,945
7.375%, 06/15/2019 (S)   300,000 320,250
11.750%, 08/15/2021   1,250,000 1,478,125
First Data Holdings, Inc., PIK      
14.500%, 09/24/2019 (S)   155,816 176,462
Micron Technology, Inc.      
5.875%, 02/15/2022 (S)   1,400,000 1,499,750
NCR Corp.      
4.625%, 02/15/2021   475,000 476,188
5.000%, 07/15/2022   2,510,000 2,522,550
5.875%, 12/15/2021   1,765,000 1,848,838
6.375%, 12/15/2023   715,000 772,200
SunGard Data Systems, Inc.      
6.625%, 11/01/2019   3,600,000 3,771,000
7.375%, 11/15/2018   1,021,000 1,066,945
7.625%, 11/15/2020   325,000 349,781
 
      25,903,403
Materials - 2.0%      
Ardagh Finance Holdings SA, PIK      
8.625%, 06/15/2019 (S)   630,000 652,838
Crown Americas LLC      
6.250%, 02/01/2021   1,597,000 1,704,798
Crown Cork & Seal Company, Inc.      
7.500%, 12/15/2096   1,250,000 1,187,500
Novelis, Inc.      
8.750%, 12/15/2020   1,150,000 1,272,188
Sealed Air Corp.      
8.375%, 09/15/2021 (S)   2,410,000 2,711,250
Silgan Holdings, Inc.      
5.000%, 04/01/2020   2,300,000 2,360,375
 
      9,888,949
Telecommunication Services - 10.9%      
GCI, Inc.      
6.750%, 06/01/2021   725,000 734,063
8.625%, 11/15/2019   5,400,000 5,649,750
Intelsat Jackson Holdings SA      
5.500%, 08/01/2023   1,125,000 1,120,781
6.625%, 12/15/2022   1,050,000 1,097,250
7.250%, 04/01/2019 to 10/15/2020   6,150,000 6,503,250
7.500%, 04/01/2021   1,050,000 1,136,625
Intelsat Luxembourg SA      
7.750%, 06/01/2021   1,490,000 1,571,950
8.125%, 06/01/2023   2,250,000 2,435,625
Level 3 Escrow II, Inc.      
5.375%, 08/15/2022 (S)   2,200,000 2,211,000
Level 3 Financing, Inc.      
6.125%, 01/15/2021 (S)   655,000 691,025
MetroPCS Wireless, Inc.      
6.625%, 11/15/2020   3,100,000 3,255,000
SBA Communications Corp.      
5.625%, 10/01/2019   190,000 199,025
SBA Telecommunications, Inc.      
5.750%, 07/15/2020   2,201,000 2,322,055
Sprint Capital Corp.      
6.875%, 11/15/2028   125,000 121,875
6.900%, 05/01/2019   2,000,000 2,147,500
8.750%, 03/15/2032   600,000 669,000
Sprint Communications, Inc.      
7.000%, 08/15/2020   5,700,000 6,084,750
9.000%, 11/15/2018 (S)   450,000 534,938

 

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
CORPORATE BONDS (continued)      
Telecommunication Services (continued)      
Sprint Corp.      
7.250%, 09/15/2021 (S) $ 255,000 $ 270,300
Syniverse Holdings, Inc.      
9.125%, 01/15/2019   5,500,000 5,823,125
T-Mobile USA, Inc.      
5.250%, 09/01/2018   455,000 469,219
6.125%, 01/15/2022   105,000 108,806
6.250%, 04/01/2021   1,010,000 1,047,875
6.464%, 04/28/2019   205,000 213,713
6.542%, 04/28/2020   205,000 215,250
6.625%, 04/01/2023   600,000 631,500
6.633%, 04/28/2021   800,000 842,000
6.731%, 04/28/2022   2,500,000 2,637,500
6.836%, 04/28/2023   1,135,000 1,204,519
Telesat Canada      
6.000%, 05/15/2017 (S)   850,000 875,500
 
      52,824,769
Utilities - 3.6%      
AmeriGas Finance LLC      
6.750%, 05/20/2020   2,850,000 3,035,250
7.000%, 05/20/2022   1,110,000 1,204,350
Calpine Corp.      
5.875%, 01/15/2024 (S)   490,000 524,300
6.000%, 01/15/2022 (S)   1,500,000 1,616,250
IPALCO Enterprises, Inc.      
5.000%, 05/01/2018   100,000 106,000
7.250%, 04/01/2016 (S)   3,340,000 3,598,850
NSG Holdings, Inc.      
7.750%, 12/15/2025 (S)   2,700,000 2,916,000
Southern Star Central Corp.      
5.125%, 07/15/2022 (S)   2,650,000 2,683,125
Suburban Propane Partners LP      
7.375%, 03/15/2020 to 08/01/2021   1,457,000 1,538,160
 
      17,222,285
TOTAL CORPORATE BONDS (Cost $393,699,523) $ 408,073,085
 
CAPITAL PREFERRED SECURITIES - 0.3%    
Financials - 0.3%      
Emigrant Capital Trust I      
2.533%, 12/10/2033 (P)(S)   2,450,000 1,666,000
TOTAL CAPITAL PREFERRED      
SECURITIES (Cost $1,024,936)   $ 1,666,000
 
TERM LOANS (M) - 13.9%      
Consumer Discretionary - 3.2%      
Alliance Laundry Systems LLC      
9.500%, 12/10/2019   2,019,288 2,031,908
Allison Transmission, Inc.      
3.750%, 08/23/2019   700,000 696,938
CCM Merger, Inc.      
4.500%, 07/18/2021   420,000 419,125
Centaur Acquisition LLC      
8.750%, 02/15/2020   2,355,000 2,380,512
Federal-Mogul Holdings Corp.      
4.750%, 04/15/2021   2,965,000 2,956,351
FOCUS Brands, Inc.      
10.250%, 08/21/2018   1,400,000 1,400,000
Learfield Communications, Inc.      
8.750%, 10/09/2021   185,000 186,388
TGI Friday’s, Inc.      
9.250%, 07/15/2021   220,000 219,175

 

The accompanying notes are an integral part of the financial statements. 239

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
 
TERM LOANS (M) (continued)      
Consumer Discretionary (continued)      
TWCC Holding Corp.      
7.000%, 06/26/2020 $ 2,460,000 $ 2,425,407
WASH Multifamily Laundry Systems LLC      
4.503%, 02/21/2019   2,611,938 2,602,143
 
      15,317,947
Energy - 1.1%      
Philadelphia Energy Solutions Refining and      
Marketing LLC      
6.250%, 04/04/2018   3,555,000 3,341,700
Tallgrass Operations LLC      
4.250%, 11/13/2018   2,140,162 2,138,379
 
      5,480,079
Financials - 1.4%      
Asurion LLC      
8.500%, 03/03/2021   1,485,000 1,531,406
Capital Automotive LP      
4.000%, 04/10/2019   2,594,061 2,584,333
6.000%, 04/30/2020   1,850,000 1,880,063
Sedgwick, Inc.      
6.750%, 02/28/2022   730,000 723,156
 
      6,718,958
Health Care - 0.3%      
Accellent, Inc.      
7.500%, 03/11/2022   730,000 719,658
Vertafore, Inc.      
9.750%, 10/27/2017   660,000 665,500
 
      1,385,158
Industrials - 2.4%      
Four Seasons Holdings, Inc.      
6.250%, 12/28/2020   800,000 802,000
HGIM Corp.      
5.500%, 06/18/2020   1,358,158 1,353,914
HHI Holdings LLC      
5.000%, 10/05/2018   1,880,545 1,881,133
KAR Auction Services, Inc.      
3.500%, 03/11/2021   4,038,532 4,020,023
LM US Member LLC      
8.500%, 10/15/2020   115,000 115,192
Neff Rental LLC      
7.250%, 06/09/2021   985,000 985,616
Spin Holdco, Inc.      
4.250%, 11/14/2019   2,110,868 2,093,981
Total Safety US, Inc.      
9.250%, 09/11/2020   369,075 367,230
 
      11,619,089
Information Technology - 1.6%      
Applied Systems, Inc.      
7.500%, 01/23/2022   380,000 382,138
Dell International LLC      
4.500%, 04/29/2020   4,719,362 4,729,193
First Data Corp.      
3.655%, 09/24/2018   2,325,052 2,295,989
Peak 10, Inc.      
8.250%, 06/17/2022   475,000 471,438
 
      7,878,758
Telecommunication Services - 0.7%      
Level 3 Financing, Inc.      
4.000%, 01/15/2020   2,050,000 2,041,800

 

U.S. High Yield Bond Fund (continued)  
    Shares or  
    Principal  
    Amount Value
 
TERM LOANS (M) (continued)      
Telecommunication Services (continued)      
LTS Buyer LLC      
8.000%, 04/12/2021 $ 666,113 $ 668,610
NTELOS, Inc.      
5.750%, 11/08/2019   808,464 808,464
 
      3,518,874
Utilities - 3.2%      
Texas Competitive Electric Holdings      
Company LLC      
4.652%, 10/10/2014 (H)   20,500,000 15,802,076
TOTAL TERM LOANS (Cost $72,421,666) $ 67,720,939
 
COMMON STOCKS - 0.0%      
Consumer Discretionary - 0.0%      
Tropicana Entertainment LLC (I)   7,500 $ 7,500
TOTAL COMMON STOCKS (Cost $750,000) $ 7,500
 
PREFERRED SECURITIES - 0.3%      
Consumer Discretionary - 0.0%      
Tropicana Las Vegas Hotel &      
Casino, Inc., Class A (I)   1,270 $ 5,080
Tropicana Las Vegas Resort & Casino LLC (I) 840 3,360
 
      8,440
Financials - 0.3%      
GMAC Capital Trust I (8.125% to 02/15/2016,    
then 3 month LIBOR + 5.785%)   58,084 1,561,298
TOTAL PREFERRED SECURITIES (Cost $1,688,917) $ 1,569,738
 
SECURITIES LENDING COLLATERAL - 1.0%    
John Hancock Collateral      
Investment Trust, 0.0970% (W)(Y)   464,690 $ 4,650,196
TOTAL SECURITIES LENDING      
COLLATERAL (Cost $4,650,225)   $ 4,650,196
 
SHORT-TERM INVESTMENTS - 0.5%      
Money Market Funds - 0.4%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y)   2,019,056 2,019,056
Repurchase Agreement - 0.1%      
Repurchase Agreement with State Street Bank    
dated 08/29/2014 at 0.000% to be      
repurchased at $596,206 on 09/02/2014,      
collateralized by $601,100 U.S. Treasury      
Notes, 1.500% due 08/31/2018 (valued at    
$603,683, including interest) $ 596,206 $ 596,206
TOTAL SHORT-TERM INVESTMENTS (Cost $2,615,262) $ 2,615,262
Total Investments (U.S. High Yield Bond Fund)    
(Cost $476,850,529) - 99.9%   $ 486,302,720
Other assets and liabilities, net - 0.1%     344,261
 
TOTAL NET ASSETS - 100.0%   $ 486,646,981

 

The accompanying notes are an integral part of the financial statements. 240

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Value Fund    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS - 98.4%    
Consumer Discretionary - 11.0%    
Auto Components - 5.1%    
Dana Holding Corp. 376,755 $ 8,752,021
Johnson Controls, Inc. 258,583 12,621,436
 
    21,373,457
Specialty Retail - 5.9%    
Advance Auto Parts, Inc. 62,460 8,520,793
Ascena Retail Group, Inc. (I) 648,383 11,275,380
Express, Inc. (I) 303,289 5,259,031
 
    25,055,204
    46,428,661
Consumer Staples - 3.2%    
Food Products - 3.2%    
ConAgra Foods, Inc. 424,259 13,661,140
Energy - 6.4%    
Energy Equipment & Services - 1.8%    
AMEC PLC 406,245 7,590,925
Oil, Gas & Consumable Fuels - 4.6%    
Newfield Exploration Company (I) 201,623 9,036,743
ONEOK, Inc. 25,166 1,766,653
The Williams Companies, Inc. 146,128 8,685,848
 
    19,489,244
    27,080,169
Financials - 25.9%    
Banks - 8.4%    
BB&T Corp. 255,040 9,520,643
Comerica, Inc. 220,164 11,083,056
Wintrust Financial Corp. 196,063 9,130,654
Zions Bancorporation 194,807 5,676,676
 
    35,411,029
Capital Markets - 5.8%    
American Capital, Ltd. (I) 313,892 4,862,187
Northern Trust Corp. 142,523 9,883,970
Stifel Financial Corp. (I) 199,879 9,570,207
 
    24,316,364
Diversified Financial Services - 0.3%    
FNFV Group (I) 79,716 1,194,146
Insurance - 8.7%    
ACE, Ltd. 79,738 8,478,542
Arthur J. Gallagher & Company 93,272 4,405,237
FNF Group 301,938 8,547,865
Marsh & McLennan Companies, Inc. 161,849 8,594,182
Willis Group Holdings PLC 158,026 6,632,351
 
    36,658,177
Real Estate Management & Development - 2.7%    
Forest City Enterprises, Inc., Class A (I) 556,228 11,569,542
 
    109,149,258
Health Care - 11.5%    
Health Care Equipment & Supplies - 2.1%    
CareFusion Corp. (I) 193,271 8,873,072
Health Care Providers & Services - 7.8%    
Brookdale Senior Living, Inc. (I) 267,032 9,332,768
HealthSouth Corp. 288,501 11,364,054
Universal Health Services, Inc., Class B 107,166 12,264,077
 
    32,960,899

 

Value Fund (continued)    
  Shares or  
  Principal  
  Amount Value
 
 
COMMON STOCKS (continued)    
Life Sciences Tools & Services - 1.6%    
PerkinElmer, Inc. 151,160 $ 6,779,526
 
    48,613,497
Industrials - 17.1%    
Aerospace & Defense - 2.2%    
Textron, Inc. 243,006 9,234,228
Air Freight & Logistics - 1.0%    
UTi Worldwide, Inc. (I) 461,384 4,235,505
Building Products - 3.1%    
Masco Corp. 150,574 3,533,972
Owens Corning 270,262 9,729,432
 
    13,263,404
Electrical Equipment - 1.9%    
The Babcock & Wilcox Company 271,691 7,892,624
Machinery - 6.8%    
Ingersoll-Rand PLC 159,829 9,621,706
Pentair PLC 116,921 7,958,812
Snap-on, Inc. 89,135 11,137,418
 
    28,717,936
Professional Services - 2.1%    
Robert Half International, Inc. 178,829 8,979,004
 
    72,322,701
Information Technology - 11.9%    
Communications Equipment - 2.2%    
Ciena Corp. (I) 444,742 9,201,712
IT Services - 2.7%    
Teradata Corp. (I) 252,335 11,524,139
Software - 5.9%    
Cadence Design Systems, Inc. (I) 608,039 10,725,808
Citrix Systems, Inc. (I) 199,018 13,983,005
 
    24,708,813
Technology Hardware, Storage & Peripherals - 1.1%  
Diebold, Inc. 82,851 3,145,852
NetApp, Inc. 34,341 1,447,817
 
    4,593,669
 
    50,028,333
Materials - 5.6%    
Chemicals - 4.5%    
Eastman Chemical Company 121,598 10,028,187
W.R. Grace & Company (I) 88,642 8,778,217
 
    18,806,404
Containers & Packaging - 1.1%    
Sealed Air Corp. 133,188 4,808,087
 
    23,614,491
Telecommunication Services - 2.6%    
Diversified Telecommunication Services - 2.6%    
tw telecom, Inc. (I) 270,071 11,082,363
Utilities - 3.2%    
Electric Utilities - 2.2%    
Edison International 158,574 9,378,066
Multi-Utilities - 1.0%    
CenterPoint Energy, Inc. 161,881 4,021,124
 
    13,399,190
TOTAL COMMON STOCKS (Cost $319,420,282) $ 415,379,803

 

The accompanying notes are an integral part of the financial statements. 241

 


John Hancock Funds II

Portfolio of Investments — August 31, 2014 (showing percentage of total net assets)

Value Fund (continued)      
  Shares or    
  Principal    
  Amount   Value
 
 
SHORT-TERM INVESTMENTS - 2.1%      
Money Market Funds - 2.1%      
State Street Institutional Liquid Reserves      
Fund, 0.0747% (Y) 8,787,426   8,787,426
TOTAL SHORT-TERM INVESTMENTS (Cost $8,787,426) $ 8,787,426
Total Investments (Value Fund) (Cost $328,207,708) - 100.5% $ 424,167,229
Other assets and liabilities, net - (0.5%)     (2,079,687)
TOTAL NET ASSETS - 100.0%   $ 422,087,542

 

Percentages are based upon net assets.

Footnotes

Key to Currency Abbreviations
 
ARS Argentine Peso
AUD Australian Dollar
BRL Brazilian Real
CAD Canadian Dollar
CHF Swiss Franc
CNY Chinese Yuan Renminbi
COP Colombian Peso
DKK Danish Krone
EUR Euro
GBP British Pound
HKD Hong Kong Dollar
IDR Indonesian Rupiah
ILS Israeli New Shekels
INR Indian Rupee
JPY Japanese Yen
KRW Korean Won
MXN Mexican Peso
MYR Malaysian Ringgit
NOK Norwegian Krone
NZD New Zealand Dollar
PHP Philippine Peso
RUB Russian Ruble
SEK Swedish Krona
SGD Singapore Dollar
THB Thai Baht
TRY Turkish Lira
ZAR South African Rand
UYU Uruguayan Peso
 

 

Key to Security Abbreviations and Legend
 
ADR American Depositary Receipts
CMT Constant Maturity Treasury
EURIBOR Euro Interbank Offered Rate
GDR Global Depositary Receipts
GO General Obligation
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
PIK Paid-in-kind
TBA To Be Announced. A forward mortgage-backed securities trade issued by
  a U.S. Government Agency, to be delivered at an agreed-upon future
  settlement date.
TBD To Be Determined
USGG U.S. Generic Government Yield Index
(A) The subadvisor is an affiliate of the advisor.
(C) Security purchased on a when-issued or delayed delivery basis.
(D) All or a portion of this security is segregated at the custodian as collateral
  pursuant to certain derivative instrument contracts.
(G) The portfolio’s subadvisor is shown parenthetically.
(H) Non-income producing — Issuer and/or security is in default.
(I) Non-income producing security.
(L) A portion of the security is on loan as of August 31, 2014.
(M) Term loans are variable rate obligations. The coupon rate shown
  represents the rate at period end.
(N) Strike price and/or expiration date not available.
(P) Variable rate obligation. Securities reset coupon rates periodically. The
  coupon rate shown represents the rate at period end.
(Q) Perpetual bonds have no stated maturity date. Date shown as maturity date
  is next call date.
(R) Direct placement securities are restricted as to resale and the fund has
  limited rights to registration under the Securities Act of 1933. For more
information on this security refer to Note 10 of the Notes to
  Financial Statements.
(S) These securities are exempt from registration under Rule 144A of the
  Securities Act of 1933. Such securities may be resold, normally to
  qualified institutional buyers, in transactions exempt from registration.
(T) 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.
(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This
investment represents collateral recieved for securities lending.
(Y) The rate shown is the annualized seven-day yield as of August 31, 2014.
(Z) Zero coupon bonds are issued at a discount from their principal amount in
  lieu of paying interest periodically. Rate shown is the annualized yield at
  period end.
(1) Manulife Asset Management (US) LLC is doing business as John
  Hancock Asset Management.
* 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.

 

The accompanying notes are an integral part of the financial statements. 242

 


John Hancock Funds II

Portfolio of investments — August 31, 2014 (showing percentage of total net assets)

Certain funds had the following country concentration as a percentage of net assets on 8-31-14:

Alpha Opportunities Fund  
United States 79.1%
Canada 3.3%
United Kingdom 3.2%
Japan 2.2%
Switzerland 2.1%
Netherlands 1.5%
Ireland 1.2%
Australia 1.0%
China 1.0%
France 1.0%
Other Countries 4.4%
 
Total 100.0%
 
Capital Appreciation Value Fund  
United States 89.6%
Luxembourg 2.3%
Ireland 1.5%
United Kingdom 1.5%
Netherlands 1.3%
Switzerland 1.2%
Cayman Islands 1.1%
Canada 0.8%
Germany 0.7%
 
Total 100.0%
 
High Yield Fund  
United States 75.6%
Luxembourg 5.0%
United Kingdom 3.5%
Netherlands 2.7%
Australia 1.6%
France 1.4%
Germany 1.3%
Ireland 1.3%
Mexico 1.2%
Canada 0.8%
Other Countries 5.6%
 
Total 100.0%
 
Real Return Bond Fund  
United States 85.7%
Spain 3.3%
Italy 2.6%
Germany 2.3%
Australia 1.3%
Greece 1.3%
France 1.2%
United Kingdom 0.8%
Netherlands 0.8%
New Zealand 0.3%
Other Countries 0.4%
 
Total 100.0%

 

Science & Technology Fund  
United States 82.4%
China 4.7%
Netherlands 2.6%
Ireland 1.9%
Japan 1.8%
United Kingdom 1.6%
Singapore 1.3%
Israel 1.1%
South Korea 1.0%
Taiwan 0.8%
Other Countries 0.8%
 
Total 100.0%
 
Spectrum Income Fund  
United States 69.2%
United Kingdom 3.5%
Mexico 2.3%
Luxembourg 2.2%
Brazil 1.7%
Netherlands 1.6%
Canada 1.5%
Venezuela 1.2%
Japan 1.1%
Indonesia 1.1%
Other Countries 14.6%
 
Total 100.0%
 
Strategic Equity Allocation Fund  
United States 73.5%
Japan 4.3%
United Kingdom 4.1%
Switzerland 2.1%
France 1.8%
Germany 1.7%
Australia 1.7%
Taiwan 0.9%
Spain 0.9%
China 0.9%
Other Countries 8.1%
 
Total 100.0%
 
Total Return Fund  
United States 71.1%
Italy 7.2%
Spain 5.4%
Mexico 4.7%
Canada 3.3%
Brazil 2.2%
United Kingdom 1.5%
Cayman Islands 1.1%
France 1.0%
Virgin Islands 0.6%
Other Countries 1.9%
 
Total 100.0%

 

The accompanying notes are an integral part of the financial statements. 243

 


John Hancock Funds II

Portfolio of investments — August 31, 2014 (showing percentage of total net assets)

The following funds had the following sector or industry distribution as a percentage of net assets on 8-31-14:

Fundamental Global Franchise Fund  
Consumer Staples 42.9%
Information Technology 22.1%
Consumer Discretionary 21.8%
Industrials 3.8%
Health Care 2.4%
Short-Term Investments & Other 7.0%
 
Total 100.0%
 
Global Equity Fund  
Consumer Discretionary 16.1%
Industrials 15.3%
Consumer Staples 14.8%
Financials 14.3%
Health Care 10.7%
Information Technology 8.2%
Energy 7.0%
Telecommunication Services 5.0%
Materials 4.9%
Short-Term Investments & Other 3.7%
 
Total 100.0%
 
Global Real Estate Fund (by industry)  
Retail REITs 22.1%
Specialized REITs 14.1%
Diversified REITs 13.7%
Real Estate Management & Development 13.5%
Office REITs 13.0%
Residential REITs 9.6%
Real Estate Operating Companies 9.0%
Industrial REITs 3.6%
Real Estate Development 0.4%
Marine Ports & Services 0.1%
Other 0.9%
 
Total 100.0%
 
International Growth Opportunities Fund  
Financials 25.7%
Information Technology 19.2%
Consumer Discretionary 18.9%
Industrials 13.4%
Materials 7.0%
Consumer Staples 5.3%
Health Care 4.8%
Telecommunication Services 4.3%
Short-Term Investments & Other 1.4%
 
Total 100.0%

 

International Growth Stock Fund  
Consumer Discretionary 22.5%
Financials 17.0%
Information Technology 13.1%
Industrials 10.2%
Health Care 10.1%
Consumer Staples 8.8%
Energy 7.8%
Materials 3.8%
Utilities 0.8%
Short-Term Investments & Other 5.9%
 
Total 100.0%
 
International Small Cap Fund  
Consumer Discretionary 28.2%
Industrials 14.2%
Financials 13.9%
Information Technology 13.0%
Consumer Staples 7.9%
Health Care 6.3%
Energy 5.2%
Materials 4.8%
Utilities 1.0%
Short-Term Investments & Other 5.5%
 
Total 100.0%
 
International Value Fund  
Financials 24.9%
Energy 16.6%
Health Care 15.4%
Industrials 9.5%
Information Technology 8.4%
Consumer Discretionary 8.2%
Telecommunication Services 5.8%
Materials 5.6%
Consumer Staples 3.0%
Utilities 0.2%
Short-Term Investments & Other 2.4%
 
Total 100.0%

 

The accompanying notes are an integral part of the financial statements. 244

 


John Hancock Funds II

Portfolio of investments — August 31, 2014 (showing percentage of total net assets)

The following funds had the following portfolio composition on 8-31-14:

Asia Pacific Total Return Bond Fund (as a percentage of net assets)
Foreign Government Obligations 37.8%
Financials 36.9%
Utilities 4.7%
Energy 4.3%
Consumer Discretionary 3.1%
Consumer Staples 2.7%
Industrials 2.3%
Materials 2.3%
Telecommunication Services 2.0%
Other 3.9%
 
Total 100.0%
 
Global Bond Fund (as a percentage of total investments)  
Foreign Government Obligations 46.9%
Collateralized Mortgage Obligations 12.2%
Financials 11.4%
U.S. Government Agency 8.0%
U.S. Government 7.6%
Energy 1.5%
Certificate of Deposit 1.2%
Asset Backed Securities 1.2%
Consumer Discretionary 0.7%
Telecommunication Services 0.6%
Consumer Staples 0.6%
Industrials 0.6%
Information Technology 0.3%
Short-Term Investments 7.2%
 
Total 100.0%

 

The accompanying notes are an integral part of the financial statements. 245

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

      Alpha Asia Pacific
  Active All Cap Opportunities Total Return
Assets Bond Fund Core Fund Fund Bond Fund
Investments in unaffiliated issuers, at value $1,734,554,193 $759,079,889 $1,846,570,998 $425,942,779
Investments in affiliated issuers, at value 4,394,828 22,620,906 127,551,522 —
Repurchase agreements, at value 20,780,000 — 54,500,000 —
Total investments, at value 1,759,729,021 781,700,795 2,028,622,520 425,942,779
Cash 62,371 — — 6,533,897
Foreign currency, at value 30,566 — 211,565 1,845,589
Cash held at broker for futures contracts — 413,203 — 1,793,681
Receivable for investments sold — — 11,622,466 2,133,333
Receivable for forward foreign currency exchange contracts — — — 4,363
Receivable for fund shares sold 830,656 — 4,022,088 —
Dividends and interest receivable 15,333,027 1,130,970 2,991,185 6,023,960
Receivable for securities lending income 1,750 12,891 81,944 —
Receivable for futures variation margin — 255,965 — —
Receivable due from advisor — — — 23,522
Other assets 253,101 2,558 6,494 1,475
Total assets 1,776,240,492 783,516,382 2,047,558,262 444,302,599
 
Liabilities        
Due to custodian — 63,697 181,039 —
Foreign capital gains tax payable — — 17,119 —
Payable for investments purchased 487,550 — 33,274,612 486,906
Payable for delayed delivery securities purchased 57,844,556 — — —
Payable for forward foreign currency exchange contracts — — — 297,054
Payable for fund shares repurchased 118,413 — — —
Payable upon return of securities loaned 4,394,325 22,620,649 127,571,059 —
Payable to affiliates        
Accounting and legal services fees 35,296 15,727 38,767 9,113
Trustees’ fees 252 88 222 60
Other liabilities and accrued expenses 189,992 86,117 200,637 487,740
Total liabilities 63,070,384 22,786,278 161,283,455 1,280,873
Net assets $1,713,170,108 $760,730,104 $1,886,274,807 $443,021,726
 
Net assets consist of        
Paid-in capital $1,627,494,765 $619,685,142 $1,476,199,439 $456,484,234
Undistributed net investment income (loss) 15,872,740 2,856,171 5,431,717 4,643,809
Accumulated undistributed net realized gain (loss) on investments (141,427) 51,481,569 184,692,875 (7,245,964)
Net unrealized appreciation (depreciation) on investments 69,944,030 86,707,222 219,950,776 (10,860,353)
Net assets $1,713,170,108 $760,730,104 $1,886,274,807 $443,021,726
Investments in unaffiliated issuers, including repurchase agreements,      
at cost $1,685,373,593 $672,629,168 $1,681,100,304 $436,322,089
Investments in affiliated issuers, at cost $4,394,536 $22,620,370 $127,551,572 —
Foreign currency, at cost $47,453 — $211,807 $1,846,251
Securities loaned, unaffiliated issuers, at value $4,258,490 $22,108,809 $123,848,051 —
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets $102,190,126 — — —
Shares outstanding 9,766,281 — — —
Net asset value, offering and redemption price per share $10.46 — — —
 
Class NAV        
Net assets $1,610,979,982 $760,730,104 $1,886,274,807 $443,021,726
Shares outstanding 154,085,225 54,027,796 138,886,971 45,987,549
Net asset value, offering price and redemption price per share $10.46 $14.08 $13.58 $9.63

 

The accompanying notes are an integral part of the financial statements. 246

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

    Capital Capital  
  Blue Chip Appreciation Appreciation Core Bond
Assets Growth Fund Fund Value Fund Fund
Investments in unaffiliated issuers, at value $2,723,742,417 $2,340,367,083 $1,980,071,136 $560,468,917
Investments in affiliated issuers, at value 64,813,952 33,333,327 — 241,185
Repurchase agreements, at value — 8,278,000 — —
Total investments, at value 2,788,556,369 2,381,978,410 1,980,071,136 560,710,102
Cash 2,236 476 — —
Foreign currency, at value — — 58,445 —
Receivable for investments sold 27,422,828 37,112,150 19,198,098 16,606,589
Receivable for delayed delivery securities sold — — — 61,737,283
Receivable for fund shares sold — 99,302 2,731,053 367,400
Dividends and interest receivable 1,288,601 1,222,927 6,358,803 2,322,156
Receivable for securities lending income 8,777 8,280 164 63
Other assets 8,993 7,831 6,558 11,795
Total assets 2,817,287,804 2,420,429,376 2,008,424,257 641,755,388
 
Liabilities        
Payable for investments purchased 201,090 3,065,049 17,437,269 19,426,527
Payable for delayed delivery securities purchased — — — 114,264,057
Payable for fund shares repurchased 10,174,605 14,602,014 — —
Payable upon return of securities loaned 64,827,900 33,358,099 — 241,188
Written options, at value — — 3,483,810 —
Payable to affiliates        
Accounting and legal services fees 57,103 49,136 40,773 10,501
Trustees’ fees 354 301 267 84
Other liabilities and accrued expenses 211,805 191,837 192,914 100,779
Total liabilities 75,472,857 51,266,436 21,155,033 134,043,136
Net assets $2,741,814,947 $2,369,162,940 $1,987,269,224 $507,712,252
 
Net assets consist of        
Paid-in capital $1,201,405,051 $1,188,024,374 $1,513,121,934 $503,610,749
Undistributed net investment income (loss) — — 15,185,940 2,897,882
Accumulated undistributed net realized gain (loss) on investments 218,541,655 152,723,343 168,375,616 (5,826,429)
Net unrealized appreciation (depreciation) on investments 1,321,868,241 1,028,415,223 290,585,734 7,030,050
Net assets $2,741,814,947 $2,369,162,940 $1,987,269,224 $507,712,252
Investments in unaffiliated issuers, including repurchase agreements,        
at cost $1,401,874,800 $1,320,231,605 $1,689,806,145 $553,438,865
Investments in affiliated issuers, at cost $64,813,434 $33,331,564 — $241,187
Foreign currency, at cost — — $59,345 —
Proceeds received on sale commitments outstanding — — — $1,019,688
Premiums received on written options — — $3,735,330 —
Securities loaned, unaffiliated issuers, at value $63,520,344 $32,701,012 — $232,638
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets $887,821,840 $588,180,799 — $93,133,158
Shares outstanding 24,677,325 32,132,869 — 7,122,628
Net asset value, offering and redemption price per share $35.98 $18.30 — $13.08
 
Class NAV        
Net assets $1,853,993,107 $1,780,982,141 $1,987,269,224 $414,579,094
Shares outstanding 51,541,855 97,190,503 156,440,649 31,748,007
Net asset value, offering price and redemption price per share $35.97 $18.32 $12.70 $13.06

 

The accompanying notes are an integral part of the financial statements. 247

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

    Fundamental    
  Equity-Income Global Franchise Global Global
Assets Fund Fund Bond Fund Equity Fund
Investments in unaffiliated issuers, at value $2,120,130,114 $423,571,546 $655,394,487 $482,858,075
Investments in affiliated issuers, at value 66,698,890 — — 5,260,253
Repurchase agreements, at value — 30,161,000 11,512,000 —
Total investments, at value 2,186,829,004 453,732,546 666,906,487 488,118,328
Cash — 685 — —
Foreign currency, at value 243,854 6,907,113 11,878,109 45,007
Cash held at broker for futures contracts — — 18,000 —
Receivable for investments sold 13,540,144 — 1,953,012 —
Receivable for delayed delivery securities sold — — 72,113,750 —
Receivable for forward foreign currency exchange contracts — — 3,707,758 154,951
Receivable for fund shares sold 2,799,370 490,743 — 713,286
Dividends and interest receivable 5,975,086 1,303,495 6,063,086 1,404,436
Receivable for securities lending income 51,253 — — 10,485
Swap contracts, at value — — 1,175,884 —
Receivable for futures variation margin — — 555,332 —
Other assets 6,790 1,291 658,923 1,838
Total assets 2,209,445,501 462,435,873 765,030,341 490,448,331
 
Liabilities        
Due to custodian — — 3,876,117 —
Payable for collateral held by fund — — 1,800,000 —
Payable for investments purchased 3,385,815 6,907,056 18,043,734 —
Payable for delayed delivery securities purchased — — 70,227,442 —
Payable for forward foreign currency exchange contracts — — 3,980,079 —
Payable for sale-buyback transactions — — 8,125,390 —
Payable for fund shares repurchased 1,839,715 — 455,690 —
Payable upon return of securities loaned 66,684,841 — — 5,260,200
Written options, at value — — 1,518,643 —
Payable for sale commitments outstanding, at value — — 47,410,975 —
Swap contracts, at value — — 162,096 —
Payable for exchange cleared swaps — — 842,138 —
Payable to affiliates        
Accounting and legal services fees 43,616 9,351 12,533 9,969
Transfer agent fees — 169 — 641
Trustees’ fees 247 61 89 51
Other liabilities and accrued expenses 174,583 190,158 179,236 178,490
Total liabilities 72,128,817 7,106,795 156,634,162 5,449,351
Net assets $2,137,316,684 $455,329,078 $608,396,179 $484,998,980
 
Net assets consist of        
Paid-in capital $1,517,402,912 $342,081,877 $609,429,820 $420,016,905
Undistributed net investment income (loss) 23,342,937 4,010,174 (391,964) 9,511,467
Accumulated undistributed net realized gain (loss) on investments 79,801,275 18,825,217 (11,505,104) 20,960,582
Net unrealized appreciation (depreciation) on investments 516,769,560 90,411,810 10,863,427 34,510,026
Net assets $2,137,316,684 $455,329,078 $608,396,179 $484,998,980
Investments in unaffiliated issuers, including repurchase agreements, at cost $1,603,353,490 $363,321,323 $658,937,723 $448,494,195
Investments in affiliated issuers, at cost $66,698,484 — — $5,260,200
Foreign currency, at cost $249,731 $6,924,199 $11,905,777 $45,008
Proceeds received on sale commitments outstanding — — $47,359,531 —
Premiums received on written options — — $2,441,957 —
Net unamortized upfront payment on swaps — — ($445,084) —
Securities loaned, unaffiliated issuers, at value $65,266,077 — — $5,033,523
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is calculated  
by dividing the net assets of each class of shares by the number of outstanding shares in the class.  
 
Class A1        
Net assets — $132,390 — $116,649
Shares outstanding — 10,000 — 10,000
Net asset value and redemption price per share — $13.24 — $11.66
 
Class I        
Net assets — $709,100 — $3,106,852
Shares outstanding — 53,360 — 265,615
Net asset value, offering price and redemption price per share — $13.29 — $11.70
 
Class 1        
Net assets $377,084,306 — $68,535,666 —
Shares outstanding 17,566,156 — 5,424,041 —
Net asset value, offering and redemption price per share $21.47 — $12.64 —
 
Class NAV        
Net assets $1,760,232,378 $454,487,588 $539,860,513 $481,775,479
Shares outstanding 82,045,358 34,166,570 42,788,954 41,182,643
Net asset value, offering price and redemption price per share $21.45 $13.30 $12.62 $11.70
 
Maximum Public Offering Price Per Share:        
Class A (net asset value per share ÷ 95%)2 — $13.94 — $12.27

 

1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.


2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

 

The accompanying notes are an integral part of the financial statements. 248

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

        International
        Growth
  Global Real Health Sciences High Yield Opportunities
Assets Estate Fund Fund Fund Fund
Investments in unaffiliated issuers, at value $335,844,309 $618,837,845 $928,806,323 $848,663,353
Investments in affiliated issuers, at value — — 10,313,511 —
Total investments, at value 335,844,309 618,837,845 939,119,834 848,663,353
Cash — — 1,200,004 —
Foreign currency, at value 2,455,309 64,938 509,009 6,273,376
Cash held at broker for futures contracts — — 573,504 —
Receivable for investments sold 6,890,712 16,698,904 8,337,883 6,603,697
Receivable for forward foreign currency exchange contracts — — 603,711 —
Dividends and interest receivable 337,003 283,715 17,465,245 1,237,519
Receivable for securities lending income — — 3,413 —
Receivable for futures variation margin — — 21,875 —
Receivable for exchange cleared swaps — — 883,224 —
Other assets 1,085 2,018 3,476 2,595
Total assets 345,528,418 635,887,420 968,721,178 862,780,540
 
Liabilities        
Due to custodian 1,918,636 — — —
Payable for investments purchased 3,292,478 2,153,713 3,277,824 13,972,266
Payable for forward foreign currency exchange contracts — — 1,151 —
Payable for fund shares repurchased 1,218,490 12,337,114 6,032,929 23,600
Payable upon return of securities loaned — — 10,314,054 —
Written options, at value — 866,745 — —
Payable to affiliates        
Accounting and legal services fees 7,106 12,908 20,756 17,569
Trustees’ fees 49 81 162 100
Other liabilities and accrued expenses 178,982 89,539 166,439 488,567
Total liabilities 6,615,741 15,460,100 19,813,315 14,502,102
Net assets $338,912,677 $620,427,320 $948,907,863 $848,278,438
 
Net assets consist of        
Paid-in capital $442,303,621 $288,153,282 $1,178,783,010 $638,277,921
Undistributed net investment income (loss) (4,116,832) (16) 13,707,673 6,770,981
Accumulated undistributed net realized gain (loss) on investments (175,623,042) 110,357,780 (257,621,060) 24,312,422
Net unrealized appreciation (depreciation) on investments 76,348,930 221,916,274 14,038,240 178,917,114
Net assets $338,912,677 $620,427,320 $948,907,863 $848,278,438
Investments in unaffiliated issuers, including repurchase agreements,        
at cost $259,487,270 $396,478,763 $914,875,974 $669,745,678
Investments in affiliated issuers, at cost — — $10,313,574 —
Foreign currency, at cost $2,461,292 $66,313 $517,513 $6,283,377
Premiums received on written options — $426,495 — —
Securities loaned, unaffiliated issuers, at value — — $9,891,938 —
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets — — $502,126,332 —
Shares outstanding — — 52,161,011 —
Net asset value, offering and redemption price per share — — $9.63 —
 
Class NAV        
Net assets $338,912,677 $620,427,320 $446,781,531 $848,278,438
Shares outstanding 36,086,358 30,618,799 46,839,224 59,794,988
Net asset value, offering price and redemption price per share $9.39 $20.26 $9.54 $14.19

 

The accompanying notes are an integral part of the financial statements. 249

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

International      
  Growth Stock International International Investment
Assets Fund Small Cap Fund Value Fund Quality Bond Fund
Investments in unaffiliated issuers, at value $691,779,338 $689,122,644 $2,073,194,968 $417,854,601
Investments in affiliated issuers, at value — 45,729,339 35,632,114 689,620
Repurchase agreements, at value — — — 103,700,000
Total investments, at value 691,779,338 734,851,983 2,108,827,082 522,244,221
Cash — 197,833 979,348 —
Foreign currency, at value 2,337,696 10,974,890 2,047,657 1,093,768
Cash held at broker for futures contracts — — — 840,000
Receivable for investments sold — 607,449 1,676,481 3,114,990
Receivable for delayed delivery securities sold — — — 28,019,086
Receivable for forward foreign currency exchange contracts — — — 192,402
Receivable for fund shares sold — — 162,874 —
Dividends and interest receivable 1,361,074 1,070,293 4,153,193 2,441,247
Receivable for securities lending income — 39,626 59,325 418
Receivable for futures variation margin — — — 41,132
Receivable for exchange cleared swaps — — — 3,870
Other assets 2,378 2,358 7,012 1,458
Total assets 695,480,486 747,744,432 2,117,912,972 557,992,592
 
Liabilities        
Due to custodian — — — 1,409,209
Foreign capital gains tax payable — 185,358 462,869 —
Payable for investments purchased 1,734,540 4,240,219 862,475 668,861
Payable for delayed delivery securities purchased — — — 111,137,129
Payable for forward foreign currency exchange contracts — — — 168,280
Payable for fund shares repurchased 3,629,497 570,400 5,021,755 2,576,752
Payable upon return of securities loaned — 45,730,257 35,616,753 689,633
Swap contracts, at value — — — 646,499
Payable to affiliates        
Accounting and legal services fees 14,432 14,425 43,273 9,086
Trustees’ fees 95 91 269 65
Other liabilities and accrued expenses 398,890 407,234 1,081,366 113,615
Total liabilities 5,777,454 51,147,984 43,088,760 117,419,129
Net assets $689,703,032 $696,596,448 $2,074,824,212 $440,573,463
 
Net assets consist of        
Paid-in capital $510,711,757 $578,066,233 $1,822,004,342 $429,223,985
Undistributed net investment income (loss) 7,362,616 582,204 50,693,749 2,690,783
Accumulated undistributed net realized gain (loss) on investments 8,629,803 (37,591,595) (125,236,988) (1,120,846)
Net unrealized appreciation (depreciation) on investments 162,998,856 155,539,606 327,363,109 9,779,541
Net assets $689,703,032 $696,596,448 $2,074,824,212 $440,573,463
Investments in unaffiliated issuers, including repurchase agreements,        
at cost $528,766,706 $533,595,455 $1,745,326,077 $511,084,036
Investments in affiliated issuers, at cost — $45,727,427 $35,628,584 $689,617
Foreign currency, at cost $2,337,508 $10,778,220 $2,070,659 $1,092,130
Net unamortized upfront payment on swaps — — — ($83,826)
Securities loaned, unaffiliated issuers, at value — $43,603,293 $34,369,200 $675,919
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets — $115,591,187 $281,441,497 $56,992,280
Shares outstanding — 5,938,272 15,536,906 4,533,562
Net asset value, offering and redemption price per share — $19.47 $18.11 $12.57
 
Class NAV        
Net assets $689,703,032 $581,005,261 $1,793,382,715 $383,581,183
Shares outstanding 48,409,686 29,850,043 99,257,892 30,553,533
Net asset value, offering price and redemption price per share $14.25 $19.46 $18.07 $12.55

 

The accompanying notes are an integral part of the financial statements. 250

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

  Lifestyle II Lifestyle II Lifestyle II Lifestyle II
  Aggressive Balanced Conservative Growth
Assets Portfolio Portfolio Portfolio Portfolio
Investments in unaffiliated issuers, at value $1,597,141 $5,278,722 $2,174,928 $4,636,637
Investments in affiliated funds, at value 3,248,768 3,605,496 316,386 5,561,636
Total investments, at value 4,845,909 8,884,218 2,491,314 10,198,273
Cash 38,471 142,900 66,206 83,081
Receivable for investments sold 1,839 — 20,793 635
Receivable for fund shares sold 8,804 14,876 — 11,230
Receivable due from advisor 5,950 6,071 5,874 6,136
Other assets 10,010 10,013 10,006 10,021
Total assets 4,910,983 9,058,078 2,594,193 10,309,376
 
Liabilities        
Payable for investments purchased 4,763 105,968 25,665 47,085
Payable for fund shares repurchased — — 151,483 —
Payable to affiliates        
Accounting and legal services fees 84 146 41 175
Transfer agent fees 3 3 3 3
Trustees’ fees 3 3 2 6
Other liabilities and accrued expenses 56,352 56,514 56,253 56,573
Total liabilities 61,205 162,634 233,447 103,842
Net assets $4,849,778 $8,895,444 $2,360,746 $10,205,534
 
Net assets consist of        
Paid-in capital $4,732,621 $8,783,391 $2,334,194 $10,018,946
Undistributed net investment income (loss) (213) 5,382 2,488 3,585
Accumulated undistributed net realized gain (loss) on investments (28) (454) (84) (884)
Net unrealized appreciation (depreciation) on investments 117,398 107,125 24,148 183,887
Net assets $4,849,778 $8,895,444 $2,360,746 $10,205,534
Investments in unaffiliated issuers, including repurchase agreements,        
at cost $1,557,819 $5,230,421 $2,159,050 $4,571,483
Investments in affiliated funds, at cost $3,170,692 $3,546,672 $308,116 $5,442,903
 
Net asset value per share        
The portfolios have an unlimited number of shares authorized with par value of $0.01 per share.  
Net asset value is calculated by dividing the net assets of each class of shares by the number of  
outstanding shares in the class.        
 
Class R6        
Net assets $107,666 $106,373 $104,931 $107,073
Shares outstanding 10,000 10,000 10,000 10,000
Net asset value, offering and redemption price per share $10.77 $10.64 $10.49 $10.71
 
Class 1        
Net assets $4,742,112 $8,789,071 $2,255,815 $10,098,461
Shares outstanding 440,298 825,944 214,960 942,729
Net asset value, offering and redemption price per share $10.77 $10.64 $10.49 $10.71

 

The accompanying notes are an integral part of the financial statements. 251

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

Lifestyle II      
  Moderate Mid Cap Mid Value Real Estate
Assets Portfolio Stock Fund Fund Equity Fund
Investments in unaffiliated issuers, at value $1,481,380 $1,660,044,005 $1,084,828,568 $260,067,412
Investments in affiliated issuers, at value — 154,708,322 58,023,347 —
Investments in affiliated funds, at value 572,517 — — —
Repurchase agreements, at value — 30,100,000 — —
Total investments, at value 2,053,897 1,844,852,327 1,142,851,915 260,067,412
Cash 54,670 — — —
Foreign currency, at value — 26 148,801 —
Receivable for investments sold — 10,060,459 4,422,243 1,603,035
Receivable for fund shares sold 110,746 — — —
Dividends and interest receivable — 710,670 1,851,588 203,979
Receivable for securities lending income — 38,047 8,264 —
Receivable due from advisor 5,843 — — —
Other assets 10,007 5,367 3,507 863
Total assets 2,235,163 1,855,666,896 1,149,286,318 261,875,289
 
Liabilities        
Due to custodian — 386,958 — —
Payable for investments purchased 43,050 5,109,097 1,199,279 2,102,381
Payable for fund shares repurchased — 6,826,866 4,752,021 188,379
Payable upon return of securities loaned — 154,700,912 58,030,196 —
Payable to affiliates        
Accounting and legal services fees 36 34,954 22,503 5,359
Transfer agent fees 3 — — —
Trustees’ fees — 203 125 34
Other liabilities and accrued expenses 56,235 154,603 118,697 57,062
Total liabilities 99,324 167,213,593 64,122,821 2,353,215
Net assets $2,135,839 $1,688,453,303 $1,085,163,497 $259,522,074
 
Net assets consist of        
Paid-in capital $2,108,736 $1,231,542,036 $729,397,949 $152,286,664
Undistributed net investment income (loss) 3,467 — 3,637,253 406,213
Accumulated undistributed net realized gain (loss) on investments (364) 171,681,284 76,808,689 (29,710,040)
Net unrealized appreciation (depreciation) on investments 24,000 285,229,983 275,319,606 136,539,237
Net assets $2,135,839 $1,688,453,303 $1,085,163,497 $259,522,074
Investments in unaffiliated issuers, including repurchase agreements,    
at cost $1,468,734 $1,404,922,788 $809,510,709 $123,528,175
Investments in affiliated issuers, at cost — $154,699,556 $58,020,922 —
Investments in affiliated funds, at cost $561,163 — — —
Foreign currency, at cost — $26 $149,509 —
Securities loaned, unaffiliated issuers, at value — $151,524,604 $56,781,163 —
 
Net asset value per share        
The portfolios have an unlimited number of shares authorized with par value of $0.01 per share.  
Net asset value is calculated by dividing the net assets of each class of shares by the number of  
outstanding shares in the class.        
 
Class R6        
Net assets $105,450 — — —
Shares outstanding 10,000 — — —
Net asset value, offering and redemption price per share $10.55 — — —
 
Class 1        
Net assets $2,030,389 $360,874,318 — —
Shares outstanding 192,582 15,986,972 — —
Net asset value, offering and redemption price per share $10.54 $22.57 — —
 
Class NAV        
Net assets — $1,327,578,985 $1,085,163,497 $259,522,074
Shares outstanding — 58,506,313 59,630,507 22,511,921
Net asset value, offering price and redemption price per share — $22.69 $18.20 $11.53

 

The accompanying notes are an integral part of the financial statements. 252

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

        Short Term
  Real Estate Real Return Science & Government
Assets Securities Fund Bond Fund Technology Fund Income Fund
Investments in unaffiliated issuers, at value $560,079,413 $650,666,368 $1,022,881,894 $227,172,001
Investments in affiliated issuers, at value — — 86,002,821 —
Repurchase agreements, at value 7,412,000 — 2,146,000 3,632,000
Total investments, at value 567,491,413 650,666,368 1,111,030,715 230,804,001
Cash 765 797,248 143 62,439
Foreign currency, at value — 1,021,594 9,195,342 —
Cash held at broker for futures contracts — 54,000 — 256,500
Receivable for investments sold 8,993,354 — 9,092,533 —
Receivable for forward foreign currency exchange contracts — 2,550,675 — —
Receivable for fund shares sold — — — 19,190
Dividends and interest receivable 171,903 1,958,192 623,105 1,388,814
Receivable for securities lending income — — 46,393 —
Receivable for collateral — 280,000 — —
Swap contracts, at value — 358,500 — —
Receivable for exchange cleared swaps — 243,555 — —
Other assets 2,025 103,946 3,628 771
Total assets 576,659,460 658,034,078 1,129,991,859 232,531,715
 
Liabilities        
Payable for collateral held by fund — 1,621,000 — —
Payable for investments purchased 8,876,342 2,299 11,496,650 —
Payable for forward foreign currency exchange contracts — 728,640 — —
Payable for sale-buyback transactions — 91,667,025 — —
Payable for open reverse repurchase agreement — 1,882,750 — —
Payable for fund shares repurchased 996,764 213,451 6,672,205 —
Payable upon return of securities loaned — — 86,003,944 —
Written options, at value — 179,785 — —
Swap contracts, at value — 2,676,456 — —
Payable for futures variation margin — 254,175 — 5,938
Payable to affiliates        
Accounting and legal services fees 11,634 11,525 21,186 4,786
Trustees’ fees 76 81 123 33
Other liabilities and accrued expenses 74,995 126,538 107,839 82,043
Total liabilities 9,959,811 99,363,725 104,301,947 92,800
Net assets $566,699,649 $558,670,353 $1,025,689,912 $232,438,915
 
Net assets consist of        
Paid-in capital $421,431,179 $570,768,095 $723,044,180 $238,118,176
Undistributed net investment income (loss) 2,916,513 6,082,222 (116,342) 1,325,379
Accumulated undistributed net realized gain (loss) on investments 29,159,607 (12,413,947) 110,646,027 (7,089,835)
Net unrealized appreciation (depreciation) on investments 113,192,350 (5,766,017) 192,116,047 85,195
Net assets $566,699,649 $558,670,353 $1,025,689,912 $232,438,915
Investments in unaffiliated issuers, including repurchase agreements,  
at cost $454,299,063 $653,468,638 $832,950,009 $230,667,964
Investments in affiliated issuers, at cost — — $86,000,020 —
Foreign currency, at cost — $1,029,657 $9,159,367 —
Premiums received on written options — $509,022 — —
Net unamortized upfront payment on swaps — ($411,028) — —
Securities loaned, unaffiliated issuers, at value — — $84,888,373 —
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets $566,699,649 $102,788,174 — —
Shares outstanding 38,596,948 8,590,774 — —
Net asset value, offering and redemption price per share $14.68 $11.96 — —
 
Class NAV        
Net assets — $455,882,179 $1,025,689,912 $232,438,915
Shares outstanding — 38,566,465 70,544,471 23,742,689
Net asset value, offering price and redemption price per share — $11.82 $14.54 $9.79

 

The accompanying notes are an integral part of the financial statements. 253

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

    Small Cap    
  Small Cap Opportunities Small Company Small Company
Assets Growth Fund Fund Growth Fund Value Fund
Investments in unaffiliated issuers, at value $234,525,364 $214,018,965 $210,857,199 $387,456,638
Investments in affiliated issuers, at value 24,583,751 14,947,617 19,061,985 22,633,360
Repurchase agreements, at value 6,900,000 — — —
Total investments, at value 266,009,115 228,966,582 229,919,184 410,089,998
Cash 6,882 59,923 — —
Receivable for investments sold 421,390 613,720 557,990 8,190,416
Receivable for fund shares sold — 4,500,000 — —
Dividends and interest receivable 35,373 117,987 125,963 356,019
Receivable for securities lending income 6,337 3,956 8,065 16,620
Other assets 777 699 614 1,378
Total assets 266,479,874 234,262,867 230,611,816 418,654,431
 
Liabilities        
Payable for investments purchased 920,761 4,566,045 6,465,153 97,470
Payable for fund shares repurchased 433,362 297,521 1,128,126 4,775,157
Payable upon return of securities loaned 24,583,463 14,951,115 19,062,786 22,628,967
Payable to affiliates        
Accounting and legal services fees 4,929 4,221 4,146 8,512
Trustees’ fees 28 28 23 58
Other liabilities and accrued expenses 58,549 26,972 51,077 65,606
Total liabilities 26,001,092 19,845,902 26,711,311 27,575,770
Net assets $240,478,782 $214,416,965 $203,900,505 $391,078,661
 
Net assets consist of        
Paid-in capital $169,107,112 $131,229,902 $126,256,377 $209,842,080
Undistributed net investment income (loss) — (18,899) — 980,870
Accumulated undistributed net realized gain (loss) on investments 22,745,981 19,007,609 15,637,111 7,042,230
Net unrealized appreciation (depreciation) on investments 48,625,689 64,198,353 62,007,017 173,213,481
Net assets $240,478,782 $214,416,965 $203,900,505 $391,078,661
Investments in unaffiliated issuers, including repurchase agreements,        
at cost $192,800,643 $149,823,134 $148,850,750 $214,254,682
Investments in affiliated issuers, at cost $24,582,783 $14,945,095 $19,061,417 $22,621,835
Securities loaned, unaffiliated issuers, at value $24,063,478 $14,645,184 $18,649,976 $22,107,825
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets — $75,291,398 — $110,246,586
Shares outstanding — 2,441,028 — 2,955,728
Net asset value, offering and redemption price per share — $30.84 — $37.30
 
Class NAV        
Net assets $240,478,782 $139,125,567 $203,900,505 $280,832,075
Shares outstanding 21,739,754 4,531,107 9,635,323 7,532,792
Net asset value, offering price and redemption price per share $11.06 $30.70 $21.16 $37.28

 

The accompanying notes are an integral part of the financial statements. 254

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

  Spectrum Strategic Equity Total Return U.S. High Yield
Assets Income Fund Allocation Fund Fund Bond Fund
Investments in unaffiliated issuers, at value $967,359,036 $5,659,319,265 $2,548,064,422 $481,056,318
Investments in affiliated issuers, at value 4,607,945 113,748,357 — 4,650,196
Repurchase agreements, at value 1,984,000 247,544,000 135,300,000 596,206
Total investments, at value 973,950,981 6,020,611,622 2,683,364,422 486,302,720
Cash 93,649 92,890 3,368,028 —
Foreign currency, at value 724,994 4,630,357 1,105,065 —
Cash held at broker for futures contracts — 22,400,000 52,000 —
Cash collateral for swap contracts 15,775 — — —
Receivable for investments sold 305,409 6,685,562 22,884,001 1,647,138
Receivable for delayed delivery securities sold 10,302,283 — 98,638,401 —
Receivable for forward foreign currency exchange contracts 1,216,777 — 14,417,227 —
Receivable for fund shares sold — — 78,326 345,075
Dividends and interest receivable 8,659,630 12,602,713 15,602,769 8,000,318
Receivable for securities lending income 2,532 111,742 — 2,214
Swap contracts, at value 4,474 — 3,472,340 —
Receivable for futures variation margin 3,151 429,632 4,487,763 —
Receivable for exchange cleared swaps — — 471,374 —
Other assets 34,265 19,593 167,338 1,767
Total assets 995,313,920 6,067,584,111 2,848,109,054 496,299,232
 
Liabilities        
Due to custodian — — — 544,637
Payable for collateral held by fund — — 16,595,024 —
Payable for investments purchased 347,598 6,819,031 20,342,144 596,206
Payable for delayed delivery securities purchased 18,168,250 — 289,355,977 —
Payable for forward foreign currency exchange contracts 848,635 — 4,623,626 —
Payable for fund shares repurchased 4,642,786 4,043,475 1,581,788 3,750,000
Payable upon return of securities loaned 4,608,293 113,768,576 — 4,650,503
Written options, at value — — 1,593,180 —
Payable for sale commitments outstanding, at value 1,016,437 — 15,571,170 —
Swap contracts, at value 5,203 — 1,306,951 —
Payable to affiliates        
Accounting and legal services fees 20,499 122,457 51,726 11,014
Trustees’ fees 153 692 369 103
Other liabilities and accrued expenses 180,069 638,668 404,403 99,788
Total liabilities 29,837,923 125,392,899 351,426,358 9,652,251
Net assets $965,475,997 $5,942,191,212 $2,496,682,696 $486,646,981
 
Net assets consist of        
Paid-in capital $890,884,903 $4,453,632,961 $2,464,710,780 $458,409,291
Undistributed net investment income (loss) 7,407,106 69,003,246 18,063,678 6,376,033
Accumulated undistributed net realized gain (loss) on investments 10,981,655 109,816,186 (25,367,830) 12,409,466
Net unrealized appreciation (depreciation) on investments 56,202,333 1,309,738,819 39,276,068 9,452,191
Net assets $965,475,997 $5,942,191,212 $2,496,682,696 $486,646,981
Investments in unaffiliated issuers, including repurchase agreements,    
at cost $913,525,935 $4,601,849,601 $2,655,792,942 $472,200,304
Investments in affiliated issuers, at cost $4,607,951 $113,744,661 — $4,650,225
Foreign currency, at cost $724,241 $4,647,430 $1,114,350 —
Proceeds received on sale commitments outstanding $1,016,437 — $15,525,000 —
Premiums received on written options — — $3,088,609 —
Net unamortized upfront payment on swaps ($4,665) — ($1,289,086) —
Securities loaned, unaffiliated issuers, at value $4,508,118 $111,240,650 — $4,559,204
 
Net asset value per share        
The funds have an unlimited number of shares authorized with no par value. Net asset value is  
calculated by dividing the net assets of each class of shares by the number of outstanding  
shares in the class.        
 
Class 1        
Net assets — — $318,416,185 $95,186,103
Shares outstanding — — 22,737,396 7,560,982
Net asset value, offering and redemption price per share — — $14.00 $12.59
 
Class NAV        
Net assets $965,475,997 $5,942,191,212 $2,178,266,511 $391,460,878
Shares outstanding 85,848,264 425,522,019 156,044,690 31,118,608
Net asset value, offering price and redemption price per share $11.25 $13.96 $13.96 $12.58

 

The accompanying notes are an integral part of the financial statements. 255

 


John Hancock Funds II

Statements of assets and liabilities — August 31, 2014

Assets Value Fund
Investments in unaffiliated issuers, at value $424,167,229
Total investments, at value 424,167,229
Foreign currency, at value 171,732
Receivable for investments sold 1,156,227
Dividends and interest receivable 252,609
Other assets 1,381
Total assets 425,749,178
 
Liabilities  
Payable for investments purchased 589,902
Payable for fund shares repurchased 2,994,749
Payable to affiliates  
Accounting and legal services fees 8,853
Trustees’ fees 43
Other liabilities and accrued expenses 68,089
Total liabilities 3,661,636
Net assets $422,087,542
 
Net assets consist of  
Paid-in capital $304,054,944
Undistributed net investment income (loss) 1,151,630
Accumulated undistributed net realized gain (loss) on investments 20,927,152
Net unrealized appreciation (depreciation) on investments 95,953,816
Net assets $422,087,542
Investments in unaffiliated issuers, including repurchase agreements, at cost $328,207,708
Foreign currency, at cost $177,437
 
Net asset value per share  
The funds have an unlimited number of shares authorized with no par value. Net asset value is calculated by dividing the net assets of each
class of shares by the number of outstanding shares in the class.
 
Class NAV  
Net assets $422,087,542
Shares outstanding 32,683,700
Net asset value, offering price and redemption price per share $12.91

 

The accompanying notes are an integral part of the financial statements. 256

 


John Hancock Funds II

Statements of operations — August 31, 2014

      Alpha Asia Pacific
  Active Bond All Cap Opportunities Total Return
Investment income Fund Core Fund Fund Bond Fund
Dividends $593,380 $10,837,150 $24,014,551 —
Interest 72,386,402 7,243 30,235 $16,814,010
Securities lending 18,174 124,054 1,290,325 —
Less foreign taxes withheld — (3,626) (531,490) (332,557)
Total investment income 72,997,956 10,964,821 24,803,621 16,481,453
 
Expenses        
Investment management fees 10,483,333 5,091,251 16,306,773 3,054,179
Class 1 distribution and service fees 40,951 — — —
Accounting and legal services fees 217,322 81,796 209,902 52,307
Professional fees 83,682 46,519 68,590 82,046
Custodian fees 231,074 84,434 380,158 478,349
Trustees’ fees 23,216 8,736 22,706 5,816
Registration and filing fees 6,463 11,304 22,543 23,222
Expense recapture — — — 12,120
Other 49,421 13,483 24,301 8,501
Total expenses before reductions 11,135,462 5,337,523 17,034,973 3,716,540
Net expense reductions (111,611) (42,253) (614,139) (48,623)
Total expenses 11,023,851 5,295,270 16,420,834 3,667,917
Net investment income (loss) 61,974,105 5,669,551 8,382,787 12,813,536
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 23,633,001 95,008,626 240,682,7241 (10,056,327)
Investments in affiliated issuers (463) 6,451 (3,794) —
Futures contracts (683,203) 1,663,938 — (875,395)
  22,949,335 96,679,015 240,678,930 (10,931,722)
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 55,815,660 24,828,678 68,810,2272 31,479,461
Investments in affiliated issuers 254 (7,189) (4,036) —
Futures contracts (127,788) 281,303 — (196,294)
  55,688,126 25,102,792 68,806,191 31,283,167
Net realized and unrealized gain (loss) 78,637,461 121,781,807 309,485,121 20,351,445
 
Increase (decrease) in net assets from operations $140,611,566 $127,451,358 $317,867,908 $33,164,981

 

1 Net of foreign taxes of $72,087.


2 Net of $17,119 increase in accrued foreign withholding taxes.

 

The accompanying notes are an integral part of the financial statements. 257

 


John Hancock Funds II

Statements of operations — August 31, 2014

    Capital Capital  
  Blue Chip Appreciation Appreciation Core Bond
Investment income Growth Fund Fund Value Fund Fund
Dividends $18,774,844 $16,518,752 $19,390,603 —
Interest 5,930 — 19,066,875 $12,181,248
Securities lending 155,874 343,811 26,547 285
Less foreign taxes withheld (11,030) (355,468) (76,135) —
Total investment income 18,925,618 16,507,095 38,407,890 12,181,533
 
Expenses        
Investment management fees 19,967,119 15,202,937 15,123,806 3,167,718
Class 1 distribution and service fees 414,765 284,069 — 42,532
Accounting and legal services fees 317,947 270,473 231,759 65,838
Professional fees 69,672 69,544 82,563 73,728
Custodian fees 332,858 317,812 260,838 70,148
Trustees’ fees 34,480 29,243 24,638 7,318
Registration and filing fees 9,092 10,877 14,666 8,943
Other 37,394 37,414 27,744 11,328
Total expenses before reductions 21,183,327 16,222,369 15,766,014 3,447,553
Net expense reductions (941,741) (139,470) (738,673) (34,284)
Total expenses 20,241,586 16,082,899 15,027,341 3,413,269
Net investment income (loss) (1,315,968) 424,196 23,380,549 8,768,264
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 289,455,690 216,133,107 204,674,541 5,421,271
Investments in affiliated issuers 641 (690) 192 —
Written options — — 825,939 —
  289,456,331 216,132,417 205,500,672 5,421,271
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 330,420,074 323,131,051 71,974,720 18,355,615
Investments in affiliated issuers (6,490) (5,033) (214) (2)
Written options — — 1,023,795 —
  330,413,584 323,126,018 72,998,301 18,355,613
Net realized and unrealized gain (loss) 619,869,915 539,258,435 278,498,973 23,776,884
 
Increase (decrease) in net assets from operations $618,553,947 $539,682,631 $301,879,522 $32,545,148

 

The accompanying notes are an integral part of the financial statements. 258

 


John Hancock Funds II

Statements of operations — August 31, 2014

    Fundamental    
  Equity-Income Global Franchise Global Global
Investment income Fund Fund Bond Fund Equity Fund
Dividends $46,298,125 $8,721,394 $5,459 $14,979,784
Interest 67,704 126 16,657,779 107
Securities lending 486,663 — — 141,098
Less foreign taxes withheld (437,146) (439,459) — (474,568)
Total investment income 46,415,346 8,282,061 16,663,238 14,646,421
 
Expenses        
Investment management fees 14,026,336 3,447,848 4,141,646 3,276,354
Class A distribution and service fees — 388 — 332
Class 1 distribution and service fees 183,066 — 35,063 —
Transfer agent fees — 823 — 2,695
Accounting and legal services fees 224,519 53,588 72,397 49,066
Professional fees 60,320 54,697 95,174 65,039
Printing and postage — 124 — —
Custodian fees 233,963 299,532 383,229 239,185
Trustees’ fees 23,922 5,798 7,892 5,250
Registration and filing fees 21,769 15,821 9,061 60,325
Expense recapture — — — 2
Interest expense — — 46,419 —
Other 36,031 12,382 19,866 9,757
Total expenses before reductions 14,809,926 3,891,001 4,810,747 3,708,005
Net expense reductions (662,376) (27,567) (37,826) (25,595)
Total expenses 14,147,550 3,863,434 4,772,921 3,682,410
Net investment income (loss) 32,267,796 4,418,627 11,890,317 10,964,011
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 107,573,765 21,527,221 (4,852,156) 22,882,749
Investments in affiliated issuers (4,803) — — 391
Futures contracts — — (540,514) —
Written options — — 1,701,645 —
Swap contracts — — 355,896 —
  107,568,962 21,527,221 (3,335,129) 22,883,140
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 171,751,491 36,630,951 23,961,399 31,620,799
Investments in affiliated issuers 1,234 — — 53
Futures contracts — — 1,479,526 —
Written options — — 1,997,025 —
Swap contracts — — 2,978,083 —
  171,752,725 36,630,951 30,416,033 31,620,852
Net realized and unrealized gain (loss) 279,321,687 58,158,172 27,080,904 54,503,992
 
Increase (decrease) in net assets from operations $311,589,483 $62,576,799 $38,971,221 $65,468,003

 

The accompanying notes are an integral part of the financial statements. 259

 


John Hancock Funds II

Statements of operations — August 31, 2014

        International
        Growth
  Global Real Health Sciences High Yield Opportunities
Investment income Estate Fund Fund Fund Fund
Dividends $9,882,180 $3,180,164 $1,226,212 $16,408,750
Interest 1,525 11,619 78,206,542 7,326
Securities lending 59,041 — 109,297 —
Less foreign taxes withheld (417,667) (79,752) — (1,409,271)
Total investment income 9,525,079 3,112,031 79,542,051 15,006,805
 
Expenses        
Investment management fees 2,929,462 5,791,437 7,376,879 6,396,528
Class 1 distribution and service fees — — 242,581 —
Accounting and legal services fees 40,336 72,504 136,825 97,030
Professional fees 66,195 63,043 86,228 77,474
Custodian fees 252,037 102,083 193,425 860,969
Trustees’ fees 4,371 7,980 15,108 10,439
Registration and filing fees 8,880 8,727 16,864 20,553
Other 11,313 13,117 24,026 14,737
Total expenses before reductions 3,312,594 6,058,891 8,091,936 7,477,730
Net expense reductions (20,853) (329,193) (70,431) (50,297)
Total expenses 3,291,741 5,729,698 8,021,505 7,427,433
Net investment income (loss) 6,233,338 (2,617,667) 71,520,546 7,579,372
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 26,908,158 140,928,0871 28,252,591 27,000,812
Investments in affiliated issuers 1,748 — (1,002) —
Futures contracts — — (1,752,110) —
Written options — 2,017,181 — —
Swap contracts — — (1,464,631) —
  26,909,906 142,945,268 25,034,848 27,000,812
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 26,454,948 48,651,4632 15,545,644 83,468,042
Investments in affiliated issuers (2,097) — 60 —
Futures contracts — — (92,732) —
Written options — (1,437,566) — —
Swap contracts — — (349,385) —
  26,452,851 47,213,897 15,103,587 83,468,042
Net realized and unrealized gain (loss) 53,362,757 190,159,165 40,138,435 110,468,854
 
Increase (decrease) in net assets from operations $59,596,095 $187,541,498 $111,658,981 $118,048,226

 

1 Net of foreign taxes of $90,550.


2 Net of $66,070 decrease in accrued foreign withholding taxes.

 

The accompanying notes are an integral part of the financial statements. 260

 


John Hancock Funds II

Statements of operations — August 31, 2014

  International     Investment
  Growth Stock International International Quality Bond
Investment income Fund Small Cap Fund Value Fund Fund
Dividends $19,162,899 $14,477,360 $78,801,079 $73,828
Interest 33,862 14,571 37,655 14,199,641
Securities lending — 680,043 1,944,848 1,429
Less foreign taxes withheld (1,248,807) (1,590,729) (5,790,368) (855)
Total investment income 17,947,954 13,581,245 74,993,214 14,274,043
 
Expenses        
Investment management fees 5,450,903 6,535,658 16,154,014 2,573,953
Class 1 distribution and service fees — 59,013 139,960 29,178
Accounting and legal services fees 85,595 85,183 250,306 54,153
Professional fees 61,479 67,525 111,649 100,429
Custodian fees 738,999 775,887 1,957,282 72,400
Trustees’ fees 9,406 9,276 27,258 5,956
Registration and filing fees 7,220 7,174 12,075 9,891
Other 13,634 13,563 29,204 9,752
Total expenses before reductions 6,367,236 7,553,279 18,681,748 2,855,712
Net expense reductions (44,111) (43,887) (129,388) (28,217)
Total expenses 6,323,125 7,509,392 18,552,360 2,827,495
Net investment income (loss) 11,624,829 6,071,853 56,440,854 11,446,548
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 26,705,667 31,201,747 77,079,2782 10,736,922
Investments in affiliated issuers — 272 3,567 (19)
Futures contracts — — — (1,634,248)
Swap contracts — — — (1,455,413)
  26,705,667 31,202,019 77,082,845 7,647,242
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 80,946,083 68,405,2001 163,200,9663 9,085,645
Investments in affiliated issuers — (472) (497) (2)
Futures contracts — — — 15,953
Swap contracts — — — 83,855
  80,946,083 68,404,728 163,200,469 9,185,451
Net realized and unrealized gain (loss) 107,651,750 99,606,747 240,283,314 16,832,693
 
Increase (decrease) in net assets from operations $119,276,579 $105,678,600 $296,724,168 $28,279,241

 

1 Net of $185,358 increase in accrued foreign withholding taxes.


2 Net of foreign taxes of $416,599.


3 Net of $462,869 increase in accrued foreign withholding taxes.

 

The accompanying notes are an integral part of the financial statements. 261

 


John Hancock Funds II

Statements of operations — August 31, 2014

  Lifestyle II1 Lifestyle II1 Lifestyle II1 Lifestyle II1
  Aggressive Balanced Conservative Growth
Investment income Portfolio Portfolio Portfolio Portfolio
Dividends $1,900 $12,657 $6,708 $8,401
Total investment income 1,900 12,657 6,708 8,401
 
Expenses        
Investment management fees 1,149 3,355 1,423 2,971
Distribution and service fees 286 521 131 574
Transfer agent fees 13 13 13 13
Accounting and legal services fees 104 169 57 203
State registration fees 561 561 561 561
Professional fees 31,633 31,643 31,626 31,647
Printing and postage 211 211 211 211
Custodian fees 7,375 7,375 7,375 7,375
Trustees’ fees 5 5 3 8
Registration and filing fees 17,286 17,440 17,195 17,493
Other 3,205 3,205 3,205 3,204
Total expenses before reductions 61,828 64,498 61,800 64,260
Net expense reductions (59,682) (59,443) (59,846) (59,431)
Total expenses 2,146 5,055 1,954 4,829
Net investment income (loss) (246) 7,602 4,754 3,572
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions (11) (462) (224) (1,392)
Investments in affiliated funds 2 4 130 506
Capital gain distributions received from unaffiliated underlying funds — 4 10 2
  (9) (454) (84) (884)
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 39,322 48,301 15,878 65,154
Investments in affiliated fund 78,076 58,824 8,270 118,733
  117,398 107,125 24,148 183,887
Net realized and unrealized gain (loss) 117,389 106,671 24,064 183,003
 
Increase (decrease) in net assets from operations $117,143 $114,273 $28,818 $186,575

 

1 Period from 12-30-13 (commencement of operations) to 8-31-14.

 

The accompanying notes are an integral part of the financial statements. 262

 


John Hancock Funds II

Statements of operations — August 31, 2014

Lifestyle II1      
  Moderate Mid Cap Mid Value Real Estate
Investment income Portfolio Stock Fund Fund Equity Fund
Dividends $7,418 $7,270,330 $17,307,181 $5,169,158
Interest — 31,305 192,020 117,831
Securities lending — 557,531 168,857 —
Less foreign taxes withheld — (55,442) (86,376) —
Total investment income 7,418 7,803,724 17,581,682 5,286,989
 
Expenses        
Investment management fees 1,447 13,437,103 10,063,352 2,148,001
Class 1 distribution and service fees — 179,161 — —
Distribution and service fees 162 — — —
Transfer agent fees 13 — — —
Accounting and legal services fees 53 201,127 125,156 30,076
State registration fees 561 — — —
Professional fees 31,627 58,262 55,781 43,043
Printing and postage 211 — — —
Custodian fees 7,375 229,938 144,874 35,591
Trustees’ fees 2 21,645 13,408 3,262
Registration and filing fees 17,176 24,279 17,157 8,397
Other 3,204 24,169 17,208 8,418
Total expenses before reductions 61,831 14,175,684 10,436,936 2,276,788
Net expense reductions (59,761) (103,348) (574,092) (111,657)
Total expenses 2,070 14,072,336 9,862,844 2,165,131
Net investment income (loss) 5,348 (6,268,612) 7,718,838 3,121,858
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions (245) 214,289,750 87,240,326 10,147,877
Investments in affiliated issuers — (9,558) (2,306) —
Investments in affiliated funds (56) — — —
Capital gain distributions received from unaffiliated underlying funds 7 — — —
  (294) 214,280,192 87,238,020 10,147,877
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 12,646 73,876,532 131,767,236 41,114,698
Investments in affiliated issuers 11,354 (3,730) 785 —
  24,000 73,872,802 131,768,021 41,114,698
Net realized and unrealized gain (loss) 23,706 288,152,994 219,006,041 51,262,575
 
Increase (decrease) in net assets from operations $29,054 $281,884,382 $226,724,879 $54,384,433

 

1 Period from 12-30-13 (commencement of operations) to 8-31-14.

 

The accompanying notes are an integral part of the financial statements. 263

 


John Hancock Funds II

Statements of operations — August 31, 2014

        Short Term
  Real Estate Real Return Science & Government
Investment income Securities Fund Bond Fund Technology Fund Income Fund
Dividends $13,718,227 — $7,617,950 —
Interest — $16,479,482 17,536 $2,992,612
Securities lending — — 633,204 —
Less foreign taxes withheld — (1,246) (153,927) —
Total investment income 13,718,227 16,478,236 8,114,763 2,992,612
 
Expenses        
Investment management fees 3,590,657 3,839,497 9,857,777 1,292,023
Class 1 distribution and service fees 256,475 53,527 — —
Accounting and legal services fees 62,799 67,055 120,431 28,363
Professional fees 46,314 94,891 47,905 69,556
Custodian fees 67,540 102,079 158,277 32,586
Trustees’ fees 6,647 7,385 13,076 3,160
Registration and filing fees 8,791 9,061 1,437 8,300
Expense recapture — — — 5,309
Interest expense — 34,905 — —
Other 13,013 12,901 15,974 6,715
Total expenses before reductions 4,052,236 4,221,301 10,214,877 1,446,012
Net expense reductions (32,864) (35,048) (408,888) (14,793)
Total expenses 4,019,372 4,186,253 9,805,989 1,431,219
Net investment income (loss) 9,698,855 12,291,983 (1,691,226) 1,561,393
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 35,629,582 (3,449,762) 131,119,429 302,438
Investments in affiliated issuers — — (3,482) —
Futures contracts — 627,860 — (440,575)
Written options — 1,579,074 — —
Swap contracts — (898,356) — —
  35,629,582 (2,141,184) 131,115,947 (138,137)
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 66,026,854 26,711,957 139,361,113 1,818,904
Investments in affiliated issuers — — 263 —
Futures contracts — 462,082 — (74,055)
Written options — 745,601 — —
Swap contracts — (2,266,330) — —
  66,026,854 25,653,310 139,361,376 1,744,849
Net realized and unrealized gain (loss) 101,656,436 23,512,126 270,477,323 1,606,712
 
Increase (decrease) in net assets from operations $111,355,291 $35,804,109 $268,786,097 $3,168,105

 

The accompanying notes are an integral part of the financial statements. 264

 


John Hancock Funds II

Statements of operations — August 31, 2014

    Small Cap    
  Small Cap Opportunities Small Company Small Company
Investment income Growth Fund Fund Growth Fund Value Fund
Dividends $519,901 $1,979,694 $1,615,983 $6,022,526
Interest 2,812 1,553 3,226 4,597
Securities lending 103,632 52,687 103,186 144,485
Less foreign taxes withheld (1,235) (1,599) — (2,507)
Total investment income 625,110 2,032,335 1,722,395 6,169,101
 
Expenses        
Investment management fees 2,379,105 1,975,963 1,883,098 4,275,517
Class 1 distribution and service fees — 38,266 — 60,569
Accounting and legal services fees 28,200 24,621 23,551 51,490
Professional fees 45,589 60,615 40,384 43,368
Custodian fees 32,166 35,108 27,212 57,307
Trustees’ fees 2,994 2,728 2,476 5,697
Registration and filing fees 12,952 9,315 12,229 9,383
Other 8,101 8,916 7,867 10,876
Total expenses before reductions 2,509,107 2,155,532 1,996,817 4,514,207
Net expense reductions (14,440) (188,664) (12,045) (248,062)
Total expenses 2,494,667 1,966,868 1,984,772 4,266,145
Net investment income (loss) (1,869,557) 65,467 (262,377) 1,902,956
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 27,395,987 25,698,896 18,050,132 20,977,182
Investments in affiliated issuers (8) 2,748 (425) 9,315
  27,395,979 25,701,644 18,049,707 20,986,497
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 15,409,979 7,495,047 18,647,040 29,523,925
Investments in affiliated issuers (277) (3,963) 91 (10,477)
  15,409,702 7,491,084 18,647,131 29,513,448
Net realized and unrealized gain (loss) 42,805,681 33,192,728 36,696,838 50,499,945
 
Increase (decrease) in net assets from operations $40,936,124 $33,258,195 $36,434,461 $52,402,901

 

The accompanying notes are an integral part of the financial statements. 265

 


John Hancock Funds II

Statements of operations — August 31, 2014

  Spectrum Strategic Equity Total Return U.S. High Yield
Investment income Income Fund Allocation Fund Fund Bond Fund
Dividends $3,799,112 $123,567,108 $2,752,127 $117,983
Interest 38,012,457 4,247 54,873,659 41,508,697
Securities lending 31,100 1,837,313 — 49,846
Less foreign taxes withheld (41,991) (3,733,372) — —
Total investment income 41,800,678 121,675,296 57,625,786 41,676,526
 
Expenses        
Investment management fees 7,671,818 33,309,745 17,375,518 4,747,536
Class 1 distribution and service fees — — 166,254 46,250
Accounting and legal services fees 130,153 655,133 317,243 79,578
Professional fees 85,513 126,887 122,477 61,375
Custodian fees 333,483 570,158 474,237 88,436
Trustees’ fees 14,221 69,646 34,040 9,066
Registration and filing fees 8,563 30,567 5,985 8,186
Other 19,399 64,379 102,045 13,526
Total expenses before reductions 8,263,150 34,826,515 18,597,799 5,053,953
Net expense reductions (337,842) (7,283,872) (674,511) (41,301)
Total expenses 7,925,308 27,542,643 17,923,288 5,012,652
Net investment income (loss) 33,875,370 94,132,653 39,702,498 36,663,874
 
Realized and unrealized gain (loss)        
Net realized gain (loss) on        
Investments in unaffiliated issuers and foreign currency transactions 24,048,142 109,511,621 11,134,505 19,784,052
Investments in affiliated issuers 17 10,017 — (220)
Futures contracts (1,387,813) 47,466,676 18,644,600 —
Written options — — 4,106,291 —
Swap contracts (2,610) — (4,907,153) —
  22,657,736 156,988,314 28,978,243 19,783,832
 
Change in net unrealized appreciation (depreciation) of      
Investments in unaffiliated issuers and translation of assets and      
liabilities in foreign currencies 37,324,562 755,021,204 74,306,739 4,767,113
Investments in affiliated issuers (78) (9,235) — (29)
Futures contracts 164,299 3,701,138 7,216,107 —
Written options — — 5,359,776 —
Swap contracts 4,513 — (18,079,582) —
  37,493,296 758,713,107 68,803,040 4,767,084
Net realized and unrealized gain (loss) 60,151,032 915,701,421 97,781,283 24,550,916
 
Increase (decrease) in net assets from operations $94,026,402 $1,009,834,074 $137,483,781 $61,214,790

 

The accompanying notes are an integral part of the financial statements. 266

 


John Hancock Funds II

Statements of operations — August 31, 2014

Investment income Value Fund
Dividends $4,961,873
Interest 13,243
Total investment income 4,975,116
 
Expenses  
Investment management fees 2,712,474
Accounting and legal services fees 48,807
Professional fees 38,844
Custodian fees 55,150
Trustees’ fees 5,140
Registration and filing fees 11,750
Other 9,101
Total expenses before reductions 2,881,266
Net expense reductions (25,155)
Total expenses 2,856,111
Net investment income (loss) 2,119,005
 
Realized and unrealized gain (loss)  
Net realized gain (loss) on  
Investments in unaffiliated issuers and foreign currency transactions 26,042,071
  26,042,071
 
Change in net unrealized appreciation (depreciation) of  
Investments in unaffiliated issuers and translation of assets and liabilities in foreign currencies 52,561,208
  52,561,208
Net realized and unrealized gain (loss) 78,603,279
 
Increase (decrease) in net assets from operations $80,722,284

 

The accompanying notes are an integral part of the financial statements. 267

 


John Hancock Funds II

Statements of changes in net assets

  Active Bond Fund All Cap Core Fund Alpha Opportunities Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $61,974,105 $55,656,411 $5,669,551 $7,651,892 $8,382,787 $9,760,685
Net realized gain (loss) 22,949,335 6,137,501 96,679,015 116,089,202 240,678,930 184,533,835
Change in net unrealized appreciation (depreciation) 55,688,126 (59,521,975) 25,102,792 (13,518,207) 68,806,191 98,548,420
Increase (decrease) in net assets resulting from            
operations 140,611,566 2,271,937 127,451,358 110,222,887 317,867,908 292,842,940
Distributions to shareholders            
From net investment income            
Class 1 (2,953,576) (2,644,798) — — — —
Class NAV (62,936,757) (59,729,979) (7,493,145) (7,502,202) (8,264,762) (11,185,749)
From net realized gain            
Class 1 (374,957) (301,392) — — — —
Class NAV (8,448,658) (6,734,971) — — (191,554,720) (58,060,283)
Total distributions (74,713,948) (69,411,140) (7,493,145) (7,502,202) (199,819,482) (69,246,032)
From fund share transactions (145,121,484) 218,615,137 71,359,453 (62,902,935) 353,643,546 (13,946,104)
Total increase (decrease) (79,223,866) 151,475,934 191,317,666 39,817,750 471,691,972 209,650,804
 
Net assets            
Beginning of year 1,792,393,974 1,640,918,040 569,412,438 529,594,688 1,414,582,835 1,204,932,031
End of year $1,713,170,108 $1,792,393,974 $760,730,104 $569,412,438 $1,886,274,807 $1,414,582,835
 
Undistributed net investment income (loss) $15,872,740 $13,279,208 $2,856,171 $4,737,862 $5,431,717 $5,499,900
 
  Asia Pacific Total Return        
  Bond Fund Blue Chip Growth Fund Capital Appreciation Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-131 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $12,813,536 $6,626,402 ($1,315,968) $5,039,281 $424,196 $6,023,359
Net realized gain (loss) (10,931,722) 4,458,946 289,456,331 278,461,478 216,132,417 153,474,152
Change in net unrealized appreciation (depreciation) 31,283,167 (42,143,520) 330,413,584 129,026,101 323,126,018 154,611,528
Increase (decrease) in net assets resulting from            
operations 33,164,981 (31,058,172) 618,553,947 412,526,860 539,682,631 314,109,039
Distributions to shareholders            
From net investment income            
Class 1 — — — (1,604,735) (385,060) (1,259,790)
Class NAV (14,665,372) — — (4,846,096) (1,692,886) (4,826,845)
From net realized gain            
Class 1 — — (18,717,294) — (31,031,106) —
Class NAV (910,387) — (38,017,618) — (83,567,806) —
Total distributions (15,575,759) — (56,734,912) (6,450,831) (116,676,858) (6,086,635)
From fund share transactions 21,084,912 435,405,764 (66,974,961) (324,112,206) 32,621,089 (243,860,420)
Total increase (decrease) 38,674,134 404,347,592 494,844,074 81,963,823 455,626,862 64,161,984
 
Net assets            
Beginning of year 404,347,592 — 2,246,970,873 2,165,007,050 1,913,536,078 1,849,374,094
End of year $443,021,726 $404,347,592 $2,741,814,947 $2,246,970,873 $2,369,162,940 $1,913,536,078
 
Undistributed net investment income (loss) $4,643,809 $11,906,577 — — — $1,414,995

 

1 Period from 1-16-13 (commencement of operations) to 8-31-13.

 

The accompanying notes are an integral part of the financial statements. 268

 


John Hancock Funds II

Statements of changes in net assets

  Capital Appreciation        
  Value Fund Core Bond Fund Equity-Income Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $23,380,549 $24,059,579 $8,768,264 $9,745,657 $32,267,796 $30,178,672
Net realized gain (loss) 205,500,672 204,337,288 5,421,271 4,186,185 107,568,962 132,821,733
Change in net unrealized appreciation (depreciation) 72,998,301 75,393,176 18,355,613 (28,316,496) 171,752,725 149,296,310
Increase (decrease) in net assets resulting from            
operations 301,879,522 303,790,043 32,545,148 (14,384,654) 311,589,483 312,296,715
Distributions to shareholders            
From net investment income            
Class 1 — — (1,613,591) (1,647,775) (8,079,253) (5,676,642)
Class NAV (24,213,098) (27,895,420) (8,925,816) (11,581,889) (31,142,028) (24,924,135)
From net realized gain            
Class 1 — — (305,403) (3,036,154) (2,357,889) —
Class NAV (212,469,220) (69,562,985) (1,678,726) (20,902,954) (8,905,104) —
Total distributions (236,682,318) (97,458,405) (12,523,536) (37,168,772) (50,484,274) (30,600,777)
From fund share transactions 152,330,229 (389,627,130) (52,137,487) (43,435,968) 310,910,067 (255,802,823)
Total increase (decrease) 217,527,433 (183,295,492) (32,115,875) (94,989,394) 572,015,276 25,893,115
 
Net assets            
Beginning of year 1,769,741,791 1,953,037,283 539,828,127 634,817,521 1,565,301,408 1,539,408,293
End of year $1,987,269,224 $1,769,741,791 $507,712,252 $539,828,127 $2,137,316,684 $1,565,301,408
 
Undistributed net investment income (loss) $15,185,940 $14,618,266 $2,897,882 $2,634,110 $23,342,937 $30,206,380
 
  Fundamental Global        
  Franchise Fund Global Bond Fund Global Equity Fund
  Year ended Year ended Year ended Year ended Year ended Period ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-131
From operations            
Net investment income (loss) $4,418,627 $4,477,896 $11,890,317 $14,874,143 $10,964,011 $1,231,759
Net realized gain (loss) 21,527,221 16,460,186 (3,335,129) (20,468,302) 22,883,140 119,303
Change in net unrealized appreciation (depreciation) 36,630,951 37,421,735 30,416,033 (30,503,026) 31,620,852 2,889,174
Increase (decrease) in net assets resulting from            
operations 62,576,799 58,359,817 38,971,221 (36,097,185) 65,468,003 4,240,236
Distributions to shareholders            
From net investment income            
Class A (764) (408) — — (598) —
Class I (3,497) (644) — — (8,321) —
Class 1 — — — (2,729,673) — —
Class NAV (4,032,151) (2,337,088) — (20,104,227) (2,891,248) —
From net realized gain            
Class A (5,920) — — — (530) —
Class I (18,135) — — — (6,031) —
Class NAV (18,704,226) — — — (1,826,704) —
Total distributions (22,764,693) (2,338,140) — (22,833,900) (4,733,432) —
From fund share transactions 6,867,939 (18,752,595) (15,134,549) (102,706,514) 94,525,063 325,499,110
Total increase (decrease) 46,680,045 37,269,082 23,836,672 (161,637,599) 155,259,634 329,739,346
 
Net assets            
Beginning of year 408,649,033 371,379,951 584,559,507 746,197,106 329,739,346 —
End of year $455,329,078 $408,649,033 $608,396,179 $584,559,507 $484,998,980 $329,739,346
 
Undistributed net investment income (loss) $4,010,174 $3,658,868 ($391,964) ($20,687,134) $9,511,467 $1,235,822

 

1 Period from 5-16-13 (commencement of operations) to 8-31-13.

 

The accompanying notes are an integral part of the financial statements. 269

 


John Hancock Funds II

Statements of changes in net assets

  Global Real Estate Fund Health Sciences Fund High Yield Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $6,233,338 $8,682,281 ($2,617,667) ($2,021,422) $71,520,546 $73,726,795
Net realized gain (loss) 26,909,906 93,698,491 142,945,268 76,772,407 25,034,848 13,825,838
Change in net unrealized appreciation (depreciation) 26,452,851 (59,099,388) 47,213,897 79,184,296 15,103,587 2,244,219
Increase (decrease) in net assets resulting from            
operations 59,596,095 43,281,384 187,541,498 153,935,281 111,658,981 89,796,852
Distributions to shareholders            
From net investment income            
Class 1 — — — — (31,839,936) (29,008,649)
Class NAV (12,325,059) (17,850,946) — — (41,433,939) (42,424,819)
From net realized gain            
Class NAV — — (99,704,308) (16,375,908) — —
Total distributions (12,325,059) (17,850,946) (99,704,308) (16,375,908) (73,273,875) (71,433,468)
From fund share transactions (2,366,610) (228,272,991) (12,553,377) (68,068,417) (188,662,135) 149,374,599
Total increase (decrease) 44,904,426 (202,842,553) 75,283,813 69,490,956 (150,277,029) 167,737,983
 
Net assets            
Beginning of year 294,008,251 496,850,804 545,143,507 475,652,551 1,099,184,892 931,446,909
End of year $338,912,677 $294,008,251 $620,427,320 $545,143,507 $948,907,863 $1,099,184,892
 
Undistributed net investment income (loss) ($4,116,832) ($3,048,641) ($16) ($84,107) $13,707,673 $15,472,675
 
  International Growth International Growth International Small
  Opportunities Fund Stock Fund Cap Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $7,579,372 $5,865,869 $11,624,829 $7,423,061 $6,071,853 $6,571,793
Net realized gain (loss) 27,000,812 6,783,886 26,705,667 (3,201,106) 31,202,019 13,986,326
Change in net unrealized appreciation (depreciation) 83,468,042 83,399,702 80,946,083 57,578,047 68,404,728 51,898,088
Increase (decrease) in net assets resulting from            
operations 118,048,226 96,049,457 119,276,579 61,800,002 105,678,600 72,456,207
Distributions to shareholders            
From net investment income            
Class 1 — — — — (1,699,241) (1,696,515)
Class NAV (6,292,032) (867,484) (11,051,305) (4,872,079) (8,465,869) (4,397,182)
From net realized gain            
Class NAV (8,725,047) (964,776) — — — —
Total distributions (15,017,079) (1,832,260) (11,051,305) (4,872,079) (10,165,110) (6,093,697)
From fund share transactions 129,562,738 30,945,046 (49,344,912) 146,143,011 (20,093,804) 206,899,741
Total increase (decrease) 232,593,885 125,162,243 58,880,362 203,070,934 75,419,686 273,262,251
 
Net assets            
Beginning of year 615,684,553 490,522,310 630,822,670 427,751,736 621,176,762 347,914,511
End of year $848,278,438 $615,684,553 $689,703,032 $630,822,670 $696,596,448 $621,176,762
 
Undistributed net investment income (loss) $6,770,981 $5,432,500 $7,362,616 $6,376,087 $582,204 $4,272,067

 

The accompanying notes are an integral part of the financial statements. 270

 


John Hancock Funds II

Statements of changes in net assets

      Investment Quality  
  International Value Fund Bond Fund  
  Year ended Year ended Year ended Year ended  
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13  
 
From operations          
Net investment income (loss) $56,440,854 $30,390,174 $11,446,548 $10,907,099  
Net realized gain (loss) 77,082,845 (15,484,535) 7,647,242 1,814,770  
Change in net unrealized appreciation (depreciation) 163,200,469 307,772,843 9,185,451 (25,663,886)  
Increase (decrease) in net assets resulting from          
operations 296,724,168 322,678,482 28,279,241 (12,942,017)  
Distributions to shareholders          
From net investment income          
Class 1 (4,197,533) (5,305,304) (1,769,748) (2,016,575)  
Class NAV (26,643,592) (27,795,127) (11,721,112) (9,906,570)  
From net realized gain          
Class 1 — — (376,038) (2,167,058)  
Class NAV — — (2,466,187) (9,586,827)  
Total distributions (30,841,125) (33,100,431) (16,333,085) (23,677,030)  
From fund share transactions 95,432,453 78,341,689 (21,960,907) 25,051,265  
Total increase (decrease) 361,315,496 367,919,740 (10,014,751) (11,567,782)  
 
Net assets          
 
Beginning of year 1,713,508,716 1,345,588,976 450,588,214 462,155,996  
End of year $2,074,824,212 $1,713,508,716 $440,573,463 $450,588,214  
 
Undistributed net investment income (loss) $50,693,749 $25,559,780 $2,690,783 $3,902,782  
 
  Lifestyle II Lifestyle II Lifestyle II Lifestyle II Lifestyle II
  Aggressive Balanced Conservative Growth Moderate
  Portfolio Portfolio Portfolio Portfolio Portfolio
  Period ended Period ended Period ended Period ended Period ended
Increase (decrease) in net assets 8-31-141 8-31-141 8-31-141 8-31-141 8-31-141
From operations          
Net investment income (loss) ($246) $7,602 $4,754 $3,572 $5,348
Net realized gain (loss) (9) (454) (84) (884) (294)
Change in net unrealized appreciation          
(depreciation) 117,398 107,125 24,148 183,887 24,000
Increase (decrease) in net assets resulting          
from operations 117,143 114,273 28,818 186,575 29,054
Distributions to shareholders          
From net investment income          
Class R6 — (314) (633) — (457)
Class 1 — (1,919) (1,646) — (1,507)
Total distributions — (2,233) (2,279) — (1,964)
From portfolio share transactions 4,732,635 8,783,404 2,334,207 10,018,959 2,108,749
Total increase (decrease) 4,849,778 8,895,444 2,360,746 10,205,534 2,135,839
 
Net assets          
End of year $4,849,778 $8,895,444 $2,360,746 $10,205,534 $2,135,839
 
Undistributed net investment income (loss) ($213) $5,382 $2,488 $3,585 $3,467

 

1 Period from 12-30-13 (commencement of operations) to 8-31-14.

 

The accompanying notes are an integral part of the financial statements. 271

 


John Hancock Funds II

Statements of changes in net assets

  Mid Cap Stock Fund Mid Value Fund Real Estate Equity Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) ($6,268,612) $1,071,961 $7,718,838 $6,726,078 $3,121,858 $3,624,028
Net realized gain (loss) 214,280,192 179,999,143 87,238,020 30,474,855 10,147,877 6,403,900
Change in net unrealized appreciation (depreciation) 73,872,802 59,990,226 131,768,021 81,409,988 41,114,698 (11,305,106)
Increase (decrease) in net assets resulting from            
operations 281,884,382 241,061,330 226,724,879 118,610,921 54,384,433 (1,277,178)
Distributions to shareholders            
From net investment income            
Class NAV (17,492) — (5,306,135) (7,337,684) (3,727,077) (2,633,312)
From net realized gain            
Class 1 (41,365,017) (11,396,409) — — — —
Class NAV (143,829,579) (26,530,570) (31,795,815) (26,391,979) — —
Total distributions (185,212,088) (37,926,979) (37,101,950) (33,729,663) (3,727,077) (2,633,312)
From fund share transactions 108,962,555 281,015,859 106,861,648 104,595,365 (4,602,259) 11,180,619
Total increase (decrease) 205,634,849 484,150,210 296,484,577 189,476,623 46,055,097 7,270,129
 
Net assets            
Beginning of year 1,482,818,454 998,668,244 788,678,920 599,202,297 213,466,977 206,196,848
End of year $1,688,453,303 $1,482,818,454 $1,085,163,497 $788,678,920 $259,522,074 $213,466,977
 
Undistributed net investment income (loss) — $209 $3,637,253 $1,154,215 $406,213 $1,149,207
 
  Real Estate     Science &
  Securities Fund Real Return Bond Fund Technology Fund
  Year ended Year ended Year ended Year ended Year ended Period ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-131
From operations            
Net investment income (loss) $9,698,855 $10,136,717 $12,291,983 $13,960,127 ($1,691,226) ($216,524)
Net realized gain (loss) 35,629,582 54,903,320 (2,141,184) 2,213,387 131,115,947 1,095,383
Change in net unrealized appreciation (depreciation) 66,026,854 (74,763,215) 25,653,310 (70,894,961) 139,361,376 52,754,671
Increase (decrease) in net assets resulting from            
operations 111,355,291 (9,723,178) 35,804,109 (54,721,447) 268,786,097 53,633,530
Distributions to shareholders            
From net investment income            
Class 1 (10,708,094) (9,064,714) (2,477,528) (4,865,785) — —
Class NAV — — (10,601,690) (15,434,389) (850,478) —
From net realized gain            
Class 1 (45,247,364) (48,020,137) — (4,024,887) — —
Class NAV — — — (12,386,323) (18,924,071) —
Total distributions (55,955,458) (57,084,851) (13,079,218) (36,711,384) (19,774,549) —
From fund share transactions 4,391,721 16,267,507 (20,509,448) (34,353,711) (96,463,379) 819,508,213
Total increase (decrease) 59,791,554 (50,540,522) 2,215,443 (125,786,542) 152,548,169 873,141,743
 
Net assets            
Beginning of year 506,908,095 557,448,617 556,454,910 682,241,452 873,141,743 —
End of year $566,699,649 $506,908,095 $558,670,353 $556,454,910 $1,025,689,912 $873,141,743
 
Undistributed net investment income (loss) $2,916,513 $4,539,370 $6,082,222 $4,399,571 ($116,342) $183,032

 

1 Period from 2-14-13 (commencement of operations) to 8-31-13.

 

The accompanying notes are an integral part of the financial statements. 272

 


John Hancock Funds II

Statements of changes in net assets

  Short Term Government     Small Cap
  Income Fund Small Cap Growth Fund Opportunities Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $1,561,393 $1,078,429 ($1,869,557) ($408,906) $65,467 $772,588
Net realized gain (loss) (138,137) 226,604 27,395,979 22,800,940 25,701,644 14,546,769
Change in net unrealized appreciation (depreciation) 1,744,849 (4,267,515) 15,409,702 13,344,472 7,491,084 25,847,482
Increase (decrease) in net assets resulting from            
operations 3,168,105 (2,962,482) 40,936,124 35,736,506 33,258,195 41,166,839
Distributions to shareholders            
From net investment income            
Class 1 — — — — (139,637) (261,564)
Class NAV (3,112,504) (3,395,114) — — (271,394) (552,589)
From net realized gain            
Class 1 — — — — (6,942,750) (861,085)
Class NAV — — (21,614,213) (8,882,671) (10,855,359) (1,667,655)
Total distributions (3,112,504) (3,395,114) (21,614,213) (8,882,671) (18,209,140) (3,342,893)
From fund share transactions 4,943,332 45,102,438 9,899,439 46,292,800 17,907,988 (11,474,087)
Total increase (decrease) 4,998,933 38,744,842 29,221,350 73,146,635 32,957,043 26,349,859
 
Net assets            
Beginning of year 227,439,982 188,695,140 211,257,432 138,110,797 181,459,922 155,110,063
End of year $232,438,915 $227,439,982 $240,478,782 $211,257,432 $214,416,965 $181,459,922
 
Undistributed net investment income (loss) $1,325,379 $740,656 — — ($18,899) $117,025
 
  Small Company Small Company    
  Growth Fund Value Fund Spectrum Income Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) ($262,377) $145,004 $1,902,956 $3,505,432 $33,875,370 $33,357,705
Net realized gain (loss) 18,049,707 8,625,306 20,986,497 22,502,587 22,657,736 30,585,405
Change in net unrealized appreciation (depreciation) 18,647,131 18,419,241 29,513,448 46,170,653 37,493,296 (41,738,359)
Increase (decrease) in net assets resulting from            
operations 36,434,461 27,189,551 52,402,901 72,178,672 94,026,402 22,204,751
Distributions to shareholders            
From net investment income            
Class 1 — — (170,523) (2,160,242) — —
Class NAV — (185,338) (531,565) (4,365,207) (33,092,885) (37,465,395)
From net realized gain            
Class 1 — — (642,785) — — —
Class NAV (8,436,114) (3,262,621) (1,527,415) — (25,819,907) (695,859)
Total distributions (8,436,114) (3,447,959) (2,872,288) (6,525,449) (58,912,792) (38,161,254)
From fund share transactions 48,850 46,688,479 (12,387,920) (33,750,874) (102,633,669) (9,737,245)
Total increase (decrease) 28,047,197 70,430,071 37,142,693 31,902,349 (67,520,059) (25,693,748)
 
Net assets            
Beginning of year 175,853,308 105,423,237 353,935,968 322,033,619 1,032,996,056 1,058,689,804
End of year $203,900,505 $175,853,308 $391,078,661 $353,935,968 $965,475,997 $1,032,996,056
 
Undistributed net investment income (loss) — ($233,769) $980,870 ($1,550,603) $7,407,106 $6,005,294

 

The accompanying notes are an integral part of the financial statements. 273

 


John Hancock Funds II

Statements of changes in net assets

  Strategic Equity     U.S. High Yield
  Allocation Fund Total Return Fund Bond Fund
  Year ended Year ended Year ended Year ended Year ended Year ended
Increase (decrease) in net assets 8-31-14 8-31-13 8-31-14 8-31-13 8-31-14 8-31-13
From operations            
Net investment income (loss) $94,132,653 $71,905,666 $39,702,498 $40,653,028 $36,663,874 $41,954,838
Net realized gain (loss) 156,988,314 39,177,896 28,978,243 24,362,873 19,783,832 14,926,297
Change in net unrealized appreciation (depreciation) 758,713,107 493,887,392 68,803,040 (108,130,021) 4,767,084 (24,787,987)
Increase (decrease) in net assets resulting from            
operations 1,009,834,074 604,970,954 137,483,781 (43,114,120) 61,214,790 32,093,148
Distributions to shareholders            
From net investment income            
Class 1 — — (6,408,692) (11,930,315) (5,887,794) (6,064,893)
Class NAV (75,823,905) (42,820,065) (43,682,483) (61,767,584) (35,821,989) (36,664,442)
From net realized gain            
Class 1 — — (4,574,820) (9,652,563) (1,746,674) (1,185,065)
Class NAV (77,841,756) (2,142,972) (30,495,108) (48,056,049) (10,831,069) (6,883,096)
Total distributions (153,665,661) (44,963,037) (85,161,103) (131,406,511) (54,287,526) (50,797,496)
From fund share transactions 668,806,371 722,012,254 (136,709,099) 312,065,582 (216,968,196) 56,215,568
Total increase (decrease) 1,524,974,784 1,282,020,171 (84,386,421) 137,544,951 (210,040,932) 37,511,220
 
Net assets            
Beginning of year 4,417,216,428 3,135,196,257 2,581,069,117 2,443,524,166 696,687,913 659,176,693
End of year $5,942,191,212 $4,417,216,428 $2,496,682,696 $2,581,069,117 $486,646,981 $696,687,913
 
Undistributed net investment income (loss) $69,003,246 $49,380,268 $18,063,678 $10,528,909 $6,376,033 $9,071,486
 
  Value Fund        
  Year ended Year ended        
Increase (decrease) in net assets 8-31-14 8-31-13        
  
From operations            
Net investment income (loss) $2,119,005 $1,483,581        
Net realized gain (loss) 26,042,071 19,201,299        
Change in net unrealized appreciation (depreciation) 52,561,208 12,286,125        
Increase (decrease) in net assets resulting from            
operations 80,722,284 32,971,005        
Distributions to shareholders            
From net investment income            
Class NAV (1,764,310) (1,794,249)        
From net realized gain            
Class NAV (20,903,448) (17,200,764)        
Total distributions (22,667,758) (18,995,013)        
From fund share transactions 56,500,789 148,435,924        
Total increase (decrease) 114,555,315 162,411,916        
 
Net assets            
  
Beginning of year 307,532,227 145,120,311        
End of year $422,087,542 $307,532,227        
 
Undistributed net investment income (loss) $1,151,630 $821,128        

 

The accompanying notes are an integral part of the financial statements. 274

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period     Ratios and supplemental data  
                           
    Income (loss) from          
investment operations Less distributions Ratios to average net assets
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Active Bond Fund                      
CLASS 1                              
08-31-2014 10.08 0.36 0.45 0.81 (0.38) (0.05) — (0.43) 10.46 8.25 0.68 0.68 3.50 102 81
08-31-2013 10.48 0.34 (0.32) 0.02 (0.38) (0.04) — (0.42) 10.08 0.15 0.68 0.68 3.21 72 96
08-31-2012 10.26 0.35 0.45 0.80 (0.42) (0.16) — (0.58) 10.48 8.14 0.68 0.68 3.45 65 89
08-31-2011 10.21 0.47 0.09 0.56 (0.48) (0.03) — (0.51) 10.26 5.59 0.69 0.69 4.55 44 112
08-31-2010 9.30 0.51 0.92 1.43 (0.52) — — (0.52) 10.21 15.88 0.69 0.69 5.26 43 75
 
CLASS NAV                              
08-31-2014 10.07 0.36 0.47 0.83 (0.39) (0.05) — (0.44) 10.46 8.41 0.63 0.63 3.54 1,611 81
08-31-2013 10.47 0.34 (0.32) 0.02 (0.38) (0.04) — (0.42) 10.07 0.20 0.63 0.63 3.26 1,720 96
08-31-2012 10.25 0.36 0.45 0.81 (0.43) (0.16) — (0.59) 10.47 8.20 0.63 0.63 3.49 1,576 89
08-31-2011 10.20 0.47 0.09 0.56 (0.48) (0.03) — (0.51) 10.25 5.64 0.64 0.64 4.61 1,193 112
08-31-2010 9.30 0.52 0.91 1.43 (0.53) — — (0.53) 10.20 15.83 0.64 0.64 5.30 788 75
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
All Cap Core Fund                      
CLASS NAV                              
08-31-2014 11.66 0.11 2.46 2.57 (0.15) — — (0.15) 14.08 22.18 0.81 0.81 0.86 761 245
08-31-2013 9.68 0.15 1.97 2.12 (0.14) — — (0.14) 11.66 22.19 0.82 0.81 1.38 569 173
08-31-2012 8.53 0.11 1.14 1.25 (0.10) — — (0.10) 9.68 14.78 0.81 0.81 1.19 530 287
08-31-2011 7.18 0.09 1.34 1.43 (0.08) — — (0.08) 8.53 19.87 0.81 0.80 0.98 601 197
08-31-2010 7.21 0.08 (0.02) 0.06 (0.09) — — (0.09) 7.18 0.73 0.81 0.81 1.01 516 196
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Alpha Opportunities Fund                    
CLASS NAV                              
08-31-2014 12.67 0.06 2.55 2.61 (0.07) (1.63) — (1.70) 13.58 21.69 1.01 0.97 0.49 1,886 109
08-31-2013 10.66 0.09 2.56 2.65 (0.10) (0.54) — (0.64) 12.67 26.04 1.01 1.00 0.76 1,415 130
08-31-2012 10.91 0.06 1.10 1.16 (0.03) (1.38) — (1.41) 10.66 12.53 1.01 1.01 0.59 1,205 151
08-31-2011 10.35 0.03 1.80 1.83 (0.03) (1.24) — (1.27) 10.91 17.00 1.02 1.01 0.26 1,533 164
08-31-2010 10.87 0.03 0.58 0.61 (0.06) (1.07) — (1.13) 10.35 5.01 1.04 1.04 0.28 1,113 171
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Asia Pacific Total Return Bond Fund                  
CLASS NAV                              
08-31-2014 9.25 0.28 0.45 0.73 (0.33) (0.02) — (0.35) 9.63 8.12 0.87 0.86 3.00 443 31
08-31-20133 10.00 0.16 (0.91) (0.75) — — — — 9.25 (7.50)4 0.895 0.865 2.645 404 7
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 1-16-13
(commencement of operations) to 8-31-13. 4. Not annualized. 5. Annualized.
 
Blue Chip Growth Fund                    
CLASS 1                              
08-31-2014 28.74 (0.03) 8.04 8.01 — (0.77) — (0.77) 35.98 28.06 0.86 0.83 (0.08) 888 33
08-31-2013 24.09 0.05 4.66 4.71 (0.06) — — (0.06) 28.74 19.62 0.86 0.83 0.18 696 33
08-31-2012 20.63 0.03 3.45 3.48 (0.02) — — (0.02) 24.09 16.87 0.86 0.83 0.12 606 27
08-31-2011 16.31 0.01 4.31 4.32 —3 — — —3 20.63 26.51 0.86 0.82 0.03 489 40
08-31-2010 15.60 —3 0.73 0.73 (0.02) — — (0.02) 16.31 4.65 0.88 0.84 0.03 405 49
 
CLASS NAV                              
08-31-2014 28.72 (0.01) 8.03 8.02 — (0.77) — (0.77) 35.97 28.11 0.81 0.78 (0.04) 1,854 33
08-31-2013 24.07 0.06 4.67 4.73 (0.08) — — (0.08) 28.72 19.69 0.81 0.78 0.24 1,551 33
08-31-2012 20.62 0.04 3.44 3.48 (0.03) — — (0.03) 24.07 16.89 0.81 0.78 0.17 1,559 27
08-31-2011 16.30 0.02 4.31 4.33 (0.01) — — (0.01) 20.62 26.58 0.81 0.78 0.07 1,881 40
08-31-2010 15.59 0.01 0.72 0.73 (0.02) — — (0.02) 16.30 4.70 0.83 0.79 0.05 1,460 49
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Less than $0.005 per share.

 

The accompanying notes are an integral part of the financial statements. 275

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period     Ratios and supplemental data  
                           
Income (loss) from
investment operations Less distributions Ratios to average net assets
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Capital Appreciation Fund                    
CLASS 1                              
08-31-2014 15.07 —3 4.19 4.19 (0.01) (0.95) — (0.96) 18.30 28.39 0.78 0.78 (0.02) 588 45
08-31-2013 12.87 0.04 2.20 2.24 (0.04) — — (0.04) 15.07 17.44 0.79 0.78 0.27 507 44
08-31-2012 11.44 0.01 1.43 1.44 (0.01) — — (0.01) 12.87 12.59 0.78 0.78 0.11 439 52
08-31-2011 9.11 0.01 2.33 2.34 (0.01) — — (0.01) 11.44 25.69 0.78 0.78 0.06 371 67
08-31-2010 8.84 0.02 0.27 0.29 (0.02) — — (0.02) 9.11 3.27 0.79 0.79 0.19 321 73
 
CLASS NAV                              
08-31-2014 15.08 0.01 4.20 4.21 (0.02) (0.95) — (0.97) 18.32 28.49 0.73 0.73 0.03 1,781 45
08-31-2013 12.89 0.05 2.18 2.23 (0.04) — — (0.04) 15.08 17.39 0.74 0.73 0.33 1,406 44
08-31-2012 11.45 0.02 1.43 1.45 (0.01) — — (0.01) 12.89 12.72 0.73 0.73 0.15 1,410 52
08-31-2011 9.12 0.01 2.34 2.35 (0.02) — — (0.02) 11.45 25.72 0.73 0.73 0.11 1,560 67
08-31-2010 8.85 0.02 0.28 0.30 (0.03) — — (0.03) 9.12 3.31 0.74 0.74 0.20 1,194 73
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Less than $0.005 per share.
 
Capital Appreciation Value Fund                  
CLASS NAV                              
08-31-2014 12.41 0.16 1.88 2.04 (0.18) (1.57) — (1.75) 12.70 17.68 0.85 0.81 1.25 1,987 63
08-31-2013 11.22 0.14 1.62 1.76 (0.16) (0.41) — (0.57) 12.41 16.37 0.84 0.80 1.21 1,770 83
08-31-2012 9.76 0.16 1.37 1.53 (0.06) (0.01) — (0.07) 11.22 15.75 0.86 0.83 1.48 1,953 84
08-31-20113 10.00 0.08 (0.32) (0.24) — — — — 9.76 (2.40)4 0.925 0.885 1.235 433 44
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. The inception date for Class
NAV shares is 1-6-11. 4. Not annualized. 5. Annualized.
 
Core Bond Fund                    
CLASS 1                              
08-31-2014 12.60 0.20 0.57 0.77 (0.24) (0.05) — (0.29) 13.08 6.22 0.68 0.68 1.59 93 332
08-31-2013 13.64 0.19 (0.48) (0.29) (0.26) (0.49) — (0.75) 12.60 (2.26) 0.67 0.67 1.46 84 346
08-31-2012 13.36 0.26 0.70 0.96 (0.38) (0.30) — (0.68) 13.64 7.41 0.68 0.68 1.93 76 362
08-31-2011 13.76 0.35 0.29 0.64 (0.46) (0.58) — (1.04) 13.36 5.09 0.68 0.67 2.64 15 536
08-31-2010 13.09 0.41 0.86 1.27 (0.51) (0.09) — (0.60) 13.76 9.99 0.69 0.69 3.09 14 496
 
CLASS NAV                              
08-31-2014 12.58 0.21 0.57 0.78 (0.25) (0.05) — (0.30) 13.06 6.29 0.63 0.63 1.64 415 332
08-31-2013 13.62 0.20 (0.48) (0.28) (0.27) (0.49) — (0.76) 12.58 (2.21) 0.62 0.62 1.50 456 346
08-31-2012 13.35 0.28 0.67 0.95 (0.38) (0.30) — (0.68) 13.62 7.39 0.63 0.63 2.06 559 362
08-31-2011 13.75 0.35 0.29 0.64 (0.46) (0.58) — (1.04) 13.35 5.15 0.63 0.62 2.69 560 536
08-31-2010 13.07 0.41 0.87 1.28 (0.51) (0.09) — (0.60) 13.75 10.13 0.64 0.64 3.11 564 496
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Equity-Income Fund                      
CLASS 1                              
08-31-2014 18.53 0.35 3.17 3.52 (0.45) (0.13) — (0.58) 21.47 19.24 0.87 0.83 1.75 377 17
08-31-2013 15.59 0.32 2.94 3.26 (0.32) — — (0.32) 18.53 21.20 0.86 0.83 1.82 339 14
08-31-2012 13.56 0.31 1.91 2.22 (0.19) — — (0.19) 15.59 16.55 0.87 0.84 2.13 286 21
08-31-2011 12.05 0.25 1.46 1.71 (0.20) — — (0.20) 13.56 14.13 0.87 0.84 1.78 254 17
08-31-2010 11.85 0.23 0.21 0.44 (0.24) — — (0.24) 12.05 3.66 0.89 0.86 1.84 140 13
 
CLASS NAV                              
08-31-2014 18.52 0.37 3.15 3.52 (0.46) (0.13) — (0.59) 21.45 19.25 0.82 0.78 1.81 1,760 17
08-31-2013 15.57 0.32 2.95 3.27 (0.32) — — (0.32) 18.52 21.33 0.81 0.78 1.87 1,226 14
08-31-2012 13.55 0.31 1.91 2.22 (0.20) — — (0.20) 15.57 16.54 0.82 0.79 2.18 1,254 21
08-31-2011 12.04 0.25 1.47 1.72 (0.21) — — (0.21) 13.55 14.19 0.82 0.79 1.79 1,269 17
08-31-2010 11.83 0.24 0.22 0.46 (0.25) — — (0.25) 12.04 3.80 0.84 0.81 1.94 981 13
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

The accompanying notes are an integral part of the financial statements. 276

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period     Ratios and supplemental data  
            
Income (loss) from
investment operations Less distributions Ratios to average net assets  
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Fundamental Global Franchise Fund                  
CLASS A                              
08-31-2014 12.11 0.06 1.74 1.80 (0.08) (0.59) — (0.67) 13.24 15.053 1.42 1.42 0.50 —4 13
08-31-2013 10.55 0.07 1.53 1.60 (0.04) — — (0.04) 12.11 15.213 1.38 1.38 0.64 —4 26
08-31-20125 10.00 0.01 0.54 0.55 — — — — 10.55 5.503,6 1.487 1.487 0.337 —4 2
 
CLASS I                              
08-31-2014 12.14 0.13 1.72 1.85 (0.11) (0.59) — (0.70) 13.29 15.52 1.02 1.02 1.01 1 13
08-31-2013 10.55 0.13 1.52 1.65 (0.06) — — (0.06) 12.14 15.75 1.00 1.00 1.14 —4 26
08-31-20125 10.00 0.01 0.54 0.55 — — — — 10.55 5.506 1.107 1.107 0.717 —4 2
 
CLASS NAV                              
08-31-2014 12.15 0.13 1.74 1.87 (0.13) (0.59) — (0.72) 13.30 15.62 0.90 0.90 1.03 454 13
08-31-2013 10.56 0.13 1.53 1.66 (0.07) — — (0.07) 12.15 15.76 0.90 0.90 1.11 408 26
08-31-20125 10.00 0.02 0.54 0.56 — — — — 10.56 5.606 0.997 0.997 0.957 371 2
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Does not reflect the effect of
sales charges, if any. 4. Less than $500,000. 5. Period from 6-29-12 (commencement of operations) to 8-31-12. 6. Not annualized. 7. Annualized.
 
Global Bond Fund                      
CLASS 1                              
08-31-2014 11.84 0.24 0.56 0.80 — — — — 12.64 6.76 0.86 0.85 1.96 69 97
08-31-2013 12.83 0.25 (0.86) (0.61) (0.38) — — (0.38) 11.84 (4.93) 0.86 0.86 2.00 74 85
08-31-20123 13.26 0.34 0.38 0.72 (1.15) — — (1.15) 12.83 6.05 0.86 0.86 2.67 92 109
08-31-2011 12.78 0.29 0.89 1.18 (0.70) — — (0.70) 13.26 9.86 0.85 0.85 2.28 86 135
08-31-2010 12.41 0.28 1.18 1.46 (1.09) — — (1.09) 12.78 12.42 0.86 0.86 2.31 76 511
 
CLASS NAV                              
08-31-2014 11.82 0.25 0.55 0.80 — — — — 12.62 6.77 0.81 0.80 2.02 540 97
08-31-2013 12.80 0.25 (0.84) (0.59) (0.39) — — (0.39) 11.82 (4.83) 0.81 0.81 2.04 511 85
08-31-20123 13.24 0.34 0.38 0.72 (1.16) — — (1.16) 12.80 6.04 0.81 0.81 2.73 654 109
08-31-2011 12.76 0.29 0.90 1.19 (0.71) — — (0.71) 13.24 9.94 0.80 0.80 2.32 753 135
08-31-2010 12.39 0.29 1.17 1.46 (1.09) — — (1.09) 12.76 12.45 0.81 0.81 2.35 730 511
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. In accordance with
Accounting Standards Update 2011-03, Reconsideration of Effective Control for Repurchase Agreements, the fund now recognizes sale-buybacks as secured borrowings and not as
purchases and sales of securities. Accordingly, the fund has excluded these transactions from its portfolio turnover calculation. Had these transactions been included, the portfolio turnover
rate would have been 156%. The fund also recorded additional income and expenses which were offset by corresponding adjustments to realized and unrealized gain/loss. These
adjustments had no overall impact to the per share net asset value but did increase the net investment income per share by $0.02, the ratio of net investment income to average net assets
by 0.16% and the ratio of expenses to average net assets by 0.01%.  
 
Global Equity Fund                      
CLASS A                              
08-31-2014 9.948 0.26 1.57 1.83 (0.06) (0.05) — (0.11) 11.66 18.523 1.37 1.34 2.368 —4 70
08-31-20135 10.00 0.04 (0.10) (0.06) — — — — 9.94 (0.60)3,6 1.487 1.247 1.357 —4 8
 
CLASS I                              
08-31-2014 9.958 0.31 1.56 1.87 (0.07) (0.05) — (0.12) 11.70 18.95 1.05 1.05 2.798 3,107 70
08-31-20135 10.00 0.08 (0.13) (0.05) — — — — 9.95 (0.50)6 1.137 1.127 3.067 1 8
 
CLASS NAV                              
08-31-2014 9.958 0.31 1.57 1.88 (0.08) (0.05) — (0.13) 11.70 19.06 0.93 0.93 2.768 481,775 70
08-31-20135 10.00 0.05 (0.10) (0.05) — — — — 9.95 (0.50)6 1.037 1.027 1.597 329 8
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Does not reflect the effect of
sales charges, if any. 4. Less than $500,000. 5. Period from 5-16-13 (commencement of operations) to 8-31-13. 6. Not annualized. 7. Annualized. 8. Net investment income per share and
the percentage of average net assets reflect special dividends received by the fund, which amounted to $0.05 and 0.47%, respectively.
 
Global Real Estate Fund                    
CLASS NAV                              
08-31-2014 8.15 0.17 1.41 1.58 (0.34) — — (0.34) 9.39 19.95 1.02 1.01 1.92 339 97
08-31-2013 7.93 0.15 0.36 0.51 (0.29) — — (0.29) 8.15 6.42 1.00 0.99 1.79 294 109
08-31-2012 7.36 0.15 0.67 0.82 (0.25) — — (0.25) 7.93 11.85 1.00 1.00 2.12 497 97
08-31-2011 6.75 0.13 0.75 0.88 (0.27) — — (0.27) 7.36 13.07 1.01 1.01 1.69 495 107
08-31-2010 6.24 0.14 0.65 0.79 (0.28) — — (0.28) 6.75 12.84 1.06 1.06 2.06 450 105
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

The accompanying notes are an integral part of the financial statements. 277

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period       Ratios and supplemental data    
              
Income (loss) from
investment operations Less distributions Ratios to average net assets
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Health Sciences Fund                    
CLASS NAV                              
08-31-2014 17.77 (0.08) 6.02 5.94 — (3.45) — (3.45) 20.26 37.34 1.04 0.99 (0.45) 620 61
08-31-2013 13.70 (0.06) 4.61 4.55 — (0.48) — (0.48) 17.77 34.29 1.08 1.03 (0.39) 545 42
08-31-20123 10.00 (0.05) 3.75 3.70 — — — — 13.70 37.004 1.125 1.065 (0.45)5 476 25
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 9-30-11
(commencement of operations) to 8-31-12. 4. Not annualized. 5. Annualized.
 
High Yield Fund                      
CLASS 1                              
08-31-2014 9.31 0.61 0.34 0.95 (0.63) — — (0.63) 9.63 10.53 0.76 0.75 6.44 502 70
08-31-2013 9.12 0.67 0.18 0.85 (0.66) — — (0.66) 9.31 9.56 0.76 0.76 7.12 453 67
08-31-2012 8.80 0.70 0.35 1.05 (0.73) — — (0.73) 9.12 12.67 0.76 0.76 7.99 367 75
08-31-2011 8.80 0.70 0.03 0.73 (0.73) — — (0.73) 8.80 8.30 0.76 0.76 7.60 325 104
08-31-2010 8.00 0.78 0.90 1.68 (0.88) — — (0.88) 8.80 21.92 0.75 0.75 9.09 82 81
 
CLASS NAV                              
08-31-2014 9.23 0.61 0.34 0.95 (0.64) — — (0.64) 9.54 10.57 0.71 0.70 6.50 447 70
08-31-2013 9.05 0.67 0.17 0.84 (0.66) — — (0.66) 9.23 9.58 0.71 0.71 7.19 646 67
08-31-2012 8.74 0.70 0.34 1.04 (0.73) — — (0.73) 9.05 12.70 0.71 0.71 8.04 565 75
08-31-2011 8.74 0.70 0.03 0.73 (0.73) — — (0.73) 8.74 8.42 0.71 0.71 7.67 565 104
08-31-2010 7.95 0.78 0.90 1.68 (0.89) — — (0.89) 8.74 21.99 0.70 0.70 9.15 910 81
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
International Growth Opportunities Fund                  
CLASS NAV                              
08-31-2014 12.21 0.13 2.12 2.25 (0.11) (0.16) — (0.27) 14.19 18.51 0.96 0.95 0.97 848 14
08-31-2013 10.27 0.12 1.86 1.98 (0.02) (0.02) — (0.04) 12.21 19.29 0.98 0.98 1.04 616 16
08-31-20123 10.00 0.01 0.26 0.27 — — — — 10.27 2.704 1.085 1.085 0.775 491 1
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 7-19-12
(commencement of operations) to 8-31-12. 4. Not annualized. 5. Annualized.  
 
International Growth Stock Fund                  
CLASS NAV                              
08-31-2014 12.14 0.23 2.09 2.32 (0.21) — — (0.21) 14.25 19.26 0.92 0.92 1.68 690 26
08-31-2013 10.89 0.16 1.20 1.36 (0.11) — — (0.11) 12.14 12.53 0.92 0.92 1.37 631 25
08-31-2012 10.61 0.15 0.25 0.40 (0.12) —4 — (0.12) 10.89 3.87 0.96 0.96 1.43 428 30
08-31-20113 10.00 0.19 0.43 0.62 (0.01) —4 — (0.01) 10.61 6.215 0.996 0.996 1.796 278 27
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 9-16-10
(commencement of operations) to 8-31-11. 4. Less than $0.005 per share. 5. Not annualized. 6. Annualized.
 
International Small Cap Fund                    
CLASS 1                              
08-31-2014 16.87 0.16 2.71 2.87 (0.27) — — (0.27) 19.47 17.10 1.14 1.14 0.84 116 23
08-31-2013 14.22 0.25 2.65 2.90 (0.25) — — (0.25) 16.87 20.57 1.19 1.18 1.52 109 29
08-31-2012 14.93 0.24 (0.71) (0.47) (0.24) — — (0.24) 14.22 (2.98) 1.22 1.20 1.72 98 25
08-31-2011 13.72 0.20 1.15 1.35 (0.14) — — (0.14) 14.93 9.74 1.20 1.19 1.27 122 28
08-31-2010 12.15 0.13 1.65 1.78 (0.21) — — (0.21) 13.72 14.73 1.22 1.22 1.00 125 21
 
CLASS NAV                              
08-31-2014 16.86 0.17 2.71 2.88 (0.28) — — (0.28) 19.46 17.17 1.09 1.09 0.89 581 23
08-31-2013 14.22 0.25 2.65 2.90 (0.26) — — (0.26) 16.86 20.56 1.14 1.13 1.55 512 29
08-31-2012 14.93 0.25 (0.71) (0.46) (0.25) — — (0.25) 14.22 (2.92) 1.17 1.15 1.82 250 25
08-31-2011 13.71 0.22 1.14 1.36 (0.14) — — (0.14) 14.93 9.87 1.15 1.14 1.37 185 28
08-31-2010 12.14 0.15 1.63 1.78 (0.21) — — (0.21) 13.71 14.78 1.17 1.17 1.11 154 21
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

The accompanying notes are an integral part of the financial statements. 278

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period       Ratios and supplemental data    
              
Income (loss) from
investment operations Less distributions Ratios to average net assets
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
International Value Fund                    
CLASS 1                              
08-31-2014 15.74 0.473 2.16 2.63 (0.26) — — (0.26) 18.11 16.80 0.97 0.96 2.693 281 28
08-31-2013 12.98 0.28 2.80 3.08 (0.32) — — (0.32) 15.74 23.98 0.96 0.96 1.94 251 36
08-31-2012 13.59 0.37 (0.54) (0.17) (0.44) — — (0.44) 12.98 (1.06) 0.97 0.91 2.92 223 22
08-31-2011 12.62 0.35 0.86 1.21 (0.24) — — (0.24) 13.59 9.49 0.97 0.95 2.39 254 29
08-31-2010 12.99 0.27 (0.38) (0.11) (0.26) — — (0.26) 12.62 (0.97) 0.98 0.96 2.04 259 19
 
CLASS NAV                              
08-31-2014 15.70 0.493 2.15 2.64 (0.27) — — (0.27) 18.07 16.90 0.92 0.91 2.813 1,793 28
08-31-2013 12.94 0.29 2.80 3.09 (0.33) — — (0.33) 15.70 24.11 0.91 0.91 2.00 1,462 36
08-31-2012 13.56 0.39 (0.56) (0.17) (0.45) — — (0.45) 12.94 (1.08) 0.92 0.86 3.07 1,122 22
08-31-2011 12.59 0.36 0.86 1.22 (0.25) — — (0.25) 13.56 9.55 0.92 0.90 2.47 897 29
08-31-2010 12.96 0.29 (0.39) (0.10) (0.27) — — (0.27) 12.59 (0.93) 0.93 0.91 2.19 900 19
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Net investment income per
share and the percentage of average net assets reflect special dividends received by the fund, which amounted to $0.10 and 0.59%, respectively.
 
Investment Quality Bond Fund                    
CLASS 1                              
08-31-2014 12.24 0.32 0.46 0.78 (0.37) (0.08) — (0.45) 12.57 6.54 0.69 0.68 2.54 57 100
08-31-2013 13.23 0.29 (0.64) (0.35) (0.32) (0.32) — (0.64) 12.24 (2.78) 0.68 0.67 2.25 64 72
08-31-2012 12.59 0.30 0.69 0.99 (0.35) —3 — (0.35) 13.23 8.01 0.68 0.68 2.35 87 66
08-31-2011 12.59 0.39 0.06 0.45 (0.45) — — (0.45) 12.59 3.71 0.68 0.68 3.19 73 70
08-31-2010 11.87 0.48 0.83 1.31 (0.59) — — (0.59) 12.59 11.38 0.71 0.71 3.98 79 17
 
CLASS NAV                              
08-31-2014 12.23 0.32 0.46 0.78 (0.38) (0.08) — (0.46) 12.55 6.51 0.64 0.63 2.60 384 100
08-31-2013 13.22 0.30 (0.64) (0.34) (0.33) (0.32) — (0.65) 12.23 (2.73) 0.63 0.62 2.31 386 72
08-31-2012 12.57 0.31 0.69 1.00 (0.35) —3 — (0.35) 13.22 8.16 0.63 0.63 2.39 375 66
08-31-2011 12.58 0.40 0.04 0.44 (0.45) — — (0.45) 12.57 3.69 0.63 0.63 3.25 383 70
08-31-2010 11.86 0.48 0.83 1.31 (0.59) — — (0.59) 12.58 11.44 0.66 0.66 4.00 261 17
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Less than $0.005 per share.
 
Lifestyle II Aggressive Portfolio                    
CLASS R6                              
08-31-20143 10.00 —4,5 0.77 0.77 — — — — 10.77 7.706 10.627,8 0.387,8 (0.04)4,7 —9 2
 
CLASS 1                              
08-31-20143 10.00 —4,5 0.77 0.77 — — — — 10.77 7.706 9.537,8 0.337,8 (0.04)4,7 5 2
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 12-30-13
(commencement of operations) to 8-31-14. 4. Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the
underlying funds in which the portfolio invests. 5. Less than $0.005 per share. 6. Not annualized. 7. Annualized. 8. Ratios do not include the expenses indirectly incurred from underlying
fund and can vary based on the mix of underlying funds held by the portfolio. The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.09% – 0.52% for
the period ended 8-31-14. 9. Less than $500,000.
 
Lifestyle II Balanced Portfolio                    
CLASS R6                              
08-31-20143 10.00 0.074 0.60 0.67 (0.03) — — (0.03) 10.64 6.735 6.846,7 0.506,7 1.004,6 —8 2
 
CLASS 1                              
08-31-20143 10.00 0.054 0.62 0.67 (0.03) — — (0.03) 10.64 6.745 5.746,7 0.456,7 0.664,6 9 2
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 12-30-13
(commencement of operations) to 8-31-14. 4. Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the
underlying funds in which the portfolio invests. 5. Not annualized. 6. Annualized. 7. Ratios do not include the expenses indirectly incurred from underlying fund and can vary based on the
mix of underlying funds held by the portfolio. The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.08% – 0.65% for the period ended 8-31-14.
8. Less than $500,000.

 

The accompanying notes are an integral part of the financial statements. 279

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period       Ratios and supplemental data    
 
    Income (loss) from                        
    investment operations   Less distributions     Ratios to average net assets    
 
 
 
 
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Lifestyle II Conservative Portfolio                  
CLASS R6                              
08-31-20143 10.00 0.144 0.41 0.55 (0.06) — — (0.06) 10.49 5.555 19.536,7 0.636,7 1.994,7 —8 11
 
CLASS 1                              
08-31-20143 10.00 0.094 0.47 0.56 (0.07) — — (0.07) 10.49 5.575 18.446,7 0.586,7 1.294,7 2 11
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 12-30-13
(commencement of operations) to 8-31-14. 4. Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the
underlying funds in which the portfolio invests. 5. Not annualized. 6. Ratios do not include the expenses indirectly incurred from underlying funds and can vary based on the mix of
underlying funds held by the fund. The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.08% – 0.65% for the period ended 8-31-14. 7. Annualized.
8. Less than $500,000.    
 
Lifestyle II Growth Portfolio                  
CLASS R6                              
08-31-20143 10.00 0.034 0.68 0.71 — — — — 10.71 7.105 6.326,7 0.446,7 0.434,7 —8 21
 
CLASS 1                              
08-31-20143 10.00 0.024 0.69 0.71 — — — — 10.71 7.105 5.226,7 0.396,7 0.294,7 10 21
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 12-30-13
(commencement of operations) to 8-31-14. 4. Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the
underlying funds in which the portfolio invests. 5. Not annualized. 6. Ratios do not include the expenses indirectly incurred from underlying fund and can vary based on the mix of
underlying funds held by the portfolio. The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.08% – 0.65% for the period ended 8-31-14.
7. Annualized. 8. Less than $500,000.        
 
Lifestyle II Moderate Portfolio                    
CLASS R6                              
08-31-20143 10.00 0.114 0.49 0.60 (0.05) — — (0.05) 10.55 5.975 16.646,7 0.576,7 1.544,6 —8 6
 
CLASS 1                              
08-31-20143 10.00 0.094 0.50 0.59 (0.05) — — (0.05) 10.54 5.905 15.546,7 0.526,7 1.324,6 2 6
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 12-30-13
(commencement of operations) to 8-31-14. 4. Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the
underlying funds in which the portfolio invests. 5. Not annualized. 6. Annualized. 7. Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix
of underlying funds held by the portfolio. The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.08% – 0.65% for the period ended 8-31-14. 8. Less
than $500,000.          
 
Mid Cap Stock Fund                    
CLASS 1                              
08-31-2014 21.40 (0.09) 3.97 3.88 — (2.71) — (2.71) 22.57 19.04 0.92 0.91 (0.43) 361 107
08-31-2013 17.68 0.01 4.40 4.41 — (0.69) — (0.69) 21.40 25.79 0.92 0.92 0.07 338 121
08-31-2012 16.79 (0.06) 1.71 1.65 — (0.76) — (0.76) 17.68 10.62 0.92 0.92 (0.33) 311 120
08-31-2011 13.61 (0.06) 3.24 3.18 — — — — 16.79 23.37 0.93 0.93 (0.33) 338 120
08-31-2010 12.45 (0.03) 1.19 1.16 — — — — 13.61 9.32 0.93 0.93 (0.23) 279 123
 
CLASS NAV                              
08-31-2014 21.49 (0.08) 3.99 3.91 — (2.71) — (2.71) 22.69 19.10 0.87 0.86 (0.38) 1,328 107
08-31-2013 17.74 0.02 4.42 4.44 — (0.69) — (0.69) 21.49 25.88 0.87 0.87 0.11 1,145 121
08-31-2012 16.84 (0.05) 1.71 1.66 — (0.76) — (0.76) 17.74 10.65 0.87 0.87 (0.28) 687 120
08-31-2011 13.64 (0.05) 3.25 3.20 — — — — 16.84 23.46 0.88 0.88 (0.28) 518 120
08-31-2010 12.47 (0.03) 1.20 1.17 —3 — — —3 13.64 9.40 0.88 0.88 (0.18) 508 123
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Less than $0.005 per share.
 
Mid Value Fund                      
CLASS NAV                              
08-31-2014 14.94 0.13 3.75 3.88 (0.09) (0.53) — (0.62) 18.20 26.44 1.04 0.98 0.77 1,085 40
08-31-2013 13.05 0.15 2.50 2.65 (0.17) (0.59) — (0.76) 14.94 21.15 1.04 0.99 1.08 789 35
08-31-2012 13.87 0.13 1.42 1.55 (0.15) (2.22) — (2.37) 13.05 13.60 1.05 0.99 1.02 599 54
08-31-2011 13.11 0.11 1.87 1.98 (0.25) (0.97) — (1.22) 13.87 14.64 1.04 0.99 0.73 389 50
08-31-2010 12.61 0.263 0.68 0.94 (0.08) (0.36) — (0.44) 13.11 7.28 1.05 1.00 1.933 391 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. 3. Net investment income per
share and the percentage of average net assets reflects special dividends received by the fund, which amounted to $0.18 and 1.35%, respectively.

 

The accompanying notes are an integral part of the financial statements. 280

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period       Ratios and supplemental data    
 
Income (loss) from
investment operations Less distributions Ratios to average net assets
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Real Estate Equity Fund                  
CLASS NAV                              
08-31-2014 9.39 0.13 2.16 2.29 (0.15) — — (0.15) 11.53 24.75 0.93 0.88 1.27 260 15
08-31-2013 9.60 0.16 (0.25) (0.09) (0.12) — — (0.12) 9.39 (0.98) 0.93 0.88 1.66 213 11
08-31-2012 8.17 0.11 1.45 1.56 (0.13) — — (0.13) 9.60 19.31 0.93 0.89 1.23 206 14
08-31-2011 6.96 0.07 1.23 1.30 (0.09) — — (0.09) 8.17 18.76 0.91 0.87 0.89 181 19
08-31-2010 5.35 0.10 1.67 1.77 (0.16) — — (0.16) 6.96 33.54 0.92 0.88 1.55 305 40
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Real Estate Securities Fund                  
CLASS 1                              
08-31-2014 13.41 0.26 2.64 2.90 (0.31) (1.32) — (1.63) 14.68 24.28 0.79 0.78 1.89 567 108
08-31-2013 15.26 0.27 (0.48) (0.21) (0.26) (1.38) — (1.64) 13.41 (1.60) 0.79 0.79 1.81 507 111
08-31-2012 13.54 0.22 2.39 2.61 (0.18) (0.71) — (0.89) 15.26 20.36 0.79 0.79 1.59 557 93
08-31-2011 11.53 0.16 2.07 2.23 (0.22) — — (0.22) 13.54 19.49 0.79 0.79 1.22 441 93
08-31-2010 8.72 0.22 2.72 2.94 (0.13) — — (0.13) 11.53 33.94 0.80 0.80 2.13 352 87
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Real Return Bond Fund                  
CLASS 1                              
08-31-2014 11.49 0.25 0.49 0.74 (0.27) — — (0.27) 11.96 6.50 0.81 0.80 2.12 103 40
08-31-2013 13.18 0.25 (1.26) (1.01) (0.38) (0.30) — (0.68) 11.49 (8.04) 0.82 0.82 1.99 122 44
08-31-20123 13.12 0.28 0.94 1.22 (0.43) (0.73) — (1.16) 13.18 9.88 0.81 0.81 2.16 172 218
08-31-2011 13.08 0.41 0.69 1.10 (0.56) (0.50) — (1.06) 13.12 9.03 0.80 0.80 3.24 121 400
08-31-2010 12.10 0.26 1.15 1.41 (0.43) — — (0.43) 13.08 11.90 0.77 0.77 2.09 94 354
 
CLASS NAV                              
08-31-2014 11.35 0.26 0.49 0.75 (0.28) — — (0.28) 11.82 6.62 0.76 0.75 2.27 456 40
08-31-2013 13.03 0.26 (1.25) (0.99) (0.39) (0.30) — (0.69) 11.35 (8.02) 0.77 0.77 2.08 434 44
08-31-20123 12.98 0.30 0.92 1.22 (0.44) (0.73) — (1.17) 13.03 9.96 0.76 0.76 2.31 510 218
08-31-2011 12.96 0.42 0.67 1.09 (0.57) (0.50) — (1.07) 12.98 9.01 0.75 0.75 3.30 521 400
08-31-2010 11.99 0.27 1.14 1.41 (0.44) — — (0.44) 12.96 11.99 0.72 0.72 2.15 991 354
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. In accordance with
Accounting Standards Update 2011-03, Reconsideration of Effective Control for Repurchase Agreements, the fund now recognizes sale-buybacks as secured borrowings and not as
purchases and sales of securities. Accordingly, the portfolio has excluded these transactions from its portfolio turnover calculation. Had these transactions been included, the portfolio
turnover rate would have been 321%. The fund also recorded additional income and expenses which were offset by corresponding adjustments to realized and unrealized gain/loss. These
adjustments had no overall impact to the per share net asset value but did increase the net investment income per share by $0.02, the ratio of net investment income to average net assets
by 0.16% and the ratio of expenses to average net assets by 0.01%
 
Science & Technology Fund                    
CLASS NAV                              
08-31-2014 11.23 (0.02) 3.59 3.57 (0.01) (0.25) — (0.26) 14.54 32.14 1.05 1.01 (0.17) 1,026 97
08-31-20133 10.00 (0.01) 1.24 1.23 — — — — 11.23 12.304 1.115 1.075 (0.09)5 873 45
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 2-14-13
(commencement of operations) to 8-31-13. 4. Not annualized. 5. Annualized.
 
Short Term Government Income Fund                  
CLASS NAV                              
08-31-2014 9.79 0.07 0.06 0.13 (0.13) — — (0.13) 9.79 1.36 0.62 0.62 0.67 232 53
08-31-2013 10.07 0.05 (0.17) (0.12) (0.16) — — (0.16) 9.79 (1.25) 0.643 0.63 0.49 227 54
08-31-2012 10.14 0.10 0.03 0.13 (0.20) — — (0.20) 10.07 1.26 0.64 0.63 0.99 189 74
08-31-2011 10.25 0.11 0.10 0.21 (0.25) (0.07) — (0.32) 10.14 2.16 0.64 0.634 1.13 140 106
08-31-2010 10.14 0.12 0.26 0.38 (0.25) (0.02) — (0.27) 10.25 3.78 0.68 0.64 1.22 136 137
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Expense ratio has been
revised to conform with current year presentation of expense recapture and net expense reductions. 4. Includes the impact of expense recapture which amounted to less than 0.01% of
average net assets.  
 
Small Cap Growth Fund                    
CLASS NAV                              
08-31-2014 10.22 (0.09) 2.03 1.94 — (1.10) — (1.10) 11.06 19.49 1.11 1.10 (0.83) 240 100
08-31-2013 8.59 (0.03) 2.20 2.17 — (0.54) — (0.54) 10.22 26.90 1.12 1.12 (0.27) 211 122
08-31-2012 10.07 (0.06) 0.81 0.75 — (2.23) — (2.23) 8.59 10.54 1.12 1.12 (0.69) 138 147
08-31-2011 8.91 (0.07) 2.30 2.23 — (1.07) — (1.07) 10.07 24.62 1.12 1.12 (0.64) 150 144
08-31-2010 8.38 (0.07) 0.60 0.53 — — — — 8.91 6.32 1.13 1.13 (0.75) 149 143
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

The accompanying notes are an integral part of the financial statements. 281

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period       Ratios and supplemental data    
 
    Income (loss) from                        
    investment operations   Less distributions     Ratios to average net assets    
 
 
 
 
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Small Cap Opportunities Fund                  
CLASS 1                              
08-31-2014 28.54 —3 5.25 5.25 (0.06) (2.89) — (2.95) 30.84 18.66 1.12 1.03 —4 75 30
08-31-2013 22.72 0.11 6.22 6.33 (0.12) (0.39) — (0.51) 28.54 28.31 1.11 1.02 0.41 68 22
08-31-2012 20.02 0.02 2.73 2.75 (0.05) — — (0.05) 22.72 13.76 1.12 1.03 0.11 54 30
08-31-2011 16.16 0.02 3.84 3.86 — — — — 20.02 23.89 1.11 1.02 0.10 58 34
08-31-2010 15.14 (0.01) 1.06 1.05 (0.03) — — (0.03) 16.16 6.90 1.12 1.04 (0.06) 48 33
 
CLASS NAV                              
08-31-2014 28.42 0.02 5.23 5.25 (0.08) (2.89) — (2.97) 30.70 18.72 1.07 0.98 0.05 139 30
08-31-2013 22.63 0.13 6.18 6.31 (0.13) (0.39) — (0.52) 28.42 28.35 1.06 0.97 0.49 113 22
08-31-2012 19.94 0.03 2.72 2.75 (0.06) — — (0.06) 22.63 13.82 1.07 0.98 0.16 101 30
08-31-2011 16.09 0.03 3.82 3.85 — — — — 19.94 23.93 1.06 0.97 0.16 94 34
08-31-2010 15.07 —3 1.05 1.05 (0.03) — — (0.03) 16.09 6.98 1.07 0.99 (0.01) 105 33
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Less than $0.005 per share.
4. Less than 0.005%.
 
Small Company Growth Fund                  
CLASS NAV                              
08-31-2014 18.26 (0.03) 3.86 3.83 — (0.93) — (0.93) 21.16 21.25 1.06 1.05 (0.14) 204 33
08-31-2013 14.76 0.02 3.98 4.00 (0.03) (0.47) — (0.50) 18.26 27.81 1.07 1.07 0.13 176 30
08-31-2012 13.04 (0.01) 1.73 1.72 — — — — 14.76 13.19 1.08 1.08 (0.09) 105 32
08-31-2011 10.46 (0.06) 2.64 2.58 — — — — 13.04 24.67 1.07 1.07 (0.44) 109 46
08-31-2010 9.51 (0.03)3 0.99 0.96 — — (0.01) (0.01) 10.46 10.09 1.11 1.11 (0.31)3 116 35
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Net investment income
(loss) per share and ratio of net investment income (loss) to average net assets reflect a special dividend received by the fund which amounted to $0.02 and 0.22%, respectively.
 
Small Company Value Fund                  
CLASS 1                              
08-31-2014 32.79 0.15 4.60 4.75 (0.05) (0.19) — (0.24) 37.30 14.48 1.12 1.06 0.42 110 20
08-31-2013 27.07 0.30 5.98 6.28 (0.56) — — (0.56) 32.79 23.51 1.13 1.07 0.98 118 10
08-31-2012 24.29 0.21 2.78 2.99 (0.21) — — (0.21) 27.07 12.37 1.13 1.08 0.79 109 6
08-31-2011 20.19 0.11 4.12 4.23 (0.13) — — (0.13) 24.29 20.91 1.12 1.07 0.42 112 13
08-31-2010 19.71 0.09 0.58 0.67 (0.19) — — (0.19) 20.19 3.34 1.12 1.07 0.42 98 26
 
CLASS NAV                              
08-31-2014 32.77 0.17 4.60 4.77 (0.07) (0.19) — (0.26) 37.28 14.54 1.07 1.01 0.47 281 20
08-31-2013 27.05 0.32 5.98 6.30 (0.58) — — (0.58) 32.77 23.58 1.08 1.02 1.03 236 10
08-31-2012 24.27 0.22 2.78 3.00 (0.22) — — (0.22) 27.05 12.42 1.08 1.03 0.85 213 6
08-31-2011 20.17 0.12 4.12 4.24 (0.14) — — (0.14) 24.27 20.97 1.07 1.02 0.48 218 13
08-31-2010 19.69 0.10 0.57 0.67 (0.19) — — (0.19) 20.17 3.39 1.07 1.02 0.47 251 26
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Spectrum Income Fund                
CLASS NAV                              
08-31-2014 10.89 0.36 0.63 0.99 (0.35) (0.28) — (0.63) 11.25 9.30 0.79 0.75 3.22 965 59
08-31-2013 11.06 0.35 (0.12) 0.23 (0.39) (0.01) — (0.40) 10.89 2.05 0.79 0.76 3.11 1,033 69
08-31-2012 10.70 0.41 0.47 0.88 (0.52) — — (0.52) 11.06 8.52 0.79 0.76 3.86 1,059 69
08-31-2011 10.53 0.43 0.28 0.71 (0.54) — — (0.54) 10.70 6.91 0.79 0.76 3.99 994 74
08-31-2010 10.00 0.47 0.56 1.03 (0.50) — — (0.50) 10.53 10.58 0.79 0.76 4.55 837 79
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Strategic Equity Allocation Fund                
CLASS NAV                              
08-31-2014 11.82 0.23 2.31 2.54 (0.20) (0.20) — (0.40) 13.96 21.80 0.66 0.52 1.79 5,942 19
08-31-2013 10.21 0.21 1.54 1.75 (0.13) (0.01) — (0.14) 11.82 17.28 0.66 0.50 1.84 4,417 10
08-31-20123 10.00 0.07 0.14 0.21 — — — — 10.21 2.104 0.685 0.515 1.935 3,135 6
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. Period from 4-13-12
(commencement of operations) to 8-31-12. 4. Not annualized. 5. Annualized.

 

The accompanying notes are an integral part of the financial statements. 282

 


John Hancock Funds II

Financial highlights

Per share operating performance for a share outstanding throughout the period       Ratios and supplemental data    
 
Income (loss) from
investment operations Less distributions Ratios to average net assets
      Net real-                        
      ized and                     Net  
  Net asset Net unrealized Total from         Net asset   Expenses Expenses Net assets,  
  value, investment gain (loss) investment From net From net From tax Total value, Total before including investment end of Portfolio
  beginning income on invest- oper- investment realized return of distri- end of return reductions reductions income period turnover
Period ended of period ($) (loss) ($)1 ments ($) ations ($) income ($) gain ($) capital ($) butions ($) period ($) (%)2 (%) (%) (loss) (%) (in millions) (%)
 
Total Return Fund                    
CLASS 1                              
08-31-2014 13.72 0.21 0.52 0.73 (0.26) (0.19) — (0.45) 14.00 5.45 0.77 0.74 1.50 318 130
08-31-2013 14.70 0.22 (0.45) (0.23) (0.42) (0.33) — (0.75) 13.72 (1.67) 0.79 0.78 1.56 355 205
08-31-20123 14.11 0.33 0.68 1.01 (0.36) (0.06) — (0.42) 14.70 7.38 0.78 0.78 2.32 410 193
08-31-2011 15.04 0.30 0.03 0.33 (0.56) (0.70) — (1.26) 14.11 2.43 0.78 0.78 2.12 363 417
08-31-2010 14.02 0.28 1.38 1.66 (0.47) (0.17) — (0.64) 15.04 12.22 0.77 0.77 1.99 349 379
 
CLASS NAV                              
08-31-2014 13.68 0.22 0.52 0.74 (0.27) (0.19) — (0.46) 13.96 5.52 0.72 0.69 1.56 2,178 130
08-31-2013 14.65 0.23 (0.44) (0.21) (0.43) (0.33) — (0.76) 13.68 (1.56) 0.74 0.73 1.61 2,226 205
08-31-20123 14.07 0.33 0.68 1.01 (0.37) (0.06) — (0.43) 14.65 7.37 0.73 0.73 2.37 2,034 193
08-31-2011 15.00 0.31 0.03 0.34 (0.57) (0.70) — (1.27) 14.07 2.49 0.73 0.73 2.16 1,920 417
08-31-2010 13.99 0.29 1.36 1.65 (0.47) (0.17) — (0.64) 15.00 12.22 0.72 0.72 2.02 1,832 379
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods. 3. In accordance with
Accounting Standards Update 2011-03, Reconsideration of Effective Control for Repurchase Agreements, the fund now recognizes sale-buybacks as secured borrowings and not as
purchases and sales of securities. Accordingly, the fund has excluded these transactions from its portfolio turnover calculation. Had these transactions been included, the portfolio turnover
rate would have been 274%. The fund also recorded additional income and expenses which were offset by corresponding adjustments to realized and unrealized gain/loss. These
adjustments had no overall impact to the per share net asset value but did increase the net investment income per share by $0.005, the ratio of net investment income to average net
assets by 0.01% and the ratio of expenses to average net assets by 0.005%  
 
U.S. High Yield Bond Fund          
CLASS 1                              
08-31-2014 12.49 0.70 0.44 1.14 (0.80) (0.24) — (1.04) 12.59 9.60 0.82 0.81 5.59 95 54
08-31-2013 12.83 0.76 (0.16) 0.60 (0.79) (0.15) — (0.94) 12.49 4.78 0.81 0.81 5.95 92 61
08-31-2012 12.49 0.85 0.57 1.42 (0.90) (0.18) — (1.08) 12.83 12.11 0.82 0.82 6.86 95 38
08-31-2011 12.62 0.91 (0.07) 0.84 (0.97) — — (0.97) 12.49 6.77 0.82 0.82 7.11 67 53
08-31-2010 11.74 0.97 0.91 1.88 (1.00) — — (1.00) 12.62 16.57 0.81 0.81 7.84 52 34
 
CLASS NAV                              
08-31-2014 12.48 0.71 0.44 1.15 (0.81) (0.24) — (1.05) 12.58 9.66 0.77 0.76 5.64 391 54
08-31-2013 12.82 0.77 (0.16) 0.61 (0.80) (0.15) — (0.95) 12.48 4.84 0.76 0.76 6.00 605 61
08-31-2012 12.48 0.86 0.57 1.43 (0.91) (0.18) — (1.09) 12.82 12.18 0.77 0.77 6.91 564 38
08-31-2011 12.62 0.92 (0.08) 0.84 (0.98) — — (0.98) 12.48 6.74 0.77 0.77 7.17 458 53
08-31-2010 11.74 0.97 0.92 1.89 (1.01) — — (1.01) 12.62 16.63 0.76 0.76 7.89 697 34
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.
 
Value Fund                      
CLASS NAV                              
08-31-2014 11.04 0.07 2.51 2.58 (0.06) (0.65) — (0.71) 12.91 24.03 0.74 0.73 0.54 422 45
08-31-2013 10.01 0.09 2.30 2.39 (0.13) (1.23) — (1.36) 11.04 26.46 0.78 0.77 0.88 308 42
08-31-2012 9.37 0.10 1.50 1.60 (0.10) (0.86) — (0.96) 10.01 18.28 0.79 0.79 1.05 145 22
08-31-2011 8.59 0.09 1.35 1.44 (0.07) (0.59) — (0.66) 9.37 16.42 0.80 0.79 0.88 160 41
08-31-2010 7.77 0.09 0.80 0.89 (0.07) — — (0.07) 8.59 11.40 0.80 0.80 1.02 145 60
1. Based on average daily shares outstanding. 2. Total returns would have been lower had certain expenses not been reduced during the applicable periods.

 

The accompanying notes are an integral part of the financial statements. 283

 


John Hancock Funds II

Notes to financial statements

1. ORGANIZATION John Hancock Funds II (the Trust) is 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). It is a series company with multiple investment series (the funds), forty-one of which are presented in this report.

The funds may offer multiple classes of shares. The shares currently offered by the Trust are detailed in the Statements of Assets and Liabilities. Class A shares are open to all investors. Class I shares are offered to institutions and certain investors. Class R6 shares are only available to certain retirement plans, institutions and other investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Class NAV shares are offered to affiliated John Hancock funds including the John Hancock Lifestyle, Retirement Choices and Retirement Living Portfolios, other affiliated John Hancock funds and the John Hancock Freedom 529 plan. The Lifestyle, Retirement Choices, Lifestyle II, Retirement Living and Retirement Living II Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other John Hancock funds and certain other investments. Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees if any, transfer agent fees, state registration fees and printing and postage for each class may differ.

The accounting policies of the John Hancock underlying funds in which the funds invest are outlined in the underlying funds’ shareholder reports, which include the underlying funds’ financial statements, available without charge by calling 800-344-1029 or visiting jhinvestments.com, on the Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s public reference room in Washington, D.C.

Effective January 1, 2014, Asia Total Return Bond Fund changed its name to Asia Pacific Total Return Bond Fund.

Effective December 30, 2013, Lifestyle Aggressive II Portfolio, Lifestyle Balanced II Portfolio, Lifestyle Conservative II Portfolio, Lifestyle Growth II Portfolio and Lifestyle Moderate II Portfolio commenced operations.

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 funds intend to qualify as investment companies under Topic 946 of Accounting Standards Codifica-tion 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 funds:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the funds use the following valuation techniques: Equity securities, including exchange-traded and closed-end funds, held by the funds are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the funds in open-end mutual funds, including John Hancock Collateral Investment Trust (JHCIT), are valued at their respective net asset values each business day. Debt obligations are valued based on the evaluated prices provided by an independent pricing vendor or from broker-dealers. Independent pricing vendors utilize matrix pricing which takes into account factors such as institutional-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data, as well as broker supplied prices. Options listed on an exchange are valued at the mean of the most recent bid and ask prices from the exchange where the option was acquired or most likely will be sold. Swaps and unlisted options are valued using evaluated prices obtained from an independent pricing vendor. Futures contracts are valued at settlement prices, which are the official closing prices published by the exchange on which they trade. Foreign index futures that trade in the electronic trading market subsequent to the close of regular trading and have sufficient liquidity will be valued at the last traded price in the electronic trading market as of 4:00 P.M ET. Foreign securities and currencies, including forward foreign currency contracts, are valued in U.S. dollars, based on foreign currency exchange rates supplied by an independent pricing vendor. Securities that trade only in the over-the-counter (OTC) market are valued using bid prices. Certain short-term securities with maturities of 60 days or less at the time of purchase are valued at amortized cost.

Other funds’ securities and assets, for which reliable market quotations are not readily available, are valued at fair value as determined in good faith by the funds’ Pricing Committee following procedures established by the Board of Trustees. The frequency with which these fair valuation procedures are used cannot be predicted and fair value of securities may differ significantly from the value that would have been used had a ready market for such securities existed. Trading in foreign securities may be completed before the daily close of trading on the NYSE. Significant events at the issuer or market level may affect the values of securities between the time when the valuation of the securities is generally determined and the close of the NYSE. If a significant event occurs, these securities may be fair valued, as determined in good faith by the funds’ Pricing Committee, following procedures established by the Board of Trustees. The funds use fair value adjustment factors provided by an independent pricing vendor to value certain foreign securities in order to adjust for events that may occur between the close of foreign exchanges or markets and the close of the NYSE.

The funds use a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the funds’ own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

For Science & Technology Fund securities with market value of approximately $15,098,805 at the beginning of the year were transferred from Level 1 to Level 3 during the period since quoted prices in active markets for identical securities were no longer available and the securities were valued using significant unobservable inputs, as described above.

As of August 31, 2014, all investments for All Cap Core Fund, Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio, Lifestyle II Moderate Portfolio, Small Company Growth Fund and Small Company Value Fund are categorized as Level 1 under the hierarchy described above.

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All investments for Real Estate Securities Fund are categorized as Level 1 under the hierarchy described above, except for repurchase agreements and/or short-term discount notes which are categorized as Level 2.

All investments for Real Estate Equity Fund are categorized as Level 1 under the hierarchy described above, except for convertible bonds which are categorized as Level 2.

All investments for Asia Pacific Total Return Bond Fund and Short Term Government Income Fund are categorized as Level 2 under the hierarchy described above, except for futures which are categorized as Level 1.

All investments for Core Bond Fund are categorized as Level 2 under the hierarchy described above, except for securities lending collateral and money market funds which are categorized as Level 1.

The following is a summary of the values by input classification of the funds’ investments as of August 31, 2014, by major security category or type:

      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Active Bond Fund        
U.S. Government & Agency Obligations $412,713,555 — $412,713,555 —
Foreign Government Obligations 3,245,795 — 3,245,795 —
Corporate Bonds 750,569,729 — 750,549,590 $20,139
Capital Preferred Securities 19,470,998 — 19,470,998 —
Term Loans 6,736,875 — 6,736,875 —
Municipal Bonds 1,489,956 — 1,489,956 —
Collateralized Mortgage Obligations 355,093,882 — 354,918,878 175,004
Asset Backed Securities 117,303,290 — 116,499,953 803,337
Common Stocks 10 — 10 —
Preferred Securities 12,098,736 $8,352,101 3,746,635 —
Escrow Certificates 221,200 — 221,200 —
Securities Lending Collateral 4,394,828 4,394,828 — —
Short-Term Investments 76,390,167 55,610,167 20,780,000 —
 
Total Investments in Securities $1,759,729,021 $68,357,096 $1,690,373,445 $998,480
 
Alpha Opportunities Fund        
Common Stocks        
Consumer Discretionary $285,023,862 $253,775,918 $31,022,557 $225,387
Consumer Staples 100,518,506 63,668,647 36,849,859 —
Energy 146,456,534 130,456,778 15,999,756 —
Financials 225,135,050 206,389,637 18,745,413 —
Health Care 286,412,411 246,148,296 40,264,115 —
Industrials 306,794,336 263,187,362 43,606,974 —
Information Technology 381,452,886 346,428,476 35,024,410 —
Materials 73,459,175 61,926,403 11,532,772 —
Telecommunication Services 7,564,772 7,564,772 — —
Utilities 16,634,365 13,842,244 2,792,121 —
Preferred Securities        
Consumer Discretionary 525,913 — — 525,913
Financials 372,593 — — 372,593
Health Care 471,688 — — 471,688
Industrials 900,574 — — 900,574
Information Technology 13,051,532 — — 13,051,532
Warrants 1,796,801 — 1,796,801 —
Securities Lending Collateral 127,551,522 127,551,522 — —
Short-Term Investments 54,500,000 — 54,500,000 —
 
Total Investments in Securities $2,028,622,520 $1,720,940,055 $292,134,778 $15,547,687
 
Blue Chip Growth Fund        
Common Stocks        
Consumer Discretionary $711,323,441 $703,418,635 $7,904,806 —
Consumer Staples 55,638,686 55,638,686 — —
Energy 121,761,427 121,761,427 — —
Financials 205,452,751 205,452,751 — —
Health Care 558,595,312 558,595,312 — —
Industrials 364,546,810 364,546,810 — —
Information Technology 588,543,124 554,116,443 34,426,681 —
Materials 97,305,308 97,305,308 — —
Telecommunication Services 10,332,483 — 10,332,483 —
Securities Lending Collateral 64,813,952 64,813,952 — —
Short-Term Investments 10,243,075 10,243,075 — —
 
Total Investments in Securities $2,788,556,369 $2,735,892,399 $52,663,970 —

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Capital Appreciation Fund        
Common Stocks        
Consumer Discretionary $683,701,837 $625,829,741 $57,872,096 —
Consumer Staples 84,934,290 84,934,290 — —
Energy 122,842,097 122,842,097 — —
Financials 54,168,364 54,168,364 — —
Health Care 467,768,959 467,768,959 — —
Industrials 152,142,477 152,142,477 — —
Information Technology 732,296,929 732,296,929 — —
Materials 42,512,130 42,512,130 — —
Securities Lending Collateral 33,333,327 33,333,327 — —
Short-Term Investments 8,278,000 — 8,278,000 —
 
Total Investments in Securities $2,381,978,410 $2,315,828,314 $66,150,096 —
 
Capital Appreciation Value Fund        
Common Stocks        
Consumer Discretionary $139,771,583 $139,771,583 — —
Consumer Staples 88,353,606 88,353,606 — —
Energy 73,361,944 73,361,944 — —
Financials 240,579,138 238,597,344 $1,981,794 —
Health Care 257,074,645 257,074,645 — —
Industrials 193,656,546 193,656,546 — —
Information Technology 128,075,306 128,075,306 — —
Materials 8,160,768 8,160,768 — —
Telecommunication Services 9,727,578 9,727,578 — —
Utilities 93,875,917 93,875,917 — —
Preferred Securities 8,438,293 8,438,293 — —
Corporate Bonds 372,111,418 — 372,111,418 —
Convertible Bonds 3,348,065 — 3,348,065 —
Term Loans 116,462,618 — 116,462,618 —
Asset Backed Securities 11,657,092 — 11,657,092 —
U.S. Government & Agency Obligations 51,454,225 — 51,454,225 —
Short-Term Investments 183,962,394 183,962,394 — —
 
Total Investments in Securities $1,980,071,136 $1,423,055,924 $557,015,212 —
Other Financial Instruments:        
Written Options ($3,483,810) ($257,821) ($3,225,989) —
 
Equity-Income Fund        
Common Stocks        
Consumer Discretionary $216,734,236 $211,275,636 $5,458,600 —
Consumer Staples 99,726,570 99,726,570 — —
Energy 303,595,368 303,595,368 — —
Financials 388,387,075 388,387,075 — —
Health Care 132,857,499 122,728,013 10,129,486 —
Industrials 279,173,245 279,173,245 — —
Information Technology 212,116,487 197,536,727 — $14,579,760
Materials 102,177,332 102,177,332 — —
Telecommunication Services 74,431,667 63,950,532 10,481,135 —
Utilities 120,723,975 120,723,975 — —
Securities Lending Collateral 66,698,890 66,698,890 — —
Short-Term Investments 190,206,660 190,206,660 — —
 
Total Investments in Securities $2,186,829,004 $2,146,180,023 $26,069,221 $14,579,760
 
Fundamental Global Franchise Fund        
Common Stocks        
Belgium $8,583,778 — $8,583,778 —
France 23,747,125 — 23,747,125 —
Germany 31,109,180 — 31,109,180 —
Ireland 10,402,225 — 10,402,225 —
Netherlands 24,123,307 — 24,123,307 —
Switzerland 8,191,990 — 8,191,990 —
United Kingdom 82,337,012 — 82,337,012 —
United States 235,076,929 $235,076,929 — —
Short-Term Investments 30,161,000 — 30,161,000 —
 
Total Investments in Securities $453,732,546 $235,076,929 $218,655,617 —

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Global Bond Fund        
Foreign Government Obligations $312,784,239 — $312,784,239 —
Corporate Bonds 102,764,741 — 102,764,741 —
U.S. Government & Agency Obligations 103,882,180 — 103,882,180 —
Collateralized Mortgage Obligations 81,583,023 — 81,583,023 —
Asset Backed Securities 7,798,187 — 7,798,187 —
Common Stocks 70,860 $70,860 — —
Preferred Securities 151,528 151,528 — —
Purchased Options 316,921 — 316,921 —
Escrow Shares 1,580,250 — 1,580,250 —
Certificate of Deposit 7,830,545 — 7,830,545 —
Short-Term Investments 48,144,013 — 48,144,013 —
 
Total Investments in Securities $666,906,487 $222,388 $666,684,099 —
Sale Commitments Outstanding ($47,410,975) — ($47,410,975) —
Sale-buyback ($8,125,390) — ($8,125,390) —
Other Financial Instruments:        
Futures $499,020 $499,020 — —
Forward Foreign Currency Contracts ($272,321) — ($272,321) —
Written Options ($1,518,643) — ($1,518,643) —
Interest Rate Swaps ($1,294,878) — ($1,294,878) —
Credit Default Swaps $625,053 — $625,053 —
Currency Swaps $8,845 — $8,845 —
 
Global Equity Fund        
Common Stocks        
Australia $16,470,605 — $16,470,605 —
Bermuda 5,879,243 — 5,879,243 —
France 27,003,562 — 27,003,562 —
Germany 8,132,817 — 8,132,817 —
Hong Kong 6,878,796 — 6,878,796 —
Ireland 14,333,548 $7,183,051 7,150,497 —
Italy 7,242,469 — 7,242,469 —
Japan 45,025,338 — 45,025,338 —
Luxembourg 8,446,181 — 8,446,181 —
Netherlands 22,236,342 — 22,236,342 —
Norway 7,165,442 — 7,165,442 —
Singapore 6,000,149 — 6,000,149 —
Switzerland 23,946,964 4,739,849 19,207,115 —
United Kingdom 37,855,390 7,207,435 30,647,955 —
United States 230,342,880 222,527,669 7,815,211 —
Securities Lending Collateral 5,260,253 5,260,253 — —
Short-Term Investments 15,898,349 15,898,349 — —
 
Total Investments in Securities $488,118,328 $262,816,606 $225,301,722 —
Other Financial Instruments:        
Forward Foreign Currency Contracts $154,951 — $154,951 —
 
Global Real Estate Fund        
Common Stocks        
Australia $21,530,170 — $21,530,170 —
Canada 11,795,265 $11,795,265 — —
Finland 1,733,303 — 1,733,303 —
France 9,513,473 — 9,513,473 —
Germany 6,060,398 — 6,060,398 —
Hong Kong 25,484,747 — 25,484,747 —
Ireland 1,059,646 — 1,059,646 —
Japan 42,882,418 — 42,882,418 —
Jersey, Channel Islands 1,544,212 — 1,544,212 —
Luxembourg 2,231,358 — 2,231,358 —
Malta 6 — — $6
Netherlands 1,736,081 — 1,736,081 —
Norway 1,298,880 — 1,298,880 —
Singapore 11,885,757 — 11,885,757 —
Spain 1,348,114 — 1,348,114 —
Sweden 2,198,834 — 2,198,834 —
Switzerland 2,324,104 — 2,324,104 —
United Kingdom 21,467,969 — 21,467,969 —
United States 169,658,969 169,658,969 — —
Warrants 90,605 90,605 — —
 
Total Investments in Securities $335,844,309 $181,544,839 $154,299,464 $6

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Health Sciences Fund        
Common Stocks        
Consumer Staples $15,256,330 $14,526,728 $729,602 —
Health Care 576,164,242 558,668,187 17,436,088 $59,967
Industrials 17,183,831 17,183,831 — —
Information Technology 3,941,476 3,941,476 — —
Preferred Securities        
Health Care 2,413,597 877,334 — 1,536,263
Information Technology 307,268 — — 307,268
Convertible Bonds 111,188 — 111,188 —
Rights 30,880 30,880 — —
Short-Term Investments 3,429,033 3,429,033 — —
 
Total Investments in Securities $618,837,845 $598,657,469 $18,276,878 $1,903,498
Other Financial Instruments:        
Written Options ($866,745) ($866,745) — —
 
High Yield Fund        
Foreign Government Obligations $10,835,120 — $10,835,120 —
Corporate Bonds 836,324,380 — 830,995,866 $5,328,514
Capital Preferred Securities 2,189,658 — 2,189,658 —
Convertible Bonds 2,358,458 — 365,458 1,993,000
Term Loans 30,599,919 — 30,599,919 —
Common Stocks 26,515,353 $13,954,229 504,633 12,056,491
Preferred Securities 15,180,348 11,921,214 3,259,134 —
Warrants 324,450 — 324,450 —
Securities Lending Collateral 10,313,511 10,313,511 — —
Short-Term Investments 4,478,637 4,478,637 — —
 
Total Investments in Securities $939,119,834 $40,667,591 $879,074,238 $19,378,005
Other Financial Instruments:        
Futures ($117,989) ($117,989) — —
Forward Foreign Currency Contracts $602,560 — $602,560 —
Credit Default Swaps ($1,790,009) — ($1,790,009) —
 
International Growth Opportunities Fund        
Common Stocks        
Argentina $10,068,744 $10,068,744 — —
Australia 14,191,428 — $14,191,428 —
Brazil 11,350,061 11,350,061 — —
Chile 3,753,798 3,753,798 — —
China 105,880,556 59,491,058 46,389,498 —
Denmark 30,226,298 — 30,226,298 —
France 38,414,278 — 38,414,278 —
Germany 17,537,186 — 17,537,186 —
Hong Kong 36,540,918 — 36,540,918 —
Ireland 4,973,913 — 4,973,913 —
Italy 53,759,354 — 53,759,354 —
Japan 91,281,117 — 91,281,117 —
Norway 7,007,292 — 7,007,292 —
Peru 13,089,924 13,089,924 — —
Portugal 3,312,016 — 3,312,016 —
Russia 7,805,774 — 7,805,774 —
Singapore 3,647,145 — 3,647,145 —
South Korea 20,291,007 — 20,291,007 —
Spain 77,877,224 — 77,877,224 —
Sweden 89,087,974 — 89,087,974 —
Switzerland 50,615,152 — 50,615,152 —
Taiwan 6,548,928 — 6,548,928 —
Turkey 18,049,664 — 18,049,664 —
United Kingdom 112,909,148 — 112,909,148 —
Preferred Securities 8,200,012 — 8,200,012 —
Short-Term Investments 12,244,442 12,244,442 — —
 
Total Investments in Securities $848,663,353 $109,998,027 $738,665,326 —

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
International Growth Stock Fund        
Common Stocks        
Australia $25,138,093 — $25,138,093 —
Belgium 10,325,230 — 10,325,230 —
Brazil 31,652,525 $31,652,525 — —
Canada 61,370,844 61,370,844 — —
China 30,161,010 12,194,175 17,966,835 —
Denmark 17,122,091 — 17,122,091 —
France 25,823,806 — 25,823,806 —
Germany 53,878,415 — 53,878,415 —
Hong Kong 22,506,474 — 22,506,474 —
Ireland 12,359,051 — 12,359,051 —
Israel 14,161,860 14,161,860 — —
Japan 44,553,929 — 44,553,929 —
Mexico 13,181,148 13,181,148 — —
Netherlands 18,380,586 — 18,380,586 —
Singapore 30,362,419 10,485,766 19,876,653 —
South Korea 20,584,045 — 20,584,045 —
Spain 6,650,304 — 6,650,304 —
Sweden 15,569,193 — 15,569,193 —
Switzerland 52,995,828 — 52,995,828 —
Taiwan 11,919,300 — 11,919,300 —
Thailand 8,265,157 — 8,265,157 —
Turkey 8,187,675 — 8,187,675 —
United Kingdom 114,142,538 — 114,142,538 —
Short-Term Investments 42,487,817 42,487,817 — —
 
Total Investments in Securities $691,779,338 $185,534,135 $506,245,203 —
 
International Small Cap Fund        
Common Stocks        
Austria $4,895,606 — $4,895,606 —
Bahamas 7,260,715 $7,260,715 — —
Belgium 7,073,056 — 7,073,056 —
Brazil 4,462,978 4,462,978 — —
Canada 60,243,422 60,243,422 — —
China 22,972,974 — 22,972,974 —
Finland 26,885,124 — 26,885,124 —
France 11,803,228 — 11,803,228 —
Germany 36,838,694 — 36,838,694 —
Greece 3,419,278 — 3,419,278 —
Hong Kong 49,768,275 — 49,768,275 —
India 5,928,423 — 5,928,423 —
Italy 18,816,686 — 18,816,686 —
Japan 96,459,461 — 96,459,461 —
Luxembourg 8,273,966 — 8,273,966 —
Netherlands 32,338,138 — 32,338,138 —
Norway 16,985,181 — 16,985,181 —
Russia 4,290,099 — 4,290,099 —
Singapore 1,602,018 — — $1,602,018
South Korea 73,114,365 — 73,114,365 —
Spain 14,682,790 — 14,682,790 —
Sweden 4,498,600 — 4,498,600 —
Switzerland 30,770,445 10,716,150 20,054,295 —
Taiwan 35,024,992 — 35,024,992 —
Thailand 9,150,593 — 9,150,593 —
United Kingdom 55,083,352 — 55,083,352 —
Preferred Securities 5,195,423 — 5,195,423 —
Exchange-Traded Funds 10,284,762 10,284,762 — —
Securities Lending Collateral 45,729,339 45,729,339 — —
Short-Term Investments 31,000,000 — 31,000,000 —
 
Total Investments in Securities $734,851,983 $138,697,366 $594,552,599 $1,602,018
 
International Value Fund        
Common Stocks        
Belgium $12,715,757 — $12,715,757 —
Brazil 24,164,606 $24,164,606 — —
Canada 127,695,454 127,695,454 — —
China 116,046,049 17,711,343 98,334,706 —

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
International Value Fund (continued)        
Denmark $8,251,367 — $8,251,367 —
France 237,084,040 — 237,084,040 —
Germany 159,480,433 — 159,480,433 —
Hong Kong 83,273,989 — 83,273,989 —
India 13,486,922 — 13,486,922 —
Ireland 14,887,650 — 14,887,650 —
Israel 27,978,192 $27,978,192 — —
Italy 64,339,872 — 64,339,872 —
Japan 141,653,220 — 141,653,220 —
Netherlands 128,023,975 — 128,023,975 —
Norway 42,077,173 — 42,077,173 —
Russia 21,942,796 11,185,519 10,757,277 —
Singapore 13,317,237 — 13,317,237 —
South Korea 260,636,205 48,263,711 212,372,494 —
Spain 28,362,900 — 28,362,900 —
Sweden 11,332,041 — 11,332,041 —
Switzerland 170,865,184 — 170,865,184 —
Thailand 9,446,119 — 9,446,119 —
United Arab Emirates 5,726,434 — 5,726,434 —
United Kingdom 281,166,188 15,306,926 265,859,262 —
United States 21,241,165 21,241,165 — —
Securities Lending Collateral 35,632,114 35,632,114 — —
Short-Term Investments 48,000,000 — 48,000,000 —
 
Total Investments in Securities $2,108,827,082 $329,179,030 $1,779,648,052 —
 
Investment Quality Bond Fund        
U.S. Government & Agency Obligations $161,809,068 — $161,809,068 —
Foreign Government Obligations 5,847,723 — 5,847,723 —
Corporate Bonds 143,899,751 — 143,899,751 —
Capital Preferred Securities 364,560 — 364,560 —
Municipal Bonds 8,847,256 — 8,847,256 —
Term Loans 17,557,870 — 17,557,870 —
Collateralized Mortgage Obligations 66,511,933 — 66,511,933 —
Asset Backed Securities 12,105,868 — 12,105,868 —
Preferred Securities 885,300 $885,300 — —
Purchased Options 25,272 — 25,272 —
Securities Lending Collateral 689,620 689,620 — —
Short-Term Investments 103,700,000 — 103,700,000 —
 
Total Investments in Securities $522,244,221 $1,574,920 $520,669,301 —
Other Financial Instruments:        
Futures $27,091 $27,091 — —
Forward Foreign Currency Contracts $24,122 — $24,122 —
Interest Rate Swaps ($559,088) — ($559,088) —
Credit Default Swaps ($1,259,350) — ($1,259,350) —
 
Mid Cap Stock Fund        
Common Stocks        
Consumer Discretionary $384,939,829 $364,278,485 $19,239,753 $1,421,591
Consumer Staples 92,145,928 92,145,928 — —
Energy 67,869,570 67,869,570 — —
Financials 63,280,955 36,124,679 27,156,276 —
Health Care 261,826,308 238,081,195 23,745,113 —
Industrials 308,741,355 308,741,355 — —
Information Technology 351,849,466 351,849,466 — —
Materials 52,892,205 52,892,205 — —
Preferred Securities        
Consumer Discretionary 3,317,036 — — 3,317,036
Health Care 2,977,848 — — 2,977,848
Industrials 5,662,360 — — 5,662,360
Information Technology 64,177,514 — — 64,177,514
Warrants 363,631 363,631 — —
Securities Lending Collateral 154,708,322 154,708,322 — —
Short-Term Investments 30,100,000 — 30,100,000 —
 
Total Investments in Securities $1,844,852,327 $1,667,054,836 $100,241,142 $77,556,349

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Mid Value Fund        
Common Stocks        
Consumer Discretionary $117,287,563 $115,090,506 $2,197,057 —
Consumer Staples 90,656,024 90,656,024 — —
Energy 105,758,394 105,758,394 — —
Financials 285,294,854 283,856,943 1,437,911 —
Health Care 91,971,230 91,971,230 — —
Industrials 117,273,383 117,273,383 — —
Information Technology 41,873,715 41,873,715 — —
Materials 82,528,738 77,957,957 4,570,781 —
Telecommunication Services 7,777,043 7,777,043 — —
Utilities 85,536,004 85,536,004 — —
Preferred Securities        
Energy 2,510,379 — 2,510,379 —
Financials 309,016 309,016 — —
Convertible Bonds        
Financials 781,643 — 781,643 —
Industrials 3,897,025 — 3,897,025 —
Securities Lending Collateral 58,023,347 58,023,347 — —
Short-Term Investments 51,373,557 51,373,557 — —
 
Total Investments in Securities $1,142,851,915 $1,127,457,119 $15,394,796 —
 
Real Return Bond Fund        
U.S. Government & Agency Obligations $545,885,066 — $545,885,066 —
Foreign Government Obligations 64,979,275 — 64,979,275 —
Corporate Bonds 10,631,179 — 10,631,179 —
Municipal Bonds 543,148 — 543,148 —
Collateralized Mortgage Obligations 12,981,175 — 12,981,175 —
Asset Backed Securities 9,478,319 — 9,478,319 —
Common Stocks 19,911 $19,911 — —
Purchased Options 1,024 — 1,024 —
Short-Term Investments 6,147,271 — 6,147,271 —
 
Total Investments in Securities $650,666,368 $19,911 $650,646,457 —
Sale-buyback ($91,667,025) — ($91,667,025) —
Reverse repurchase ($1,882,750) — ($1,882,750) —
Other Financial Instruments:        
Futures ($293,904) ($293,904) — —
Forward Foreign Currency Contracts $1,822,035 — $1,822,035 —
Written Options ($179,785) — ($179,785) —
Inflation Swaps ($746,897) — ($746,897) —
Interest Rate Swaps ($4,536,435) — ($4,536,435) —
Credit Default Swaps $289,675 — $289,675 —
 
Science & Technology Fund        
Common Stocks        
Consumer Discretionary $131,335,444 $131,335,444 — —
Financials 2,455,140 2,455,140 — —
Health Care 35,927,467 35,927,467 — —
Industrials 15,349,419 11,290,846 $4,058,573 —
Information Technology 773,475,187 727,884,961 29,825,071 $15,765,155
Telecommunication Services 25,005,699 10,715,253 14,290,446 —
Preferred Securities 1,271,211 — — 1,271,211
Securities Lending Collateral 86,002,821 86,002,821 — —
Short-Term Investments 40,208,327 38,062,327 2,146,000 —
 
Total Investments in Securities $1,111,030,715 $1,043,674,259 $50,320,090 $17,036,366
 
Small Cap Growth Fund        
Common Stocks        
Consumer Discretionary $31,449,535 $31,449,535 — —
Consumer Staples 1,718,923 1,718,923 — —
Energy 9,945,397 9,945,397 — —
Financials 17,541,553 17,541,553 — —
Health Care 46,513,650 46,513,650 — —
Industrials 50,310,387 50,310,387 — —
Information Technology 61,849,737 61,620,066 — $229,671
Materials 5,916,963 5,916,963 — —

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Small Cap Growth Fund (continued)        
Preferred Securities        
Consumer Discretionary $4,990,239 — $4,990,239 —
Information Technology 4,288,980 — — $4,288,980
Securities Lending Collateral 24,583,751 $24,583,751 — —
Short-Term Investments 6,900,000 — 6,900,000 —
 
Total Investments in Securities $266,009,115 $249,600,225 $11,890,239 $4,518,651
 
Small Cap Opportunities Fund        
Common Stocks        
Consumer Discretionary $24,905,861 $24,905,861 — —
Consumer Staples 4,622,061 4,622,061 — —
Energy 19,407,136 19,392,521 $14,615 —
Financials 45,066,200 45,065,847 — $353
Health Care 22,811,690 22,806,068 — 5,622
Industrials 36,850,796 36,850,796 — —
Information Technology 35,378,989 35,378,989 — —
Materials 13,319,144 13,319,144 — —
Telecommunication Services 1,431,105 1,422,272 — 8,833
Utilities 1,714,378 1,714,378 — —
Warrants 261 — 261 —
Securities Lending Collateral 14,947,617 14,947,617 — —
Short-Term Investments 8,511,344 8,511,344 — —
 
Total Investments in Securities $228,966,582 $228,936,898 $14,876 $14,808
 
Spectrum Income Fund        
U.S. Government & Agency Obligations $224,806,299 — $224,806,299 —
Foreign Government Obligations 137,491,486 — 137,491,486 —
Corporate Bonds 371,684,222 — 371,683,943 $279
Capital Preferred Securities 281,765 — 281,765 —
Convertible Bonds 585,000 — 585,000 —
Municipal Bonds 5,289,429 — 5,289,429 —
Term Loans 13,886,652 — 13,886,652 —
Collateralized Mortgage Obligations 30,776,766 — 30,776,766 —
Asset Backed Securities 31,310,127 — 31,310,127 —
Common Stocks 121,605,133 $118,247,462 2,002,991 1,354,680
Preferred Securities 1,362,096 375,977 986,119 —
Purchased Options 31,988 1,125 30,863 —
Securities Lending Collateral 4,607,945 4,607,945 — —
Short-Term Investments 30,232,073 27,898,098 2,333,975 —
 
Total Investments in Securities $973,950,981 $151,130,607 $821,465,415 $1,354,959
Sale Commitments Outstanding ($1,016,437) — ($1,016,437) —
Other Financial Instruments:        
Futures $53,798 $53,798 — —
Forward Foreign Currency Contracts $368,142 — $368,142 —
Credit Default Swaps ($729) — ($729) —
 
Strategic Equity Allocation Fund        
Common Stocks        
Consumer Discretionary $663,812,874 $505,745,614 $157,971,106 $96,154
Consumer Staples 498,819,565 361,366,632 137,452,933 —
Energy 509,281,429 407,528,604 101,752,825 —
Financials 1,096,404,218 725,171,882 371,228,874 3,462
Health Care 672,445,790 548,940,593 123,495,239 9,958
Industrials 622,846,648 463,482,118 159,364,530 —
Information Technology 898,884,007 789,765,214 109,118,793 —
Materials 286,135,481 175,492,785 110,642,696 —
Telecommunication Services 171,112,113 93,187,291 77,904,884 19,938
Utilities 185,974,654 132,320,848 53,653,806 —
Preferred Securities        
Consumer Discretionary 5,894,459 302,895 5,591,564 —
Consumer Staples 2,233,442 603,366 1,630,076 —
Energy 3,688,027 3,688,027 — —
Financials 8,831,550 8,831,550 — —
Information Technology 1,576,974 — 1,576,974 —
Materials 3,277,530 2,925,587 351,943 —

 

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      Level 2 Level 3
  Total Market   Significant Significant
  Value at Level 1 Observable Unobservable
  8-31-14 Quoted Price Inputs Inputs
Strategic Equity Allocation Fund (continued)        
Telecommunication Services $684,966 $684,966 — —
Utilities 1,102,418 1,102,418 — —
Exchange-Traded Funds 26,153,057 26,153,057 — —
Rights 121,847 54,124 $67,723 —
Warrants $38,216 $30,501 7,715 —
Securities Lending Collateral 113,748,357 113,748,357 — —
Short-Term Investments 247,544,000 — 247,544,000 —
 
Total Investments in Securities $6,020,611,622 $4,361,126,429 $1,659,355,681 $129,512
Other Financial Instruments:        
Futures $4,763,840 $4,763,840 — —
 
Total Return Fund        
U.S. Government & Agency Obligations $777,684,114 — $777,684,114 —
Foreign Government Obligations 409,340,985 — 409,340,985 —
Corporate Bonds 743,439,138 — 743,439,138 —
Term Loans 8,458,836 — 8,458,836 —
Municipal Bonds 156,975,519 — 156,975,519 —
Collateralized Mortgage Obligations 238,461,231 — 238,461,231 —
Asset Backed Securities 83,906,925 — 83,906,925 —
Preferred Securities 40,408,728 $40,408,728 — —
Short-Term Investments 224,688,946 — 224,688,946 —
 
Total Investments in Securities $2,683,364,422 $40,408,728 $2,642,955,694 —
Sale Commitments Outstanding ($15,571,170) — ($15,571,170) —
Other Financial Instruments:        
Futures $3,981,760 $3,981,760 — —
Forward Foreign Currency Contracts $9,793,601 — $9,793,601 —
Written Options ($1,593,180) — ($1,593,180) —
Interest Rate Swaps $5,547,531 — $5,547,531 —
Credit Default Swaps $447,136 — $447,136 —
 
U.S. High Yield Bond Fund        
Corporate Bonds $408,073,085 — $408,073,085 —
Capital Preferred Securities 1,666,000 — 1,666,000 —
Term Loans 67,720,939 — 67,720,939 —
Common Stocks 7,500 — 7,500 —
Preferred Securities 1,569,738 $1,561,298 5,080 $3,360
Securities Lending Collateral 4,650,196 4,650,196 — —
Short-Term Investments 2,615,262 2,019,056 596,206 —
 
Total Investments in Securities $486,302,720 $8,230,550 $478,068,810 $3,360
 
Value Fund        
Common Stocks        
Consumer Discretionary $46,428,661 $46,428,661 — —
Consumer Staples 13,661,140 13,661,140 — —
Energy 27,080,169 19,489,244 $7,590,925 —
Financials 109,149,258 109,149,258 — —
Health Care 48,613,497 48,613,497 — —
Industrials 72,322,701 72,322,701 — —
Information Technology 50,028,333 50,028,333 — —
Materials 23,614,491 23,614,491 — —
Telecommunication Services 11,082,363 11,082,363 — —
Utilities 13,399,190 13,399,190 — —
Short-Term Investments 8,787,426 8,787,426 — —
 
Total Investments in Securities $424,167,229 $416,576,304 $7,590,925 —

 

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The following is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value. Transfers into or out of Level 3 represent the beginning value of any security or instrument where a change in the level has occurred from the beginning to the end of the period. Securities were transferred into Level 3 because of a lack of observable market data which resulted from an absence of market activity for these securities. In addition, securities were transferred from Level 3 since observable market data became available due to the increased market activity of these securities.

High Yield Fund        
  Corporate Convertible Common  
  Bonds Bonds Stocks Totals
Balance as of 8-31-13 $2,484,753 — $12,430,043 $14,914,796
Realized gain (loss) — — — —
Change in unrealized appreciation (depreciation) 111,640 — (2,962,831) (2,851,191)
Purchases 2,732,121 $1,993,000 2,589,279 7,314,400
Sales — — — —
Transfers into Level 3 — — — —
Transfers out of Level 3 — — — —
Balance as of 8-31-14 $5,328,514 $1,993,000 $12,056,491 $19,378,005
Change in unrealized at period end* $143,477 — ($2,635,817) ($2,492,340)
 
Mid Cap Stock Fund        
  Common Preferred  
  Stocks Securities Totals
Balance as of 8-31-13 — — —
Realized gain (loss) — — —
Change in unrealized appreciation (depreciation)   ($197,970) ($197,970)
Purchases $1,421,591 76,332,728 77,754,319
Sales — — —
Transfers into Level 3 — — —
Transfers out of Level 3 — — —
Balance as of 8-31-14 $1,421,591 $76,134,758 $77,556,349
Change in unrealized at period end* — ($197,970) ($197,970)
 
Science & Technology Fund      
  Common Preferred  
  Stocks Securities Totals
Balance as of 8-31-13 $385,012 — $385,012
Realized gain (loss) 3,989 — 3,989
Change in unrealized appreciation (depreciation) 645,638 $606,096 1,251,734
Purchases 1,450,848 665,115 2,115,963
Sales (1,434,125) — (1,434,125)
Transfers into Level 3 15,098,805 — 15,098,805
Transfers out of Level 3 (385,012) — (385,012)
Balance as of 8-31-14 $15,765,155 $1,271,211 $17,036,366
Change in unrealized at period end* $645,638 606,096 $1,251,734
 
Small Cap Growth Fund      
  Common Preferred  
  Stocks Securities Totals
Balance as of 8-31-13 — $860,529 $860,529
Realized gain (loss) — — —
Change in unrealized appreciation (depreciation) ($93,024) 556,100 463,076
Purchases 322,695 3,732,880 4,055,575
Sales — — —
Transfers into Level 3 — — —
Transfers out of Level 3 — (860,529) (860,529)
Balance as of 8-31-14 $229,671 $4,288,980 $4,518,651
Change in unrealized at period end* ($93,024) 556,100 $463,076
 
* Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at period end.

 

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The valuation techniques and significant amounts of unobservable inputs used in the fair value measurement of the funds’ Level 3 securities are outlined in the
table below:        
High Yield Fund Fair Value at 8-31-14 Valuation Technique Unobservable Inputs Input/Range
Common Stocks $12,056,491 Market Approach EV/EBITDA multiple 6.09x – 9.30x
      Discount for lack of marketability (weighted average 6.92x)
        10%
Convertible Bonds $1,993,000 Market Approach Prior/recent transactions $100.00
 
Corporate Bonds $5,328,514 Market Approach Yield spread 408 bps – 756 bps
        (weighted average 610.01 bps)
Total $19,378,005      
 
Increases/decreases in enterprise values or earnings before interst, taxes, depreciation and amortization (“EV/EBITDA”) multiples, prior/recent transactions, and yield
spread may result in increases/decreases in security valuation. Increases/decreases in discounts for lack of marketability may result in decreases/increases in security
valuation.        
Mid Cap Stock Fund Fair Value at 8-31-14 Valuation Technique Unobservable Inputs Input/Range
Common Stocks $1,421,591 Market Approach Prior/recent transactions $27.06
 
Preferred Securities $65,205,983 Market Approach Prior/recent transactions $1.58 – $62.05
        (weighted average $24.50)
 
  $2,855,172 Market Approach EV to revenue multiple 7.32x
      Discount for lack of marketability 10%
 
  $8,073,603 Market Approach EV to revenue multiple 1.57x
      Illiquidity discount 17.5%
      Allocated using OPM – Volatility 40%
 
 
  $76,134,758      
Total $77,556,349      
 
Increases/decreases in prior/recent transactions, enterprise value (“EV”) to revenue multiple and allocated using option pricing method (“OPM”)—volatility may result in
increases/decreases in security valuation. Increases/decreases in discounts for lack of marketability and illiquidity discount may result in decreases/increases in security
valuation.        
Science & Technology Fund Fair Value at 8-31-14 Valuation Technique Unobservable Inputs Input/Range
Common Stocks $1,450,848 Market Approach Prior/recent transactions $16.00
 
  $14,314,307 Market Approach Prior/recent transactions 13.75
      Interest rate 5.75%
 
 
  $15,765,155      
 
Preferred Securities $1,271,211 Market Approach Prior/recent transactions $30.92
      Discount for lack of marketability 10%
 
Total $17,036,366      
 
Increases/decreases in prior/recent transactions and interest rate may result in increases/decreases in security valuation. Increases/decreases in discount for lack of market-
ability may result in decreases/increases in security valuation.      
Small Cap Growth Fund Fair Value at 8-31-14 Valuation Technique Unobservable Inputs Input/Range
Common Stocks $229,671 Market Approach EV to revenue multiple 3.52x
      Probability-weighted expected price 2.00
      Implied discount rate at time 27%
      of purchase  
 
Preferred Securities $2,428,463 Market Approach Prior/recent transactions $2.91 – $18.47
        (weighted average $11.85)
 
  $921,719 Market Approach Prior/recent transactions $30.92
      Discount for lack of marketability 10%
 
  $322,122 Market Approach EV to revenue multiple 7.32x
      Discount for lack of marketability 10%
 
  $616,676 Market Approach EV to revenue multiple 3.52x
      Probability-weighted expected price 3.96
      Implied discount rate at time 27%
      of purchase  
 
 
  $4,288,980      
 
Total $4,518,651      

 

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Increases/decreases in enterprise value (“EV”) to revenue multiple, probability-weighted expected price and prior/recent transactions may result in increases/decreases in security valuation. Increases/decreases in implied discount rate at time of purchase, and discount for lack of marketability may result in decreases/increases in security valuation.

Repurchase agreements. The funds may enter into repurchase agreements. When a 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 funds for repurchase agreements is disclosed in the Portfolio of investments as part of the caption related to the repurchase agreement.

Repurchase agreements are typically governed by the terms and conditions of the Master Repurchase Agreement and/or Global Master Repurchase Agreement (collectively, MRA). Upon an event of default, the non-defaulting party may close out all transactions traded under the MRA and net amounts owed. Absent an event of default, the MRA does not result in an offset of the reported amounts of assets and liabilities in the Statements of assets and liabilities. In the event of a default by the counter-party, 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.

In a reverse repurchase agreement, the funds deliver a security, as collateral, in exchange for cash to a financial institution, the counterparty, with a simultaneous agreement to repurchase the same or substantially the same security at an agreed upon price and date. The funds are entitled to receive principal and interest payments, if any, made on the security delivered to the counterparty during the term of the agreement.

            Payable for
            Reverse
    Borrowing Settlement Maturity Borrowing Repurchase
Fund Counterparty Rate Date Date Amount Agreements
Real Return Bond Fund Bank of Nova Scotia* 0.15% 8/27/2014 10/8/2014 $1,882,750 ($1,882,781)

* Reverse repurchase agreement with Bank of Nova Scotia dated 08/27/2014 at 0.15% to be repurchased at $1,883,079 on 10/08/2014, collateralized by $1,869,660 Treasury Inflation Index Notes, 0.50% due 04/15/2015 (valued at $1,878,131, including interest)

When-issued/delayed-delivery securities. The funds may purchase or sell debt securities on a when-issued or delayed-delivery basis, or in a “To Be Announced” (TBA) or “forward commitment” transaction, with delivery or payment to occur at a later date beyond the normal settlement period. TBA securities resulting from these transactions are included in the Portfolio of investments or in a schedule to the Portfolio of investments (Sale Commitments Outstanding). At the time a fund enters into a commitment to purchase or sell a security, the transaction is recorded and the value of the security is reflected in the fund’s net asset value. The price of such security and the date that the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctua-tions. No interest accrues to the fund until settlement takes place. At the time that the portfolio enters into this type of transaction, the fund is required to have sufficient cash and/or liquid securities to cover its commitments.

Certain risks may arise upon entering into when-issued or delayed-delivery securities transactions, including the potential inability of counterparties to meet the terms of their contracts, and the issuer’s failure to issue the securities due to political, economic or other factors. Additionally, losses may arise due to declines in the value of the securities purchased or increase in the value of securities sold prior to settlement date. As a result, the Total Return Fund has received the following amount of cash collateral from certain counterparties to these transactions, which is recorded as a Payable for collateral held by the fund.

Fund Counterparty Collateral Received
Total Return Fund Credit Suisse Securities (USA) LLC $260,000

Sale-buyback transactions. Certain funds may enter into financing transactions referred to as sale-buybacks and are governed by the terms of the MRA. A sale-buyback transaction consists of a sale of a security by a fund to a counterparty, with a simultaneous agreement to repurchase the same or substantially the same security at an agreed-upon price and date. The fund is not entitled to receive principal and interest payments, if any, made on the security sold to the counterparty during the term of the agreement. The agreed-upon repurchase value of the securities to be repurchased by the fund is reflected as a liability on the Statements of assets and liabilities. The fund will recognize income represented by the price differential between the price received for the transferred security and the agreed-upon repurchase price. This is commonly referred to as the price drop. A price drop consists of the foregone interest and inflationary income adjustments, if any, the fund would have otherwise received had the security not been sold along with negotiated financing terms. Foregone interest and inflationary income adjustments, if any, are recorded as components of interest income on the Statements of operations. Interest payments based upon negotiated financing terms made by the fund to counterparties are recorded as a component of interest expense on the Statements of operations. In periods of increased demand for the security, the fund may receive a fee for use of the security by the counterparty, which may result in income to the fund. The average borrowings by the funds and the weighted average interest rate for the year ended August 31, 2014 and the exposure to the counterparties at August 31, 2014 were as follows:

Fund   Average Borrowing Weighted Average Interest Rate
Global Bond Fund   $11,297,454   0.41%
Real Return Bond Fund   26,645,283   0.12%
Total Return Fund     4,721,137   (0.37)%
 
Fund Counterparty Payable for Fund Borrowed Market Value of Securities Net Exposure
Global Bond Fund Morgan Stanley and Co. International ($8,125,390)   $8,421,187 $295,797
Real Return Bond Fund Barclays Capital, Inc. ($64,215,297)   $64,459,912 $244,615
  BNP Paribas Securities Corp. (25,955,894)   25,805,249 (150,645)
  Morgan Stanley and Co. International (1,495,834)   1,513,829 17,995
 
 
    ($91,667,025)   $91,778,990 $111,965

Term loans (Floating rate loans). Certain funds may invest in term loans, which often include debt securities that are rated below investment grade at the time of purchase. Term loans are generally subject to legal or contractual restrictions on resale. The liquidity of term loans, including the volume and frequency of secondary

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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. Because many term loans are not rated by independent credit rating agencies, a decision to invest in a particular loan could depend exclusively on the subadvisor’s credit analysis of the borrower and/or term loan agents. The fund may have limited rights to enforce the terms of an underlying loan.

At August 31, 2014, Investment Quality Bond Fund had $544,499 in unfunded loan commitments outstanding.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Interest income is accrued as earned. Interest income includes coupon interest and amortization/accretion of premiums/discounts on debt securities. Debt obligations may be placed in a non-accrual status and related interest income may be reduced by stopping current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the fund becomes aware of the dividends. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain if amounts are estimable. Foreign taxes are provided for based on the fund’s understanding of the tax rules and rates that exist in the foreign markets in which it invests. Income and capital gain distributions from underlying funds are recorded on ex-date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Inflation-indexed bonds. Inflation-indexed bonds are securities that generally have a lower coupon interest rate fixed at issuance but whose principal value is periodically adjusted based on a rate of inflation, such as the Consumer Price Index. Over the life of an inflation-indexed bond, interest is paid on the inflation adjusted principal value as described above. Increases in the principal amount of these securities are recorded as interest income. Decreases in the principal amount of these securities may reduce interest income to the extent of income previously recorded. Excess amounts are recorded as an adjustment to cost.

Payment-in-kind bonds. The funds may invest in payment-in-kind bonds (PIK Bonds). PIK Bonds allow the issuer, at its option, to make current interest payments on the bonds either in cash or in additional bonds. The market prices of PIK Bonds are affected to a greater extent by interest rate changes and thereby tend to be more volatile than securities which pay cash interest periodically. The funds accrue income on these securities and this income is required to be distributed to shareholders. Because no cash is received at the time income accrues on these securities, the funds may need to sell other investments to make distributions.

Real estate investment trusts. The funds may invest in real estate investment trusts (REITs). Distributions from REITs may be recorded as income and subsequently characterized by the REIT at the end of the fiscal year as a reduction of cost of investments and/or as a realized gain. As a result, the funds will estimate the components of distributions from these securities. Such estimates are revised when the actual components of the distributions are known.

Securities lending. The funds may lend their securities to earn additional income. They receive cash collateral from the borrower in an amount not less than the market value of the loaned securities. The funds will invest their collateral in JHCIT, an affiliate of the funds, which has a floating net asset value and is registered with the SEC as an investment company. JHCIT invests cash received as collateral as part of the securities lending program in short-term money market investments. Each fund will receive the benefit of any gains and bear any losses generated by JHCIT with respect to the cash collateral.

If a borrower fails to return loaned securities when due, then the lending agent is responsible to and indemnifies the funds for the lent securities. The lending agent uses the collateral received from the borrower to purchase replacement securities of the same issue, type, class and series of the loaned securities. If the value of the collateral is less than the purchase cost of replacement securities, the lending agent is responsible for satisfying the shortfall but only to the extent that the shortfall is not due to any decrease in the value of JHCIT.

Although the risk of the loss of the securities lent is mitigated by receiving collateral from the borrower and through lending agent indemnification, the funds could experience a delay in recovering securities or could experience a lower than expected return if the borrower fails to return the securities on a timely basis. The funds may receive compensation for lending their securities by retaining a portion of the return on the investment of the collateral and compensation from fees earned from borrowers of the securities. Net income received from JHCIT is a component of securities lending income as recorded on the Statements of operations.

Obligations to repay collateral received by the funds is shown on the Statements of assets and liabilities as Payable upon return of securities loaned.

Foreign currency translation. Assets, including investments and liabilities denominated in foreign currencies, are translated into U.S. dollar values each day at the prevailing exchange rate. Purchases and sales of securities, income and expenses are translated into U.S. dollars at the prevailing exchange rate on the date of the transaction. The effect of changes in foreign currency exchange rates on the value of securities is reflected as a component of the realized and unrealized gains (losses) on investments.

Funds that invest internationally generally carry more risk than funds that invest strictly in U.S. securities. These risks are heightened for investments in emerging markets. Funds investing in a single country or in a limited geographic region tend to be riskier than funds that invest more broadly. Risks can result from differences in economic and political conditions, regulations, market practices (including higher transaction costs), accounting standards and other factors. Foreign investments are also subject to a decline in the value of a foreign currency versus the U.S. dollar, which reduces the dollar value of securities denominated in that currency.

Foreign taxes. The funds may be subject to withholding tax on income and/or capital gains or repatriation taxes imposed by certain countries in which the funds invest. Taxes are accrued based upon investment income, realized gains or unrealized appreciation.

Stripped securities. Stripped securities are financial instruments structured to separate principal and interest cash flows so that one class receives principal payments from the underlying assets (PO or principal only), while the other class receives the interest cash flows (IO or interest only). Both PO and IO investments represent an interest in the cash flows of an underlying stripped security. If the underlying assets experience greater than anticipated prepayments of principal, the funds may fail to fully recover its initial investment in an IO security. The market value of these securities can be extremely volatile in response to changes in interest rates or prepayments on the underlying securities. In addition, these securities present additional credit risk such that the funds may not receive all or part of its principal or interest payments because the borrower or issuer has defaulted on its obligation.

Line of credit. The funds may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the funds’ custodian agreement, the custodian may loan money to the funds to make properly authorized payments. The funds

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are 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 or trust or property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

In addition, the funds and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statements of operations. Commitment fees for the year ended August 31, 2014 were as follows:

Fund Commitment Fee Fund Commitment Fee
  
Active Bond Fund $1,199 Lifestyle II Balanced Portfolio 325
All Cap Core Fund 659 Lifestyle II Conservative Portfolio 325
Alpha Opportunities Fund 1,088 Lifestyle II Growth Portfolio 325
Asia Pacific Total Return Bond Fund 542 Lifestyle II Moderate Portfolio 325
Blue Chip Growth Fund 1,509 Mid Cap Stock Fund 1,058
Capital Appreciation Fund 1,328 Mid Value Fund 790
Capital Appreciation Value Fund 1,256 Real Estate Equity Fund 487
Core Bond Fund 646 Real Estate Securities Fund 610
Equity-Income Fund 1,157 Real Return Bond Fund 662
Fundamental Global Franchise Fund 569 Science & Technology Fund 715
Global Bond Fund 675 Short Term Government Income Fund 483
Global Equity Fund 427 Small Cap Growth Fund 471
Global Real Estate Fund 559 Small Cap Opportunities Fund 462
Health Sciences Fund 634 Small Company Growth Fund 455
High Yield Fund 878 Small Company Value Fund 559
International Growth Opportunities Fund 711 Spectrum Income Fund 882
International Growth Stock Fund 675 Strategic Equity Allocation Fund 2,526
International Small Cap Fund 649 Total Return Fund 1,583
International Value Fund $1,247 U.S. High Yield Bond Fund 696
Investment Quality Bond Fund 589 Value Fund 528
Lifestyle II Aggressive Portfolio 325    

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, transfer agent fees, state registration fees and printing and postage expenses, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. Each of the funds intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

Under the Regulated Investment Company Modernization Act of 2010, the funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. Any losses incurred during those taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.

For federal income tax purposes, as of August 31, 2014, certain funds have capital loss carryforwards available to offset future net realized capital gains. Use of certain losses acquired in mergers, may be limited in a given year. The following table details the capital loss carryforwards available as of August 31, 2014:

  Capital Loss Carryforwards    
  Expiring at August 31 No Expiration Date
 
Fund 2017 2018 Short Term Long Term
Asia Pacific Total Return Bond Fund — — $1,017,175 $2,157,715
Core Bond Fund — — 2,142,577 2,180,185
Global Bond Fund $6,575,057 — 1,979,660 —
Global Real Estate Fund — $157,387,960 — —
High Yield Fund 25,417,825 229,714,878 — —
International Small Cap Fund — 36,767,295 — —
International Value Fund — 113,011,260 — —
Real Return Bond Fund — — 7,087,018 1,878,467
Short Term Government Income Fund — — 2,072,132 2,242,575
Total Return Fund — — 6,861,355 —

As of August 31, 2014, the funds had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The funds’ federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

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The costs of investments owned on August 31, 2014, including short-term investments, for federal income tax purposes, were as follows:

        Net Unrealized
  Aggregate Unrealized Unrealized Appreciation/
Fund Cost Appreciation (Depreciation) (Depreciation)
Active Bond Fund $1,695,068,449 $75,255,559 ($10,594,987) $64,660,572
All Cap Core Fund 696,739,112 87,913,712 (2,952,029) 84,961,683
Alpha Opportunities Fund 1,823,835,144 239,011,345 (34,223,969) 204,787,376
Asia Pacific Total Return Bond Fund 440,589,454 2,844,739 (17,491,414) (14,646,675)
Blue Chip Growth Fund 1,479,676,014 1,311,126,837 (2,246,482) 1,308,880,355
Capital Appreciation Fund 1,367,928,075 1,025,497,907 (11,447,572) 1,014,050,335
Capital Appreciation Value Fund 1,692,463,101 290,406,197 (2,798,162) 287,608,035
Core Bond Fund 555,183,719 6,531,557 (1,005,174) $5,526,383
Equity-Income Fund 1,687,990,105 524,804,633 (25,965,734) 498,838,899
Fundamental Global Franchise Fund 363,340,094 90,865,379 (472,927) 90,392,452
Global Bond Fund 660,852,606 17,794,193 (11,740,312) 6,053,881
Global Equity Fund 454,342,766 37,878,630 (4,103,068) 33,775,562
Global Real Estate Fund 288,129,258 49,690,677 (1,975,626) 47,715,051
Health Sciences Fund 397,321,405 224,888,233 (3,371,793) 221,516,440
High Yield Fund 927,996,042 36,389,526 (25,265,734) 11,123,792
International Growth Opportunities Fund 669,760,703 200,115,068 (21,212,418) 178,902,650
International Growth Stock Fund 536,390,037 157,400,388 (2,011,087) 155,389,301
International Small Cap Fund 583,215,339 177,071,734 (25,435,090) 151,636,644
International Value Fund 1,793,180,389 368,608,972 (52,962,279) 315,646,693
Investment Quality Bond Fund 513,946,656 10,687,092 (2,389,527) 8,297,565
Lifestyle II Aggressive Portfolio 4,728,539 117,761 (391) 117,370
Lifestyle II Balanced Portfolio 8,777,570 107,786 (1,138) 106,648
Lifestyle II Conservative Portfolio 2,467,451 23,863 — 23,863
Lifestyle II Growth Portfolio 10,016,535 182,190 (452) 181,738
Lifestyle II Moderate Portfolio 2,030,261 24,472 (836) 23,636
Mid Cap Stock Fund 1,561,288,318 302,057,572 (18,493,563) 283,564,009
Mid Value Fund 874,512,176 282,034,257 (13,694,518) 268,339,739
Real Estate Equity Fund 158,584,553 101,588,261 (105,402) 101,482,859
Real Estate Securities Fund 460,780,161 107,431,448 (720,196) 106,711,252
Real Return Bond Fund 657,306,639 6,070,836 (12,711,107) (6,640,271)
Science & Technology Fund 923,603,254 193,921,304 (6,493,843) 187,427,461
Short Term Government Income Fund 233,430,932 502,492 (3,129,423) (2,626,931)
Small Cap Growth Fund 217,960,141 51,836,145 (3,787,171) 48,048,974
Small Cap Opportunities Fund 165,402,426 68,824,587 (5,260,431) 63,564,156
Small Company Growth Fund 168,557,743 63,750,204 (2,388,763) 61,361,441
Small Company Value Fund 247,956,076 166,273,883 (4,139,961) 162,133,922
Spectrum Income Fund 925,893,346 57,917,822 (9,860,187) 48,057,635
Strategic Equity Allocation Fund 4,734,272,485 1,336,794,637 (50,455,500) 1,286,339,137
Total Return Fund 2,670,812,342 47,527,980 (34,975,900) 12,552,080
U.S. High Yield Bond Fund 478,848,782 14,828,642 (7,374,704) 7,453,938
Value Fund 329,281,132 97,434,192 (2,548,095) 94,886,097

Distribution of income and gains. Distributions to shareholders from net investment income and net realized gains, if any, are recorded on the ex-date. Active Bond Fund, Core Bond Fund, High Yield Fund, Investment Quality Bond Fund, Lifestye II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Moderate Portfolio, Real Return Bond Fund, Short Term Government Income Fund, Spectrum Income Fund, Total Return Fund and U.S. High Yield Bond Fund generally declare and pay dividends from net investment income quarterly. All other funds generally declare and pay dividends from net investment income annually. All funds generally declare and pay capital gain distributions, if any, annually.

The tax character of distributions for the year ended August 31, 2014, was as follows:

    2014 Distributions  
  Ordinary Long Term  
Fund Income Capital Gains Total
Active Bond Fund $66,273,818 $8,440,130 $74,713,948
All Cap Core Fund 7,493,145 — 7,493,145
Alpha Opportunities Fund 152,208,389 47,611,093 199,819,482
Asia Pacific Total Return Bond Fund 15,511,730 64,029 15,575,759
Blue Chip Growth Fund 5,690,289 51,044,623 56,734,912
Capital Appreciation Fund 12,838,978 103,837,880 116,676,858
Capital Appreciation Value Fund 68,494,135 168,188,183 236,682,318
Core Bond Fund 10,540,349 1,983,187 12,523,536
Equity-Income Fund 39,899,744 10,584,530 50,484,274
Fundamental Global Franchise Fund 15,559,683 7,205,010 22,764,693
Global Equity 4,733,432 — 4,733,432
Global Real Estate Fund 12,325,059 — 12,325,059
Health Sciences Fund 7,867,113 91,837,195 99,704,308
High Yield Fund 73,273,875 — 73,273,875
International Growth Opportunities Fund 10,096,542 4,920,537 15,017,079
International Growth Stock Fund 11,051,305 — 11,051,305
International Small Cap Fund 10,165,110 — 10,165,110
International Value Fund 30,841,125 — 30,841,125
Investment Quality Bond Fund 13,491,702 2,841,383 16,333,085
Lifestyle II Balanced Portfolio 2,233 — 2,233
Lifestyle II Conservative Portfolio 2,279 — 2,279
Lifestyle II Moderate Portfolio 1,964 — 1,964

 

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    2014 Distributions  
  Ordinary Long Term  
Fund Income Capital Gains Total
Mid Cap Stock Fund $87,961,771 $97,250,317 $185,212,088
Mid Value Fund 16,106,488 20,995,462 37,101,950
Real Estate Equity Fund 3,727,077 — 3,727,077
Real Estate Securities Fund 16,537,265 39,418,193 55,955,458
Real Return Bond Fund 13,079,218 — 13,079,218
Science & Technology Fund 19,774,549 — 19,774,549
Short Term Government Income Fund 3,112,504 — 3,112,504
Small Cap Growth Fund $6,069,136 $15,545,077 $21,614,213
Small Cap Opportunities Fund 1,180,090 17,029,050 18,209,140
Small Company Growth Fund 1,739,076 6,697,038 8,436,114
Small Company Value Fund 734,181 2,138,107 2,872,288
Spectrum Income Fund 33,092,885 25,819,907 58,912,792
Strategic Equity Allocation Fund 96,559,329 57,106,332 153,665,661
Total Return Fund 56,709,862 28,451,241 85,161,103
U.S. High Yield Bond Fund 43,388,258 10,899,268 54,287,526
Value Fund 3,478,560 19,189,198 22,667,758
 
The tax character of distributions for the year ended August 31, 2013, was as follows:    
    2013 Distributions  
  Ordinary Long Term  
Fund Income Capital Gains Total
Active Bond Fund $69,411,140 — $69,411,140
All Cap Core Fund 7,502,202 — 7,502,202
Alpha Opportunities Fund 30,985,847 $38,260,185 69,246,032
Blue Chip Growth Fund 6,379,369 71,462 6,450,831
Capital Appreciation Fund 6,086,635 — 6,086,635
Capital Appreciation Value Fund 71,359,351 26,099,054 97,458,405
Core Bond Fund 32,329,519 4,839,253 37,168,772
Equity-Income Fund 30,600,777 — 30,600,777
Fundamental Global Franchise Fund 2,338,140 — 2,338,140
Global Bond Fund 22,833,900 — 22,833,900
Global Real Estate Fund 17,850,946 — 17,850,946
Health Sciences Fund 12,470,425 3,905,483 16,375,908
High Yield Fund 71,433,468 — 71,433,468
International Growth Opportunities Fund 1,832,260 — 1,832,260
International Growth Stock Fund 4,872,079 — 4,872,079
International Small Cap Fund 6,093,697 — 6,093,697
International Value Fund 33,100,431 — 33,100,431
Investment Quality Bond Fund 18,601,820 5,075,210 23,677,030
Mid Cap Stock Fund 8,655,483 29,271,496 37,926,979
Mid Value Fund 11,066,628 22,663,035 33,729,663
Real Estate Equity Fund 2,633,312 — 2,633,312
Real Estate Securities Fund 20,027,490 37,057,361 57,084,851
Real Return Bond Fund 27,411,858 9,299,526 36,711,384
Short Term Government Income Fund 3,395,114 — 3,395,114
Small Cap Growth Fund 398,738 8,483,933 8,882,671
Small Cap Opportunities Fund 1,234,019 2,108,874 3,342,893
Small Company Growth Fund 514,506 2,933,453 3,447,959
Small Company Value Fund 6,481,092 44,357 6,525,449
Spectrum Income Fund 37,465,395 695,859 38,161,254
Strategic Equity Allocation Fund 43,026,814 1,936,223 44,963,037
Total Return Fund 124,577,235 6,829,276 131,406,511
U.S. High Yield Bond Fund 43,746,330 7,051,166 50,797,496
Value Fund 2,211,760 16,783,253 18,995,013

Distributions paid by the funds 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. Net capital losses that are a result of security transactions occurring after October 31, 2013, are treated as occurring on September 1, 2014, the first day of the funds’ next taxable year. Qualified late year ordinary losses are treated as occurring on September 1, 2014, the first day of the fund’s next taxable year. As of August 31, 2014, the components of distributable earnings on a tax basis were as follows:

  Undistributed Undistributed   Late Year
  Ordinary Long Term Capital Loss Ordinary
Fund Income Capital Gains Carryforward Losses
Active Bond Fund $15,876,502 $5,156,693 — —
All Cap Core Fund 2,856,171 53,227,108 — —
Alpha Opportunities Fund 114,385,631 90,924,030 — —
Asia Pacific Total Return Bond Fund 4,346,755 — $3,174,890 —
Blue Chip Growth Fund 7,435,599 224,093,836 — —
Capital Appreciation Fund 30,251,046 136,837,203 — —
Capital Appreciation Value Fund 48,189,705 138,028,807 — —

 

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        Qualified
  Undistributed Undistributed   Late Year
  Ordinary Long Term Capital Loss Ordinary
Fund Income Capital Gains Carryforward Losses
Core Bond Fund $2,897,882 — $4,322,762 —
Equity-Income Fund 26,349,110 $94,733,233 — —
Fundamental Global Franchise Fund 4,071,835 18,782,327 — —
Global Bond Fund — — 8,554,717 —
Global Equity 22,788,015 8,427,356 — —
Global Real Estate Fund 6,290,076 — 157,387,960 —
Health Sciences Fund 4,967,218 106,239,096 — —
High Yield Fund 14,160,995 — 255,132,703 —
International Growth Opportunities Fund 6,770,981 24,327,447 — —
International Growth Stock Fund 13,733,553 9,882,197 — —
International Small Cap Fund 3,650,361 — 36,767,295 —
International Value Fund 50,693,749 — 113,011,260 —
Investment Quality Bond Fund 2,676,744 981,408 — —
Lifestyle II Aggressive Portfolio — — — $213
Lifestyle II Balanced Portfolio 5,401 4 — —
Lifestyle II Conservative Portfolio 2,679 10 — —
Lifestyle II Growth Portfolio 4,848 — — —
Lifestyle II Moderate Portfolio 3,467 — — —
Mid Cap Stock Fund 32,748,683 140,598,575 — —
Mid Value Fund 30,042,349 57,384,138 — —
Real Estate Equity Fund 723,110 5,029,441 — —
Real Estate Securities Fund 5,327,360 33,229,858 — —
Real Return Bond Fund 8,283,403 — 8,965,485 —
Science & Technology Fund 68,309,240 46,873,795 — —
Short Term Government Income Fund 1,325,379 — 4,314,707 —
Small Cap Growth Fund 7,605,235 15,717,461 — —
Small Cap Opportunities Fund 843,426 18,779,481 — —
Small Company Growth Fund 3,985,436 12,297,251 — —
Small Company Value Fund 2,570,489 16,532,170 — —
Spectrum Income Fund 8,040,460 18,577,597 — —
Strategic Equity Allocation Fund 87,272,766 114,961,482 — —
Total Return Fund 29,142,011 — 6,861,355 —
U.S. High Yield Bond Fund 8,724,551 12,059,201 — —
Value Fund 11,403,817 11,748,389 — —

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 funds’ financial statements as a return of capital. Short-term gains from underlying funds are treated as ordinary income for tax purposes.

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, net operating losses, derivative transactions, partnerships, amortization and accretion on debt securities, real estate investment trusts, characterization of distributions, wash sale loss deferrals, litigation proceeds and investments in passive foreign investment companies.

3. DERIVATIVE INSTRUMENTS The funds may invest in derivatives in order to meet their investment objective. Derivatives include a variety of different instruments that may be traded in the OTC market, on a regulated exchange or through a clearing facility. The risks in using derivatives vary depending upon the structure of the instruments, including the use of leverage, optionality, the liquidity or lack of liquidity of the contract, the creditworthiness of the counterparty or clearing organization and the volatility of the 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 funds are 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, certain options and certain swaps are typically traded through the OTC market. Non-deliverable forwards, currency options and cash settled currency swaps are all regulated by the Commodity Futures Trading Commission (the CFTC) as swaps. Derivative counterparty risk is managed through an ongoing evaluation of the creditworthiness of all potential counterparties and, if applicable, designated clearing organizations. The funds attempt to reduce their 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 funds 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 funds is held in a segregated account by a third-party agent or held by the custodian bank for the benefit of the funds and can be in the form of cash or debt securities issued by the U.S. government or related agencies; collateral posted by the funds for OTC transactions is held in a segregated account at the funds’ custodian and is noted in the accompanying Portfolio of investments, or if cash is posted, on the Statements of assets and liabilities. The funds’ maximum risk of loss due to counterparty risk is equal to the asset value of outstanding contracts offset by collateral received.

Futures, certain options and cleared swaps are traded or cleared on an exchange or central clearinghouse. Exchange-traded or cleared transactions generally present less counterparty risk to a fund than OTC transactions. The exchange or clearinghouse stands between the fund and the broker to the contract and therefore, credit risk is generally limited to the failure of the exchange or clearinghouse and the clearing member.

Cleared swap contracts are subject to clearing house rules, including initial and variation margin requirements, daily settlement of obligations and the clearinghouse guarantee of payments to the broker. There is, however, still counterparty risk due to the potential insolvency of the broker with respect to any margin held in the brokers’

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customer accounts. While clearing members are required to segregate customer assets from their own assets, in the event of insolvency, there may be a shortfall in the amount of margin held by the broker for its clients. Collateral or margin requirements for exchange-traded or cleared derivatives are set by the broker or applicable clear-inghouse. Margin for exchange-traded and exchange-cleared transactions are detailed in the Statements of assets and liabilities as Cash held at broker for futures contracts and receivable for exchange-cleared swaps, respectively. Securities pledged by the funds for exchanged-traded and cleared transactions, if any, are identified in the Portfolio of investments.

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 Statements of assets and liabilities. Use of long futures contracts subjects the funds to the risk of loss up to the notional value of the futures contracts. Use of short futures contracts subjects the funds to unlimited risk of loss.

Upon entering into a futures contract, a 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 Statements 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 funds. When the contract is closed, the funds record 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.

The following tables summarize the contracts held at August 31, 2014, and range of futures contracts notional amounts held by the funds during the year ended August 31, 2014. In addition, the tables detail how the funds used futures contracts during the year ended August 31, 2014.

Active Bond Fund

The fund used futures contracts to manage duration. During the year ended August 31, 2014 the fund held futures contracts with total notional values ranging up to $53.3 million as measured at each quarter end. At August 31, 2014, the fund held no futures contracts.

All Cap Core Fund

The fund used futures contracts to manage against anticipated changes in securities markets. During the year ended August 31, 2014 the fund held futures contracts with total notional values ranging from approximately $1.3 million to $10.8 million, as measured at each quarter end.

              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
All Cap Core Fund Russell 2000 Mini Index Futures 9 Long Sep 2014 $1,057,609 $1,056,060 ($1,549)
  S&P 500 Index E-Mini Futures 97 Long Sep 2014 9,449,504 9,707,018 257,514
              $255,965
 
Asia Pacific Total Return Bond Fund            
 
The fund used futures contracts to manage against anticipated interest rate changes and manage duration of the fund. During the year ended August 31, 2014 the fund
held futures contracts with total notional values ranging from approximately $22.6 million to $69.8 million, as measured at each quarter end.  
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
Asia Pacific Total Return Bond Fund 10-Year U.S. Treasury Note Futures 555 Short Dec 2014 ($69,612,300) ($69,808,594) ($196,294)
              ($196,294)
 
Global Bond Fund              
 
The fund used futures contracts to gain exposure to foreign bond markets, gain exposure to treasuries markets, maintain diversity and liquidity of the fund, manage
against anticipated interest rate changes, and manage duration of the fund. During the year ended August 31, 2014 the fund held futures contracts with total notional
values ranging from approximately $485.1 million to $843.4 million, as measured at each quarter end.        
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
Global Bond Fund 10-Year U.S. Treasury Note Futures 507 Long Dec 2014 $63,729,519 $63,771,094 $41,575
  3-Month EURIBOR Futures 199 Long Jun 2015 65,249,521 65,290,567 41,046
  3-Month EURIBOR Futures 143 Long Sep 2015 46,883,269 46,912,645 29,376
  Euro-BTP Italian Government Bond            
  Futures 162 Long Sep 2014 26,350,751 27,782,473 1,431,722
  Eurodollar Futures 46 Long Sep 2014 11,471,870 11,472,975 1,105
  Eurodollar Futures 94 Long Jun 2015 23,362,616 23,373,100 10,484
  Eurodollar Futures 59 Long Sep 2015 14,629,107 14,637,162 8,055
  Eurodollar Futures 94 Long Dec 2015 23,250,939 23,266,175 15,236
  Eurodollar Futures 191 Long Mar 2016 47,117,498 47,157,900 40,402
  Mid-Term Euro-OAT Futures 128 Long Sep 2014 21,009,230 21,406,662 397,432
  U.K. Long Gilt Bond Futures 76 Long Dec 2014 14,316,735 14,325,508 8,773
  U.S. Treasury Long Bond Futures 146 Long Dec 2014 20,384,856 20,453,688 68,832

 

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              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
Global Bond Fund, continued 10-Year Australian Treasury Bond Futures 59 Short Sep 2014 ($6,512,579) ($6,776,701) ($264,122)
  10-Year Canada Government Bond            
  Futures 183 Short Dec 2014 (22,942,683) (23,113,575) (170,892)
  3-Month Sterling Futures 129 Short Sep 2015 (26,397,665) (26,432,627) (34,962)
  5-Year U.S. Treasury Note Futures 67 Short Dec 2014 (7,941,536) (7,962,008) (20,472)
  German Euro BUND Futures 205 Short Sep 2014 (39,714,205) (40,818,775) (1,104,570)
              $499,020
 
High Yield Fund              
 
The fund used futures contracts to manage against anticipated interest rate changes. During the year ended August 31, 2014 the fund held futures contracts with total
notional values ranging from approximately $2.2 million to $68.1 million, as measured at each quarter end.        
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS POSITION DATE BASIS VALUE (DEPRECIATION)
High Yield Fund 10-Year U.S. Treasury Note Futures 350 Short Dec 2014 ($43,905,449) ($44,023,438)   ($117,989)
              ($117,989)
 
Investment Quality Bond Fund              
 
The fund used futures contracts to gain exposure to foreign bond markets, gain exposure to treasuries market, manage against anticipated interest rate changes, and man-
age duration of the fund. During the year ended August 31, 2014 the fund held futures contracts with total notional values ranging from approximately $36.3 million to
$137.6 million, as measured at each quarter end.            
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS POSITION DATE BASIS VALUE (DEPRECIATION)
Investment Quality Bond Fund 2-Year U.S. Treasury Note Futures 139 Long Dec 2014 $30,423,856 $30,447,516 $23,660
  5-Year U.S. Treasury Note Futures 370 Long Dec 2014 43,917,635 43,969,297 51,662
  U.S. Treasury Long Bond Futures 28 Long Dec 2014 3,894,890 3,922,625 27,735
  U.S. Treasury Ultra Bond Futures 15 Long Dec 2014 2,330,013 2,332,500 2,487
  10-Year U.S. Treasury Note Futures 279 Short Dec 2014 (35,032,263) (35,092,969) (60,706)
  Eurodollar Futures 89 Short Dec 2016 (21,781,691) (21,799,438) (17,747)
              $27,091
 
Real Return Bond Fund              
 
The fund used futures contracts to gain exposure to treasuries markets, maintain diversity and liquidity of the fund, manage against anticipated interest rate changes,
manage duration of the fund and gain exposure to foreign bond markets. During the year ended August 31, 2014 the fund held futures contracts with total notional
values ranging from approximately $71.3 million to $173.9 million, as measured at each quarter end.        
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS POSITION DATE BASIS VALUE (DEPRECIATION)
Real Return Bond Fund 10-Year U.S. Treasury Note Futures 124 Long Dec 2014 $15,566,983 $15,596,875 $29,892
  5-Year U.S. Treasury Note Futures 354 Long Dec 2014 41,943,865 42,067,922 124,057
  German Euro BUND Futures 100 Short Sep 2014 (19,463,744) (19,911,597) (447,853)
              ($293,904)
 
Short Term Government Income Fund            
 
The fund used futures contracts to manage duration of the fund. During the year ended August 31, 2014 the fund held futures contracts with total notional values rang-
ing from approximately $22.6 million to $23.0 million, as measured at each quarter end.          
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS POSITION DATE BASIS VALUE (DEPRECIATION)
Short Term Government Income Fund 5-Year U.S. Treasury Note Futures 190 Short Dec 2014 ($22,527,985) ($22,578,827)   ($50,842)
              ($50,842)
 
Spectrum Income Fund              
 
The fund used futures contracts to gain exposure to foreign bond markets, gain exposure to treasuries markets, maintain diversity and liquidity of the fund, manage
against anticipated interest rate changes, manage duration of the fund, and substitute for securities purchased. During the year ended August 31, 2014 the fund held
futures contracts with total notional values ranging from approximately $46.5 million to $70.0 million, as measured at each quarter end.    

 

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              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
Spectrum Income Fund 5-Year U.S. Treasury Note Futures 47 Long Dec 2014 $5,568,876 $5,585,289 $16,413
  10-Year U.S. Treasury Note Futures 10 Long Dec 2014 1,256,427 1,257,812 1,385
  German Euro BUXL Futures 11 Long Sep 2014 1,946,317 2,105,579 159,262
  German Euro SCHATZ Futures 12 Long Sep 2014 1,744,922 1,746,870 1,948
  U.S. Treasury Long Bond Futures 1 Long Dec 2014 139,292 140,094 802
  U.S. Treasury Ultra Bond Futures 3 Long Dec 2014 462,288 466,500 4,212
  2-year Interest Rate Swap Futures 57 Short Sep 2014 (5,725,190) (5,729,836) (4,646)
  2-Year U.S. Treasury Note Futures 1 Short Dec 2014 (218,857) (219,047) (190)
  5-Year U.S. Treasury Note Futures 14 Short Dec 2014 (1,660,223) (1,663,703) (3,480)
  10-Year Australian Treasury Bond Futures 13 Short Sep 2014 (1,476,373) (1,493,171) (16,798)
  10-Year Canada Government Bond            
  Futures 28 Short Dec 2014 (3,521,235) (3,536,503) (15,268)
  10-Year U.S. Treasury Note Futures 155 Short Dec 2014 (19,435,124) (19,496,094)  (60,970)
  German Euro BOBL Futures 9 Short Dec 2014 (1,508,060) (1,508,112) (52)
  German Euro BUND Futures 5 Short Sep 2014 (970,753) (995,580) (24,827)
  U.S. Treasury Long Bond Futures 4 Short Dec 2014 (557,118) (560,375) (3,257)
  U.S. Treasury Ultra Bond Futures 1 Short Dec 2014 (154,764) (155,500) (736)
              $53,798
 
Strategic Equity Allocation Fund              
 
The fund used futures contracts to gain exposure to certain securities markets, maintain diversity and liquidity of the fund, and as a substitute for securities purchased.
During the year ended August 31, 2014 the fund held futures contracts with total notional values ranging from approximately $130.9 million to $373.2 million, as mea-
sured at each quarter end.              
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
Strategic Equity Allocation Fund 10-Year Government of Canada Bond            
  Futures 13 Long Sep 2014 $1,206,679 $1,195,350 ($11,329)
  Mini MSCI EAFE Index Futures 975 Long Sep 2014 94,472,833 93,639,000 (833,833)
  Mini MSCI Emerging Markets Index            
  Futures 418 Long Sep 2014 22,041,785 22,693,220 651,435
  Russell 2000 Mini Index Futures 126 Long Sep 2014 14,523,824 14,784,840 261,016
  S&P 500 Index Futures 258 Long Sep 2014 124,880,589 129,090,300 4,209,711
  S&P Mid 400 Index E-Mini Futures 171 Long Sep 2014 24,127,257 24,574,410 447,153
  S&P/TSX 60 Index Futures 7 Long Sep 2014 1,115,763 1,155,450 39,687
              $4,763,840
 
Total Return Fund              
 
The fund used futures contracts to gain exposure to foreign bond markets, gain exposure to treasuries markets, maintain diversity and liquidity of the fund, manage
against anticipated interest rate changes, and manage duration of the fund. During the year ended August 31, 2014 the fund held futures contracts with total notional
values ranging from approximately $1.2 billion to $3.7 billion, as measured at each quarter end.          
 
              UNREALIZED
    NUMBER OF   EXPIRATION NOTIONAL NOTIONAL APPRECIATION
FUND OPEN CONTRACTS CONTRACTS  POSITION DATE BASIS VALUE (DEPRECIATION)
Total Return Fund 10-Year U.S. Treasury Note Futures 2,165 Long Sep 2014 $270,225,475 $273,500,391 $3,274,916
  10-Year U.S. Treasury Note Futures 2,187 Long Dec 2014 274,628,832 275,083,594 454,762
  5-Year U.S. Treasury Note Futures 1,986 Long Dec 2014 235,351,662 236,008,173 656,511
  Eurodollar Futures 6,815 Long Dec 2015 1,687,376,748 1,686,797,688 (579,060)
  Eurodollar Futures 2,499 Long Mar 2016 617,221,046 617,003,100 (217,946)
  Eurodollar Futures 642 Long Jun 2016 158,102,579 158,084,475 (18,104)
  Eurodollar Futures 535 Long Sep 2016 131,409,416 131,375,938 (33,478)
  Eurodollar Futures 289 Long Dec 2016 70,758,641 70,786,938 28,297
  Eurodollar Futures 615 Long Mar 2017 150,269,987 150,329,062 59,075
  Eurodollar Futures 192 Long Jun 2017 46,818,590 46,843,200 24,610
  U.S. Treasury Long Bond Futures 597 Long Dec 2014 83,303,794 83,635,971 332,177
              $3,981,760

Notional basis refers to the contractual amount agreed upon at inception of open contracts; notional value represents the current value of the open contract.

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

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DERIVATIVE INSTRUMENTS, CONTINUED

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 Statements 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 funds 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.

The following tables summarize the contracts held at August 31, 2014, and the range of notional contract amounts held by the funds during the year ended August 31, 2014. In addition, the tables detail how the funds used the forward foreign currency contracts during the year ended August 31, 2014.

Asia Pacific Total Return Bond Fund

The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from approximately $43.4 million to $78.2 million, as measured at each quarter end.

                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Asia Pacific Total Return Bond Fund              
  NZD 6,400,000 USD 5,345,728 Royal Bank of Canada 9/30/2014 — ($6,450) ($6,450)
  USD 34,112,100 AUD 36,700,000 Royal Bank of Canada 9/30/2014 — (99,117) (99,117)
  USD 8,000,000 KRW 8,291,280,000 Royal Bank of Canada 9/11/2014 — (176,231) (176,231)
  USD 12,081,545 NZD 14,500,000 Royal Bank of Canada 9/30/2014 — (15,256) (15,256)
  USD 16,977,140 SGD 21,200,000 Royal Bank of Canada 9/30/2014 $4,363 — 4,363
              $4,363 ($297,054) ($292,691)

Global Bond Fund

The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currencies, and to maintain diversity and liquidity of the fund. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from approximately $563.9 million to $847.7 million, as measured at each quarter end.

                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Global Bond Fund                
  AUD 242,000 USD 224,800 Goldman Sachs Capital        
          Markets LP 9/3/2014 $1,216 — $1,216
  AUD 24,632,639 USD 22,891,149 JPMorgan Chase Bank N.A. 9/3/2014 114,508 — 114,508
  BRL 12,310,238 USD 5,366,059 Bank of America, N.A. 9/3/2014 133,266 — 133,266
  BRL 2,002,304 USD 888,294 Barclays Capital 9/3/2014 6,190 — 6,190
  BRL 14,881,812 USD 6,544,529 BNP Paribas SA 9/3/2014 103,588 — 103,588
  BRL 3,900,936 USD 1,725,696 Citibank N.A. 9/3/2014 16,960 — 16,960
  BRL 1,058,230 USD 472,508 Deutsche Bank AG London 9/3/2014 232 — 232
  BRL 10,185,474 USD 4,547,899 Goldman Sachs Capital        
          Markets LP 9/3/2014 2,235 — 2,235
  BRL 5,082,101 USD 2,234,382 UBS AG 9/3/2014 35,933 — 35,933
  BRL 817,889 USD 360,058 BNP Paribas SA 10/2/2014 2,280 — 2,280
  CAD 788,000 USD 718,148 JPMorgan Chase Bank N.A. 9/18/2014 6,320 — 6,320
  CAD 2,853,000 USD 2,624,438 Royal Bank of Canada 9/18/2014 — ($1,459) (1,459)
  CHF 1,059,000 USD 1,164,921 Barclays Bank PLC Wholesale 11/13/2014 — (10,530) (10,530)
  CHF 1,091,000 USD 1,205,032 Goldman Sachs Capital        
          Markets LP 11/13/2014 — (15,759) (15,759)
  CNY 3,868,200 USD 630,000 Bank of America, N.A. 9/8/2015 — (12,563) (12,563)
  CNY 6,668,200 USD 1,092,925 Barclays Capital 9/8/2015 — (28,555) (28,555)
  CNY 30,936,600 USD 5,114,017 Citibank N.A. 9/8/2015 — (175,959) (175,959)
  CNY 3,950,000 USD 653,595 JPMorgan Chase Bank 9/8/2015 — (23,101) (23,101)
  CNY 3,753,050 USD 610,000 Morgan Stanley Bank,N.A. 9/8/2015 — (10,944) (10,944)
  DKK 18,598,000 USD 3,348,101 Citibank N.A. 11/13/2014 — (65,667) (65,667)
  EUR 3,544,000 USD 4,741,719 Bank of America, N.A. 11/20/2014 — (82,706) (82,706)
  EUR 10,386,000 USD 13,770,623 Barclays Bank PLC Wholesale 11/20/2014 — (116,983) (116,983)
  EUR 4,851,000 USD 6,448,124 Citibank N.A. 11/20/2014 — (70,903) (70,903)
  EUR 3,574,000 USD 4,772,493 JPMorgan Chase Bank N.A. 11/20/2014 — (74,041) (74,041)
  GBP 21,569,000 USD 36,637,319 Barclays Bank PLC Wholesale 9/3/2014 — (829,531) (829,531)
  GBP 3,694,000 USD 6,124,652 Bank of America, N.A. 10/2/2014 6,552 — 6,552
  INR 84,350,860 USD 1,393,768 JPMorgan Chase Bank 9/2/2014 — (3,675) (3,675)
  INR 917,833,510 USD 15,087,261 Deutsche Bank AG London 10/15/2014 — (116,790) (116,790)

 

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                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Global Bond Fund, continued              
  JPY 2,138,100,000 USD 20,994,986 BNP Paribas SA 9/3/2014 — ($445,224) ($445,224)
  JPY 946,100,000 USD 9,219,939 JPMorgan Chase Bank N.A. 9/3/2014 — (126,758) (126,758)
  JPY 6,120,189,000 USD 59,457,410 UBS AG 9/3/2014 — (634,890) (634,890)
  JPY 7,410,089,000 USD 71,183,437 Goldman Sachs Capital        
          Markets LP 10/2/2014 $52,950 — 52,950
  MXN 28,042,613 USD 2,095,000 BNP Paribas SA 12/18/2014 35,355 — 35,355
  MXN 166,539,000 USD 12,627,573 Citibank N.A. 12/18/2014 24,145 — 24,145
  MXN 61,515,157 USD 4,598,000 Goldman Sachs Capital        
          Markets LP 12/18/2014 75,214 — 75,214
  MYR 4,646,682 USD 1,466,000 UBS AG 9/19/2014 6,283 — 6,283
  MYR 4,349,536 USD 1,376,000 HSBC Bank USA 9/22/2014 1,797 — 1,797
  MYR 1,465,080 USD 464,000 UBS AG 9/22/2014 92 — 92
  MYR 6,376,425 USD 2,018,000 Barclays Capital 10/15/2014 — (1,879) (1,879)
  MYR 23,366,194 USD 7,395,000 JPMorgan Chase Bank 10/15/2014 — (6,993) (6,993)
  NZD 4,436,000 USD 3,779,539 Bank of America, N.A. 9/3/2014 — (69,047) (69,047)
  NZD 17,178,000 USD 14,315,522 Barclays Bank PLC Wholesale 9/3/2014 53,013 — 53,013
  RUB 15,542,610 USD 426,000 Bank of America, N.A. 9/11/2014 — (6,856) (6,856)
  RUB 15,677,631 USD 433,000 BNP Paribas SA 9/11/2014 — (10,214) (10,214)
  RUB 28,156,570 USD 767,000 Barclays Capital 10/15/2014 — (14,122) (14,122)
  RUB 101,836,455 USD 2,779,000 Citibank N.A. 10/15/2014 — (55,997) (55,997)
  RUB 11,498,680 USD 314,000 HSBC Bank USA 10/15/2014 — (6,537) (6,537)
  RUB 63,563,546 USD 1,733,000 JPMorgan Chase Bank 10/15/2014 — (33,376) (33,376)
  USD 4,315,093 AUD 4,634,000 Goldman Sachs Capital        
          Markets LP 9/3/2014 — (12,832) (12,832)
  USD 3,346,687 AUD 3,595,000 HSBC Bank USA 9/3/2014 — (10,864) (10,864)
  USD 15,623,710 AUD 16,645,639 JPMorgan Chase Bank N.A. 9/3/2014 77,514 — 77,514
  USD 22,844,963 AUD 24,632,639 JPMorgan Chase Bank N.A. 10/2/2014 — (114,020) (114,020)
  USD 5,477,254 BRL 12,310,238 Bank of America, N.A. 9/3/2014 — (22,070) (22,070)
  USD 894,045 BRL 2,002,304 Barclays Capital 9/3/2014 — (439) (439)
  USD 6,537,000 BRL 14,881,813 BNP Paribas SA 9/3/2014 — (111,119) (111,119)
  USD 1,741,800 BRL 3,900,936 Citibank N.A. 9/3/2014 — (856) (856)
  USD 460,000 BRL 1,058,230 Deutsche Bank AG London 9/3/2014 — (12,741) (12,741)
  USD 4,527,000 BRL 10,185,474 Goldman Sachs Capital        
          Markets LP 9/3/2014 — (23,133) (23,133)
  USD 2,253,640 BRL 5,082,101 UBS AG 9/3/2014 — (16,675) (16,675)
  USD 3,112,991 BRL 7,170,464 Bank of America, N.A. 10/2/2014 — (63,641) (63,641)
  USD 1,754,008 BRL 4,021,765 BNP Paribas SA 10/2/2014 — (27,699) (27,699)
  USD 1,711,838 BRL 3,900,936 Citibank N.A. 10/2/2014 — (16,340) (16,340)
  USD 1,759,984 BRL 4,023,411 UBS AG 10/2/2014 — (22,453) (22,453)
  USD 2,043,000 CAD 2,217,999 JPMorgan Chase Bank N.A. 9/2/2014 3,085 — 3,085
  USD 182,903 CAD 199,000 Bank of America, N.A. 9/18/2014 — (52) (52)
  USD 5,859,481 CAD 6,368,000 HSBC Bank USA 9/18/2014 4,897 — 4,897
  USD 1,646,807 CAD 1,796,000 JPMorgan Chase Bank N.A. 9/18/2014 — (4,392) (4,392)
  USD 3,506,317 CAD 3,811,194 Barclays Bank PLC Wholesale 10/2/2014 3,509 — 3,509
  USD 812,138 CHF 734,000 BNP Paribas SA 11/13/2014 12,022 — 12,022
  USD 340,272 CHF 308,000 HSBC Bank USA 11/13/2014 4,529 — 4,529
  USD 2,610,781 CHF 2,386,000 JPMorgan Chase Bank N.A. 11/13/2014 9,858 — 9,858
  USD 6,964,607 CHF 6,292,000 UBS AG 11/13/2014 105,845 — 105,845
  USD 7,402,508 CNY 45,880,747 UBS AG 10/15/2014 — (31,566) (31,566)
  USD 2,305,571 DKK 12,623,000 Deutsche Bank AG London 10/1/2014 78,427 — 78,427
  USD 2,435,939 EUR 1,821,000 BNP Paribas SA 9/3/2014 43,236 — 43,236
  USD 48,577,207 EUR 36,253,000 Bank of America, N.A. 11/20/2014 918,291 — 918,291
  USD 5,876,603 EUR 4,388,000 BNP Paribas SA 11/20/2014 108,050 — 108,050
  USD 32,616,250 EUR 24,468,000 Citibank N.A. 11/20/2014 450,129 — 450,129
  USD 15,954,550 EUR 12,092,000 HSBC Bank USA 11/20/2014 58,166 — 58,166
  USD 8,305,263 GBP 4,993,000 Bank of America, N.A. 9/3/2014 16,131 — 16,131
  USD 10,028,862 GBP 5,919,000 Citibank N.A. 9/3/2014 202,431 — 202,431
  USD 8,198,950 GBP 4,855,000 Deutsche Bank AG London 9/3/2014 138,919 — 138,919
  USD 7,358,714 GBP 4,347,000 HSBC Bank USA 9/3/2014 142,040 — 142,040
  USD 2,470,175 GBP 1,455,000 JPMorgan Chase Bank N.A. 9/3/2014 54,656 — 54,656
  USD 429,609 GBP 259,000 BNP Paribas SA 10/2/2014 — (272) (272)
  USD 1,397,000 INR 84,350,860 JPMorgan Chase Bank 9/2/2014 6,907 — 6,907
  USD 2,412,000 INR 147,180,240 Barclays Capital 10/15/2014 11,393 — 11,393
  USD 2,408,000 INR 148,092,000 HSBC Bank USA 10/15/2014 — (7,478) (7,478)

 

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                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Global Bond Fund, continued              
  USD 1,384,446 INR 84,350,860 JPMorgan Chase Bank 10/15/2014 $8,628 — $8,628
  USD 3,772,553 JPY 386,400,000 BNP Paribas SA 9/3/2014 58,776 — 58,776
  USD 82,504,797 JPY 8,589,089,000 Goldman Sachs Capital        
          Markets LP 9/3/2014 — ($46,877) (46,877)
  USD 2,225,576 JPY 228,900,000 JPMorgan Chase Bank N.A. 9/3/2014 25,566 — 25,566
  USD 4,510,602 JPY 468,500,000 BNP Paribas SA 10/2/2014 6,709 — 6,709
  USD 907,950 MXN 11,861,000 Goldman Sachs Capital        
          Markets LP 9/23/2014 2,107 — 2,107
  USD 417,993 MXN 5,436,000 Royal Bank of Canada 9/23/2014 2,837 — 2,837
  USD 11,967,690 MXN 156,772,372 BNP Paribas SA 9/25/2014 — (3,691) (3,691)
  USD 5,977,835 MXN 78,632,444 BNP Paribas SA 10/22/2014 — (16,621) (16,621)
  USD 1,359,968 MXN 17,868,617 Goldman Sachs Capital        
          Markets LP 10/22/2014 — (2,226) (2,226)
  USD 11,940,060 MXN 156,880,443 Royal Bank of Canada 12/11/2014 16,676 — 16,676
  USD 1,144,000 MXN 14,984,607 Bank of America, N.A. 12/18/2014 5,642 — 5,642
  USD 21,676,066 MXN 288,130,013 BNP Paribas SA 12/18/2014 — (212,741) (212,741)
  USD 4,557,761 MXN 59,930,006 Deutsche Bank AG London 12/18/2014 4,969 — 4,969
  USD 15,030,876 MXN 198,775,810 Goldman Sachs Capital        
          Markets LP 12/18/2014 — (69,824) (69,824)
  USD 402,000 MXN 5,308,571 JPMorgan Chase Bank N.A. 12/18/2014 — (1,284) (1,284)
  USD 18,335,372 NZD 21,614,000 Bank of America, N.A. 9/3/2014 256,346 — 256,346
  USD 14,275,377 NZD 17,178,000 Barclays Bank PLC Wholesale 10/2/2014 — (52,803) (52,803)
  USD 6,539,269 RUB 238,492,215 Barclays Capital 10/15/2014 162,231 — 162,231
  USD 703,234 SEK 4,863,000 Barclays Bank PLC Wholesale 11/13/2014 7,552 — 7,552
  USD 164,417 ZAR 1,762,795 Citibank N.A. 10/15/2014 267 — 267
  USD 745,000 ZAR 7,944,680 Goldman Sachs Capital        
          Markets LP 10/15/2014 5,197 — 5,197
  USD 746,000 ZAR 8,116,853 HSBC Bank USA 10/15/2014 — (9,836) (9,836)
  USD 3,927,315 ZAR 42,316,293 JPMorgan Chase Bank N.A. 10/15/2014 — (13,148) (13,148)
  ZAR 16,505,618 USD 1,533,000 Credit Suisse International 10/15/2014 3,991 — 3,991
  ZAR 24,218,154 USD 2,248,000 Goldman Sachs Capital        
          Markets LP 10/15/2014 7,177 — 7,177
  ZAR 5,280,030 USD 493,000 HSBC Bank USA 10/15/2014 — (1,327) (1,327)
  ZAR 9,664,850 USD 895,061 JPMorgan Chase Bank N.A. 10/15/2014 4,923 — 4,923
              $3,707,758 ($3,980,079) ($272,321)
 
Global Equity Fund                
 
The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates. During the year ended August 31, 2014 the fund
held forward foreign currency contracts with USD notional values ranging up to $14.3 million as measured at each quarter end.    
 
                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION  (DEPRECIATION) 
Global Equity Fund                
  USD 14,282,020 EUR 10,750,000 State Street Bank and Trust        
          Company 10/1/2014 $154,951 — $154,951
              $154,951 — $154,951
 
High Yield Fund                
 
The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates. During the year ended August 31, 2014 the fund
held forward foreign currency contracts with USD notional values ranging from approximately $36.5 million to $42.2 million, as measured at each quarter end.

 

307

 


DERIVATIVE INSTRUMENTS, CONTINUED

                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
High Yield Fund                
  EUR 333,164 USD 439,115 Citibank N.A. London 11/14/2014 — ($1,151) ($1,151)
  GBP 678,237 USD 1,123,581 UBS AG London 11/14/2014 $1,713 — 1,713
  USD 28,244,659 EUR 21,103,759 UBS AG London 11/14/2014 502,503 — 502,503
  USD 6,691,072 GBP 3,972,875 UBS AG London 11/14/2014 99,495 — 99,495
              $603,711 ($1,151) $602,560
 
Investment Quality Bond Fund              
 
The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currencies, and as a substi-
tute for securities purchased. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from approxi-
mately $2.0 million to $21.6 million, as measured at each quarter end.        
 
                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Investment Quality Bond Fund              
  JPY 162,650,000 USD 1,588,813 Barclays Bank PLC Wholesale 9/17/2014 — ($25,374) ($25,374)
  JPY 291,229,000 USD 2,870,527 BNP Paribas SA 9/17/2014 — (71,149) (71,149)
  JPY 97,238,000 USD 955,994 Credit Suisse International 9/17/2014 — (21,314) (21,314)
  JPY 101,604,000 USD 994,665 HSBC Bank USA 9/17/2014 — (18,017) (18,017)
  PEN 1,218,000 USD 431,685 Standard Chartered Bank 9/17/2014 — (4,332) (4,332)
  RUB 15,814,000 USD 452,604 JPMorgan Chase Bank 9/17/2014 — (26,761) (26,761)
  USD 5,926,608 EUR 4,479,000 Standard Chartered Bank 9/30/2014 $40,580 — 40,580
  USD 1,446,012 GBP 872,000 Citibank N.A. 9/30/2014 — (1,333) (1,333)
  USD 3,006,367 JPY 306,362,000 Bank of America, N.A. 9/17/2014 61,526 — 61,526
  USD 3,006,428 JPY 306,361,000 BNP Paribas SA 9/17/2014 61,597 — 61,597
  USD 80,585 PEN 227,000 BNP Paribas SA 9/17/2014 939 — 939
  USD 350,983 PEN 991,000 Citibank N.A. 9/17/2014 3,276 — 3,276
  USD 450,328 RUB 15,814,000 Bank of America, N.A. 9/17/2014 24,484 — 24,484
              $192,402 ($168,280) $24,122
 
Real Return Bond Fund              
 
The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currencies, and to maintain
diversity and liquidity of the fund. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from
approximately $104.9 million to $350.0 million, as measured at each quarter end.        
 
                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Real Return Bond Fund              
  AUD 8,564,000 USD 7,958,538 JPMorgan Chase Bank N.A. 9/3/2014 $39,811 — $39,811
  BRL 18,768,886 USD 8,326,554 Barclays Capital 9/3/2014 58,027 — 58,027
  BRL 600,063 USD 267,933 Goldman Sachs Capital        
          Markets LP 9/3/2014 132 — 132
  BRL 18,168,823 USD 8,112,530 UBS AG 9/3/2014 3,986 — 3,986
  BRL 18,168,823 USD 7,950,171 UBS AG 10/2/2014 98,914 — 98,914
  EUR 1,272,000 USD 1,704,638 BNP Paribas SA 9/3/2014 — ($33,294) (33,294)
  EUR 51,382,000 USD 67,813,964 Goldman Sachs Capital        
          Markets LP 9/3/2014 — (300,588) (300,588)
  INR 175,350,285 USD 2,894,000 Barclays Capital 10/15/2014 — (33,921) (33,921)
  INR 41,689,908 USD 687,000 Citibank N.A. 10/15/2014 — (7,010) (7,010)
  INR 36,632,750 USD 605,000 Deutsche Bank AG London 10/15/2014 — (7,496) (7,496)
  INR 415,953,925 USD 6,845,288 UBS AG 10/15/2014 — (60,805) (60,805)
  JPY 1,248,300,000 USD 11,989,051 Goldman Sachs Capital        
          Markets LP 9/3/2014 8,642 — 8,642
  MXN 69,058,659 USD 5,295,300 Goldman Sachs Capital        
          Markets LP 9/23/2014 — (21,184) (21,184)
  MXN 17,946,832 USD 1,341,819 BNP Paribas SA 12/18/2014 21,575 — 21,575
  MYR 860,436 USD 270,000 Barclays Capital 10/15/2014 2,056 — 2,056
  MYR 7,843,813 USD 2,446,070 Credit Suisse International 10/15/2014 34,015 — 34,015

 

308

 


DERIVATIVE INSTRUMENTS, CONTINUED

                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Real Return Bond Fund, continued              
  MYR 1,912,680 USD 600,000 JPMorgan Chase Bank 10/15/2014 $4,758 — $4,758
  PLN 6,327,737 USD 2,049,304 Barclays Capital 10/30/2014 — ($80,370) (80,370)
  USD 8,038,229 AUD 8,564,000 JPMorgan Chase Bank N.A. 9/3/2014 39,880 — 39,880
  USD 7,942,481 AUD 8,564,000 JPMorgan Chase Bank N.A. 10/2/2014 — (39,641) (39,641)
  USD 8,380,464 BRL 18,768,886 Barclays Capital 9/3/2014 — (4,118) (4,118)
  USD 266,233 BRL 600,063 Goldman Sachs Capital        
          Markets LP 9/3/2014 — (1,832) (1,832)
  USD 8,015,001 BRL 18,168,823 UBS AG 9/3/2014 — (101,516) (101,516)
  USD 496,211 COP 953,097,529 Credit Suisse International 10/16/2014 2,326 — 2,326
  USD 90,187 COP 171,031,167 Goldman Sachs Capital        
          Markets LP 10/16/2014 1,561 — 1,561
  USD 2,692,364 EUR 2,005,000 Barclays Bank PLC Wholesale 9/3/2014 57,895 — 57,895
  USD 65,951,072 EUR 49,068,000 Citibank N.A. 9/3/2014 1,478,176 — 1,478,176
  USD 2,127,402 EUR 1,581,000 Deutsche Bank AG London 9/3/2014 50,047 — 50,047
  USD 67,823,829 EUR 51,382,000 Goldman Sachs Capital        
          Markets LP 10/2/2014 300,022 — 300,022
  USD 3,686,006 GBP 2,196,000 Barclays Bank PLC Wholesale 9/11/2014 40,544 — 40,544
  USD 1,242,464 GBP 734,000 Citibank N.A. 9/11/2014 23,990 — 23,990
  USD 3,099,404 HUF 712,676,970 JPMorgan Chase Bank 10/30/2014 129,816 — 129,816
  USD 12,127,188 JPY 1,248,300,000 UBS AG 9/3/2014 129,495 — 129,495
  USD 11,991,527 JPY 1,248,300,000 Goldman Sachs Capital        
          Markets LP 10/2/2014 — (8,920) (8,920)
  USD 2,170,000 MXN 28,770,945 Bank of America, N.A. 12/18/2014 — (15,686) (15,686)
  USD 2,750,000 MXN 36,202,125 BNP Paribas SA 12/18/2014 — (221) (221)
  USD 1,250,000 MXN 16,382,500 Deutsche Bank AG London 12/18/2014 5,446 — 5,446
  USD 490,000 MXN 6,425,762 JPMorgan Chase Bank N.A. 12/18/2014 1,844 — 1,844
  USD 1,654,649 NZD 1,957,000 Deutsche Bank AG London 9/3/2014 17,717 — 17,717
  USD 550,615 ZAR 6,042,279 JPMorgan Chase Bank N.A. 10/15/2014 — (12,038) (12,038)
              $2,550,675 ($728,640) $1,822,035
 
Spectrum Income Fund              
 
The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currencies, and to maintain
diversity and liquidity of the fund. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from
approximately $100.0 million to $145.2 million, as measured at each quarter end.        
 
                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Spectrum Income Fund              
  AUD 135,000 USD 125,828 Royal Bank of Scotland PLC 9/19/2014 $114 — $114
  BRL 325,000 USD 144,509 Bank of America, N.A. 9/3/2014 678 — 678
  BRL 490,000 USD 217,972 Credit Suisse International 9/3/2014 925 — 925
  BRL 2,255,000 USD 989,035 Royal Bank of Scotland PLC 9/3/2014 18,336 — 18,336
  BRL 465,000 USD 199,614 Morgan Stanley & Company        
          International 11/21/2014 3,626 — 3,626
  BRL 150,000 USD 64,935 Credit Suisse International 12/2/2014 423 — 423
  CAD 467,000 USD 427,658 Morgan Stanley & Company        
          International 11/21/2014 1,054 — 1,054
  CAD 57,057 USD 52,155 State Street Bank London 11/21/2014 225 — 225
  CHF 1,173,000 USD 1,294,738 Deutsche Bank AG London 11/21/2014 — ($15,940) (15,940)
  CHF 4,000 USD 4,417 State Street Bank London 11/21/2014 — (56) (56)
  COP 1,337,205,000 USD 706,040 HSBC Bank PLC 11/21/2014 — (15,596) (15,596)
  CZK 3,806,000 USD 183,393 JPMorgan Chase Bank N.A.        
          London 11/21/2014 — (2,930) (2,930)
  EUR 324,400 USD 439,009 Barclays Bank PLC Wholesale 9/12/2014 — (12,742) (12,742)
  EUR 348,031 USD 462,332 Canadian Imperial Bank of        
          Commerce 9/12/2014 — (5,015) (5,015)
  EUR 480,141 USD 634,940 HSBC Bank PLC 9/12/2014 — (4,030) (4,030)
  EUR 791,756 USD 1,079,813 Merrill Lynch International 9/12/2014 — (39,435) (39,435)
  EUR 571,289 USD 776,598 Royal Bank of Canada (UK) 9/12/2014 — (25,917) (25,917)
  EUR 148,577 USD 202,234 Royal Bank of Scotland PLC 9/12/2014 — (7,002) (7,002)

 

309

 


DERIVATIVE INSTRUMENTS, CONTINUED

                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Spectrum Income Fund, continued              
  EUR 429,297 USD 576,863 State Street Bank London 9/12/2014 — ($12,762) ($12,762)
  EUR 445,000 USD 594,605 Goldman Sachs International 11/3/2014 — (9,674) (9,674)
  EUR 206,061 USD 272,849 JPMorgan Chase Bank N.A.        
          London 11/21/2014 — (1,956) (1,956)
  GBP 107,708 USD 181,549 Morgan Stanley & Company        
          International 10/10/2014 — (2,790) (2,790)
  GBP 61,000 USD 102,902 Royal Bank of Scotland PLC 10/10/2014 — (1,663) (1,663)
  HKD 15,115,000 USD 1,950,272 Standard Chartered Bank 10/9/2014 $193 — 193
  HKD 15,045,000 USD 1,941,270 Standard Chartered Bank 11/12/2014 222 — 222
  HKD 4,047,000 USD 522,241 Standard Chartered Bank 11/21/2014 10 — 10
  IDR 3,133,552,000 USD 264,927 Standard Chartered Bank 10/15/2014 1,107 — 1,107
  INR 17,562,000 USD 288,659 HSBC Bank USA 11/17/2014 — (4,153) (4,153)
  INR 17,336,000 USD 280,065 Standard Chartered Bank        
          London 11/17/2014 780 — 780
  INR 10,029,000 USD 161,251 Standard Chartered Bank 11/21/2014 1,081 — 1,081
  INR 17,134,000 USD 280,150 Standard Chartered Bank        
          London 12/8/2014 — (3,842) (3,842)
  INR 26,479,000 USD 422,762 Standard Chartered Bank 1/20/2015 118 — 118
  JPY 58,052,000 USD 567,725 Barclays Bank PLC Wholesale 11/21/2014 — (9,449) (9,449)
  JPY 31,526,000 USD 303,655 JPMorgan Chase Bank N.A.        
          London 11/21/2014 — (475) (475)
  JPY 1,490,136,000 USD 14,571,401 Morgan Stanley & Company        
          International 11/21/2014 — (241,018) (241,018)
  KRW 552,477,000 USD 534,104 HSBC Bank PLC 11/21/2014 10,198 — 10,198
  MXN 24,425,000 USD 1,844,120 Royal Bank of Scotland PLC 11/14/2014 15,321 — 15,321
  MXN 21,895,000 USD 1,663,564 Royal Bank of Scotland PLC 11/21/2014 2,576 — 2,576
  MYR 344,000 USD 107,185 HSBC Bank PLC 11/21/2014 1,260 — 1,260
  NOK 3,022,000 USD 489,515 Morgan Stanley & Company        
          International 11/21/2014 — (3,320) (3,320)
  PEN 1,374,000 USD 486,716 Credit Suisse International 11/21/2014 — (8,304) (8,304)
  PLN 7,720,000 USD 2,522,109 Deutsche Bank AG London 9/12/2014 — (113,133) (113,133)
  PLN 3,411,000 USD 1,087,050 HSBC Bank PLC 11/21/2014 — (26,878) (26,878)
  RUB 19,510,000 USD 562,005 State Street Bank London 9/15/2014 — (36,380) (36,380)
  RUB 19,037,000 USD 535,725 State Street Bank London 10/15/2014 — (26,695) (26,695)
  SEK 59,000 USD 8,607 Morgan Stanley & Company        
          International 11/21/2014 — (167) (167)
  SGD 28,000 USD 22,478 JPMorgan Chase Bank N.A.        
          London 11/21/2014 — (61) (61)
  TRY 75,000 USD 34,123 Royal Bank of Scotland PLC 11/21/2014 — (14) (14)
  USD 941,469 AUD 1,015,000 Goldman Sachs International 9/19/2014 — (5,428) (5,428)
  USD 814,304 AUD 879,000 Morgan Stanley & Company        
          International 11/21/2014 — (2,098) (2,098)
  USD 1,345,134 BRL 3,070,000 Merrill Lynch International 9/3/2014 — (26,320) (26,320)
  USD 6,421,075 BRL 14,990,000 Morgan Stanley & Company        
          International 11/21/2014 — (130,670) (130,670)
  USD 1,016,521 BRL 2,375,000 Royal Bank of Scotland PLC 12/2/2014 — (18,313) (18,313)
  USD 567,623 CAD 615,000 Goldman Sachs International 10/29/2014 2,741 — 2,741
  USD 213,871 CHF 193,708 JPMorgan Chase Bank N.A.        
          London 11/12/2014 2,717 — 2,717
  USD 1,071,088 CLP 622,977,000 Credit Suisse International 11/21/2014 16,539 — 16,539
  USD 89,446 DKK 498,000 JPMorgan Chase Bank N.A.        
          London 11/21/2014 1,547 — 1,547
  USD 411,589 EUR 303,851 Canadian Imperial Bank of        
          Commerce 9/12/2014 12,325 — 12,325
  USD 187,339 EUR 138,278 Deutsche Bank AG London 9/12/2014 5,640 — 5,640
  USD 14,534,056 EUR 10,734,083 JPMorgan Chase Bank N.A.        
          London 9/12/2014 429,332 — 429,332
  USD 180,174 EUR 133,394 State Street Bank London 9/12/2014 4,892 — 4,892
  USD 2,545,259 EUR 1,900,000 State Street Bank London 11/3/2014 47,804 — 47,804
  USD 6,963,778 EUR 5,201,000 Deutsche Bank AG London 11/21/2014 126,388 — 126,388
  USD 300,707 EUR 227,132 JPMorgan Chase Bank N.A.        
          London 11/21/2014 2,113 — 2,113

 

310

 


DERIVATIVE INSTRUMENTS, CONTINUED

                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Spectrum Income Fund, continued              
  USD 535,933 EUR 400,000 Morgan Stanley & Company        
          International 11/21/2014 $10,081 — $10,081
  USD 325,683 EUR 243,127 State Street Bank London 11/21/2014 6,061 — 6,061
  USD 329,685 GBP 192,602 Goldman Sachs International 10/10/2014 10,032 — 10,032
  USD 574,381 GBP 335,039 HSBC Bank PLC 10/10/2014 18,330 — 18,330
  USD 4,014,292 GBP 2,345,728 JPMorgan Chase Bank N.A.        
          London 10/10/2014 121,183 — 121,183
  USD 2,275,868 GBP 1,335,000 Barclays Bank PLC Wholesale 10/23/2014 60,475 — 60,475
  USD 6,637,163 GBP 3,980,993 JPMorgan Chase Bank N.A.        
          London 11/21/2014 32,533 — 32,533
  USD 150,183 GBP 89,711 State Street Bank London 11/21/2014 1,347 — 1,347
  USD 485,031 HUF 113,342,000 Morgan Stanley & Company        
          International 11/21/2014 13,030 — 13,030
  USD 22,382 IDR 267,128,000 State Street Bank London 10/15/2014 — ($297) (297)
  USD 252,040 IDR 2,995,499,000 Deutsche Bank AG London 11/21/2014 — (585) (585)
  USD 200,646 ILS 696,000 Barclays Bank PLC Wholesale 11/20/2014 5,732 — 5,732
  USD 1,125,084 JPY 115,680,000 State Street Bank London 11/4/2014 12,738 — 12,738
  USD 515,339 MXN 6,805,000 Royal Bank of Scotland PLC 11/18/2014 — (2,593) (2,593)
  USD 4,261,748 MXN 56,091,000 Royal Bank of Scotland PLC 11/21/2014 — (6,600) (6,600)
  USD 481,704 NOK 2,987,000 UBS AG London 11/21/2014 1,140 — 1,140
  USD 640,275 NZD 745,000 Goldman Sachs International 9/16/2014 17,906 — 17,906
  USD 499,897 NZD 590,000 Goldman Sachs International 10/30/2014 9,152 — 9,152
  USD 496,988 NZD 590,000 HSBC Bank PLC 11/21/2014 7,268 — 7,268
  USD 498,146 NZD 592,000 Morgan Stanley & Company        
          International 11/21/2014 6,765 — 6,765
  USD 107,333 PEN 303,000 Credit Suisse International 11/21/2014 1,831 — 1,831
  USD 255,062 PLN 780,000 Bank of America, N.A. 9/12/2014 11,668 — 11,668
  USD 516,632 PLN 1,580,000 Barclays Bank PLC Wholesale 9/12/2014 23,603 — 23,603
  USD 546,717 PLN 1,725,000 Goldman Sachs International 9/12/2014 8,441 — 8,441
  USD 625,476 PLN 1,930,000 State Street Bank London 9/12/2014 23,232 — 23,232
  USD 559,047 PLN 1,705,000 UBS AG London 9/12/2014 27,012 — 27,012
  USD 269,964 RON 881,000 JPMorgan Chase Bank N.A.        
          London 10/15/2014 7,360 — 7,360
  USD 550,236 RUB 19,510,000 State Street Bank London 9/15/2014 24,612 — 24,612
  USD 532,355 RUB 19,037,000 State Street Bank London 10/15/2014 23,325 — 23,325
  USD 1,244,064 ZAR 13,570,000 Royal Bank of Scotland PLC 9/26/2014 — (23,563) (23,563)
  USD 1,603,142 ZAR 17,165,000 HSBC Bank PLC 11/21/2014 14,515 — 14,515
  USD 262,905 ZAR 2,849,000 Morgan Stanley & Company        
          International 11/21/2014 — (771) (771)
  ZAR 1,925,000 USD 176,512 Credit Suisse International 9/26/2014 3,310 — 3,310
  ZMW 684,000 USD 107,818 Barclays Bank PLC Wholesale 10/14/2014 3,810 — 3,810
              $1,216,777 ($848,635) $368,142
 
Total Return Fund                
 
The fund used forward foreign currency contracts to manage against anticipated changes in currency exchange rates, gain exposure to foreign currencies, and to maintain
diversity and liquidity of the fund. During the year ended August 31, 2014 the fund held forward foreign currency contracts with USD notional values ranging from
approximately $271.9 million to $1.7 billion, as measured at each quarter end.        
 
                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Total Return Fund                
  BRL 21,624,460 USD 9,655,501 Bank of America, N.A. 9/3/2014 $4,745 — $4,745
  BRL 4,536,184 USD 2,025,444 Barclays Capital 9/3/2014 995 — 995
  BRL 44,178,482 USD 19,438,614 BNP Paribas SA 9/3/2014 297,139 — 297,139
  BRL 8,710,650 USD 3,889,378 Goldman Sachs Capital        
          Markets LP 9/3/2014 1,911 — 1,911
  BRL 44,178,482 USD 19,726,059 JPMorgan Chase Bank 9/3/2014 9,693 — 9,693
  BRL 34,871,294 USD 15,295,359 UBS AG 9/3/2014 282,614 — 282,614
  CAD 1,358,000 USD 1,267,909 Goldman Sachs Capital        
          Markets LP 9/18/2014 — ($19,397) (19,397)

 

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                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Total Return Fund, continued              
  EUR 11,749,000 USD 15,680,979 Barclays Bank PLC Wholesale 9/3/2014 — ($243,381) ($243,381)
  EUR 4,544,000 USD 6,076,361 BNP Paribas SA 9/3/2014 — (105,773) (105,773)
  EUR 5,754,000 USD 7,619,429 Deutsche Bank AG London 9/3/2014 — (58,961) (58,961)
  EUR 226,430,000 USD 298,979,365 Goldman Sachs Capital Markets LP 9/3/2014 — (1,461,679) (1,461,679)
  EUR 9,619,000 USD 12,869,309 JPMorgan Chase Bank N.A. 9/3/2014 — (230,425) (230,425)
  EUR 5,235,000 USD 6,903,204 Barclays Bank PLC Wholesale 10/2/2014 — (23,613) (23,613)
  EUR 3,114,000 USD 4,111,034 BNP Paribas SA 10/2/2014 — (18,762) (18,762)
  EUR 2,800,000 USD 3,691,036 Credit Suisse International 10/2/2014 — (11,407) (11,407)
  EUR 30,000 USD 39,687 Bank of America, N.A. 6/15/2015 — (177) (177)
  EUR 1,868,000 USD 2,489,828 Barclays Bank PLC Wholesale 6/15/2015 — (29,662) (29,662)
  EUR 3,114,000 USD 4,174,348 BNP Paribas SA 6/15/2015 — (73,194) (73,194)
  EUR 3,992,000 USD 5,281,296 Citibank N.A. 6/15/2015 — (23,811) (23,811)
  EUR 7,355,000 USD 9,856,619 Credit Suisse International 6/15/2015 — (170,045) (170,045)
  EUR 9,406,000 USD 12,571,721 Goldman Sachs Capital Markets LP 6/15/2015 — (183,968) (183,968)
  EUR 2,597,000 USD 3,472,449 JPMorgan Chase Bank N.A. 6/15/2015 — (52,186) (52,186)
  EUR 1,143,000 USD 1,543,679 Bank of America, N.A. 6/13/2016 — (24,388) (24,388)
  EUR 4,162,000 USD 5,625,359 Deutsche Bank AG London 6/13/2016 — (93,176) (93,176)
  GBP 1,429,000 USD 2,430,206 Bank of America, N.A. 9/11/2014 — (57,999) (57,999)
  JPY 195,800,000 USD 1,923,147 Barclays Bank PLC Wholesale 9/3/2014 — (41,269) (41,269)
  JPY 2,346,875,000 USD 22,540,098 Goldman Sachs Capital Markets LP 9/3/2014 $16,248 — 16,248
  MXN 115,100,770 USD 8,819,069 Goldman Sachs Capital Markets LP 9/23/2014 — (28,646) (28,646)
  MXN 212,550,000 USD 16,147,719 Barclays Bank PLC Wholesale 12/18/2014 — (613) (613)
  MXN 130,304,484 USD 9,923,801 BNP Paribas SA 12/18/2014 — (24,764) (24,764)
  MXN 51,922,880 USD 3,962,218 JPMorgan Chase Bank N.A. 12/18/2014 — (17,714) (17,714)
  MXN 9,562,785 USD 725,403 Societe Generale 12/18/2014 1,068 — 1,068
  USD 9,452,489 BRL 21,624,460 Bank of America, N.A. 9/3/2014 — (207,756) (207,756)
  USD 2,012,415 BRL 4,536,184 Barclays Capital 9/3/2014 — (14,024) (14,024)
  USD 19,725,797 BRL 44,178,481 BNP Paribas SA 9/3/2014 — (9,955) (9,955)
  USD 3,864,701 BRL 8,710,650 Goldman Sachs Capital Markets LP 9/3/2014 — (26,588) (26,588)
  USD 19,455,488 BRL 44,178,482 JPMorgan Chase Bank 9/3/2014 — (280,264) (280,264)
  USD 15,570,322 BRL 34,871,293 UBS AG 9/3/2014 — (7,651) (7,651)
  USD 5,794,639 BRL 13,246,834 UBS AG 10/2/2014 — (73,924) (73,924)
  USD 50,664 BRL 124,700 BNP Paribas SA 4/2/2015 — (2,014) (2,014)
  USD 2,407,071 BRL 5,930,300 Credit Suisse International 4/2/2015 — (98,066) (98,066)
  USD 2,413,919 BRL 5,945,000 HSBC Bank USA 4/2/2015 — (97,427) (97,427)
  USD 6,335,797 BRL 15,000,000 JPMorgan Chase Bank 4/2/2015 — (652) (652)
  USD 144,123 BRL 348,616 BNP Paribas SA 7/2/2015 327 — 327
  USD 1,505,729 BRL 3,643,864 Deutsche Bank AG London 7/2/2015 2,718 — 2,718
  USD 6,606,488 BRL 16,007,520 Goldman Sachs Capital Markets LP 7/2/2015 3,750 — 3,750
  USD 1,995,215 BRL 5,000,000 BNP Paribas SA 10/2/2015 — (18,528) (18,528)
  USD 19,032,822 BRL 49,000,000 BNP Paribas SA 1/5/2016 — (260,559) (260,559)
  USD 9,650,647 BRL 25,000,000 UBS AG 1/5/2016 — (192,915) (192,915)
  USD 14,733,831 CAD 16,017,000 Royal Bank of Canada 9/18/2014 8,191 — 8,191
  USD 17,540,519 CAD 19,214,148 Citibank N.A. 2/10/2015 — (63,864) (63,864)
  USD 21,391,270 CAD 23,480,128 Bank of America, N.A. 5/5/2015 — (78,989) (78,989)
  USD 1,529,334 EUR 1,143,000 Bank of America, N.A. 9/3/2014 27,489 — 27,489
  USD 2,203,853 EUR 1,640,000 Barclays Bank PLC Wholesale 9/3/2014 48,975 — 48,975
  USD 334,761,869 EUR 249,136,000 Citibank N.A. 9/3/2014 7,409,636 — 7,409,636
  USD 5,574,999 EUR 4,162,000 Deutsche Bank AG London 9/3/2014 106,339 — 106,339
  USD 2,674,711 EUR 2,015,000 Goldman Sachs Capital Markets LP 9/3/2014 27,102 — 27,102
  USD 39,608 EUR 30,000 Bank of America, N.A. 9/24/2014 185 — 185
  USD 2,673,384 EUR 2,014,000 Goldman Sachs Capital        
          Markets LP 9/24/2014 26,792 — 26,792
  USD 960,531 EUR 729,000 Barclays Bank PLC Wholesale 10/2/2014 2,514 — 2,514
  USD 289,896,643 EUR 219,620,000 Goldman Sachs Capital        
          Markets LP 10/2/2014 1,282,374 — 1,282,374
  USD 16,190,474 EUR 11,908,000 Bank of America, N.A. 6/15/2015 507,574 — 507,574
  USD 9,237,189 EUR 6,799,000 Barclays Bank PLC Wholesale 6/15/2015 282,870 — 282,870
  USD 7,289,521 EUR 5,375,000 BNP Paribas SA 6/15/2015 210,618 — 210,618
  USD 10,886,788 EUR 7,964,000 Citibank N.A. 6/15/2015 398,157 — 398,157
  USD 13,309,555 EUR 9,806,000 Credit Suisse International 6/15/2015 395,000 — 395,000
  USD 10,030,252 EUR 7,500,000 Bank of America, N.A. 8/7/2015 145,239 — 145,239
  USD 936,551 EUR 700,000 Deutsche Bank AG London 8/7/2015 13,950 — 13,950
  USD 39,571,936 EUR 28,934,000 Bank of America, N.A. 6/13/2016 1,112,494 — 1,112,494

 

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                  NET
            CONTRACTUAL     UNREALIZED
            SETTLEMENT UNREALIZED UNREALIZED APPRECIATION/
FUND CONTRACT TO BUY CONTRACT TO SELL COUNTERPARTY DATE APPRECIATION DEPRECIATION (DEPRECIATION)
Total Return Fund, continued              
  USD 14,138,359 EUR 10,326,000 Deutsche Bank AG London 6/13/2016 $412,908 — $412,908
  USD 8,992,038 EUR 6,531,000 Bank of America, N.A. 6/27/2016 307,474 — 307,474
  USD 9,937,486 EUR 7,227,000 Barclays Bank PLC Wholesale 6/27/2016 327,420 — 327,420
  USD 16,345,321 GBP 9,738,000 Barclays Bank PLC Wholesale 9/11/2014 179,787 — 179,787
  USD 200,368 JPY 20,500,000 Goldman Sachs Capital        
          Markets LP 9/3/2014 3,338 — 3,338
  USD 24,502,837 JPY 2,522,175,000 UBS AG 9/3/2014 261,643 — 261,643
  USD 22,544,753 JPY 2,346,875,000 Goldman Sachs Capital        
          Markets LP 10/2/2014 — ($16,770) (16,770)
  USD 2,300,000 JPY 233,406,760 Bank of America, N.A. 8/7/2015 48,017 — 48,017
  USD 8,713,000 JPY 888,451,540 HSBC Bank USA 8/7/2015 140,937 — 140,937
  USD 1,978,012 MXN 26,111,346 Goldman Sachs Capital        
          Markets LP 11/13/2014 — (9,927) (9,927)
  USD 3,619,216 MXN 47,660,005 Goldman Sachs Capital        
          Markets LP 12/11/2014 — (3,087) (3,087)
  USD 720,600 MXN 9,603,000 Citibank N.A. 12/18/2014 — (8,926) (8,926)
  USD 15,366,083 MXN 202,253,000 Credit Suisse International 12/18/2014 1,226 — 1,226
  USD 26,174,193 MXN 343,405,417 Deutsche Bank AG London 12/18/2014 86,198 — 86,198
  USD 3,157,263 MXN 41,518,012 Goldman Sachs Capital        
          Markets LP 12/18/2014 3,202 — 3,202
  USD 16,159,201 MXN 212,550,056 JPMorgan Chase Bank N.A. 12/24/2014 18,370 — 18,370
  USD 26,561,706 MXN 351,997,458 BNP Paribas SA 1/22/2015 — (118,480) (118,480)
  USD 1,263,480 MXN 16,686,775 Goldman Sachs Capital        
          Markets LP 1/22/2015 — (1,320) (1,320)
  USD 9,658,854 MXN 127,607,950 BNP Paribas SA 2/5/2015 — (4,635) (4,635)
  USD 19,240,392 MXN 254,213,680 Deutsche Bank AG London 2/5/2015 — (10,690) (10,690)
  USD 6,249,686 MXN 82,888,329 BNP Paribas SA 2/19/2015 — (21,605) (21,605)
              $14,417,227 ($4,623,626) $9,793,601

Options. There are two types of options, put options and call options. Options are traded either over-the-counter 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 Statements of assets and liabilities. In addition, OTC options are subject to the risks of all OTC derivatives contracts.

When a 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 a 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. If a fund enters into a closing sale transaction, the fund realizes a gain or loss, depending on whether proceeds from the closing sale are greater or less than the original cost. When a 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 August 31, 2014, Global Bond Fund and Real Return Bond Fund used purchased options to manage duration of the fund, manage against anticipated interest rate changes and maintain diversity and liquidity of the fund. Investment Quality Bond Fund used purchased options to manage duration of the fund. Health Sciences Fund used purchased options to manage against changes in securities markets and gain exposure to certain securities markets. Spectrum Income Fund used purchased options to manage against anticipated changes in currency exchange rate, manage duration of the fund and manage against anticipated interest rate changes. The following table summarizes the approximate range of market value of purchased options held by the funds during the year ended August 31, 2014, as measured at each quarter end. At August 31, 2014, Health Sciences Fund held no purchased options.

Fund Market Value Range
Global Bond Fund $316,900 to $1.3 million
Health Sciences Fund up to $1,200
Investment Quality Bond Fund up to $155,100
Real Return Bond Fund $1,000 to $200,100
Spectrum Income Fund up to $32,000

The following tables summarize the funds’ written options activities during the year ended August 31, 2014. In addition, the tables detail how the funds used written option contracts held during the year ended August 31, 2014.

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  NUMBER OF  
  CONTRACTS/NOTIONAL PREMIUMS RECEIVED
Capital Appreciation Value Fund    
Outstanding, beginning of period 22,184 $4,400,513
Options written 21,400 5,016,509
Option closed (9,272) (2,039,214)
Options exercised (16,945) (3,351,899)
Options expired (1,736) (290,579)
Outstanding, end of period 15,631 $3,735,330
Global Bond Fund    
Outstanding, beginning of period 102,400,142 $1,075,276
Options written 376,356,441 4,234,776
Option closed (22,465,990) (144,449)
Options exercised (71,406,963) (1,072,196)
Options expired (261,483,227) (1,651,450)
Outstanding, end of period 123,400,403 $2,441,957
Health Sciences Fund    
Outstanding, beginning of period 2,930 $2,142,957
Options written 2,340 1,130,140
Option closed (869) (630,308)
Options exercised (773) (276,901)
Options expired (3,010) (1,939,393)
Outstanding, end of period 618 $426,495
Real Return Bond Fund    
Outstanding, beginning of period 153,600,000 $1,214,103
Options written 228,665,708 1,231,339
Option closed (35,599,990) (147,605)
Options exercised (40,200,275) (270,881)
Options expired (231,955,334) (1,517,934)
Outstanding, end of period 74,510,109 $509,022
Total Return Fund    
Outstanding, beginning of period 650,600,000 $2,046,320
Options written 1,292,600,392 6,230,794
Option closed (22,600,038) (102,721)
Options exercised (305,700,067) (979,811)
Options expired (1,094,900,287) (4,105,973)
Outstanding, end of period 520,000,000 $3,088,609
 
Options on Securities    

 

Capital Appreciation Value Fund          
 
The fund used written options to manage against anticipated changes in securities markets.        
    EXERCISE EXPIRATION NUMBER OF    
FUND NAME OF ISSUER PRICE DATE CONTRACTS PREMIUM VALUE
Capital Appreciation            
Value Fund CALLS          
  AutoZone, Inc. $600.00 Sep 2014 4 $4,188 ($100)
  AutoZone, Inc. 600.00 Jan 2015 4 7,468 (1,600)
  AutoZone, Inc. 570.00 Jan 2015 4 11,508 (4,100)
  AutoZone, Inc. 570.00 Sep 2014 4 7,628 (140)
  JPMorgan Chase & Company 70.00 Jan 2015 1,257 122,015 (15,713)
  JPMorgan Chase & Company 60.00 Sep 2014 80 20,000 (3,840)
  JPMorgan Chase & Company 65.00 Sep 2014 80 7,440 (80)
  JPMorgan Chase & Company 65.00 Jan 2015 80 14,240 (4,440)
  JPMorgan Chase & Company 60.00 Jan 2015 80 28,160 (16,760)
  Philip Morris International, Inc. 95.00 Jan 2015 157 39,877 (2,983)
  Philip Morris International, Inc. 97.50 Jan 2015 421 95,531 (5,052)
  Texas Instruments, Inc. 48.00 Oct 2014 103 14,420 (12,257)
  Texas Instruments, Inc. 50.00 Jan 2015 206 25,171 (23,999)
  Texas Instruments, Inc. 50.00 Oct 2014 692 83,871 (4,069)
  The Boeing Company 140.00 Jan 2015 72 42,623 (7,992)
  The Boeing Company 135.00 Jan 2015 72 55,583 (15,120)
  The Procter & Gamble Company 85.00 Jan 2015 1,002 244,749 (138,276)
  United Technologies Corp. 130.00 Jan 2015 40 10,840 (380)
  United Technologies Corp. 125.00 Jan 2015 40 16,880 (920)
          $852,192 ($257,821)

 

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DERIVATIVE INSTRUMENTS, CONTINUED

Health Sciences Fund            
 
The fund used written options to manage against anticipated changes in securities markets, as a substitute for securities purchased and to maintain diversity and liquidity
of the fund.            
    EXERCISE EXPIRATION NUMBER OF    
FUND NAME OF ISSUER PRICE DATE CONTRACTS PREMIUM VALUE
Health Sciences Fund CALLS          
  Allergan, Inc. $150.00 Sep 2014 42 $15,414 ($61,950)
  Cooper, Inc. 170.00 Sep 2014 2 594 (470)
  Gilead Sciences, Inc. 105.00 Jan 2015 63 31,448 (62,685)
  Gilead Sciences, Inc. 110.00 Jan 2015 95 33,083 (72,200)
  Intercept Pharmaceuticals, Inc. 330.00 Nov 2014 32 84,699 (71,360)
  Intercept Pharmaceuticals, Inc. 350.00 Nov 2014 19 41,325 (32,300)
  Intermune, Inc. 50.00 Jan 2015 108 37,795 (255,150)
  Intermune, Inc. 55.00 Jan 2015 101 30,097 (186,850)
  Pharmacyclics, Inc. 140.00 Nov 2014 74 33,080 (39,960)
Health Sciences Fund,            
continued CALLS          
  Puma Biotechnology, Inc. $350.00 Jan 2015 19 $34,078 ($26,315)
  Puma Biotechnology, Inc. 330.00 Jan 2015 31 69,759 (55,025)
  Vertex Pharmaceuticals, Inc. 105.00 Oct 2014 32 15,123 (2,480)
          $426,495 ($866,745)
 
Over the Counter Options on Securities          
 
Capital Appreciation Value Fund          
 
The fund used written options to manage against anticipated changes in securities markets.        

 

      EXERCISE EXPIRATION NUMBER OF    
FUND NAME OF ISSUER COUNTERPARTY PRICE DATE CONTRACTS PREMIUM VALUE
Capital Appreciation              
Value Fund CALLS            
  Allergan, Inc. Citigroup Global Markets, Inc. $170.00 Jan 2015 294 $295,319 ($252,836)
  Anadarko Petroleum Corp. Citigroup Global Markets, Inc. 110.00 Jan 2015 93 38,260 (86,955)
  Anadarko Petroleum Corp. Citigroup Global Markets, Inc. 115.00 Jan 2015 56 15,977 (39,480)
  Apache Corp. Morgan Stanley Company, Inc. 97.50 Jan 2015 94 38,540 (72,850)
  Apache Corp. Morgan Stanley Company, Inc. 95.00 Jan 2015 293 89,569 (276,153)
  Apache Corp. Morgan Stanley Company, Inc. 105.00 Jan 2015 94 22,090 (38,070)
  Apache Corp. Morgan Stanley Company, Inc. 100.00 Jan 2015 188 63,356 (118,440)
  Apache Corp. Morgan Stanley Company, Inc. 92.50 Jan 2015 217 67,043 (244,125)
  Apache Corp. Morgan Stanley Company, Inc. 90.00 Jan 2015 109 43,753 (144,698)
  CVS Health Corp. Morgan Stanley Company, Inc. 77.50 Jan 2015 63 18,952 (25,358)
  CVS Health Corp. Morgan Stanley Company, Inc. 80.00 Jan 2015 63 14,218 (16,475)
  Danaher Corp. J.P. Morgan Clearing Corp. 80.00 Sep 2014 61 17,717 (915)
  Danaher Corp. J.P. Morgan Clearing Corp. 85.00 Sep 2014 61 8,180 (305)
  Danaher Corp. J.P. Morgan Clearing Corp. 90.00 Jan 2015 210 43,470 (4,725)
  Danaher Corp. J.P. Morgan Clearing Corp. 80.00 Jan 2015 61 25,667 (11,590)
  Danaher Corp. J.P. Morgan Clearing Corp. 85.00 Jan 2015 61 14,925 (3,965)
  Duke Energy Corp. Citigroup Global Markets, Inc. 75.00 Jan 2016 685 197,680 (236,325)
  Google, Inc. Merrill Lynch Pierce Fenner & Smith, Inc. 1,280.00 Sep 2014 4 22,828 (430)
  Google, Inc. Merrill Lynch Pierce Fenner & Smith, Inc. 1,330.00 Sep 2014 4 15,988 (390)
  Google, Inc. Merrill Lynch Pierce Fenner & Smith, Inc. 1,280.00 Jan 2015 4 31,947 (6,100)
  Google, Inc. Merrill Lynch Pierce Fenner & Smith, Inc. 1,330.00 Jan 2015 4 24,388 (3,420)
  Lowe’s Companies, Inc. Morgan Stanley Company, Inc. 52.50 Oct 2014 46 10,624 (5,589)
  Lowe’s Companies, Inc. Morgan Stanley Company, Inc. 55.00 Oct 2014 46 6,865 (1,518)
  Lowe’s Companies, Inc. Morgan Stanley Company, Inc. 52.50 Jan 2015 46 13,703 (10,511)
  Lowe’s Companies, Inc. Morgan Stanley Company, Inc. 55.00 Jan 2015 46 9,712 (5,658)
  Lowe’s Companies, Inc. Morgan Stanley Company, Inc. 55.00 Jan 2015 544 123,336 (66,912)
  PepsiCo, Inc. Morgan Stanley Company, Inc. 100.00 Jan 2016 530 132,996 (157,145)
  Pfizer, Inc. Citigroup Global Markets, Inc. 35.00 Jan 2015 316 19,564 (16)
  Pfizer, Inc. Citigroup Global Markets, Inc. 32.00 Jan 2015 316 46,566 (7,584)
  State Street Corp. Morgan Stanley Company, Inc. 70.00 Jan 2015 70 30,489 (29,925)
  State Street Corp. Morgan Stanley Company, Inc. 72.50 Jan 2015 70 23,692 (20,055)
  TD Ameritrade Holding Corp. J.P. Morgan Clearing Corp. 33.00 Jan 2015 2,135 341,700 (373,625)
  TE Connectivity, Ltd. J.P. Morgan Clearing Corp. 65.00 Oct 2014 78 10,038 (3,705)
  Texas Instruments, Inc. Goldman Sachs & Company 50.00 Oct 2014 103 8,858 (27,334)
  Texas Instruments, Inc. Citigroup Global Markets, Inc. 45.00 Jan 2015 1,805 361,388 (717,488)
  Texas Instruments, Inc. Goldman Sachs & Company 50.00 Jan 2015 692 115,814 (80,618)
  The Boeing Company Citigroup Global Markets, Inc. 145.00 Jan 2015 138 67,038 (7,797)
  The Boeing Company Citigroup Global Markets, Inc. 150.00 Jan 2015 137 51,967 (4,247)
  The Boeing Company Citigroup Global Markets, Inc. 155.00 Jan 2015 137 39,709 (2,535)
  The Procter & Gamble Company J.P. Morgan Clearing Corp. 85.00 Jan 2015 349 60,503 (48,162)
  TRW Automotive Holdings Corp. J.P. Morgan Clearing Corp. 90.00 Oct 2014 28 10,310 (24,780)

 

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      EXERCISE EXPIRATION NUMBER OF    
FUND NAME OF ISSUER COUNTERPARTY PRICE DATE CONTRACTS PREMIUM VALUE
Capital Appreciation              
Value Fund, continued CALLS            
  TRW Automotive Holdings Corp. J.P. Morgan Clearing Corp. $95.00 Oct 2014 28 $6,550 ($13,020)
  United Technologies Corp. Citigroup Global Markets, Inc. 120.00 Jan 2015 427 166,113 (24,339)
  United Technologies Corp. Citigroup Global Markets, Inc. 125.00 Jan 2015 427 115,736 (9,821)
            $2,883,138 ($3,225,989)
 
Options on Exchange-Traded Future Contracts            
 
Global Bond Fund              
 
The fund used written options to manage against anticipated interest rate changes, manage duration of the fund, and maintain diversity and liquidity of the fund.

 

    EXERCISE EXPIRATION   NUMBER OF    
FUND NAME OF ISSUER PRICE DATE   CONTRACTS PREMIUM VALUE
Global Bond Fund CALLS            
  3-Month Euribor 99.50 Dec 2014 EUR 71 $46,788 ($85,128)
  Euro BUND 151.00 Sep 2014 EUR 55 9,859 (16,621)
            $56,647 ($101,749)
 
  PUTS            
  3-Month Euribor 99.50 Dec 2014 EUR 71 $60,421 —
  Euro BUND 147.00 Sep 2014 EUR 55 11,570 ($6,504)
  Euro BUND 147.50 Sep 2014 EUR 46 16,018 (8,462)
  Euro BUND 148.00 Sep 2014 EUR 63 34,399 (17,384)
  Euro BUND 148.50 Sep 2014 EUR 42 20,458 (17,659)
            $142,866 ($50,009)
 
Real Return Bond Fund              
 
The fund used written options to manage against interest rate changes, manage duration of the fund, and maintain diversity and liquidity of the fund.  
    EXERCISE EXPIRATION   NUMBER OF    
FUND NAME OF ISSUER PRICE DATE   CONTRACTS PREMIUM VALUE
Real Return Bond Fund CALLS            
  Euro BUND 150.00 Sep 2014 EUR 109 $39,455 ($77,339)
            $39,455 ($77,339)

 

Foreign Currency Options              
 
Global Bond Fund              
 
The fund used written options to manage against anticipated changes in currency exchange rates and gain exposure to foreign currencies.    
      EXERCISE  EXPIRATION   NOTIONAL    
PORTFOLIO DESCRIPTION COUNTERPARTY RATE DATE   AMOUNT PREMIUM VALUE
Global Bond Trust CALLS              
  Australian Dollar versus U.S. Dollar Bank of America N.A. $0.945 Nov 2014 AUD 1,700,000 $8,018 ($8,018)
  Australian Dollar versus U.S. Dollar UBS AG 0.945 Nov 2014 AUD 3,100,000 12,189 (14,829)
  U.S. Dollar versus Brazilian Real Bank of America N.A. 2.42 Sep 2014 USD 2,100,000 15,330 (634)
  U.S. Dollar versus Brazilian Real Bank of America N.A. 2.64 Jun 2015 USD 2,000,000 55,800 (37,836)
  U.S. Dollar versus Brazilian Real BNP Paribas 2.39 Sep 2014 USD 2,400,000 14,400 (22)
  U.S. Dollar versus Brazilian Real BNP Paribas 2.70 May 2015 USD 3,000,000 75,000 (43,365)
  U.S. Dollar versus Brazilian Real Citibank N.A. 2.60 Mar 2015 USD 2,000,000 35,800 (20,662)
  U.S. Dollar versus Brazilian Real Citibank N.A. 2.74 Jun 2015 USD 2,900,000 65,250 (39,231)
  U.S. Dollar versus Brazilian Real Deutche Bank AG 2.40 Sep 2014 USD 2,300,000 15,985 (874)
  U.S. Dollar versus Brazilian Real Mitsubishi Trust & Bank – Tokyo 2.65 Jun 2015 USD 9,900,000 295,020 (177,578)
  U.S. Dollar versus Brazilian Real UBS AG 2.64 Jun 2015 USD 3,300,000 90,173 (64,343)
  U.S. Dollar versus Mexican Peso Citibank N.A. 13.43 Sep 2014 USD 1,400,000 4,508 (274)
  U.S. Dollar versus Mexican Peso HSBC Bank USA, N.A. 13.45 Sep 2014 USD 2,800,000 9,800 (445)
              $697,273 ($408,111)
  PUTS              
  U.S. Dollar versus Japanese Yen Bank of America N.A. $80.00 Feb 2019 USD 2,500,000 $123,704 ($93,020)
  U.S. Dollar versus Japanese Yen Bank of America N.A. 80.00 Feb 2019 USD 4,400,000 242,590 (161,537)
  U.S. Dollar versus Japanese Yen Barclays Bank PLC 91.00 Feb 2016 USD 2,200,000 52,448 (22,266)
  U.S. Dollar versus Japanese Yen Barclays Bank PLC 93.00 Apr 2016 USD 1,400,000 33,625 (21,323)
  U.S. Dollar versus Japanese Yen Barclays Bank PLC 94.75 Apr 2016 USD 4,600,000 138,953 (84,585)
  U.S. Dollar versus Japanese Yen Barclays Bank PLC 94.75 Apr 2016 USD 700,000 20,524 (12,872)
  U.S. Dollar versus Japanese Yen Deutche Bank AG 92.00 May 2016 USD 3,000,000 70,140 (44,283)
  U.S. Dollar versus Japanese Yen JPMorgan Chase Bank 91.00 Feb 2016 USD 5,600,000 141,763 (56,678)
              $823,747 ($496,564)

 

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DERIVATIVE INSTRUMENTS, CONTINUED

Real Return Bond Fund              
The fund used written options to manage against anticpated changes in currency exchange rates and gain exposure to foreign currencies.    
      EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY RATE DATE   AMOUNT PREMIUM VALUE
Real Return Bond Fund                
  U.S. Dollar versus Brazilian Real Deutsche Bank AG $2.68 Jul 2015 USD 1,610,000 $38,366 ($31,245)
              $38,366 ($31,245)
Total Return Fund                
The fund used written options to manage against anticipated currency exchange rate changes, maintain diversity and liquidity, gain exposure to foreign currency and as a
substitute for securities purchased.              
      EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY PRICE DATE   AMOUNT PREMIUM VALUE
Total Return Fund PUTS              
  U.S. Dollar versus Japanese Yen Bank of America N.A. 97.00 Nov 2014 USD 3,900,000 $5,382 ($1,400)
  U.S. Dollar versus Japanese Yen Barclays Capital 97.00 Nov 2014 USD 2,400,000 3,000 (862)
  U.S. Dollar versus Japanese Yen UBS Securities LLC 98.00 Nov 2014 USD 2,300,000 4,830 (1,442)
  U.S. Dollar versus Japanese Yen Bank of America N.A. 80.00 Feb 2019 USD 1,200,000 67,020 (44,056)
              $80,232 ($47,760)
Interest Rate Swaptions              
An interest rate swaption is an option to enter into an interest rate swap.            
Global Bond Fund                
The fund used interest rate swaptions to manage against anticipated interest rate changes, manage duration of the fund, and maintain diversity and liquidity of the fund.

 

        PAY/            
        RECEIVE            
      FLOATING FLOATING EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY RATE INDEX RATE RATE DATE   AMOUNT PREMIUM VALUE
Global Bond Fund PUTS                  
  5-Year Interest Rate Swap Bank of America N.A. 3-Month USD LIBOR Receive 2.50% Sep 2015 USD 21,000,000 $399,000 ($270,677)
  5-Year Interest Rate Swap Citibank N.A. 3-Month USD LIBOR Receive 2.50% Sep 2015 USD 13,000,000 245,040 (167,562)
                  $644,040 ($438,239)
 
Real Return Bond Fund                  
 
The fund used interest rate swaptions to manage duration of the fund, manage against anticipated interest rate changes and maintain diversity and liquidity of the fund.
        PAY/            
        RECEIVE            
      FLOATING FLOATING EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY RATE INDEX RATE RATE DATE   AMOUNT PREMIUM VALUE
Real Return Bond Fund CALLS                  
  5-Year Interest Rate Swap JPMorgan Chase Bank 3-Month USD LIBOR Receive 3.20% Nov 2014 USD 6,200,000 $16,585 ($22,164)
                  $16,585 ($22,164)
 
  PUTS                  
  5-Year Interest Rate Swap Goldman Sachs Capital 6-Month EURIBOR Receive 1.235% Nov 2014 EUR 13,800,000 $96,003 ($254)
    Markets, L.P.                
                  $96,003 ($254)
 
Total Return Fund                    
 
The fund used interest rate swaptions to manage duration, manage against anticipated interest rate changes and to gain exposure to treasuries markets.  
        PAY/            
        RECEIVE            
      FLOATING FLOATING EXERCISE EXPIRATION   NOTIONAL    
FUND NAME OF ISSUER COUNTERPARTY RATE INDEX RATE RATE DATE   AMOUNT PREMIUM VALUE
Total Return Fund CALLS                  
  10-Year Interest Rate Swap Goldman Sachs Capital 3-Month EURIBOR Receive 1.20% Jan 2015 EUR 3,000,000 $16,229 ($55,981)
  10-Year Interest Rate Swap Morgan Stanley Company, 3-Month USD LIBOR Receive 2.55% Sep 2014 USD 7,400,000 30,340 (37,420)
    Inc.                
  10-Year Interest Rate Swap JPMorgan Securities 3-Month USD LIBOR Receive 2.55% Sep 2014 USD 7,600,000 30,590 (38,432)
  10-Year Interest Rate Swap Morgan Stanley Company, 3-Month USD LIBOR Receive 2.55% Oct 2014 USD 42,600,000 161,880 (365,989)
    Inc.                
  5-Year Interest Rate Swap Deutsche Bank Securities 3-Month USD LIBOR Receive 1.65% Nov 2014 USD 51,000,000 81,600 (77,765)
  5-Year Interest Rate Swap Deutsche Bank Securities 3-Month USD LIBOR Receive 1.70% Dec 2014 USD 9,200,000 19,320 (21,274)
  5-Year Interest Rate Swap JPMorgan Securities 3-Month USD LIBOR Receive 1.70% Nov 2014 USD 13,700,000 26,030 (29,113)
  5-Year Interest Rate Swap JPMorgan Securities 3-Month USD LIBOR Receive 1.56% Sep 2014 USD 26,500,000 47,700 (3)
                  $413,689 ($625,977)

 

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DERIVATIVE INSTRUMENTS, CONTINUED

        PAY/            
        RECEIVE            
      FLOATING FLOATING EXERCISE EXPIRATION   NOTIONAL    
FUND NAME OF ISSUER COUNTERPARTY RATE INDEX RATE RATE DATE   AMOUNT PREMIUM VALUE
Total Return Fund, PUTS                  
continued                    
  10-Year Interest Rate Swap Goldman Sachs Capital 3-Month EURIBOR Receive 1.60% Jan 2015 EUR 3,000,000 31,647 (8,469)
  10-Year Interest Rate Swap Morgan Stanley Company, 3-Month USD LIBOR Receive 2.80% Feb 2015 USD 15,500,000 247,225 (161,016)
    Inc.                
  10-Year Interest Rate Swap JPMorgan Securities 3-Month USD LIBOR Receive 2.80% Nov 2014 USD 51,000,000 246,075 (195,050)
  10-Year Interest Rate Swap Morgan Stanley Company, 3-Month USD LIBOR Receive 2.85% Nov 2014 USD 100,500,000 649,951 (298,725)
    Inc.                
  10-Year Interest Rate Swap Deutsche Bank Securities 3-Month USD LIBOR Receive 2.85% Nov 2014 USD 51,000,000 280,500 (151,591)
  10-Year Interest Rate Swap Morgan Stanley Company, 3-Month USD LIBOR Receive 2.95% Oct 2014 USD 42,600,000 197,025 (17,968)
    Inc.                
  10-Year Interest Rate Swap The Royal Bank of 3-Month USD LIBOR Receive 3.03% Sep 2014 USD 15,000,000 263,250 (2)
    Scotland                
  5-Year Interest Rate Swap Deutsche Bank Securities 3-Month USD LIBOR Receive 2.05% Dec 2014 USD 9,200,000 41,492 (37,382)
  5-Year Interest Rate Swap JPMorgan Securities 3-Month USD LIBOR Receive 2.05% Nov 2014 USD 13,700,000 46,923 (43,221)
  5-Year Interest Rate Swap JPMorgan Securities 3-Month USD LIBOR Receive 1.86% Sep 2014 USD 26,500,000 389,550 (1,593)
                  $2,393,638 ($915,017)

 

Credit Default Swaptions                  
 
A credit default swaption is an option to enter into a credit default swap.              
 
Global Bond Fund                    
 
The fund used credit default swaptions to take a long position in the exposure of the benchmark credit.            
 
        BUY/SELL EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY INDEX PROTECTION RATE DATE   AMOUNT PREMIUM VALUE
Global Bond Fund PUTS                  
  5-Year Credit Default Swap BNP Paribas CDX Sell 0.90% Sep 2014 EUR 4,400,000 $12,165 ($88)
      ITRAXX.MAIN21              
  5-Year Credit Default Swap Goldman Sachs CDX Sell 0.85% Dec 2014 EUR 7,900,000 21,997 (12,573)
    Capital Markets, L.P. ITRAXX.MAIN21              
  5-Year Credit Default Swap Goldman Sachs CDX Sell 0.95% Dec 2014 EUR 7,700,000 14,523 (7,699)
    Capital Markets, L.P. ITRAXX.MAIN21              
  5-Year Credit Default Swap JPMorgan Chase Bank CDX Sell 0.95% Dec 2014 EUR 1,700,000 2,989 (1,700)
      ITRAXX.MAIN21              
  5-Year Credit Default Swap JPMorgan Chase Bank CDX IG22 Sell 0.90% Dec 2014 USD 2,700,000 3,780 (1,476)
                  $55,454 ($23,536)

 

Real Return Bond Fund                  
 
The fund used credit default swaptions to take a long position in the exposure of the benchmark credit.            
 
        BUY/SELL EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY INDEX PROTECTION RATE DATE   AMOUNT PREMIUM VALUE
Real Return Bond Fund PUTS                  
  5-Year Credit Default Swap Bank of America N.A. CDX.IG22 Sell 0.95% Dec 2014 USD $300,000 $548 ($120)
  5-Year Credit Default Swap BNP Paribas ITRAXX.MAIN21 Sell 1.10% Sep 2014 EUR 1,900,000 6,461 (4)
  5-Year Credit Default Swap Citibank N.A. CDX.IG22 Sell 0.95% Dec 2014 USD 700,000 1,426 (280)
  5-Year Credit Default Swap Citibank N.A. CDX.IG22 Sell 1.00% Dec 2014 USD 300,000 591 (86)
  5-Year Credit Default Swap Citibank N.A. ITRAXX.MAIN21 Sell 0.95% Sep 2014 EUR 1,700,000 5,648 (19)
  5-Year Credit Default Swap Citibank N.A. ITRAXX.MAIN21 Sell 1.00% Sep 2014 EUR 400,000 1,234 (3)
  5-Year Credit Default Swap Goldman Sachs ITRAXX.MAIN21 Sell 0.85% Dec 2014 EUR 1,500,000 4,196 (2,387)
    International                
  5-Year Credit Default Swap Goldman Sachs ITRAXX.MAIN21 Sell 0.95% Sep 2014 EUR 900,000 2,734 (10)
    International                
  5-Year Credit Default Swap Goldman Sachs ITRAXX.MAIN21 Sell 0.95% Dec 2014 EUR 4,200,000 8,018 (4,200)
    International                
  5-Year Credit Default Swap Goldman Sachs ITRAXX.MAIN21 Sell 1.10% Sep 2014 EUR 600,000 2,103 (1)
    International                
  5-Year Credit Default Swap JPMorgan Chase Bank CDX.IG22 Sell 0.85% Dec 2014 USD 2,800,000 3,220 (1,958)
  5-Year Credit Default Swap JPMorgan Chase Bank CDX.IG22 Sell 0.90% Dec 2014 USD 2,800,000 4,540 (1,530)
  5-Year Credit Default Swap JPMorgan Chase Bank CDX.IG22 Sell 0.95% Dec 2014 USD 1,100,000 1,943 (440)
  5-Year Credit Default Swap JPMorgan Chase Bank ITRAXX.MAIN21 Sell 0.95% Sep 2014 EUR 1,700,000 5,652 (19)
  5-Year Credit Default Swap JPMorgan Chase Bank ITRAXX.MAIN21 Sell 0.95% Dec 2014 EUR 300,000 528 (300)
  5-Year Credit Default Swap JPMorgan Chase Bank ITRAXX.MAIN21 Sell 1.10% Sep 2014 EUR 700,000 2,579 (2)
                  $51,421 ($11,359)

 

318

 


DERIVATIVE INSTRUMENTS, CONTINUED

Inflation Floors (OTC)                
Inflation floors are instruments where in return for a premium, one party agrees to make payments to the other to the extent that inflation falls below a specified rate
(based on the Consumer Price Index or other designated measure), or “floor”.            
Global Bond Fund                
The fund used inflation floors to manage against anticipated interest rate changes, manage duration of the fund, and as a subsitute for securities purchased.  
          EXPIRATION        
FUND DESCRIPTION COUNTERPARTY INITIAL INDEX EXERCISE INDEX DATE   NOTIONAL AMOUNT PREMIUM VALUE
Global Bond Fund Floor-OTC Citibank N.A. 217.965 Maximum of ((1+0.0%)10 – Sep 2020 USD $1,700,000 $21,930 ($435)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
                $21,930 ($435)

 

Real Return Bond Fund              
 
The fund used inflation floors to manage duration of the fund, manage against anticipated interest rate changes and as a subsitute for securities purchased.  
          EXPIRATION        
FUND DESCRIPTION COUNTERPARTY INITIAL INDEX EXERCISE INDEX DATE   NOTIONAL AMOUNT PREMIUM VALUE
Real Return Bond Fund Floor-OTC Citibank N.A. 216.69 Maximum of ((1+0.0%)10 – Apr 2020 USD $23,900,000 $213,520 ($4,784)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
  Floor-OTC Deutsche Bank AG 233.546 Maximum of ((1+0.0%)10 – Jan 2018 USD 900,000 8,730 (1,576)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
                $222,250 ($6,360)

 

Total Return Fund              
 
The fund used inflation floors to manage duration of the fund, manage against anticipated interest rate changes and as a substitute for securities purchased.  
          EXPIRATION        
FUND DESCRIPTION COUNTERPARTY INITIAL INDEX EXERCISE INDEX DATE   NOTIONAL AMOUNT PREMIUM VALUE
Total Return Fund Floor-OTC Deutsche Bank AG 215.95 Maximum of ((1+0.0%)10 – Mar 2020 USD $1,600,000 $12,000 ($306)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
  Floor-OTC Citibank N.A. 215.95 Maximum of ((1+0.0%)10 – Mar 2020 USD 4,500,000 38,060 (869)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
  Floor-OTC Citibank N.A. 216.69 Maximum of ((1+0.0%)10 – Apr 2020 USD 11,000,000 98,100 (2,202)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
  Floor-OTC Citibank N.A. 217.97 Maximum of ((1+0.0%)10 – Sep 2020 USD 4,100,000 52,890 (1,049)
  CPURNSA Index     (Index Final/Index Initial)) or $0          
                $201,050 ($4,426)

Inflation Caps (OTC)

Inflation caps are instruments where in return for a premium, one party agrees to make payments to the other to the extent that interest rate exceeds a specified rate (based on the Consumer Price Index or other designated measure), or “cap”.

Real Return Bond Fund

The fund used inflation capped options to manage duration of the fund, manage against anticipated interest rate changes and as a subsitute for securities purchased.

      INITIAL EXERCISE EXPIRATION   NOTIONAL    
FUND DESCRIPTION COUNTERPARTY INDEX INDEX DATE   AMOUNT PREMIUM VALUE
Real Return Bond Fund Floor- OTC CPURNSA Index JPMorgan Chase Bank 233.9 Maximum of ((1+0.0%)10 – Apr 2024 USD $5,700,000 $41,467 ($28,948)
        (Index Final/Index Initial)) or $0          
  Floor- OTC CPURNSA Index JPMorgan Chase Bank 234.8 Maximum of ((1+0.0%)10 – May 2024 USD 500,000 3,475 (2,116)
        (Index Final/Index Initial)) or $0          
                $44,942 ($31,064)

Swaps. Swap agreements are agreements between a fund and counterparty to exchange cash flows, assets, foreign currencies or market-linked returns at specified intervals. Swap agreements are privately negotiated in the OTC market (OTC swaps) or may be executed on a registered commodities exchange (centrally cleared swaps). Swaps are marked-to-market daily and the change in value is recorded as a component of unrealized appreciation/depreciation of swap contracts. The value of the swap will typically impose collateral posting obligations on the party that is considered out-of-the-money on the swap.

Upfront payments made/received by a fund are amortized/accreted for financial reporting purposes, with the unamortized/unaccreted portion included in the Statements of assets and liabilities. A termination payment by the counterparty or a fund is recorded as realized gain or loss, as well as the net periodic payments received or paid by a fund.

Entering into swap agreements involves, to varying degrees, elements of credit, market and documentation risk that may amount to values that are in excess of the amounts recognized on the Statements of assets and liabilities. Such risks involve the possibility that there will be no liquid market for the swap, or that a counterparty may default on its obligation or delay payment under the swap terms. The counterparty may disagree or contest the terms of the swap. Market risks may also accompany the swap, including interest rate risk. A fund may also suffer losses if it is unable to terminate or assign outstanding swaps or reduce its exposure through offsetting transactions.

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DERIVATIVE INSTRUMENTS, CONTINUED

Interest rate swaps. Interest rate swaps represent an agreement between a fund and a counterparty to exchange cash flows based on the difference between two interest rates applied to a notional amount. The payment flows are usually netted against each other, with the difference being paid by one party to the other. A fund settles accrued net interest receivable or payable under the swap contracts at specified, future intervals.

The following tables summarize the interest rate swap contracts held at August 31, 2014, and the range of notional contract amounts held by the funds during the year ended August 31, 2014. In addition, the tables detail how the funds used interest rate swap contracts during the year ended August 31, 2014.

Global Bond Fund

The fund used interest rate swaps to manage against anticipated interest rate changes, manage duration and as a substitute for securities purchased. During the year ended August 31, 2014, the fund held interest rate swaps with total USD notional amounts ranging from approximately $118.5 million to $426.7 million, as measured at each quarter end.

                 
                 
      USD PAYMENTS PAYMENTS   UNAMORTIZED UNREALIZED  
  NOTIONAL   NOTIONAL MADE RECEIVED MATURITY UPFRONT APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT CURRENCY AMOUNT  BY FUND BY FUND DATE PAYMENT (DEPRECIATION) VALUE
Global Bond Fund                  
Barclays Bank 8,200,000 MXN $634,528 MXN-TIIE-Banxico Fixed 7.14% Apr 2034 — $34,018 $34,018
BNP Paribas SA 24,912,888 BRL 15,463,918 BRL-Interbank-Deposit- Fixed 10.91% Jan 2017 ($46,785) 146,250 99,465
Rate-Annualized
Credit Suisse International 774,129 BRL 478,188 BRL-Interbank-Deposit- Fixed 10.91% Jan 2017 (1,356) 4,447 3,091
Rate-Annualized
Deutsche Bank AG 7,800,000 MXN 599,021 MXN-TIIE-Banxico Fixed 6.60% May 2029 (6,235) 16,128 9,893
Deutsche Bank AG 9,000,000 MXN 694,578 MXN-TIIE-Banxico Fixed 7.38% Feb 2029 40,939 23,705 64,644
Goldman Sachs Bank USA 32,935,683 BRL 20,389,291 BRL-Interbank-Deposit- Fixed 10.91% Jan 2017 (71,995) 203,491 131,496
Rate-Annualized
Goldman Sachs Bank USA 9,000,000 MXN 693,308 MXN-TIIE-Banxico Fixed 6.98% May 2034 — 24,962 24,962
Goldman Sachs Bank USA 6,500,000 MXN 502,561 MXN-TIIE-Banxico Fixed 7.15% Apr 2034 — 27,475 27,475
HSBC Bank 6,000,000 MXN 463,052 MXN-TIIE-Banxico Fixed 7.38% Feb 2029 28,839 14,257 43,096
UBS AG 21,534,870 BRL 13,360,695 BRL-Interbank-Deposit- Fixed 10.91% Jan 2017 (37,378) 123,356 85,978
Rate-Annualized
UBS AG 70,000,000 MXN 5,300,306 MXN-TIIE-Banxico Fixed 5.61% Jul 2021 (39,138) 62,060 22,922
Exchange Cleared Swaps                  
  2,900,000 EUR 4,037,795 Fixed 2.75% EUR-EURIBOR-Reuters Sep 2044 (303,222) (626,255) (929,477)
  59,200,000 GBP 100,426,713 Fixed 1.75% GBP-LIBOR-BBA Dec 2016 191,295 (414,235) (222,940)
  900,000 GBP 1,497,375 Fixed 3.50% GBP-LIBOR-BBA Sep 2044 (22,035) (211,362) (233,397)
  3,910,000,000 JPY 38,584,965 JPY-LIBOR-BBA Fixed 1.50% Jun 2033 (148,106) 1,592,184 1,444,078
  85,300,000 MXN 6,588,795 MXN-TIIE-Banxico Fixed 5.61% Jul 2021 33,445 (5,408) 28,037
  5,900,000 USD 5,900,000 Fixed 0.75% USD-LIBOR-BBA Dec 2016 16,179 5,017 21,196
  100,500,000 USD 100,500,000 Fixed 1.00% USD-LIBOR-BBA Sep 2016 (456,270) (58,893) (515,163)
  33,300,000 USD 33,300,000 Fixed 1.25% USD-LIBOR-BBA Jun 2017 87,701 (4,727) 82,974
  43,000,000 USD 43,000,000 Fixed 2.50% USD-LIBOR-BBA Jun 2021 (213,450) (1,067,084) (1,280,534)
  6,600,000 USD 6,600,000 Fixed 3.00% USD-LIBOR-BBA Dec 2024 (70,415) (171,026) (241,441)
  24,300,000 USD 24,300,000 USD-LIBOR-BBA Fixed 3.00% Jun 2023 (1,358,516) 1,187,322 (171,194)
  3,400,000 USD 3,400,000 USD-LIBOR-BBA Fixed 4.50% Jun 2024 (18,180) 194,123 175,943
  $426,715,089 ($2,394,683) $1,099,805 ($1,294,878)

Investment Quality Bond Fund

The fund used interest rate swaps to manage against anticipated interest rate changes. During the year ended August 31, 2014, the fund held interest rate swaps with total USD notional amounts ranging up to approximately $3.4 million, as measured at each quarter end.

              UNAMORTIZED    
              UPFRONT    
      USD PAYMENTS PAYMENTS   PAYMENT UNREALIZED  
  NOTIONAL   NOTIONAL MADE RECEIVED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT CURRENCY AMOUNT  BY FUND BY FUND DATE (RECEIVED) (DEPRECIATION) VALUE
Investment Quality Bond Fund                  
JPMorgan Chase Bank, N.A. 2,480,000 USD $2,480,000 Fixed 4.3175% 3 Month LIBOR Dec 2028 — ($486,436) ($486,436)
JPMorgan Chase Bank, N.A. 925,000 USD 925,000 Fixed 3.425% 3 Month LIBOR Jul 2039 — (72,652) (72,652)
      $3,405,000       — ($559,088) ($559,088)
Real Return Bond Fund                  
 
The fund used interest rate swaps to manage duration, manage against anticpated interest rate changes and substitute for securities purchased. During the year ended
August 31, 2014, the fund held interest rate swaps with total USD notional amounts ranging from approximately $77.5 million to $103.6 million, as measured at each
quarter end.                  
              UNAMORTIZED    
              UPFRONT    
      USD PAYMENTS PAYMENTS   PAYMENT UNREALIZED  
  NOTIONAL   NOTIONAL MADE RECEIVED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT CURRENCY AMOUNT  BY FUND BY FUND DATE (RECEIVED) (DEPRECIATION) VALUE
Real Return Bond Fund                  
Barclays 300,000 AUD $269,685 AUD-BBR-BBSW Fixed 4.00% Jun 2019 $277 $11,003 $11,280
Deutsche Bank 1,100,000 AUD 993,190 AUD-BBR-BBSW Fixed 4.00% Jun 2019 1,202 40,157 41,359

 

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DERIVATIVE INSTRUMENTS, CONTINUED

                UNAMORTIZED    
                UPFRONT    
        USD PAYMENTS PAYMENTS   PAYMENT UNREALIZED  
    NOTIONAL   NOTIONAL MADE RECEIVED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT CURRENCY AMOUNT BY FUND BY FUND DATE (RECEIVED) (DEPRECIATION) VALUE
Real Return Bond Fund, continued                  
  Morgan Stanley Capital Services, Inc. 11,963,816 BRL 7,722,008 BRL-Interbank-Deposit- Fixed Jan 2017 (7,916) 55,682 47,766
          Rate-Annualized 10.91%        
  UBS AG 40,245,022 BRL 25,204,033 BRL-Interbank-Deposit- Fixed 8.15% Jan 2017 (52,089) (1,424,067) (1,476,156)
          Rate-Annualized          
  Exchange Cleared Swaps                  
 
    1,140,000,000 JPY 11,551,936 Fixed 1.00% JPY-LIBOR- Sep 2023 (79,170) (416,902) (496,072)
            BBA        
    500,000 EUR 683,675 Fixed 2.00% EUR- Jan 2024 (3,841) (62,713) (66,554)
            EURIBOR-        
            Reuters        
    9,600,000 USD 9,600,000 Fixed 2.75% 3 Month Jun 2043 546,026 2,670 548,696
            LIBOR        
    8,800,000 USD 8,800,000 Fixed 3.50% 3 Month Dec 2043 330,753 (1,173,622) (842,869)
            LIBOR        
    2,300,000 USD 2,300,000 Fixed 3.75% USD-LIBOR- Jun 2044 (131,646) (208,950) (340,596)
            BBA        
    3,500,000 EUR 4,796,335 Fixed 2.75% EUR- Sep 2044 (424,533) (697,250) (1,121,783)
            EURIBOR-        
            Reuters        
    8,200,000 USD 8,200,000 Fixed 3.50% USD-LIBOR- Dec 2044 (314,565) (343,200) (657,765)
            BBA        
    2,800,000 EUR 3,743,110 Fixed 2.00% EUR- Mar 2045 3,431 (187,172) (183,741)
            EURIBOR-        
            Reuters        
        $83,863,972       ($132,071) ($4,404,364) ($4,536,435)
Total Return Fund                  

 

The fund used interest rate swaps to manage duration, manage against anticipated interest rate changes and substitute for securities purchased. During the year ended August 31, 2014, the fund held interest rate swaps with total USD notional amounts ranging from approximately $480 million to $1.1 billion, as measured at each quarter end.

                UPFRONT    
        USD PAYMENTS PAYMENTS   PAYMENT UNREALIZED  
    NOTIONAL   NOTIONAL MADE RECEIVED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT CURRENCY AMOUNT  BY FUND BY FUND DATE (RECEIVED) (DEPRECIATION) VALUE
Total Return Fund                  
  Bank of America N.A. 12,000,000 MXN $897,263 MXN-TIIE-Banxico Fixed 5.70% Jan 2019 ($2,800) $36,050 $33,250
  Barclays Bank PLC 9,900,000 MXN 739,797 MXN-TIIE-Banxico Fixed 5.60% Sep 2016 1,975 24,985 26,960
  Barclays Bank PLC 54,400,000 MXN 3,956,516 MXN-TIIE-Banxico Fixed 5.50% Sep 2017 (5,357) 149,406 144,049
  Barclays Bank PLC 3,300,000 MXN 255,989 MXN-TIIE-Banxico Fixed 5.75% Jun 2023 (8,330) 6,691 (1,639)
  Barclays Bank PLC 7,600,000 MXN 589,456 MXN-TIIE-Banxico Fixed 6.00% Jun 2023 (11,636) 18,265 6,629
  BNP Paribas 3,700,000 MXN 291,440 MXN-TIIE-Banxico Fixed 5.75% Jun 2023 (4,191) 2,354 (1,837)
  Deutsche Bank AG 7,500,000 MXN 587,811 MXN-TIIE-Banxico Fixed 5.75% Jun 2023 (11,144) 7,420 (3,724)
  Deutsche Bank AG 11,000,000 MXN 822,491 MXN-TIIE-Banxico Fixed 5.70% Jan 2019 (3,996) 34,475 30,479
  Deutsche Bank AG 15,900,000 MXN 1,225,575 MXN-TIIE-Banxico Fixed 7.02% Jun 2034 11,635 35,319 46,954
  Deutsche Bank AG 20,000,000 MXN 1,541,426 MXN-TIIE-Banxico Fixed 6.81% Jun 2034 2,198 22,565 24,763
  Goldman Sachs 7,800,000 MXN 606,575 MXN-TIIE-Banxico Fixed 5.75% Jun 2023 (16,905) 13,032 (3,873)
  Goldman Sachs 11,000,000 MXN 822,491 MXN-TIIE-Banxico Fixed 5.70% Jan 2019 (2,777) 33,256 30,479
  HSBC Bank USA 106,000,000 MXN 8,179,351 MXN-TIIE-Banxico Fixed 5.60% Sep 2016 19,775 268,884 288,659
  HSBC Bank USA 60,600,000 MXN 4,416,169 MXN-TIIE-Banxico Fixed 5.50% Sep 2017 (6,161) 166,627 160,466
  HSBC Bank USA 44,900,000 MXN 3,518,809 MXN-TIIE-Banxico Fixed 4.75% Feb 2018 (25,323) 54,352 29,029
  HSBC Bank USA 9,400,000 MXN 740,459 MXN-TIIE-Banxico Fixed 5.75% Jun 2023 (13,652) 8,984 (4,668)
  HSBC Bank USA 70,000,000 MXN 5,429,197 MXN-TIIE-Banxico Fixed 5.00% Jun 2018 (85,173) 162,884 77,711
  Hsbc Bank Usa 157,400,000 MXN 12,031,110 MXN-TIIE-Banxico Fixed 6.57% Apr 2024 — 557,075 557,075
  JPMorgan Chase Bank, N.A. 8,100,000 MXN 610,305 MXN-TIIE-Banxico Fixed 6.00% Jun 2023 (33,780) 40,846 7,066
  JPMorgan Chase Bank, N.A. 11,000,000 MXN 822,491 MXN-TIIE-Banxico Fixed 5.70% Jan 2019 (3,265) 33,744 30,479
  Morgan Stanley Capital Services, Inc. 8,900,000 MXN 723,710 MXN-TIIE-Banxico Fixed 5.60% Sep 2016 769 23,467 24,236
  Morgan Stanley Capital Services, Inc. 65,100,000 MXN 5,288,662 MXN-TIIE-Banxico Fixed 6.35% Jun 2021 63,215 183,014 246,229
  Morgan Stanley Capital Services, Inc. 15,000,000 MXN 1,085,278 MXN-TIIE-Banxico Fixed 5.50% Sep 2017 (1,893) 41,612 39,719
  Morgan Stanley Capital Services, Inc. 33,800,000 MXN 2,622,041 MXN-TIIE-Banxico Fixed 5.50% Sep 2022 (44,498) 2,921 (41,577)
  Morgan Stanley Capital Services, Inc. 46,000,000 MXN 3,567,758 MXN-TIIE-Banxico Fixed 5.00% Jun 2018 (56,840) 107,908 51,068
  Societe Generale 22,000,000 MXN 1,644,983 MXN-TIIE-Banxico Fixed 5.70% Jan 2019 (3,236) 64,194 60,958

 

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                UNAMORTIZED    
                UPFRONT    
        USD PAYMENTS PAYMENTS   PAYMENT UNREALIZED  
    NOTIONAL   NOTIONAL MADE RECEIVED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT CURRENCY   AMOUNT  BY FUND BY FUND DATE (RECEIVED) (DEPRECIATION) VALUE
Total Return Fund, continued                  
  Exchange Cleared Swaps                  
 
    102,500,000 USD 102,500,000 Fixed 2.75% 3 Month Jun 2043 7,100,459 (1,241,986) 5,858,473
            LIBOR        
    104,100,000 USD 104,100,000 Federal Fund Effective Fixed 1.00% Oct 2017 (122,697) (822,760) (945,457)
          Rate US          
    34,900,000 USD 34,900,000 Fixed 3.50% 3 Month Dec 2043 1,677,948 (5,020,688) (3,342,740)
            LIBOR        
    125,600,000 USD 125,600,000 USD-LIBOR-BBA Fixed 3.00% Sep 2017 1,495,015 (372,905) 1,122,110
    13,900,000 USD 13,900,000 USD-LIBOR-BBA Fixed 4.00% Jun 2024 229,012 192,344 421,356
    8,700,000 MXN 663,603 MXN-TIIE-Banxico Fixed 5.50% Sep 2022 (23,642) 12,940 (10,702)
    60,400,000 MXN 4,655,644 MXN-TIIE-Banxico Fixed 7.02% Jun 2034 21,263 157,057 178,320
    300,000,000 MXN 23,141,210 MXN-TIIE-Banxico Fixed 6.81% Jun 2034 145,422 226,369 371,791
    7,500,000 USD 7,500,000 USD-LIBOR-BBA Fixed 2.55% Sep 2024 18,450 16,990 35,440
        $479,977,610       $10,299,840 ($4,752,309) $5,547,531

 

The following are abbreviations for the table above:
CDI Brazil Interbank Deposit Rate
CDOR Canadian Dealer Offered Rate
EURIBOR Euro Interbank Offered Rate
LIBOR London Interbank Offered Rate
TIIE Tasa de Interes Interbancaria de Equilibrio (Interbank Equilibrium Interest Rate)

Currency swaps. A currency swap is an agreement between a fund and a counterparty to exchange cash flows based on the notional difference among two or more currencies.

The following tables summarize the contracts held at August 31, 2014, and the range of notional contracts amounts held by the fund during the year ended August 31, 2014. In addition, the tables detail how the funds used currency swap contracts during the year ended August 31, 2014.

Global Bond Fund

The fund used currency swaps to manage against anticipated currency exchange rate changes, maintain diversity and liquidity of the fund, and as a substitute for securities purchased. During the year ended August 31, 2014, the fund held currency swaps with total USD notional amounts ranging up to approximately $27.4 million, as a measured at each quarter end.

          NOTIONAL   NOTIONAL UNAMORTIZED    
          AMOUNT OF   AMOUNT OF UPFRONT UNREALIZED  
        MATURITY CURRENCY   CURRENCY PAYMENT PAID   APPRECIATION  MARKET
FUND COUNTERPARTY PAY RECEIVE DATE* RECEIVED   DELIVERED (RECEIVED) (DEPRECIATION) VALUE
Global Bond Fund                  
  Bank of America N.A Floating rate equal to Floating rate equal to Dec 2019 $2,600,000 EUR 3,425,500 $2,341 $8,089 $10,430
    3 Month USD-LIBOR 3 Month EUR-LIBOR              
    based on the notional less 0.100% based on              
    amount of currency the notional amount              
    delivered of the currency              
      received              
  BNP Paribas Floating rate equal to Floating rate equal to Dec 2019 11,500,000 EUR 15,164,763 (54,338) — (54,338)
    3 Month USD-LIBOR 3 Month EUR-LIBOR              
    based on the notional less 0.100% based on              
    amount of currency the notional amount              
    delivered of the currency              
      received              
  Citi Bank N.A. Floating rate equal to Floating rate equal to Dec 2019 10,300,000 EUR 13,570,250 9,272 32,046 41,318
    3 Month USD-LIBOR 3 Month EUR-LIBOR              
    based on the notional less 0.100% based on              
    amount of currency the notional amount              
    delivered of the currency              
      received              
  Goldman Sachs Floating rate equal to Floating rate equal to Dec 2019 3,000,000 EUR 3,953,100 (11,250) 22,685 11,435
  International 3 Month USD-LIBOR 3 Month EUR-LIBOR              
    based on the notional less 0.100% based on              
    amount of currency the notional amount              
    delivered of the currency              
      received              
          $27,400,000     ($53,975) $62,820 $8,845
* At the maturity date, the notional amount of the currency received will be exchanged back for the notional amount of the currency delivered.    

 

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DERIVATIVE INSTRUMENTS, CONTINUED

Credit default swaps. Credit default swaps (CDS) involve the exchange of a fixed rate premium (paid by the Buyer), for protection against the loss in value of an underlying debt instrument, referenced entity or index, in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a “guarantor” (the Seller), receiving the premium and agreeing to contingent payments that are specified within the credit default agreement. A fund may enter into CDS in which it may act as either Buyer or Seller. By acting as the Seller, a fund may incur economic leverage since it would be obligated to pay the Buyer the notional amount of the contract in the event of a default. The amount of loss in such case could be significant, but would typically be reduced by any recovery value on the underlying credit.

The following tables summarize the contracts held at August 31, 2014, and the range of notional contract amounts held by the funds during year ended August 31, 2014. In addition, the tables detail how the funds used credit default swap contracts as buyer of protection during the year ended August 31, 2014.

Global Bond Fund

The fund used credit default swaps to manage against potential credit events. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging from approximately $2.7 million to $16.7 million, as measured at each quarter end.

                UNAMORTIZED    
            (PAY)/   UPFRONT    
          USD RECEIVED   PAYMENT UNREALIZED  
      NOTIONAL   NOTIONAL FIXED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AMOUNT CURRENCY AMOUNT RATE DATE (RECEIVED) (DEPRECIATION) VALUE
Global Bond                  
  Bank of America N.A. Intuit Inc. 2,000,000 USD $2,000,000 (1.380)% Mar 2017 — ($52,789) ($52,789)
  Citi Bank N.A. Russian Federation 600,000 USD 600,000 (1.000)% Sep 2019 $35,400 (28,407) 6,993
  JPMorgan Chase Bank Russian Federation 100,000 USD 100,000 (1.000)% Sep 2019 6,032 35,929 41,961
          $2,700,000     $41,432 ($45,267) ($3,835)

High Yield Fund

The fund used credit default swaps to manage against potential credit events. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging up to $41.4 million, as measured at each quarter end.

              UNAMORTIZED    
          (PAY)/   UPFRONT    
        USD RECEIVE   PAYMENT UNREALIZED  
    NOTIONAL   NOTIONAL FIXED MATURITY PAID APPRECIATION MARKET
FUND REFERENCE OBLIGATION AMOUNT CURRENCY AMOUNT RATE DATE (RECEIVED) (DEPRECIATION) VALUE
High Yield Fund                  
Exchange Cleared Swaps                  
  MARKIT CDX.NA.HY.22 19,740,600 USD $19,740,600   (5.000)% Jun 2019 ($1,440,624) ($349,385) ($1,790,009)
        $19,740,600     ($1,440,624) ($349,385) ($1,790,009)

 

Investment Quality Bond Fund

The fund used credit default swaps to manage against potential credit events and to gain exposure to a security or a credit index. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging from $5.9 million to $54.5 million, as measured at each quarter end.

                UNAMORTIZED    
            (PAY)/   UPFRONT    
          USD RECEIVE   PAYMENT UNREALIZED  
      NOTIONAL   NOTIONAL FIXED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AMOUNT CURRENCY AMOUNT RATE DATE (RECEIVED) (DEPRECIATION) VALUE
Investment Quality Bond Fund                  
  Goldman Sachs International CDX-EMS21V1-5Y 835,000.00 USD $835,000 (5.000)%  Jun 2019 ($83,826) ($3,585) ($87,411)
  Exchange Cleared Swaps                  
 
    CDX-NAHYS22V2-5Y 10,607,850.00 USD 10,607,850  (5.000)%  Jun 2019 (817,668) (144,215) (961,883)
    ITRAXX-XOVERS21V1-5Y 1,375,000.00 EUR 1,837,657  (5.000)%  Jun 2019 (197,168) (25,333) (222,501)
          $13,280,507     ($1,098,662) ($173,133) ($1,271,795)

Real Return Bond Fund

The fund used credit default swaps to manage against potential credit events. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging from approximately $2.1 million to $4.6 million, as measured at each quarter end.

                UNAMORTIZED    
            (PAY)/   UPFRONT    
          USD RECEIVED   PAYMENT UNREALIZED  
      NOTIONAL   NOTIONAL FIXED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AMOUNT CURRENCY AMOUNT RATE DATE (RECEIVED) (DEPRECIATION) VALUE
Real Return Bond Fund                  
  Barclays Bank PLC Cardinal Health, Inc. 95,000 USD $95,000 (1.000)% Jun 2017 ($829) ($1,618) ($2,447)
  Citibank N.A GATX Corp. 1,000,000 USD 1,000,000 (1.070)% Mar 2016 — (16,457) (16,457)
  Goldman Sachs RPM International, Inc. 1,000,000 USD 1,000,000 (1.500)% Mar 2018 — (42,723) (42,723)
          $2,095,000     ($829) ($60,798) ($61,627)

Spectrum Income Fund

The fund used credit default swaps to manage against potential credit events. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging from approximately $99.2 thousand to $638.0 thousand, as measured at each quarter end.

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                UNAMORTIZED    
            (PAY)/   UPFRONT    
          USD RECEIVED   PAYMENT UNREALIZED  
      NOTIONAL   NOTIONAL FIXED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AMOUNT CURRENCY AMOUNT RATE DATE (RECEIVED) (DEPRECIATION) VALUE
Spectrum Income Fund                  
  JPMorgan Chase Bank, N.A. United Utilities PLC 75,000 EUR $99,161 (1.000)% Jun 2017 ($577) ($1,291) ($1,868)
  JPMorgan Chase Bank, N.A. People’s Republic of China 100,000 USD 100,000 (1.000)% Jun 2019 (1,198) (606) (1,804)
                ($1,775) ($1,897) ($3,672)

Implied credit spreads are utilized in determining the market value of CDS agreements in which a fund is the Seller at period end. The implied credit spread generally represents the yield of the instrument above a credit-risk free rate, such as the U.S. Treasury Bond Yield, and may include upfront payments required to be made to enter into the agreement. It also serves as an indicator of the current status of the payment/performance risk and represents the likelihood or risk of default for the credit derivative. Wider credit spreads represent a deterioration of the referenced entity’s creditworthiness and an increased risk of default or other credit event occurring as defined under the terms of the agreement.

For CDS agreements where implied credit spreads are not reported or available, the average credit rating on the underlying index is shown. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s creditworthiness and a greater likelihood of a credit event occurring. This is also represented by a decrease in the average credit rating of the underlying index. The maximum potential amount of future payments (undiscounted) that a fund as the Seller could be required to make under any CDS agreement equals the notional amount of the agreement.

The following tables summarize the contracts held at August 31, 2014, and range of notional contract amounts held by the funds during year ended August 31, 2014. In addition, the tables detail how the funds used credit default swap contracts as seller of protection during the year ended August 31, 2014.

Global Bond Fund

The fund used credit default swaps to take a long position in the exposure of the benchmark credit. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging from approximately $13.3 million to $61.7 million, as measured at each quarter end.

                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Global Bond Fund                    
  Bank of America N.A. Japan 0.25% 5,400,000.00 USD $5,400,000 1.000 % Jun 2018 $76,779 $85,932 $162,711
  Bank of America N.A. Republic of Italy 0.95% 100,000.00 USD 100,000 1.000 % Jun 2019 (1,976) 2,399 423
  Bank of America N.A. Republic of Italy 0.98% 100,000.00 USD 100,000 1.000 % Sep 2019 238 63 301
  Barclays Bank People’s Republic of China 0.61% 200,000.00 USD 200,000 1.000 % Mar 2019 (258) 4,117 3,859
  Barclays Bank Republic of Italy 0.92% 3,300,000.00 USD 3,300,000 1.000 % Mar 2019 (54,654) 72,730 18,076
  BNP Paribas Republic of Italy 0.98% 500,000.00 USD 500,000 1.000 % Sep 2019 832 671 1,503
  Citi Bank N.A. Federative Republic of Brazil 1.17% 2,100,000.00 USD 2,100,000 1.000 % Mar 2019 (77,324) 66,330 (10,994)
  Citi Bank N.A. Republic of Italy 0.98% 500,000.00 USD 500,000 1.000 % Sep 2019 1,191 312 1,503
  Deutsche Bank AG Federative Republic of Brazil 1.26% 100,000.00 USD 100,000 1.000 % Sep 2019 (2,912) 1,854 (1,058)
  Deutsche Bank AG Republic of Italy 0.92% 7,800,000.00 USD 7,800,000 1.000 % Mar 2019 (154,925) 197,650 42,725
  Deutsche Bank AG Republic of Italy 0.98% 700,000.00 USD 700,000 1.000 % Sep 2019 1,331 773 2,104
  Goldman Sachs International Japan  0.25% 5,400,000.00 USD 5,400,000 1.000 % Jun 2018 73,281 89,430 162,711
  Goldman Sachs International United Mexican States  0.70% 600,000.00 USD 600,000 1.000 % Sep 2019 5,209 4,730 9,939
  HSBC Bank Federative Republic of Brazil 1.26% 400,000.00 USD 400,000 1.000 % Sep 2019 (11,371) 7,140 (4,231)
  HSBC Bank United Mexican States 0.70% 400,000.00 USD 400,000 1.000 % Sep 2019 3,376 3,250 6,626
  JPMorgan Chase Bank Federative Republic of Brazil 1.17% 2,600,000.00 USD 2,600,000 1.000 % Mar 2019 (83,293) 69,499 (13,794)
  JPMorgan Chase Bank People’s Republic of China 0.61% 900,000.00 USD 900,000 1.000 % Mar 2019 2,718 14,646 17,364
  Morgan Stanley Capital Federative Republic of Brazil 1.17% 2,100,000.00 USD 2,100,000 1.000 % Mar 2019 (74,878) 63,737 (11,141)
  Services, Inc.                    
  Morgan Stanley Capital Federative Republic of Brazil 1.26% 1,300,000.00 USD 1,300,000 1.000 % Sep 2019 (37,208) 23,457 (13,751)
  Services, Inc.                    
  Morgan Stanley Capital Japan 0.25% 2,500,000.00 USD 2,500,000 1.000 % Jun 2018 33,636 41,693 75,329
  Services, Inc.                    
  Morgan Stanley Capital People’s Republic of China 0.61% 600,000.00 USD 600,000 1.000 % Mar 2019 776 10,757 11,533
  Services, Inc.                    
  Exchange Cleared                    
  Swaps                    
 
    CDX.NA.IG.22 0.57% 7,600,000.00 USD 7,600,000 1.000 % Jun 2019 122,797 44,353 167,150
            $45,200,000     ($176,635) $805,523 $628,888

Investment Quality Bond Fund

The fund used credit default swaps to take a long position in the exposure of the benchmark credit and to gain exposure to a credit index. During the year ended August 31, 2014, the fund held credit default swaps with total USD notional amounts ranging from approximately $565 thousand to $35.5 million, as measured at each quarter end.

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DERIVATIVE INSTRUMENTS, CONTINUED

                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Investment Quality Bond Fund                    
Exchange Cleared                    
  CDX-NAIGS22V1-5Y Baa1 565,000.00 USD $565,000  1.000 %  Jun 2019 $10,780 $1,665 $12,445
          $565,000     $10,780 $1,665 $12,445
 
Real Return Bond Fund                    
 
The fund used credit default swaps to take a long position in exposure of the benchmark credit. During the year ended August 31, 2014, the fund held credit default
swaps with total USD notional amounts ranging from approximately $400.0 thousand to $39.0 million, as measured at each quarter end.    
 
                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Real Return Bond Fund                    
Bank of America Federative Republic of Brazil 1.17% 100,000 USD $100,000 1.000 % Mar 2019 ($4,559) $4,037 ($522)
Bank of America Russian Federation 2.49% 100,000 USD 100,000 1.000 % Mar 2019 (7,619) 1,555 (6,064)
Deutsche Bank Federative Republic of Brazil 1.17% 1,900,000 USD 1,900,000 1.000 % Mar 2019 (85,087) 75,171 (9,916)
Deutsche Bank Republic of Italy 0.92% 3,200,000 USD 3,200,000 1.000 % Mar 2019 (50,171) 67,699 17,528
Goldman Sachs Russian Federation 2.56% 1,300,000 USD 1,300,000 1.000 % Sep 2019 (66,041) (24,874) (90,915)
HSBC Bank USA Russian Federation 2.49% 300,000 USD 300,000 1.000 % Mar 2019 (22,779) 4,569 (18,210)
JPMorgan Chase Bank, N.A. Petroleo Brasileiro S/A 0.83% 400,000 USD 400,000 1.000 % Sep 2015 (2,348) 3,873 1,525
  Petrobras                  
JPMorgan Chase Bank, N.A. Federative Republic of Brazil 1.17% 2,600,000 USD 2,600,000 1.000 % Mar 2019 (117,484) 103,915 (13,569)
JPMorgan Chase Bank, N.A. Russian Federation 2.56% 100,000 USD 100,000 1.000 % Sep 2019 (5,476) (1,517) (6,993)
Morgan Stanley Capital Hellenic Republic 3.33% 300,000 EUR 411,285 1.000 % Jun 2015 (10,373) 3,828 (6,545)
Services, Inc.                    
Exchange Cleared                    
Swaps                    
  iTraxx Europe Series 21 Version 1 0.60% 7,200,000 EUR 9,925,436 1.000 % Jun 2019 134,806 63,636 198,442
  iTraxx Europe Series 21 Version 1 1.02% 4,100,000 EUR 5,692,033 1.000 % Jun 2024 (97,469) 97,666 197
  CDX.NA.IG.22 0.57% 13,000,000 USD 13,000,000 1.000 % Jun 2019 223,458 62,886 286,344
          $39,028,754     ($111,142) $462,444 $351,302
 
Spectrum Income Fund                    
 
The fund used credit default swaps to take a long position in the exposure of the benchmark credit. During year ended August 31, 2014, the fund held credit default
swaps with total USD notional amounts ranging from approximately $280.0 thousand to $960.0 thousand, as measured at each quarter end.    
                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Spectrum Income                    
JPMorgan Chase Bank, N.A. Arab Republic of Egypt 2.12% 100,000 USD $100,000 1.000 % Mar 2016 ($3,848) $2,317 ($1,531)
JPMorgan Chase Bank, N.A. Humana, Inc. 0.46% 180,000 USD 180,000 4.000 % Dec 2018 958 3,516 4,474
          $280,000     ($2,890) $5,833 $2,943
 
Total Return Fund                    
 
The fund used credit default swaps to take a long position in exposure of the benchmark credit, gain exposure to a credit index and as a substitute for securities pur-
chased. During the year ended August, 2014, the fund held credit default swaps with total USD notional amounts ranging from approximately $84.3 million to $170.2
million, as measured at each quarter end.                  
 
                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Total Return Fund                    
Bank of America N.A. Berkshire Hathaway Inc. 0.08% 1,800,000 USD $1,800,000 1.000 % Mar 2015 ($3,416) $16,347 $12,931
Bank of America N.A. People’s Republic Of China 0.06% 500,000 USD 500,000 1.000 % Jun 2015 1,349 3,505 4,854
Bank of America N.A. People’s Republic Of China 0.06% 1,500,000 USD 1,500,000 1.000 % Jun 2015 3,857 10,704 14,561
Bank of America N.A. United Mexican States 0.18% 500,000 USD 500,000 1.000 % Sep 2015 (193) 5,583 5,390
Bank of America N.A. Prudential Financial, Inc. 0.15% 2,400,000 USD 2,400,000 1.000 % Dec 2015 (18,179) 50,025 31,846
Bank of America N.A. Metlife, Inc. 0.14% 1,700,000 USD 1,700,000 1.000 % Dec 2015 (16,041) 38,804 22,763
Bank of America N.A. Republic of Indonesia 0.47% 1,800,000 USD 1,800,000 1.000 % Sep 2016 (11,029) 34,288 23,259
Bank of America N.A. Citigroup Inc. 0.31% 1,800,000 USD 1,800,000 1.000 % Sep 2016 14,633 14,627 29,260
Bank of America N.A. Russian Federation 2.49% 3,700,000 USD 3,700,000 1.000 % Mar 2019 (247,159) 22,761 (224,398)
Bank of America N.A. Republic of Italy 0.50% 800,000 USD 800,000 1.000 % Sep 2016 7,821 2,103 9,924
Barclays Bank PLC Federative Republic of Brazil 0.38% 500,000 USD 500,000 1.000 % Jun 2015 (1,105) 4,666 3,561

 

325

 


DERIVATIVE INSTRUMENTS, CONTINUED

                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Total Return Fund, continued                    
  Barclays Bank PLC General Electric Capital 0.31% 1,800,000 USD 1,800,000 1.000 % Sep 2016 $13,526 $15,976 $29,502
    Corporation                  
  Barclays Bank PLC Republic of Italy 0.95% 1,300,000 USD 1,300,000 1.000 % Jun 2019 (8,170) 13,673 5,503
  Barclays Bank PLC Republic of Italy 0.95% 1,200,000 USD 1,200,000 1.000 % Jun 2019 (7,006) 12,086 5,080
  Barclays Bank PLC Russian Federation 2.56% 9,300,000 USD 9,300,000 1.000 % Sep 2019 (538,398) (111,994) (650,392)
  Barclays Bank PLC Russian Federation 2.04% 1,100,000 USD 1,100,000 1.000 % Sep 2015 (13,398) 3,546 (9,852)
  Barclays Bank PLC Republic of Italy 0.98% 200,000 USD 200,000 1.000 % Sep 2019 — 601 601
  BNP Paribas United States of America 0.14% 5,100,000 EUR 7,150,709 0.250 % Mar 2016 (24,543) 39,091 14,548
  BNP Paribas Republic of Italy 0.50% 1,000,000 USD 1,000,000 1.000 % Sep 2016 10,530 1,876 12,406
  Citibank N.A United Mexican States 0.15% 1,000,000 USD 1,000,000 1.000 % Mar 2015 (2,462) 9,254 6,792
  Citibank N.A People’s Republic Of China 0.06% 400,000 USD 400,000 1.000 % Jun 2015 1,019 2,864 3,883
  Citibank N.A. Federative Republic Of Brazil 0.39% 1,000,000 USD 1,000,000 1.000 % Sep 2015 (3,270) 11,808 8,538
  Citibank N.A. United Mexican States 0.18% 700,000 USD 700,000 1.000 % Sep 2015 (2,215) 9,761 7,546
  Citibank N.A. Metlife, Inc. 0.14% 2,500,000 USD 2,500,000 1.000 % Dec 2015 (23,590) 57,065 33,475
  Citibank N.A. Russian Federation 2.49% 4,900,000 USD 4,900,000 1.000 % Mar 2019 (326,615) 29,102 (297,513)
  Citibank N.A. Republic of Italy 0.63% 4,000,000 USD 4,000,000 1.000 % Jun 2017 21,577 27,311 48,888
  Citibank N.A. Russian Federation 2.04% 5,000,000 USD 5,000,000 1.000 % Sep 2015 (55,646) 10,862 (44,784)
  Citibank N.A. Open Joint Stock Company 2.65% 200,000 USD 200,000 1.000 % Mar 2015 (1,450) 15 (1,435)
    ‘Oil Company Rosneft’                  
  Credit Suisse International Federative Republic of Brazil 0.38% 4,300,000 USD 4,300,000 1.000 % Jun 2015 (9,196) 39,817 30,621
  Credit Suisse International Federative Republic of Brazil 0.39% 1,900,000 USD 1,900,000 1.000 % Sep 2015 (4,842) 21,064 16,222
  Credit Suisse International United Mexican States 0.58% 800,000 USD 800,000 1.000 % Dec 2018 (1,397) 17,165 15,768
  Deutsche Bank AG United Mexican States 0.15% 700,000 USD 700,000 1.000 % Mar 2015 (1,724) 6,479 4,755
  Deutsche Bank AG Federative Republic of Brazil 0.38% 1,700,000 USD 1,700,000 1.000 % Jun 2015 (2,880) 14,986 12,106
  Deutsche Bank AG Federative Republic of Brazil 0.38% 500,000 USD 500,000 1.000 % Jun 2015 (738) 4,299 3,561
  Deutsche Bank AG General Electric Capital 0.26% 1,000,000 USD 1,000,000 1.000 % Sep 2015 6,463 3,471 9,934
    Corporation                  
  Deutsche Bank AG Berkshire Hathaway Inc. 0.16% 900,000 USD 900,000 1.000 % Sep 2016 9,541 7,888 17,429
  Deutsche Bank AG JPMorgan Chase & Co. 0.25% 1,800,000 USD 1,800,000 1.000 % Sep 2016 15,743 15,812 31,555
  Deutsche Bank AG Federative Republic of Brazil 1.17% 300,000 USD 300,000 1.000 % Mar 2019 (11,523) 9,957 (1,566)
  Deutsche Bank AG Republic of Italy 0.95% 400,000 USD 400,000 1.000 % Jun 2019 (2,704) 4,397 1,693
  Deutsche Bank AG United Mexican States 0.67% 4,000,000 USD 4,000,000 1.000 % Jun 2019 23,850 46,584 70,434
  Deutsche Bank AG Republic of Italy 0.50% 3,800,000 USD 3,800,000 1.000 % Sep 2016 27,292 19,849 47,141
  Deutsche Bank AG Republic of Italy 0.50% 2,500,000 USD 2,500,000 1.000 % Sep 2016 15,416 15,598 31,014
  Deutsche Bank AG Russian Federation 2.04% 400,000 USD 400,000 1.000 % Sep 2015 (4,662) 1,079 (3,583)
  Deutsche Bank AG Republic of Italy 0.98% 1,000,000 USD 1,000,000 1.000 % Sep 2019 (477) 3,483 3,006
  Deutsche Bank AG Republic of Italy 0.50% 800,000 USD 800,000 1.000 % Sep 2016 7,904 2,020 9,924
  Goldman Sachs CDX.NA.IG.9-V4 0.11% 868,049 USD 868,049 0.548 % Dec 2017 — 13,384 13,384
  Goldman Sachs Berkshire Hathaway Inc. 0.08% 1,000,000 USD 1,000,000 1.000 % Mar 2015 (1,898) 9,082 7,184
  Goldman Sachs Federative Republic of Brazil 0.38% 500,000 USD 500,000 1.000 % Jun 2015 (1,032) 4,593 3,561
  Goldman Sachs Republic of Italy 0.63% 1,700,000 USD 1,700,000 1.000 % Jun 2017 8,917 11,860 20,777
  Goldman Sachs International United Mexican States 0.29% 1,100,000 USD 1,100,000 1.000 % Sep 2016 (2,098) 20,535 18,437
  HSBC Bank Federative Republic of Brazil 0.39% 700,000 USD 700,000 1.000 % Sep 2015 (1,465) 7,442 5,977
  HSBC Bank USA Federative Republic of Brazil 0.38% 1,300,000 USD 1,300,000 1.000 % Jun 2015 (5,546) 14,803 9,257
  HSBC Bank USA United Mexican States 0.29% 200,000 USD 200,000 1.000 % Sep 2016 733 2,619 3,352
  HSBC Bank USA United Mexican States 0.32% 100,000 USD 100,000 1.000 % Dec 2016 726 1,044 1,770
  HSBC Bank USA Republic of Italy 0.63% 1,800,000 USD 1,800,000 1.000 % Jun 2017 5,435 16,564 21,999
  HSBC Bank USA Republic of Italy 0.95% 400,000 USD 400,000 1.000 % Jun 2019 (2,704) 4,397 1,693
  HSBC Bank USA Russian Federation 2.25% 300,000 USD 300,000 1.000 % Jun 2017 (5,697) (3,880) (9,577)
  HSBC Bank USA Republic of Italy 0.50% 7,700,000 USD 7,700,000 1.000 % Sep 2016 56,891 38,632 95,523
  HSBC Bank USA Republic of Italy 0.50% 6,000,000 USD 6,000,000 1.000 % Sep 2016 38,239 36,194 74,433
  HSBC Bank USA Republic of Italy 0.50% 9,300,000 USD 9,300,000 1.000 % Sep 2016 61,204 54,168 115,372
  JP Morgan Chase Bank, N.A. CDX.NA.IG.9-V4 0.11% 1,928,998 USD 1,928,998 0.553 % Dec 2017 — 30,079 30,079
  JP Morgan Chase Bank, N.A. Federative Republic of Brazil 0.39% 8,800,000 USD 8,800,000 1.000 % Sep 2015 (24,636) 99,771 75,135
  JP Morgan Chase Bank, N.A. Federative Republic of Brazil 0.59% 900,000 USD 900,000 1.000 % Sep 2016 (2,194) 11,665 9,471
  JP Morgan Chase Bank, N.A. United Mexican States 0.29% 200,000 USD 200,000 1.000 % Sep 2016 763 2,589 3,352
  JP Morgan Chase Bank, N.A. United Mexican States 0.32% 1,300,000 USD 1,300,000 1.000 % Dec 2016 13,129 9,885 23,014
  JP Morgan Chase Bank, N.A. United Mexican States 0.58% 2,400,000 USD 2,400,000 1.000 % Dec 2018 (4,928) 52,231 47,303
  JP Morgan Chase Bank, N.A. United Mexican States 0.67% 4,200,000 USD 4,200,000 1.000 % Jun 2019 30,852 43,103 73,955
  JP Morgan Chase Bank, N.A. Russian Federation 2.52% 100,000 USD 100,000 1.000 % Jun 2019 (5,335) (1,198) (6,533)
  Morgan Stanley Capital United Mexican States 0.29% 2,400,000 USD 2,400,000 1.000 % Sep 2016 (4,128) 44,354 40,226
  Services                    
  Morgan Stanley Capital Republic of Indonesia 0.47% 1,400,000 USD 1,400,000 1.000 % Sep 2016 (8,314) 26,404 18,090
  Services                    
  Morgan Stanley Capital Federative Republic of Brazil 0.38% 500,000 USD 500,000 1.000 % Jun 2015 (747) 4,308 3,561
  Services Inc.                    
  Morgan Stanley Capital Federative Republic of Brazil 0.39% 9,900,000 USD 9,900,000 1.000 % Sep 2015 (28,112) 112,639 84,527
  Services Inc.                    
  Royal Bank of Scotland PLC People’s Republic Of China 0.06% 900,000 USD 900,000 1.000 % Jun 2015 2,360 6,377 8,737
  Royal Bank of Scotland PLC United Mexican States 0.18% 1,900,000 USD 1,900,000 1.000 % Sep 2015 (4,473) 24,956 20,483

 

326

 


DERIVATIVE INSTRUMENTS, CONTINUED

                  UNAMORTIZED    
      IMPLIED CREDIT       (PAY)/   UPFRONT    
      SPREAD AND/OR     USD RECEIVED   PAYMENT UNREALIZED  
      CREDIT RATING NOTIONAL   NOTIONAL FIXED  MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY REFERENCE OBLIGATION AT 8-31-14 AMOUNT CURRENCY   AMOUNT  RATE DATE (RECEIVED)  (DEPRECIATION)  VALUE
Total Return Fund, continued                    
  Societe Generale Paris United Kingdom of Great 0.04% 3,200,000 USD 3,200,000 1.000 % Mar 2015 $1,466 $22,353 $23,819
    Britain and Northern Ireland                  
  The Royal Bank Of Scotland People’s Republic of China 0.15% 1,300,000 USD 1,300,000 1.000 % Jun 2016 4,914 17,806 22,720
  UBS AG Berkshire Hathaway Inc. 0.08% 1,000,000 USD 1,000,000 1.000 % Mar 2015 (1,947) 9,131 7,184
  UBS AG People’s Republic of China 0.15% 300,000 USD 300,000 1.000 % Jun 2016 1,160 4,083 5,243
  UBS AG United Mexican States 0.29% 1,100,000 USD 1,100,000 1.000 % Sep 2016 (1,932) 20,369 18,437
  UBS AG Republic of Indonesia 0.47% 600,000 USD 600,000 1.000 % Sep 2016 (3,792) 11,545 7,753
  Exchange Cleared Swaps                  
 
    CDX.NA.IG.22 0.57% 6,400,000 USD 6,400,000 1.000 % Jun 2019 99,055 41,632 140,687
            $170,247,756     ($948,641) $1,395,777 $447,136

 

Inflation Swaps. In an inflation swap, one party pays a fixed rate on a notional principal amount while the other party pays a floating rate linked to an inflation index on that same notional amount. The party paying the floating rate pays the inflation adjusted rate multiplied by the notional principal amount. If the average inflation rateover the term of the swap is the same as the fixed rate of the swap, the two legs will have the same value and the swap will break even.

The following table summarizes the inflation swap contracts of the fund held as August 31, 2014.

Real Return Bond Fund

The fund used inflation swaps to take a position on current versus future inflation expectations. During the year ended August 31, 2014, the fund held inflation swaps with total USD notional amounts ranging from approximately $73.3 million to $129.6 million, as measured at each quarter end.

                UNAMORTIZED    
                UPFRONT    
        USD PAYMENTS PAYMENTS   PAYMENT UNREALIZED  
    NOTIONAL   NOTIONAL MADE BY RECEIVED MATURITY PAID APPRECIATION MARKET
FUND COUNTERPARTY AMOUNT  CURRENCY AMOUNT PORTFOLIO BY FUND DATE (RECEIVED)  (DEPRECIATION)  VALUE
Real Return Bond Fund                  
  BNP Paribas 2,600,000 USD $2,600,000 Fixed 1.825% USA-CPI-U Nov 2016 ($551) $14,040 $13,489
  BNP Paribas 14,500,000 USD 14,500,000 Fixed 2.250% USA-CPI-U Jul 2017 17,091 (304,234) (287,143)
  BNP Paribas 3,500,000 EUR 4,618,249 Eurostat Eurozone Fixed 1.05% Sep 2019 2,309 1,775 4,084
          HICP Ex Tob          
  Citibank NA 11,100,000 USD 11,100,000 Fixed 2.250% USA-CPI-U Jul 2017 1,632 (221,445) (219,813)
  Citibank NA 500,000 EUR 676,025 FRC-EXT-CPI Fixed 2.1075% Oct 2023 6,355 41,731 48,086
  Deutsche Bank 5,300,000 USD 5,300,000 Fixed 1.800% USA-CPI-U Jan 2016 (240) 32,603 32,363
  Deutsche Bank 4,000,000 USD 4,000,000 Fixed 1.935% USA-CPI-U Jan 2017 — 21,553 21,553
  Deutsche Bank AG 3,500,000 USD 3,500,000 Fixed 1.86% USA-CPI-U Nov 2016 — 13,062 13,062
  Deutsche Bank AG 3,700,000 USD 3,700,000 Fixed 1.825% USA-CPI-U Nov 2016 (1,612) 20,808 19,196
  Deutsche Bank AG 2,300,000 USD 2,300,000 Fixed 1.845% USA-CPI-U Nov 2016 — 10,522 10,522
  Deutsche Bank AG 1,900,000 USD 1,900,000 Fixed 2.360% USA-CPI-U Jan 2017 — (37,407) (37,407)
  Deutsche Bank AG 2,500,000 USD 2,500,000 Fixed 2.1725% USA-CPI-U Nov 2018 — (6,290) (6,290)
  Deutsche Bank AG 1,100,000 USD 1,100,000 Fixed 2.5% USA-CPI-U Jul 2022 8,083 (41,273) (33,190)
  Deutsche Bank AG 400,000 EUR 543,460 FRC-EXT-CPI Fixed 1.95% Jul 2023 3,397 26,766 30,163
  Goldman Sachs 10,700,000 USD 10,700,000 Fixed 1.73% USA-CPI-U Apr 2016 (22,698) 55,812 33,114
  Goldman Sachs 7,600,000 USD 7,600,000 Fixed 2.415% USA-CPI-U Feb 2017 2,561 (159,883) (157,322)
  Goldman Sachs 1,800,000 USD 1,800,000 Fixed 2.033% USA-CPI-U Apr 2018 — (3,283) (3,283)
  Goldman Sachs 600,000 USD 600,000 Fixed 2.175% USA-CPI-U Oct 2018 (374) (1,501) (1,875)
  The Royal Bank of Scotland PLC 2,000,000 USD 2,000,000 Fixed 1.935% USA-CPI-U Oct 2016 (5,900) 8,456 2,556
  The Royal Bank of Scotland PLC 7,200,000 USD 7,200,000 Fixed 1.93% USA-CPI-U Oct 2016 — 10,854 10,854
  The Royal Bank of Scotland PLC 12,100,000 USD 12,100,000 Fixed 2.25% USA-CPI-U Jul 2017 10,211 (249,827) (239,616)
        $100,337,734       $20,264 ($767,161) ($746,897)

 

The following are abbreviation for the table above:
 
FRC-EXT-CPI France Consumer Price ex-Tobacco Index
HICP Ex Tob Harmonised Index of Consumer Prices ex-Tobacco
USA-CPI-U Consumer Price All Urban Non-Seasonally Adjusted Index

 

Fair value of derivative instruments by risk category        
 
The table below summarizes the fair value of derivatives held by the funds at August 31, 2014 by risk category:    
      Financial Asset Liability
    Statements of assets and Instruments Derivatives Derivatives
Fund Risk liabilities location Location Fair Value Fair Value
All Cap Core Fund Equity contracts Receivable/payable for futures Futures† $257,514 ($1,549)
        $257,514 ($1,549)
Asia Pacific Total Return Bond Interest rate contracts Receivable/payable for futures Futures† — ($196,294)
Fund          
  Foreign currency contracts Receivable/payable for Forward foreign currency $4,363 297,054
    forward foreign currency contracts    
    exchange contracts      
        $4,363 $100,760

 

327

 


DERIVATIVE INSTRUMENTS, CONTINUED

      Financial Asset Liability
    Statements of assets and Instruments Derivatives Derivatives
Fund Risk liabilities location Location Fair Value Fair Value
Capital Appreciation Value Equity contracts Written options, at value Written options — ($3,483,810)
Fund          
        — ($3,483,810)
Global Bond Fund Interest rate contracts Receivable/payable for futures Futures† $2,094,038 ($1,595,018)
  Interest rate contracts Written options, at value Written options — (590,432)
  Interest rate contracts Swap contracts, at value Interest rate swaps^ 2,299,268 (3,594,146)
  Interest rate contracts Investments in unaffiliated Purchased options 316,921 —
    issuers, at value*      
  Credit contracts Written options, at value Written options — (23,536)
  Credit contracts Swap contracts, at value Credit default swaps^ 732,811 (107,758)
  Foreign currency contracts Written options, at value Written options — (904,675)
  Foreign currency contracts Swap contracts, at value Currency swaps 63,183 (54,338)
  Foreign currency contracts Receivable/payable for Forward foreign currency 3,707,758 (3,980,079)
    forward foreign currency contracts    
    exchange contracts      
        $9,213,979 ($10,849,982)
Global Equity Fund Foreign currency contracts Receivable/payable for Forward foreign currency $154,951 —
    forward foreign currency contracts    
    exchange contracts      
        $154,951 —
Health Sciences Fund Equity contracts Written options, at value Written options — ($866,745)
        — ($866,745)
High Yield Fund Foreign currency contracts Receivable/payable for Forward foreign currency $603,711 ($1,151)
    forward foreign currency contracts    
    exchange contracts      
  Interest rate contracts Receivable/payable for Futures† — (117,989)
    futures      
  Credit contracts Swap contracts, at value Credit default swaps^ — (1,790,009)
        $603,711 ($1,909,149)
Investment Quality Bond Fund Foreign currency contracts Receivable/payable for Forward foreign currency $192,402 ($168,280)
    forward foreign currency contracts    
    exchange contracts      
  Interest rate contracts Receivable/payable for Futures† 105,544 (78,453)
    futures      
  Interest rate contracts Investments in unaffiliated Purchased options 25,272 —
    issuers, at value*      
  Credit contracts Swap contracts, at value Credit default swaps^ 12,445 (1,271,795)
  Interest rate contracts Swap contracts, at value Interest rate swaps^ — (559,088)
        $335,663 ($2,077,616)
Real Return Bond Fund Interest rate contracts Receivable/payable for Futures† $153,949 ($447,853)
    futures      
  Interest rate contracts Written options, at value Written options — (137,181)
  Credit contracts Written options, at value Written options — (11,359)
  Foreign currency contracts Written options, at value Written options — (31,245)
  Interest rate contracts Swap contracts, at value Interest rate swaps^ 888,143 (6,171,475)
  Interest rate contracts Investments in unaffiliated Purchased options 1,024 —
    issuers, at value*      
  Credit contracts Swap contracts, at value Credit default swaps^ 504,036 (214,361)
  Foreign currency contracts Receivable/payable for Forward foreign currency 2,550,675 (728,640)
    forward foreign currency contracts    
    exchange contracts      
        $4,097,827 ($7,742,114)
Short Term Government Interest rate contracts Receivable/payable for Futures† — ($50,842)
Income Fund   futures      
        — ($50,842)
Spectrum Income Fund Interest rate contracts Receivable/payable for Futures† $184,022 ($130,224)
    futures      
  Credit contracts Swap contracts, at value Credit default swaps^ 4,479 (5,208)
  Foreign currency contracts Receivable/payable for Forward foreign currency 1,216,777 (848,635)
    forward foreign currency contracts    
    exchange contracts      
  Interest rate contracts Investments in unaffiliated Purchased options 1,125 —
    issuers, at value*      
  Foreign currency contracts Investments in unaffiliated Purchased options 30,863 —
    issuers, at value*      
        $1,437,266 ($984,067)
Strategic Equity Allocation Equity contracts Receivable/payable for Futures† $5,609,002 ($833,833)
Fund   futures      
  Interest rate contracts Receivable/payable for Futures† — ($11,329)
    futures      
        $5,609,002 ($845,162)

 

328

 


DERIVATIVE INSTRUMENTS, CONTINUED

      Financial Asset Liability
    Statements of assets and Instruments Derivatives Derivatives
Fund Risk liabilities location Location Fair Value Fair Value
Total Return Fund Interest rate contracts Receivable/payable for Futures† $4,830,348 ($848,588)
    futures      
  Interest rate contracts Written options, at value Written options — (1,545,420)
  Foreign currency contracts Written options, at value Written options — (47,760)
  Interest rate contracts Swap contracts, at value Interest rate swaps^ 9,903,748 (4,356,217)
  Credit contracts Swap contracts, at value Credit default swaps^ 1,696,769 (1,249,633)
  Foreign currency contracts Receivable/payable for Forward foreign currency 14,417,227 (4,623,626)
    forward foreign currency contracts    
    exchange contracts      
        $30,848,092 ($12,671,244)

† Reflects cumulative appreciation/depreciation on futures as disclosed in Note 3. Only the year end variation margin is separately disclosed in the Statements of assets and liabilities. * Purchased options are included in the Portfolio’s Investments ^ Reflects cumulative appreciation/depreciation on swap contracts. Receivable/Payable for exchange cleared swaps, which represents margin, and swap contracts at value, which represents appreciation/depreciation on OTC swaps, are shown separately on Statements of assets and liabilities.

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 August 31, 2014:

  Statements of Operations Location—Net Realized Gain (Loss) on:  
 
 
            Investments in  
    Investments       unaffiliated issuers  
    (Purchased Written Futures Swap and Foreign Currency  
Fund Risk Options) Options Contracts Contracts Transactions* Total
Active Bond Fund Interest rate contracts — — ($683,203)     ($683,203)
  Total — — ($683,203) — — ($683,203)
All Cap Core Fund Equity contracts — — $1,663,938 — — $1,663,938
  Total — — $1,663,938 — — $1,663,938
Asia Pacific Total Return Bond Fund Interest rate contracts — — ($875,395) — — ($875,395)
  Foreign currency contracts — — — — ($2,881,753) (2,881,753)
  Total — — ($875,395) — ($2,881,753) ($3,757,148)
Capital Appreciation Value Fund Equity contracts — $825,939       $825,939
  Total — $825,939 — — — $825,939
Global Bond Fund Interest rate contracts — $876,373 ($540,514) $410,125 — $745,984
  Credit contracts — 16,304 — (54,229) — (37,925)
  Foreign currency contracts — 808,968 — — ($6,134,738) (5,325,770)
  Total — $1,701,645 ($540,514) $355,896 ($6,134,738) ($4,617,711)
Health Sciences Fund Equity contracts ($7,703) $2,017,181   — — $2,009,478
  Total ($7,703) $2,017,181 — — — $2,009,478
High Yield Fund Interest rate contracts — — ($1,752,110) — — ($1,752,110)
  Credit contracts — — — ($1,464,631) — (1,464,631)
  Foreign currency contracts — — — — ($1,202,109) (1,202,109)
  Total — — ($1,752,110) ($1,464,631) ($1,202,109) ($4,418,850)
Investment Quality Bond Fund Interest rate contracts ($197,006) — ($1,634,248) ($130,086) — ($1,961,340)
  Credit contracts — — — (1,325,327) — (1,325,327)
  Foreign currency contracts — — — — ($99,389) (99,389)
  Total ($197,006) — ($1,634,248) ($1,455,413) ($99,389) ($3,386,056)
Real Return Bond Fund Interest rate contracts ($245,268) $1,240,041 $627,860 ($970,693)   $651,940
  Foreign currency contracts — 303,824     $480,415 784,239
  Credit contracts — 35,209 — 72,337 — 107,546
  Total ($245,268) $1,579,074 $627,860 ($898,356) $480,415 $1,543,725
Short Term Government Income              
Fund Interest rate contracts — — ($440,575) — — ($440,575)
  Total — — ($440,575) — — ($440,575)
Spectrum Income Fund Interest rate contracts ($13,022) — ($1,387,813) — — ($1,400,835)
  Credit contracts — — — ($2,610) — (2,610)
  Foreign currency contracts (26,785) — — — ($3,276,603) (3,303,388)
  Total ($39,807) — ($1,387,813) ($2,610) ($3,276,603) ($4,706,833)
Strategic Equity Allocation Fund Equity contracts — — $47,490,136     $47,490,136
  Foreign currency contracts — — (23,460)     (23,460)
  Total — — $47,466,676 — — $47,466,676
Total Return Fund Interest rate contracts — $3,992,944 $18,644,600 ($6,173,194) — $16,464,350
  Credit contracts — 113,347 — 1,266,041 — 1,379,388
  Foreign currency contracts — — — — $5,331,551 5,331,551
  Total — $4,106,291 $18,644,600 ($4,907,153) $5,331,551 $23,175,289

* Realized gain/loss associated with forward foreign currency contracts is included in the caption on the Statements 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 August 31, 2014:

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DERIVATIVE INSTRUMENTS, CONTINUED

  Statements of Operations Location—Change in Unrealized Appreciation (Depreciation) of:  
 
 
            Investments in  
            Unaffiliated Issuers  
    Investments       and Translation of  
    (Purchased Written Futures Swap Assets and Liabilities  
Fund Risk Options) Options Contracts Contracts in Foreign Currencies* Total
Active Bond Fund Interest rate contracts — — ($127,788) — — ($127,788)
  Total — — ($127,788) — — ($127,788)
All Cap Core Fund Equity contracts — — $281,303 — — $281,303
  Total — — $281,303 — — $281,303
Asia Pacific Total Return Bond Fund Interest rate contracts — — ($196,294) — — ($196,294)
  Foreign currency contracts — — — — ($60,545) ($60,545)
  Total — — ($196,294) — ($60,545) ($256,839)
Capital Appreciation Value Fund Equity contracts — $1,023,795 — — — $1,023,795
  Total — $1,023,795 — — — $1,023,795
Global Bond Fund Interest rate contracts ($941,414) $1,348,762 $1,479,526 $1,500,788 — $3,387,662
  Credit contracts — 31,918 — 1,414,475 — 1,446,393
  Foreign currency contracts — 616,345 — 62,820 ($5,048,697) (4,369,532)
  Total ($941,414) $1,997,025 $1,479,526 $2,978,083 ($5,048,697) $464,523
Global Equity Fund Foreign currency contracts — — — — $154,951 $154,951
  Total — — — — $154,951 $154,951
Health Sciences Fund Equity contracts — ($1,437,566) — — — ($1,437,566)
  Total — ($1,437,566) — — — ($1,437,566)
High Yield Fund Interest rate contracts — — ($92,732) — — ($92,732)
  Credit contracts — — — ($349,385) — (349,385)
  Foreign currency contracts — — — — $490,267 490,267
  Total — — ($92,732) ($349,385) $490,267 $48,150
Investment Quality Bond Fund Interest rate contracts ($184,053) — $15,953 ($293,859)   ($461,959)
  Credit contracts — —   377,714   377,714
  Foreign currency contracts — —     $42,269 42,269
  Total ($184,053) — $15,953 $83,855 $42,269 ($41,976)
Real Return Bond Fund Interest rate contracts ($91,711) $698,418 $462,082 ($2,736,892) — ($1,668,103)
  Credit contracts — 40,062 — 470,562 — 510,624
  Foreign currency contracts — 7,121 — — $1,975,482 1,982,603
  Total ($91,711) $745,601 $462,082 ($2,266,330) $1,975,482 $825,124
Short Term Government Income              
Fund Interest rate contracts     ($74,055)   — ($74,055)
  Total — — ($74,055) — — ($74,055)
Spectrum Income Fund Interest rate contracts ($6,028) — $164,299 — — $158,271
  Credit contracts — — — $4,513 — 4,513
  Foreign currency contracts 4,133 — — — $182,064 186,197
  Total ($1,895) — $164,299 $4,513 $182,064 $348,981
Strategic Equity Allocation Fund Interest rate contracts — — ($11,329) — — ($11,329)
  Equity contracts — — 3,693,748 — — 3,693,748
  Foreign currency contracts — — 18,719 — — 18,719
  Total — — $3,701,138 — — $3,701,138
Total Return Fund Interest rate contracts — $5,327,304 $7,216,107 ($18,969,623) — ($6,426,212)
  Credit contracts — — — 890,041 — 890,041
  Foreign currency contracts — 32,472 — — $8,034,897 8,067,369
  Total — $5,359,776 $7,216,107 ($18,079,582) $8,034,897 $2,531,198

* Change in unrealized appreciation/depreciation associated with forward foreign currency contracts is included in this caption on the Statements of operations.

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 funds. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss from such claims is considered remote.

5. FEES AND TRANSACTIONS WITH AFFILIATES John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the funds. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for the funds. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the funds. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation (MFC).

Management fee The funds have an investment management agreement with the Advisor under which the funds pay a monthly management fee to the Advisor equivalent, on an annual basis, as detailed below. Aggregate net assets generally include the net assets of the funds and the net assets of a similar fund of John Hancock Variable Insurance Trust (JHVIT), unless otherwise noted below. JHVIT funds are advised by the Advisor and are distributed by an affiliate of the Advisor, John Hancock Distributors, LLC.

• Active Bond Fund — a) 0.600% of the first $2.5 billion of aggregate net assets; b) 0.575% of the next $2.5 billion and c) 0.550% of the excess over $5 billion of aggregate net assets.

• All Cap Core Fund — a) 0.800% of the first $500 million of aggregate net assets and b) 0.750% of the excess over $500 million of aggregate net assets.

330

 


FEES AND TRANSACTIONS WITH AFFILIATES, CONTINUED

• Alpha Opportunities Fund — a) 1.025% of the first $250 million of aggregate net assets; b) 1.000% of the next $250 million; c) 0.975% of the next $500 million; and d) 0.950% of the excess over $1 billion of aggregate net assets.

• Asia Pacific Total Return Bond Fund — a) 0.725% of the first $250 million of average net assets; b) 0.700% of the next $250 million of average net assets and c) 0.600% of the excess over $500 million of average net assets.

• Blue Chip Growth Fund and Equity-Income Fund — a) 0.825% of the first $1 billion of aggregate net assets and b) 0.775% of the excess over $1 billion of aggregate net assets. However, when aggregate net assets exceed $1 billion on any day, the annual rate of advisory fee for that day is 0.800% on the first $1 billion of aggregate net assets of the fund.

• Capital Appreciation Fund — a) 0.850% of the first $300 million of aggregate net assets; b) 0.800% of the next $200 million; c) 0.700% of the next $500 million; and d) 0.670% of the excess over $1 billion of aggregate net assets.

• Capital Appreciation Value Fund — If net assets are less than $500 million, then the following fee schedule shall apply: a) 0.950% of the first $250 million of aggregate net assets and b) 0.850% of the excess over $250 million of aggregate net assets. If net assets equal or exceed $500 million but are less than $2 billion, then the following fee schedule shall apply: a) 0.850% of the first $1 billion of aggregate net assets and b) 0.800% of the excess over $1 billion of aggregate net assets. If net assets equal or exceed $2 billion but are less than $3 billion, then the following fee schedule shall apply: a) 0.850% of the first $500 million of aggregate net assets and b) 0.800% of the excess over $500 million of aggregate net assets. If net assets equal or exceed $3 billion, then the advisory fee to be paid is 0.800% of aggregate net assets.

• Core Bond Fund — a) 0.690% of the first $200 million of aggregate net assets; b) 0.640% of the next $200 million; and c) 0.570% of the excess over $400 million of aggregate net assets.

• Fundamental Global Franchise Fund — a) 0.800% of the first $1 billion of aggregate net assets and b) 0.780% of the excess over $1 billion of aggregate net assets.

• Global Bond Fund and Real Estate Securities Fund — 0.700% of aggregate net assets.

• Global Equity Fund — a) 0.825% first $500 million of aggregate net assets; and b) 0.800% excess over $500 million of aggregate net assets. However when net assets aggregate exceeds $500 million, the advisory fee is 0.800% on all asset levels.

• Global Real Estate Fund — a) 0.900% of the first $500 million of average net assets; b) 0.875% of the next $250 million; and c) 0.850% of the excess over $750 million of average net assets.

• Health Sciences Fund — a) 1.050% of the first $500 million of aggregate net assets and b) 1.000% of the next $250 million of aggregate net assets; and c) 0.950% of excess over $750 million of aggregate net assets. However, when aggregate net assets exceed $750 million, the advisory fee is 0.95% on all net assets. Prior to April 1, 2014, the following fees were in effect: a) 1.050% of the first $500 million of aggregate net assets and b) 1.000% of excess over $500 million of aggregate net assets.

• High Yield Fund — a) 0.700% of the first $500 million of aggregate net assets and b) 0.650% of the excess over $500 million of aggregate net assets.

• International Growth Opportunities Fund — a) 0.975% of the first $100 million of average net assets; b) 0.850% of the next $300 million; and c) 0.750% of the excess over $400 million of average net assets.

• International Growth Stock Fund — a) 0.850% of the first $250 million of aggregate net assets; b) 0.800% of the next $500 million; and c) 0.750% of the excess over $750 million of aggregate net assets.

• International Small Cap Fund — a) 1.050% of the first $200 million of average net assets; b) 0.950% of the next $300 million; and c) 0.850% of the excess over $500 million of average net assets.

• International Value Fund — Aggregate net assets are the aggregate net assets of the fund, Income Fund, International Small Cap Fund and the following funds of JHVIT: International Value Trust, Global Trust, Income Trust and Mutual Shares Trust. The advisory fee paid is as follows: a) 0.950% of the first $150 million of aggregate net assets; b) 0.850% of the next $150 million; and c) 0.800% of the excess over $300 million of aggregate net assets. However, when aggregate net assets exceed $300 million, then the advisory fee rate is 0.800% of aggregate net assets of the fund.

• Investment Quality Bond Fund — a) 0.600% of the first $500 million of aggregate net assets and b) 0.550% of the excess over $500 million of aggregate net assets.

• Lifestyle II Portfolios — Each fund pays the advisor a management fee for its services to the fund. The management fee has two components: (a) a fee on assets invested in a fund of John Hancock Funds II (JHF II) or John Hancock Funds III (JHF III); and (b) a fee on assets invested in investments other than a fund of JHF II or JHF III (other assets). The fee on assets invested in a fund of JHF II or JHF III is stated as an annual percentage of the current value of the net assets of the fund (together with the assets of any applicable fund identified in the advisory agreement), is equivalent to the sum of a) 0.050% for the first $7.5 billion of aggregate net assets and b) 0.040% of the excess over $7.5 billion of aggregate net assets. The fee on other assets is stated as an annual percentage of the current value of the net assets of the fund (together with the assets of any applicable fund identified in the advisory agreement), is equivalent to the sum of: a) 0.500% of the first $7.5 billion of aggregate net assets and b) 0.490% of the excess over $7.5 billion of aggregate net assets.

• Mid Cap Stock Fund — a) 0.875% of the first $200 million of aggregate net assets; b) 0.850% of the next $300 million; and c) 0.825% of the excess over $500 million of aggregate net assets.

• Mid Value Fund — a) 1.050% of the first $50 million of aggregate net assets and b) 1.000% of the excess over $50 million of aggregate net assets.

• Real Estate Equity Fund — a) 0.875% of the first $250 million of average net assets; b) 0.850% of the next $250 million; and c) 0.825% of the excess over $500 million of average net assets.

• Real Return Bond Fund — a) 0.700% of the first $1 billion of aggregate net assets and b) 0.650% of the excess over $1 billion of aggregate net assets.

• Science & Technology Fund — (a) 1.050% of the first $500 million of aggregate net assets and (b) 1.000% of the excess over $500 million of aggregate net assets.

• Short-Term Government Income Fund — a) 0.570% of the first $250 million of aggregate net assets and b) 0.550% of the excess over $250 million of aggregate net assets.

331

 


FEES AND TRANSACTIONS WITH AFFILIATES, CONTINUED

• Small Cap Growth Fund — a) 1.100% of the first $100 million of aggregate net assets; b) 1.050% of the next $400 million and c) 1.000% of the excess over $500 million of aggregate net assets. Prior to July 1, 2014, the following fees were in effect: a) 1.100% of the first $100 million of aggregate net assets and b) 1.050% of the excess over $100 million of aggregate net assets.

• Small Cap Opportunities Fund — a) 1.000% of the first $500 million of aggregate net assets; b) 0.950% of the next $500 million; c) 0.900% of the next $1 billion; and d) 0.850% of the excess over $2 billion of aggregate net assets.

• Small Company Growth Fund — Aggregate net assets are the aggregate net assets of the fund, Small Cap Opportunities Fund, International Growth Stock Fund, Value Fund and the following funds of JHVIT: Small Company Growth Trust, Small Cap Opportunities Trust, International Growth Stock Trust and Value Trust. The advisory fee paid is as follows: a) 1.050% of the first $250 million of aggregate net assets and b) 1.000% of the excess over $250 million of aggregate net assets. However, when the aggregate net assets of exceed $1 billion, then the advisory fee rate is 1.000% of aggregate net assets of the fund.

• Small Company Value Fund — a) 1.050% of the first $500 million of aggregate net assets and b) 1.000% of the excess over $500 million of aggregate net assets.

• Spectrum Income Fund — a) 0.800% of the first $250 million of aggregate net assets and b) 0.725% of the excess over $250 million of aggregate net assets.

• Strategic Equity Allocation Fund — a) 0.675% of the first $2.5 billion of aggregate net assets; b) 0.650% of the next $5 billion; c) 0.625% of the next $2.5 billion; and d) 0.600% of the excess over $10 billion of aggregate net assets.

• Total Return Fund — If Relationship Net Assets are equal to or exceed $3 billion, then the following fee schedule applies: a) 0.700% of the first $1 billion of Total Return Net Assets and b) 0.675% of the excess over $1 billion of Total Return Net Assets. If Relationship Net Assets are less than $3 billion, then the advisory fee to be paid is 0.700% of aggregate net assets. Relationship Net Assets are aggregate net assets of all funds of the Trust and JHVIT that are subadvised by Pacific Investment Management Company, LLC. The term Total Return Net Assets includes the net assets of the Total Return Fund, a series of the Trust, and Total Return Trust, a series of JHVIT.

• U.S. High Yield Bond Fund — a) 0.750% of the first $200 million of average net assets and b) 0.720% of the excess over $200 million of average net assets.

• Value Fund — a) 0.750% of the first $200 million of aggregate net assets; b) 0.725% of the next $300 million; and c) 0.650% of the excess over $500 million of aggregate net assets.

The organizations described below act as the subadvisors to the Trust and its funds pursuant to Subadvisory Agreements with the Advisor. Fund management is allocated among the following managers:

Fund Subadvisor
Science & Technology Fund Allianz Global Investors U.S. LLC; T. Rowe Price Associates, Inc.
Active Bond Fund Declaration Management & Research LLC and John Hancock Asset Management a division of Manulife Asset Management
  (US) LLC1,3
All Cap Core Fund QS Investors, LLC.
Alpha Opportunities Fund Wellington Management Company, LLP
Investment Quality Bond Fund  
Mid Cap Stock Fund  
Small Cap Growth Fund  
Blue Chip Growth Fund T. Rowe Price Associates, Inc.
Capital Appreciation Value Fund  
Equity-Income Fund  
Health Sciences, Fund  
Mid Value Fund  
Real Estate Equity Fund  
Spectrum Income Fund  
Small Company Value Fund  
Capital Appreciation Fund Jennison Associates, LLC
Core Bond Fund Wells Capital Management, Incorporated
U.S. High Yield Bond Fund  
Lifestyle II Aggressive Portfolio John Hancock Asset Management a division of Manulife Asset Management (North America) Limited and John Hancock Asset
Lifestyle II Balanced Portfolio Management a division of Manulife Asset Management (US) LLC 1,2,3
Lifestyle II Conservative Portfolio  
Lifestyle II Growth Portfolio  
Lifestyle II Moderate Portfolio  
Asia Pacific Total Return Bond Fund John Hancock Asset Management a division of Manulife Asset Management (US) LLC 1,3
Fundamental Global Franchise Fund  
Global Equity Fund  
Short-Term Government Income Fund  
Strategic Equity Allocation Fund  
Global Bond Fund Pacific Investment Management Company LLC
Real Return Bond Fund  
Total Return Fund  
Global Real Estate Fund Deutsche Investment Management Americas Inc. and RREEF America L.L.C.
Real Estate Securities Fund  

 

332

 


FEES AND TRANSACTIONS WITH AFFILIATES, CONTINUED

Fund Subadvisor
High Yield Fund Legg Mason (formerly Western Asset Management Company)
International Growth Opportunities Fund Baillie Gifford Overseas Ltd
International Growth Stock Fund Invesco Advisers, Inc.
Small Company Growth Fund  
Value Fund  
International Small Cap Fund Franklin Templeton Investments Corporation
International Value Fund Templeton Investment Counsel, LLC
Small Cap Opportunities Fund Dimensional Fund Advisors LP and Invesco Advisers, Inc.

 

1 An affiliate of the Advisor.
2 Manulife Asset Management (North America) Limited is doing business as John Hancock Asset Management.
3 Manulife Asset Management (US), LLC is doing business as John Hancock Asset Management.

The funds are not responsible for payment of the subadvisory fees.

Expense reimbursements The Advisor voluntarily agrees to waive a portion of its management fee if certain expenses of the respective funds exceed the percentage of average net assets as detailed below. Expenses excluded from this waiver are taxes, portfolio brokerage commissions, interest, litigation and indemnification expenses, and extraordinary expenses not incurred in the ordinary course of the funds’ business, advisory fees, class specific expenses, and fees under any agreements or plans of the funds dealing with services for shareholders and others with beneficial interests in shares of the funds. This expense reduction will continue in effect until terminated by the Advisor.

  Expense   Expense
  limitation as a   limitation as a
  percentage of   percentage of
  average net   average net
Fund assets Fund assets
Active Bond Fund 0.150% International Value Fund 0.250%
All Cap Core Fund 0.200% Investment Quality Bond Fund 0.150%
Alpha Opportunities Fund 0.200% Mid Cap Stock Fund 0.200%
Blue Chip Growth Fund 0.200% Mid Value Fund 0.200%
Capital Appreciation Fund 0.200% Real Estate Equity Fund 0.200%
Capital Appreciation Value Fund 0.200% Real Estate Securities Fund 0.200%
Core Bond Fund 0.150% Real Return Bond Fund 0.150%
Equity-Income Fund 0.200% Science & Technology Fund 0.200%
Fundamental Global Franchise Fund 0.250% Small Cap Growth Fund 0.200%
Global Bond Fund 0.150% Small Cap Opportunities Fund 0.200%
Global Equity Fund 0.250% Small Company Growth Fund 0.200%
Global Real Estate Fund 0.250% Small Company Value Fund 0.200%
Health Sciences Fund 0.200% Spectrum Income Fund 0.150%
High Yield Fund 0.150% Strategic Equity Allocation Fund 0.200%
International Growth Opportunities Fund 0.250% Total Return Fund 0.150%
International Growth Stock Fund 0.250% U.S. High Yield Bond Fund 0.150%
International Small Cap Fund 0.250% Value Fund 0.200%

The Advisor has contractually agreed to waive a portion of its management fee and/or reimburse expenses for certain funds of the John Hancock complex, the participating portfolios (including certain of the funds presented in this report). The waiver equals, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the participating portfolios that exceeds $75 billion but is less than or equal to $125 billion; 0.0125% of that portion of the aggregate net assets of all the participating portfolios that exceeds $125 billion but is less than or equal to $150 billion; and 0.015% of that portion of the aggregate net assets of all the participating portfolios that exceeds $150 billion. 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. This arrangement may be amended or terminated at any time by the Advisor upon notice to the funds and with the approval of the Board of Trustees.

The Advisor has contractually agreed to reimburse the Asia Pacific Total Return Bond Fund for certain fund expenses excluding certain expenses such as advisory fees, taxes, transfer agent fees, Rule 12b-1 fees, brokerage commissions, interest, blue sky fees, printing and postage, litigation and indemnification expenses and other extraordinary expenses, short term dividend expense and acquired fund fees and expenses that exceed 0.15% of the fund’s average net assets. The expense limitation shall continue in effect until December 31, 2014, unless renewed by mutual agreement of the fund and the Advisor.

The Advisor contractually agreed to waive its advisory fee on International Value Fund and Small Cap Opportunities Fund so that the amount retained by the Advisor after payment of the subadvisory fees for each fund does not exceed 0.45% of the fund’s average net assets. The expense reimbursement shall continue in effect until December 31, 2014 and may terminate any time thereafter.

The Advisor has voluntarily agreed to reduce its management fee and/or make payment to Short Term Government Income Fund in an amount equal to the amount by which certain expenses of the fund exceed 0.15% of the average annual net assets of the fund excluding expenses such as advisory fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business, Rule 12b-1 fees, transfer agency and service fees, blue sky fees, printing and postage, acquired fund fees, and short dividend expense. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund. Prior to January 1, 2014, The Advisor had contractually agreed to reimburse Short Term Government Income Fund for “other” fund expenses exceeding 0.08% of the fund’s average net assets.

333

 


FEES AND TRANSACTIONS WITH AFFILIATES, CONTINUED

For Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio and Lifestyle II Moderate Portfolio the Advisor has contractually agreed to waive all or a portion of its management fee and/or reimburse or pay operation expenses of each fund in an amount equal to the amount by which the expenses of the fund exceed 0.10% of the average annual net assets, excluding taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the funds’ business, acquired fund fees and expenses paid indirectly, short dividend expense, management fees, Rule 12b-1 fees, transfer agent and service fees, blue sky fees, and printing and postage. This expense limitation shall continue in effect until December 31, 2014, unless renewed by mutual agreement of the funds and the Advisor.

In addition, for Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio and Lifestyle II Moderate Portfolio, the Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to Class R6 shares of the funds in an amount equal to the amount by which the expenses of the share class exceed 0.10% of the average annual net assets, excluding fund level expenses such as advisory fees, acquired fund fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expense not incurred in the ordinary course of business and short dividend expense. This expense limitation shall continue in effect until December 31, 2014, unless renewed by mutual agreement of the funds and the Advisor.

The Advisor voluntarily agreed to waive its advisory fee on Strategic Equity Allocation Fund so that the amount retained by the Advisor after payment of the subadvisory fees for the fund does not exceed 0.45% of the fund’s average net assets. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

The Advisor has voluntarily agreed to waive and/or reimburse operating expenses for Class A shares on Global Equity Fund, excluding certain expenses such as taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the fund’s business. The fee waivers and/or reimbursements are such that the expenses will not exceed 1.35% for Class A shares. This voluntary expense reimbursement may be terminated at any time by the Advisor on notice to the fund.

The Advisor voluntarily agreed to waive a portion of its advisory fees for the funds sub-advised by T. Rowe Price Associates, Inc. which include Blue Chip Growth Fund, Capital Appreciation Value Fund, Equity-Income Fund, Health Sciences Fund, Mid Value Fund, Real Estate Equity Fund, Science & Technology Fund, Small Company Value Fund and Spectrum Income Fund. This voluntary waiver is the amount that the subadvisory fee is reduced by T. Rowe Price Associates, Inc. This voluntary expense reimbursement may terminate at any time.

The Advisor voluntarily agreed to waive a portion of its advisory fees for the funds sub-advised by Deutsche Investment Management Americas, Inc. which include Global Real Estate Fund and Real Estate Securities Fund. This voluntary waiver is the amount that the subadvisory fee is reduced by Deutsche Investment Management Americas, Inc. This voluntary expense reimbursement may terminate at any time.

The Advisor voluntarily agreed to reduce its advisory fees that would be payable by the Alpha Opportunities Fund (after giving effect to asset-based break-points) 0.03%, of the fund’s average daily net assets. The Advisor may terminate this voluntary waiver at any time upon notice to the fund.

The Advisor voluntarily agreed to reduce its advisory fees that would be payable by the Total Return Fund (after giving effect to asset-based break-points) 0.02%, of the fund’s average daily net assets. The Advisor may terminate this voluntary waiver at any time upon notice to the fund.

The Advisor has voluntarily agreed to waive its advisory fee for Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio and Lifestyle II Moderate Portfolio so that the aggregate advisory fee retained by the Advisor with respect to both the funds and their underlying investments (after payment of subadvisory fees) does not exceed 0.50% of the funds’ first $7.5 billion of average net assets and 0.49% of the funds’ average net assets in excess of $7.5 billion. This voluntary waiver may be terminated at any time by the Advisor on notice to the Trust.

For the year ended August 31, 2014, the waivers under these agreements amounted to:

Fund Class A Class I Class R6 Class 1 Class NAV Total
Active Bond Fund — — — $5,285 $106,326 $111,611
All Cap Core Fund — — — — 42,253 42,253
Alpha Opportunities Fund — — — — 614,139 614,139
Asia Pacific Total Return Bond Fund — — — — 48,623 48,623
Blue Chip Growth Fund — — — 305,424 636,317 941,741
Capital Appreciation Fund — — — 36,321 103,149 139,470
Capital Appreciation Value Fund — — — — 738,673 738,673
Core Bond Fund — — — 5,447 28,837 34,284
Equity-Income Fund — — — 134,965 527,411 662,376
Fundamental Global Franchise Fund $8 $36 — — 27,523 27,567
Global Bond Fund — — — 4,468 33,358 37,826
Global Equity Fund 29 141 — — 25,425 25,595
Global Real Estate Fund — — — — 20,853 20,853
Health Sciences Fund — — — — 329,193 329,193
High Yield Fund — — — 31,113 39,318 70,431
International Growth Opportunities Fund — — — — 50,297 50,297
International Growth Stock Fund — — — — 44,111 44,111
International Small Cap Fund — — — 7,537 36,350 43,887
International Value Fund — — — 17,891 111,497 129,388
Investment Quality Bond Fund — — — 3,715 24,502 28,217
Lifestyle II Aggressive Portfolio — — 7,018 52,664 — 59,682
Lifestyle II Balanced Portfolio — — 4,340 55,103 — 59,443
Lifestyle II Conservative Portfolio — — 12,953 46,893 — 59,846
Lifestyle II Growth Portfolio — — 4,027 55,404 — 59,431
Lifestyle II Moderate Portfolio — — 11,006 48,755 — 59,761

 

334

 


FEES AND TRANSACTIONS WITH AFFILIATES, CONTINUED

Fund Class A Class I Class R6 Class 1 Class NAV Total
Mid Cap Stock Fund — — — $22,891 $80,457 $103,348
Mid Value Fund — — — — 574,092 574,092
Real Estate Equity Fund — — — — 111,657 111,657
Real Estate Securities Fund — — — 32,864 — 32,864
Real Return Bond Fund — — — 6,805 28,243 35,048
Science & Technology Fund — — — — 408,888 408,888
Short Term Government Income Fund — — — — 14,793 14,793
Small Cap Growth Fund — — — — 14,440 14,440
Small Cap Opportunities Fund — — — 73,042 115,622 188,664
Small Company Growth Fund — — — — 12,045 12,045
Small Company Value Fund — — — 72,377 175,685 248,062
Spectrum Income Fund — — — — 337,842 337,842
Strategic Equity Allocation Fund — — — — 7,283,872 7,283,872
Total Return Fund — — — 87,667 586,844 674,511
U.S. High Yield Bond Fund — — — 5,924 35,377 41,301
Value Fund — — — — 25,155 25,155

 

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that a fund is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

  Amount Eligible Amount Eligible Amount Eligible Amount recovered
  for recovery for recovery for recovery during the year
Fund through 8-1-15 through 8-1-16 through 8-1-17 ended 8-31-14
Asia Pacific Total Return Bond Fund — $55,722 $21,286 $12,120
Global Equity Fund — — 9 2
Short Term Government Income Fund — — — 5,309

 

Amount recovered by class    
Fund Class A Class NAV
Asia Pacific Total Return Bond Fund — $12,120
Global Equity Fund $2 —
Short Term Government Income Fund — 5,309

 

Effective October 1, 2014, the expense recapture program has been terminated.

The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of the funds’ average daily net assets as follows:

Fund Annual Effective Rate Fund Annual Effective Rate
Active Bond Fund 0.59% Lifestyle II Balanced Portfolio 0.00%
All Cap Core Fund 0.77% Lifestyle II Conservative Portfolio 0.00%
Alpha Opportunities Fund 0.93% Lifestyle II Growth Portfolio 0.00%
Asia Pacific Total Return Bond Fund 0.70% Lifestyle II Moderate Portfolio 0.00%
Blue Chip Growth Fund 0.74% Mid Cap Stock Fund 0.83%
Capital Appreciation Fund 0.69% Mid Value Fund 0.94%
Capital Appreciation Value Fund 0.77% Real Estate Equity Fund 0.83%
Core Bond Fund 0.58% Real Estate Securities Fund 0.69%
Equity-Income Fund 0.74% Real Return Bond Fund 0.69%
Fundamental Global Franchise Fund 0.79% Science & Technology Fund 0.98%
Global Bond Fund 0.69% Short Term Government Income Fund 0.55%
Global Equity Fund 0.82% Small Cap Growth Fund 1.05%
Global Real Estate Fund 0.89% Small Cap Opportunities Fund 0.90%
Health Sciences Fund 0.94% Small Company Growth Fund 0.99%
High Yield Fund 0.66% Small Company Value Fund 0.97%
International Growth Opportunities Fund 0.81% Spectrum Income Fund 0.70%
International Growth Stock Fund 0.78% Strategic Equity Allocation Fund 0.49%
International Small Cap Fund 0.95% Total Return Fund 0.65%
International Value Fund 0.79% U.S. High Yield Bond Fund 0.72%
Investment Quality Bond Fund 0.58% Value Fund 0.69%
Lifestyle II Aggressive Portfolio 0.00%    

Accounting and legal services. Pursuant to a service agreement, the funds reimburse the Advisor for all expenses associated with providing the administrative, finan-cial, legal, accounting and recordkeeping services to the funds, 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 August 31, 2014 amounted to an annual rate of 0.01% of the fund’s average daily net assets for all funds, except Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio and Lifestyle Growth II Portfolio, which amounted to an annual rate of 0.02% of the fund’s average daily net assets.

335

 


FEES AND TRANSACTIONS WITH AFFILIATES, CONTINUED

Distribution and service plans. The funds have a distribution agreement with the Distributor. The funds have adopted distribution and service plans with respect to Class A and Class 1 pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the funds. The funds pay 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 funds’ shares.

Class Rule 12b-1 Fee
Class A 0.30%
Class 1 0.05%

Sales charges. Class A shares of Fundamental Global Franchise Fund and Global Equity Fund are assessed up-front sales charges, which resulted in payments to the Distributor. For the year ended August 31, 2014 no sales charges were assessed.

Class A shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, there were no CDSCs received by the Distributor for Class A shares.

Transfer agent fees. Fundamental Global Franchise Fund, Global Equity Fund, Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio and Lifestyle II Moderate Portfolio have a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the funds and to all other John Hancock affiliated funds. 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.

Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

        State  
    Distribution and Transfer Registration Printing and
Fund Class Service Fees Agent Fees fees postage
Fundamental Global Franchise Fund          
  Class A $388 $174 — $110
  Class I — 649 — 14
  Total $388 $823 — $124
Global Equity Fund          
  Class A $332 $149 — —
  Class I — 2,546 — —
  Total $332 $2,695 — —
Lifestyle II Aggressive Portfolio          
  Class R6 — $13 $561 $211
  Total — $13 $561 $211
Lifestyle II Balanced Portfolio          
  Class R6 — $13 $561 $211
  Total — $13 $561 $211
Lifestyle II Conservative Portfolio          
  Class R6 — $13 $561 $211
  Total — $13 $561 $211
Lifestyle II Growth Portfolio          
  Class R6 — $13 $561 $211
  Total — $13 $561 $211
Lifestyle II Moderate Portfolio          
  Class R6 — $13 $561 $211
  Total — $13 $561 $211

Trustee expenses. The Trust compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

Interfund Lending Program: Pursuant to an Exemptive Order issued by the SEC, the funds, along with certain other funds advised by the Advisor, may be allowed to participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans at period end are presented under the caption Payable for interfund lending in the respective fund’s Statement of assets and liabilities. At period end, no interfund loans were outstanding. The funds’ activity in this program during the period for which loans were outstanding was as follows:

    Weighted Average Days Weighted Average Interest Income/
Fund Borrower or Lender Loan Balance Outstanding Interest Rate (Expense)
Blue Chip Growth Fund Borrower $10,454,973 1 0.43% ($125)
Capital Appreciation Fund Borrower 14,459,987 13 0.44% (2,309)
Fundamental Global Franchise Fund Lender 10,276,465 1 0.44% 126
High Yield Fund Borrower 18,267,943 1 0.45% (228)
Strategic Equity Allocation Fund Lender 18,690,695 6 0.45% 1,390

 

336

 


6. FUND SHARE TRANSACTIONS Transactions in fund shares for the years ended August 31, 2014 and August 31, 2013 were as follows:

Active Bond Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 3,395,725 $34,874,606 2,111,859 $22,160,598
Distributions reinvested 327,995 3,328,533 284,212 2,946,190
Repurchased (1,093,596) (11,117,264) (1,481,122) (15,335,262)
Net increase 2,630,124 $27,085,875 914,949 $9,771,526
Class NAV shares        
Sold 3,604,111 $36,658,696 25,593,562 $263,665,693
Distributions reinvested 7,049,787 71,385,415 6,415,119 66,464,950
Repurchased (27,452,875) (280,251,470) (11,644,909) (121,287,032)
Net increase (decrease) (16,798,977) ($172,207,359) 20,363,772 $208,843,611
Total net increase (decrease) (14,168,853) ($145,121,484) 21,278,721 $218,615,137
 
All Cap Core Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 4,623,229 $63,866,308 386,873 $4,561,268
Distributions reinvested 576,396 7,493,145 757,798 7,502,202
Repurchased — — (7,039,305) (74,966,405)
Net increase (decrease) 5,199,625 $71,359,453 (5,894,634) ($62,902,935)
 
Alpha Opportunities Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 16,294,767 $219,858,112 5,118,433 $62,643,666
Distributions reinvested 15,909,194 199,819,482 6,501,975 69,246,032
Repurchased (4,991,954) (66,034,048) (13,019,396) (145,835,802)
Net increase (decrease) 27,212,007 $353,643,546 (1,398,988) ($13,946,104)
 
Asia Pacific Total Return Bond Fund Year ended 8/31/14 Period ended 8/31/131
  Shares Amount Shares Amount
Class NAV shares        
Sold 581,167 $5,509,153 43,971,659 $437,954,226
Distributions reinvested 1,707,868 15,575,759 — —
Repurchased — — (273,145) (2,548,462)
Net increase 2,289,035 $21,084,912 43,698,514 $435,405,764
 
1 Period from 1-16-13 (commencement of operations) to 8-31-13.      
 
Blue Chip Growth Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 2,119,288 $70,408,415 1,468,068 $37,946,623
Distributions reinvested 558,892 18,717,294 65,607 1,604,735
Repurchased (2,215,761) (73,820,499) (2,494,614) (64,512,209)
Net increase (decrease) 462,419 $15,305,210 (960,939) ($24,960,851)
Class NAV shares        
Sold 3,932,489 $128,524,116 1,752,877 $43,406,430
Distributions reinvested 1,135,871 38,017,618 198,367 4,846,096
Repurchased (7,529,017) (248,821,905) (12,702,618) (347,403,881)
Net decrease (2,460,657) ($82,280,171) (10,751,374) ($299,151,355)
Total net decrease (1,998,238) ($66,974,961) (11,712,313) ($324,112,206)
 
Capital Appreciation Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 1,122,344 $19,145,093 4,345,394 $60,007,104
Distributions reinvested 1,867,786 31,416,166 96,684 1,259,790
Repurchased (4,511,567) (76,529,939) (4,888,807) (67,065,222)
Net decrease (1,521,437) ($25,968,680) (446,729) ($5,798,328)
Class NAV shares        
Sold 13,597,167 $225,636,981 4,197,523 $56,500,980
Distributions reinvested 5,065,995 85,260,692 370,157 4,826,845
Repurchased (14,701,959) (252,307,904) (20,782,991) (299,389,917)
Net increase (decrease) 3,961,203 $58,589,769 (16,215,311) ($238,062,092)
Total net increase (decrease) 2,439,766 $32,621,089 (16,662,040) ($243,860,420)

 

337

 


FUND SHARE TRANSACTIONS, CONTINUED

Capital Appreciation Value Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 3,581,972 $44,346,292 2,117,213 $24,465,517
Distributions reinvested 20,333,532 236,682,318 8,835,758 97,458,405
Repurchased (10,072,663) (128,698,381) (42,350,373) (511,551,052)
Net increase (decrease) 13,842,841 $152,330,229 (31,397,402) ($389,627,130)
 
Core Bond Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 1,186,484 $15,273,647 2,012,905 $26,761,424
Distributions reinvested 151,145 1,918,994 356,748 4,683,929
Repurchased (842,779) (10,759,861) (1,329,236) (17,345,557)
Net increase 494,850 $6,432,780 1,040,417 $14,099,796
Class NAV shares        
Sold 772,067 $9,807,325 3,769,793 $50,264,009
Distributions reinvested 836,805 10,604,542 2,476,855 32,484,843
Repurchased (6,123,706) (78,982,134) (10,985,329) (140,284,616)
Net decrease (4,514,834) ($58,570,267) (4,738,681) ($57,535,764)
Total net decrease (4,019,984) ($52,137,487) (3,698,264) ($43,435,968)
 
Equity-Income Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 903,383 $18,171,230 1,166,665 $20,550,026
Distributions reinvested 524,216 10,437,142 354,126 5,676,642
Repurchased (2,165,467) (43,762,990) (1,541,084) (26,150,395)
Net decrease (737,868) ($15,154,618) (20,293) $76,273
Class NAV shares        
Sold 16,999,858 $349,985,836 701,244 $11,433,332
Distributions reinvested 2,012,419 40,047,132 1,555,814 24,924,135
Repurchased (3,181,029) (63,968,283) (16,548,657) (292,236,563)
Net increase (decrease) 15,831,248 $326,064,685 (14,291,599) ($255,879,096)
Total net increase (decrease) 15,093,380 $310,910,067 (14,311,892) ($255,802,823)
 
Fundamental Global Franchise Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class I shares        
Sold 21,588 $275,641 20,633 $244,094
Distributions reinvested 1,139 14,570 — —
Net increase 22,727 $290,211 20,633 $244,094
Class NAV shares        
Sold 2,297,305 $29,633,534 652,327 $7,565,238
Distributions reinvested 1,777,668 22,736,377 213,433 2,337,088
Repurchased (3,509,157) (45,792,183) (2,424,830) (28,899,015)
Net increase (decrease) 565,816 $6,577,728 (1,559,070) ($18,996,689)
Total net increase (decrease) 588,543 $6,867,939 (1,538,437) ($18,752,595)
 
There were no fund shares transactions for Class A shares for the years ended 8-31-14 and 8-31-13.    
 
Global Bond Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 455,777 $5,614,647 516,678 $6,581,742
Distributions reinvested — — 215,444 2,729,673
Repurchased (1,260,253) (15,363,838) (1,662,197) (20,500,647)
Net decrease (804,476) ($9,749,191) (930,075) ($11,189,232)
Class NAV shares        
Sold 2,392,553 $29,060,174 7,702,540 $95,971,221
Distributions reinvested — — 1,590,524 20,104,227
Repurchased (2,830,175) (34,445,532) (17,175,639) (207,592,730)
Net decrease (437,622) ($5,385,358) (7,882,575) ($91,517,282)
Total net decrease (1,242,098) ($15,134,549) (8,812,650) ($102,706,514)

 

338

 


FUND SHARE TRANSACTIONS, CONTINUED

Global Equity Fund Year ended 8/31/14 Period ended 8/31/131
  Shares Amount Shares Amount
Class A shares        
Sold — — 10,000 $100,000
Net increase — — 10,000 $100,000
Class I shares        
Sold 185,641 $2,056,099 113,710 $1,172,365
Distributions reinvested 1,199 13,090 — —
Repurchased (34,935) (395,811) — —
Net increase 151,905 $1,673,378 113,710 $1,172,365
Class NAV shares        
Sold 8,937,655 $101,556,927 33,023,119 $324,226,745
Distributions reinvested 432,047 4,717,952 — —
Repurchased (1,210,178) (13,423,194) — —
Net increase 8,159,524 $92,851,685 33,023,119 $324,226,745
Total net increase 8,311,429 $94,525,063 33,146,829 $325,499,110
 
1 Period from 5-16-13 (commencement of operations) to 8-31-13.      
 
Global Real Estate Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 3,151,071 $26,968,809 3,788,067 $32,468,371
Distributions reinvested 1,508,575 12,325,059 2,174,293 17,850,946
Repurchased (4,661,110) (41,660,478) (32,539,487) (278,592,308)
Net decrease (1,464) ($2,366,610) (26,577,127) ($228,272,991)
 
Health Sciences Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 45,816 $830,439 1,156,115 $16,070,753
Distributions reinvested 5,910,154 99,704,308 1,202,343 16,375,908
Repurchased (6,019,962) (113,088,124) (6,383,432) (100,515,078)
Net decrease (63,992) ($12,553,377) (4,024,974) ($68,068,417)
 
High Yield Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 5,761,771 $54,980,698 11,932,843 $113,151,055
Distributions reinvested 3,365,142 31,839,936 3,141,518 29,008,649
Repurchased (5,586,323) (53,080,753) (6,657,957) (62,543,551)
Net increase 3,540,590 $33,739,881 8,416,404 $79,616,153
Class NAV shares        
Sold 3,296,998 $31,106,793 6,343,984 $58,862,637
Distributions reinvested 4,424,680 41,433,939 4,633,549 42,424,819
Repurchased (30,893,730) (294,942,748) (3,411,188) (31,529,010)
Net increase (decrease) (23,172,052) ($222,402,016) 7,566,345 $69,758,446
Total net increase (decrease) (19,631,462) ($188,662,135) 15,982,749 $149,374,599
 
International Growth Opportunities Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 9,846,045 $136,663,945 2,486,929 $29,274,476
Distributions reinvested 1,087,406 15,017,079 162,868 1,832,260
Repurchased (1,560,720) (22,118,286) (13,423) (161,690)
Net increase 9,372,731 $129,562,738 2,636,374 $30,945,046
Total net increase 9,372,731 $129,562,738 2,636,374 $30,945,046
 
International Growth Stock Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 1,310,034 $17,380,492 12,446,037 $143,310,061
Distributions reinvested 834,691 11,051,305 426,627 4,872,079
Repurchased (5,699,047) (77,776,709) (176,580) (2,039,129)
Net increase (decrease) (3,554,322) ($49,344,912) 12,696,084 $146,143,011

 

339

 


FUND SHARE TRANSACTIONS, CONTINUED

International Small Cap Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 420,134 $7,921,207 597,691 $9,606,714
Distributions reinvested 92,350 1,699,241 109,736 1,696,515
Repurchased (1,044,074) (19,731,262) (1,147,807) (18,366,341)
Net decrease (531,590) ($10,110,814) (440,380) ($7,063,112)
Class NAV shares        
Sold 1,145,898 $21,824,136 13,174,897 $219,471,737
Distributions reinvested 460,102 8,465,869 284,607 4,397,182
Repurchased (2,118,385) (40,272,995) (658,206) (9,906,066)
Net increase (decrease) (512,385) ($9,982,990) 12,801,298 $213,962,853
Total net increase (decrease) (1,043,975) ($20,093,804) 12,360,918 $206,899,741
 
International Value Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 1,056,025 $18,460,591 1,112,447 $16,387,869
Distributions reinvested 241,933 4,197,533 371,780 5,305,304
Repurchased (1,731,983) (30,354,776) (2,735,593) (39,489,334)
Net decrease (434,025) ($7,696,652) (1,251,366) ($17,796,161)
Class NAV shares        
Sold 10,866,442 $188,718,890 9,468,487 $139,955,499
Distributions reinvested 1,540,092 26,643,592 1,953,277 27,795,127
Repurchased (6,279,575) (112,233,377) (4,993,623) (71,612,776)
Net increase 6,126,959 $103,129,105 6,428,141 $96,137,850
Total net increase 5,692,934 $95,432,453 5,176,775 $78,341,689
 
Investment Quality Bond Fund Year ended8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 489,432 $6,079,185 866,320 $11,277,498
Distributions reinvested 174,753 2,145,786 326,459 4,183,633
Repurchased (1,379,585) (17,028,046) (2,531,215) (32,322,247)
Net decrease (715,400) ($8,803,075) (1,338,436) ($16,861,116)
Class NAV shares        
Sold 1,091,465 $13,513,901 2,983,016 $38,505,176
Distributions reinvested 1,156,885 14,187,299 1,525,051 19,493,397
Repurchased (3,294,852) (40,859,032) (1,282,570) (16,086,192)
Net increase (decrease) (1,046,502) ($13,157,832) 3,225,497 $41,912,381
Total net increase (decrease) (1,761,902) ($21,960,907) 1,887,061 $25,051,265
 
Lifestyle II Aggressive Portfolio Period ended 8/31/141    
  Shares Amount    
  
Class R6 Shares        
Sold 10,000 $100,000    
Net Increase 10,000 $100,000    
  
Class 1 shares        
Sold 442,369 $4,654,687    
Repurchased (2,071) (22,052)    
Net increase 440,298 $4,632,635    
  
Total net increase 450,298 $4,732,635    
 
1 Period from 12-30-13 (commencement of operations) to 8-31-14.      
 
Lifestyle II Balanced Portfolio Period ended 8/31/141    
  Shares Amount    
Class R6 Shares        
Sold 10,000 $100,000    
Net Increase 10,000 $100,000    
  
Class 1 shares        
Sold 825,807 $8,681,964    
Distributions reinvested 151 1,590    
Repurchased (14) (150)    
Net increase 825,944 $8,683,404    
  
Total net increase 835,944 $8,783,404    
 
1 Period from 12-30-13 (commencement of operations) to 8-31-14.      

 

340

 


FUND SHARE TRANSACTIONS, CONTINUED

Lifestyle II Conservative Portfolio Period ended 8/31/141    
  Shares Amount    
  
Class R6 Shares        
Sold 10,000 $100,000    
Net Increase 10,000 $100,000    
  
Class 1 shares        
Sold 230,868 $2,400,940    
Distributions reinvested 95 986    
Repurchased (16,003) (167,719)    
Net increase 214,960 $2,234,207    
  
Total net increase 224,960 $2,334,207    
 
1 Period from 12-30-13 (commencement of operations) to 8-31-14.      
 
Lifestyle II Growth Portfolio Period ended 8/31/141    
  Shares Amount    
  
Class R6 Shares        
Sold 10,000 $100,000    
Net Increase 10,000 $100,000    
  
Class 1 shares        
Sold 982,428 $10,341,969    
Repurchased (39,699) (423,010)    
Net increase 942,729 $9,918,959    
  
Total net increase 952,729 $10,018,959    
 
1 Period from 12-30-13 (commencement of operations) to 8-31-14.      
 
Lifestyle II Moderate Portfolio Period ended 8/31/141    
  Shares Amount    
  
Class R6 Shares        
Sold 10,000 $100,000    
Net Increase 10,000 $100,000    
  
Class 1 shares        
Sold 195,216 $2,036,071    
Distributions reinvested 98 1,025    
Repurchased (2,732) (28,347)    
Net increase 192,582 $2,008,749    
  
Total net increase 202,582 $2,108,749    
 
1 Period from 12-30-13 (commencement of operations) to 8-31-14.      
 
Mid Cap Stock Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 695,434 $15,392,008 788,808 $15,407,977
Distributions reinvested 1,961,357 41,365,017 644,229 11,396,409
Repurchased (2,476,128) (53,876,629) (3,239,881) (60,803,078)
Net increase (decrease) 180,663 $2,880,396 (1,806,844) ($33,998,692)
Class NAV shares        
Sold 3,425,308 $72,757,915 15,449,613 $333,110,441
Distributions reinvested 6,785,239 143,847,071 1,493,838 26,530,570
Repurchased (4,955,870) (110,522,827) (2,421,198) (44,626,460)
Net increase 5,254,677 $106,082,159 14,522,253 $315,014,551
Total net increase 5,435,340 $108,962,555 12,715,409 $281,015,859
 
Mid Value Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 8,504,462 $137,706,170 8,218,569 $124,638,186
Distributions reinvested 2,287,420 37,101,950 2,594,590 33,729,663
Repurchased (3,958,446) (67,946,472) (3,918,677) (53,772,484)
Net increase 6,833,436 $106,861,648 6,894,482 $104,595,365
 
Real Estate Equity Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 2,304,209 $22,911,589 3,019,159 $28,997,465
Distributions reinvested 387,430 3,727,077 278,953 2,633,312
Repurchased (2,924,772) (31,240,925) (2,042,503) (20,450,158)
Net increase (decrease) (233,133) ($4,602,259) 1,255,609 $11,180,619

 

341

 


FUND SHARE TRANSACTIONS, CONTINUED

Real Estate Securities Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 2,837,676 $39,355,334 2,867,990 $42,570,059
Distributions reinvested 4,632,074 55,955,458 4,175,922 57,084,851
Repurchased (6,684,856) (90,919,071) (5,753,045) (83,387,403)
Net increase 784,894 $4,391,721 1,290,867 $16,267,507
 
Real Return Bond Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 646,880 $7,617,660 841,864 $11,029,910
Distributions reinvested 210,684 2,477,528 702,195 8,890,672
Repurchased (2,883,527) (33,516,234) (3,972,870) (49,061,682)
Net decrease (2,025,963) ($23,421,046) (2,428,811) ($29,141,100)
Class NAV shares        
Sold 3,354,825 $38,232,619 7,248,317 $90,500,627
Distributions reinvested 911,741 10,601,690 2,227,831 27,820,712
Repurchased (3,966,440) (45,922,711) (10,389,870) (123,533,950)
Net increase (decrease) 300,126 $2,911,598 (913,722) ($5,212,611)
Total net decrease (1,725,837) ($20,509,448) (3,342,533) ($34,353,711)
 
Science & Technology Fund Year ended 8/31/14 Period ended 8/31/131
  Shares Amount Shares Amount
Class NAV shares        
Sold 2,679,227 $34,334,248 77,750,621 $819,508,213
Distributions reinvested 1,541,274 19,774,549 — —
Repurchased (11,426,651) (150,572,176) — —
Net increase (decrease) (7,206,150) ($96,463,379) 77,750,621 $819,508,213
 
1 Period from 2-14-13 (commencement of operations) to 8-31-13.      
 
Short Term Government Income Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 2,233,561 $21,881,847 5,046,441 $50,505,454
Distributions reinvested 318,538 3,112,504 341,659 3,395,114
Repurchased (2,049,967) (20,051,019) (893,627) (8,798,130)
Net increase 502,132 $4,943,332 4,494,473 $45,102,438
 
Small Cap Growth Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 2,517,575 $26,357,483 6,244,376 $63,014,499
Distributions reinvested 2,039,077 21,614,213 1,092,579 8,882,671
Repurchased (3,479,781) (38,072,257) (2,750,775) (25,604,370)
Net increase 1,076,871 $9,899,439 4,586,180 $46,292,800
 
Small Cap Opportunities Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 333,655 $10,145,617 409,927 $11,008,186
Distributions reinvested 235,217 7,082,387 47,369 1,122,649
Repurchased (522,470) (15,797,966) (443,397) (11,100,874)
Net increase 46,402 $1,430,038 13,899 $1,029,961
Class NAV shares        
Sold 563,277 $17,099,196 57,003 $1,467,291
Distributions reinvested 371,263 11,126,753 94,118 2,220,244
Repurchased (383,169) (11,747,999) (635,778) (16,191,583)
Net increase (decrease) 551,371 $16,477,950 (484,657) ($12,504,048)
Total net increase (decrease) 597,773 $17,907,988 (470,758) ($11,474,087)
 
Small Company Growth Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 866,721 $17,567,509 3,207,478 $58,714,360
Distributions reinvested 419,290 8,436,114 229,253 3,447,959
Repurchased (1,280,876) (25,954,773) (948,203) (15,473,840)
Net increase 5,135 $48,850 2,488,528 $46,688,479

 

342

 


FUND SHARE TRANSACTIONS, CONTINUED

Small Company Value Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 92,628 $3,414,138 182,692 $5,677,519
Distributions reinvested 21,717 813,308 75,427 2,160,242
Repurchased (748,264) (27,499,412) (695,226) (21,150,027)
Net decrease (633,919) ($23,271,966) (437,107) ($13,312,266)
Class NAV shares        
Sold 1,487,554 $54,097,482 289,000 $8,793,595
Distributions reinvested 55,024 2,058,980 152,576 4,365,207
Repurchased (1,219,021) (45,272,416) (1,108,467) (33,597,410)
Net increase (decrease) 323,557 $10,884,046 (666,891) ($20,438,608)
Total net decrease (310,362) ($12,387,920) (1,103,998) ($33,750,874)
 
Spectrum Income Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 2,870,365 $31,555,610 5,938,579 $66,443,850
Distributions reinvested 5,399,093 58,912,792 3,456,283 38,161,254
Repurchased (17,283,814) (193,102,071) (10,239,916) (114,342,349)
Net decrease (9,014,356) ($102,633,669) (845,054) ($9,737,245)
 
Strategic Equity Allocation Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 77,681,064 $1,014,613,230 79,323,802 $861,422,264
Distributions reinvested 11,939,834 153,665,661 4,274,053 44,963,037
Repurchased (37,763,056) (499,472,520) (16,921,507) (184,373,047)
Net increase 51,857,842 $668,806,371 66,676,348 $722,012,254
 
Total Return Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 916,273 $12,713,964 2,398,110 $34,703,732
Distributions reinvested 799,484 10,983,512 1,507,860 21,582,878
Repurchased (4,825,811) (66,868,649) (5,942,584) (84,005,345)
Net decrease (3,110,054) ($43,171,173) (2,036,614) ($27,718,735)
Class NAV shares        
Sold 10,966,348 $151,268,258 28,222,967 $398,418,124
Distributions reinvested 5,417,666 74,177,591 7,701,442 109,823,633
Repurchased (23,108,624) (318,983,775) (11,922,005) (168,457,440)
Net increase (decrease) (6,724,610) ($93,537,926) 24,002,404 $339,784,317
Total net increase (decrease) (9,834,664) ($136,709,099) 21,965,790 $312,065,582
 
U.S. High Yield Bond Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class 1 shares        
Sold 1,223,443 $15,316,020 1,240,005 $15,912,324
Distributions reinvested 618,089 7,634,468 574,275 7,249,958
Repurchased (1,656,180) (20,696,337) (1,850,923) (23,573,213)
Net increase (decrease) 185,352 $2,254,151 (36,643) ($410,931)
Class NAV shares        
Sold 1,845,540 $23,050,830 2,774,328 $35,478,944
Distributions reinvested 3,782,508 46,653,058 3,453,586 43,547,538
Repurchased (22,945,996) (288,926,235) (1,775,331) (22,399,983)
Net increase (decrease) (17,317,948) ($219,222,347) 4,452,583 $56,626,499
Total net increase (decrease) (17,132,596) ($216,968,196) 4,415,940 $56,215,568
 
Value Fund Year ended 8/31/14 Year ended 8/31/13
  Shares Amount Shares Amount
Class NAV shares        
Sold 4,848,855 $57,922,395 12,716,361 $143,867,984
Distributions reinvested 1,945,730 22,667,758 2,051,297 18,995,013
Repurchased (1,955,069) (24,089,364) (1,414,321) (14,427,073)
Net increase 4,839,516 $56,500,789 13,353,337 $148,435,924
Total net increase 4,839,516 $56,500,789 13,353,337 $148,435,924

 

Affiliates of the Trust owned shares of beneficial interest in the following funds on August 31, 2014:
 
Fund Class % of Class
Fundamental Global Franchise Fund Class A 100%
Fundamental Global Franchise Fund Class I 19%
Global Equity Fund Class A 100%
Global Equity Fund Class I 4%
Lifestyle II Aggressive Portfolio Class 1 2%
Lifestyle II Aggressive Portfolio Class R6 100%
Lifestyle II Growth Portfolio Class 1 1%
Lifestyle II Growth Portfolio Class R6 100%
Lifestyle II Conservative Portfolio Class 1 4%

 

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FUND SHARE TRANSACTIONS, CONTINUED

Fund Class % of Class
Lifestyle II Conservative Portfolio Class R6 100%
Lifestyle II Balanced Portfolio Class 1 1%
Lifestyle II Balanced Portfolio Class R6 100%
Lifestyle II Moderate Portfolio Class 1 5%
Lifestyle II Moderate Portfolio Class R6 100%

7. PURCHASE AND SALE OF SECURITIES Purchases and sales of securities, other than short-term investments and U.S. Treasury obligations, are aggregated below for the year ended August 31, 2014. In addition, the purchases and sales of U.S. Treasury obligations are aggregated below for the year ended August 31, 2014.

  PURCHASES SALES AND MATURITIES
  U.S. GOVERNMENT OTHER ISSUERS U.S. GOVERNMENT OTHER ISSUERS
Active Bond Fund $535,903,087 $843,831,810 $573,073,565 $795,059,278
All Cap Core Fund — 1,652,922,412 — 1,590,967,624
Alpha Opportunities Fund — 1,975,874,391 — 1,793,215,667
Asia Pacific Total Return Bond Fund — 147,735,951 — 123,368,060
Blue Chip Growth Fund — 843,138,649 — 977,653,916
Capital Appreciation Fund — 962,255,132 — 1,070,294,968
Capital Appreciation Value Fund 103,432,716 989,630,614 75,223,712 1,211,209,596
Core Bond Fund 1,285,725,902 627,124,797 1,218,996,914 761,074,430
Equity-Income Fund — 477,175,296 — 276,179,859
Fundamental Global Franchise Fund — 53,577,150 — 85,673,103
Global Bond Fund 71,800,811 465,736,674 65,807,133 449,687,693
Global Equity Fund — 305,341,423 — 272,048,340
Global Real Estate Fund — 310,173,394 — 315,991,112
Health Sciences Fund — 349,106,643 — 452,849,289
High Yield Fund 543,684 750,442,411 540,783 949,100,419
International Growth Opportunities Fund — 222,841,396 — 105,807,169
International Growth Stock Fund — 165,664,064 — 201,346,023
International Small Cap Fund — 148,049,952 — 172,185,342
International Value Fund — 706,056,035 — 532,852,647
Investment Quality Bond Fund 175,797,895 257,728,261 259,171,849 285,872,317
Lifestyle II Aggressive Portfolio — 4,748,649 — 20,129
Lifestyle II Balanced Portfolio — 8,821,041 — 43,489
Lifestyle II Conservative Portfolio — 2,529,735 — 62,475
Lifestyle II Growth Portfolio — 10,472,379 — 457,107
Lifestyle II Moderate Portfolio — 2,069,861 — 39,662
Mid Cap Stock Fund — 1,669,775,390 — 1,728,979,427
Mid Value Fund — 461,306,484 — 383,689,721
Real Estate Equity Fund — 33,824,442 — 40,544,897
Real Estate Securities Fund — 551,633,953 — 590,928,936
Real Return Bond Fund 217,740,095 75,159,929 193,671,622 42,349,224
Science & Technology Fund — 886,645,794 — 984,711,656
Short Term Government Income Fund 33,313,666 94,566,168 32,122,596 85,651,318
Small Cap Growth Fund — 220,549,083 — 229,469,940
Small Cap Opportunities Fund — 59,326,432 — 66,797,699
Small Company Growth Fund — 60,144,415 — 67,887,279
Small Company Value Fund — 79,239,220 — 92,464,602
Spectrum Income Fund 88,021,438 508,880,953 77,653,935 652,799,510
Strategic Equity Allocation Fund — 1,550,097,356 — 963,850,274
Total Return Fund 2,778,251,015 874,614,807 3,222,352,430 327,588,563
U.S. High Yield Bond Fund — 337,148,042 — 563,143,987
Value Fund — 213,573,933 — 169,436,799

8. INVESTMENT BY AFFILIATED FUNDS Certain investors in the funds are affiliated funds that are managed by the Advisor and its affiliates. The affiliated funds do not invest in the funds for the purpose of exercising management or control; however, this investment may represent a significant portion of the fund’s net assets. The following funds had an affiliate ownership of 5% or more of the funds’ net assets at August 31, 2014.

FUND   FUND  
Active Bond Fund 94.1% Fundamental Global Franchise Fund 99.8%
All Cap Core Fund 100.0% Global Bond Fund 88.8%
Alpha Opportunities Fund 100.0% Global Equity Fund 99.3%
Asia Pacific Total Return Bond Fund 100.0% Global Real Estate Fund 99.0%
Blue Chip Growth Fund 67.6% Health Sciences Fund 100.0%
Capital Appreciation Fund 65.6% High Yield Fund 47.1%
Capital Appreciation Value Fund 100.0% International Growth Opportunities Fund 100.0%
Core Bond Fund 81.7% International Growth Stock Fund 99.4%
Equity Income Fund 82.3% International Small Cap Fund 83.4%

 

344

 


INVESTMENT BY AFFILIATED FUNDS, CONTINUED

FUND   FUND  
International Value Fund 75.6% Small Cap Opportunities Fund 64.9%
Investment Quality Bond Fund 87.0% Small Company Growth Fund 100.0%
Mid Cap Stock Fund 78.6% Small Company Value Fund 71.8%
Mid Value Fund 100.0% Spectrum Income Fund 100.0%
Real Estate Equity Fund 100.0% Strategic Equity Allocation Fund 100.0%
Real Return Bond Fund 81.6% Total Return Fund 63.9%
Science & Technology Fund 100.0% U.S. High Yield Bond Fund 80.4%
Short Term Government Income Fund 100.0% Value Fund 100.0%
Small Cap Growth Fund 100.0%    

9. INVESTMENT IN AFFILIATED UNDERLYING FUNDS Lifestyle II Portfolios invest primarily in affiliated underlying funds that are managed by the Advisor and its affiliates. The funds do not invest in the affiliated underlying funds for the purpose of exercising management or control; however, the funds’ investment may represent a significant portion of each underlying fund’s net assets. For the year ended August 31, 2014, the funds did not hold 5% or more of any underlying funds’ net assets.

Information regarding the portfolios’ fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the portfolios’ from their investments in affiliated underlying funds is as follows:

          DIVIDENDS AND DISTRIBUTIONS    
 
 
  BEGINNING     ENDING INCOME CAPITAL GAINS    
  SHARE SHARES SHARES SHARE DISTRIBUTIONS DISTRIBUTIONS REALIZED ENDING
Portfolio AMOUNT PURCHASED SOLD AMOUNT RECEIVED RECEIVED GAIN (LOSS) VALUE
Lifestyle II Aggressive Portfolio                
Strategic Equity Allocation — 233,648 (928) 232,720 — — $2 $3,248,768
Lifestyle II Balanced Portfolio                
Strategic Equity Allocation — 258,285 (12) 258,273 — — $4 $3,605,496
Lifestyle II Conservative Portfolio                
Strategic Equity Allocation — 24,394 (1,730) 22,664 — — $130 $316,386
Lifestyle II Growth Portfolio                
Strategic Equity Allocation — 415,031 (16,633) 398,398 — — $506 $5,561,636
Lifestyle II Moderate Portfolio                
Strategic Equity Allocation — 41,538 (527) 41,011 — — ($56) $572,517

 

10. DIRECT PLACEMENT SECURITIES The funds may hold private placement securities which are restricted as to resale and the funds have limited rights to registration under the Securities Act of 1933. The following table summarizes the direct placement securities held at August 31, 2014.

            Value as a  
    Original   Beginning Ending percentage  
    acquisition Acquisition share share of fund’s Value as
Fund Issuer, Description date cost amount amount net assets of 8-31-14
Alpha Opportunities Fund Apigee Corp., Series H 4/17/2014 $817,436 — 280,906 0.0%* $817,436
  Bought: 280,906 shares            
Alpha Opportunities Fund Cloudera, Inc., Series F 2/5/2014 $421,963 — 28,981 0.0%* $806,483
  Bought: 28,981 shares            
Alpha Opportunities Fund ConforMIS, Inc. 8/12/2014 $471,688 — 58,961 0.0%* $471,688
  Bought: 58,961 shares            
Alpha Opportunities Fund Datalogix Holdings, Inc. 5/22/2014 $996,257 — 96,724 0.1% $996,257
  Bought: 96,724 shares            
Alpha Opportunities Fund DocuSign, Inc., Series B 2/28/2014 $21,498 — 1,637 0.0%* $20,741
  Bought: 1,637 shares            
Alpha Opportunities Fund DocuSign, Inc., Series B1 3/3/2014 $6,448 — 491 0.0%* $6,221
  Bought: 491 shares            
Alpha Opportunities Fund DocuSign, Inc., Series D 3/3/2014 $15,457 — 1,177 0.0%* $14,913
  Bought: 1,177 shares            
Alpha Opportunities Fund DocuSign, Inc., Series E 2/28/2014 $399,606 — 30,429 0.0%* $385,535
  Bought: 30,429 shares            
Alpha Opportunities Fund Dropbox, Inc., Series C 1/28/2014 $392,243 — 20,535 0.0%* $326,712
  Bought: 20,535 shares            
Alpha Opportunities Fund Essence Group Holdings Corp. 5/1/2014 $604,000 — 381,964 0.0%* $604,000
  Bought: 381,964 shares            
Alpha Opportunities Fund LendingClub Corp., Series D 4/15/2014 $372,593 — 18,316 0.0%* $372,593
  Bought: 18,316 shares            
Alpha Opportunities Fund Lithium Technology Corp. 8/18/2014 $900,574 — 184,771 0.0%* $900,574
  Bought: 184,771 shares            
Alpha Opportunities Fund Lookout, Inc., Series F 7/31/2014 $583,926 — 51,118 0.0%* $583,926
  Bought: 51,118 shares            

 

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DIRECT PLACEMENT SECURITIES, CONTINUED

            Value as a  
    Original   Beginning Ending percentage  
    acquisition Acquisition share share of fund’s Value as
Fund Issuer, Description date cost amount amount net assets of 8-31-14
Alpha Opportunities Fund New Relic, Inc., Series F 4/16/2014 $621,907 — 21,494 0.0%* $621,907
  Bought: 21,494 shares            
Alpha Opportunities Fund Nutanix, Inc. 8/25/2014 $938,478 — 70,054 0.0%* $938,478
  Bought: 70,054 shares            
Alpha Opportunities Fund Pure Storage, Inc., Series F 4/16/2014 $1,877,028 — 119,359 0.1% $1,877,028
  Bought: 119,359 shares            
Alpha Opportunities Fund The Honest Company, Inc. 8/20/2014 $525,913 — 19,437 0.0%* $525,913
  Bought: 19,437 shares            
Alpha Opportunities Fund Uber Technologies, Inc. 6/5/2014 $4,229,225 — 69,284 0.2% $4,299,225
  Bought: 69,284 shares            
Alpha Opportunities Fund Veracode, Inc. 8/26/2014 $752,670 — 40,760 0.0%* $752,670
  Bought: 40,760 shares            
Health Sciences Fund Calithera Biosciences, Inc. 10/7/2013 $161,981 — 924,549 0.0%* $161,981
  Bought: 924,549 shares            
Health Sciences Fund Diplomat Pharmacy, Inc., Series A 1/23/2014 $996,240 — 7 0.2% $996,240
  Bought: 7 shares            
Health Sciences Fund Doximity, Inc. 4/10/2014 $307,268 — 63,738 0.1% $307,268
  Bought: 63,738 shares            
Health Sciences Fund Spark Therapeutics, Inc. 5/23/2014 $151,834 — 94,307 0.0%* $151,834
  Bought: 94,307 shares            
Mid Cap Stock Fund Apigee Corp., Series H 4/17/2014 $5,464,398 — 1,877,800 0.3% $5,464,398
  Bought: 1,877,800 shares            
Mid Cap Stock Fund ConforMIS, Inc. 8/12/2014 $2,977,848 — 372,231 0.2% $2,977,848
  Bought: 372,231 shares            
Mid Cap Stock Fund Datalogix Holdings, Inc. 5/22/2014 $6,639,071 — 644,570 0.4% $6,639,071
  Bought: 644,570 shares            
Mid Cap Stock Fund DocuSign, Inc., Series B 3/7/2014 $143,642 — 10,938 0.0%* $138,534
  Bought: 10,938 shares            
Mid Cap Stock Fund DocuSign, Inc., Series B1 3/3/2014 $43,022 — 3,276 0.0%* $41,507
  Bought: 3,276 shares            
Mid Cap Stock Fund DocuSign, Inc., Series D 3/3/2014 $103,221 — 7,860 0.0%* $99,586
  Bought: 7,860 shares            
Mid Cap Stock Fund DocuSign, Inc., Series E 3/3/2014 $2,669,489 — 203,275 0.2% $2,575,494
  Bought: 203,275 shares            
Mid Cap Stock Fund Essence Group Holdings Corp. 5/1/2014 $4,074,999 — 2,576,993 0.2% $4,074,999
  Bought: 2,576,993 shares            
Mid Cap Stock Fund Lithium Technology Corp. 8/18/2014 $5,662,360 — 1,161,748 0.3% $5,662,360
  Bought: 1,161,748 shares            
Mid Cap Stock Fund Lookout, Inc., Series F 7/31/2014 $3,902,691 — 341,649 0.2% $3,902,691
  Bought: 341,649 shares            
Mid Cap Stock Fund New Relic, Inc., Series F 4/16/2014 $2,558,778 — 88,435 0.2% $2,558,778
  Bought: 88,435 shares            
Mid Cap Stock Fund Nutanix, Inc. 8/25/2014 $3,669,904 — 273,945 0.2% $3,669,904
  Bought: 273,945 shares            
Mid Cap Stock Fund One Kings Lane, Inc. 1/28/2014 $8,167,372 — 529,764 0.5% $8,073,603
  Bought: 529,764 shares            
Mid Cap Stock Fund Pure Storage, Inc., Series F 4/16/2014 $5,802,071 — 368,950 0.3% $5,802,071
  Bought: 368,950 shares            
Mid Cap Stock Fund The Honest Company, Inc. 8/20/2014 $3,317,036 — 122,593 0.2% $3,317,036
  Bought: 122,593 shares            
Mid Cap Stock Fund Uber Technologies, Inc. 6/5/2014 $16,434,339 — 264,847 1.0% $16,434,339
  Bought: 264,847 shares            
Mid Cap Stock Fund Veracode, Inc. 8/26/2014 $4,702,489 — 254,658 0.3% $4,702,489
  Bought: 254,658 shares            
Science & Technology Fund Atlassian, Inc. 4/9/2014 $95,344 — 5,959 0.0%* $95,344
  Bought: 5,959 shares            
Science & Technology Fund Atlassian, Inc., Class A 4/9/2014 $65,680 — 4,105 0.0%* $65,680
  Bought: 4,105 shares            
Science & Technology Fund Atlassian, Inc., Class A Ordinary 4/9/2014 $342,992 — 21,437 0.0%* $342,992
  Bought: 21,437 shares            

 

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            Value as a  
    Original   Beginning Ending percentage  
    acquisition Acquisition share share of fund’s Value as
Fund Issuer, Description date cost amount amount net assets of 8-31-14
Science & Technology Fund Atlassian, Inc., Series 1 4/9/2014 $167,360 — 10,460 0.0%* $167,360
  Bought: 10,460 shares            
Science & Technology Fund Atlassian, Inc., Series 2 4/9/2014 $448,096 — 28,006 0.0%* $448,096
  Bought: 28,006 shares            
Science & Technology Fund Atlassian, Inc., Series A 4/9/2014 $331,376 — 20,711 0.0%* $331,376
  Bought: 20,711 shares            
Science & Technology Fund Cloudera, Inc., Series F 2/5/2014 $665,115 — 45,681 0.1% $1,271,211
  Bought: 45,681 shares            
Small Cap Growth Fund Apigee Corp., Series H 4/17/2014 $758,419 — 260,625 0.3% $758,419
  Bought: 260,625 shares            
Small Cap Growth Fund Cloudera, Inc., Series F 2/5/2014 $482,256 — 33,122 0.4% $921,719
  Bought: 33,122 shares            
Small Cap Growth Fund DocuSign, Inc., Series B 2/28/2014 $16,205 — 1,234 0.0%* $15,635
  Bought: 1,234 shares            
Small Cap Growth Fund DocuSign, Inc., Series B1 3/3/2014 $4,859 — 370 0.0%* $4,688
  Bought: 370 shares            
Small Cap Growth Fund DocuSign, Inc., Series D 3/3/2014 $11,648 — 887 0.0%* $11,238
  Bought: 887 shares            
Small Cap Growth Fund DocuSign, Inc., Series E 2/28/2014 $301,165 — 22,933 0.1%* $290,561
  Bought: 22,933 shares            
Small Cap Growth Fund Nutanix, Inc. 8/25/2014 $530,100 — 39,570 0.2% $530,100
  Bought: 39,570 shares            
Small Cap Growth Fund Pure Storage, Inc., Series F 4/16/2014 $577,565 — 36,727 0.2% $577,565
  Bought: 36,727 shares            
Small Cap Growth Fund Telogis, Inc. (Common) 9/27/2013 $322,695 — 162,887 0.1% $229,671
  Bought: 162,887 shares            
Small Cap Growth Fund Telogis, Inc. (Preferred) 9/27/2013 $488,283 — 221,826 0.3% $616,676
  Bought: 221,826 shares            
Small Cap Growth Fund Veracode, Inc. 8/26/2014 $562,379 — 30,455 0.2% $562,379
  Bought: 30,455 shares            

* Less than 0.05%

11. OTHER MATTERS The Trust has been named as a defendant in an adversary proceeding originally brought by the Official Committee of Unsecured Creditors of Tribune Company in the U.S. Bankruptcy Court for the District of Delaware, in connection with Tribune Company’s Chapter 11 bankruptcy proceeding (In re Tribune Company). The proceeding relates to a leveraged buy-out transaction by which Tribune Company converted to a privately-held company in 2007. The plaintiff seeks to recover payments of the proceeds from the leveraged buy-out made to the beneficial owners of shares of Tribune Company, and alleges these payments were intentionally fraudulent conveyances under the U.S. Bankruptcy Code. The adversary proceeding, which is now captioned Marc S. Kirschner, as Litigation Trustee for the Tribune Litigation Trust v. FitzSimons, No. 12-2652 (S.D.N.Y.), has been transferred to the U.S. District Court for the Southern District of New York and consolidated into the multidistrict litigation proceeding captioned In re Tribune Co. Fraudulent Conveyance Litig., No. 11-md-2296 (S.D.N.Y.). On May 23, 2014, the defendants filed motions to dismiss the FitzSimons action, including a global motion to dismiss Count I, which is the claim brought against former Tribune shareholders for intentional fraudulent conveyance under U.S. federal law. The Court has not yet issued a decision on any of these motions.

In a related matter, the Trust has been named as a defendant in Deutsche Bank Trust Co. Americas v. Paniagua, No. 11-9409 (S.D.N.Y.). This case also relates to the Tribune Company leveraged buy-out transaction and asserts claims on behalf of Tribune noteholders for constructive fraudulent conveyance under state law, and it also has been consolidated into the multidistrict litigation proceeding. On September 23, 2013, the Court granted the defendants’ motion to dismiss this action on the basis that the plaintiffs did not have standing to pursue their claims. On September 30, 2013, the plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit. On October 28, 2013, the defendants filed a joint notice of cross-appeal of that same order. The Court has not yet issued a decision on the appeal.

The potential amount sought to be recovered by the plaintiffs in these two actions from the Equity-Income Fund, the Index 500 Fund, and the Spectrum Income Fund is unknown, but it includes approximately $11,971,400, $65,824, and $2,091,000, respectively, representing the proceeds that the funds received in the leveraged buy-out, plus an unknown amount of interest and the plaintiffs’ attorneys’ fees and expenses. The funds cannot predict the outcome of this proceeding. The funds are currently assessing the case and have not yet determined the effect, if any, on the funds’ net assets and results of operations. If the proceeding were to be decided in a manner adverse to the funds, or if the funds were to enter into a settlement agreement with the plaintiffs, the payment of such judgment or settlement could have an adverse effect on the Funds’ net asset value.

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John Hancock Funds II

Report of independent registered public accounting firm

To the Board of Trustees and Shareholders of John Hancock Funds II:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the funds (as listed in the Table of Contents on Page 2) which are part of John Hancock Funds II (the “Trust”) at August 31, 2014, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian, brokers, agent banks and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 22, 2014

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John Hancock Funds II

Federal tax information (Unaudited)

For federal income tax purposes, the following information is furnished with respect to the distributions of the funds, if any, paid during its taxable year ended August 31, 2014.

Dividend Received Deduction The funds report the maximum amount allowable of their net taxable income as eligible for the corporate dividends-received deduction.

Qualified Dividend Income The funds report the maximum amount allowable of their net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.

Foreign Tax Credit The following table details the income derived from foreign sources and the amounts the funds intend to pass through as foreign tax credits for the year ended August 31, 2014:

Fund Foreign Sourced Income Foreign Tax Credit
Asia Pacific Total Return Bond Fund $19,219,444 $332,557
International Growth Opportunities Fund 16,370,255 1,406,883
International Growth Stock Fund 19,162,899 1,246,078
International Small Cap Fund 11,603,467 1,179,817
International Value Fund 47,497,880 3,124,479

 

Long Term Capital Gains The funds below paid the following amounts in capital gain dividends.

Fund Capital Gains
Active Bond Fund $8,440,130
Alpha Opportunities Fund 47,611,093
Asia Pacific Total Return Bond Fund 64,029
Blue Chip Growth Fund 51,044,623
Capital Appreciation Fund 103,837,880
Capital Appreciation Value Fund 168,188,183
Core Bond Fund 1,983,187
Equity-Income Fund 10,584,530
Fundamental Global Franchise Fund 7,205,010
Health Sciences Fund 91,837,195
International Growth Opportunities Fund 4,920,537
Investment Quality Bond Fund 2,841,383
Mid Cap Stock Fund 97,250,317
Mid Value Fund 20,995,462
Real Estate Securities Fund 39,418,193
Small Cap Growth Fund 15,545,077
Small Cap Opportunities Fund 17,029,050
Small Company Growth Fund 6,697,038
Small Company Value Fund 2,138,107
Spectrum Income Fund 25,819,907
Strategic Equity Allocation Fund 57,106,332
Total Return Fund 28,451,241
U.S. High Yield Bond Fund 10,899,268
Value Fund 19,189,198

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

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Evaluation of advisory and subadvisory agreements by the board of trustees

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) with John Hancock Advisers, LLC (the Advisor) and each Subadvi-sory Agreement (collectively, the Subadvisory Agreements) with respect to each of the portfolios of the Trust included in this report. The Advisory Agreement and Subadvisory Agreement are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the prosposed continuation of the Agreements at an in-person meeting held on May 27-29, 2014.

The advisory agreements and subadvisory agreements for the Lifestyle II Aggressive Portfolio, Lifestyle II Balanced Portfolio, Lifestyle II Conservative Portfolio, Lifestyle II Growth Portfolio and Lifestyle II Moderate Portfolio were not considered for renewal at this time because these portfolios recently commenced operations.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period, the continuation of the Advisory Agreement between the Trust and the Advisor and the applicable Subadvisory Agreements between the Advisor (each, a “Subadvisor” and collectively, the “Subadvisors”) with respect to each of the Funds.

In considering the Advisory Agreement and the Subadvisory Agreements with respect to each Fund, the Board received in advance of the meeting a variety of materials relating to each Fund, the Advisor and each Subadvisor, including comparative performance, fee and expense information for peer groups of similar mutual funds prepared by an independent third-party provider of mutual fund data; performance information for the Funds’ benchmark indices; and, with respect to each Subadvisor, comparative performance information for comparably managed accounts, as applicable; and other information provided by the Advisor and the Subadvisors regarding the nature, extent and quality of services provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the Funds and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreements is considered, particular focus is given to information concerning Fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisors is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvi-sors to the Funds, including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisors with respect to the Funds they manage. The Board noted the affiliation of certain of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the Funds by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to each Fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of Fund performance and operations throughout the year.

Nature, Extent and Quality of Services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services provided to the Funds, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the Funds’ compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the Funds, including but not limited to, general supervision of and coordination of the services provided by the Subadvisors, and is also responsible for monitoring and reviewing the activities of the Subadvisors and other third-party service providers.

In considering the nature, extent and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationships, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives, review of brokerage matters including with respect to trade allocation and best execution, and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the Funds;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the Funds; and

(f) the Advisor’s reputation and experience in serving as an investment adviser to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the Funds.

Investment Performance. In considering each Fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the Funds’ performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the Funds’ performance;

(b) considered the comparative performance of each Fund’s respective benchmark;

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Evaluation of advisory and subadvisory agreements by the board of trustees

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of mutual fund data.

(d) took into account the Advisor’s analysis of each Fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally and with respect to particular Funds.

The Board concluded that the performance of each of the Funds has generally been in line with or generally outperformed the historical performance of comparable funds and/or the Fund’s respective benchmark, with certain exceptions noted in Appendix A. In such cases, the Board concluded that such performance is being monitored and reasonably addressed.

Fees and Expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data including, among other data, each Fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the Fund. The Board considered each Fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the Fund’s ranking within broader groups of funds. In comparing each Fund’s contractual and net management fees to that of comparable funds, the Board noted that such fee includes both advisory and administrative costs.

The Board took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fees. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to certain of the Funds. The Board also noted that the Advisor pays the subadvisory fees of the Funds, and that such fees are negotiated at arm’s length with respect to unaffiliated Subadvisors. In addition, the Board noted that the Advisor effected advisory and subadvisory fee reductions in the past year with respect to several Funds. The Board also took into account that management had agreed to implement an overall fee waiver across the complex, which is discussed further below. The Board also noted management’s discussion of the Funds’ expenses, as well as certain actions taken over the past several years to reduce the Funds’ operating expenses. The Board reviewed information provided by the Advisor concerning investment advisory fees charged to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to a Fund and the services they provide to other such comparable clients or funds. The Board concluded that the advisory fee paid with respect to each of the Funds is reasonable.

In addition, in the case of the Lifestyle Portfolios (each a Fund of Funds), the Trustees reviewed the advisory fee to be paid to the Advisor for each Fund of Funds and concluded that the advisory fee to be paid to the Advisor with respect to each Fund of Funds is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the Fund of Funds and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of a Fund of Funds and those of its underlying portfolios.

Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisors that are affiliated with the Advisor) from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered (i) informaton presented by the Advisor regarding the net profitability to the Advisor and its affiliates, of each Fund; and (ii) the representation by the John Hancock insurance companies in registration statements for registered variable insurance contracts using the Funds as investment options in registered separate accounts, that the fees and charges deducted under their variable insurance contracts (including the fees and expenses of the Trust), in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred and the risks assumed by such companies;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain Funds of the Trust and noted that these tax benefits, which are not available to contract owners under applicable income tax law, are reflected in the profitability analysis reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the Funds on a cost basis pursuant to an administrative services agreement;

(g) noted that certain of the Funds’ Subadvisors are affiliates of the Advisor;

(h) noted that affiliates of the Advisor provide transfer agency services and distribution services to the Funds, and that the Trust’s distributor also receives Rule 12b-1 payments to support distribution of the products;

(i) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the Funds;

(j) noted that the subadvisory fees for the Funds are paid by the Advisor and are negotiated at arms’ length with respect to the unaffiliated Subadvisors;

(k) with respect to each Fund of Funds, the Board noted that the advisory fee is in addition to the fees received by the Advisor and its affiliates with regard to the underlying portfolios in which the Fund of Funds may invest; and

(l) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to each Fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including any Subadvisors that are affiliated with the Advisor), from their relationship with each Fund was reasonable and not excessive.

Economies of Scale. In considering the extent to which economies of scale would be realized as a Fund grows and whether fee levels reflect these economies of scale for the benefit of Fund shareholders, the Board:

(a) with respect to each Fund (except those discussed specifically below), considered that the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such Fund and for each of the other John Hancock funds in the complex except as discussed below (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement): The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The Funds that are not Participating Portfolios are each of the fund of funds in the fund complex. These Funds of Funds also benefit from such overall management fee waiver through their investment in underlying portfolios that include certain of the Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the Trust’s advisory fee structure and the incorporation therein of any subadvisory fee breakpoints in the advisory fees charged and concluded that (i) most of the Funds’ fee structures contain breakpoints at the subadvisory fee level and that such breakpoints are reflected as breakpoints in the advisory fees

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Evaluation of advisory and subadvisory agreements by the board of trustees

for Funds and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of Funds with advisory fee breakpoints to benefit from economies of scale if those Funds grow. The Board also took into account management’s discussion of the Funds’ advisory fee structure, including with respect to those Funds that did not currently have breakpoints; and

(c) the Board also considered the effect of the Funds’ growth in size on their performance and fees. The Board also noted that if the Funds’ assets increase over time, the Funds may realize other economies of scale.

Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(1) information relating to each Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of each Fund and comparative performance information relating to the Fund’s benchmark and comparable funds;

(3) the subadvisory fee for each Fund, including any breakpoints, and comparative fee information, where available, prepared by an independent third party provider of mutual fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and unaffiliated Subadvisors.

Nature, Extent and Quality of Services. With respect to the services provided by each of the Subadvisors with respect to each Fund, the Board received information provided to the Board by each Subadvisor, including each Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered each Subadvisor’s current level of staffing and its overall resources, as well as received information relating to a Sub-advisor’s compensation program. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the Funds. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed each Subadvisor’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of each Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the CCO and his staff conduct regular, periodic compliance reviews with each of the Subadvi-sors and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisors and procedures reasonably designed by them to assure compliance with the federal securities laws. The Board also took into account the financial condition of each Subadvisor.

The Board considered each Subadvisor’s investment process and philosophy. The Board took into account that each Subadvisor’s responsibilities include the development and maintenance of an investment program for the applicable Fund which is consistent with the Fund’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor Compensation. In considering the cost of services to be provided by each Subadvisor and the profitability to that Subadvisor of its relationship with the Fund, the Board noted that the fees under the Subadvisory Agreements are paid by the Advisor and not the Funds. The Board also relied on the ability of the Advisor to negotiate each Subadvisory Agreement with Sub-advisors that are not affiliated with the Advisor and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by unaffiliated Subadvisors from their relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreements.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to unaffiliated Subadvisors) of any material relationships with respect to the unaffiliated Subadvisors, which include arrangements in which unaffiliated Subadvisors or their affiliates provide advisory, distribution or management services in connection with financial products sponsored by the Trust’s Advisor or its affiliates, and may include shares of the Trust, other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreements.

In addition, the Board considered other potential indirect benefits that the Subad-visors and their affiliates may receive from the Subadvisor’s relationship with the Fund, such as the opportunity to provide advisory services to additional portfolios of the Trusts and reputational benefits.

Subadvisory Fees. The Board considered that the Fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to each Subadvisor. As noted above, the Board also considered, if available, each Fund’s sub-advisory fees as compared to similarly situated investment companies deemed to be comparable to the Fund as included in the report prepared by the independent third party provider of mutual fund data. The Board also took into account the sub-advisory fees paid by the Advisor to fees charged by each Fund’s Subadvisor to manage other sub-advised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor Performance. As noted above, the Board considered each Fund’s performance as compared to the Fund’s respective peer group and benchmark and noted that the Board reviews information about the Fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style, and risk-adjusted performance of each Subadvisor. The Board was mindful of the Advisor’s focus on each Subadvisor’s performance. The Board also noted each Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement with respect to each Fund was based on a number of determinations, including the following:

(1) Each Subadvisor has extensive experience and demonstrated skills as a manager;

(2) Although not without variation, the performance of each Fund managed by a Subadvisor generally has been in line with or outperformed the historical performance of comparable funds and the Fund’s respective benchmarks and each Fund’s overall performance is satisfactory, with the exceptions noted in Appendix A (with respect to such exceptions, the Board concluded that performance is being monitored and reasonably addressed;

(3) The subadvisory fees are reasonable in relation to the level and quality of services being provided; and

352

 


John Hancock Funds II

Evaluation of advisory and subadvisory agreements by the board of trustees

(4) With respect to those Funds that have subadvisory fees that contain breakpoints, certain breakpoints are reflected as breakpoints in the advisory fees for the Funds in order to permit shareholders to benefit from economies of scale if those Funds grow.

In addition, in the case of each Fund of Funds, the Trustees reviewed the subad-visory fee to be paid to the Subadvisor for the Fund of Funds and concluded that the subadvisory fee to be paid to the Subadvisor with respect to each Fund of Funds is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the Fund of Funds and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of a Fund of Funds and those of its underlying portfolios.

Additional information relating to each Fund’s fees and expenses and performance that the Board considered in approving the Advisory Agreement and Subadvisory Agreement for a particular Fund is set forth in Appendix A.

***

Based on their evaluation of all factors that they deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and each of the Subadvisory Agreements with respect to each Fund would be in the best interest of each of the respective Funds and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subad-visory Agreement with respect to each Fund for an additional one-year period.

353

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Active Bond Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board took into account
outperformed for the one-, three- not provided due to limited size management’s discussion of the
(Declaration Management &  and five-year periods. of Lipper peer group for this Fund’s performance. The Board
Research LLC)    purpose.  noted the Fund’s favorable 
Lipper Category — The Fund    performance relative to the 
(John Hancock Asset Management  outperformed the average for the Net management fees for this  benchmark index for the one-,
(United States))  one- and five-year periods and  Fund are higher than the peer  three- and five-year periods and 
underperformed the average for group median. to the peer group for the one-
  the three-year period.  and five-year periods, as well as 
  Total expenses for this Fund are  over the ten-year period ended
  higher than the peer group December 31, 2013. 
    median. 
    The Board took into account 
      management’s discussion of the
      Fund’s expenses.
All Cap Core Fund Benchmark Index — The Fund The subadvisor fees for this The Board noted the Fund’s
  outperformed for the one- and Fund are equal to the peer group favorable performance relative to
(QS Investors LLC) three-year periods and  median.  the benchmark index for the 
  underperformed for the five-year   one- and three-year periods and
  period.  Net management fees for this relative to the peer group for the 
    Fund are higher than the peer  one-, three- and five-year
  Lipper Category — The Fund group median. periods. 
  outperformed the average for the    
  one- and three- and five-year  Total expenses for this Fund are The Board took into account 
  periods. higher than the peer group  management’s discussion of the
    median. Fund’s expenses. 
     
Alpha Opportunities Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one- and  not provided due to limited size  favorable performance relative to 
(Wellington Management Company,  five-year periods and of Lipper peer group for this the benchmark index for the
LLP) underperformed for the three-  purpose.  one- and five-year periods and to 
  year period. the peer group for the one-,
  Net management fees for this  three- and five-year periods. 
  Lipper Category — The Fund Fund are higher than the peer
  outperformed the average for the  group median.  The Board took into account 
  one- and three- and five-year   management’s discussion of the
  periods  Total expenses for this Fund are Fund’s expenses. 
    higher than the peer group 
  median. The Board also noted that the 
      Adviser had agreed to implement
      a three basis point voluntary
      advisory fee waiver.

 

354

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
 
Asia Pacific Total Return Bond Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board took into account
  underperformed for the period not provided due to limited size management’s discussion of the
(John Hancock Asset Management since its inception.  of Lipper peer group for this  Fund’s performance, including 
(United States))  purpose. the differences between the
Lipper Category — The Fund    investment policies of the Fund 
  underperformed the average for  Net management fees for this and those of its peer group.
  the period since inception. Fund are higher than the peer   
    group median.  The Board also noted that the
  Fund has a limited performance 
    Total expenses for this Fund are history (inception January 2013).
  higher than the peer group  
    median. The Board also took into account
      management’s discussion of the
    Fund’s expenses; including action 
      taken that will further reduce
      certain fund expenses. The Board
      also noted that the Fund is
      subject to an expense cap until
      December 31, 2014, which
      reduces certain expenses of the
      Fund.
Blue Chip Growth Fund Benchmark Index — the Fund The subadvisor fees for this The Board noted the Fund’s
  outperformed for the one-, three- Fund are higher than the peer favorable performance relative to
(T. Rowe Price Associates, Inc.) and five-year periods.  group median.  the benchmark index and to the 
  peer group for the one-, three-
  Lipper Category — The Fund  Net management fees for this  and five-year periods.
  outperformed the average for the Fund are higher than the peer  
  one-, three- and five-year  group median.  The Board took into account
  periods. management’s discussion of the 
  Total expenses for this Fund are Fund’s expenses, noting that the
  lower than the peer group  Fund is subject to a voluntary
    median. fee waiver which reduces certain 
      expenses of the Fund.
     
Capital Appreciation Fund Benchmark Index — The Fund Subadvisory fee comparative data The Board noted the favorable
  outperformed for the one-, three- not provided due to limited size performance of the Fund relative
(Jennison Associates LLC) and five-year periods.  of Lipper peer group for this  to the benchmark index and the 
  purpose. peer group over all periods.
  Lipper Category — The Fund    
  outperformed the average for the Net management fees for this The Board took into account
  one-, three- and five-year Fund are higher than the peer management’s discussion of the
  periods. group median. Fund’s expenses.
       
    Total expenses for this Fund are  
    lower than the peer group  
    median.  

 

355

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Capital Appreciation Value Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one-year not provided due to limited size favorable performance relative to
(T. Rowe Price Associates, Inc.) period  of Lipper peer group for this the benchmark index and to the 
    purpose. peer group for the one-year
  Lipper Category — The Fund   period. 
  outperformed the average for the Net management fees for this  
  one-year period. Fund are higher than the peer The Board took into account
    group median. management’s discussion of the
      Fund’s expenses, noting that the
    Total expenses for this Fund are Fund is subject to a voluntary 
    higher than the peer group fee waiver which reduces certain 
    median. expenses of the Fund. Year-over- 
      year, the Fund’s net total
      expenses have decreased five
      basis points due to a decrease in
      underlying fund expenses as well
      as a rise in net assets.
Core Bond Fund Benchmark Index — The Fund Subadvisory fee comparative data The Board took into account
  underperformed for the one-year not provided due to limited size management’s discussion of the
(Wells Capital Management period and outperformed for the  of Lipper peer group for this  Fund’s performance, including 
Incorporated) three- and five-year periods.  purpose  the factors that contributed to 
      the Fund’s performance relative
  Lipper Category — The Fund Net management fees for this to peers. 
  underperformed the average for Fund are higher than the peer  
  the one- and five-year periods group median. The Board noted the Fund’s
  and outperformed the average for   favorable performance relative to
  the three-year period.  Total expenses for this Fund are the benchmark index for the 
    lower than the peer group three- and five-year periods and 
    median. relative to the peer group for the 
      three-year period.
       
      The Board took into account
      management’s discussion of the
      Fund’s expenses.
Equity-Income Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board noted the Fund’s
  underperformed for the one- and not provided due to limited size favorable performance relative to
(T. Rowe Price Associates, Inc.) three-year periods and  of Lipper peer group for this  the benchmark index for the 
  outperformed for the five-year purpose. five-year period and to the peer
  period.   group for the one-, three- and
    Net management fees for this five-year periods. 
  Lipper Category — The Fund Fund are higher than the peer  
  outperformed the average for the group median. The Board took into account
  one- three- and five-year periods.   management’s discussion of the
    Total expenses for this Fund are Fund’s expenses, noting that the 
    lower than the peer group  
    median.  Fund is subject to a voluntary
    fee waiver which reduces certain
      expenses of the Fund.
 
Fundamental Global Franchise Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board noted that the Fund
  underperformed for the one-year not provided due to limited size has a limited performance history
(John Hancock Asset Management period  of Lipper peer group for this  (inception date of June 2012). 
(United States))  . purpose.
  Lipper Category — The Fund   The Board noted the Fund’s
  outperformed the average for the Net management fees for this favorable performance relative to
  one-year period. Trust are lower than the peer peer group for the one-year
    group median. period.
       
    Total expenses for this Fund are The Board also noted action
    lower than the peer group taken that will further reduce
    median. certain Fund expenses.

 

356

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Global Bond Fund Benchmark Index — The Fund The subadvisory fees for this The Board took into account
  underperformed for the one-year Fund are higher than the peer management’s discussion of the
(Pacific Investment Management period and outperformed for the  group median.  factors that contributed the 
Company LLC)  three- and five-year periods. Fund’s one-year performance, 
    Net management fees for this noting the Fund’s favorable
  Lipper Category — The Fund  Fund are higher than the peer  performance relative to the
  underperformed the average for group median. benchmark index and peer group 
  the one-year period and   for the three- and five-year
  outperformed the average for the Total expenses for this Fund are periods. 
  three- and five-year periods.  lower than the peer group 
  median. The Board took into account 
    management’s discussion of the
      Fund’s expenses.
 
Global Equity Fund Benchmark Index — The Fund Subadvisory fee comparative data The Board noted that the Fund
  outperformed for the one-year not provided due to limited size has a relatively limited
(John Hancock Asset Management period.  of Lipper peer group for this  performance history 
(United States))  purpose (commencing on May 31, 2013).
Lipper Category — The Fund     
  outperformed the average for the Net management fees for this The Board took into account
  one-year period. Fund are higher than the peer management’s discussion of the
    group median. Fund’s expenses; including action
      taken that will further reduce
    Total expenses for this Fund are certain fund expenses. 
    higher than the peer group  
    median.  
Global Real Estate Fund Benchmark Index — The Fund Subadvisory fee comparative data The Board took into account
  underperformed for the one-, not provided due to limited size management’s discussion of the
(Deutsche Investment Management three and five-year periods.  of Lipper peer group for this  Fund’s performance, including 
Americas, Inc./RREEF America, LLC)  purpose. that the Fund outperformed its
Lipper Category — The Fund    peer group for the one- and 
  outperformed the average for the Net management fees for this three-year periods. 
  one- and three-year periods and Fund are higher than the peer  
  underperformed the average for group median. The Board took into account
  the five-year period.   management’s discussion of the
    Total expenses for this Fund are Fund’s expenses; including action 
    equal to the peer group median.  taken that will further reduce
    certain Fund expenses. 
     
      The Board noted that 
      management had implemented a
      voluntary asset-level based
      advisory fee waiver and a
      contractual asset-level based
      subadvisory fee waiver effective
      June 1, 2013 to be implemented
      when the Fund reaches a certain
      amount of assets under
      management.

 

357

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Health Sciences Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  underperformed for the one-year not provided due to limited size favorable performance relative to
(T. Rowe Price Associates, Inc.) period.  of Lipper peer group for this  the peer group for the one-year 
  purpose. period.
  Lipper Category — The Fund    
  outperformed the average for the Net management fees for this The Board also noted that the
  one-year period. Fund are higher than the peer Fund has a relatively limited
    group median. performance history.
       
    Total expenses for this Fund are The Board took into account
    lower than the peer group management’s discussion of the
    median. Fund’s expenses, noting that the
      Fund is subject to a voluntary
      fee waiver which reduces certain
      expenses of the Fund.
       
      The Board also noted, that a
      subadvisor fee decrease was
      approved in March 2014, which
      is expected to reduce total
      expenses in the future.
 
High Yield Fund Benchmark Index — The Fund Subadvisory fee comparative data The Board noted the Fund’s
  outperformed the one- and not provided due to limited size favorable performance relative to
(Western Asset Management five-year periods and  of Lipper peer group for this  the benchmark index for the 
Company) underperformed for the three-  purpose.  one- and five-year periods and 
  year period. relative to the peer group for the
  Net management fees for this  one-, three- and five-year
  Lipper Category — The Fund  Fund are higher than the peer periods. 
  outperformed the average for the  group median. 
  one-, three- and five-year The Board took into account 
  periods.  Total expenses for this Fund are  management’s discussion of the
  lower than the peer group Fund’s expenses. 
  median. 
     
International Growth Opportunities Benchmark Index — The Fund Subadvisory fee comparative data The Board noted the favorable
Fund outperformed for the one-year not provided due to limited size performance of the Fund relative
  period. of Lipper peer group for this to the benchmark index and the
(Baillie Gifford)   purpose.  peer group. 
  Lipper Category — The Fund    
  outperformed the average for the Net management fees for this The Board took into account
  one-year period. Fund are higher than the peer management’s discussion of the
    group median. Fund’s expenses, including action
      that will further reduce certain
    Total expenses for this Fund are fund expenses. 
    lower than the peer group  
    median.  
 
International Growth Stock Fund Benchmark Index — The Fund The subadvisory fees for this The Board noted the Fund’s
  outperformed for the one- and Fund are lower than the peer favorable performance relative to
(Invesco Advisers Inc.) three-year periods.  group median.  the benchmark index and to the 
  Lipper Category — The Fund The subadvisor fees for this peer group for the one- and 
  outperformed the average for the  Fund are lower than the peer  three-year periods.
  one- and three-year periods. group median.  
  The Board noted action taken
    Net management fees for this  that will further reduce certain
    Fund are lower than the peer Fund expenses. 
    group median.  
       
    Total expenses for this Fund are  
    lower than the peer group  
    median.  

 

358

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
 
 
International Small Cap Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one-, three- not provided due to limited size favorable performance relative to
(Franklin Templeton Investments and five-year periods.  of Lipper peer group for this  the benchmark index for the 
Corp.)   purpose  one-, three- and five-year periods 
  Lipper Category — The Fund   and to the peer group for the 
  underperformed the average for  Net management fees for this  five-year period.
  the one- and three-year periods Fund are higher than the peer  
  and outperformed the average for group median. The Board took into account
  the five-year period.   management’s discussion of the
    Total expenses for this Fund are Fund’s expenses and also noted 
    lower than the peer group that the Fund’s year-over-year net 
    median. total expenses have decreased by 
      two basis points.
 
      The Board noted that action
      taken that will further reduce
      certain Fund expenses.
International Value Fund Benchmark Index — The Fund The subadvisor fees for this The Board noted the Fund’s
  outperformed for the one-, three- Fund are lower than the peer favorable performance relative to
(Franklin Templeton Investment and five-year periods.  group median.  the benchmark index and to the 
Counsel, LLC)  peer group for the one-, three-
  Lipper Category — The Fund Net management fees for this and five-year periods. 
  outperformed the average for the  Fund are higher than the peer 
  one-, three- and five-year group median. The Board took into account 
  periods.   management’s discussion of the
    Total expenses for this Fund are Fund’s expenses; including action 
    lower than the peer group  taken that will further reduce
    median. certain Fund expenses. 
     
Investment Quality Bond Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one-, three- not provided due to limited size favorable performance relative to
(Wellington Management Company, and five-year periods.  of Lipper peer group for this  the benchmark index for the 
LLP)  purpose. one-, three- and five-year periods
Lipper Category — The Fund    and to the peer group for the 
  underperformed the average for  Net management fees for this three- and five-year periods.
  the one-year period and Fund are higher than the peer   
  outperformed the average for the group median. The Board took into account
  three- and five-year periods.   management’s discussion of the
    Total expenses for this Fund are Fund’s expenses. 
    lower than the peer group 
    median.  
 
     
Mid Cap Stock Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one-year not provided due to limited size favorable performance relative to
(Wellington Management Company, period and underperformed for  of Lipper peer group for this  the benchmark index for the 
LLP)  the three- and five-year periods. purpose. one-year period and to the peer
      group for the one- and three-year
  Lipper Category — The Fund Net management fees for this periods. 
  outperformed the average for the  Fund are higher than the peer 
  one- and three-year periods and group median. The Board took into account 
  underperformed the average for   management’s discussion of the
 the five-year period.  Total expenses for this Fund are Fund’s expenses. 
  lower than the peer group 
    median.  

 

359

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Mid Value Fund Benchmark Index — the Fund The subadvisor fees for this The Board took into account
  underperformed for the one- and Fund are higher than the peer management’s discussion of the
(T. Rowe Price Associates, Inc.) three-year periods.  group median.  Fund’s performance and the 
  reasons for the
  Lipper Category — The Fund Net management fees for this underperformance. 
  underperformed the average for  Fund are higher than the peer 
  the one- and three-year periods. group median. The Board noted that the Fund
      has outperformed the benchmark 
    Total expenses for this Fund are  index and peer group on a
    higher than the peer group risk-adjusted basis for the three- 
    median.  year period since inception.
     
      The Board took into account
      management’s discussion of the
      Fund’s expenses, noting that the
      Fund is subject to a voluntary
      fee waiver which reduces certain
      expenses of the Fund.
Real Estate Equity Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  underperformed for the three- not provided due to limited size favorable performance relative to
(T. Rowe Price Associates, Inc.) year period and outperformed  of Lipper peer group for this  the benchmark index for the 
  the average for the one- and purpose. one- and five-year periods and to
  five-year period.   the peer group for the one-,
    Net management fees for this three- and five-year periods. 
  Lipper Category — The Fund  Fund are equal to the peer group 
  outperformed the average for the median. The Board took into account
  one-, three- and five-year    management’s discussion of the 
  periods. Total expenses for this Fund are  Fund’s expenses, noting that the
    lower than the peer group Fund is subject to a voluntary 
  median.  fee waiver which reduces certain
    expenses of the Fund. 
      
Real Estate Securities Fund Benchmark Index — The Fund Subadvisory fee comparative data The Board took into account
  underperformed for the one-, not provided due to limited size management’s discussion of the
(Deutsche Investment Management three- and five-year periods.  of Lipper peer group for this  Fund’s performance, including 
Americas, Inc./RREEF America, LLC)  purpose. the factors that contributed to
Lipper Category — The Fund     the Fund’s performance relative
  underperformed the average for Net management fees for this to the peer group and 
  the one- and three-year periods  Fund are lower than the peer  benchmark index.
  and outperformed the average for group median.  
  the five-year period.   The Board noted the Fund’s
    Total expenses for this Fund are favorable performance relative to 
    lower than the peer group  the peer group for the five-year
    median. period. 
     
      The Board noted that
      management had implemented a
      voluntary asset-level based
      advisory fee waiver and a
      contractual asset-level based
      subadvisory fee waiver effective
      June 1, 2013 to be implemented
      when the Fund reaches a certain
      amount of assets under
      management.

 

360

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Real Return Bond Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board took into account
  underperformed for the one- and not provided due to limited size management’s discussion of the
(Pacific Investment Management three-year periods and  of Lipper peer group for this  factors that contributed to the 
Company LLC)  outperformed for the five-year purpose. Fund’s more recent relative
period.    performance and noted the 
    Net management fees for this Fund’s favorable performance 
  Lipper Category — The Fund  Fund are higher than the peer  relative to the benchmark index
  underperformed the average for group median. for the five-year period and peer 
  the one-year period and    group for the three- and five-year
  outperformed the average for the Total expenses for this Fund are periods. 
  three- and five-year periods.  higher than the peer group 
  median.  The Board took into account 
      management’s discussion of the
      Fund’s expenses.
Science & Technology Fund Less than one year of Subadvisor fee comparative data The Board noted the Fund’s
  performance. not provided due to limited size outperformance relative to the
(Allianz Global Investors U.S. LLC   of Lipper peer group for this  Lipper index and peer group 
T. Rowe Price Associates, LLC)   purpose  average for the period since
      inception (February 28, 2013)
    Net management fees for this through December 31, 2013. The 
    Fund are higher than the peer  Board noted the favorable
    group median. performance of the JHVIT 
      Science & Technology Trust, a
    Total expenses for this Fund are fund managed by the 
    lower than the peer group  subadvisors in a similar manner
    median. for the one-, three- and five-year
       periods ended December 31,
      2013.
 
      management’s discussion of the
      Fund’s expenses noting that the
      Fund is subject to a voluntary
      fee waiver which reduces certain
      expenses of the Fund.
Short Term Government Income Benchmark Index — The Fund Subadvisor fee comparative data The Board took into account
Fund underperformed for the one- and not provided due to limited size management’s discussion of the
  three-year periods. of Lipper peer group for this Fund’s performance relative to
(John Hancock Asset Management   purpose.  the peer group, including the 
(United States)) Lipper Category — The Fund   difference in the Fund’s strategy 
  underperformed the average for  Net management fees for this  from many other funds in the
  the one-year period and Fund are higher than the peer peer group. 
  outperformed the average for the  group median. 
  three-year period.  
    The Board also noted the
    Total expenses for this Fund are relatively small range with 
    equal to the peer group median.  respect to returns among the
    peers. 
 
      The Board noted the Fund’s
      favorable performance relative to
      the peer group for the three-year
      period and that it has ranked
      median or better since inception.
      The Board took into account
      management’s discussion of the
      Fund’s expenses.

 

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John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
Small Cap Growth Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board took into account
  outperformed for the one-year not provided due to limited size management’s discussion of the
(Wellington Management Company, period and underperformed for  of Lipper peer group for this  Fund’s performance. The Board 
LLP) the three- and five-year periods.  purpose.  noted the Fund’s favorable 
      performance relative the
  Lipper Category — The Fund Net management fees for this benchmark index for the one- 
  outperformed the average for the  Fund are higher than the peer  year period and to the peer
  one- and three-year periods and group median. group for the one- and three-year 
  underperformed the average for    periods.
  the five-year period. Total expenses for this Fund are  
    higher than the peer group  The Board took into account
  median.  management’s discussion of the 
      Fund’s expenses which is two
      basis points above the peer
      group median.
 
 
 
Small Cap Opportunities Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one-, three- not provided due to limited size favorable performance relative to
(Invesco Advisers Inc.) and five-year periods.  of Lipper peer group for this  the benchmark index and to the 
    purpose. peer group for the one-, three-
  Lipper Category — The Fund   and five-year periods. 
  outperformed the average for the  Net management fees for this 
  one-, three- and five-year Fund are higher than the peer The Board took into account
  periods. group median. management’s discussion of the
      Fund’s expenses and the proposal
    Total expenses for this Fund are by the Adviser to cap the 
    lower than the peer group  expenses of certain of the Fund’s
    median. share classes.
     
    The Board also took into account 
      the proposal by the Adviser to
      add additional subadvisors and
      in connection therewith to
      change the Fund’s investment
      policies.
Small Company Growth Fund Benchmark Index — The Fund The subadvisor fees for this Trust The Board noted the Fund’s
  underperformed for the one-year are higher than the peer group favorable performance relative to
(Invesco Advisers Inc.) period and outperformed for the median  the benchmark index and peer 
  three- and five-year periods.   group for the longer term three-
    Net management fees for this and five-year periods. 
  Lipper Category — The Fund  Fund are higher than the peer 
  underperformed the average for group median. The Board took into account
  the one-year period and   management’s discussion of the
  outperformed the average for the  Total expenses for this Fund are Fund’s expenses. 
  three- and five-year periods. lower than the peer group 
    median.  
     
     
 
 
 
Small Company Value Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  underperformed for the one-year not provided due to limited size favorable performance relative to
(T. Rowe Price Associates, Inc.) period and outperformed for the  of Lipper peer group for this  the benchmark index for the 
  three- and five-year periods. purpose. three- and five-year periods.
 
  Lipper Category — The Fund Net management fees for this The Board took into account
  underperformed the average for Fund are higher than the peer management’s discussion of the
  the one-, three- and five-year group median. Fund’s expenses, noting that the
  periods.   Fund is subject to a voluntary
    Total expenses for this Fund are fee waiver which reduces certain 
    higher than the peer group  expenses of the Fund.
    median.  
      The Board also took into account
      management’s discussion of
      underlying Fund expenses.

 

362

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
 
Spectrum Income Fund Benchmark Index — the Fund Subadvisor fee comparative data The Board noted the Fund’s
  outperformed for the one-, three- not provided due to limited size favorable performance relative to
(T. Rowe Price Associates, Inc.) and five-year periods.  of Lipper peer group for this  the benchmark index for the 
  purpose. one-, three- and five-year
  Lipper Category — The Fund  periods.
  underperformed the average for Net management fees for this   
  the one-, three- and five-year  Fund are higher than the peer  The Board took into account
  periods. group median. management’s discussion of the 
  Fund’s expenses, noting that the
  Total expenses for this Fund are Fund is subject to a voluntary
    equal to the peer group median.  fee waiver which reduces certain
    expenses of the Fund. 
     
 
Strategic Income Opportunities Benchmark Index — The Fund Subadvisor fee comparative data The Board noted the Fund’s
Fund outperformed for the one- and not provided due to limited size favorable performance relative to
  three-year periods. of Lipper peer group for this the benchmark index and peer
(John Hancock Asset Management   purpose  group for the one- and three- 
(United States)) Lipper Category — The Fund   year periods. 
  outperformed the average for the Net management fees for this  
  one- and three-year periods. Fund are higher than the peer The Board took into account
    group median. management’s discussion of the
      Fund’s expenses.
    Total expenses for this Fund are  
    higher than the peer group The Board also noted that the
    median. Fund is subject to an expense
      cap until December 2014, which
      reduces certain expenses of the
      Fund and that the Adviser has
      proposed to waive a portion of
      the advisory fee.
 
Total Return Fund Benchmark Index — The Fund Subadvisor fee comparative data The Board took into account
  outperformed for the one-, three- not provided due to limited size management’s discussion of the
(Pacific Investment Management and five-year periods.  of Lipper peer group for this  Fund’s relative performance, 
  Lipper Category — The Fund purpose including the differences in the
Company LLC) underperformed the average for    Fund’s investment strategies from 
  the one-, three- and five-year Net management fees for this the peer group. 
  periods.  Fund are higher than the peer 
  group median. The Board noted the Fund’s 
  favorable performance relative to
    Total expenses for this Fund are  the benchmark index for the
    equal to the peer group median. one-, three- and five-year 
      periods.
     
      The Board also took into account
      that the Adviser had agreed to
      implement a two basis point
      voluntary advisory fee waiver
      effective June 1, 2013.

 

363

 


John Hancock Funds II

PORTFOLIO Performance of Trust,   2014
 
(SUBADVISER) as of December 31, 2013 Fees and Expenses Comments
 
 
U.S. High Yield Bond Fund Benchmark Index — The Fund The subadvisor fees for this The Board took into account
  underperformed for the one-, Fund are equal to the peer group management’s discussion of the
(Wells Capital Management three- and five-year periods.  median.  Fund’s performance, including 
Incorporated)     the differences between the 
  Lipper Category — The Fund  Net management fees for this  investment strategies of the Fund
  underperformed the average for Fund are higher than the peer and those of its benchmark 
  the one-, three- and five-year  group median.  index and peer group.
  periods.  
    Total expenses for this Fund are  The Board further considered
    lower than the peer group that on a risk-adjusted basis, the 
    median  Fund’s performance is generally
      in line with expectations.
       
      The Board took into account 
      management’s discussion of the
      Fund’s expenses.
Value Fund Benchmark Index — The Fund The subadvisor fees for this The Board noted the Fund’s
  outperformed for the one-, three- Fund are lower than the peer favorable performance relative to
(Invesco Advisers Inc.) and five-year periods.  group median.  the benchmark index and peer 
    group for the one-, three- and
  Lipper Category — The Fund Net management fees for this five-year periods. 
  outperformed the average for the Fund are lower than the peer  
  one-, three- and five-year group median.  
  periods.    
    Total expenses for this Fund are  
    lower than the peer group  
    median.  

 

364

 


John Hancock Funds II

Trustees and officers information

This chart provides information about the Trustees and Officers of John Hancock Funds II who oversee your John Hancock funds. Officers elected by the Trustees manage the day-to-day operations of the Funds and execute policies formulated by the Trustees.

INDEPENDENT TRUSTEES    
 
    Principal Occupation(s) and
Name, Year of Birth Position with the Trust1 Other Directorships During Past Five Years
James M. Oates Trustee and Chairperson of the Managing Director, Wydown Group (financial consulting firm) (since
Born: 1946 Board 1994); Chairman and Director, Emerson Investment Management,
  (since 2005) Inc. (since 2000); Independent Chairman, Hudson Castle Group,
    Inc. (formerly IBEX Capital Markets, Inc.) (financial services
    company) (1997-2011); Director, Stifel Financial (since 1996);
    Director, Investor Financial Services Corporation (1995-2007);
    Director, Connecticut River Bancorp (since 1998); Director, Virtus
    Funds (formerly Phoenix Mutual Funds) (since 1988).
 
    Trustee and Chairperson of the Board, John Hancock retail funds2
    (since 2012); Trustee (2005-2006 and since 2012) and Chairperson
    of the Board (since 2012), John Hancock Funds III; Trustee (since
    2004) and Chairperson of the Board (since 2005), John Hancock
    Variable Insurance Trust; Trustee and Chairperson of the Board, John
    Hancock Funds II (since 2005).
 
Charles L. Bardelis3 Trustee Director, Island Commuter Corp. (marine transport).
Born: 1941 (since 2005) Trustee, John Hancock retail funds2 (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).
Peter S. Burgess3 Trustee Consultant (financial, accounting, and auditing matters) (since
Born: 1942 (since 2005) 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 (since 2010); Director, PMA Capital
    Corporation (2004-2010).
 
    Trustee, John Hancock retail funds2 (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 Trustee Professor, University of Texas, Austin, Texas (since 1971); former
Born: 1944 (since 2012 and 2005-2006) Chancellor, University of Texas System and former President of the
    University of Texas, Austin, Texas; Director, LIN Television (since
    2009); Chairman (since 2009) and Director (since 2006), Lincoln
    National Corporation (insurance); Director, Resolute Energy
    Corporation (since 2009); Director, Southwest Airlines (since 2000);
    former Director, Introgen (manufacturer of biopharmaceuticals)
    (until 2008); former Director, Hicks Acquisition Company I, Inc.
    (until 2007); former Director, Texas Exchange Bank, SSB (formerly
    Bank of Crowley) (until 2009); former Advisory Director, JPMorgan
    Chase Bank (formerly Texas Commerce Bank–Austin) (until 2009).
 
    Trustee, John Hancock retail funds2 (since 1986); Trustee, John
    Hancock Variable Insurance Trust (since 2012); Trustee, John
    Hancock Funds II (2005-2006 and since 2012).

 

365

 


John Hancock Funds II

Trustees and officers information

    Principal Occupation(s) and
Name, Year of Birth Position with the Trust1 Other Directorships During Past Five Years
Grace K. Fey Trustee Chief Executive Officer, Grace Fey Advisors (since 2007); Director
Born: 1946 (since 2008) and Executive Vice President, Frontier Capital Management
    Company (1988-2007); Director, Fiduciary Trust (since 2009).
 
    Trustee, John Hancock retail funds2 (since 2012); Trustee, John
    Hancock Variable Insurance Trust and John Hancock Funds II
  (since 2008).
 
Theron S. Hoffman3 Trustee Chief Executive Officer, T. Hoffman Associates, LLC (consulting
Born: 1947 (since 2008) firm) (since 2003); Director, The Todd Organization (consulting
    firm) (2003-2010); President, Westport Resources Management
    (investment management consulting firm) (2006-2008); 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 retail funds2 (since 2012); Trustee, John
    Hancock Variable Insurance Trust and John Hancock Funds II
    (since 2008).
 
Deborah C. Jackson Trustee President, Cambridge College, Cambridge, Massachusetts (since
Born: 1952 (since 2012) 2011); 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 funds2 (since 2008); Trustee, John
    Hancock Variable Insurance Trust and John Hancock Funds II
    (since 2012).
 
Hassell H. McClellan Trustee Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge
Born: 1945 (since 2005) Series Funds) (since 2008); Director, The Barnes Group (since
    2010); Associate Professor, The Wallace E. Carroll School of
    Management, Boston College (retired 2013).
     
    Trustee, John Hancock retail funds2 (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).
   
Steven R. Pruchansky Trustee and Vice Chairperson Chairman and Chief Executive Officer, Greenscapes of Southwest
Born: 1944 of the Board Florida, Inc. (since 2000); Director and President, Greenscapes of
  (since 2012) Southwest Florida, Inc. (until 2000); Member, Board of Advisors,
    First American Bank (until 2010); Managing Director, Jon James,
    LLC (real estate) (since 2000); Director, First Signature Bank & Trust
    Company (until 1991); Director, Mast Realty Trust (until 1994);
    President, Maxwell Building Corp. (until 1991).
     
    Trustee (since 1992) and Chairperson of the Board (2011-2012),
    John Hancock retail funds2 ; Trustee and Vice Chairperson of the
    Board, John Hancock retail funds, John Hancock Variable Insurance
    Trust and John Hancock Funds II (since 2012).

 

366

 


John Hancock Funds II

Trustees and officers information

    Principal Occupation(s) and
Name, Year of Birth Position with the Trust1 Other Directorships During Past Five Years
Gregory A Russo Trustee Director and Audit Committee Chairman (since 2012), and Member,
Born: 1949 (since 2012) Audit Committee and Finance Committee (since 2011), NCH
    Healthcare System, Inc. (holding company for multi-entity healthcare
    system); Director and Member of Finance Committee, The Moorings,
    Inc. (nonprofit continuing care community) (since 2012); 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 funds2 (since 2008); Trustee, John
    Hancock Variable Insurance Trust and John Hancock Funds II
    (since 2012).
 
NON-INDEPENDENT TRUSTEES4    
 
    Principal Occupation(s) and
Name, Year of Birth Position with the Trust1 Other Directorships During Past Five Years
Craig Bromley Trustee President, John Hancock Financial Services (since 2012); Senior
Born: 1966 (since 2012) Executive Vice President and General Manager, U. S. Division,
    Manulife Financial Corporation (since 2012); President and Chief
    Executive Officer, Manulife Insurance Company (Manulife (Japan))
    (2005-2012, including prior positions).
 
    Trustee, John Hancock retail funds2 and John Hancock Variable
    Insurance Trust (since 2012).
 
Warren A. Thomson Trustee Senior Executive Vice President and Chief Investment Officer,
Born: 1955 (since 2012) Manulife Financial Corporation and The Manufacturers Life
    Insurance Company (since 2009); Chairman and Chief Executive
    Officer, Manulife Asset Management (since 2001, including prior
    positions); Director (since 2006), and President and Chief Executive
    Officer (since 2013), Manulife Asset Management Limited; Director
    and Chairman, Hancock Natural Resources Group, Inc. (since 2013).
 
    Trustee, John Hancock retail funds2 and John Hancock Variable
    Insurance Trust (since 2012).
 
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES  
 
    Principal Occupation(s) and
Name, Year of Birth Position with the Trust Other Directorships During Past Five Years
Andrew G. Arnott President (since 2014); Executive Senior Vice President, John Hancock Financial Services (since 2009);
Born: 1971 Vice President Director and Executive Vice President, John Hancock Advisers, LLC
  (2007-2014, including prior (since 2005, including prior positions); Director and Executive Vice
  positions) 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 funds2 and John Hancock Variable Insurance Trust
    (since 2007, including prior positions).

 

367

 


John Hancock Funds II

Trustees and officers information

    Principal Occupation(s) and
Name, Year of Birth Position with the Trust Other Directorships During Past Five Years
John J. Danello Senior Vice President Vice President and Chief Counsel, John Hancock Wealth
Born: 1955 (since 2006, including prior Management (since 2005); Senior Vice President (since 2007) and
  positions), Chief Legal Counsel (2007-2010), John Hancock Funds, LLC and
  Secretary and Chief Legal Officer The Berkeley Financial Group, LLC; Senior Vice President (since
  (since 2014) 2006, including prior positions) and Chief Legal Officer and
    Secretary (since 2014), John Hancock retail funds2 and John
    Hancock Variable Insurance Trust; 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. Chief Compliance Officer Vice President, John Hancock Financial Services (since 2005); Chief
Born: 1947 (since 2005) Compliance Officer, John Hancock retail funds2 , John Hancock
    Variable Insurance Trust, John Hancock Advisers, LLC, and John
    Hancock Investment Management Services, LLC (since 2005).
 
Charles A. Rizzo Chief Financial Officer Vice President, John Hancock Financial Services (since 2008); Senior
Born: 1957 (since 2007) Vice President, John Hancock Advisers, LLC and John Hancock
    Investment Management Services, LLC (since 2008); Chief Financial
    Officer, John Hancock retail funds2 and John Hancock Variable
    Insurance Trust(since 2007).
   
Salvatore Schiavone Treasurer Assistant Vice President, John Hancock Financial Services (since
Born: 1965 (2007-2009 and since 2010, 2007); Vice President, John Hancock Advisers, LLC and John
  including prior positions) Hancock Investment Management Services, LLC (since 2007);
    Treasurer, John Hancock retail funds2 (since 2007, including prior
    positions); Treasurer, John Hancock Variable Insurance Trust (2007-
    2009 and since 2010, including prior positions).

1 Because the Trust does not hold regular annual shareholders meetings, each Trustee holds office for an indefinite term until his/her successor is duly elected and qualified or until he/she
dies, retires, resigns, is removed or becomes disqualified.
2 John Hancock retail funds is composed of John Hancock Funds III and 36 other John Hancock funds consisting of 26 series of other John Hancock trusts and 10 closed-end funds.
3 Member of the audit committee.
4 Because Messr. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the
Investment Company Act of 1940.

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

The Statement of Additional Information of the fund includes additional information about members of the Board of Trustees of the fund and is available without charge, upon request, by
calling 1-800-225-5291.

368

 


John Hancock Funds II

For more information

The Statement of Additional Information, a separate document with supplemental information not contained in the prospectus, includes additional information on the Board of Trustees and can be obtained without charge by calling 800-344-1029 or on the Securities and Exchange Commission (SEC) website at sec.gov.

PROXY VOTING POLICY The Trust’s proxy voting policies and procedures, as well as the funds’ 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.

QUARTERLY PORTFOLIO DISCLOSURE The funds’ complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The funds’ 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.

369

 







 

Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A1  Class R11,2  Class R21,2  Class R31,2  Class R41,2  Class R51,2  Class R61,2  Class 12  Index 1  Index 2  Index 3 
Inception  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11 
Average annual total returns                     
1 year  13.71%  19.44%  19.70%  19.44%  19.94%  20.23%  20.29%  20.14%  25.25%  5.66%  24.21% 
Since inception  7.04%  8.85%  9.03%  8.91%  9.24%  9.41%  9.44%  9.39%  14.75%  3.89%  14.22% 
Cumulative returns                       
1 year  13.71%  19.44%  19.70%  19.44%  19.94%  20.23%  20.29%  20.14%  25.25%  5.66%  24.21% 
Since inception  25.53%  32.78%  33.51%  33.03%  34.36%  35.07%  35.20%  34.97%  58.37%  13.61%  55.97% 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  2.90  13.84  12.90  16.72  16.40  3.44  9.06  0.99 
Net (%)  1.17  1.42  1.17  1.32  0.92  0.72  0.67  0.72 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 Class A, Class R1, Class R2, Class R3, Class R4, Class R5, and Class R6 shares were first offered on 3-1-12. The returns prior to this date are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class A, Class R1, Class R2, Class R3, Class R4, Class R5, and Class R6 shares, as applicable.

2 For certain types of investors, as described in the portfolio’s prospectuses.

8  Retirement Living Portfolios | Annual report 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  13.73%  19.39%  19.76%  19.58%  20.04%  20.27%  20.46%  20.29%  25.25%  5.66%  24.21% 
5-year  11.74%  12.66%  11.95%  12.77%  13.13%  13.44%  12.76%  13.39%  16.88%  4.48%  16.28% 
Since inception  4.86%  5.32%  4.34%  5.42%  5.74%  6.04%  5.06%  6.03%  7.18%  5.13%  7.16% 
Cumulative returns                       
1-year  13.73%  19.39%  19.76%  19.58%  20.04%  20.27%  20.46%  20.29%  25.25%  5.66%  24.21% 
5-year  74.22%  81.48%  75.87%  82.39%  85.27%  87.88%  82.30%  87.47%  118.10%  24.50%  112.59% 
Since inception  45.06%  50.13%  39.59%  51.32%  54.98%  58.45%  47.26%  58.23%  72.29%  48.01%  71.99% 


Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.39  2.55  12.95  2.65  3.16  1.87  1.98  0.89 
Net (%)  1.14  1.39  1.14  1.29  0.89  0.69  0.64  0.69 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

Annual report | Retirement Living Portfolios  9 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  13.83%  19.45%  19.75%  19.58%  20.03%  20.36%  20.34%  20.27%  25.25%  5.66%  24.21% 
5-year  11.73%  12.66%  12.09%  12.78%  13.13%  13.44%  12.73%  13.42%  16.88%  4.48%  16.28% 
Since inception  4.88%  5.35%  4.57%  5.43%  5.76%  6.06%  5.06%  6.04%  7.18%  5.13%  7.16% 
Cumulative returns                       
1-year  13.83%  19.45%  19.75%  19.58%  20.03%  20.36%  20.34%  20.27%  25.25%  5.66%  24.21% 
5-year  74.12%  81.51%  76.93%  82.48%  85.27%  87.86%  82.02%  87.68%  118.10%  24.50%  112.59% 
Since inception  45.30%  50.50%  41.94%  51.36%  55.14%  58.59%  47.28%  58.38%  72.29%  48.01%  71.99% 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.38  2.33  10.46  1.98  3.46  1.26  1.88  0.89 
Net (%)  1.14  1.39  1.14  1.29  0.89  0.69  0.64  0.69 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

10  Retirement Living Portfolios | Annual report 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  13.57%  19.35%  19.61%  19.42%  19.85%  20.15%  20.20%  20.15%  25.25%  5.66%  23.91% 
5-year  11.69%  12.59%  12.06%  12.70%  13.12%  13.37%  12.78%  13.34%  16.88%  4.48%  16.18% 
Since inception  4.83%  5.30%  4.53%  5.39%  5.75%  6.01%  5.14%  6.00%  7.18%  5.13%  7.10% 
Cumulative returns                       
1-year  13.57%  19.35%  19.61%  19.42%  19.85%  20.15%  20.20%  20.15%  25.25%  5.66%  23.91% 
5-year  73.82%  80.94%  76.68%  81.80%  85.20%  87.26%  82.44%  87.00%  118.10%  24.50%  111.68% 
Since inception  44.82%  49.98%  41.51%  50.94%  55.03%  58.05%  48.17%  57.97%  72.29%  48.01%  71.21% 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.37  2.21  15.91  2.04  2.51  1.44  1.46  0.89 
Net (%)  1.14  1.39  1.14  1.29  0.89  0.69  0.64  0.69 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

Annual report | Retirement Living Portfolios  11 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1 year  12.86%  18.40%  18.78%  18.59%  19.02%  19.30%  19.47%  19.30%  25.25%  5.66%  22.59% 
5 years  11.35%  12.26%  11.83%  12.34%  12.69%  13.02%  12.52%  13.01%  16.88%  4.48%  15.51% 
Since inception  4.61%  5.05%  4.45%  5.13%  5.46%  5.75%  5.02%  5.75%  7.18%  5.13%  6.75% 
Cumulative returns                       
1 year  12.86%  18.40%  18.78%  18.59%  19.02%  19.30%  19.47%  19.30%  25.25%  5.66%  22.59% 
5 years  71.18%  78.28%  74.94%  78.92%  81.73%  84.37%  80.34%  84.31%  118.10%  24.50%  105.61% 
Since inception  42.45%  47.14%  40.71%  48.09%  51.73%  55.09%  46.84%  55.01%  72.29%  48.01%  66.92% 


Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.35  2.08  6.55  1.95  3.48  1.12  1.24  0.88 
Net (%)  1.13  1.38  1.13  1.28  0.88  0.68  0.63  0.68 


Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

12  Retirement Living Portfolios | Annual report 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  11.51%  17.09%  17.46%  17.28%  17.78%  18.01%  17.97%  17.89%  25.25%  5.66%  20.76% 
5-year  10.83%  11.75%  11.29%  11.83%  12.24%  12.49%  11.97%  12.45%  16.88%  4.48%  14.48% 
Since inception  4.54%  4.97%  4.37%  5.06%  5.40%  5.67%  4.97%  5.66%  7.18%  5.13%  6.51% 
Cumulative returns                       
1-year  11.51%  17.09%  17.46%  17.28%  17.78%  18.01%  17.97%  17.89%  25.25%  5.66%  20.76% 
5-year  67.24%  74.26%  70.75%  74.89%  78.14%  80.11%  76.03%  79.84%  118.10%  24.50%  96.63% 
Since inception  41.65%  46.30%  39.86%  47.25%  51.09%  54.09%  46.29%  54.05%  72.29%  48.01%  63.95% 


Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.34  2.05  8.04  1.89  2.14  1.16  1.19  0.88 
Net (%)  1.13  1.38  1.13  1.28  0.88  0.68  0.63  0.68 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

Annual report | Retirement Living Portfolios  13 

 


Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  10.04%  15.36%  15.73%  15.56%  16.00%  16.16%  16.35%  16.27%  25.25%  5.66%  18.35% 
5-year  10.10%  10.99%  10.53%  11.10%  11.44%  11.75%  11.22%  11.72%  16.88%  4.48%  13.09% 
Since inception  4.51%  4.95%  4.32%  5.03%  5.35%  5.65%  4.92%  5.65%  7.18%  5.13%  6.23% 
Cumulative returns                       
1-year  10.04%  15.36%  15.73%  15.56%  16.00%  16.16%  16.35%  16.27%  25.25%  5.66%  18.35% 
5-year  61.80%  68.46%  64.97%  69.30%  71.85%  74.29%  70.15%  74.04%  118.10%  24.50%  84.95% 
Since inception  41.30%  46.02%  39.32%  46.98%  50.46%  53.90%  45.71%  53.87%  72.29%  48.01%  60.55% 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.34  2.07  6.61  1.82  3.00  1.07  1.22  0.88 
Net (%)  1.11  1.36  1.11  1.26  0.86  0.66  0.61  0.66 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

14  Retirement Living Portfolios | Annual report 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  8.23%  13.69%  13.96%  13.69%  14.11%  14.40%  14.46%  14.40%  25.25%  5.66%  16.17% 
5-year  9.29%  10.22%  9.76%  10.29%  10.66%  10.96%  10.35%  10.93%  16.88%  4.48%  11.70% 
Since inception  4.36%  4.81%  4.19%  4.88%  5.22%  5.51%  4.66%  5.50%  7.18%  5.13%  6.10% 
Cumulative returns                       
1-year  8.23%  13.69%  13.96%  13.69%  14.11%  14.40%  14.46%  14.40%  25.25%  5.66%  16.17% 
5-year  55.91%  62.64%  59.33%  63.19%  65.94%  68.19%  63.66%  67.96%  118.10%  24.50%  73.88% 
Since inception  39.71%  44.60%  38.02%  45.31%  49.01%  52.30%  42.94%  52.24%  72.29%  48.01%  59.02% 

 

Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.34  2.60  11.58  1.76  13.92  1.29  1.40  0.88 
Net (%)  1.09  1.34  1.09  1.24  0.84  0.64  0.59  0.64 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

Annual report | Retirement Living Portfolios  15 

 



Performance chart

Total returns with maximum sales charge for the period ended 8-31-14

  Class A  Class R11  Class R21,2  Class R31  Class R41  Class R51  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06  10-30-06 
Average annual total returns                     
1-year  6.76%  12.11%  12.45%  12.31%  12.72%  12.93%  12.97%  12.92%  25.25%  5.66%  14.33% 
5-year  8.60%  9.50%  8.96%  9.58%  9.97%  10.24%  9.61%  10.23%  16.88%  4.48%  10.48% 
Since inception  4.30%  4.75%  4.00%  4.84%  5.19%  5.46%  4.54%  5.46%  7.18%  5.13%  5.97% 
Cumulative returns                       
1-year  6.76%  12.11%  12.45%  12.31%  12.72%  12.93%  12.97%  12.92%  25.25%  5.66%  14.33% 
5-year  51.04%  57.41%  53.56%  58.02%  60.85%  62.80%  58.22%  62.71%  118.10%  24.50%  64.56% 
Since inception  39.09%  43.91%  35.99%  44.86%  48.68%  51.72%  41.64%  51.73%  72.29%  48.01%  57.60% 


Performance figures assume all distributions are reinvested. Figures reflect maximum sales charge on Class A shares of 5%. Sales charges are not applicable to Class R1, Class R2, Class R3, Class R4, Class R5, Class R6, and Class 1 shares.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1 
Gross (%)  1.36  5.09  6.79  2.49  4.49  1.33  1.71  0.88 
Net (%)  1.07  1.32  1.07  1.22  0.82  0.62  0.57  0.62 

 

Please refer to the most recent prospectuses and annual or semiannual report for more information on expenses and any expense limitation arrangements for each class.

The returns reflect past results and should not be considered indicative of future performance. The return and principal value of an investment will fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R6 and Class R2 shares were first offered on 9-1-11 and 3-1-12, respectively. The returns prior to these dates are those of Class A shares that have been recalculated to apply the gross fees and expenses of Class R6 and Class R2 shares, as applicable.

16  Retirement Living Portfolios | Annual report 

 


Your expenses

As a shareholder of a John Hancock Funds Retirement Living Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchases or redemptions, and (2) ongoing costs, including management fees, distribution and service (Rule 12b-1) fees, and other portfolio expenses. In addition to the operating expenses, which each portfolio bears directly, the portfolio indirectly bears a pro rata share of the operating expenses of the underlying funds in which each portfolio invests. Because the underlying funds have varied operating expenses and transaction costs and each portfolio may own different proportions of the underlying funds at different times, the amount of expenses incurred indirectly by the portfolio will vary. Had these indirect expenses been reflected in the following analysis, total expenses would have been higher than the amounts shown.

These examples are intended to help you understand your ongoing costs (in dollars) of investing in a portfolio so you can compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 at the beginning of the period and held for the entire period (March 1, 2014 through August 31, 2014).

Actual expenses:

The first line of each share class in the tables on the following pages provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes:

The second line of each share class in the table on the following pages provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed annualized rate of return of 5% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. See the portfolios’ prospectuses for details regarding transaction costs.

Annual report | Retirement Living Portfolios  17 

 


Shareholder expense example chart

    Beginning  Ending  Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-14  8-31-14  3-1-14–8-31-14  Expense Ratio2 
Retirement Living through 2055 Portfolio 3         
Class A  Actual  $1,000.00  $1,064.00  $2.68  0.60% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.20  3.06  0.60% 
Class R1  Actual  1,000.00  1,063.00  3.80  0.85% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.90  4.33  0.85% 
Class R2  Actual  1,000.00  1,064.00  2.68  0.60% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.20  3.06  0.60% 
Class R3  Actual  1,000.00  1,064.00  3.35  0.75% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.40  3.82  0.75% 
Class R4  Actual  1,000.00  1,065.00  1.56  0.35% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.40  1.79  0.35% 
Class R5  Actual  1,000.00  1,066.00  0.67  0.15% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.40  0.77  0.15% 
Class R6  Actual  1,000.00  1,067.00  0.45  0.10% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.70  0.51  0.10% 
Class 1  Actual  1,000.00  1,066.00  0.67  0.15% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.40  0.77  0.15% 
Retirement Living through 2050 Portfolio         
Class A  Actual  $1,000.00  $1,050.70  $3.10  0.60% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.20  3.06  0.60% 
Class R1  Actual  1,000.00  1,049.80  4.44  0.86% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.90  4.38  0.86% 
Class R2  Actual  1,000.00  1,050.70  3.15  0.61% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.10  3.11  0.61% 
Class R3  Actual  1,000.00  1,049.80  3.87  0.75% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.40  3.82  0.75% 
Class R4  Actual  1,000.00  1,052.40  1.81  0.35% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.40  1.79  0.35% 
Class R5  Actual  1,000.00  1,053.20  0.78  0.15% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.40  0.77  0.15% 
Class R6  Actual  1,000.00  1,053.20  0.57  0.11% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.70  0.56  0.11% 
Class 1  Actual  1,000.00  1,053.20  0.83  0.16% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.40  0.82  0.16% 

 

18  Retirement Living Portfolios | Annual report 

 


Shareholder expense example chart, continued

    Beginning  Ending  Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-14  8-31-14  3-1-14–8-31-14  Expense Ratio2 
Retirement Living through 2045 Portfolio         
Class A  Actual  $1,000.00  $1,051.40  $3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,049.80  4.29  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,051.30  3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,050.60  3.77  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,052.20  1.71  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,053.70  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,054.70  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,053.80  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Retirement Living through 2040 Portfolio         
Class A  Actual  $1,000.00  $1,051.00  $3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,050.30  4.29  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,050.90  3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,050.30  3.77  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,052.70  1.71  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,053.30  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,053.40  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,053.40  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 

 

Annual report | Retirement Living Portfolios  19 

 


Shareholder expense example chart, continued

    Beginning  Ending  Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-14  8-31-14  3-1-14–8-31-14  Expense Ratio2 
Retirement Living through 2035 Portfolio         
Class A  Actual  $1,000.00  $1,050.80  $3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,050.00  4.29  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,050.60  3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,050.80  3.77  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,052.30  1.71  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,053.10  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,054.00  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,053.10  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Retirement Living through 2030 Portfolio         
Class A  Actual  $1,000.00  $1,050.00  $3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,048.40  4.29  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,050.20  3.00  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,049.20  3.77  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,051.00  1.71  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,052.70  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,053.60  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,052.70  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 

 

20  Retirement Living Portfolios | Annual report 

 


Shareholder expense example chart, continued

    Beginning  Ending  Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-14  8-31-14  3-1-14–8-31-14  Expense Ratio2 
Retirement Living through 2025 Portfolio         
Class A  Actual  $1,000.00  $1,047.00  $2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,046.30  4.28  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,047.20  2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,047.10  3.77  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,048.80  1.70  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,049.70  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,049.80  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,049.70  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Retirement Living through 2020 Portfolio         
Class A  Actual  $1,000.00  $1,044.70  $2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,043.00  4.27  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,044.80  2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,043.90  3.76  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,045.70  1.70  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,046.50  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,047.50  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,047.40  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 

 

Annual report | Retirement Living Portfolios  21 

 


Shareholder expense example chart, continued

    Beginning  Ending  Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-14  8-31-14  3-1-14–8-31-14  Expense Ratio2 
Retirement Living through 2015 Portfolio         
Class A  Actual  $1,000.00  $1,042.20  $2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R1  Actual  1,000.00  1,040.40  4.27  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R2  Actual  1,000.00  1,042.30  2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R3  Actual  1,000.00  1,040.40  3.75  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,043.20  1.70  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class R5  Actual  1,000.00  1,044.10  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Class R6  Actual  1,000.00  1,044.10  0.41  0.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.41  0.08% 
Class 1  Actual  1,000.00  1,044.10  0.67  0.13% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.60  0.66  0.13% 
Retirement Living through 2010 Portfolio         
Class A  Actual  $1,000.00  $1,038.30  $3.03  0.59% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.20  3.01  0.59% 
Class R1  Actual  1,000.00  1,037.40  4.31  0.84% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.28  0.84% 
Class R2  Actual  1,000.00  1,038.30  3.03  0.59% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.20  3.01  0.59% 
Class R3  Actual  1,000.00  1,038.40  3.80  0.74% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.77  0.74% 
Class R4  Actual  1,000.00  1,040.30  1.75  0.34% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.73  0.34% 
Class R5  Actual  1,000.00  1,041.30  0.72  0.14% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.50  0.71  0.14% 
Class R6  Actual  1,000.00  1,041.30  0.46  0.09% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.80  0.46  0.09% 
Class 1  Actual  1,000.00  1,041.30  0.72  0.14% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.50  0.71  0.14% 


1 Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period 184 and divided by 365 (to reflect the one-half year period).

2 The portfolios’ expense ratios do not include fees and expenses indirectly incurred by the underlying funds and can vary based on the mix of underlying funds held by the portfolios. The range of expense ratios of the underlying funds held by the portfolios was as follows:

  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living  Living  Living  Living  Living  Living 
Period  through  through  through  through  through  through  through  through  through  through 
ended  2055  2050  2045  2040  2035  2030  2025  2020  2015  2010 
8-31-14  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26%  0.52%–1.26% 


3 The inception date for Retirement Living through 2055 is 3-26-14. Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period 158 and divided by 365 (to reflect the period).

 

 

22  Retirement Living Portfolios | Annual report 

 


Asset Allocation*

Retirement Living through 2055 Portfolio   
EQUITY  92.8% OF TOTAL 
Large Blend  43.2% 
U.S. Large Cap  19.2% 
International Large Cap  8.2% 
U.S. Mid Cap  5.2% 
Emerging Markets  3.9% 
International Small Cap  3.6% 
U.S. Small Cap  2.5% 
Financial Industries  2.0% 
Natural Resources  1.8% 
Health Sciences  1.3% 
Real Estate  1.0% 
Global Large Cap  0.9% 
FIXED INCOME  4.5% OF TOTAL 
Multi-Sector Bond  1.6% 
Bank Loan  0.9% 
High Yield Bond  0.8% 
Intermediate Bond  0.6% 
Global Bond  0.4% 
Treasury Inflation-Protected Securities  0.2% 
ALTERNATIVE  2.7% OF TOTAL 

 

Retirement Living through 2050 Portfolio   
EQUITY  92.9% OF TOTAL 
Large Blend  42.7% 
U.S. Large Cap  18.9% 
International Large Cap  8.4% 
U.S. Mid Cap  5.2% 
Emerging Markets  4.6% 
International Small Cap  3.5% 
U.S. Small Cap  2.4% 
Financial Industries  2.0% 
Natural Resources  1.9% 
Health Sciences  1.4% 
Real Estate  1.0% 
Global Large Cap  0.9% 
FIXED INCOME  4.3% OF TOTAL 
Multi-Sector Bond  1.4% 
Bank Loan  0.8% 
High Yield Bond  0.8% 
Intermediate Bond  0.6% 
Global Bond  0.5% 
Treasury Inflation-Protected Securities  0.2% 
ALTERNATIVE  2.8% OF TOTAL 

 

Retirement Living through 2045 Portfolio   
EQUITY  92.9% OF TOTAL 
Large Blend  42.0% 
U.S. Large Cap  18.8% 
International Large Cap  8.2% 
Emerging Markets  5.5% 
U.S. Mid Cap  5.1% 
International Small Cap  3.5% 
U.S. Small Cap  2.3% 
Financial Industries  2.0% 
Natural Resources  1.9% 
Health Sciences  1.7% 
Real Estate  1.0% 
Global Large Cap  0.9% 
FIXED INCOME  4.2% OF TOTAL 
Multi-Sector Bond  1.4% 
Bank Loan  0.8% 
High Yield Bond  0.8% 
Intermediate Bond  0.6% 
Global Bond  0.5% 
Treasury Inflation-Protected Securities  0.1% 
ALTERNATIVE  2.9% OF TOTAL 

 

Retirement Living through 2040 Portfolio   
Equity  92.9% OF TOTAL 
Large Blend  42.1% 
U.S. Large Cap  18.8% 
International Large Cap  8.2% 
Emerging Markets  5.4% 
U.S. Mid Cap  5.1% 
International Small Cap  3.5% 
U.S. Small Cap  2.3% 
Financial Industries  2.0% 
Natural Resources  1.9% 
Health Sciences  1.7% 
Real Estate  1.0% 
Global Large Cap  0.9% 
FIXED INCOME  4.2% OF TOTAL 
Multi-Sector Bond  1.4% 
Bank Loan  0.8% 
High Yield Bond  0.8% 
Intermediate Bond  0.6% 
Global Bond  0.5% 
Treasury Inflation-Protected Securities  0.1% 
ALTERNATIVE  2.9% OF TOTAL 

 

Annual report | Retirement Living Portfolios  23 

 


Asset Allocation*, continued

Retirement Living through 2035 Portfolio   
EQUITY  91.8% OF TOTAL 
Large Blend  42.0% 
U.S. Large Cap  18.7% 
International Large Cap  7.9% 
Emerging Markets  5.3% 
U.S. Mid Cap  5.0% 
International Small Cap  3.4% 
U.S. Small Cap  2.2% 
Financial Industries  2.0% 
Natural Resources  1.8% 
Health Sciences  1.6% 
Real Estate  1.0% 
Global Large Cap  0.9% 
FIXED INCOME  5.3% OF TOTAL 
Multi-Sector Bond  1.7% 
Bank Loan  1.0% 
High Yield Bond  1.0% 
Global Bond  0.7% 
Intermediate Bond  0.7% 
Treasury Inflation-Protected Securities  0.2% 
ALTERNATIVE  2.9% OF TOTAL 

 

Retirement Living through 2030 Portfolio   
EQUITY  85.9% OF TOTAL 
Large Blend  39.5% 
U.S. Large Cap  18.0% 
International Large Cap  7.3% 
Emerging Markets  4.7% 
U.S. Mid Cap  4.6% 
International Small Cap  3.0% 
Financial Industries  1.9% 
U.S. Small Cap  1.8% 
Natural Resources  1.7% 
Health Sciences  1.6% 
Real Estate  1.0% 
Global Large Cap  0.8% 
FIXED INCOME  11.2% OF TOTAL 
Multi-Sector Bond  3.8% 
Bank Loan  2.1% 
High Yield Bond  2.0% 
Intermediate Bond  1.5% 
Global Bond  1.4% 
Treasury Inflation-Protected Securities  0.4% 
ALTERNATIVE  2.9% OF TOTAL 

 

Retirement Living through 2025 Portfolio   
EQUITY  77.0% OF TOTAL 
Large Blend  34.4% 
U.S. Large Cap  18.0% 
International Large Cap  6.2% 
U.S. Mid Cap  4.0% 
Emerging Markets  3.9% 
International Small Cap  2.6% 
Financial Industries  1.7% 
Natural Resources  1.5% 
Health Sciences  1.4% 
U.S. Small Cap  1.3% 
Real Estate  1.1% 
Global Large Cap  0.9% 
FIXED INCOME  20.0% OF TOTAL 
Multi-Sector Bond  6.7% 
Bank Loan  3.7% 
Intermediate Bond  3.6% 
High Yield Bond  3.3% 
Global Bond  2.1% 
Treasury Inflation-Protected Securities  0.6% 
ALTERNATIVE  3.0% OF TOTAL 

 

Retirement Living through 2020 Portfolio   
EQUITY  65.0% OF TOTAL 
Large Blend  28.1% 
U.S. Large Cap  15.5% 
International Large Cap  5.5% 
U.S. Mid Cap  3.2% 
Emerging Markets  3.1% 
International Small Cap  2.1% 
Financial Industries  1.5% 
Natural Resources  1.5% 
Health Sciences  1.3% 
Real Estate  1.2% 
U.S. Small Cap  1.1% 
Global Large Cap  0.9% 
FIXED INCOME  31.7% OF TOTAL 
Multi-Sector Bond  10.5% 
Intermediate Bond  7.4% 
Bank Loan  5.4% 
High Yield Bond  4.4% 
Global Bond  3.1% 
Treasury Inflation-Protected Securities  0.9% 
ALTERNATIVE  3.3% OF TOTAL 

 

24  Retirement Living Portfolios | Annual report 

 


Asset Allocation*, continued

Retirement Living through 2015 Portfolio   
EQUITY  54.2% OF TOTAL 
Large Blend  23.2% 
U.S. Large Cap  14.4% 
International Large Cap  3.8% 
Emerging Markets  2.7% 
U.S. Mid Cap  2.5% 
International Small Cap  1.7% 
Natural Resources  1.4% 
Real Estate  1.1% 
Financial Industries  0.9% 
U.S. Small Cap  0.9% 
Global Large Cap  0.8% 
Health Sciences  0.8% 
FIXED INCOME  42.1% OF TOTAL 
Intermediate Bond  12.2% 
Multi-Sector Bond  12.2% 
Bank Loan  7.1% 
High Yield Bond  5.3% 
Global Bond  4.2% 
Treasury Inflation-Protected Securities  1.1% 
ALTERNATIVE  3.7% OF TOTAL 

 

Retirement Living through 2010 Portfolio   
EQUITY  44.1% OF TOTAL 
Large Blend  19.2% 
U.S. Large Cap  13.3% 
International Large Cap  2.4% 
U.S. Mid Cap  2.0% 
Emerging Markets  1.8% 
International Small Cap  1.4% 
Natural Resources  1.1% 
Real Estate  1.0% 
Global Large Cap  0.8% 
U.S. Small Cap  0.7% 
Financial Industries  0.2% 
Health Sciences  0.2% 
FIXED INCOME  51.8% OF TOTAL 
Intermediate Bond  17.2% 
Multi-Sector Bond  13.6% 
Bank Loan  8.6% 
High Yield Bond  5.8% 
Global Bond  5.3% 
Treasury Inflation-Protected Securities  1.3% 
ALTERNATIVE  4.1% OF TOTAL 


*As a percentage of net assets on 8-31-14.

 

 

 

Annual report | Retirement Living Portfolios  25 

 


Portfolios’ investments

Investment companies   
 
Underlying Funds’ Subadvisors   
 
Allianz Life Insurance Company  (Allianz) 
 
Baillie Gifford Overseas, Ltd.  (Baillie Gifford) 
 
Barrow, Hanley, Mewhinney & Strauss, LLC  (Barrow Hanley) 
 
Declaration Management & Research, LLC  (Declaration) 
 
Deutsche Investment Management   
Americas, Inc.  (Deutsche) 
 
Dimensional Fund Advisors L.P.  (DFA) 
 
Epoch Investment Partners, Inc.  (Epoch) 
 
First Quadrant, LP  (First Quadrant) 
 
Franklin Templeton Investment Corp.  (Franklin Templeton) 
 
Grantham, Mayo, Van Otterloo & Co. LLC  (GMO) 
 
Invesco Advisers, Inc.  (Invesco) 
 
Jennison Associates LLC  (Jennison) 
 
John Hancock Asset Management  (John Hancock) 
 
Pacific Investment Management   
Company LLC  (PIMCO) 
 
Robeco Investment Management, Inc.  (Robeco) 
 
Standard Life Investments   
(Corporate Funds) Limited  (Standard Life) 
 
Stone Harbor Investment Partners LP  (Stone Harbor) 
 
T. Rowe Price Associates, Inc.  (T. Rowe Price) 
 
Templeton Investment Counsel, LLC  (Templeton) 
 
Wellington Management Company, LLP  (Wellington) 
 
Wells Capital Management, Incorporated  (Wells Capital) 
 
Western Asset Management Company  (WAMCO) 

 

Retirement Living through 2055 Portfolio
As of 8-31-14

AFFILIATED INVESTMENT COMPANIES (G) 100.0%  Shares  Value 
 
EQUITY 92.8%     
 
Alpha Opportunities, Class NAV (Wellington)  22,029  $299,157 
Blue Chip Growth, Class NAV (T. Rowe Price)  4,745  170,672 
Capital Appreciation, Class NAV (Jennison)  8,297  151,992 
Capital Appreciation Value, Class NAV (T. Rowe Price)  21,236  269,699 
Disciplined Value, Class NAV (Robeco)  3,473  67,276 
Emerging Markets, Class NAV (DFA)  25,475  288,889 
Equity-Income, Class NAV (T. Rowe Price)  7,576  162,505 
Financial Industries, Class NAV (John Hancock1) (A)  8,722  150,713 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  5,173  68,799 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  8,595  122,571 
Global Equity, Class NAV (John Hancock1) (A)  6,506  76,122 
Global Real Estate, Class NAV (Deutsche)  4,053  38,061 
Global Shareholder Yield, Class NAV (Epoch)  7,829  96,530 
Health Sciences, Class NAV (T. Rowe Price)  4,866  98,635 
International Core, Class NAV (GMO)  2,115  75,119 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  3,463  49,137 
International Growth Stock, Class NAV (Invesco)  4,413  62,881 
International Small Cap, Class NAV     
(Franklin Templeton)  6,858  133,449 
International Small Company, Class NAV (DFA)  12,356  133,449 
International Value, Class NAV (Templeton)  8,907  160,949 
International Value Equity, Class NAV     
(John Hancock1) (A)  3,910  37,498 
Mid Cap Stock, Class NAV (Wellington)  7,897  179,175 
Mid Value, Class NAV (T. Rowe Price)  8,198  149,198 
Natural Resources, Class NAV     
(Jennison)  7,148  134,248 
Real Estate Equity, Class NAV (T. Rowe Price)  3,294  37,985 
Redwood, Class NAV (Robeco)  6,052  69,963 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  13,654  198,536 
Small Cap Growth, Class NAV (Wellington)  4,158  45,993 
Small Cap Value, Class NAV (Wellington)  2,477  47,957 
Small Company Growth, Class NAV (Invesco)  1,928  40,786 
Small Company Value, Class NAV (T. Rowe Price)  1,286  47,957 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  205,555  2,869,550 
Strategic Growth, Class NAV (John Hancock1) (A)  9,200  151,992 
U.S. Equity, Class NAV (GMO)  8,345  115,241 
Value, Class NAV (Invesco)  4,599  59,375 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  4,876  49,197 
 
FIXED INCOME 4.5%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  2,212  23,136 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  175  1,686 
Core High Yield Fund, Class NAV (John Hancock1) (A)  1,192  13,209 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  1,784  18,112 
Floating Rate Income, Class NAV (WAMCO)  7,188  67,280 
Global Bond, Class NAV (PIMCO) (I)  761  9,598 
Global Income, Class NAV (Stone Harbor)  2,484  25,386 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  1,817  18,312 

 

26  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Retirement Living through 2055 Portfolio
(continued)

  Shares  Value 
FIXED INCOME (continued)     
 
High Yield, Class NAV (WAMCO)  1,271  $12,128 
Real Return Bond, Class NAV (PIMCO)  1,021  12,063 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  3,426  35,114 
Spectrum Income, Class NAV (T. Rowe Price)  2,203  24,779 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  3,599  39,482 
Total Return, Class NAV (PIMCO)  1,656  23,114 
U.S. High Yield Bond, Class NAV (Wells Capital)  972  12,226 
 
ALTERNATIVE 2.7%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  14,748  148,363 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  4,703  53,475 
 
Total investments     
(Cost $7,273,779) 100.0%    $7,448,719 
Other assets and liabilities, net 0.0%    1,636 
TOTAL NET ASSETS 100.0%    $7,450,355 
 
Percentages are based upon net assets.     

 

Retirement Living through 2050 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 92.9%     
 
Alpha Opportunities, Class NAV (Wellington)  683,840  $9,286,549 
Blue Chip Growth, Class NAV (T. Rowe Price)  151,718  5,457,311 
Capital Appreciation, Class NAV (Jennison)  267,388  4,898,557 
Capital Appreciation Value, Class NAV (T. Rowe Price)  684,619  8,694,658 
China Emerging Leaders, Class NAV (DFA)  143,632  1,447,808 
Disciplined Value, Class NAV (Robeco)  112,135  2,172,057 
Emerging Markets, Class NAV (DFA)  855,584  9,702,323 
Equity-Income, Class NAV (T. Rowe Price)  244,595  5,246,558 
Financial Industries, Class NAV (John Hancock1) (A)  281,604  4,866,116 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  166,807  2,218,537 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  277,509  3,957,283 
Global Equity, Class NAV (John Hancock1) (A)  210,054  2,457,634 
Global Real Estate, Class NAV (Deutsche)  130,105  1,221,690 
Global Shareholder Yield, Class NAV (Epoch)  252,760  3,116,526 
Health Sciences, Class NAV (T. Rowe Price)  169,778  3,441,396 
International Core, Class NAV (GMO)  59,804  2,124,245 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  111,810  1,586,583 
International Growth Stock, Class NAV (Invesco)  136,457  1,944,513 
International Small Cap, Class NAV     
(Franklin Templeton)  220,609  4,293,053 
International Small Company, Class NAV (DFA)  397,917  4,297,506 
International Value, Class NAV (Templeton)  326,037  5,891,491 
International Value Equity, Class NAV     
(John Hancock1) (A)  120,242  1,153,122 
Mid Cap Stock, Class NAV (Wellington)  254,808  5,781,585 
Mid Value, Class NAV (T. Rowe Price)  265,114  4,825,074 
Natural Resources, Class NAV     
(Jennison)  240,108  4,509,219 
Real Estate Equity, Class NAV (T. Rowe Price)  106,211  1,224,610 
Redwood, Class NAV (Robeco)  194,751  2,251,317 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  476,535  6,928,823 
Small Cap Growth, Class NAV (Wellington)  134,192  1,484,165 
Small Cap Value, Class NAV (Wellington)  73,597  1,424,840 

 

Retirement Living through 2050 Portfolio
(continued)

  Shares  Value 
EQUITY (continued)     
 
Small Company Growth, Class NAV (Invesco)  62,544  $1,323,436 
Small Company Value, Class NAV (T. Rowe Price)  41,234  1,537,198 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  6,636,475  92,645,197 
Strategic Growth, Class NAV (John Hancock1) (A)  297,282  4,911,091 
U.S. Equity, Class NAV (GMO)  268,355  3,705,984 
Value, Class NAV (Invesco)  148,448  1,916,463 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  157,664  1,590,827 
 
FIXED INCOME 4.3%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  67,289  703,839 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  31,619  304,487 
Core High Yield Fund, Class NAV (John Hancock1) (A)  34,940  387,130 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  58,854  597,364 
Floating Rate Income, Class NAV (WAMCO)  219,345  2,053,073 
Global Bond, Class NAV (PIMCO) (I)  23,494  296,499 
Global Income, Class NAV (Stone Harbor)  75,869  775,382 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  55,430  558,738 
High Yield, Class NAV (WAMCO)  38,739  369,566 
Real Return Bond, Class NAV (PIMCO)  31,052  367,034 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  104,451  1,070,621 
Spectrum Income, Class NAV (T. Rowe Price)  68,273  768,076 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  109,399  1,200,103 
Total Return, Class NAV (PIMCO)  50,328  702,579 
U.S. High Yield Bond, Class NAV (Wells Capital)  29,662  373,143 
 
ALTERNATIVE 2.8%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  483,804  4,867,071 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  170,392  1,937,353 
 
Total investments     
(Cost $209,662,878) 100.0%    $242,867,403 
Other assets and liabilities, net 0.0%    12,606 
TOTAL NET ASSETS 100.0%    $242,880,009 

 

Percentages are based upon net assets.

Retirement Living through 2045 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 92.9%     
 
Alpha Opportunities, Class NAV (Wellington)  2,314,470  $31,430,501 
Blue Chip Growth, Class NAV (T. Rowe Price)  511,527  18,399,617 
Capital Appreciation, Class NAV (Jennison)  892,931  16,358,498 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  2,290,272  29,086,460 
China Emerging Leaders, Class NAV (DFA)  643,154  6,482,993 
Disciplined Value, Class NAV (Robeco)  373,729  7,239,134 
Emerging Markets, Class NAV (DFA)  3,425,527  38,845,473 
Equity-Income, Class NAV (T. Rowe Price)  816,813  17,520,631 
Financial Industries, Class NAV (John Hancock1) (A)  940,403  16,250,164 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  557,223  7,411,059 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  926,729  13,215,158 
Global Equity, Class NAV (John Hancock1) (A)  700,712  8,198,335 
Global Real Estate, Class NAV (Deutsche)  434,481  4,079,776 

 

  Annual report | Retirement Living Portfolios  27 
See notes to financial statements     

 


Retirement Living through 2045 Portfolio
(continued)

  Shares  Value 
EQUITY (continued)     
 
Global Shareholder Yield, Class NAV (Epoch)  840,152  $10,359,069 
Health Sciences, Class NAV (T. Rowe Price)  677,019  13,723,181 
International Core, Class NAV (GMO)  213,368  7,578,828 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  372,083  5,279,856 
International Growth Stock, Class NAV (Invesco)  434,770  6,195,467 
International Small Cap, Class NAV     
(Franklin Templeton)  738,513  14,371,467 
International Small Company, Class NAV (DFA)  1,331,839  14,383,857 
International Value, Class NAV (Templeton)  1,012,092  18,288,502 
International Value Equity, Class NAV     
(John Hancock1) (A)  401,543  3,850,796 
Mid Cap Stock, Class NAV (Wellington)  851,388  19,317,997 
Mid Value, Class NAV (T. Rowe Price)  885,335  16,113,104 
Natural Resources, Class NAV (Jennison)  827,113  15,533,176 
Real Estate Equity, Class NAV (T. Rowe Price)  353,291  4,073,441 
Redwood, Class NAV (Robeco)  649,494  7,508,153 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  1,602,596  23,301,750 
Small Cap Growth, Class NAV (Wellington)  451,268  4,991,020 
Small Cap Value, Class NAV (Wellington)  213,706  4,137,347 
Small Company Growth, Class NAV (Invesco)  208,864  4,419,552 
Small Company Value, Class NAV (T. Rowe Price)  138,033  5,145,885 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  22,049,987  307,817,823 
Strategic Growth, Class NAV (John Hancock1) (A)  992,727  16,399,845 
U.S. Equity, Class NAV (GMO)  899,697  12,424,809 
Value, Class NAV (Invesco)  495,735  6,399,938 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  526,510  5,312,490 
 
FIXED INCOME 4.2%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  218,738  2,288,003 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  156,585  1,507,917 
Core High Yield Fund, Class NAV (John Hancock1) (A)  120,990  1,340,567 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  192,963  1,958,576 
Floating Rate Income, Class NAV (WAMCO)  713,037  6,674,025 
Global Bond, Class NAV (PIMCO) (I)  76,374  963,844 
Global Income, Class NAV (Stone Harbor)  246,631  2,520,570 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  180,190  1,816,318 
High Yield, Class NAV (WAMCO)  125,002  1,192,523 
Real Return Bond, Class NAV (PIMCO)  100,942  1,193,136 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  339,863  3,483,595 
Spectrum Income, Class NAV (T. Rowe Price)  218,300  2,455,877 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  357,046  3,916,793 
Total Return, Class NAV (PIMCO)  163,604  2,283,909 
U.S. High Yield Bond, Class NAV (Wells Capital)  96,010  1,207,802 
 
ALTERNATIVE 2.9%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  1,630,606  16,403,893 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  639,261  7,268,397 
 
Total investments     
(Cost $611,209,025) 100.0%    $819,920,897 
Other assets and liabilities, net 0.0%    56,232 
TOTAL NET ASSETS 100.0%    $819,977,129 

 

Percentages are based upon net assets.

Retirement Living through 2040 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 92.9%     
 
Alpha Opportunities, Class NAV (Wellington)  2,361,061  $32,063,209 
Blue Chip Growth, Class NAV (T. Rowe Price)  533,174  19,178,267 
Capital Appreciation, Class NAV (Jennison)  933,054  17,093,543 
Capital Appreciation Value, Class NAV (T. Rowe Price)  2,381,018  30,238,931 
China Emerging Leaders, Class NAV (DFA)  642,047  6,471,831 
Disciplined Value, Class NAV (Robeco)  390,317  7,560,441 
Emerging Markets, Class NAV (DFA)  3,510,305  39,806,860 
Equity-Income, Class NAV (T. Rowe Price)  851,379  18,262,083 
Financial Industries, Class NAV (John Hancock1) (A)  980,200  16,937,851 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  581,318  7,731,530 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  965,947  13,774,408 
Global Equity, Class NAV (John Hancock1) (A)  724,887  8,481,178 
Global Real Estate, Class NAV (Deutsche)  452,868  4,252,427 
Global Shareholder Yield, Class NAV (Epoch)  879,799  10,847,924 
Health Sciences, Class NAV (T. Rowe Price)  705,670  14,303,930 
International Core, Class NAV (GMO)  224,051  7,958,308 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  386,578  5,485,548 
International Growth Stock, Class NAV (Invesco)  472,939  6,739,376 
International Small Cap, Class NAV     
(Franklin Templeton)  767,108  14,927,931 
International Small Company, Class NAV (DFA)  1,385,560  14,964,044 
International Value, Class NAV (Templeton)  1,015,370  18,347,739 
International Value Equity, Class NAV     
(John Hancock1) (A)  418,536  4,013,757 
Mid Cap Stock, Class NAV (Wellington)  887,418  20,135,512 
Mid Value, Class NAV (T. Rowe Price)  922,802  16,794,992 
Natural Resources, Class NAV (Jennison)  864,966  16,244,070 
Real Estate Equity, Class NAV (T. Rowe Price)  369,652  4,262,089 
Redwood, Class NAV (Robeco)  677,150  7,827,852 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  1,670,416  24,287,852 
Small Cap Growth, Class NAV (Wellington)  467,093  5,166,045 
Small Cap Value, Class NAV (Wellington)  246,275  4,767,879 
Small Company Growth, Class NAV (Invesco)  216,611  4,583,485 
Small Company Value, Class NAV (T. Rowe Price)  143,875  5,363,653 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  23,081,216  322,213,771 
Strategic Growth, Class NAV (John Hancock1) (A)  1,034,770  17,094,398 
U.S. Equity, Class NAV (GMO)  936,180  12,928,651 
Value, Class NAV (Invesco)  516,714  6,670,776 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  546,158  5,510,730 
 
FIXED INCOME 4.2%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  228,501  2,390,119 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  161,207  1,552,427 
Core High Yield Fund, Class NAV (John Hancock1) (A)  127,310  1,410,597 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  202,731  2,057,716 
Floating Rate Income, Class NAV (WAMCO)  744,860  6,971,893 
Global Bond, Class NAV (PIMCO) (I)  79,783  1,006,861 
Global Income, Class NAV (Stone Harbor)  257,639  2,633,066 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  185,092  1,865,730 
High Yield, Class NAV (WAMCO)  131,504  1,254,544 
Real Return Bond, Class NAV (PIMCO)  105,447  1,246,386 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  354,698  3,635,650 
Spectrum Income, Class NAV (T. Rowe Price)  228,043  2,565,486 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  371,500  4,075,350 

 

28  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Retirement Living through 2040 Portfolio
(continued)

  Shares  Value 
FIXED INCOME (continued)     
 
Total Return, Class NAV (PIMCO)  170,906  $2,385,842 
U.S. High Yield Bond, Class NAV (Wells Capital)  100,737  1,267,272 
 
ALTERNATIVE 2.9%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  1,690,452  17,005,944 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  657,740  7,478,504 
 
Total investments     
(Cost $640,697,369) 100.0%    $854,096,258 
Other assets and liabilities, net 0.0%    57,349 
TOTAL NET ASSETS 100.0%    $854,153,607 

 

Percentages are based upon net assets.

Retirement Living through 2035 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 91.8%     
 
Alpha Opportunities, Class NAV (Wellington)  3,078,283  $41,803,078 
Blue Chip Growth, Class NAV (T. Rowe Price)  687,711  24,736,955 
Capital Appreciation, Class NAV (Jennison)  1,202,477  22,029,372 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  3,078,018  39,090,834 
China Emerging Leaders, Class NAV (DFA)  846,660  8,534,329 
Disciplined Value, Class NAV (Robeco)  503,514  9,753,073 
Emerging Markets, Class NAV (DFA)  4,418,660  50,107,599 
Equity-Income, Class NAV (T. Rowe Price)  1,096,193  23,513,330 
Financial Industries, Class NAV (John Hancock1) (A)  1,259,680  21,767,277 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  735,735  9,785,279 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  1,246,009  17,768,095 
Global Equity, Class NAV (John Hancock1) (A)  947,004  11,079,948 
Global Real Estate, Class NAV (Deutsche)  591,248  5,551,817 
Global Shareholder Yield, Class NAV (Epoch)  1,149,666  14,175,384 
Health Sciences, Class NAV (T. Rowe Price)  883,068  17,899,787 
International Core, Class NAV (GMO)  285,508  10,141,258 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  490,492  6,960,086 
International Growth Stock, Class NAV (Invesco)  585,202  8,339,133 
International Small Cap, Class NAV     
(Franklin Templeton)  974,790  18,969,406 
International Small Company, Class NAV (DFA)  1,760,934  19,018,090 
International Value, Class NAV (Templeton)  1,212,723  21,913,910 
International Value Equity, Class NAV     
(John Hancock1) (A)  532,358  5,105,315 
Mid Cap Stock, Class NAV (Wellington)  1,132,062  25,686,497 
Mid Value, Class NAV (T. Rowe Price)  1,171,596  21,323,047 
Natural Resources, Class NAV     
(Jennison)  1,083,734  20,352,529 
Real Estate Equity, Class NAV (T. Rowe Price)  481,217  5,548,434 
Redwood, Class NAV (Robeco)  853,084  9,861,650 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  2,140,340  31,120,542 
Small Cap Growth, Class NAV (Wellington)  582,199  6,439,116 
Small Cap Value, Class NAV (Wellington)  300,782  5,823,146 
Small Company Growth, Class NAV (Invesco)  272,477  5,765,612 
Small Company Value, Class NAV (T. Rowe Price)  183,099  6,825,917 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  29,663,579  414,103,558 
Strategic Growth, Class NAV (John Hancock1) (A)  1,332,354  22,010,488 
U.S. Equity, Class NAV (GMO)  1,207,118  16,670,293 

 

Retirement Living through 2035 Portfolio
(continued)

  Shares  Value 
EQUITY (continued)     
 
Value, Class NAV (Invesco)  666,775  $8,608,069 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  706,169  7,125,247 
 
FIXED INCOME 5.3%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  367,562  3,844,700 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  253,989  2,445,919 
Core High Yield Fund, Class NAV (John Hancock1) (A)  195,931  2,170,919 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  321,255  3,260,734 
Floating Rate Income, Class NAV (WAMCO)  1,189,921  11,137,660 
Global Bond, Class NAV (PIMCO) (I)  126,273  1,593,571 
Global Income, Class NAV (Stone Harbor)  412,868  4,219,506 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  298,648  3,010,372 
High Yield, Class NAV (WAMCO)  219,498  2,094,012 
Real Return Bond, Class NAV (PIMCO)  166,378  1,966,593 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  572,064  5,863,653 
Spectrum Income, Class NAV (T. Rowe Price)  365,131  4,107,723 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  602,259  6,606,776 
Total Return, Class NAV (PIMCO)  275,012  3,839,174 
U.S. High Yield Bond, Class NAV (Wells Capital)  168,143  2,115,239 
 
ALTERNATIVE 2.9%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  2,206,069  22,193,049 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  844,245  9,599,065 
 
Total investments     
(Cost $832,146,550) 100.0%    $1,105,376,165 
Other assets and liabilities, net 0.0%    70,619 
TOTAL NET ASSETS 100.0%    $1,105,446,784 

 

Percentages are based upon net assets.

Retirement Living through 2030 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 85.9%     
 
Alpha Opportunities, Class NAV (Wellington)  4,137,155  $56,182,569 
Blue Chip Growth, Class NAV (T. Rowe Price)  794,041  28,561,672 
Capital Appreciation, Class NAV (Jennison)  1,393,279  25,524,873 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  3,551,536  45,104,511 
China Emerging Leaders, Class NAV (DFA)  904,412  9,116,470 
Disciplined Value, Class NAV (Robeco)  582,487  11,282,782 
Emerging Markets, Class NAV (DFA)  4,711,005  53,422,794 
Equity-Income, Class NAV (T. Rowe Price)  1,270,506  27,252,361 
Financial Industries, Class NAV (John Hancock1) (A)  1,430,357  24,716,575 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  804,934  10,705,617 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  1,441,433  20,554,838 
Global Equity, Class NAV (John Hancock1)  1,141,907  13,360,310 
Global Real Estate, Class NAV (Deutsche)  713,374  6,698,580 
Global Shareholder Yield, Class NAV (Epoch)  1,392,701  17,172,007 
Health Sciences, Class NAV (T. Rowe Price)  1,028,421  20,846,092 
International Core, Class NAV (GMO)  299,995  10,655,813 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  512,573  7,273,406 
International Growth Stock, Class NAV (Invesco)  599,231  8,539,037 

 

  Annual report | Retirement Living Portfolios  29 
See notes to financial statements     

 


Retirement Living through 2030 Portfolio
(continued)

  Shares  Value 
EQUITY (continued)     
 
International Small Cap, Class NAV     
(Franklin Templeton)  1,044,918  $20,334,095 
International Small Company, Class NAV (DFA)  1,881,082  20,315,688 
International Value, Class NAV (Templeton)  1,370,615  24,767,015 
International Value Equity, Class NAV     
(John Hancock1) (A)  558,793  5,358,821 
Mid Cap Stock, Class NAV (Wellington)  1,253,596  28,444,101 
Mid Value, Class NAV (T. Rowe Price)  1,321,349  24,048,559 
Natural Resources, Class NAV     
(Jennison)  1,192,538  22,395,867 
Real Estate Equity, Class NAV (T. Rowe Price)  579,719  6,684,163 
Redwood, Class NAV (Robeco)  909,717  10,516,332 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  2,408,164  35,014,701 
Small Cap Growth, Class NAV (Wellington)  571,498  6,320,763 
Small Cap Value, Class NAV (Wellington)  263,406  5,099,548 
Small Company Growth, Class NAV (Invesco)  261,776  5,539,185 
Small Company Value, Class NAV (T. Rowe Price)  174,852  6,518,495 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  33,398,479  466,242,768 
Strategic Growth, Class NAV (John Hancock1) (A)  1,538,943  25,423,335 
U.S. Equity, Class NAV (GMO)  1,472,246  20,331,720 
Value, Class NAV (Invesco)  694,922  8,971,448 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  818,965  8,263,352 
 
FIXED INCOME 11.2%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  943,242  9,866,314 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  641,103  6,173,821 
Core High Yield Fund, Class NAV (John Hancock1) (A)  514,658  5,702,413 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  793,984  8,058,941 
Floating Rate Income, Class NAV (WAMCO)  3,049,639  28,544,617 
Global Bond, Class NAV (PIMCO) (I)  323,633  4,084,247 
Global Income, Class NAV (Stone Harbor)  1,053,521  10,766,988 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  767,687  7,738,290 
High Yield, Class NAV (WAMCO)  548,731  5,234,893 
Real Return Bond, Class NAV (PIMCO)  431,610  5,101,635 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  1,471,459  15,082,454 
Spectrum Income, Class NAV (T. Rowe Price)  944,129  10,621,447 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  1,542,464  16,920,833 
Total Return, Class NAV (PIMCO)  705,572  9,849,787 
U.S. High Yield Bond, Class NAV (Wells Capital)  420,369  5,288,237 
 
ALTERNATIVE 2.9%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  2,656,125  26,720,621 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  1,022,005  11,620,195 
 
Total investments     
(Cost $1,016,855,076) 100.0%    $1,334,935,996 
Other assets and liabilities, net 0.0%    62,757 
TOTAL NET ASSETS 100.0%    $1,334,998,753 

 

Percentages are based upon net assets.

Retirement Living through 2025 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 77.0%     
 
Alpha Opportunities, Class NAV (Wellington)  2,764,444  $37,541,153 
Blue Chip Growth, Class NAV (T. Rowe Price)  744,886  26,793,534 
Capital Appreciation, Class NAV (Jennison)  1,298,753  23,793,158 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  4,680,821  59,446,432 
China Emerging Leaders, Class NAV (DFA)  887,034  8,941,307 
Disciplined Value, Class NAV (Robeco)  590,703  11,441,909 
Emerging Markets, Class NAV (DFA)  4,340,696  49,223,495 
Equity-Income, Class NAV (T. Rowe Price)  1,288,456  27,637,389 
Financial Industries, Class NAV (John Hancock1) (A)  1,472,779  25,449,616 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  1,026,309  13,649,914 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  1,461,877  20,846,360 
Global Equity, Class NAV (John Hancock1) (A)  1,272,036  14,882,816 
Global Real Estate, Class NAV (Deutsche)  894,712  8,401,350 
Global Shareholder Yield, Class NAV (Epoch)  1,848,463  22,791,544 
Health Sciences, Class NAV (T. Rowe Price)  1,035,310  20,985,740 
International Core, Class NAV (GMO)  264,456  9,393,488 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  496,534  7,045,818 
International Growth Stock, Class NAV (Invesco)  568,199  8,096,836 
International Small Cap, Class NAV     
(Franklin Templeton)  986,880  19,204,690 
International Small Company, Class NAV (DFA)  1,783,468  19,261,455 
International Value, Class NAV (Templeton)  1,076,325  19,449,186 
International Value Equity, Class NAV     
(John Hancock1) (A)  538,047  5,159,872 
Mid Cap Stock, Class NAV (Wellington)  1,218,567  27,649,295 
Mid Value, Class NAV (T. Rowe Price)  1,219,164  22,188,790 
Natural Resources, Class NAV     
(Jennison)  1,202,686  22,586,442 
Real Estate Equity, Class NAV (T. Rowe Price)  645,783  7,445,873 
Redwood, Class NAV (Robeco)  1,129,819  13,060,704 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  2,424,548  35,252,926 
Small Cap Growth, Class NAV (Wellington)  488,723  5,405,272 
Small Cap Value, Class NAV (Wellington)  177,246  3,431,481 
Small Company Growth, Class NAV (Invesco)  226,522  4,793,197 
Small Company Value, Class NAV (T. Rowe Price)  155,535  5,798,345 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  33,389,427  466,116,401 
Strategic Growth, Class NAV (John Hancock1) (A)  1,444,408  23,861,619 
U.S. Equity, Class NAV (GMO)  2,003,386  27,666,756 
Value, Class NAV (Invesco)  694,455  8,965,408 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  830,027  8,374,971 
 
FIXED INCOME 20.0%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  2,580,672  26,993,831 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  1,000,860  9,638,283 
Core High Yield Fund, Class NAV (John Hancock1) (A)  782,822  8,673,670 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  1,233,504  12,520,067 
Floating Rate Income, Class NAV (WAMCO)  5,816,503  54,442,469 
Global Bond, Class NAV (PIMCO) (I)  720,276  9,089,879 
Global Income, Class NAV (Stone Harbor)  1,915,253  19,573,888 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  1,350,740  13,615,463 
High Yield, Class NAV (WAMCO)  1,092,973  10,426,966 
Real Return Bond, Class NAV (PIMCO)  777,701  9,192,424 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  2,898,258  29,707,144 
Spectrum Income, Class NAV (T. Rowe Price)  1,852,456  20,840,128 

 

30  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Retirement Living through 2025 Portfolio
(continued)

  Shares  Value 
FIXED INCOME (continued)     
 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  3,101,845  $34,027,241 
Total Return, Class NAV (PIMCO)  1,925,736  26,883,274 
U.S. High Yield Bond, Class NAV (Wells Capital)  837,015  10,529,648 
 
ALTERNATIVE 3.0%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  3,030,884  30,490,690 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  1,210,430  13,762,592 
 
Total investments     
(Cost $1,154,845,666) 100.0%    $1,482,442,199 
Other assets and liabilities, net 0.0%    31,815 
TOTAL NET ASSETS 100.0%    $1,482,474,014 

 

Percentages are based upon net assets.

Retirement Living through 2020 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 65.0%     
 
Alpha Opportunities, Class NAV (Wellington)  985,275  $13,380,034 
Blue Chip Growth, Class NAV (T. Rowe Price)  482,009  17,337,870 
Capital Appreciation, Class NAV (Jennison)  842,824  15,440,542 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  3,888,932  49,389,431 
China Emerging Leaders, Class NAV (DFA)  627,160  6,321,771 
Disciplined Value, Class NAV (Robeco)  379,062  7,342,434 
Emerging Markets, Class NAV (DFA)  2,856,812  32,396,252 
Equity-Income, Class NAV (T. Rowe Price)  826,871  17,736,384 
Financial Industries, Class NAV (John Hancock1) (A)  1,116,847  19,299,110 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  840,390  11,177,193 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  938,134  13,377,792 
Global Equity, Class NAV (John Hancock1) (A)  1,071,102  12,531,890 
Global Real Estate, Class NAV (Deutsche)  946,365  8,886,363 
Global Shareholder Yield, Class NAV (Epoch)  1,543,465  19,030,928 
Health Sciences, Class NAV (T. Rowe Price)  791,852  16,050,845 
International Core, Class NAV (GMO)  189,919  6,745,916 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  374,679  5,316,688 
International Growth Stock, Class NAV (Invesco)  410,079  5,843,620 
International Small Cap, Class NAV     
(Franklin Templeton)  679,901  13,230,878 
International Small Company, Class NAV (DFA)  1,227,777  13,259,993 
International Value, Class NAV (Templeton)  751,994  13,588,531 
International Value Equity, Class NAV     
(John Hancock1) (A)  404,314  3,877,367 
Mid Cap Stock, Class NAV (Wellington)  781,959  17,742,650 
Mid Value, Class NAV (T. Rowe Price)  871,104  15,854,094 
Natural Resources, Class NAV     
(Jennison)  999,950  18,779,066 
Real Estate Equity, Class NAV (T. Rowe Price)  543,338  6,264,692 
Redwood, Class NAV (Robeco)  934,853  10,806,898 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  1,785,924  25,967,329 
Small Cap Growth, Class NAV (Wellington)  337,092  3,728,237 
Small Cap Value, Class NAV (Wellington)  162,378  3,143,633 
Small Company Growth, Class NAV (Invesco)  145,920  3,087,668 
Small Company Value, Class NAV (T. Rowe Price)  112,948  4,210,715 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  23,854,578  333,009,910 

 

Retirement Living through 2020 Portfolio
(continued)

  Shares  Value 
EQUITY (continued)     
 
Strategic Growth, Class NAV (John Hancock1) (A)  934,582  $15,439,288 
U.S. Equity, Class NAV (GMO)  1,692,123  23,368,215 
Value, Class NAV (Invesco)  402,845  5,200,734 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  533,071  5,378,687 
 
FIXED INCOME 31.7%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  4,447,455  46,520,377 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  1,294,584  12,466,845 
Core High Yield Fund, Class NAV (John Hancock1) (A)  957,084  10,604,487 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  1,232,111  12,505,927 
Floating Rate Income, Class NAV (WAMCO)  7,134,422  66,778,193 
Global Bond, Class NAV (PIMCO) (I)  1,103,613  13,927,600 
Global Income, Class NAV (Stone Harbor)  2,112,204  21,586,724 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  1,598,717  16,115,068 
High Yield, Class NAV (WAMCO)  1,201,448  11,461,818 
Real Return Bond, Class NAV (PIMCO)  976,768  11,545,399 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  3,982,282  40,818,394 
Spectrum Income, Class NAV (T. Rowe Price)  2,524,618  28,401,953 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  4,216,796  46,258,255 
Total Return, Class NAV (PIMCO)  3,319,570  46,341,197 
U.S. High Yield Bond, Class NAV (Wells Capital)  920,006  11,573,676 
 
ALTERNATIVE 3.3%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  2,760,419  27,769,813 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  1,215,647  13,821,906 
 
Total investments     
(Cost $1,001,420,943) 100.0%    $1,252,041,280 
Other assets and liabilities, net 0.0%    (279,483) 
TOTAL NET ASSETS 100.0%    $1,251,761,797 

 

Percentages are based upon net assets.

Retirement Living through 2015 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 54.2%     
 
Alpha Opportunities, Class NAV (Wellington)  349,746  $4,749,551 
Blue Chip Growth, Class NAV (T. Rowe Price)  195,507  7,032,386 
Capital Appreciation, Class NAV (Jennison)  341,212  6,251,010 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  2,230,531  28,327,743 
China Emerging Leaders, Class NAV (DFA)  285,509  2,877,933 
Disciplined Value, Class NAV (Robeco)  151,473  2,934,024 
Emerging Markets, Class NAV (DFA)  1,321,819  14,989,423 
Equity-Income, Class NAV (T. Rowe Price)  330,387  7,086,807 
Financial Industries, Class NAV (John Hancock1) (A)  355,761  6,147,543 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  424,435  5,644,990 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  374,848  5,345,339 
Global Equity, Class NAV (John Hancock1) (A)  401,969  4,703,038 
Global Real Estate, Class NAV (Deutsche)  466,082  4,376,513 
Global Shareholder Yield, Class NAV (Epoch)  914,398  11,274,526 
Health Sciences, Class NAV (T. Rowe Price)  252,835  5,124,968 
International Core, Class NAV (GMO)  80,313  2,852,729 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  158,946  2,255,443 

 

  Annual report | Retirement Living Portfolios  31 
See notes to financial statements     

 


Retirement Living through 2015 Portfolio
(continued)

  Shares  Value 
EQUITY (continued)     
 
International Growth Stock, Class NAV (Invesco)  174,354  $2,484,548 
International Small Cap, Class NAV     
(Franklin Templeton)  302,062  5,878,126 
International Small Company, Class NAV (DFA)  538,050  5,810,940 
International Value, Class NAV (Templeton)  314,701  5,686,645 
International Value Equity, Class NAV     
(John Hancock1) (A)  169,752  1,627,923 
Mid Cap Stock, Class NAV (Wellington)  329,743  7,481,862 
Mid Value, Class NAV (T. Rowe Price)  365,464  6,651,440 
Natural Resources, Class NAV     
(Jennison)  500,468  9,398,788 
Real Estate Equity, Class NAV (T. Rowe Price)  291,354  3,359,313 
Redwood, Class NAV (Robeco)  479,080  5,538,163 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  565,307  8,219,567 
Small Cap Growth, Class NAV (Wellington)  279,437  3,090,568 
Small Cap Value, Class NAV (Wellington)  84,220  1,630,491 
Small Company Value, Class NAV (T. Rowe Price)  44,118  1,644,720 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  10,694,936  149,301,307 
Strategic Growth, Class NAV (John Hancock1) (A)  379,163  6,263,775 
U.S. Equity, Class NAV (GMO)  1,079,359  14,905,944 
Value, Class NAV (Invesco)  185,894  2,399,893 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  213,145  2,150,632 
 
FIXED INCOME 42.1%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  3,938,059  41,192,098 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  895,187  8,620,655 
Core High Yield Fund, Class NAV (John Hancock1) (A)  591,405  6,552,773 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  833,103  8,455,998 
Floating Rate Income, Class NAV (WAMCO)  5,010,665  46,899,825 
Global Bond, Class NAV (PIMCO) (I)  889,523  11,225,782 
Global Income, Class NAV (Stone Harbor)  1,322,672  13,517,713 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  993,777  10,017,271 
High Yield, Class NAV (WAMCO)  833,081  7,947,596 
Real Return Bond, Class NAV (PIMCO)  637,369  7,533,696 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  2,522,790  25,858,597 
Spectrum Income, Class NAV (T. Rowe Price)  1,598,740  17,985,825 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  2,610,717  28,639,570 
Total Return, Class NAV (PIMCO)  2,939,358  41,033,441 
U.S. High Yield Bond, Class NAV (Wells Capital)  637,522  8,020,026 
 
ALTERNATIVE 3.7%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  1,540,829  15,500,737 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  850,137  9,666,062 
 
Total investments     
(Cost $553,238,840) 100.0%    $674,166,276 
Other assets and liabilities, net 0.0%    (36,003) 
TOTAL NET ASSETS 100.0%    $674,130,273 

 

Percentages are based upon net assets.

Retirement Living through 2010 Portfolio
As of 8-31-14

  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 100.0%   
EQUITY 44.1%     
 
Alpha Opportunities, Class NAV (Wellington)  155,881  $2,116,870 
Blue Chip Growth, Class NAV (T. Rowe Price)  102,436  3,684,609 
Capital Appreciation, Class NAV (Jennison)  179,105  3,281,196 
Capital Appreciation Value, Class NAV     
(T. Rowe Price)  1,141,317  14,494,723 
China Emerging Leaders, Class NAV (DFA)  113,765  1,146,749 
Disciplined Value, Class NAV (Robeco)  88,626  1,716,684 
Emerging Markets, Class NAV (DFA)  519,310  5,888,976 
Equity-Income, Class NAV (T. Rowe Price)  191,442  4,106,433 
Financial Industries, Class NAV (John Hancock1) (A)  51,370  887,667 
Fundamental Global Franchise, Class NAV     
(John Hancock1) (A)  229,217  3,048,580 
Fundamental Large Cap Value, Class NAV     
(John Hancock1) (A)  219,288  3,127,043 
Global Equity, Class NAV (John Hancock1) (A)  237,090  2,773,958 
Global Real Estate, Class NAV (Deutsche)  227,175  2,133,174 
Global Shareholder Yield, Class NAV (Epoch)  498,676  6,148,676 
Health Sciences, Class NAV (T. Rowe Price)  37,399  758,083 
International Core, Class NAV (GMO)  35,199  1,250,263 
International Growth Opportunities, Series NAV     
(Baillie Gifford)  69,119  980,792 
International Growth Stock, Class NAV (Invesco)  75,835  1,080,655 
International Small Cap, Class NAV     
(Franklin Templeton)  145,174  2,825,078 
International Small Company, Class NAV (DFA)  263,416  2,844,892 
International Value, Class NAV (Templeton)  135,482  2,448,165 
International Value Equity, Class NAV     
(John Hancock1) (A)  74,339  712,907 
Mid Cap Stock, Class NAV (Wellington)  154,111  3,496,772 
Mid Value, Class NAV (T. Rowe Price)  232,978  4,240,193 
Natural Resources, Class NAV     
(Jennison)  247,698  4,651,772 
Real Estate Equity, Class NAV (T. Rowe Price)  171,916  1,982,191 
Redwood, Class NAV (Robeco)  293,423  3,391,965 
Science & Technology, Class NAV     
(T. Rowe Price/Allianz)  80,860  1,175,711 
Small Cap Growth, Class NAV (Wellington)  119,129  1,317,566 
Small Cap Value, Class NAV (Wellington)  35,821  693,490 
Small Company Value, Class NAV (T. Rowe Price)  19,031  709,468 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  5,211,561  72,753,391 
Strategic Growth, Class NAV (John Hancock1) (A)  190,211  3,142,291 
U.S. Equity, Class NAV (GMO)  589,628  8,142,756 
Value Equity Fund, Class NAV (Barrow Hanley) (I)  123,046  1,241,533 
 
FIXED INCOME 51.8%     
 
Active Bond, Class NAV (John Hancock1(A)/     
Declaration)  3,269,379  34,197,708 
Asia Pacific Total Return Bond, Class NAV     
(John Hancock1) (A)  627,872  6,046,411 
Core High Yield Fund, Class NAV (John Hancock1) (A)  376,513  4,171,765 
Emerging Markets Debt, Class NAV     
(John Hancock1) (A)  612,849  6,220,420 
Floating Rate Income, Class NAV (WAMCO)  3,620,751  33,890,234 
Global Bond, Class NAV (PIMCO) (I)  688,960  8,694,676 
Global Income, Class NAV (Stone Harbor)  856,398  8,752,390 
Global Short Duration Credit, Class NAV     
(John Hancock1) (A)  655,585  6,608,302 
High Yield, Class NAV (WAMCO)  514,278  4,906,209 
Real Return Bond, Class NAV (PIMCO)  430,347  5,086,704 
Short Duration Credit Opportunities Fund, Class NAV     
(Stone Harbor)  1,637,224  16,781,544 
Spectrum Income, Class NAV (T. Rowe Price)  1,039,504  11,694,414 
Strategic Income Opportunities, Class NAV     
(John Hancock1) (A)  1,710,008  18,758,792 

 

32  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Retirement Living through 2010 Portfolio
(continued)

  Shares  Value 
FIXED INCOME (continued)     
 
Total Return, Class NAV (PIMCO)  2,433,245  $33,968,100 
U.S. High Yield Bond, Class NAV (Wells Capital)  392,647  4,939,505 
 
ALTERNATIVE 4.1%     
 
Absolute Return Currency, Class NAV     
(First Quadrant)  932,930  9,385,271 
Global Absolute Return Strategies, Class NAV     
(Standard Life)  594,755  6,762,363 
 
Total investments     
(Cost $334,281,145) 100.0%    $395,260,080 
Other assets and liabilities, net 0.0%    (34,049) 
TOTAL NET ASSETS 100.0%    $395,226,031 

 

Percentages are based upon net assets.

Footnote Legend: 
(A) The subadvisor is an affiliate of the advisor. 
(G) The portfolio’s subadvisor is shown parenthetically. 
(I)   Non-income producing. 
   1 Manulife Asset Management (US) LLC is doing business as John Hancock 
      Asset Management. 

 

  Annual report | Retirement Living Portfolios  33 
See notes to financial statements     

 


F I N A N C I A L  S T A T E M E N T S

 

Financial statements

Statements of assets and liabilities 8-31-14

These Statements of assets and liabilities are the portfolios’ balance sheets. They show the value of what each portfolio owns, is due and owes. You’ll also find the net asset value and the maximum public offering price per share for each portfolio. Net asset value is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

  Retirement  Retirement  Retirement  Retirement 
  Living through  Living through  Living through  Living through 
  2055 Portfolio  2050 Portfolio  2045 Portfolio  2040 Portfolio 
Assets         
Investments in affiliated funds, at value  7,448,719  242,867,403  819,920,897  854,096,258 
Cash  76,328  6,508  2,768  2,655 
Receivable for investments sold  71  1,787,031  4,101,833  4,247,727 
Receivable for fund shares sold  106,401  34,177  121,190  31,237 
Dividends and interest receivable  655  25,156  98,768  102,145 
Receivable due from advisor  4,645  —  1,208  1,023 
Other assets  105,261  44,639  42,272  42,014 
Total assets  7,742,080  244,764,914  824,288,936  858,523,059 
 
Liabilities         
Payable for investments purchased  107,071  273,752  826,570  829,844 
Payable for fund shares repurchased  —  1,547,999  3,400,498  3,451,287 
Payable to affiliates         
Accounting and legal services fees  138  5,070  17,377  17,965 
Transfer agent fees  46  1,691  9,458  9,848 
Trustees’ fees  —  21  102  106 
Investment management fees  —  5,875  —  — 
Distribution and service fees  —  488  2,347  4,019 
Other liabilities and accrued expenses  184,470  50,009  55,455  56,383 
Total liabilities  291,725  1,884,905  4,311,807  4,369,452 
 
Net assets  $7,450,355  $242,880,009  $819,977,129  $854,153,607 
 
Net assets consist of         
Paid-in capital  $7,281,301  $204,800,740  $595,954,156  $624,704,480 
Undistributed net investment income (loss)  —  —  —  — 
Accumulated undistributed net realized gain (loss) on investments  (5,886)  4,874,744  15,311,101  16,050,238 
Net unrealized appreciation (depreciation) on investments  174,940  33,204,525  208,711,872  213,398,889 
Net assets  $7,450,355  $242,880,009  $819,977,129  $854,153,607 
 
Investments in affiliated funds, at cost  $7,273,779  $209,662,878  $611,209,025  $640,697,369 
 
Net asset value per share         
The funds have an unlimited number of shares authorized with no par value.         
Net asset value is calculated by dividing the net assets of each class of shares by         
the number of outstanding shares in the class.         
Class A1: Net assets  $132,240  $8,304,528  $44,702,769  $45,468,789 
Shares outstanding  12,427  667,367  3,643,027  3,678,593 
Net asset value and redemption price per share  $10.64  $12.44  $12.27  $12.36 
Class R1: Net assets  $106,307  $408,791  $1,446,755  $2,257,518 
Shares outstanding  10,000  32,897  118,253  183,165 
Net asset value, offering and redemption price per share  $10.63  $12.43  $12.23  $12.33 
Class R2: Net assets  $106,423  $457,972  $524,219  $1,488,873 
Shares outstanding  10,000  36,801  42,610  120,217 
Net asset value, offering and redemption price per share  $10.64  $12.44  $12.30  $12.38 
Class R3: Net assets  $106,353  $183,891  $2,026,839  $3,213,002 
Shares outstanding  10,000  14,790  165,482  260,815 
Net asset value, offering and redemption price per share  $10.64  $12.43  $12.25  $12.32 
Class R4: Net assets  $106,537  $130,943  $1,215,254  $1,348,546 
Shares outstanding  10,000  10,508  98,763  108,922 
Net asset value, offering and redemption price per share  $10.65  $12.46  $12.30  $12.38 
Class R5: Net assets  $106,630  $131,091  $1,399,259  $2,270,736 
Shares outstanding  10,000  10,504  113,214  182,534 
Net asset value, offering and redemption price per share  $10.66  $12.48  $12.36  $12.44 
Class R6: Net assets  $106,653  $1,222,565  $1,495,778  $1,231,987 
Shares outstanding  10,000  97,925  121,164  99,159 
Net asset value, offering and redemption price per share  $10.67  $12.48  $12.35  $12.42 
Class 1: Net assets  $6,679,212  $232,040,228  $767,166,256  $796,874,156 
Shares outstanding  626,494  18,601,848  62,124,115  64,115,303 
Net asset value, offering and redemption price per share  $10.66  $12.47  $12.35  $12.43 
 
Maximum public offering price per share         
Class A (net asset value per share ÷ 95%)2  $11.20  $13.09  $12.92  $13.01 


1 Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

 

34  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of assets and liabilities 8-31-14

Continued

  Retirement  Retirement  Retirement 
  Living through  Living through  Living through 
  2035 Portfolio  2030 Portfolio  2025 Portfolio 
Assets       
Investments in affiliated funds, at value  1,105,376,165  1,334,935,996  1,482,442,199 
Cash  2,299  1,962  2,500 
Receivable for investments sold  4,717,982  6,814,263  5,897,978 
Receivable for fund shares sold  231,759  42,830  139,438 
Dividends and interest receivable  153,631  336,308  585,466 
Receivable due from advisor  955  959  677 
Other assets  42,022  44,601  43,586 
Total assets  1,110,524,813  1,342,176,919  1,489,111,844 
Liabilities       
Payable for investments purchased  877,225  2,074,691  1,101,131 
Payable for fund shares repurchased  4,103,605  4,994,766  5,423,128 
Payable to affiliates       
Accounting and legal services fees  23,157  27,938  31,030 
Transfer agent fees  11,554  15,770  16,201 
Trustees’ fees  135  166  187 
Distribution and service fees  3,960  4,999  5,440 
Other liabilities and accrued expenses  58,393  59,836  60,713 
Total liabilities  5,078,029  7,178,166  6,637,830 
 
Net assets  $1,105,446,784  $1,334,998,753  $1,482,474,014 
 
Net assets consist of       
Paid-in capital  $812,385,982  $989,236,976  $1,122,697,067 
Undistributed net investment income (loss)  36,314  1,829,112  4,828,480 
Accumulated undistributed net realized gain (loss) on investments  19,794,873  25,851,745  27,351,934 
Net unrealized appreciation (depreciation) on investments  273,229,615  318,080,920  327,596,533 
Net assets  $1,105,446,784  $1,334,998,753  $1,482,474,014 
 
Investments in affiliated funds, at cost  $832,146,550  $1,016,855,076  $1,154,845,666 
 
Net asset value per share       
 
The funds have an unlimited number of shares authorized with no par value. Net asset value is calculated       
by dividing the net assets of each class of shares by the number of outstanding shares in the class.       
Class A1: Net assets  $55,884,867  $73,551,098  $74,976,560 
Shares outstanding  4,498,792  6,032,676  6,225,315 
Net asset value and redemption price per share  $12.42  $12.19  $12.04 
Class R1: Net assets  $3,744,965  $3,684,912  $4,313,109 
Shares outstanding  302,248  303,686  359,907 
Net asset value, offering and redemption price per share  $12.39  $12.13  $11.98 
Class R2: Net assets  $605,349  $1,155,561  $912,144 
Shares outstanding  48,580  95,181  76,057 
Net asset value, offering and redemption price per share  $12.46  $12.14  $11.99 
Class R3: Net assets  $2,831,089  $3,604,466  $4,783,749 
Shares outstanding  228,160  296,726  398,753 
Net asset value, offering and redemption price per share  $12.41  $12.15  $12.00 
Class R4: Net assets  $1,536,096  $1,251,970  $1,388,451 
Shares outstanding  123,061  102,920  115,426 
Net asset value, offering and redemption price per share  $12.48  $12.16  $12.03 
Class R5: Net assets  $1,270,521  $2,577,475  $1,733,449 
Shares outstanding  101,634  211,471  144,042 
Net asset value, offering and redemption price per share  $12.50  $12.19  $12.03 
Class R6: Net assets  $1,178,301  $2,554,424  $1,066,529 
Shares outstanding  94,277  209,615  88,754 
Net asset value, offering and redemption price per share  $12.50  $12.19  $12.02 
Class 1: Net assets  $1,038,395,596  $1,246,618,847  $1,393,300,023 
Shares outstanding  83,059,528  102,273,725  115,776,335 
Net asset value, offering and redemption price per share  $12.50  $12.19  $12.03 
 
Maximum public offering price per share       
Class A (net asset value per share ÷ 95%)2  $13.07  $12.83  $12.67 


1 Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge.
2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

 

 

 

  Annual report | Retirement Living Portfolios  35 
See notes to financial statements     

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of assets and liabilities 8-31-14

Continued

  Retirement  Retirement  Retirement 
  Living through  Living through  Living through 
  2020 Portfolio  2015 Portfolio  2010 Portfolio 
Assets       
Investments in affiliated funds, at value  1,252,041,280  674,166,276  395,260,080 
Cash  2,196  1,828  2,209 
Receivable for investments sold  5,560,238  3,642,887  1,379,436 
Receivable for fund shares sold  70,906  75,852  109,847 
Dividends and interest receivable  687,681  446,235  301,935 
Receivable due from advisor  742  661  624 
Other assets  43,596  40,651  39,219 
Total assets  1,258,406,639  678,374,390  397,093,350 
 
Liabilities       
Payable for investments purchased  883,928  481,799  328,396 
Payable for fund shares repurchased  5,654,597  3,677,594  1,468,790 
Payable to affiliates       
Accounting and legal services fees  26,233  14,282  8,392 
Transfer agent fees  16,783  13,227  8,441 
Trustees’ fees  164  97  58 
Distribution and service fees  5,457  3,389  1,115 
Other liabilities and accrued expenses  57,680  53,729  52,127 
Total liabilities  6,644,842  4,244,117  1,867,319 
   
Net assets  $1,251,761,797  $674,130,273  $395,226,031 
 
Net assets consist of       
Paid-in capital  $970,431,092  $528,074,108  $322,917,594 
Undistributed net investment income (loss)  6,888,910  5,081,848  3,590,424 
Accumulated undistributed net realized gain (loss) on investments  23,821,458  20,046,881  7,739,078 
Net unrealized appreciation (depreciation) on investments  250,620,337  120,927,436  60,978,935 
Net assets  $1,251,761,797  $674,130,273  $395,226,031 
   
Investments in affiliated funds, at cost  $1,001,420,943  $553,238,840  $334,281,145 
Net asset value per share       
The funds have an unlimited number of shares authorized with no par value. Net asset value is calculated       
by dividing the net assets of each class of shares by the number of outstanding shares in the class.       
Class A1: Net assets  $77,842,656  $61,465,109  $39,226,967 
Shares outstanding  6,661,495  5,416,014  3,709,934 
Net asset value and redemption price per share  $11.69  $11.35  $10.57 
Class R1: Net assets  $3,552,955  $1,184,303  $531,011 
Shares outstanding  305,124  104,659  50,424 
Net asset value, offering and redemption price per share  $11.64  $11.32  $10.53 
Class R2: Net assets  $1,233,212  $366,433  $681,272 
Shares outstanding  105,857  32,349  64,446 
Net asset value, offering and redemption price per share  $11.65  $11.33  $10.57 
Class R3: Net assets  $4,269,253  $6,277,396  $1,199,880 
Shares outstanding  366,218  554,524  113,769 
Net asset value, offering and redemption price per share  $11.66  $11.32  $10.55 
Class R4: Net assets  $1,150,653  $251,121  $607,262 
Shares outstanding  98,644  22,143  57,419 
Net asset value, offering and redemption price per share  $11.66  $11.34  $10.58 
Class R5: Net assets  $3,896,452  $1,360,352  $213,024 
Shares outstanding  332,994  119,660  20,116 
Net asset value, offering and redemption price per share  $11.70  $11.37  $10.59 
Class R6: Net assets  $1,744,997  $656,350  $505,798 
Shares outstanding  149,222  57,703  47,718 
Net asset value, offering and redemption price per share  $11.69  $11.37  $10.60 
Class 1: Net assets  $1,158,071,619  $602,569,209  $352,260,817 
Shares outstanding  98,998,565  53,011,355  33,243,518 
Net asset value, offering and redemption price per share  $11.70  $11.37  $10.60 
 
Maximum public offering price per share       
Class A (net asset value per share ÷ 95%)2  $12.31  $11.95  $11.13 


1 Redemption price per share is equal to the net asset value less any applicable contingent deferred sales charge.
2 On single retail sales of less than $50,000. On sales of $50,000 or more and on group sales the offering price is reduced.

 

 

36  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of operations For the year ended 8-31-14

These Statements of operations summarize the portfolios’ investment income earned and expenses directly incurred in operating each Portfolio. They also show net gains (losses) for the period stated.

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living through  Living through  Living through  Living through  Living through 
  2055 Portfolio1  2050 Portfolio  2045 Portfolio  2040 Portfolio  2035 Portfolio 
Investment income           
Income distributions received from affiliated           
underlying funds  $2,396  $2,224,701  $9,819,064  $10,155,032  $13,390,884 
 
Expenses           
Investment management fees  828  120,074  482,629  501,691  642,471 
Distribution and service fees  1,290  110,454  495,064  530,124  659,650 
Transfer agent fees  115  7,077  51,899  54,170  64,147 
Accounting and legal services fees  189  23,419  94,841  97,978  125,482 
State registration fees  48,262  104,611  107,574  106,637  108,435 
Professional fees  38,740  39,188  50,863  51,238  54,420 
Printing and postage  1,809  2,480  7,741  7,891  8,006 
Custodian fees  4,542  12,227  12,227  12,227  12,227 
Trustees’ fees  7  2,352  10,068  10,463  13,413 
Registration and filing fees  23,853  23,382  22,459  23,113  24,352 
Expense recapture  —  7,354  2,834  3,821  7,124 
Other  5,342  7,285  10,766  10,908  12,144 
 
Total expenses before reductions  124,977  459,903  1,348,965  1,410,261  1,731,871 
     
Net expense reductions  (122,034)  (138,342)  (150,884)  (154,297)  (169,109) 
Total expenses  2,943  321,561  1,198,081  1,255,964  1,562,762 
 
Net investment income (loss)  (547)  1,903,140  8,620,983  8,899,068  11,828,122 
 
Realized and unrealized gain (loss)           
Net realized gain (loss) on           
     
Investments in affiliated issuers  (5,863)  2,013,700  11,028,297  10,998,397  13,012,686 
Capital gain distributions received from affiliated           
underlying funds  —  5,144,370  23,734,054  24,482,629  31,216,935 
  (5,863)  7,158,070  34,762,351  35,481,026  44,229,621 
Change in net unrealized appreciation of           
Investments in affiliated issuers  174,940  22,956,162  93,259,262  97,353,739  124,367,052 
 
Net realized and unrealized gain  169,077  30,114,232  128,021,613  132,834,765  168,596,673 
 
Increase in net assets from operations  $168,530  $32,017,372  $136,642,596  $141,733,833  $180,424,795 


1 Period from 3-26-14 (commencement of operations) to 8-31-14.

 

 

  Annual report | Retirement Living Portfolios  37 
See notes to financial statements     

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of operations For the year ended 8-31-14

Continued

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living through  Living through  Living through  Living through  Living through 
  2030 Portfolio  2025 Portfolio  2020 Portfolio  2015 Portfolio  2010 Portfolio 
Investment income           
Income distributions received from affiliated           
underlying funds  $18,699,269  $24,476,821  $24,794,034  $16,231,223  $10,444,460 
Expenses           
Investment management fees  786,757  871,533  745,680  396,388  233,236 
Distribution and service fees  821,166  909,199  815,638  514,805  307,282 
Transfer agent fees  88,283  93,797  95,372  73,988  52,407 
Accounting and legal services fees  152,709  170,583  147,311  84,020  49,871 
State registration fees  109,585  107,635  108,197  107,987  105,677 
Professional fees  57,541  59,602  56,934  49,729  45,844 
Printing and postage  9,947  10,064  10,188  7,945  6,940 
Custodian fees  12,227  12,227  12,227  12,227  12,227 
Trustees’ fees  16,428  18,386  15,966  9,198  5,458 
Registration and filing fees  24,361  24,345  23,163  21,470  21,680 
Expense recapture  14,539  18,371  18,764  11,732  4,281 
Other  13,466  14,422  13,462  10,679  9,362 
 
Total expenses before reductions  2,107,009  2,310,164  2,062,902  1,300,168  854,265 
     
Net expense reductions  (188,966)  (190,948)  (171,753)  (109,965)  (100,833) 
Total expenses  1,918,043  2,119,216  1,891,149  1,190,203  753,432 
 
Net investment income  16,781,226  22,357,605  22,902,885  15,041,020  9,691,028 
 
Realized and unrealized gain           
Net realized gain on           
Investments in affiliated issuers  17,624,488  19,692,271  17,356,414  16,669,286  8,929,103 
Capital gain distributions received from affiliated           
underlying funds  37,367,284  39,183,771  30,940,705  17,121,222  8,925,580 
  54,991,772  58,876,042  48,297,119  33,790,508  17,854,683 
Change in net unrealized appreciation of           
Investments in affiliated issuers  140,638,277  141,620,765  104,677,003  41,760,509  21,126,712 
 
Net realized and unrealized gain  195,630,049  200,496,807  152,974,122  75,551,017  38,981,395 
 
Increase in net assets from operations  $212,411,275  $222,854,412  $175,877,007  $90,592,037  $48,672,423 

 

38  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of changes in net assets

These Statements of changes in net assets show how the value of the portfolios’ net assets have changed during the last two periods. They reflect income less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of portfolio share transactions.

  Retirement Living    Retirement Living    Retirement Living 
  through 2055 Portfolio  through 2050 Portfolio  through 2045 Portfolio 
  Period ended  Year ended  Year ended  Year ended  Year ended 
  8-31-141  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets           
From operations           
 
Net investment income (loss)  ($547)  $1,903,140  $826,077  $8,620,983  $6,956,299 
Net realized gain (loss)  (5,863)  7,158,070  2,228,470  34,762,351  14,443,834 
Change in net unrealized appreciation           
(depreciation)  174,940  22,956,162  8,563,672  93,259,262  66,483,751 
Increase in net assets resulting           
from operations  168,530  32,017,372  11,618,219  136,642,596  87,883,884 
 
Distributions to shareholders           
From net investment income           
Class A  —  (29,235)  (6,895)  (297,737)  (169,103) 
Class R1  —  (2,324)  (537)  (7,733)  (9,525) 
Class R2  —  (2,652)  (1,044)  (3,503)  (858) 
Class R3  —  (820)  (635)  (10,869)  (8,075) 
Class R4  —  (1,276)  (1,035)  (9,408)  (7,126) 
Class R5  —  (13,355)  (1,336)  (14,156)  (22,907) 
Class R6  —  (4,203)  (2,382)  (32,186)  (8,917) 
Class 1  —  (1,910,224)  (817,263)  (8,618,941)  (6,892,075) 
From net realized gain           
Class A  —  (87,246)  (11,997)  (1,058,430)  (1,153,753) 
Class R1  —  (9,733)  (1,372)  (37,925)  (91,498) 
Class R2  —  (7,915)  (1,815)  (12,450)  (5,853) 
Class R3  —  (2,960)  (1,366)  (46,275)  (66,679) 
Class R4  —  (2,959)  (1,365)  (26,225)  (37,699) 
Class R5  —  (26,269)  (1,478)  (33,652)  (102,720) 
Class R6  —  (7,966)  (2,533)  (73,795)  (39,087) 
Class 1  —  (3,757,094)  (904,290)  (20,488,594)  (31,143,700) 
 
Total distributions  —  (5,866,231)  (1,757,343)  (30,771,879)  (39,759,575) 
From fund share transactions  7,281,825  88,459,523  65,886,628  46,562,573  69,145,047 
 
Total increase  7,450,355  114,610,664  75,747,504  152,433,290  117,269,356 
 
Net assets           
 
Beginning of period  —  128,269,345  52,521,841  667,543,839  550,274,483 
 
End of period  $7,450,355  $242,880,009  $128,269,345  $819,977,129  $667,543,839 
 
Undistributed net investment           
income (loss)  —  —  $17,963  —  $170,155 


1 Period from 3-26-14 (commencement of operations) to 8-31-14.

 

 

  Annual report | Retirement Living Portfolios  39 
See notes to financial statements     

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of changes in net assets

Continued

  Retirement Living  Retirement Living  Retirement Living 
  through 2040 Portfolio  through 2035 Portfolio  through 2030 Portfolio 
  Year ended  Year ended  Year ended  Year ended  Year ended  Year ended 
  8-31-14  8-31-13  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets             
From operations             
Net investment income  $8,899,068  $7,012,083  $11,828,122  $9,242,750  $16,781,226  $13,531,444 
Net realized gain  35,481,026  13,977,050  44,229,621  17,550,126  54,991,772  21,182,212 
Change in net unrealized appreciation  97,353,739  68,171,908  124,367,052  86,243,892  140,638,277  98,308,261 
Increase in net assets resulting             
from operations  141,733,833  89,161,041  180,424,795  113,036,768  212,411,275  133,021,917 
 
Distributions to shareholders             
From net investment income             
Class A  (297,991)  (181,590)  (382,285)  (218,307)  (601,350)  (382,701) 
Class R1  (11,840)  (11,980)  (16,995)  (15,825)  (26,075)  (25,952) 
Class R2  (4,545)  (1,066)  (2,888)  (850)  (8,199)  (1,320) 
Class R3  (24,758)  (19,388)  (17,682)  (17,508)  (32,173)  (28,845) 
Class R4  (9,794)  (5,686)  (14,502)  (10,471)  (13,264)  (7,040) 
Class R5  (53,099)  (44,776)  (21,829)  (47,256)  (90,163)  (106,859) 
Class R6  (31,176)  (7,720)  (55,474)  (11,207)  (105,403)  (13,618) 
Class 1  (8,814,528)  (6,894,093)  (11,714,912)  (8,919,369)  (16,047,491)  (12,904,919) 
From net realized gain             
Class A  (1,029,836)  (1,125,828)  (1,254,024)  (1,256,026)  (1,569,138)  (1,533,447) 
Class R1  (56,555)  (104,623)  (76,063)  (128,693)  (87,793)  (134,635) 
Class R2  (15,708)  (6,607)  (9,476)  (4,885)  (21,394)  (5,290) 
Class R3  (102,574)  (145,530)  (69,065)  (122,187)  (97,052)  (133,855) 
Class R4  (26,514)  (27,326)  (37,545)  (46,613)  (28,253)  (22,980) 
Class R5  (122,520)  (182,351)  (48,365)  (178,131)  (167,454)  (303,772) 
Class R6  (69,373)  (30,510)  (118,632)  (40,988)  (189,672)  (37,500) 
Class 1  (20,338,727)  (28,293,893)  (25,955,857)  (33,621,396)  (29,804,258)  (37,407,201) 
 
Total distributions  (31,009,538)  (37,082,967)  (39,795,594)  (44,639,712)  (48,889,132)  (53,049,934) 
From fund share transactions  57,657,196  83,853,430  88,345,595  98,393,016  89,204,542  100,969,071 
 
Total increase  168,381,491  135,931,504  228,974,796  166,790,072  252,726,685  180,941,054 
 
Net assets             
Beginning of period  685,772,116  549,840,612  876,471,988  709,681,916  1,082,272,068  901,331,014 
 
End of period  $854,153,607  $685,772,116  $1,105,446,784  $876,471,988  $1,334,998,753  $1,082,272,068 
 
Undistributed net investment             
income (loss)  —  $156,877  $36,314  $434,077  $1,829,112  $1,971,127 

 

40  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of changes in net assets

Continued

  Retirement Living  Retirement Living 
  through 2025 Portfolio  through 2020 Portfolio 
  Year ended  Year ended  Year ended  Year ended 
  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets         
From operations         
Net investment income  $22,357,605  $18,796,012  $22,902,885  $20,551,065 
Net realized gain  58,876,042  22,338,694  48,297,119  22,929,720 
Change in net unrealized appreciation  141,620,765  96,971,202  104,677,003  64,014,331 
Increase in net assets resulting         
from operations  222,854,412  138,105,908  175,877,007  107,495,116 
 
Distributions to shareholders         
From net investment income         
Class A  (810,882)  (574,203)  (1,004,168)  (687,680) 
Class R1  (34,399)  (34,839)  (40,338)  (44,541) 
Class R2  (7,185)  (2,547)  (11,215)  (1,718) 
Class R3  (47,157)  (40,579)  (62,633)  (65,305) 
Class R4  (23,844)  (23,327)  (16,488)  (13,356) 
Class R5  (41,448)  (154,881)  (140,282)  (221,192) 
Class R6  (163,641)  (17,508)  (161,682)  (9,464) 
Class 1  (21,050,266)  (17,514,879)  (21,186,229)  (19,022,412) 
From net realized gain         
Class A  (1,585,235)  (1,496,030)  (1,678,170)  (1,395,024) 
Class R1  (82,421)  (111,376)  (79,407)  (106,048) 
Class R2  (14,046)  (6,686)  (18,742)  (3,504) 
Class R3  (103,636)  (118,928)  (115,108)  (145,382) 
Class R4  (39,363)  (51,290)  (23,940)  (23,723) 
Class R5  (60,851)  (302,753)  (184,352)  (354,340) 
Class R6  (233,783)  (33,479)  (207,535)  (14,882) 
Class 1  (30,904,942)  (34,428,342)  (27,841,761)  (30,613,869) 
 
Total distributions  (55,203,099)  (54,911,647)  (52,772,050)  (52,722,440) 
From fund share transactions  93,291,781  91,261,467  48,579,501  59,266,237 
 
Total increase  260,943,094  174,455,728  171,684,458  114,038,913 
Net assets         
Beginning of year  1,221,530,920  1,047,075,192  1,080,077,339  966,038,426 
 
End of year  $1,482,474,014  $1,221,530,920  $1,251,761,797  $1,080,077,339 
 
Undistributed net investment         
income (loss)  $4,828,480  $4,647,366  $6,888,910  $6,608,018 

 

  Annual report | Retirement Living Portfolios  41 
See notes to financial statements     

 


F I N A N C I A L  S T A T E M E N T S

 

Statements of changes in net assets

Continued

  Retirement Living  Retirement Living 
  through 2015 Portfolio  through 2010 Portfolio 
  Year ended  Year ended  Year ended  Year ended 
  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets         
From operations         
Net investment income  $15,041,020  $14,787,634  $9,691,028  $10,765,455 
Net realized gain  33,790,508  14,016,066  17,854,683  12,601,527 
Change in net unrealized appreciation  41,760,509  27,963,199  21,126,712  8,664,491 
Increase in net assets resulting         
from operations  90,592,037  56,766,899  48,672,423  32,031,473 
 
Distributions to shareholders         
From net investment income         
Class A  (935,672)  (688,224)  (807,595)  (648,860) 
Class R1  (21,739)  (26,566)  (7,515)  (8,074) 
Class R2  (3,882)  (2,147)  (13,665)  (2,422) 
Class R3  (98,365)  (106,288)  (22,575)  (34,262) 
Class R4  (5,024)  (1,500)  (11,838)  (11,189) 
Class R5  (41,527)  (129,795)  (29,445)  (116,233) 
Class R6  (104,898)  (15,368)  (86,673)  (2,999) 
Class 1  (14,061,292)  (13,878,950)  (9,133,778)  (10,487,113) 
From net realized gain         
Class A  (1,327,408)  (619,062)  (1,334,530)  (1,666,045) 
Class R1  (35,341)  (27,210)  (13,993)  (23,145) 
Class R2  (5,508)  (1,931)  (22,581)  (6,221) 
Class R3  (151,098)  (103,141)  (40,006)  (93,849) 
Class R4  (6,322)  (1,203)  (17,584)  (26,015) 
Class R5  (47,928)  (95,759)  (40,462)  (251,259) 
Class R6  (118,611)  (11,117)  (116,912)  (6,393) 
Class 1  (16,228,724)  (10,239,504)  (12,551,031)  (22,669,689) 
 
Total distributions  (33,193,339)  (25,947,765)  (24,250,183)  (36,053,768) 
From fund share transactions  (31,959,462)  (8,627,058)  (24,926,355)  (26,356,269) 
 
Total increase (decrease)  25,439,236  22,192,076  (504,115)  (30,378,564) 
 
Net assets         
Beginning of year  648,691,037  626,498,961  395,730,146  426,108,710 
 
End of year  $674,130,273  $648,691,037  $395,226,031  $395,730,146 
 
Undistributed net investment         
income (loss)  $5,081,848  $5,312,288  $3,590,424  $4,012,041 

 

42  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

These Financial highlights show how each Portfolio’s net asset value for a share has changed since the end of the previous period.

Retirement Living through 2055 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
 
 
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from  From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in- gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  period (in  Portfolio 
  of period   come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-20146  10.00  (0.02)  0.66  0.64  —  —  —  —  10.64  6.407  23.488  0.608  (0.43)8  1329  24 
CLASS R1                               
08-31-20146  10.00  (0.03)  0.66  0.63  —  —  —  —  10.63  6.307  21.558  0.858  (0.66)8  1069  24 
CLASS R2                               
08-31-20146  10.00  (0.02)  0.66  0.64  —  —  —  —  10.64  6.407  21.028  0.608  (0.41)8  1069  24 
CLASS R3                               
08-31-20146  10.00  (0.03)  0.67  0.64  —  —  —  —  10.64  6.407  21.608  0.758  (0.56)8  1069  24 
CLASS R4                               
08-31-20146  10.00  (0.01)  0.66  0.65  —  —  —  —  10.65  6.507  21.138  0.358  (0.17)8  1069  24 
CLASS R5                               
08-31-20146  10.00  —9  0.66  0.66  —  —  —  —  10.66  6.607  21.198  0.158  0.038  1069  24 
CLASS R6                               
08-31-20146  10.00  —9  0.67  0.67  —  —  —  —  10.67  6.707  23.058  0.108  0.098  1069  24 
CLASS 1                               
08-31-20146  10.00  —9  0.66  0.66  —  —  —  —  10.66  6.607  5.888  0.158  0.048  6,679  24 


1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26% for the period ended 8-31-14.
6 Period from 3-26-14 (commencement of operations) to 8-31-14.
7 Not annualized.
8 Annualized.
9 Less than $0.005 per share.

 

 

 

  Annual report | Retirement Living Portfolios  43 
  See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2050 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.73  0.05  2.04  2.09  (0.10)  (0.28)  —  (0.38)  12.44  19.70  0.90  0.60  0.43  8,305  10 
08-31-2013  9.51  0.04  1.39  1.43  (0.08)  (0.13)  —  (0.21)  10.73  15.21  2.15  0.61  0.42  2,264  16 
08-31-20126  9.52  (0.01)  —  (0.01)  —  —  —  —  9.51  (0.11)7  7.088  0.618  (0.16)7  503  679 
CLASS R1                               
08-31-2014  10.72  0.07  1.99  2.06  (0.07)  (0.28)  —  (0.35)  12.43  19.44  4.80  0.86  0.59  409  10 
08-31-2013  9.50  0.02  1.38  1.40  (0.05)  (0.13)  —  (0.18)  10.72  14.95  12.87  0.86  0.23  183  16 
08-31-20126  9.52  (0.03)  0.01  (0.02)  —  —  —  —  9.50  (0.21)7  17.288  0.868  (0.28)7  100  679 
CLASS R2                               
08-31-2014  10.73  0.08  2.01  2.09  (0.10)  (0.28)  —  (0.38)  12.44  19.70  5.16  0.61  0.71  458  10 
08-31-2013  9.51  0.07  1.36  1.43  (0.08)  (0.13)  —  (0.21)  10.73  15.21  11.95  0.61  0.55  155  16 
08-31-20126  9.52  (0.01)  —  (0.01)  —  —  —  —  9.51  (0.11)7  16.978  0.618  (0.15)7  100  679 
CLASS R3                               
08-31-2014  10.73  0.05  2.01  2.06  (0.08)  (0.28)  —  (0.36)  12.43  19.44  11.01  0.75  0.43  184  10 
08-31-2013  9.50  0.06  1.36  1.42  (0.06)  (0.13)  —  (0.19)  10.73  15.17  15.81  0.76  0.55  113  16 
08-31-20126  9.52  (0.02)  —  (0.02)  —  —  —  —  9.50  (0.21)7  17.318  0.768  (0.23)7  100  679 
CLASS R4                               
08-31-2014  10.75  0.12  1.99  2.11  (0.12)  (0.28)  —  (0.40)  12.46  19.94  12.39  0.35  0.99  131  10 
08-31-2013  9.52  0.10  1.36  1.46  (0.10)  (0.13)  —  (0.23)  10.75  15.59  15.54  0.36  0.95  113  16 
08-31-20126  9.52  —10  —  —10  —  —  —  —  9.52  —7  17.058  0.418  (0.05)7  100  679 
CLASS R5                               
08-31-2014  10.76  0.16  1.98  2.14  (0.14)  (0.28)  —  (0.42)  12.48  20.23  1.80  0.16  1.39  131  10 
08-31-2013  9.53  0.02  1.46  1.48  (0.12)  (0.13)  —  (0.25)  10.76  15.79  2.67  0.16  0.23  985  16 
08-31-20126  9.52  0.01  —  0.01  —  —  —  —  9.53  0.117  16.348  0.168  0.077  100  679 
CLASS R6                               
08-31-2014  10.76  0.08  2.07  2.15  (0.15)  (0.28)  —  (0.43)  12.48  20.29  2.34  0.11  0.64  1,223  10 
08-31-2013  9.53  0.12  1.37  1.49  (0.13)  (0.13)  —  (0.26)  10.76  15.85  8.30  0.11  1.17  253  16 
08-31-20126  9.52  0.01  —  0.01  —  —  —  —  9.53  0.117  16.758  0.118  0.107  100  679 
CLASS 1                               
08-31-2014  10.76  0.12  2.01  2.13  (0.14)  (0.28)  —  (0.42)  12.47  20.14  0.17  0.16  1.03  232,040  10 
08-31-2013  9.53  0.10  1.38  1.48  (0.12)  (0.13)  —  (0.25)  10.76  15.79  0.23  0.16  0.94  124,203  16 
08-31-2012  8.88  0.08  0.73  0.81  (0.11)  (0.05)  —  (0.16)  9.53  9.25  0.42  0.16  0.86  51,411  67 
08-31-201111  10.00  —10  (1.12)  (1.12)  —  —  —  —  8.88  (11.20)7  4.978  0.168  (0.01)8  6,391  4 


1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47% and 0.48%–1.14% for the periods ended
8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 The inception date for Class A, Class R1, Class R2, Class R3, Class R4, Class R5 and Class R6 shares is 3-1-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
10 Less than $0.005 per share.
11 The inception date for Class 1 shares is 4-29-11.

 

 

 

44  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

Continued

Retirement Living through 2045 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.65  0.08  1.99  2.07  (0.10)  (0.35)  —  (0.45)  12.27  19.71  0.59  0.58  0.68  44,703  14 
08-31-2013  9.88  0.06  1.38  1.44  (0.09)  (0.58)  —  (0.67)  10.65  15.25  0.65  0.59  0.62  28,714  15 
08-31-2012  9.22  0.07  0.72  0.79  (0.07)  (0.06)  —  (0.13)  9.88  8.72  0.75  0.59  0.74  17,140  70 
08-31-2011  8.11  0.05  1.20  1.25  (0.07)  (0.07)  —  (0.14)  9.22  15.37  0.78  0.59  0.53  10,641  16 
08-31-2010  7.76  0.07  0.40  0.47  (0.09)  (0.03)  —  (0.12)  8.11  6.00  0.85  0.606  0.87  6,026  19 
CLASS R1                               
08-31-2014  10.62  0.05  1.98  2.03  (0.07)  (0.35)  —  (0.42)  12.23  19.39  2.00  0.83  0.44  1,447  14 
08-31-2013  9.86  0.06  1.34  1.40  (0.06)  (0.58)  —  (0.64)  10.62  14.89  1.80  0.84  0.54  1,163  15 
08-31-2012  9.21  0.07  0.70  0.77  (0.06)  (0.06)  —  (0.12)  9.86  8.45  2.05  0.81  0.75  1,254  70 
08-31-2011  8.10  0.04  1.20  1.24  (0.06)  (0.07)  —  (0.13)  9.21  15.23  2.27  0.74  0.40  1,063  16 
08-31-2010  7.75  0.07  0.39  0.46  (0.08)  (0.03)  —  (0.11)  8.10  5.88  1.737  0.75  0.78  721  19 
CLASS R2                               
08-31-2014  10.67  0.08  2.00  2.08  (0.10)  (0.35)  —  (0.45)  12.30  19.76  3.96  0.58  0.69  524  14 
08-31-2013  9.90  0.05  1.39  1.44  (0.09)  (0.58)  —  (0.67)  10.67  15.22  11.95  0.59  0.50  293  15 
08-31-20128  9.92  (0.01)  (0.01)  (0.02)  —  —  —  —  9.90  (0.20)9  16.7810  0.5910  (0.15)9  100  7011 
CLASS R3                               
08-31-2014  10.63  0.06  1.99  2.05  (0.08)  (0.35)  —  (0.43)  12.25  19.58  1.69  0.73  0.50  2,027  14 
08-31-2013  9.87  0.05  1.36  1.41  (0.07)  (0.58)  —  (0.65)  10.63  14.99  1.90  0.74  0.53  1,332  15 
08-31-2012  9.22  0.06  0.72  0.78  (0.07)  (0.06)  —  (0.13)  9.87  8.55  2.20  0.71  0.68  1,102  70 
08-31-2011  8.10  0.05  1.21  1.26  (0.07)  (0.07)  —  (0.14)  9.22  15.46  2.59  0.64  0.49  943  16 
08-31-2010  7.76  0.07  0.39  0.46  (0.09)  (0.03)  —  (0.12)  8.10  5.83  2.547  0.65  0.84  570  19 
CLASS R4                               
08-31-2014  10.67  0.10  2.00  2.10  (0.12)  (0.35)  —  (0.47)  12.30  20.04  2.05  0.33  0.89  1,215  14 
08-31-2013  9.90  0.10  1.36  1.46  (0.11)  (0.58)  —  (0.69)  10.67  15.50  2.41  0.34  0.92  812  15 
08-31-2012  9.25  0.09  0.71  0.80  (0.09)  (0.06)  —  (0.15)  9.90  8.81  2.75  0.40  0.95  677  70 
08-31-2011  8.13  0.06  1.22  1.28  (0.09)  (0.07)  —  (0.16)  9.25  15.66  3.75  0.39  0.67  498  16 
08-31-2010  7.78  0.07  0.42  0.49  (0.11)  (0.03)  —  (0.14)  8.13  6.17  3.797  0.40  0.82  283  19 
CLASS R5                               
08-31-2014  10.72  0.12  2.01  2.13  (0.14)  (0.35)  —  (0.49)  12.36  20.27  1.36  0.13  1.01  1,399  14 
08-31-2013  9.94  0.15  1.34  1.49  (0.13)  (0.58)  —  (0.71)  10.72  15.78  1.11  0.14  1.43  1,023  15 
08-31-2012  9.28  0.12  0.72  0.84  (0.12)  (0.06)  —  (0.18)  9.94  9.24  1.47  0.13  1.27  1,633  70 
08-31-2011  8.16  0.11  1.20  1.31  (0.12)  (0.07)  —  (0.19)  9.28  15.92  2.72  0.09  1.10  534  16 
08-31-2010  7.80  0.13  0.39  0.52  (0.13)  (0.03)  —  (0.16)  8.16  6.55  3.667  0.10  1.50  218  19 
CLASS R6                               
08-31-2014  10.70  0.14  2.01  2.15  (0.15)  (0.35)  —  (0.50)  12.35  20.46  0.70  0.08  1.19  1,496  14 
08-31-2013  9.93  0.09  1.39  1.48  (0.13)  (0.58)  —  (0.71)  10.70  15.72  1.22  0.09  0.87  1,885  15 
08-31-201212  9.27  0.13  0.71  0.84  (0.12)  (0.06)  —  (0.18)  9.93  9.25  16.83  0.09  1.35  107  70 
CLASS 1                               
08-31-2014  10.71  0.14  1.99  2.13  (0.14)  (0.35)  —  (0.49)  12.35  20.29  0.14  0.13  1.16  767,166  14 
08-31-2013  9.93  0.12  1.37  1.49  (0.13)  (0.58)  —  (0.71)  10.71  15.78  0.14  0.14  1.14  632,322  15 
08-31-2012  9.27  0.12  0.71  0.83  (0.11)  (0.06)  —  (0.17)  9.93  9.19  0.15  0.14  1.25  528,261  70 
08-31-2011  8.15  0.10  1.20  1.30  (0.11)  (0.07)  —  (0.18)  9.27  15.89  0.15  0.14  1.05  443,236  16 
08-31-2010  7.80  0.11  0.39  0.50  (0.12)  (0.03)  —  (0.15)  8.15  6.38  0.16  0.15  1.32  309,787  19 

 

  Annual report | Retirement Living Portfolios  45 
See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2045 Portfolio continued

1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14% and 0.48%–1.17% for the
periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Includes small account fee credits of 0.02% of average net assets
7 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
8 The inception date for Class R2 shares is 3-1-12.
9 Not annualized.
10 Annualized.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 The inception date for Class R6 shares is 9-1-11.

Retirement Living through 2040 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.71  0.08  2.01  2.09  (0.10)  (0.34)  —  (0.44)  12.36  19.79  0.58  0.58  0.66  45,469  14 
08-31-2013  9.89  0.07  1.36  1.43  (0.08)  (0.53)  —  (0.61)  10.71  15.13  0.64  0.59  0.63  30,120  14 
08-31-2012  9.23  0.07  0.72  0.79  (0.07)  (0.06)  —  (0.13)  9.89  8.71  0.73  0.60  0.75  18,146  69 
08-31-2011  8.12  0.05  1.20  1.25  (0.07)  (0.07)  —  (0.14)  9.23  15.35  0.76  0.59  0.51  12,218  16 
08-31-2010  7.77  0.08  0.39  0.47  (0.09)  (0.03)  —  (0.12)  8.12  6.00  0.756  0.607  0.91  6,843  20 
CLASS R1                               
08-31-2014  10.69  0.05  2.00  2.05  (0.07)  (0.34)  —  (0.41)  12.33  19.45  1.62  0.83  0.46  2,258  14 
08-31-2013  9.86  0.05  1.37  1.42  (0.06)  (0.53)  —  (0.59)  10.69  15.00  1.58  0.84  0.51  1,985  14 
08-31-2012  9.21  0.06  0.71  0.77  (0.06)  (0.06)  —  (0.12)  9.86  8.44  1.72  0.82  0.67  1,846  69 
08-31-2011  8.10  0.04  1.20  1.24  (0.06)  (0.07)  —  (0.13)  9.21  15.23  2.02  0.74  0.41  1,142  16 
08-31-2010  7.76  0.06  0.39  0.45  (0.08)  (0.03)  —  (0.11)  8.10  5.75  1.346  0.75  0.70  1,190  20 
CLASS R2                               
08-31-2014  10.73  0.03  2.06  2.09  (0.10)  (0.34)  —  (0.44)  12.38  19.75  2.11  0.58  0.22  1,489  14 
08-31-2013  9.90  0.05  1.39  1.44  (0.08)  (0.53)  —  (0.61)  10.73  15.21  9.52  0.59  0.51  312  14 
08-31-20128  9.92  (0.01)  (0.01)  (0.02)  —  —  —  —  9.90  (0.20)9  16.7710  0.6010  (0.15)9  100  6911 
CLASS R3                               
08-31-2014  10.68  0.08  1.98  2.06  (0.08)  (0.34)  —  (0.42)  12.32  19.58  1.22  0.73  0.66  3,213  14 
08-31-2013  9.86  0.05  1.37  1.42  (0.07)  (0.53)  —  (0.60)  10.68  15.01  1.23  0.74  0.51  3,235  14 
08-31-2012  9.21  0.07  0.71  0.78  (0.07)  (0.06)  —  (0.13)  9.86  8.56  1.32  0.71  0.71  2,766  69 
08-31-2011  8.10  0.05  1.20  1.25  (0.07)  (0.07)  —  (0.14)  9.21  15.34  1.43  0.64  0.47  2,763  16 
08-31-2010  7.75  0.08  0.39  0.47  (0.09)  (0.03)  —  (0.12)  8.10  5.97  1.256  0.65  0.90  1,547  20 
CLASS R4                               
08-31-2014  10.73  0.10  2.01  2.11  (0.12)  (0.34)  —  (0.46)  12.38  20.03  1.94  0.33  0.87  1,349  14 
08-31-2013  9.90  0.09  1.38  1.47  (0.11)  (0.53)  —  (0.64)  10.73  15.51  2.71  0.34  0.84  763  14 
08-31-2012  9.24  0.09  0.72  0.81  (0.09)  (0.06)  —  (0.15)  9.90  8.93  3.78  0.40  1.00  505  69 
08-31-2011  8.13  0.09  1.18  1.27  (0.09)  (0.07)  —  (0.16)  9.24  15.54  8.19  0.39  0.95  162  16 
08-31-2010  7.78  0.04  0.45  0.49  (0.11)  (0.03)  —  (0.14)  8.13  6.18  6.936  0.40  0.53  156  20 

 

46  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

Continued

Retirement Living through 2040 Portfolio continued

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS R5                               
08-31-2014  10.77  0.16  2.00  2.16  (0.15)  (0.34)  —  (0.49)  12.44  20.36  0.57  0.13  1.33  2,271  14 
08-31-2013  9.94  0.11  1.38  1.49  (0.13)  (0.53)  —  (0.66)  10.77  15.67  0.51  0.14  1.03  4,126  14 
08-31-2012  9.28  0.10  0.74  0.84  (0.12)  (0.06)  —  (0.18)  9.94  9.23  0.92  0.14  1.10  3,371  69 
08-31-2011  8.16  0.11  1.20  1.31  (0.12)  (0.07)  —  (0.19)  9.28  15.92  1.89  0.09  1.11  900  16 
08-31-2010  7.80  0.14  0.38  0.52  (0.13)  (0.03)  —  (0.16)  8.16  6.56  1.576  0.10  1.64  456  20 
CLASS R6                               
08-31-2014  10.76  0.14  2.01  2.15  (0.15)  (0.34)  —  (0.49)  12.42  20.34  0.70  0.08  1.16  1,232  14 
08-31-2013  9.93  0.07  1.42  1.49  (0.13)  (0.53)  —  (0.66)  10.76  15.73  1.12  0.09  0.69  2,168  14 
08-31-201212  9.27  0.13  0.71  0.84  (0.12)  (0.06)  —  (0.18)  9.93  9.24  16.85  0.10  1.35  107  69 
CLASS 1                               
08-31-2014  10.77  0.14  2.01  2.15  (0.15)  (0.34)  —  (0.49)  12.43  20.27  0.14  0.13  1.16  796,874  14 
08-31-2013  9.93  0.12  1.37  1.49  (0.12)  (0.53)  —  (0.65)  10.77  15.78  0.14  0.14  1.14  643,062  14 
08-31-2012  9.27  0.12  0.71  0.83  (0.11)  (0.06)  —  (0.17)  9.93  9.19  0.15  0.15  1.25  523,000  69 
08-31-2011  8.15  0.10  1.20  1.30  (0.11)  (0.07)  —  (0.18)  9.27  15.89  0.15  0.14  1.06  428,868  16 
08-31-2010  7.79  0.11  0.40  0.51  (0.12)  (0.03)  —  (0.15)  8.15  6.52  0.16  0.15  1.34  311,176  20 


1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14% and 0.48%–1.17% for the
periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 Includes small account fee credits of 0.01% of average net assets
8 The inception date for Class R2 shares is 3-1-12.
9 Not annualized.
10 Annualized.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 The inception date for Class R6 shares is 9-1-11.

 

 

  Annual report | Retirement Living Portfolios  47 
See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2035 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.78  0.09  1.99  2.08  (0.10)  (0.34)  —  (0.44)  12.42  19.57  0.59  0.58  0.74  55,885  14 
08-31-2013  9.92  0.07  1.36  1.43  (0.09)  (0.48)  —  (0.57)  10.78  15.04  0.63  0.59  0.66  37,108  15 
08-31-2012  9.26  0.07  0.72  0.79  (0.07)  (0.06)  —  (0.13)  9.92  8.69  0.70  0.59  0.74  23,816  70 
08-31-2011  8.14  0.05  1.21  1.26  (0.07)  (0.07)  —  (0.14)  9.26  15.45  0.71  0.59  0.56  15,711  17 
08-31-2010  7.79  0.07  0.40  0.47  (0.09)  (0.03)  —  (0.12)  8.14  6.00  0.716  0.607  0.88  8,883  20 
CLASS R1                               
08-31-2014  10.75  0.05  2.00  2.05  (0.07)  (0.34)  —  (0.41)  12.39  19.35  1.39  0.83  0.44  3,745  14 
08-31-2013  9.90  0.06  1.33  1.39  (0.06)  (0.48)  —  (0.54)  10.75  14.68  1.46  0.84  0.61  2,400  15 
08-31-2012  9.24  0.06  0.72  0.78  (0.06)  (0.06)  —  (0.12)  9.90  8.54  1.51  0.81  0.66  2,475  70 
08-31-2011  8.13  0.05  1.19  1.24  (0.06)  (0.07)  —  (0.13)  9.24  15.19  1.61  0.74  0.47  1,827  17 
08-31-2010  7.79  0.06  0.39  0.45  (0.08)  (0.03)  —  (0.11)  8.13  5.74  1.356  0.75  0.75  1,453  20 
CLASS R2                               
08-31-2014  10.81  0.09  2.00  2.09  (0.10)  (0.34)  —  (0.44)  12.46  19.61  5.07  0.58  0.72  605  14 
08-31-2013  9.94  0.08  1.36  1.44  (0.09)  (0.48)  —  (0.57)  10.81  15.10  14.91  0.59  0.77  111  15 
08-31-20128  9.96  (0.01)  (0.01)  (0.02)  —  —  —  —  9.94  (0.20)9  16.7710  0.5910  (0.14)9  100  7011 
CLASS R3                               
08-31-2014  10.77  0.07  1.99  2.06  (0.08)  (0.34)  —  (0.42)  12.41  19.42  1.37  0.73  0.57  2,831  14 
08-31-2013  9.91  0.06  1.35  1.41  (0.07)  (0.48)  —  (0.55)  10.77  14.88  1.29  0.74  0.57  2,382  15 
08-31-2012  9.25  0.06  0.72  0.78  (0.06)  (0.06)  —  (0.12)  9.91  8.59  1.45  0.73  0.63  2,376  70 
08-31-2011  8.14  0.04  1.20  1.24  (0.06)  (0.07)  —  (0.13)  9.25  15.22  1.58  0.69  0.41  1,967  17 
08-31-2010  7.79  0.05  0.42  0.47  (0.09)  (0.03)  —  (0.12)  8.14  5.91  1.566  0.70  0.59  1,167  20 
CLASS R4                               
08-31-2014  10.83  0.12  2.00  2.12  (0.13)  (0.34)  —  (0.47)  12.48  19.85  1.57  0.33  0.98  1,536  14 
08-31-2013  9.96  0.10  1.36  1.46  (0.11)  (0.48)  —  (0.59)  10.83  15.36  1.78  0.34  0.93  1,145  15 
08-31-2012  9.30  0.10  0.71  0.81  (0.09)  (0.06)  —  (0.15)  9.96  8.89  1.82  0.40  1.02  1,146  70 
08-31-2011  8.18  0.08  1.20  1.28  (0.09)  (0.07)  —  (0.16)  9.30  15.58  1.95  0.39  0.77  957  17 
08-31-2010  7.81  0.04  0.47  0.51  (0.11)  (0.03)  —  (0.14)  8.18  6.43  2.776  0.40  0.47  574  20 
CLASS R5                               
08-31-2014  10.84  0.16  1.99  2.15  (0.15)  (0.34)  —  (0.49)  12.50  20.15  1.14  0.13  1.33  1,271  14 
08-31-2013  9.97  0.17  1.31  1.48  (0.13)  (0.48)  —  (0.61)  10.84  15.57  0.68  0.14  1.61  1,411  15 
08-31-2012  9.31  0.09  0.75  0.84  (0.12)  (0.06)  —  (0.18)  9.97  9.22  1.09  0.13  0.97  3,543  70 
08-31-2011  8.19  0.12  1.19  1.31  (0.12)  (0.07)  —  (0.19)  9.31  15.88  1.60  0.09  1.23  742  17 
08-31-2010  7.83  0.16  0.36  0.52  (0.13)  (0.03)  —  (0.16)  8.19  6.55  2.646  0.10  1.93  281  20 
CLASS R6                               
08-31-2014  10.84  0.16  1.99  2.15  (0.15)  (0.34)  —  (0.49)  12.50  20.20  0.51  0.08  1.37  1,178  14 
08-31-2013  9.97  0.07  1.41  1.48  (0.13)  (0.48)  —  (0.61)  10.84  15.62  0.71  0.09  0.71  3,720  15 
08-31-201212  9.31  0.13  0.71  0.84  (0.12)  (0.06)  —  (0.18)  9.97  9.22  16.85  0.09  1.36  107  70 
CLASS 1                               
08-31-2014  10.84  0.14  2.01  2.15  (0.15)  (0.34)  —  (0.49)  12.50  20.15  0.14  0.13  1.19  1,038,396  14 
08-31-2013  9.97  0.12  1.36  1.48  (0.13)  (0.48)  —  (0.61)  10.84  15.57  0.14  0.14  1.17  828,194  15 
08-31-2012  9.31  0.12  0.72  0.84  (0.12)  (0.06)  —  (0.18)  9.97  9.17  0.14  0.14  1.26  676,119  70 
08-31-2011  8.18  0.10  1.21  1.31  (0.11)  (0.07)  —  (0.18)  9.31  15.97  0.14  0.14  1.07  562,731  17 
08-31-2010  7.83  0.12  0.39  0.51  (0.13)  (0.03)  —  (0.16)  8.18  6.38  0.15  0.15  1.36  413,289  20 

 

48  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

Continued

Retirement Living through 2035 Portfolio continued

1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14% and 0.48%–1.17% for the
periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 Includes small account fee credits of 0.01% of average net assets
8 The inception date for Class R2 shares is 3-1-12.
9 Not annualized.
10 Annualized.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 The inception date for Class R6 shares is 9-1-11.

 

 

Retirement Living through 2030 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.65  0.10  1.87  1.97  (0.12)  (0.31)  —  (0.43)  12.19  18.80  0.59  0.58  0.90  73,551  15 
08-31-2013  9.85  0.09  1.25  1.34  (0.11)  (0.43)  —  (0.54)  10.65  14.11  0.61  0.58  0.86  49,497  15 
08-31-2012  9.21  0.10  0.68  0.78  (0.09)  (0.05)  —  (0.14)  9.85  8.66  0.68  0.59  1.02  32,160  69 
08-31-2011  8.13  0.07  1.16  1.23  (0.08)  (0.07)  —  (0.15)  9.21  15.09  0.66  0.59  0.72  23,069  19 
08-31-2010  7.76  0.09  0.40  0.49  (0.09)  (0.03)  —  (0.12)  8.13  6.31  0.676  0.59  1.04  14,723  21 
CLASS R1                               
08-31-2014  10.61  0.08  1.84  1.92  (0.09)  (0.31)  —  (0.40)  12.13  18.40  1.31  0.83  0.68  3,685  15 
08-31-2013  9.81  0.08  1.23  1.31  (0.08)  (0.43)  —  (0.51)  10.61  13.88  1.32  0.83  0.74  2,908  15 
08-31-2012  9.17  0.08  0.69  0.77  (0.08)  (0.05)  —  (0.13)  9.81  8.53  1.44  0.81  0.83  2,742  69 
08-31-2011  8.10  0.06  1.15  1.21  (0.07)  (0.07)  —  (0.14)  9.17  14.86  1.47  0.74  0.59  2,240  19 
08-31-2010  7.74  0.07  0.40  0.47  (0.08)  (0.03)  —  (0.11)  8.10  6.06  1.176  0.74  0.81  1,812  21 
CLASS R2                               
08-31-2014  10.61  0.10  1.86  1.96  (0.12)  (0.31)  —  (0.43)  12.14  18.78  2.21  0.58  0.86  1,156  15 
08-31-2013  9.82  0.04  1.29  1.33  (0.11)  (0.43)  —  (0.54)  10.61  14.04  5.79  0.58  0.37  567  15 
08-31-20127  9.80  —8  0.02  0.02  —  —  —  —  9.82  0.209  16.0110  0.5910  (0.01)9  100  6911 
CLASS R3                               
08-31-2014  10.62  0.09  1.85  1.94  (0.10)  (0.31)  —  (0.41)  12.15  18.59  1.18  0.73  0.82  3,604  15 
08-31-2013  9.82  0.08  1.24  1.32  (0.09)  (0.43)  —  (0.52)  10.62  13.98  1.20  0.73  0.79  3,397  15 
08-31-2012  9.18  0.08  0.69  0.77  (0.08)  (0.05)  —  (0.13)  9.82  8.58  1.28  0.72  0.88  3,146  69 
08-31-2011  8.11  0.05  1.16  1.21  (0.07)  (0.07)  —  (0.14)  9.18  14.90  1.38  0.69  0.57  2,651  19 
08-31-2010  7.75  0.06  0.42  0.48  (0.09)  (0.03)  —  (0.12)  8.11  6.10  1.416  0.69  0.67  1,615  21 
CLASS R4                               
08-31-2014  10.63  0.13  1.86  1.99  (0.15)  (0.31)  —  (0.46)  12.16  19.02  1.89  0.33  1.11  1,252  15 
08-31-2013  9.83  0.11  1.25  1.36  (0.13)  (0.43)  —  (0.56)  10.63  14.42  2.72  0.33  1.09  747  15 
08-31-2012  9.19  0.12  0.68  0.80  (0.11)  (0.05)  —  (0.16)  9.83  8.91  2.36  0.40  1.31  498  69 
08-31-2011  8.12  0.04  1.20  1.24  (0.10)  (0.07)  —  (0.17)  9.19  15.19  3.87  0.39  0.42  560  19 
08-31-2010  7.76  0.06  0.44  0.50  (0.11)  (0.03)  —  (0.14)  8.12  6.37  5.306  0.39  0.76  106  21 

 

  Annual report | Retirement Living Portfolios  49 
See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2030 Portfolio continued

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS R5                               
08-31-2014  10.65  0.18  1.84  2.02  (0.17)  (0.31)  —  (0.48)  12.19  19.30  0.43  0.13  1.54  2,577  15 
08-31-2013  9.85  0.15  1.23  1.38  (0.15)  (0.43)  —  (0.58)  10.65  14.62  0.36  0.13  1.43  5,557  15 
08-31-2012  9.21  0.11  0.72  0.83  (0.14)  (0.05)  —  (0.19)  9.85  9.24  0.58  0.13  1.18  6,777  69 
08-31-2011  8.13  0.12  1.16  1.28  (0.13)  (0.07)  —  (0.20)  9.21  15.61  0.88  0.09  1.29  2,031  19 
08-31-2010  7.76  0.15  0.38  0.53  (0.13)  (0.03)  —  (0.16)  8.13  6.76  0.986  0.09  1.82  724  21 
CLASS R6                               
08-31-2014  10.64  0.17  1.86  2.03  (0.17)  (0.31)  —  (0.48)  12.19  19.47  0.32  0.08  1.44  2,554  15 
08-31-2013  9.85  0.07  1.31  1.38  (0.16)  (0.43)  —  (0.59)  10.64  14.57  0.48  0.08  0.66  6,446  15 
08-31-201212  9.20  0.15  0.69  0.84  (0.14)  (0.05)  —  (0.19)  9.85  9.36  16.91  0.09  1.60  107  69 
CLASS 1                               
08-31-2014  10.65  0.16  1.86  2.02  (0.17)  (0.31)  —  (0.48)  12.19  19.30  0.14  0.13  1.39  1,246,619  15 
08-31-2013  9.85  0.14  1.24  1.38  (0.15)  (0.43)  —  (0.58)  10.65  14.58  0.13  0.13  1.37  1,013,152  15 
08-31-2012  9.20  0.14  0.70  0.84  (0.14)  (0.05)  —  (0.19)  9.85  9.30  0.14  0.14  1.50  855,802  69 
08-31-2011  8.12  0.12  1.15  1.27  (0.12)  (0.07)  —  (0.19)  9.20  15.58  0.14  0.14  1.24  719,995  19 
08-31-2010  7.75  0.12  0.41  0.53  (0.13)  (0.03)  —  (0.16)  8.12  6.72  0.15  0.14  1.48  537,945  21 


1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the Portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14% and 0.48%–1.17% for the
periods ended 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 The inception date for Class R2 shares is 3-1-12.
8 Less than $0.005 per share.
9 Not annualized.
10 Annualized.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 The inception date for Class R6 shares is 9-1-11.

 

 

50  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

Continued

Retirement Living through 2025 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.65  0.14  1.68  1.82  (0.14)  (0.29)  —  (0.43)  12.04  17.38  0.58  0.58  1.18  74,977  15 
08-31-2013  9.91  0.12  1.10  1.22  (0.13)  (0.35)  —  (0.48)  10.65  12.71  0.60  0.58  1.18  54,244  17 
08-31-2012  9.27  0.13  0.68  0.81  (0.12)  (0.05)  —  (0.17)  9.91  8.93  0.67  0.59  1.36  38,080  66 
08-31-2011  8.28  0.10  1.07  1.17  (0.11)  (0.07)  —  (0.18)  9.27  14.09  0.66  0.58  1.06  25,760  22 
08-31-2010  7.87  0.12  0.44  0.56  (0.12)  (0.03)  —  (0.15)  8.28  7.02  0.656  0.59  1.37  14,515  22 
CLASS R1                               
08-31-2014  10.60  0.11  1.67  1.78  (0.11)  (0.29)  —  (0.40)  11.98  17.09  1.30  0.83  0.93  4,313  15 
08-31-2013  9.87  0.10  1.08  1.18  (0.10)  (0.35)  —  (0.45)  10.60  12.38  1.30  0.83  0.99  2,928  17 
08-31-2012  9.23  0.12  0.68  0.80  (0.11)  (0.05)  —  (0.16)  9.87  8.80  1.41  0.81  1.26  2,646  66 
08-31-2011  8.25  0.09  1.06  1.15  (0.10)  (0.07)  —  (0.17)  9.23  13.86  1.53  0.73  0.98  2,214  22 
08-31-2010  7.84  0.11  0.44  0.55  (0.11)  (0.03)  —  (0.14)  8.25  6.91  1.226  0.74  1.33  1,771  22 
CLASS R2                               
08-31-2014  10.60  0.12  1.70  1.82  (0.14)  (0.29)  —  (0.43)  11.99  17.46  2.75  0.58  1.05  912  15 
08-31-2013  9.87  0.10  1.11  1.21  (0.13)  (0.35)  —  (0.48)  10.60  12.64  7.20  0.58  1.00  438  17 
08-31-20127  9.81  0.02  0.04  0.06  —  —  —  —  9.87  0.61  17.388  0.598  0.299  101  6610 
CLASS R3                               
08-31-2014  10.61  0.12  1.68  1.80  (0.12)  (0.29)  —  (0.41)  12.00  17.28  1.11  0.73  1.04  4,784  15 
08-31-2013  9.88  0.11  1.08  1.19  (0.11)  (0.35)  —  (0.46)  10.61  12.47  1.14  0.73  1.04  3,710  17 
08-31-2012  9.24  0.12  0.68  0.80  (0.11)  (0.05)  —  (0.16)  9.88  8.84  1.21  0.72  1.27  3,650  66 
08-31-2011  8.25  0.09  1.07  1.16  (0.10)  (0.07)  —  (0.17)  9.24  14.04  1.27  0.68  0.92  3,068  22 
08-31-2010  7.85  0.08  0.46  0.54  (0.11)  (0.03)  —  (0.14)  8.25  6.82  1.276  0.69  0.97  1,937  22 
CLASS R4                               
08-31-2014  10.63  0.18  1.68  1.86  (0.17)  (0.29)  —  (0.46)  12.03  17.78  1.51  0.33  1.58  1,388  15 
08-31-2013  9.90  0.16  1.07  1.23  (0.15)  (0.35)  —  (0.50)  10.63  12.89  1.40  0.33  1.52  1,408  17 
08-31-2012  9.26  0.14  0.69  0.83  (0.14)  (0.05)  —  (0.19)  9.90  9.17  1.64  0.39  1.46  1,416  66 
08-31-2011  8.27  0.12  1.07  1.19  (0.13)  (0.07)  —  (0.20)  9.26  14.32  1.87  0.38  1.23  1,050  22 
08-31-2010  7.85  0.11  0.47  0.58  (0.13)  (0.03)  —  (0.16)  8.27  7.35  2.186  0.39  1.32  660  22 
CLASS R5                               
08-31-2014  10.63  0.21  1.67  1.88  (0.19)  (0.29)  —  (0.48)  12.03  18.01  0.85  0.13  1.82  1,733  15 
08-31-2013  9.90  0.23  1.02  1.25  (0.17)  (0.35)  —  (0.52)  10.63  13.11  0.40  0.13  2.21  2,099  17 
08-31-2012  9.26  0.16  0.70  0.86  (0.17)  (0.05)  —  (0.22)  9.90  9.51  0.50  0.12  1.66  8,683  66 
08-31-2011  8.27  0.16  1.06  1.22  (0.16)  (0.07)  —  (0.23)  9.26  14.63  0.64  0.08  1.67  3,342  22 
08-31-2010  7.86  0.17  0.42  0.59  (0.15)  (0.03)  —  (0.18)  8.27  7.48  1.246  0.09  1.97  831  22 
CLASS R6                               
08-31-2014  10.63  0.21  1.66  1.87  (0.19)  (0.29)  —  (0.48)  12.02  17.97  0.29  0.08  1.84  1,067  15 
08-31-2013  9.90  0.09  1.17  1.26  (0.18)  (0.35)  —  (0.53)  10.63  13.16  0.43  0.08  0.88  9,211  17 
08-31-201211  9.26  0.18  0.68  0.86  (0.17)  (0.05)  —  (0.22)  9.90  9.51  18.84  0.09  1.95  107  66 
CLASS 1                               
08-31-2014  10.64  0.19  1.68  1.87  (0.19)  (0.29)  —  (0.48)  12.03  17.89  0.13  0.13  1.65  1,393,300  15 
08-31-2013  9.90  0.17  1.09  1.26  (0.17)  (0.35)  —  (0.52)  10.64  13.21  0.13  0.13  1.65  1,147,492  17 
08-31-2012  9.26  0.17  0.68  0.85  (0.16)  (0.05)  —  (0.21)  9.90  9.46  0.14  0.14  1.84  992,393  66 
08-31-2011  8.27  0.15  1.06  1.21  (0.15)  (0.07)  —  (0.22)  9.26  14.58  0.14  0.13  1.59  829,297  22 
08-31-2010  7.86  0.16  0.43  0.59  (0.15)  (0.03)  —  (0.18)  8.27  7.44  0.14  0.14  1.83  631,319  22 

 

  Annual report | Retirement Living Portfolios  51 
See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2025 Portfolio continued

1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14% and 0.48%–1.17% for the
periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 The inception date for Class R2 shares is 3-1-12.
8 Annualized.
9 Not annualized.
10 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
11 The inception date for Class R6 shares is 9-1-11.

 

Retirement Living through 2020 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.53  0.16  1.47  1.63  (0.18)  (0.29)  —  (0.47)  11.69  15.79  0.59  0.58  1.46  77,843  17 
08-31-2013  10.00  0.16  0.88  1.04  (0.17)  (0.34)  —  (0.51)  10.53  10.71  0.60  0.58  1.50  52,733  18 
08-31-2012  9.39  0.17  0.66  0.83  (0.17)  (0.05)  —  (0.22)  10.00  9.03  0.67  0.59  1.78  37,860  63 
08-31-2011  8.52  0.16  0.94  1.10  (0.15)  (0.08)  —  (0.23)  9.39  12.87  0.65  0.58  1.61  29,087  24 
08-31-2010  8.06  0.17  0.47  0.64  (0.15)  (0.03)  —  (0.18)  8.52  7.91  0.656  0.59  1.92  18,528  23 
CLASS R1                               
08-31-2014  10.50  0.14  1.44  1.58  (0.15)  (0.29)  —  (0.44)  11.64  15.36  1.32  0.83  1.23  3,553  17 
08-31-2013  9.97  0.14  0.87  1.01  (0.14)  (0.34)  —  (0.48)  10.50  10.48  1.33  0.83  1.34  2,973  18 
08-31-2012  9.37  0.15  0.65  0.80  (0.15)  (0.05)  —  (0.20)  9.97  8.77  1.39  0.81  1.59  2,704  63 
08-31-2011  8.51  0.15  0.93  1.08  (0.14)  (0.08)  —  (0.22)  9.37  12.61  1.47  0.73  1.51  2,308  24 
08-31-2010  8.04  0.15  0.49  0.64  (0.14)  (0.03)  —  (0.17)  8.51  7.92  1.126  0.74  1.77  1,859  23 
CLASS R2                               
08-31-2014  10.50  0.15  1.47  1.62  (0.18)  (0.29)  —  (0.47)  11.65  15.73  2.24  0.58  1.33  1,233  17 
08-31-2013  9.98  0.10  0.93  1.03  (0.17)  (0.34)  —  (0.51)  10.50  10.62  5.81  0.58  0.93  640  18 
08-31-20127  9.86  0.04  0.08  0.12  —  —  —  —  9.98  1.228  16.599  0.59  0.378  101  6310 
CLASS R3                               
08-31-2014  10.51  0.16  1.45  1.61  (0.17)  (0.29)  —  (0.46)  11.66  15.56  1.12  0.73  1.42  4,269  17 
08-31-2013  9.98  0.15  0.87  1.02  (0.15)  (0.34)  —  (0.49)  10.51  10.57  1.07  0.73  1.40  4,378  18 
08-31-2012  9.38  0.15  0.66  0.81  (0.16)  (0.05)  —  (0.21)  9.98  8.82  1.14  0.72  1.62  4,493  63 
08-31-2011  8.51  0.14  0.95  1.09  (0.14)  (0.08)  —  (0.22)  9.38  12.78  1.15  0.68  1.49  3,839  24 
08-31-2010  8.04  0.12  0.52  0.64  (0.14)  (0.03)  —  (0.17)  8.51  7.96  1.186  0.69  1.38  2,817  23 
CLASS R4                               
08-31-2014  10.51  0.20  1.45  1.65  (0.21)  (0.29)  —  (0.50)  11.66  16.00  2.00  0.33  1.80  1,151  17 
08-31-2013  9.99  0.18  0.87  1.05  (0.19)  (0.34)  —  (0.53)  10.51  10.89  2.25  0.33  1.74  891  18 
08-31-2012  9.38  0.19  0.66  0.85  (0.19)  (0.05)  —  (0.24)  9.99  9.27  2.34  0.40  2.01  797  63 
08-31-2011  8.51  0.15  0.97  1.12  (0.17)  (0.08)  —  (0.25)  9.38  13.09  5.58  0.39  1.56  466  24 
08-31-2010  8.05  0.16  0.50  0.66  (0.17)  (0.03)  —  (0.20)  8.51  8.11  5.546  0.39  1.90  151  23 

 

52  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

Continued

Retirement Living through 2020 Portfolio continued

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS R5                               
08-31-2014  10.55  0.24  1.43  1.67  (0.23)  (0.29)  —  (0.52)  11.70  16.16  0.40  0.13  2.10  3,896  17 
08-31-2013  10.02  0.22  0.86  1.08  (0.21)  (0.34)  —  (0.55)  10.55  11.19  0.31  0.13  2.12  6,515  18 
08-31-2012  9.41  0.19  0.69  0.88  (0.22)  (0.05)  —  (0.27)  10.02  9.58  0.44  0.13  1.97  10,120  63 
08-31-2011  8.53  0.21  0.95  1.16  (0.20)  (0.08)  —  (0.28)  9.41  13.50  0.70  0.08  2.17  3,114  24 
08-31-2010  8.06  0.21  0.48  0.69  (0.19)  (0.03)  —  (0.22)  8.53  8.50  0.956  0.09  2.44  668  23 
CLASS R6                               
08-31-2014  10.53  0.23  1.45  1.68  (0.23)  (0.29)  —  (0.52)  11.69  16.35  0.30  0.08  2.06  1,745  17 
08-31-2013  10.01  0.11  0.96  1.07  (0.21)  (0.34)  —  (0.55)  10.53  11.14  0.46  0.08  1.11  7,360  18 
08-31-201211  9.40  0.23  0.65  0.88  (0.22)  (0.05)  —  (0.27)  10.01  9.59  16.95  0.09  2.38  106  63 
CLASS 1                               
08-31-2014  10.54  0.22  1.46  1.68  (0.23)  (0.29)  —  (0.52)  11.70  16.27  0.14  0.13  1.95  1,158,072  17 
08-31-2013  10.01  0.21  0.87  1.08  (0.21)  (0.34)  —  (0.55)  10.54  11.18  0.13  0.13  2.00  1,004,587  18 
08-31-2012  9.40  0.22  0.65  0.87  (0.21)  (0.05)  —  (0.26)  10.01  9.53  0.14  0.14  2.27  909,856  63 
08-31-2011  8.53  0.20  0.94  1.14  (0.19)  (0.08)  —  (0.27)  9.40  13.33  0.14  0.13  2.11  787,437  24 
08-31-2010  8.06  0.20  0.49  0.69  (0.19)  (0.03)  —  (0.22)  8.53  8.45  0.14  0.14  2.30  631,670  23 


1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds whose expense ratios can vary based on the mix of underlying funds held by the portfo-
lio. The range of expense ratios of the underlying funds held by the portfolios was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14% and
0.48%–1.17% for the periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 The inception date for Class R2 shares is 3-1-12.
8 Not annualized.
9 Annualized.
10 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
11 The inception date for Class R6 shares is 9-1-11.

 

 

  Annual report | Retirement Living Portfolios  53 
See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2015 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  10.43  0.19  1.23  1.42  (0.21)  (0.29)  —  (0.50)  11.35  13.93  0.59  0.58  1.74  61,465  20 
08-31-2013  9.96  0.19  0.66  0.85  (0.20)  (0.18)  —  (0.38)  10.43  8.78  0.61  0.59  1.80  43,192  20 
08-31-2012  9.39  0.21  0.62  0.83  (0.21)  (0.05)  —  (0.26)  9.96  9.11  0.68  0.59  2.16  31,143  59 
08-31-2011  8.66  0.19  0.81  1.00  (0.20)  (0.07)  —  (0.27)  9.39  11.54  0.67  0.59  2.00  22,954  30 
08-31-2010  8.17  0.22  0.50  0.72  (0.19)  (0.04)  —  (0.23)  8.66  8.82  0.666  0.59  2.49  13,255  26 
CLASS R1                               
08-31-2014  10.40  0.18  1.22  1.40  (0.19)  (0.29)  —  (0.48)  11.32  13.69  2.09  0.83  1.63  1,184  20 
08-31-2013  9.93  0.17  0.66  0.83  (0.18)  (0.18)  —  (0.36)  10.40  8.53  1.86  0.84  1.69  1,276  20 
08-31-2012  9.37  0.22  0.59  0.81  (0.20)  (0.05)  —  (0.25)  9.93  8.85  1.83  0.81  2.32  1,330  59 
08-31-2011  8.64  0.20  0.79  0.99  (0.19)  (0.07)  —  (0.26)  9.37  11.41  1.78  0.74  2.03  1,618  30 
08-31-2010  8.15  0.20  0.51  0.71  (0.18)  (0.04)  —  (0.22)  8.64  8.69  1.396  0.74  2.32  1,267  26 
CLASS R2                               
08-31-2014  10.41  0.18  1.24  1.42  (0.21)  (0.29)  —  (0.50)  11.33  13.96  5.76  0.58  1.62  366  20 
08-31-2013  9.94  0.16  0.69  0.85  (0.20)  (0.18)  —  (0.38)  10.41  8.79  10.80  0.59  1.53  194  20 
08-31-20127  9.76  0.05  0.13  0.18  —  —  —  —  9.94  1.848  16.519  0.599  0.569  102  5910 
CLASS R3                               
08-31-2014  10.41  0.18  1.22  1.40  (0.20)  (0.29)  —  (0.49)  11.32  13.69  1.03  0.73  1.62  6,277  20 
08-31-2013  9.93  0.18  0.67  0.85  (0.19)  (0.18)  —  (0.37)  10.41  8.75  1.03  0.74  1.73  5,628  20 
08-31-2012  9.37  0.20  0.61  0.81  (0.20)  (0.05)  —  (0.25)  9.93  8.91  1.08  0.73  2.14  5,485  59 
08-31-2011  8.64  0.20  0.79  0.99  (0.19)  (0.07)  —  (0.26)  9.37  11.46  1.34  0.69  2.03  2,946  30 
08-31-2010  8.15  0.21  0.50  0.71  (0.18)  (0.04)  —  (0.22)  8.64  8.74  1.316  0.69  2.40  1,780  26 
CLASS R4                               
08-31-2014  10.43  0.22  1.22  1.44  (0.24)  (0.29)  —  (0.53)  11.34  14.11  6.96  0.33  2.03  251  20 
08-31-2013  9.95  0.18  0.71  0.89  (0.23)  (0.18)  —  (0.41)  10.43  9.16  13.15  0.34  1.78  160  20 
08-31-2012  9.38  0.24  0.61  0.85  (0.23)  (0.05)  —  (0.28)  9.95  9.34  10.46  0.41  2.51  68  59 
08-31-2011  8.65  0.20  0.82  1.02  (0.22)  (0.07)  —  (0.29)  9.38  11.76  11.17  0.39  2.04  158  30 
08-31-2010  8.16  0.24  0.50  0.74  (0.21)  (0.04)  —  (0.25)  8.65  9.01  7.456  0.39  2.74  64  26 
CLASS R5                               
08-31-2014  10.45  0.26  1.21  1.47  (0.26)  (0.29)  —  (0.55)  11.37  14.40  1.13  0.13  2.41  1,360  20 
08-31-2013  9.97  0.29  0.62  0.91  (0.25)  (0.18)  —  (0.43)  10.45  9.35  0.54  0.14  2.76  1,662  20 
08-31-2012  9.41  0.21  0.66  0.87  (0.26)  (0.05)  —  (0.31)  9.97  9.55  0.76  0.13  2.22  5,380  59 
08-31-2011  8.67  0.23  0.83  1.06  (0.25)  (0.07)  —  (0.32)  9.41  12.17  1.24  0.09  2.38  1,465  30 
08-31-2010  8.17  0.25  0.52  0.77  (0.23)  (0.04)  —  (0.27)  8.67  9.41  3.596  0.09  2.81  273  26 
CLASS R6                               
08-31-2014  10.45  0.27  1.20  1.47  (0.26)  (0.29)  —  (0.55)  11.37  14.46  0.50  0.08  2.48  656  20 
08-31-2013  9.97  0.16  0.75  0.91  (0.25)  (0.18)  —  (0.43)  10.45  9.40  0.65  0.09  1.53  4,406  20 
08-31-201211  9.40  0.27  0.61  0.88  (0.26)  (0.05)  —  (0.31)  9.97  9.67  15.61  0.09  2.80  106  59 
CLASS 1                               
08-31-2014  10.45  0.25  1.22  1.47  (0.26)  (0.29)  —  (0.55)  11.37  14.40  0.14  0.13  2.27  602,569  20 
08-31-2013  9.97  0.24  0.67  0.91  (0.25)  (0.18)  —  (0.43)  10.45  9.35  0.14  0.14  2.32  592,173  20 
08-31-2012  9.40  0.26  0.61  0.87  (0.25)  (0.05)  —  (0.30)  9.97  9.61  0.14  0.14  2.70  582,885  59 
08-31-2011  8.67  0.25  0.79  1.04  (0.24)  (0.07)  —  (0.31)  9.40  12.00  0.14  0.14  2.59  534,245  30 
08-31-2010  8.17  0.25  0.52  0.77  (0.23)  (0.04)  —  (0.27)  8.67  9.36  0.14  0.14  2.88  439,994  26 

 

54  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Financial highlights

Continued

Retirement Living through 2015 Portfolio continued

1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52%–1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.14%, and 0.48%–1.17% for
the periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 The inception date for Class R2 shares is 3-1-12.
8 Not annualized.
9 Annualized.
10 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
11 The inception date for Class R6 shares is 9-1-11.

 

 

Retirement Living through 2010 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS A                               
08-31-2014  9.97  0.21  0.98  1.19  (0.22)  (0.37)  —  (0.59)  10.57  12.33  0.60  0.59  2.00  39,227  23 
08-31-2013  10.11  0.20  0.51  0.71  (0.24)  (0.61)  —  (0.85)  9.97  7.40  0.63  0.59  2.03  35,013  18 
08-31-2012  9.58  0.25  0.59  0.84  (0.27)  (0.04)  —  (0.31)  10.11  9.09  0.71  0.60  2.56  21,845  55 
08-31-2011  8.98  0.23  0.69  0.92  (0.26)  (0.06)  —  (0.32)  9.58  10.21  0.70  0.59  2.30  17,032  43 
08-31-2010  8.38  0.26  0.54  0.80  (0.17)  (0.03)  —  (0.20)  8.98  9.60  0.656  0.60  2.89  9,538  48 
CLASS R1                               
08-31-2014  9.93  0.17  1.00  1.17  (0.20)  (0.37)  —  (0.57)  10.53  12.11  4.01  0.84  1.65  531  23 
08-31-2013  10.08  0.18  0.49  0.67  (0.21)  (0.61)  —  (0.82)  9.93  7.05  4.34  0.84  1.82  387  18 
08-31-2012  9.55  0.22  0.61  0.83  (0.26)  (0.04)  —  (0.30)  10.08  8.94  4.76  0.82  2.31  379  55 
08-31-2011  8.95  0.26  0.64  0.90  (0.24)  (0.06)  —  (0.30)  9.55  10.09  4.44  0.74  2.65  337  43 
08-31-2010  8.36  0.26  0.52  0.78  (0.16)  (0.03)  —  (0.19)  8.95  9.36  1.946  0.75  2.95  411  48 
CLASS R2                               
08-31-2014  9.96  0.21  0.99  1.20  (0.22)  (0.37)  —  (0.59)  10.57  12.45  2.81  0.59  1.99  681  23 
08-31-2013  10.11  0.15  0.55  0.70  (0.24)  (0.61)  —  (0.85)  9.96  7.30  6.04  0.59  1.50  613  18 
08-31-20127  9.87  0.07  0.17  0.24  —  —  —  —  10.11  2.438  16.449  0.609  0.728  102  5510 
CLASS R3                               
08-31-2014  9.94  0.19  1.00  1.19  (0.21)  (0.37)  —  (0.58)  10.55  12.31  2.09  0.74  1.82  1,200  23 
08-31-2013  10.09  0.22  0.46  0.68  (0.22)  (0.61)  —  (0.83)  9.94  7.16  1.74  0.74  2.13  1,124  18 
08-31-2012  9.56  0.24  0.59  0.83  (0.26)  (0.04)  —  (0.30)  10.09  8.99  1.47  0.73  2.51  1,765  55 
08-31-2011  8.96  0.23  0.68  0.91  (0.25)  (0.06)  —  (0.31)  9.56  10.13  1.53  0.69  2.33  2,196  43 
08-31-2010  8.37  0.25  0.54  0.79  (0.17)  (0.03)  —  (0.20)  8.96  9.39  1.346  0.70  2.79  1,441  48 
CLASS R4                               
08-31-2014  9.97  0.23  1.00  1.23  (0.25)  (0.37)  —  (0.62)  10.58  12.72  3.39  0.34  2.21  607  23 
08-31-2013  10.12  0.24  0.48  0.72  (0.26)  (0.61)  —  (0.87)  9.97  7.57  3.75  0.34  2.41  445  18 
08-31-2012  9.58  0.26  0.61  0.87  (0.29)  (0.04)  —  (0.33)  10.12  9.42  4.40  0.40  2.64  407  55 
08-31-2011  8.98  0.21  0.73  0.94  (0.28)  (0.06)  —  (0.34)  9.58  10.42  8.04  0.39  2.14  347  43 
08-31-2010  8.38  0.30  0.52  0.82  (0.19)  (0.03)  —  (0.22)  8.98  9.79  8.986  0.40  3.31  71  48 

 

  Annual report | Retirement Living Portfolios  55 
See notes to financial statements     

 


Financial highlights

Continued

Retirement Living through 2010 Portfolio continued

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations    Less distributions     Ratios to average net assets     
 
      Net                         
      realized  Total                    Net   
  Net asset  Net  and  from From net                  assets,   
  value,  invest-  unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  end of   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total value, end  Total  before  including  investment  period (in  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  thousands)  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($) capital ($)  tions ($)  ($)  (%)3,4  (%)5  (%)5  (loss) (%)1  ($)  (%) 
CLASS R5                               
08-31-2014  9.98  0.28  0.97  1.25  (0.27)  (0.37)  —  (0.64)  10.59  12.93  1.81  0.14  2.75  213  23 
08-31-2013  10.13  0.29  0.45  0.74  (0.28)  (0.61)  —  (0.89)  9.98  7.78  0.58  0.15  2.87  1,085  18 
08-31-2012  9.60  0.27  0.62  0.89  (0.32)  (0.04)  —  (0.36)  10.13  9.64  0.62  0.13  2.82  4,614  55 
08-31-2011  8.99  0.26  0.71  0.97  (0.30)  (0.06)  —  (0.36)  9.60  10.83  0.79  0.09  2.65  2,679  43 
08-31-2010  8.39  0.32  0.52  0.84  (0.21)  (0.03)  —  (0.24)  8.99  10.08  3.296  0.10  3.54  261  48 
CLASS R6                               
08-31-2014  9.99  0.27  0.98  1.25  (0.27)  (0.37)  —  (0.64)  10.60  12.97  0.58  0.09  2.57  506  23 
08-31-2013  10.13  0.15  0.61  0.76  (0.29)  (0.61)  —  (0.90)  9.99  7.92  0.96  0.09  1.58  3,149  18 
08-31-201211  9.60  0.30  0.59  0.89  (0.32)  (0.04)  —  (0.36)  10.13  9.63  16.98  0.10  3.12  106  55 
CLASS 1                               
08-31-2014  9.99  0.25  1.00  1.25  (0.27)  (0.37)  —  (0.64)  10.60  12.92  0.14  0.14  2.46  352,261  23 
08-31-2013  10.13  0.26  0.49  0.75  (0.28)  (0.61)  —  (0.89)  9.99  7.88  0.14  0.14  2.60  353,914  18 
08-31-2012  9.60  0.30  0.59  0.89  (0.32)  (0.04)  —  (0.36)  10.13  9.58  0.15  0.15  3.07  396,890  55 
08-31-2011  8.99  0.30  0.67  0.97  (0.30)  (0.06)  —  (0.36)  9.60  10.78  0.14  0.14  3.05  421,921  43 
08-31-2010  8.39  0.31  0.53  0.84  (0.21)  (0.03)  —  (0.24)  8.99  10.04  0.15  0.15  3.45  447,295  48 


1 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
2 Based on average daily shares outstanding.
3 Does not reflect the effect of sales charges, if any.
4 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
5 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.52% –1.26%, 0.50%–1.29%, 0.51%–1.47%, 0.48%–1.12%, and 0.48%–1.13% for
the periods ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
6 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
7 The inception date for Class R2 shares is 3-1-12.
8 Not annualized.
9 Annualized.
10 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
11 The inception date for Class R6 shares is 9-1-11.

 

 

 

56  Retirement Living Portfolios | Annual report   
    See notes to financial statements 

 


Notes to financial statements

Note 1 — Organization

John Hancock Funds II (the Trust) is 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). It is a series company with multiple investment series, ten of which (collectively, Retirement Living Portfolios or the portfolios, and each individually the portfolio), are presented in this report. The Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in Class NAV shares of underlying funds of the Trust, John Hancock Funds III (JHF III) and other funds of the John Hancock funds complex.

The portfolios may offer multiple classes of shares. The shares currently offered by the Trust are detailed in the Statements of assets and liabilities. Class A shares are open to all investors. Class R1 shares, Class R2 shares, Class R3 shares, Class R4 shares, and Class R5 shares are available only to certain retirement plans. Class R6 shares are only available to certain retirement plans, institutions and other investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ.

The accounting policies of the John Hancock underlying funds in which the portfolios invest are outlined in the underlying funds’ shareholder reports, which include the underlying funds’ financial statements, available without charge by calling 800-344-1029 or visiting jhinvestments.com, on the Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s public reference room in Washington, D.C. The underlying funds are not covered by this report.

Retirement Living through 2055 Portfolio commenced operations on March 26, 2014.

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 portfolios intend to qualify as investment companies 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 portfolios:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. Investments by the portfolios in underlying affiliated funds and/or other open-end management investment companies are valued at their respective net asset values each business day.

The portfolios use a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the portfolios’ own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

As of August 31, 2014, all investments are categorized as Level 1 under the hierarchy described above.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Income and capital gain distributions from underlying funds are recorded on ex-date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Line of credit. The portfolios may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the portfolios’ custodian agreement, the custodian may loan money to the portfolios to make properly authorized payments. The portfolios are obligated to repay the custodian for any overdraft, including any related costs or expenses. The custodian may have a lien, security interest or security

Annual report | Retirement Living Portfolios  57 

 


entitlement in any portfolio property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

In addition, the portfolios and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statements of operations. For the year ended August 31, 2014, the portfolios had no borrowings under the line of credit.

The commitment fees for the year ended August 31, 2014 were as follows:

Portfolio  Commitment Fees 
Retirement Living through 2055  $215 
Retirement Living through 2050  440 
Retirement Living through 2045  699 
Retirement Living through 2040  709 
Retirement Living through 2035  804 
Retirement Living through 2030  901 
Retirement Living through 2025  969 
Retirement Living through 2020  901 
Retirement Living through 2015  687 
Retirement Living through 2010  570 

 

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual portfolio are allocated to such portfolio. Expenses that are not readily attributable to a specific portfolio are allocated among all portfolios in an equitable manner, taking into consideration, among other things, the nature and type of expense and the portfolio’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 portfolio level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. The portfolios intend to continue to qualify as regulated investment companies by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, the portfolios had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The portfolios’ federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

The costs of investments owned on August 31, 2014, including short-term investments, for federal income tax purposes, were as follows:

        Net Unrealized 
    Unrealized  Unrealized  Appreciation/ 
Portfolio  Aggregate Cost  Appreciation  (Depreciation)  (Depreciation) 
Retirement Living through 2055 Portfolio  $7,280,889  $170,259  ($2,429)  $167,830 
Retirement Living through 2050 Portfolio  210,073,694  32,800,947  (7,238)  32,793,709 
Retirement Living through 2045 Portfolio  620,855,815  199,066,903  (1,821)  199,065,082 
Retirement Living through 2040 Portfolio  650,134,657  203,963,844  (2,243)  203,961,601 
Retirement Living through 2035 Portfolio  844,109,635  261,269,596  (3,066)  261,266,530 
Retirement Living through 2030 Portfolio  1,031,659,465  303,473,101  (196,570)  303,276,531 
Retirement Living through 2025 Portfolio  1,172,030,755  310,715,364  (303,920)  310,411,444 
Retirement Living through 2020 Portfolio  1,015,332,977  237,107,825  (399,522)  236,708,303 
Retirement Living through 2015 Portfolio  559,624,100  114,818,595  (276,419)  114,542,176 
Retirement Living through 2010 Portfolio  340,033,268  55,428,820  (202,008)  55,226,812 

 

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 portfolios generally declare and pay dividends and capital gain distributions, if any, annually.

58  Retirement Living Portfolios | Annual report 

 


During the year ended August 31, 2014, the tax character of distributions paid was as follows:

  Ordinary  Long Term   
Portfolio  Income  Capital Gains  Total 
Retirement Living through 2050  $3,813,926  $2,052,305  $5,866,231 
Retirement Living through 2045  17,948,635  12,823,244  30,771,879 
Retirement Living through 2040  18,543,481  12,466,057  31,009,538 
Retirement Living through 2035  23,701,517  16,094,077  39,795,594 
Retirement Living through 2030  30,488,295  18,400,837  48,889,132 
Retirement Living through 2025  36,783,209  18,419,890  55,203,099 
Retirement Living through 2020  34,078,618  18,693,432  52,772,050 
Retirement Living through 2015  20,416,771  12,776,568  33,193,339 
Retirement Living through 2010  13,432,080  10,818,103  24,250,183 

 

During the year ended August 31, 2013, the tax character of distributions paid was as follows:

  Ordinary  Long Term   
Portfolio  Income  Capital Gains  Total 
Retirement Living through 2050  $1,629,302  $128,041  $1,757,343 
Retirement Living through 2045  9,016,700  30,742,875  39,759,575 
Retirement Living through 2040  9,087,690  27,995,277  37,082,967 
Retirement Living through 2035  11,701,610  32,938,102  44,639,712 
Retirement Living through 2030  16,629,637  36,420,297  53,049,934 
Retirement Living through 2025  22,152,224  32,759,423  54,911,647 
Retirement Living through 2020  23,666,069  29,056,371  52,722,440 
Retirement Living through 2015  17,584,305  8,363,460  25,947,765 
Retirement Living through 2010  13,511,186  22,542,582  36,053,768 

 

Distributions paid by the portfolios 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 August 31, 2014, the components of distributable earnings on a tax basis were as follows:

    Undistributed 
  Undistributed  Long Term 
Portfolio  Ordinary Income  Capital Gains 
Retirement Living through 2055  $1,224  — 
Retirement Living through 2050  —  $5,285,560 
Retirement Living through 2045  800,241  24,157,650 
Retirement Living through 2040  925,415  24,562,111 
Retirement Living through 2035  1,102,318  30,691,954 
Retirement Living through 2030  4,434,204  38,051,042 
Retirement Living through 2025  6,783,434  42,582,069 
Retirement Living through 2020  9,372,825  35,249,577 
Retirement Living through 2015  7,226,575  24,287,414 
Retirement Living through 2010  4,643,244  12,438,381 

 

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 portfolios’ financial statements as a return of capital. Short-term gains from underlying funds are treated as ordinary income for tax purposes.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the portfolios. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 – Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the portfolios. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for all the portfolios except Retirement Living through 2055. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS.

Annual report | Retirement Living Portfolios  59 

 


In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor prior to January 1, 2014. JHA has served as the investment Advisor to Retirement Living through 2055 since inception. 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 MFC.

Management fee. The portfolios pay the Advisor a management fee for its services to the portfolios. The management fee has two components: (a) a fee on net assets invested in affiliated funds (Affiliated Fund Assets) and (b) a fee on net assets not invested in affiliated funds (Other Assets). Affiliated funds are any funds of the Trust or JHF III. The fee on assets invested in Affiliated Fund Assets is stated as an annual percentage of the current value of the aggregate net assets of all the portfolios and is equivalent to the sum of: (a) 0.06% of the first $7.5 billion of aggregate net assets and (b) 0.05% of the excess over $7.5 billion of aggregate net assets. The fee on Other Assets is stated as an annual percentage of the current value of the aggregate net assets of all the portfolios and is equivalent to the sum of: (a) 0.51% of the first $7.5 billion of aggregate net assets and (b) 0.50% of the excess over $7.5 billion of aggregate net assets and is applied to the Other Assets of the portfolios.

John Hancock Asset Management a division of Manulife Asset Management (North America) Limited and John Hancock Asset Management a division of Manulife Asset Management (US) LLC, both indirectly owned subsidiaries of MFC and affiliates of the Advisor, act as subadvisors to the portfolios. QS Investors, LLC acts as subadvisor consultant. The portfolios are not responsible for payment of the subadvisory fees.

Expense reimbursements. The Advisor has voluntarily agreed to reduce its management fee if certain expenses of each portfolio exceed 0.10% of average net assets. Expenses excluded from this waiver are taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the portfolios’ business, advisory fees, Rule 12b-1 fees, printing and postage, state registration fees, transfer agent and service fees, acquired fund fees and short dividend expense. This expense reimbursement may be terminated by the Advisor on notice to the Trust.

The Advisor has voluntarily agreed to waive its advisory fee or reimburse the portfolios so that the aggregate advisory fee retained by the Advisor with respect to each portfolio and the underlying investments in a portfolio does not exceed 0.51% of the portfolio’s first $7.5 billion of average daily net assets and 0.50% of the portfolio’s average daily net assets in excess of $7.5 billion. This voluntary waiver may be terminated at any time by the Advisor on notice to the Trust.

The Advisor has contractually agreed to waive fees and/or reimburse certain class specific expenses, excluding portfolio level such as advisory fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of a portfolio’s business, short dividend expenses and acquired fund fees for Class A, Class R1, Class R2, Class R3, Class R4, Class R5 and Class R6 shares, to the extent that fees/expenses for each class exceed 0.50%, 0.75%, 0.50%, 0.65%, 0.25%, 0.05% and 0.00%, respectively, of the average daily net assets attributable to that class. This expense fee waiver and/or reimbursement will continue in effect until at least December 31, 2015 for Retirement Living through 2055 and until at least December 31, 2014 for all other portfolios.

Additionally, the Advisor has contractually agreed to waive fees and/or reimburse certain portfolio level expenses for Retirement Living through 2055 and Retirement Living through 2050 that exceed 0.05% of the portfolio’s average net assets excluding portfolio level and advisory fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the portfolio’s business, Rule 12b-1 fees, transfer agent and service fees, state registration fees, printing and postage, short dividend expense and acquired fund fees for all classes. This expense fee waiver and/or reimbursement will continue in effect until at least December 31, 2015 for Retirement Living through 2055 and until at least December 31, 2014 for Retirement Living through 2050.

For the year ended August 31, 2014, the expense reductions to these plans amounted to the following and are reflected as a reduction of total expenses in the Statements of operations:

      Expense Reimbursement by Class     
 
Portfolio  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1  Total 
Retirement Living through 2055  $13,064  $11,054  $10,936  $11,124  $11,055  $11,222  $12,077  $42,332  $122,864 
Retirement Living through 2050  14,756  14,697  14,825  14,698  14,782  15,274  15,541  33,645  138,218 
Retirement Living through 2045  3,670  15,388  14,847  15,984  15,609  16,603  16,061  51,756  149,918 
Retirement Living through 2040  3,506  15,747  15,551  16,473  15,603  16,746  16,093  53,543  153,262 
Retirement Living through 2035  3,599  16,403  14,975  16,447  15,831  15,954  16,737  67,773  167,719 
Retirement Living through 2030  4,697  16,357  14,529  16,656  15,568  17,349  17,787  84,958  187,901 
Retirement Living through 2025  4,551  16,152  14,905  16,754  15,693  15,944  18,260  87,242  189,501 
Retirement Living through 2020  4,234  15,815  15,291  16,911  15,544  17,463  17,973  67,534  170,765 
Retirement Living through 2015  1,364  15,220  14,476  17,644  15,292  15,750  16,566  13,419  109,731 
Retirement Living through 2010  1,280  14,906  14,425  15,720  15,363  15,660  16,125  6,832  100,311 

 

Effective September 29, 2014, the Advisor has contractually agreed to waive its advisory fees and/or reimburse certain expenses including underlying fund expenses to reduce the total annual operating expenses of the portfolios by amounts ranging from 0.20% to 0.26% of each portfolio’s average net assets.

60  Retirement Living Portfolios | Annual report 

 


The investment management fees, including the impact of the waivers and reimbursements as described above, incurred for the year ended August 31, 2014 were equivalent to a net annual effective rate of the portfolio’s average daily net assets as follows:

  Annual    Annual 
Portfolio  Effective Rate  Portfolio  Effective Rate 
Retirement Living through 2055  0.00%  Retirement Living through 2030  0.05% 
Retirement Living through 2050  0.00%  Retirement Living through 2025  0.05% 
Retirement Living through 2045  0.04%  Retirement Living through 2020  0.05% 
Retirement Living through 2040  0.04%  Retirement Living through 2015  0.04% 
Retirement Living through 2035  0.05%  Retirement Living through 2010  0.03% 

 

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that a portfolio is below its expense limitation during this period. The table below outlines the amounts recovered during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

  Amounts eligible  Amounts eligible  Amounts eligible  Amount recovered 
  for recovery  for recovery  for recovery  during the 
  through  through  through  period ended 
Portfolio  August 1, 2015  August 1, 2016  August 1, 2017  August 31, 2014 
Retirement Living through 2055  —  —  $116,835  — 
Retirement Living through 2050  $119,739  $180,669  124,206  $7,354 
Retirement Living through 2045  80,929  99,026  94,789  2,834 
Retirement Living through 2040  80,261  100,265  95,906  3,821 
Retirement Living through 2035  81,370  100,797  95,748  7,124 
Retirement Living through 2030  83,580  100,755  96,693  14,539 
Retirement Living through 2025  84,747  104,725  96,357  18,371 
Retirement Living through 2020  83,332  103,168  97,599  18,764 
Retirement Living through 2015  83,513  101,241  94,769  11,732 
Retirement Living through 2010  78,913  100,076  92,615  4,281 

 

Amounts Recovered by Class                   
Portfolio  Class A  Class R1  Class R2  Class R3  Class R4  Class R5  Class R6  Class 1  Total 
Retirement Living through 2050  $249  $12  $14  $6  $4  $5  $37  $7,027  $7,354 
Retirement Living through 2045  2,834  —  —  —  —  —  —  —  2,834 
Retirement Living through 2040  3,821  —  —  —  —  —  —  —  3,821 
Retirement Living through 2035  7,124  —  —  —  —  —  —  —  7,124 
Retirement Living through 2030  14,539  —  —  —  —  —  —  —  14,539 
Retirement Living through 2025  18,371  —  —  —  —  —  —  —  18,371 
Retirement Living through 2020  18,764  —  —  —  —  —  —  —  18,764 
Retirement Living through 2015  11,732  —  —  —  —  —  —  —  11,732 
Retirement Living through 2010  4,281  —  —  —  —  —  —  —  4,281 

 

Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the portfolios reimburse the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the fund, including the preparation of all tax returns, periodic reports to shareholders and regulatory reports, among other services. These expenses are allocated to each share class based on its relative net assets at the time the expense was incurred. These accounting and legal services fees incurred for the year ended August 31, 2014 amounted to an annual rate of 0.01% of the portfolios’ average daily net assets.

Distribution and service plans. The Trust has a distribution agreement with the Distributor. The portfolios have adopted distribution and service plans with respect to Class A, Class R1, Class R2, Class R3, Class R4, and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the portfolios. In addition, under a service plan for Class R1, Class R2, Class R3, Class R4, and Class R5 shares, the portfolios pay for certain other services. The portfolios 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 
A  0.30%  — 
R1  0.50%  0.25% 
R2  0.25%  0.25% 
R3  0.50%  0.15% 
R4  0.25%  0.10% 
R5  —  0.05% 
1  0.05%  — 

 

Annual report | Retirement Living Portfolios  61 

 


The Portfolios’ Distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares to limit the 12b-1 fees on Class R4 shares to 0.15% of the average daily net assets of Class R4 shares, until at least December 31, 2015 for Retirement Living 2055 and December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolios and the Distributor based upon a determination that is appropriate under the circumstances at the time.

Accordingly the fee limitation amounted to the following for Class R4 shares, for the year ended August 31, 2014.

  Class R4 
Portfolio  12b-1 Reimbursement 
Retirement Living through 2055  $45 
Retirement Living through 2050  124 
Retirement Living through 2045  966 
Retirement Living through 2040  1,035 
Retirement Living through 2035  1,390 
Retirement Living through 2030  1,065 
Retirement Living through 2025  1,447 
Retirement Living through 2020  988 
Retirement Living through 2015  234 
Retirement Living through 2010  522 

 

Sales charges. Class A shares are assessed up-front sales charges of up to 5% of net asset value of such shares. The following summarizes the net up-front sales charges received by the Distributor during the year ended August 31, 2014:

  Retirement   Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living  Living  Living  Living  Living  Living 
  through  through  through  through  through  through  through  through  through  through 
  2055  2050  2045  2040  2035  2030  2025  2020  2015  2010 
Net sales charges  $482  $10,785  $33,565  $30,260  $37,689  $43,742  $31,589  $50,348  $14,127  $15,139 
Retained for printing                     
prospectuses,                     
advertising and                     
sales literature  —  1,560  4,217  3,963  4,826  5,492  3,960  6,861  1,470  2,273 
Sales commissions                     
to unrelated                     
broker-dealers  481  9,134  27,277  24,030  29,358  37,099  25,831  43,184  12,606  12,866 
Sales commissions                     
to affiliated                     
sales personnel  1  91  2,071  2,267  3,505  1,151  1,798  303  51  — 

 

Class A shares may be subject to contingent deferred sales charges (CDSCs). Certain Class A shares that are acquired through purchases of $1 million or more and are redeemed within one year of purchase are subject to a 1.00% sales charge. CDSCs are applied to the lesser of the current market value at the time of redemption or the original purchase cost of the shares being redeemed. Proceeds from CDSCs are used to compensate the Distributor for providing distribution-related services in connection with the sale of these shares. During the year ended August 31, 2014, CDSCs received by the Distributor for Class A shares were as follows:

Portfolio  Class A 
Retirement Living through 2045  $2,206 
Retirement Living through 2040  713 
Retirement Living through 2035  3,101 
Retirement Living through 2030  1,787 
Retirement Living through 2025  917 
Retirement Living through 2020  908 
Retirement Living through 2015  508 
Retirement Living through 2010  344 

 

Transfer agent fees. The portfolios have a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the portfolios and to all other John Hancock affiliated funds. 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 Classes of Non-Municipal Bond Funds, Class R6 Shares, Retirement Share Classes and Municipal Bond Share Classes. Within each

62  Retirement Living Portfolios | Annual report 

 


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.

Prior to October 1, 2013, Signature Services Cost was calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

    Distribution and  Transfer  State registration  Printing and 
Portfolio  Class  service fees  agent fees  fees  postage 
 
Retirement Living through 2055  Class A  $148  $61  $7,488  $1,012 
  Class R1  223  9  6,656  136 
  Class R2  112  9  6,656  17 
  Class R3  223  9  6,656  161 
  Class R4  112  9  6,663  61 
  Class R5  —  9  6,656  211 
  Class R6  —  9  7,487  211 
  Class 1  472  —  —  — 
  Total  $1,290  $115  $48,262  $1,809 
Retirement Living through 2050  Class A  $14,825  $6,555  $15,839  $1,362 
  Class R1  2,470  75  14,729  145 
  Class R2  1,266  64  14,896  169 
  Class R3  716  29  14,728  130 
  Class R4  310  25  14,728  129 
  Class R5  421  194  14,728  208 
  Class R6  —  135  14,963  337 
  Class 1  90,446  —  —  — 
  Total  $110,454  $7,077  $104,611  $2,480 
Retirement Living through 2045  Class A  $112,345  $50,216  $17,132  $5,618 
  Class R1  9,788  268  14,619  516 
  Class R2  1,948  88  14,902  78 
  Class R3  10,887  337  15,099  429 
  Class R4  3,384  194  15,099  241 
  Class R5  676  271  15,889  344 
  Class R6  —  525  14,834  515 
  Class 1  356,036  —  —  — 
  Total  $495,064  $51,899  $107,574  $7,741 
Retirement Living through 2040  Class A  $114,898  $51,347  $16,672  $5,434 
  Class R1  15,131  407  14,635  499 
  Class R2  5,056  198  15,190  122 
  Class R3  21,743  685  15,106  538 
  Class R4  3,645  207  15,104  190 
  Class R5  1,959  793  15,085  575 
  Class R6  —  533  14,845  533 
  Class 1  367,692  —  —  — 
  Total  $530,124  $54,170  $106,637  $7,891 
Retirement Living through 2035  Class A  $137,647  $61,567  $17,539  $5,822 
  Class R1  21,838  584  15,039  540 
  Class R2  1,420  66  15,069  61 
  Class R3  16,797  523  15,268  453 
  Class R4  4,860  280  15,267  188 
  Class R5  789  321  15,250  273 
  Class R6  —  806  15,003  669 
  Class 1  476,299  —  —  — 
  Total  $659,650  $64,147  $108,435  $8,006 
Retirement Living through 2030  Class A  $187,433  $83,789  $19,532  $7,094 
  Class R1  25,180  681  14,950  542 
  Class R2  3,701  177  14,922  106 
  Class R3  23,785  743  15,128  500 
  Class R4  3,743  213  15,106  153 
  Class R5  2,929  1,178  15,118  603 
  Class R6  —  1,502  14,829  949 
  Class 1  574,395  —  —  — 
  Total  $821,166  $88,283  $109,585  $9,947 

 

Annual report | Retirement Living Portfolios  63 

 


    Distribution and  Transfer  State registration  Printing and 
Portfolio  Class  service fees  agent fees  fees  postage 
 
Retirement Living through 2025  Class A  $200,029  $89,534  $18,054  $7,392 
  Class R1  25,703  688  14,630  507 
  Class R2  3,175  136  14,881  96 
  Class R3  28,177  876  15,097  496 
  Class R4  5,070  296  15,096  203 
  Class R5  1,115  450  15,121  219 
  Class R6  —  1,817  14,756  1,151 
  Class 1  645,930  —  —  — 
  Total  $909,199  $93,797  $107,635  $10,064 
Retirement Living through 2020  Class A  $202,312  $90,469  $18,295  $7,346 
  Class R1  23,996  651  14,650  466 
  Class R2  4,618  183  14,917  105 
  Class R3  27,943  876  15,240  516 
  Class R4  3,467  200  15,117  157 
  Class R5  3,321  1,346  15,125  575 
  Class R6  —  1,647  14,853  1,023 
  Class 1  549,981  —  —  — 
  Total  $815,638  $95,372  $108,197  $10,188 
Retirement Living through 2015  Class A  $159,414  $71,286  $17,540  $5,796 
  Class R1  9,054  248  14,676  317 
  Class R2  810  56  14,940  61 
  Class R3  38,317  1,196  15,581  720 
  Class R4  822  47  15,140  97 
  Class R5  806  326  15,150  230 
  Class R6  —  829  14,960  724 
  Class 1  305,582  —  —  — 
  Total  $514,805  $73,988  $107,987  $7,945 
Retirement Living through 2010  Class A  $113,613  $50,967  $15,957  $5,074 
  Class R1  3,409  95  14,640  283 
  Class R2  2,496  132  14,903  129 
  Class R3  7,540  238  15,104  423 
  Class R4  1,826  105  15,103  144 
  Class R5  462  197  15,130  328 
  Class R6  —  673  14,840  559 
  Class 1  177,936  —  —  — 
  Total  $307,282  $52,407  $105,677  $6,940 

 

Trustee expenses. The Trust compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each fund based on its net assets relative to other funds within the John Hancock group of funds complex.

64  Retirement Living Portfolios | Annual report 

 


Note 5 — Fund share transactions

Transactions in portfolio shares for the for the years ended August 31, 2014 and 2013 were as follows:

Retirement Living through 2055 Portfolio

    Period ended 8-31-141 
  Shares  Amount 
Class A shares     
Sold  12,427  $125,416 
 
Net increase  12,427  $125,416 
 
Class R1 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R2 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R3 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R5 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class 1 shares     
Sold  634,490  $6,640,112 
Repurchased  (7,996)  (83,703) 
 
Net increase  626,494  $6,556,409 
 
Total net increase  698,921  $7,281,825 


1Period from 3-26-14 (commencement of operations) to 8-31-14.

 

 

 

Annual report | Retirement Living Portfolios  65 

 


Retirement Living through 2050 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  680,262  $8,041,215  274,604  $2,870,449 
Distributions reinvested  10,012  116,136  1,728  16,742 
Repurchased  (233,865)  (2,767,884)  (118,294)  (1,245,904) 
 
Net increase  456,409  $5,389,467  158,038  $1,641,287 
 
Class R1 shares         
Sold  33,780  $384,021  7,774  $82,122 
Distributions reinvested  101  1,176  1  8 
Repurchased  (18,101)  (210,154)  (1,191)  (12,949) 
 
Net increase  15,780  $175,043  6,584  $69,181 
 
Class R2 shares         
Sold  28,900  $340,986  3,936  $38,759 
Distributions reinvested  555  6,439  73  709 
Repurchased  (7,138)  (83,720)  (29)  (324) 
 
Net increase  22,317  $263,705  3,980  $39,144 
 
Class R3 shares         
Sold  4,290  $51,338  —  $3 
Repurchased  (4)  (55)  —  (3) 
 
Net increase  4,286  $51,283  —  — 
 
Class R4 shares         
Sold  5  $50  —  — 
Repurchased  (1)  (8)  —  — 
 
Net increase  4  $42  —  — 
 
Class R5 shares         
Sold  15,797  $184,859  93,546  $923,785 
Distributions reinvested  3,031  35,161  22  215 
Repurchased  (99,823)  (1,221,662)  (13,365)  (141,567) 
 
Net increase (decrease)  (80,995)  ($1,001,642)  80,203  $782,433 
 
Class R6 shares         
Sold  88,947  $1,056,840  20,434  $205,568 
Distributions reinvested  659  7,649  234  2,266 
Repurchased  (15,194)  (184,952)  (7,659)  (79,713) 
 
Net increase  74,412  $879,537  13,009  $128,121 
 
Class 1 shares         
Sold  7,068,652  $83,058,442  6,229,552  $64,122,981 
Distributions reinvested  488,983  5,667,318  177,846  1,721,553 
Repurchased  (503,219)  (6,023,672)  (257,378)  (2,618,072) 
 
Net increase  7,054,416  $82,702,088  6,150,020  $63,226,462 
 
Total net increase  7,546,629  $88,459,523  6,411,834  $65,886,628 

 

66  Retirement Living Portfolios | Annual report 

 


Retirement Living through 2045 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  1,805,623  $21,016,044  1,656,943  $17,189,870 
Distributions reinvested  118,246  1,351,554  135,595  1,304,424 
Repurchased  (977,827)  (11,381,114)  (830,177)  (8,615,395) 
 
Net increase  946,042  $10,986,484  962,361  $9,878,899 
 
Class R1 shares         
Sold  36,267  $420,240  84,023  $859,698 
Distributions reinvested  3,791  43,259  9,073  87,191 
Repurchased  (31,284)  (360,908)  (110,848)  (1,162,103) 
 
Net increase (decrease)  8,774  $102,591  (17,752)  ($215,214) 
 
Class R2 shares         
Sold  15,386  $179,293  17,821  $189,734 
Distributions reinvested  701  8,036  1  5 
Repurchased  (893)  (10,392)  (487)  (5,320) 
 
Net increase  15,194  $176,937  17,335  $184,419 
 
Class R3 shares         
Sold  55,055  $641,473  51,606  $534,158 
Distributions reinvested  5,004  57,144  7,779  74,754 
Repurchased  (19,892)  (230,047)  (45,747)  (476,206) 
 
Net increase  40,167  $468,570  13,638  $132,706 
 
Class R4 shares         
Sold  34,219  $405,930  22,848  $238,536 
Distributions reinvested  3,115  35,633  4,655  44,825 
Repurchased  (14,681)  (172,594)  (19,798)  (204,721) 
 
Net increase  22,653  $268,969  7,705  $78,640 
 
Class R5 shares         
Sold  86,627  $997,776  66,100  $684,258 
Distributions reinvested  4,168  47,808  13,018  125,627 
Repurchased  (73,056)  (858,001)  (147,974)  (1,543,644) 
 
Net increase (decrease)  17,739  $187,583  (68,856)  ($733,759) 
 
Class R6 shares         
Sold  143,996  $1,684,652  211,283  $2,190,688 
Distributions reinvested  8,777  100,586  4,183  40,318 
Repurchased  (207,727)  (2,515,014)  (50,135)  (522,936) 
 
Net increase  (54,954)  ($729,776)  165,331  $1,708,070 
 
Class 1 shares         
Sold  5,800,487  $67,469,434  5,306,542  $54,795,110 
Distributions reinvested  2,537,710  29,107,535  3,945,620  38,035,775 
Repurchased  (5,262,451)  (61,475,754)  (3,381,463)  (34,719,599) 
 
Net increase  3,075,746  $35,101,215  5,870,699  $58,111,286 
 
Total net increase  4,071,361  $46,562,573  6,950,461  $69,145,047 

 

Annual report | Retirement Living Portfolios  67 

 


Retirement Living through 2040 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  1,744,356  $20,425,839  1,659,472  $17,227,913 
Distributions reinvested  115,193  1,325,870  134,293  1,299,954 
Repurchased  (992,464)  (11,625,372)  (817,811)  (8,529,606) 
 
Net increase  867,085  $10,126,337  975,954  $9,998,261 
 
Class R1 shares         
Sold  45,667  $534,817  100,866  $1,046,180 
Distributions reinvested  5,648  64,951  10,477  101,309 
Repurchased  (53,957)  (614,805)  (112,674)  (1,170,622) 
Net decrease  (2,642)  ($15,037)  (1,331)  ($23,133) 
 
Class R2 shares         
Sold  97,384  $1,126,309  20,699  $218,068 
Distributions reinvested  1,069  12,337  156  1,510 
Repurchased  (7,340)  (86,434)  (1,832)  (19,264) 
 
Net increase  91,113  $1,052,212  19,023  $200,314 
 
Class R3 shares         
Sold  105,804  $1,236,644  102,288  $1,054,735 
Distributions reinvested  11,092  127,332  17,072  164,918 
Repurchased  (159,014)  (1,857,800)  (97,078)  (1,018,039) 
 
Net increase (decrease)  (42,118)  ($493,824)  22,282  $201,614 
 
Class R4 shares         
Sold  45,097  $532,178  29,139  $303,317 
Distributions reinvested  3,155  36,308  3,414  33,012 
Repurchased  (10,493)  (122,921)  (12,353)  (130,033) 
 
Net increase  37,759  $445,565  20,200  $206,296 
 
Class R5 shares         
Sold  82,655  $968,488  236,879  $2,369,916 
Distributions reinvested  15,205  175,619  23,415  227,127 
Repurchased  (298,237)  (3,577,208)  (216,588)  (2,274,254) 
 
Net increase (decrease)  (200,377)  ($2,433,101)  43,706  $322,789 
 
Class R6 shares         
Sold  107,609  $1,261,983  217,512  $2,261,464 
Distributions reinvested  8,254  95,251  3,211  31,114 
Repurchased  (218,104)  (2,664,317)  (30,110)  (316,083) 
 
Net increase  (102,241)  ($1,307,083)  190,613  $1,976,495 
 
Class 1 shares         
Sold  7,122,695  $83,252,872  6,781,273  $70,205,408 
Distributions reinvested  2,526,279  29,153,255  3,627,627  35,187,986 
Repurchased  (5,261,766)  (62,124,000)  (3,345,061)  (34,422,600) 
 
Net increase  4,387,208  $50,282,127  7,063,839  $70,970,794 
 
Total net increase  5,035,787  $57,657,196  8,334,286  $83,853,430 

 

68  Retirement Living Portfolios | Annual report 

 


Retirement Living through 2035 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  2,198,059  $25,964,838  1,877,113  $19,699,207 
Distributions reinvested  140,437  1,624,855  149,304  1,455,712 
Repurchased  (1,282,440)  (15,041,871)  (984,977)  (10,321,536) 
 
Net increase  1,056,056  $12,547,822  1,041,440  $10,833,383 
 
Class R1 shares         
Sold  132,379  $1,575,595  78,295  $812,895 
Distributions reinvested  6,656  76,942  10,687  104,096 
Repurchased  (60,023)  (704,865)  (115,844)  (1,204,857) 
 
Net increase (decrease)  79,012  $947,672  (26,862)  ($287,866) 
 
Class R2 shares         
Sold  50,754  $602,564  279  $2,954 
Distributions reinvested  66  764  —  — 
Repurchased  (12,552)  (147,393)  (7)  (75) 
 
Net increase  38,268  $455,935  272  $2,879 
 
Class R3 shares         
Sold  74,482  $871,938  60,929  $636,409 
Distributions reinvested  7,498  86,747  14,328  139,695 
Repurchased  (75,002)  (871,938)  (93,905)  (1,025,446) 
 
Net increase (decrease)  6,978  $86,747  (18,648)  ($249,342) 
 
Class R4 shares         
Sold  19,373  $228,573  18,727  $195,798 
Distributions reinvested  4,483  52,047  5,837  57,084 
Repurchased  (6,585)  (78,682)  (33,856)  (349,342) 
 
Net increase (decrease)  17,271  $201,938  (9,292)  ($96,460) 
 
Class R5 shares         
Sold  39,363  $462,917  74,335  $778,513 
Distributions reinvested  6,046  70,194  23,046  225,387 
Repurchased  (73,871)  (894,786)  (322,554)  (3,391,301) 
 
Net decrease  (28,462)  ($361,675)  (225,173)  ($2,387,401) 
 
Class R6 shares         
Sold  190,610  $2,263,039  398,730  $4,171,516 
Distributions reinvested  14,541  168,818  4,661  45,539 
Repurchased  (454,067)  (5,526,049)  (70,939)  (749,647) 
 
Net increase  (248,916)  ($3,094,192)  332,452  $3,467,408 
 
Class 1 shares         
Sold  9,472,005  $111,516,617  8,857,303  $92,439,215 
Distributions reinvested  3,244,683  37,670,769  4,349,771  42,540,765 
Repurchased  (6,046,633)  (71,626,038)  (4,614,325)  (47,869,565) 
 
Net increase  6,670,055  $77,561,348  8,592,749  $87,110,415 
 
Total net increase  7,590,262  $88,345,595  9,686,938  $98,393,016 

 

Annual report | Retirement Living Portfolios  69 

 


Retirement Living through 2030 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  2,434,624  $28,109,370  2,457,260  $25,552,759 
Distributions reinvested  189,226  2,151,500  194,778  1,889,345 
Repurchased  (1,237,194)  (14,292,903)  (1,269,386)  (13,217,625) 
 
Net increase  1,386,656  $15,967,967  1,382,652  $14,224,479 
 
Class R1 shares         
Sold  97,859  $1,129,838  120,346  $1,236,460 
Distributions reinvested  8,795  99,652  14,927  144,492 
Repurchased  (77,132)  (885,184)  (140,492)  (1,465,519) 
 
Net increase (decrease)  29,522  $344,306  (5,219)  ($84,567) 
 
Class R2 shares         
Sold  54,100  $624,349  43,336  $450,054 
Distributions reinvested  2,126  24,066  117  1,131 
Repurchased  (14,516)  (169,639)  (186)  (2,001) 
Net increase  41,710  $478,776  43,267  $449,184 
 
Class R3 shares         
Sold  64,053  $740,145  88,325  $903,808 
Distributions reinvested  11,396  129,225  16,808  162,700 
Repurchased  (98,702)  (1,152,228)  (105,418)  (1,084,778) 
 
Net decrease  (23,253)  ($282,858)  (285)  ($18,270) 
 
Class R4 shares         
Sold  45,296  $527,810  23,649  $244,159 
Distributions reinvested  3,664  41,517  3,108  30,021 
Repurchased  (16,326)  (194,859)  (7,099)  (73,944) 
 
Net increase  32,634  $374,468  19,658  $200,236 
 
Class R5 shares         
Sold  84,095  $969,041  417,630  $4,136,785 
Distributions reinvested  22,738  257,617  42,464  410,631 
Repurchased  (417,219)  (5,003,568)  (626,156)  (6,498,961) 
 
Net decrease  (310,386)  ($3,776,910)  (166,062)  ($1,951,545) 
 
Class R6 shares         
Sold  267,955  $3,091,542  669,926  $6,926,923 
Distributions reinvested  25,601  289,806  4,633  44,751 
Repurchased  (689,722)  (8,265,853)  (79,648)  (835,003) 
 
Net increase  (396,166)  ($4,884,505)  594,911  $6,136,671 
 
Class 1 shares         
Sold  9,813,384  $113,047,700  8,861,769  $91,040,947 
Distributions reinvested  4,046,933  45,851,749  5,202,908  50,312,121 
Repurchased  (6,734,869)  (77,916,151)  (5,828,945)  (59,340,185) 
 
Net increase  7,125,448  $80,983,298  8,235,732  $82,012,883 
 
Total net increase  7,886,165  $89,204,542  10,104,654  $100,969,071 

 

70  Retirement Living Portfolios | Annual report 

 


Retirement Living through 2025 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  2,427,562  $27,791,693  2,388,556  $24,776,973 
Distributions reinvested  211,251  2,378,689  209,375  2,051,879 
Repurchased  (1,508,609)  (17,331,996)  (1,344,844)  (13,953,480) 
 
Net increase  1,130,204  $12,838,386  1,253,087  $12,875,372 
 
Class R1 shares         
Sold  126,451  $1,455,071  132,281  $1,356,545 
Distributions reinvested  9,047  101,505  12,538  122,497 
Repurchased  (51,897)  (587,153)  (136,658)  (1,429,225) 
 
Net increase  83,601  $969,423  8,161  $49,817 
 
Class R2 shares         
Sold  39,326  $446,466  30,659  $322,021 
Distributions reinvested  1,227  13,758  448  4,374 
Repurchased  (5,776)  (64,507)  (21)  (223) 
 
Net increase  34,777  $395,717  31,086  $326,172 
 
Class R3 shares         
Sold  63,817  $727,872  120,002  $1,240,791 
Distributions reinvested  13,428  150,793  16,310  159,507 
Repurchased  (28,293)  (326,205)  (156,116)  (1,636,219) 
 
Net increase (decrease)  48,952  $552,460  (19,804)  ($235,921) 
 
Class R4 shares         
Sold  20,712  $235,767  25,338  $261,760 
Distributions reinvested  5,628  63,207  7,638  74,617 
Repurchased  (43,352)  (493,107)  (43,571)  (459,608) 
 
Net decrease  (17,012)  ($194,133)  (10,595)  ($123,231) 
 
Class R5 shares         
Sold  58,825  $675,368  132,452  $1,374,457 
Distributions reinvested  9,117  102,201  46,878  457,527 
Repurchased  (121,251)  (1,406,784)  (858,980)  (8,926,956) 
 
Net decrease  (53,309)  ($629,215)  (679,650)  ($7,094,972) 
 
Class R6 shares         
Sold  126,914  $1,462,023  913,436  $9,484,605 
Distributions reinvested  35,017  392,190  4,642  45,310 
Repurchased  (939,829)  (11,129,501)  (62,225)  (659,528) 
 
Net increase  (777,898)  ($9,275,288)  855,853  $8,870,387 
 
Class 1 shares         
Sold  11,738,111  $133,831,513  10,363,552  $107,050,946 
Distributions reinvested  4,630,589  51,955,208  5,322,051  51,943,221 
Repurchased  (8,484,274)  (97,152,290)  (8,035,814)  (82,400,324) 
 
Net increase  7,884,426  $88,634,431  7,649,789  $76,593,843 
 
Total net increase  8,333,741  $93,291,781  9,087,927  $91,261,467 

 

Annual report | Retirement Living Portfolios  71 

 


Retirement Living through 2020 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  2,960,904  $33,114,384  2,092,572  $21,779,580 
Distributions reinvested  241,671  2,648,715  205,987  2,028,972 
Repurchased  (1,548,242)  (17,375,978)  (1,075,524)  (11,177,012) 
 
Net increase  1,654,333  $18,387,121  1,223,035  $12,631,540 
 
Class R1 shares         
Sold  80,516  $898,115  156,970  $1,597,986 
Distributions reinvested  9,484  103,758  13,294  130,680 
Repurchased  (68,125)  (755,722)  (158,073)  (1,628,401) 
 
Net increase  21,875  $246,151  12,191  $100,265 
 
Class R2 shares         
Sold  45,512  $508,756  50,889  $533,988 
Distributions reinvested  2,259  24,687  10  97 
Repurchased  (2,899)  (32,093)  (56)  (590) 
 
Net increase  44,872  $501,350  50,843  $533,495 
 
Class R3 shares         
Sold  107,078  $1,190,105  131,232  $1,359,926 
Distributions reinvested  16,247  177,741  21,411  210,687 
Repurchased  (173,683)  (1,929,736)  (186,141)  (1,939,437) 
 
Net decrease  (50,358)  ($561,890)  (33,498)  ($368,824) 
 
Class R4 shares         
Sold  22,557  $254,705  14,696  $152,575 
Distributions reinvested  3,702  40,428  3,780  37,079 
Repurchased  (12,404)  (139,559)  (13,513)  (135,942) 
 
Net increase  13,855  $155,574  4,963  $53,712 
 
Class R5 shares         
Sold  111,444  $1,244,559  481,181  $4,847,617 
Distributions reinvested  29,674  324,634  58,549  575,532 
Repurchased  (425,923)  (4,884,849)  (932,015)  (9,691,622) 
 
Net decrease  (284,805)  ($3,315,656)  (392,285)  ($4,268,473) 
 
Class R6 shares         
Sold  223,337  $2,485,849  756,974  $7,857,635 
Distributions reinvested  33,300  363,640  1,878  18,444 
Repurchased  (806,142)  (9,313,739)  (70,763)  (748,980) 
 
Net increase (decrease)  (549,505)  ($6,464,250)  688,089  $7,127,099 
 
Class 1 shares         
 
Sold  8,372,321  $93,567,290  8,237,506  $85,298,330 
Distributions reinvested  4,481,535  49,027,990  5,049,469  49,636,281 
Repurchased  (9,163,849)  (102,964,179)  (8,860,173)  (91,477,188) 
 
Net increase  3,690,007  $39,631,101  4,426,802  $43,457,423 
 
Total net increase  4,540,274  $48,579,501  5,980,140  $59,266,237 

 

72  Retirement Living Portfolios | Annual report 

 


Retirement Living through 2015 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  2,350,760  $25,768,065  2,015,136  $20,764,289 
Distributions reinvested  207,182  2,212,708  129,698  1,284,014 
Repurchased  (1,282,113)  (14,108,159)  (1,132,609)  (11,629,357) 
 
Net increase  1,275,829  $13,872,614  1,012,225  $10,418,946 
 
Class R1 shares         
Sold  22,495  $245,151  71,028  $731,950 
Distributions reinvested  4,674  49,866  5,161  51,042 
Repurchased  (45,158)  (487,336)  (87,446)  (900,635) 
 
Net decrease  (17,989)  ($192,319)  (11,257)  ($117,643) 
 
Class R2 shares         
Sold  21,536  $236,296  28,450  $296,632 
Distributions reinvested  356  3,797  15  148 
Repurchased  (8,132)  (90,908)  (20,122)  (214,694) 
 
Net increase  13,760  $149,185  8,343  $82,086 
 
Class R3 shares         
Sold  69,701  $762,182  207,672  $2,137,088 
Distributions reinvested  23,380  249,463  21,197  209,429 
Repurchased  (79,302)  (862,798)  (240,309)  (2,483,415) 
 
Net increase (decrease)  13,779  $148,847  (11,440)  ($136,898) 
 
Class R4 shares         
Sold  8,726  $94,495  10,167  $105,170 
Distributions reinvested  1,064  11,346  274  2,703 
Repurchased  (2,977)  (32,356)  (1,987)  (20,399) 
 
Net increase  6,813  $73,485  8,454  $87,474 
 
Class R5 shares         
Sold  33,422  $366,071  76,436  $780,799 
Distributions reinvested  8,384  89,455  22,829  225,553 
Repurchased  (81,220)  (888,437)  (479,664)  (4,963,548) 
 
Net decrease  (39,414)  ($432,911)  (380,399)  ($3,957,196) 
 
Class R6 shares         
Sold  72,801  $790,637  497,457  $5,151,684 
Distributions reinvested  20,395  217,610  2,215  21,882 
Repurchased  (456,971)  (5,111,013)  (88,832)  (921,676) 
 
Net increase (decrease)  (363,775)  ($4,102,766)  410,840  $4,251,890 
 
Class 1 shares         
Sold  3,840,642  $41,998,847  5,103,920  $52,634,239 
Distributions reinvested  2,838,802  30,290,016  2,441,139  24,118,454 
Repurchased  (10,348,173)  (113,764,460)  (9,334,851)  (96,008,410) 
 
Net decrease  (3,668,729)  ($41,475,597)  (1,789,792)  ($19,255,717) 
 
Total net decrease  (2,779,726)  ($31,959,462)  (753,026)  ($8,627,058) 

 

Annual report | Retirement Living Portfolios  73 

 


Retirement Living through 2010 Portfolio         
    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class A shares         
Sold  1,129,236  $11,600,809  1,934,153  $19,591,902 
Distributions reinvested  213,019  2,128,057  241,006  2,306,430 
Repurchased  (1,145,677)  (11,734,266)  (821,938)  (8,292,394) 
 
Net increase  196,578  $1,994,600  1,353,221  $13,605,938 
 
Class R1 shares         
Sold  30,775  $313,612  14,069  $140,473 
Distributions reinvested  2,138  21,293  3,144  30,022 
Repurchased  (21,497)  (220,982)  (15,839)  (158,841) 
 
Net increase  11,416  $113,923  1,374  $11,654 
 
Class R2 shares         
Sold  1,211  $12,519  51,450  $516,569 
Distributions reinvested  3,028  30,217  —  — 
Repurchased  (1,316)  (13,378)  (59)  (594) 
 
Net increase  2,923  $29,358  51,391  $515,975 
 
Class R3 shares         
Sold  31,499  $321,787  51,309  $515,968 
Distributions reinvested  6,277  62,581  13,062  124,748 
Repurchased  (37,082)  (384,398)  (126,237)  (1,264,756) 
 
Net increase (decrease)  694  ($30)  (61,866)  ($624,040) 
 
Class R4 shares         
Sold  12,572  $129,638  9,961  $100,285 
Distributions reinvested  2,951  29,422  3,895  37,204 
Repurchased  (2,792)  (28,340)  (9,380)  (92,973) 
 
Net increase  12,731  $130,720  4,476  $44,516 
 
Class R5 shares         
Sold  9,543  $98,278  141,321  $1,365,017 
Distributions reinvested  7,012  69,907  38,480  367,492 
Repurchased  (105,119)  (1,094,703)  (526,850)  (5,257,508) 
 
Net decrease  (88,564)  ($926,518)  (347,049)  ($3,524,999) 
 
Class R6 shares         
Sold  50,177  $506,272  322,583  $3,215,419 
Distributions reinvested  19,726  196,861  —  — 
Repurchased  (337,468)  (3,545,499)  (17,717)  (177,559) 
 
Net increase  (267,565)  ($2,842,366)  304,866  $3,037,860 
 
Class 1 shares         
Sold  4,818,265  $49,197,551  2,537,009  $25,455,983 
Distributions reinvested  2,172,827  21,684,809  3,468,285  33,156,802 
Repurchased  (9,188,969)  (94,308,402)  (9,737,039)  (98,035,958) 
 
Net decrease  (2,197,877)  ($23,426,042)  (3,731,745)  ($39,423,173) 
 
Total net decrease  (2,329,664)  ($24,926,355)  (2,425,332)  ($26,356,269) 

 

74  Retirement Living Portfolios | Annual report 

 


Affiliates of the Trust owned shares of beneficial interest of the following portfolios on August 31, 2014: 
 
Portfolio  Class  % by Class 
Retirement Living through 2055  1  2% 
Retirement Living through 2055  A  80% 
Retirement Living through 2055  R1  100% 
Retirement Living through 2055  R2  100% 
Retirement Living through 2055  R3  100% 
Retirement Living through 2055  R4  100% 
Retirement Living through 2055  R5  100% 
Retirement Living through 2055  R6  100% 
Retirement Living through 2050  R1  32% 
Retirement Living through 2050  R2  29% 
Retirement Living through 2050  R3  71% 
Retirement Living through 2050  R4  100% 
Retirement Living through 2050  R5  100% 
Retirement Living through 2050  R6  11% 
Retirement Living through 2045  R2  24% 
Retirement Living through 2045  R6  6% 
Retirement Living through 2040  R2  8% 
Retirement Living through 2040  R6  8% 
Retirement Living through 2035  R2  21% 
Retirement Living through 2035  R6  6% 
Retirement Living through 2030  R2  11% 
Retirement Living through 2030  R6  3% 
Retirement Living through 2025  R2  13% 
Retirement Living through 2025  R6  4% 
Retirement Living through 2020  R2  10% 
Retirement Living through 2020  R6  4% 
Retirement Living through 2015  R2  32% 
Retirement Living through 2015  R6  11% 
Retirement Living through 2010  R2  16% 
Retirement Living through 2010  R6  9% 

 

Note 6 — Purchase and sale of securities

The following summarizes the purchases and sales of the affiliated underlying funds for the year ended August 31, 2014:

Portfolio  Purchase  Sales 
Retirement Living through 2055  $8,036,252  $756,608 
Retirement Living through 2050  108,980,205  19,311,853 
Retirement Living through 2045  155,366,715  107,277,774 
Retirement Living through 2040  172,772,506  112,793,323 
Retirement Living through 2035  228,282,718  136,758,288 
Retirement Living through 2030  273,166,447  178,772,442 
Retirement Living through 2025  304,915,654  205,338,610 
Retirement Living through 2020  246,351,558  196,466,674 
Retirement Living through 2015  138,156,932  171,137,623 
Retirement Living through 2010  93,542,703  124,091,840 

 

Note 7 — Investment in affiliated underlying funds

The portfolios invest primarily in affiliated underlying funds that are managed by the Advisor and its affiliates. The portfolios do not invest in the affiliated underlying funds for the purpose of exercising management or control; however, a portfolio’s investment may represent a significant portion of each underlying fund’s net assets. For the year ended August 31, 2014, the following portfolios held 5% or more of the net assets of the underlying funds shown below:

Portfolio  Affiliated Series NAV  Underlying Funds Net Assets 
Retirement Living Through 2045  John Hancock Funds II Strategic Equity Allocation Fund  5.2% 
Retirement Living Through 2040  John Hancock Funds II Strategic Equity Allocation Fund  5.4% 
Retirement Living Through 2035  John Hancock Funds II Strategic Equity Allocation Fund  7.0% 
Retirement Living Through 2030  John Hancock Funds II Strategic Equity Allocation Fund  7.9% 
Retirement Living Through 2025  John Hancock Funds II Strategic Equity Allocation Fund  7.8% 
Retirement Living Through 2020  John Hancock Funds II Strategic Equity Allocation Fund  5.6% 

 

Annual report | Retirement Living Portfolios  75 

 


Information regarding each portfolio’s fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the portfolios’ from their investments in affiliated underlying funds is as follows:

          Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2055                 
Absolute Return Currency  —  14,845  (97)  14,748  —  —  ($5)  $148,363 
Active Bond  —  2,453  (241)  2,212  $71  —  2  23,136 
Alpha Opportunities  —  24,130  (2,101)  22,029  —  —  (136)  299,157 
Asia Pacific Total Return Bond  —  175  —  175  —  —  —  1,686 
Blue Chip Growth  —  5,141  (396)  4,745  —  —  (87)  170,672 
Capital Appreciation  —  8,676  (379)  8,297  —  —  (9)  151,992 
Capital Appreciation Value  —  21,661  (425)  21,236  —  —  19  269,699 
Core High Yield  —  1,192  —  1,192  —  —  —  13,209 
Disciplined Value  —  3,602  (129)  3,473  —  —  (1)  67,276 
Emerging Markets  —  25,475  —  25,475  —  —  —  288,889 
Emerging Markets Debt  —  2,518  (734)  1,784  157  —  (8)  18,112 
Equity-Income  —  7,735  (159)  7,576  —  —  (10)  162,505 
Financial Industries  —  9,506  (784)  8,722  —  —  (118)  150,713 
Floating Rate Income  —  12,914  (5,726)  7,188  550  —  (194)  67,280 
Fundamental Global Franchise  —  5,362  (189)  5,173  —  —  (1)  68,799 
Fundamental Large Cap Value  —  10,109  (1,514)  8,595  —  —  207  122,571 
Fundamental Value  —  384  (384)  —  —  —  259  — 
Global Absolute Return Strategies  —  4,703  —  4,703  —  —  —  53,475 
Global Bond  —  932  (171)  761  —  —  (2)  9,598 
Global Equity  —  6,855  (349)  6,506  —  —  (24)  76,122 
Global Income  —  3,296  (812)  2,484  264  —  (44)  25,386 
Global Real Estate  —  4,234  (181)  4,053  —  —  8  38,061 
Global Shareholder Yield  —  8,120  (291)  7,829  420  —  (65)  96,530 
Global Short Duration Credit  —  2,098  (281)  1,817  81  —  (16)  18,312 
Health Sciences  —  4,866  —  4,866  —  —  —  98,635 
High Yield  —  1,913  (642)  1,271  78  —  14  12,128 
International Core  —  2,446  (331)  2,115  —  —  (530)  75,119 
International Growth                 
Opportunities  —  8,368  (4,905)  3,463  —  —  (981)  49,137 
International Growth Stock  —  5,094  (681)  4,413  —  —  (183)  62,881 
International Small Cap  —  7,291  (433)  6,858  —  —  (140)  133,449 
International Small Company  —  13,124  (768)  12,356  —  —  (189)  133,449 
International Value  —  15,526  (6,619)  8,907  —  —  (2,724)  160,949 
International Value Equity  —  4,188  (278)  3,910  —  —  (42)  37,498 
Mid Cap Stock  —  8,495  (598)  7,897  —  —  (505)  179,175 
Mid Value  —  9,136  (938)  8,198  —  —  (261)  149,198 
Mutual Shares  —  364  (364)  —  —  —  192  — 
Natural Resources  —  7,149  (1)  7,148  —  —  —  134,248 
Real Estate Equity  —  3,422  (128)  3,294  —  —  4  37,985 
Real Return Bond  —  1,253  (232)  1,021  74  —  (2)  12,063 
Redwood  —  6,283  (231)  6,052  —  —  (1)  69,963 
Science & Technology  —  13,668  (14)  13,654  —  —  5  198,536 
Short Duration Credit                 
Opportunities  —  4,274  (848)  3,426  197  —  (20)  35,114 
Small Cap Growth  —  4,306  (148)  4,158  —  —  (42)  45,993 
Small Cap Value  —  3,457  (980)  2,477  —  —  8  47,957 
Small Company Growth  —  1,996  (68)  1,928  —  —  (32)  40,786 
Small Company Value  —  1,344  (58)  1,286  —  —  (54)  47,957 
Spectrum Income  —  2,688  (485)  2,203  93  —  (10)  24,779 
Strategic Equity Allocation  —  217,781  (12,226)  205,555  —  —  (215)  2,869,550 
Strategic Growth  —  11,176  (1,976)  9,200  —  —  186  151,992 
Strategic Income Opportunities  —  6,085  (2,486)  3,599  291  —  (117)  39,482 
Total Return  —  1,836  (180)  1,656  48  —  (6)  23,114 
U.S. Equity  —  8,858  (513)  8,345  —  —  28  115,241 
U.S. High Yield Bond  —  1,460  (488)  972  72  —  17  12,226 
Value  —  4,902  (303)  4,599  —  —  (38)  59,375 
Value Equity  —  4,876  —  4,876  —  —  —  49,197 
          $2,396  —  ($5,863)  $7,448,719 

 

76  Retirement Living Portfolios | Annual report 

 


          Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2050                 
Absolute Return Currency  251,898  243,078  (11,172)  483,804  —  $212,770  $273  $4,867,071 
Active Bond  45,769  52,804  (31,284)  67,289  $23,154  3,065  (3,696)  703,839 
All Cap Value  91,247  16,344  (107,591)  —  6,902  190,376  65,198  — 
Alpha Opportunities  256,198  432,808  (5,166)  683,840  24,044  557,271  7,023  9,286,549 
Asia Pacific Total Return Bond  —  31,619  —  31,619  10,083  626  —  304,487 
Blue Chip Growth  106,183  74,000  (28,465)  151,718  —  93,157  243,793  5,457,311 
Capital Appreciation  171,722  128,630  (32,964)  267,388  3,846  189,850  126,319  4,898,557 
Capital Appreciation Value  343,172  351,662  (10,215)  684,619  74,366  652,564  1,549  8,694,658 
China Emerging Leaders  149,617  5,261  (11,246)  143,632  6,624  38,351  (21,070)  1,447,808 
Core High Yield  —  34,940  —  34,940  —  —  —  387,130 
Disciplined Value  60,064  54,462  (2,391)  112,135  11,558  62,708  7,220  2,172,057 
Emerging Markets  750,611  265,218  (160,245)  855,584  143,026  —  38,218  9,702,323 
Emerging Markets Debt  13,171  46,239  (556)  58,854  12,624  698  (140)  597,364 
Equity-Income  116,321  137,631  (9,357)  244,595  67,987  19,441  30,781  5,246,558 
Financial Industries  83,479  205,750  (7,625)  281,604  18,313  —  2,759  4,866,116 
Floating Rate Income  116,017  149,460  (46,132)  219,345  73,056  3,651  (3,639)  2,053,073 
Fundamental Global Franchise  92,051  79,852  (5,096)  166,807  13,458  62,431  6,133  2,218,537 
Fundamental Large Cap Value  149,241  138,696  (10,428)  277,509  29,774  229,050  14,516  3,957,283 
Fundamental Value  93,492  671  (94,163)  —  14,030  —  511,144  — 
Global Absolute Return Strategies  115,705  54,687  —  170,392  19,990  —  —  1,937,353 
Global Bond  11,865  17,649  (6,020)  23,494  —  —  (1,588)  296,499 
Global Equity  111,472  104,087  (5,505)  210,054  10,729  6,779  378  2,457,634 
Global Income  43,332  56,882  (24,345)  75,869  34,172  3,680  (9,506)  775,382 
Global Real Estate  84,393  57,290  (11,578)  130,105  34,467  —  27  1,221,690 
Global Shareholder Yield  139,291  120,476  (7,007)  252,760  71,175  69,992  10,453  3,116,526 
Global Short Duration Credit  —  56,865  (1,435)  55,430  3,291  —  (100)  558,738 
Health Sciences  105,359  64,419  —  169,778  —  363,636  —  3,441,396 
High Yield  53,805  46,177  (61,243)  38,739  43,357  —  27,128  369,566 
International Core  47,917  31,358  (19,471)  59,804  59,685  —  93,543  2,124,245 
International Growth                 
Opportunities  —  118,943  (7,133)  111,810  5,746  7,968  (1,708)  1,586,583 
International Growth Stock  103,402  68,075  (35,020)  136,457  25,261  —  66,908  1,944,513 
International Small Cap  135,643  94,272  (9,306)  220,609  43,360  —  22,364  4,293,053 
International Small Company  250,761  164,974  (17,818)  397,917  37,787  —  33,638  4,297,506 
International Value  159,894  206,664  (40,521)  326,037  63,198  —  108,788  5,891,491 
International Value Equity  86,908  65,363  (32,029)  120,242  13,841  38,108  23,238  1,153,122 
Mid Cap Stock  136,196  128,296  (9,684)  254,808  54  442,166  12,831  5,781,585 
Mid Value  150,551  123,317  (8,754)  265,114  16,507  98,916  19,706  4,825,074 
Mutual Shares  60,423  9,908  (70,331)  —  14,985  61,976  125,703  — 
Natural Resources  162,537  91,592  (14,021)  240,108  22,543  —  (11,492)  4,509,219 
Real Estate Equity  69,483  39,125  (2,397)  106,211  12,982  —  1,171  1,224,610 
Real Return Bond  15,520  23,669  (8,137)  31,052  7,030  —  (9,756)  367,034 
Redwood  87,105  110,978  (3,332)  194,751  —  26,590  1,133  2,251,317 
Science & Technology  326,013  172,934  (22,412)  476,535  4,150  92,352  64,297  6,928,823 
Short Duration Credit                 
Opportunities  43,929  70,388  (9,866)  104,451  25,361  7,363  (3,050)  1,070,621 
Small Cap Growth  64,912  75,565  (6,285)  134,192  —  80,752  8,747  1,484,165 
Small Cap Value  27,051  48,306  (1,760)  73,597  1,186  60,346  2,970  1,424,840 
Small Company Growth  32,729  31,872  (2,057)  62,544  —  33,960  7,356  1,323,436 
Small Company Value  22,872  23,057  (4,695)  41,234  1,993  5,728  21,098  1,537,198 
Spectrum Income  38,709  53,062  (23,498)  68,273  18,726  13,082  (1,308)  768,076 
Strategic Equity Allocation  4,161,581  2,683,745  (208,851)  6,636,475  939,471  964,473  369,085  92,645,197 
Strategic Growth  188,216  114,886  (5,820)  297,282  11,781  109,606  16,270  4,911,091 
Strategic Income Opportunities  72,203  78,364  (41,168)  109,399  44,495  9,595  (8,333)  1,200,103 
Total Return  33,633  39,697  (23,002)  50,328  11,846  8,371  (10,355)  702,579 
U.S. Equity  145,795  126,945  (4,385)  268,355  45,425  242,734  2,209  3,705,984 
U.S. High Yield Bond  39,782  36,174  (46,294)  29,662  41,507  12,002  (2,473)  373,143 
Value  84,953  69,737  (6,242)  148,448  5,755  68,186  7,463  1,916,463 
Value Equity  —  157,830  (166)  157,664  —  —  13  1,590,827 
          $2,224,701  $5,144,370  $2,013,229  $242,867,403 

 

Annual report | Retirement Living Portfolios  77 

 


          Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2045                 
Absolute Return Currency  1,302,501  541,710  (213,605)  1,630,606  —  $956,513  ($87,553)  $16,403,893 
Active Bond  234,660  95,737  (111,659)  218,738  $94,916  13,204  (5,043)  2,288,003 
All Cap Value  497,839  89,174  (587,013)  —  37,657  1,038,681  993,082  — 
Alpha Opportunities  1,373,437  1,014,684  (73,651)  2,314,470  107,549  2,492,685  (36,964)  31,430,501 
Asia Pacific Total Return Bond  —  156,585  —  156,585  49,935  3,100  —  1,507,917 
Blue Chip Growth  579,534  75,606  (143,613)  511,527  —  417,437  1,207,729  18,399,617 
Capital Appreciation  955,568  151,949  (214,586)  892,931  17,281  853,037  564,140  16,358,498 
Capital Appreciation Value  1,868,444  516,783  (94,955)  2,290,272  329,891  2,894,787  61,946  29,086,460 
China Emerging Leaders  811,939  28,546  (197,331)  643,154  35,945  208,124  (275,570)  6,482,993 
Core High Yield  —  120,990  —  120,990  —  —  —  1,340,567 
Disciplined Value  321,708  74,242  (22,221)  373,729  52,475  284,714  15,666  7,239,134 
Emerging Markets  4,227,643  205,735  (1,007,851)  3,425,527  661,278  —  (214,389)  38,845,473 
Emerging Markets Debt  67,986  128,076  (3,099)  192,963  49,402  3,028  (1,000)  1,958,576 
Equity-Income  635,131  245,901  (64,219)  816,813  302,579  86,523  19,372  17,520,631 
Financial Industries  516,117  478,958  (54,672)  940,403  83,147  —  26,204  16,250,164 
Floating Rate Income  595,023  270,712  (152,698)  713,037  283,397  15,727  (10,318)  6,674,025 
Fundamental Global Franchise  463,720  148,597  (55,094)  557,223  59,881  277,776  15,508  7,411,059 
Fundamental Large Cap Value  753,189  266,774  (93,234)  926,729  133,008  1,023,237  9,643  13,215,158 
Fundamental Value  545,960  3,922  (549,882)  —  81,932  —  5,866,173  — 
Global Absolute Return Strategies  629,393  9,868  —  639,261  108,740  —  —  7,268,397 
Global Bond  60,839  37,617  (22,082)  76,374  —  —  (79)  963,844 
Global Equity  562,074  175,565  (36,927)  700,712  47,931  30,283  9,778  8,198,335 
Global Income  222,887  109,758  (86,014)  246,631  131,936  15,851  (22,317)  2,520,570 
Global Real Estate  425,676  92,570  (83,765)  434,481  153,327  —  26,318  4,079,776 
Global Shareholder Yield  785,666  188,146  (133,660)  840,152  286,385  316,803  115,642  10,359,069 
Global Short Duration Credit  —  186,522  (6,332)  180,190  10,722  —  (606)  1,816,318 
Health Sciences  624,688  125,765  (73,434)  677,019  —  2,121,658  34,981  13,723,181 
High Yield  283,071  86,450  (244,519)  125,002  181,078  —  136,233  1,192,523 
International Core  239,766  36,615  (63,013)  213,368  270,571  —  157,398  7,578,828 
International Growth  —  393,481  (21,398)  372,083  26,434  36,655  (385)  5,279,856 
Opportunities                 
International Growth Stock  519,623  73,179  (158,032)  434,770  112,495  —  216,877  6,195,467 
International Small Cap  685,557  98,536  (45,580)  738,513  192,344  —  18,232  14,371,467 
International Small Company  1,277,215  170,008  (115,384)  1,331,839  170,317  —  58,615  14,383,857 
International Value  840,907  409,169  (237,984)  1,012,092  286,266  —  56,594  18,288,502 
International Value Equity  435,982  91,259  (125,698)  401,543  62,491  172,060  54,742  3,850,796 
Mid Cap Stock  712,790  226,799  (88,201)  851,388  242  1,989,968  139  19,317,997 
Mid Value  703,059  217,367  (35,091)  885,335  73,799  442,224  7,431  16,113,104 
Mutual Shares  305,586  35,541  (341,127)  —  73,115  302,385  1,300,711  — 
Natural Resources  826,024  94,501  (93,412)  827,113  100,622  —  (85,062)  15,533,176 
Real Estate Equity  349,525  60,107  (56,341)  353,291  57,587  —  7,711  4,073,441 
Real Return Bond  79,831  53,238  (32,127)  100,942  26,118  —  (38,959)  1,193,136 
Redwood  514,948  174,207  (39,661)  649,494  —  117,954  (3,644)  7,508,153 
Science & Technology  1,690,415  165,263  (253,082)  1,602,596  18,616  414,219  244,688  23,301,750 
Short Duration Credit  225,777  146,237  (32,151)  339,863  98,451  31,713  (4,354)  3,483,595 
Opportunities                 
Small Cap Growth  329,558  172,408  (50,698)  451,268  —  362,084  13,049  4,991,020 
Small Cap Value  134,931  94,702  (15,927)  213,706  5,279  268,708  10,945  4,137,347 
Small Company Growth  166,478  58,739  (16,353)  208,864  —  151,825  15,830  4,419,552 
Small Company Value  114,195  43,815  (19,977)  138,033  8,868  25,481  7,736  5,145,885 
Spectrum Income  199,209  89,006  (69,915)  218,300  74,925  56,350  (265)  2,455,877 
Strategic Equity Allocation  20,944,139  1,911,570  (805,722)  22,049,987  4,184,723  4,296,088  135,163  307,817,823 
Strategic Growth  951,885  118,451  (77,609)  992,727  53,491  497,642  123,601  16,399,845 
Strategic Income Opportunities  366,745  142,323  (152,022)  357,046  173,126  41,329  (12,710)  3,916,793 
Total Return  172,736  71,642  (80,774)  163,604  48,559  36,057  (10,061)  2,283,909 
U.S. Equity  810,545  219,597  (130,445)  899,697  202,462  1,081,879  282,458  12,424,809 
U.S. High Yield Bond  204,004  71,095  (179,089)  96,010  172,065  51,696  7,541  1,207,802 
Value  436,285  91,460  (32,010)  495,735  25,706  304,569  8,472  6,399,938 
Value Equity  —  528,034  (1,524)  526,510  —  —  15  5,312,490 
          $9,819,064  $23,734,054  $11,021,084  $819,920,897 

 

78  Retirement Living Portfolios | Annual report 

 


          Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2040                 
Absolute Return Currency  1,335,225  551,861  (196,634)  1,690,452  —  $991,671  ($69,314)  $17,005,944 
Active Bond  240,463  97,861  (109,823)  228,501  $98,787  13,701  (4,151)  2,390,119 
All Cap Value  510,939  91,521  (602,460)  —  38,647  1,066,013  1,010,381  — 
Alpha Opportunities  1,412,243  1,035,639  (86,821)  2,361,061  111,023  2,573,204  (38,288)  32,063,209 
Asia Pacific Total Return Bond  —  161,207  —  161,207  51,409  3,191  —  1,552,427 
Blue Chip Growth  594,808  103,874  (165,508)  533,174  —  429,965  1,091,195  19,178,267 
Capital Appreciation  979,116  197,232  (243,294)  933,054  17,812  879,263  513,047  17,093,543 
Capital Appreciation Value  1,918,502  542,310  (79,794)  2,381,018  342,290  3,003,585  10,567  30,238,931 
China Emerging Leaders  810,785  28,506  (197,244)  642,047  35,893  207,829  (277,984)  6,471,831 
Core High Yield  —  127,310  —  127,310  —  —  —  1,410,597 
Disciplined Value  329,986  86,472  (26,141)  390,317  54,234  294,256  11,581  7,560,441 
Emerging Markets  4,356,312  155,781  (1,001,788)  3,510,305  681,024  —  (257,980)  39,806,860 
Emerging Markets Debt  69,668  134,574  (1,511)  202,731  51,343  3,129  (474)  2,057,716 
Equity-Income  650,713  257,633  (56,967)  851,379  312,925  89,481  13,124  18,262,083 
Financial Industries  538,142  495,607  (53,549)  980,200  85,934  —  17,285  16,937,851 
Floating Rate Income  609,739  296,174  (161,053)  744,860  295,892  16,320  (10,692)  6,971,893 
Fundamental Global Franchise  476,450  176,761  (71,893)  581,318  61,946  287,352  15,970  7,731,530 
Fundamental Large Cap Value  773,292  288,829  (96,174)  965,947  137,041  1,054,260  8,037  13,774,408 
Fundamental Value  560,327  4,025  (564,352)  —  84,088  —  5,942,676  — 
Global Absolute Return Strategies  647,587  10,153  —  657,740  111,884  —  —  7,478,504 
Global Bond  62,344  42,140  (24,701)  79,783  —  —  737  1,006,861 
Global Equity  577,504  180,129  (32,746)  724,887  49,517  31,285  7,482  8,481,178 
Global Income  228,399  115,898  (86,658)  257,639  137,570  16,448  (21,634)  2,633,066 
Global Real Estate  437,281  102,245  (86,658)  452,868  158,642  —  31,267  4,252,427 
Global Shareholder Yield  804,872  228,250  (153,323)  879,799  297,586  325,571  135,353  10,847,924 
Global Short Duration Credit  —  190,562  (5,470)  185,092  11,183  —  (383)  1,865,730 
Health Sciences  638,713  129,028  (62,071)  705,670  —  2,176,695  45,510  14,303,930 
High Yield  290,071  90,395  (248,962)  131,504  188,713  —  124,029  1,254,544 
International Core  246,348  43,052  (65,349)  224,051  277,999  —  144,867  7,958,308 
International Growth  —  386,578  —  386,578  27,271  37,816  —  5,485,548 
Opportunities                 
International Growth Stock  533,888  81,444  (142,393)  472,939  116,272  —  178,311  6,739,376 
International Small Cap  708,986  112,683  (54,561)  767,108  199,573  —  16,765  14,927,931 
International Small Company  1,319,677  193,413  (127,530)  1,385,560  175,979  —  50,760  14,964,044 
International Value  864,677  330,509  (179,816)  1,015,370  295,472  —  69,440  18,347,739 
International Value Equity  447,951  102,026  (131,441)  418,536  64,229  176,847  57,640  4,013,757 
Mid Cap Stock  732,546  251,212  (96,340)  887,418  249  2,045,937  (2,516)  20,135,512 
Mid Value  728,802  225,125  (31,125)  922,802  76,146  456,290  7,587  16,794,992 
Mutual Shares  313,083  38,715  (351,798)  —  75,437  311,990  1,333,938  — 
Natural Resources  829,252  118,877  (83,163)  864,966  103,959  —  (67,981)  16,244,070 
Real Estate Equity  360,023  72,809  (63,180)  369,652  59,752  —  14,109  4,262,089 
Real Return Bond  81,805  59,099  (35,457)  105,447  27,163  —  (41,086)  1,246,386 
Redwood  527,581  190,994  (41,425)  677,150  —  122,387  (3,260)  7,827,852 
Science & Technology  1,763,811  193,444  (286,839)  1,670,416  19,161  426,356  249,399  24,287,852 
Short Duration Credit  231,361  150,655  (27,318)  354,698  102,674  32,907  (4,094)  3,635,650 
Opportunities                 
Small Cap Growth  338,692  184,208  (55,807)  467,093  —  371,945  12,129  5,166,045 
Small Cap Value  138,662  126,757  (19,144)  246,275  5,443  277,061  7,441  4,767,879 
Small Company Growth  170,880  80,889  (35,158)  216,611  —  156,199  20,232  4,583,485 
Small Company Value  117,391  51,247  (24,763)  143,875  9,153  26,299  5,670  5,363,653 
Spectrum Income  204,136  99,937  (76,030)  228,043  77,876  58,471  2,135  2,565,486 
Strategic Equity Allocation  21,519,116  2,578,211  (1,016,111)  23,081,216  4,324,147  4,439,222  270,168  322,213,771 
Strategic Growth  975,239  163,271  (103,740)  1,034,770  55,284  514,321  112,634  17,094,398 
Strategic Income Opportunities  375,878  138,277  (142,655)  371,500  180,846  42,885  (10,711)  4,075,350 
Total Return  177,007  72,975  (79,076)  170,906  50,606  37,414  (12,664)  2,385,842 
U.S. Equity  830,622  233,045  (127,487)  936,180  209,143  1,117,579  266,518  12,928,651 
U.S. High Yield Bond  209,049  74,273  (182,585)  100,737  179,326  53,642  5,187  1,267,272 
Value  449,999  108,385  (41,670)  516,714  26,489  313,842  11,314  6,670,776 
Value Equity  —  546,158  —  546,158  —  —  —  5,510,730 
          $10,155,032  $24,482,629  $10,991,273  $854,096,258 

 

Annual report | Retirement Living Portfolios  79 

 


        Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2035                 
Absolute Return Currency  1,718,254  745,949  (258,134)  2,206,069  —  $1,271,065  ($106,680)  $22,193,049 
Active Bond  381,914  142,003  (156,355)  367,562  $156,866  21,647  (21,448)  3,844,700 
All Cap Value  657,373  117,751  (775,124)  —  49,724  1,371,531  1,306,579  — 
Alpha Opportunities  1,785,372  1,393,853  (100,942)  3,078,283  141,794  3,286,404  (67,577)  41,803,078 
Asia Pacific Total Return Bond  —  253,989  —  253,989  80,997  5,028  —  2,445,919 
Blue Chip Growth  758,650  126,936  (197,875)  687,711  —  557,155  1,283,100  24,736,955 
Capital Appreciation  1,242,486  256,971  (296,980)  1,202,477  23,029  1,136,830  486,235  22,029,372 
Capital Appreciation Value  2,465,433  672,015  (59,430)  3,078,018  443,410  3,890,914  (24,239)  39,090,834 
China Emerging Leaders  1,068,648  37,571  (259,559)  846,660  47,309  273,926  (368,050)  8,534,329 
Core High Yield  —  195,931  —  195,931  —  —  —  2,170,919 
Disciplined Value  428,157  103,870  (28,513)  503,514  70,158  380,653  22,582  9,753,073 
Emerging Markets  5,555,486  336,547  (1,473,373)  4,418,660  856,811  —  (357,560)  50,107,599 
Emerging Markets Debt  110,765  233,719  (23,229)  321,255  81,456  4,982  212  3,260,734 
Equity-Income  834,337  325,010  (63,154)  1,096,193  404,405  115,640  17,527  23,513,330 
Financial Industries  569,422  777,972  (87,714)  1,259,680  110,414  —  27,086  21,767,277 
Floating Rate Income  964,941  419,724  (194,744)  1,189,921  467,166  25,809  (11,787)  11,137,660 
Fundamental Global Franchise  603,219  210,602  (78,086)  735,735  78,630  364,747  14,734  9,785,279 
Fundamental Large Cap Value  979,695  382,136  (115,822)  1,246,009  174,565  1,342,934  10,557  17,768,095 
Fundamental Value  720,938  5,179  (726,117)  —  108,191  —  7,668,627  — 
Global Absolute Return Strategies  831,213  13,032  —  844,245  143,609  —  —  9,599,065 
Global Bond  99,592  59,137  (32,456)  126,273  —  —  (236)  1,593,571 
Global Equity  742,509  242,129  (37,634)  947,004  63,915  40,382  8,576  11,079,948 
Global Income  360,256  169,746  (117,134)  412,868  218,463  26,116  (49,083)  4,219,506 
Global Real Estate  569,793  124,946  (103,491)  591,248  207,385  —  35,703  5,551,817 
Global Shareholder Yield  1,042,159  272,816  (165,309)  1,149,666  388,808  429,702  137,148  14,175,384 
Global Short Duration Credit  —  303,440  (4,792)  298,648  17,538  —  (335)  3,010,372 
Health Sciences  747,454  149,980  (14,366)  883,068  —  2,530,171  69,152  17,899,787 
High Yield  453,588  133,923  (368,013)  219,498  294,679  —  117,649  2,094,012 
International Core  309,172  54,959  (78,623)  285,508  350,783  —  151,490  10,141,258 
International Growth  —  490,492  —  490,492  35,101  48,674  —  6,960,086 
Opportunities                 
International Growth Stock  670,305  111,596  (196,699)  585,202  146,544  —  231,141  8,339,133 
International Small Cap  903,129  132,816  (61,155)  974,790  251,792  —  22,570  18,969,406 
International Small Company  1,639,114  254,676  (132,856)  1,760,934  219,434  —  34,460  19,018,090 
International Value  1,079,056  361,971  (228,304)  1,212,723  355,818  —  80,886  21,913,910 
International Value Equity  561,593  135,013  (164,248)  532,358  81,412  224,157  59,790  5,105,315 
Mid Cap Stock  918,652  328,349  (114,939)  1,132,062  317  2,605,209  (4,703)  25,686,497 
Mid Value  910,239  308,703  (47,346)  1,171,596  97,630  585,026  11,445  21,323,047 
Mutual Shares  406,290  47,327  (453,617)  —  96,947  400,948  1,734,086  — 
Natural Resources  1,068,183  134,101  (118,550)  1,083,734  131,935  —  (101,837)  20,352,529 
Real Estate Equity  466,755  81,818  (67,356)  481,217  76,855  —  16,485  5,548,434 
Real Return Bond  130,014  84,259  (47,895)  166,378  43,371  —  (64,983)  1,966,593 
Redwood  669,565  223,154  (39,635)  853,084  —  154,584  (3,309)  9,861,650 
Science & Technology  2,023,676  419,493  (302,829)  2,140,340  24,588  547,108  201,560  31,120,542 
Short Duration Credit  367,637  236,177  (31,750)  572,064  162,353  52,016  (7,625)  5,863,653 
Opportunities                 
Small Cap Growth  420,139  231,628  (69,568)  582,199  —  465,633  8,306  6,439,116 
Small Cap Value  170,989  151,254  (21,461)  300,782  6,785  345,367  8,174  5,823,146 
Small Company Growth  211,800  80,453  (19,776)  272,477  —  195,238  11,400  5,765,612 
Small Company Value  145,083  63,237  (25,221)  183,099  11,469  32,955  5,050  6,825,917 
Spectrum Income  328,173  147,547  (110,589)  365,131  123,414  92,278  (5,817)  4,107,723 
Strategic Equity Allocation  27,366,849  3,210,280  (913,550)  29,663,579  5,519,594  5,666,483  72,051  414,103,558 
Strategic Growth  1,245,976  191,945  (105,567)  1,332,354  70,419  655,133  126,570  22,010,488 
Strategic Income Opportunities  599,287  221,614  (218,642)  602,259  286,359  67,791  (28,754)  6,606,776 
Total Return  281,131  107,223  (113,342)  275,012  80,466  59,113  (47,427)  3,839,174 
U.S. Equity  1,065,403  268,235  (126,520)  1,207,118  271,990  1,453,411  297,853  16,670,293 
U.S. High Yield Bond  335,466  111,222  (278,545)  168,143  281,960  84,670  (14,790)  2,115,239 
Value  569,469  137,754  (40,448)  666,775  34,226  405,505  10,870  8,608,069 
Value Equity  —  706,169  —  706,169  —  —  —  7,125,247 
          $13,390,884  $31,216,935  $13,003,414  $1,105,376,165 

 

80  Retirement Living Portfolios | Annual report 

 


        Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2030                 
Absolute Return Currency  2,129,256  755,369  (228,500)  2,656,125  —  $1,556,661  ($97,214)  $26,720,621 
Active Bond  1,018,867  270,498  (346,123)  943,242  $413,357  56,610  (8,593)  9,866,314 
All Cap Value  769,652  137,863  (907,515)  —  58,216  1,605,786  1,576,292  — 
Alpha Opportunities  1,921,824  2,301,364  (86,033)  4,137,155  151,109  3,502,296  (40,011)  56,182,569 
Asia Pacific Total Return Bond  617,294  23,809  —  641,103  204,448  12,692  —  6,173,821 
Blue Chip Growth  884,057  112,436  (202,452)  794,041  —  636,736  1,645,316  28,561,672 
Capital Appreciation  1,434,684  262,577  (303,982)  1,393,279  26,264  1,296,515  683,748  25,524,873 
Capital Appreciation Value  3,351,305  718,541  (518,310)  3,551,536  597,166  5,240,118  347,299  45,104,511 
China Emerging Leaders  1,141,390  40,129  (277,107)  904,412  50,529  292,572  (397,965)  9,116,470 
Core High Yield  —  514,658  —  514,658  —  —  —  5,702,413 
Disciplined Value  495,969  113,194  (26,676)  582,487  80,489  436,710  15,357  11,282,782 
Emerging Markets  6,106,871  196,416  (1,592,282)  4,711,005  914,092  —  (65,093)  53,422,794 
Emerging Markets Debt  283,915  555,487  (45,418)  793,984  208,389  12,930  3,342  8,058,941 
Equity-Income  974,189  372,982  (76,665)  1,270,506  465,894  133,223  22,576  27,252,361 
Financial Industries  620,597  862,343  (52,583)  1,430,357  122,387  —  15,888  24,716,575 
Floating Rate Income  2,523,131  764,050  (237,542)  3,049,639  1,203,192  67,470  (22,010)  28,544,617 
Fundamental Global Franchise  782,632  177,422  (155,120)  804,934  100,948  468,274  32,581  10,705,617 
Fundamental Large Cap Value  1,106,077  460,618  (125,262)  1,441,433  194,700  1,497,837  19,095  20,554,838 
Fundamental Value  792,490  5,693  (798,183)  —  118,929  —  8,690,969  — 
Global Absolute Return Strategies  1,006,229  15,776  —  1,022,005  173,846  —  —  11,620,195 
Global Bond  264,357  101,698  (42,422)  323,633  —  —  147  4,084,247 
Global Equity  890,960  293,976  (43,029)  1,141,907  77,481  48,953  11,570  13,360,310 
Global Income  898,162  276,131  (120,772)  1,053,521  562,525  68,294  (64,002)  10,766,988 
Global Real Estate  731,718  171,455  (189,799)  713,374  269,594  —  137,830  6,698,580 
Global Shareholder Yield  1,481,718  235,501  (324,518)  1,392,701  550,850  605,040  301,687  17,172,007 
Global Short Duration Credit  —  804,643  (36,956)  767,687  153,079  —  (4,467)  7,738,290 
Health Sciences  941,979  189,064  (102,622)  1,028,421  —  3,189,511  185,900  20,846,092 
High Yield  1,128,461  259,658  (839,388)  548,731  719,636  —  395,953  5,234,893 
International Core  325,149  45,044  (70,198)  299,995  366,924  —  173,291  10,655,813 
International Growth  —  512,573  —  512,573  37,816  52,438  —  7,273,406 
Opportunities                 
International Growth Stock  714,045  85,478  (200,292)  599,231  152,074  —  290,863  8,539,037 
International Small Cap  981,241  134,088  (70,411)  1,044,918  273,256  —  37,042  20,334,095 
International Small Company  1,674,927  340,790  (134,635)  1,881,082  237,254  —  31,517  20,315,688 
International Value  1,141,267  512,641  (283,293)  1,370,615  410,020  —  107,866  24,767,015 
International Value Equity  590,719  116,480  (148,406)  558,793  82,316  226,646  71,984  5,358,821 
Mid Cap Stock  1,049,559  348,328  (144,291)  1,253,596  355  2,920,468  22,512  28,444,101 
Mid Value  1,030,754  348,332  (57,737)  1,321,349  110,312  661,020  25,998  24,048,559 
Mutual Shares  474,638  50,698  (525,336)  —  112,137  463,773  2,030,644  — 
Natural Resources  1,258,096  129,669  (195,227)  1,192,538  143,095  —  (144,042)  22,395,867 
Real Estate Equity  554,375  103,871  (78,527)  579,719  93,692  —  23,641  6,684,163 
Real Return Bond  346,313  150,843  (65,546)  431,610  109,252  —  (77,586)  5,101,635 
Redwood  851,492  189,320  (131,095)  909,717  —  193,529  2,416  10,516,332 
Science & Technology  2,309,406  424,107  (325,349)  2,408,164  27,758  617,652  290,883  35,014,701 
Short Duration Credit  979,974  566,571  (75,086)  1,471,459  408,686  131,209  (19,066)  15,082,454 
Opportunities                 
Small Cap Growth  380,393  252,519  (61,414)  571,498  —  415,837  17,239  6,320,763 
Small Cap Value  163,830  118,568  (18,992)  263,406  6,396  325,576  19,262  5,099,548 
Small Company Growth  196,369  90,359  (24,952)  261,776  —  179,244  19,490  5,539,185 
Small Company Value  139,186  61,160  (25,494)  174,852  11,189  32,150  12,204  6,518,495 
Spectrum Income  827,262  241,583  (124,716)  944,129  308,664  236,748  (13,680)  10,621,447 
Strategic Equity Allocation  31,606,802  2,961,176  (1,169,499)  33,398,479  6,273,115  6,440,058  603,360  466,242,768 
Strategic Growth  1,395,473  279,696  (136,226)  1,538,943  77,355  719,659  228,548  25,423,335 
Strategic Income Opportunities  1,333,573  363,886  (154,995)  1,542,464  716,408  173,013  (41,798)  16,920,833 
Total Return  750,000  209,703  (254,131)  705,572  212,653  154,586  (41,159)  9,849,787 
U.S. Equity  1,500,829  302,363  (330,946)  1,472,246  386,092  2,063,124  532,369  20,331,720 
U.S. High Yield Bond  838,984  218,830  (637,445)  420,369  689,584  208,814  7,216  5,288,237 
Value  599,918  141,741  (46,737)  694,922  35,746  423,512  16,280  8,971,448 
Value Equity  —  819,129  (164)  818,965  —  —  2  8,263,352 
          $18,699,269  $37,367,284  $17,613,491  $1,334,935,996 

 

Annual report | Retirement Living Portfolios  81 

 


        Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2025                 
Absolute Return Currency  2,445,506  850,661  (265,283)  3,030,884  —  $1,783,262  ($113,276)  $30,490,690 
Active Bond  2,527,734  592,815  (539,877)  2,580,672  $1,045,559  139,508  (85,565)  26,993,831 
All Cap Value  764,524  136,945  (901,469)  —  57,829  1,595,088  1,649,058  — 
Alpha Opportunities  1,808,854  1,047,491  (91,901)  2,764,444  140,577  3,258,203  (65,174)  37,541,153 
Asia Pacific Total Return Bond  963,690  37,170  —  1,000,860  319,174  19,813  —  9,638,283 
Blue Chip Growth  866,213  101,045  (222,372)  744,886  —  626,840  2,085,127  26,793,534 
Capital Appreciation  1,405,298  231,923  (338,468)  1,298,753  25,953  1,281,130  1,039,389  23,793,158 
Capital Appreciation Value  3,926,251  857,918  (103,348)  4,680,821  694,601  6,095,107  86,991  59,446,432 
China Emerging Leaders  1,120,420  39,391  (272,777)  887,034  49,601  287,197  (390,938)  8,941,307 
Core High Yield  —  782,822  —  782,822  —  —  —  8,673,670 
Disciplined Value  492,748  131,179  (33,224)  590,703  79,660  432,212  20,192  11,441,909 
Emerging Markets  5,889,564  238,867  (1,787,735)  4,340,696  842,521  —  181,748  49,223,495 
Emerging Markets Debt  492,330  803,212  (62,038)  1,233,504  344,331  22,308  3,638  12,520,067 
Equity-Income  961,818  407,045  (80,407)  1,288,456  455,737  130,318  24,710  27,637,389 
Financial Industries  612,740  945,043  (85,004)  1,472,779  120,486  —  41,263  25,449,616 
Floating Rate Income  4,809,405  1,325,068  (317,970)  5,816,503  2,280,209  127,742  (29,414)  54,442,469 
Fundamental Global Franchise  879,918  228,194  (81,803)  1,026,309  113,370  525,898  30,557  13,649,914 
Fundamental Large Cap Value  1,078,497  522,548  (139,168)  1,461,877  189,438  1,457,356  12,641  20,846,360 
Fundamental Value  802,654  5,733  (808,387)  —  119,761  —  9,041,025  — 
Global Absolute Return Strategies  1,191,746  18,684  —  1,210,430  205,898  —  —  13,762,592 
Global Bond  609,449  201,779  (90,952)  720,276  —  —  3,879  9,089,879 
Global Equity  931,648  396,730  (56,342)  1,272,036  81,873  51,728  17,887  14,882,816 
Global Income  1,642,755  520,641  (248,143)  1,915,253  1,030,606  125,078  (124,050)  19,573,888 
Global Real Estate  909,764  190,564  (205,616)  894,712  334,391  —  138,104  8,401,350 
Global Shareholder Yield  1,744,819  327,059  (223,415)  1,848,463  643,291  710,209  261,746  22,791,544 
Global Short Duration Credit  —  1,364,374  (13,634)  1,350,740  196,646  —  (569)  13,615,463 
Health Sciences  859,473  175,837  —  1,035,310  —  2,966,376  —  20,985,740 
High Yield  2,017,171  439,694  (1,363,892)  1,092,973  1,311,705  —  663,222  10,426,966 
International Core  302,158  41,487  (79,189)  264,456  340,979  —  241,222  9,393,488 
International Growth  —  496,534  —  496,534  35,480  49,200  —  7,045,818 
Opportunities                 
International Growth Stock  646,714  86,205  (164,720)  568,199  140,985  —  227,991  8,096,836 
International Small Cap  924,758  133,483  (71,361)  986,880  258,628  —  24,661  19,204,690 
International Small Company  1,725,299  221,737  (163,568)  1,783,468  230,069  —  82,595  19,261,455 
International Value  1,079,122  410,147  (412,944)  1,076,325  378,852  —  270,313  19,449,186 
International Value Equity  545,118  109,187  (116,258)  538,047  78,520  216,194  40,180  5,159,872 
Mid Cap Stock  1,028,576  352,698  (162,707)  1,218,567  349  2,866,125  7,836  27,649,295 
Mid Value  951,630  327,637  (60,103)  1,219,164  102,273  612,849  24,277  22,188,790 
Mutual Shares  470,877  46,549  (517,426)  —  111,128  459,598  2,019,906  — 
Natural Resources  1,361,540  148,055  (306,909)  1,202,686  145,058  —  (118,715)  22,586,442 
Real Estate Equity  620,896  109,279  (84,392)  645,783  104,615  —  26,955  7,445,873 
Real Return Bond  664,055  238,593  (124,947)  777,701  204,765  —  (129,424)  9,192,424 
Redwood  931,309  230,141  (31,631)  1,129,819  —  211,644  (3,515)  13,060,704 
Science & Technology  2,389,547  417,307  (382,306)  2,424,548  28,282  629,316  308,010  35,252,926 
Short Duration Credit  1,996,003  1,007,990  (105,735)  2,898,258  834,400  270,131  (27,666)  29,707,144 
Opportunities                 
Small Cap Growth  312,415  234,748  (58,440)  488,723  —  341,188  13,624  5,405,272 
Small Cap Value  —  177,246  —  177,246  —  —  —  3,431,481 
Small Company Growth  161,691  84,696  (19,865)  226,522  —  147,016  15,340  4,793,197 
Small Company Value  192,228  73,196  (109,889)  155,535  14,596  41,941  407,119  5,798,345 
Spectrum Income  1,744,830  446,712  (339,086)  1,852,456  653,537  506,092  (9,358)  20,840,128 
Strategic Equity Allocation  31,998,812  2,959,798  (1,569,183)  33,389,427  6,309,890  6,477,811  1,381,110  466,116,401 
Strategic Growth  1,342,558  215,571  (113,721)  1,444,408  75,212  699,718  188,976  23,861,619 
Strategic Income Opportunities  2,702,785  621,689  (222,629)  3,101,845  1,448,803  350,107  (64,139)  34,027,241 
Total Return  1,857,871  468,295  (400,430)  1,925,736  541,881  380,954  (207,895)  26,883,274 
U.S. Equity  1,806,451  414,875  (217,940)  2,003,386  464,524  2,482,235  491,303  27,666,756 
U.S. High Yield Bond  1,491,866  379,893  (1,034,744)  837,015  1,254,701  378,846  (39,695)  10,529,648 
Value  598,779  150,490  (54,814)  694,455  36,077  427,433  17,767  8,965,408 
Value Equity  —  830,027  —  830,027  —  —  —  8,374,971 
          $24,476,821  $39,183,771  $19,680,969  $1,482,442,199 

 

82  Retirement Living Portfolios | Annual report 

 


        Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2020                 
Absolute Return Currency  2,301,293  647,032  (187,906)  2,760,419  —  $1,655,427  ($80,492)  $27,769,813 
Active Bond  4,311,070  818,688  (682,303)  4,447,455  $1,765,290  234,108  (131,416)  46,520,377 
All Cap Value  553,945  99,224  (653,169)  —  41,900  1,155,739  1,241,389  — 
Alpha Opportunities  820,552  317,253  (152,530)  985,275  65,985  1,529,362  (29,075)  13,380,034 
Asia Pacific Total Return Bond  1,246,506  48,078  —  1,294,584  412,843  25,628  —  12,466,845 
Blue Chip Growth  600,895  71,835  (190,721)  482,009  —  426,451  2,377,222  17,337,870 
Capital Appreciation  973,398  163,330  (293,904)  842,824  17,586  868,120  1,339,396  15,440,542 
Capital Appreciation Value  3,368,588  669,847  (149,503)  3,888,932  590,636  5,182,813  189,152  49,389,431 
China Emerging Leaders  792,742  27,871  (193,453)  627,160  35,095  203,204  (282,400)  6,321,771 
Core High Yield  —  957,084  —  957,084  —  —  —  10,604,487 
Disciplined Value  354,159  56,116  (31,213)  379,062  56,964  309,067  27,721  7,342,434 
Emerging Markets  4,303,330  139,651  (1,586,169)  2,856,812  555,089  —  428,295  32,396,252 
Emerging Markets Debt  539,519  704,269  (11,677)  1,232,111  356,307  23,612  (42)  12,505,927 
Equity-Income  701,325  180,581  (55,035)  826,871  331,117  94,683  19,261  17,736,384 
Financial Industries  491,762  703,179  (78,094)  1,116,847  87,235  —  36,791  19,299,110 
Floating Rate Income  6,176,996  1,268,028  (310,602)  7,134,422  2,855,480  160,314  (36,492)  66,778,193 
Fundamental Global Franchise  743,248  196,213  (99,071)  840,390  94,717  439,370  42,311  11,177,193 
Fundamental Large Cap Value  766,820  273,199  (101,885)  938,134  133,923  1,030,279  19,029  13,377,792 
Fundamental Value  351,106  2,474  (353,580)  —  51,685  —  4,350,350  — 
Global Absolute Return Strategies  1,196,882  18,765  —  1,215,647  206,785  —  —  13,821,906 
Global Bond  977,627  248,155  (122,169)  1,103,613  —  —  7,126  13,927,600 
Global Equity  844,019  273,570  (46,487)  1,071,102  70,847  44,762  18,011  12,531,890 
Global Income  1,838,379  476,304  (202,479)  2,112,204  1,141,737  139,126  (100,331)  21,586,724 
Global Real Estate  925,611  143,659  (122,905)  946,365  330,456  —  50,625  8,886,363 
Global Shareholder Yield  1,508,165  265,668  (230,368)  1,543,465  546,453  610,645  277,102  19,030,928 
Global Short Duration Credit  —  1,617,435  (18,718)  1,598,717  216,277  —  (240)  16,115,068 
Health Sciences  742,428  151,891  (102,467)  791,852  —  2,562,409  216,522  16,050,845 
High Yield  2,398,330  381,528  (1,578,410)  1,201,448  1,525,968  —  979,091  11,461,818 
International Core  231,429  31,208  (72,718)  189,919  261,163  —  275,463  6,745,916 
International Growth  —  374,679  —  374,679  24,365  33,786  —  5,316,688 
Opportunities                 
International Growth Stock  506,418  52,667  (149,006)  410,079  108,312  —  242,247  5,843,620 
International Small Cap  675,069  63,988  (59,156)  679,901  187,993  —  39,973  13,230,878 
International Small Company  1,261,753  131,249  (165,225)  1,227,777  168,255  —  102,398  13,259,993 
International Value  829,337  353,848  (431,191)  751,994  284,334  —  417,772  13,588,531 
International Value Equity  418,761  65,051  (79,498)  404,314  59,353  163,419  38,051  3,877,367 
Mid Cap Stock  683,375  230,204  (131,620)  781,959  224  1,839,209  45,292  17,742,650 
Mid Value  759,356  188,953  (77,205)  871,104  70,008  419,508  37,393  15,854,094 
Mutual Shares  336,580  29,947  (366,527)  —  78,719  325,563  1,451,497  — 
Natural Resources  1,011,098  98,697  (109,845)  999,950  121,799  —  (60,418)  18,779,066 
Real Estate Equity  557,576  74,771  (89,009)  543,338  90,650  —  48,707  6,264,692 
Real Return Bond  1,046,494  227,208  (296,934)  976,768  272,247  —  (82,523)  11,545,399 
Redwood  793,409  159,064  (17,620)  934,853  —  176,954  (1,545)  10,806,898 
Science & Technology  1,893,568  227,945  (335,589)  1,785,924  21,475  477,842  431,534  25,967,329 
Short Duration Credit  2,792,222  1,286,756  (96,696)  3,982,282  1,145,105  370,120  (24,466)  40,818,394 
Opportunities                 
Small Cap Growth  452,469  152,842  (268,219)  337,092  —  489,423  466,708  3,728,237 
Small Cap Value  —  162,378  —  162,378  —  —  —  3,143,633 
Small Company Growth  —  145,920  —  145,920  —  —  —  3,087,668 
Small Company Value  142,008  49,571  (78,631)  112,948  10,635  30,560  489,894  4,210,715 
Spectrum Income  2,505,931  497,555  (478,868)  2,524,618  914,212  712,341  7,885  28,401,953 
Strategic Equity Allocation  23,809,567  1,913,946  (1,868,935)  23,854,578  4,645,612  4,769,242  2,101,483  333,009,910 
Strategic Growth  916,431  135,772  (117,621)  934,582  50,918  473,708  176,287  15,439,288 
Strategic Income Opportunities  3,784,456  698,674  (266,334)  4,216,796  1,988,290  483,175  (56,556)  46,258,255 
Total Return  3,167,960  651,902  (500,292)  3,319,570  918,263  639,279  (285,138)  46,341,197 
U.S. Equity  1,563,644  353,295  (224,816)  1,692,123  400,385  2,139,503  460,965  23,368,215 
U.S. High Yield Bond  1,773,765  340,626  (1,194,385)  920,006  1,459,259  440,311  40,341  11,573,676 
Value  356,425  101,132  (54,712)  402,845  22,083  261,643  24,590  5,200,734 
Value Equity  —  533,134  (63)  533,071  —  —  1  5,378,687 
          $24,794,034  $30,940,705  $17,346,741  $1,252,041,280 

 

Annual report | Retirement Living Portfolios  83 

 


        Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2015                 
Absolute Return Currency  1,468,425  291,780  (219,376)  1,540,829  —  $1,014,995  ($46,027)  $15,500,737 
Active Bond  4,003,849  654,326  (720,116)  3,938,059  $1,616,557  220,483  (34,798)  41,192,098 
All Cap Value  310,949  55,698  (366,647)  —  23,520  648,757  610,323  — 
Alpha Opportunities  268,655  132,700  (51,609)  349,746  18,062  418,624  28,318  4,749,551 
Asia Pacific Total Return Bond  861,942  33,245  —  895,187  285,475  17,722  —  8,620,655 
Blue Chip Growth  316,413  48,043  (168,949)  195,507  —  216,903  1,502,639  7,032,386 
Capital Appreciation  516,430  84,229  (259,447)  341,212  9,006  444,567  1,118,411  6,251,010 
Capital Appreciation Value  2,161,988  371,542  (302,999)  2,230,531  389,094  3,414,290  177,278  28,327,743 
China Emerging Leaders  360,451  12,672  (87,614)  285,509  15,957  92,394  (127,130)  2,877,933 
Core High Yield    591,405  —  591,405  —  —  —  6,552,773 
Disciplined Value  196,542  22,224  (67,293)  151,473  30,374  164,801  187,126  2,934,024 
Emerging Markets  1,966,994  67,589  (712,764)  1,321,819  254,681  —  556,501  14,989,423 
Emerging Markets Debt  393,559  477,234  (37,690)  833,103  249,105  17,102  (2,726)  8,455,998 
Equity-Income  391,419  110,211  (171,243)  330,387  205,756  58,836  377,328  7,086,807 
Financial Industries    363,155  (7,394)  355,761  —  —  188  6,147,543 
Floating Rate Income  4,864,696  515,151  (369,182)  5,010,665  2,107,476  121,759  (43,149)  46,899,825 
Fundamental Global Franchise  452,622  72,776  (100,963)  424,435  55,268  256,375  109,727  5,644,990 
Fundamental Large Cap Value  352,114  239,728  (216,994)  374,848  73,752  567,378  104,452  5,345,339 
Fundamental Value  113,237  814  (114,051)  —  16,993  —  1,468,397  — 
Global Absolute Return Strategies  837,015  13,122  —  850,137  144,611  —  —  9,666,062 
Global Bond  892,107  98,515  (101,099)  889,523  —  —  18,406  11,225,782 
Global Equity  444,055  34,163  (76,249)  401,969  36,244  22,899  51,247  4,703,038 
Global Income  1,314,114  190,409  (181,851)  1,322,672  760,417  95,372  (65,783)  13,517,713 
Global Real Estate  514,976  70,628  (119,522)  466,082  179,673  —  115,957  4,376,513 
Global Shareholder Yield  1,003,944  145,556  (235,102)  914,398  358,228  414,022  290,767  11,274,526 
Global Short Duration Credit  —  1,009,940  (16,163)  993,777  126,753  —  14  10,017,271 
Health Sciences  335,010  58,346  (140,521)  252,835  —  984,304  861,629  5,124,968 
High Yield  1,742,884  177,120  (1,086,923)  833,081  1,064,405  —  862,707  7,947,596 
International Core  122,198  15,690  (57,575)  80,313  137,898  —  320,062  2,852,729 
International Growth  —  173,645  (14,699)  158,946  11,148  15,458  2,052  2,255,443 
Opportunities                 
International Growth Stock  260,350  20,487  (106,483)  174,354  55,233  —  243,635  2,484,548 
International Small Cap  348,104  26,453  (72,495)  302,062  96,940  —  126,662  5,878,126 
International Small Company  657,390  64,044  (183,384)  538,050  87,663  —  246,958  5,810,940 
International Value  438,259  138,859  (262,417)  314,701  145,269  —  573,057  5,686,645 
International Value Equity  213,476  23,992  (67,716)  169,752  29,680  81,718  49,017  1,627,923 
Mid Cap Stock  320,968  95,594  (86,819)  329,743  102  837,697  42,021  7,481,862 
Mid Value  326,012  121,150  (81,698)  365,464  31,375  188,007  34,040  6,651,440 
Mutual Shares  190,975  16,179  (207,154)  —  42,529  175,889  772,156  — 
Natural Resources  527,026  59,523  (86,081)  500,468  63,883  —  (5,646)  9,398,788 
Real Estate Equity  330,601  43,043  (82,290)  291,354  52,680  —  124,902  3,359,313 
Real Return Bond  789,267  110,319  (262,217)  637,369  193,578  —  (44,057)  7,533,696 
Redwood  490,481  31,212  (42,613)  479,080  —  104,275  14,465  5,538,163 
Science & Technology  —  581,479  (16,172)  565,307  —  —  215  8,219,567 
Short Duration Credit  2,276,744  511,978  (265,932)  2,522,790  865,024  291,412  (40,061)  25,858,597 
Opportunities                 
Small Cap Growth  206,852  189,500  (116,915)  279,437  —  214,741  88,858  3,090,568 
Small Cap Value  —  84,220  —  84,220  —  —  —  1,630,491 
Small Company Value  63,755  22,141  (41,778)  44,118  4,742  13,626  406,208  1,644,720 
Spectrum Income  2,098,230  279,358  (778,848)  1,598,740  720,761  564,429  256,456  17,985,825 
Strategic Equity Allocation  12,060,722  1,094,741  (2,460,527)  10,694,936  2,271,369  2,331,815  4,832,088  149,301,307 
Strategic Growth  405,472  79,375  (105,684)  379,163  21,330  198,438  212,497  6,263,775 
Strategic Income Opportunities  2,448,691  477,207  (315,181)  2,610,717  1,219,958  300,511  (22,645)  28,639,570 
Total Return  2,953,500  486,249  (500,391)  2,939,358  836,673  602,075  (129,811)  41,033,441 
U.S. Equity  1,105,931  213,191  (239,763)  1,079,359  293,613  1,568,952  294,361  14,905,944 
U.S. High Yield Bond  1,297,185  154,880  (814,543)  637,522  1,017,543  312,345  127,165  8,020,026 
Value  182,253  46,509  (42,868)  185,894  10,825  128,251  17,310  2,399,893 
Value Equity    213,787  (642)  213,145  —  —  58  2,150,632 
          $16,231,223  $17,121,222  $16,663,825  $674,166,276 

 

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        Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Portfolio  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through 2010                 
Absolute Return Currency  911,894  216,560  (195,524)  932,930  —  $620,343  ($6,610)  $9,385,271 
Active Bond  3,554,796  496,815  (782,232)  3,269,379  $1,358,556  182,231  17,217  34,197,708 
All Cap Value  158,832  28,450  (187,282)  —  12,014  331,383  297,728  — 
Alpha Opportunities  115,760  78,465  (38,344)  155,881  7,347  170,290  7,019  2,116,870 
Asia Pacific Total Return Bond  604,555  23,317  —  627,872  200,228  12,430  —  6,046,411 
Blue Chip Growth  144,761  29,452  (71,777)  102,436  —  96,061  360,921  3,684,609 
Capital Appreciation  233,942  55,451  (110,288)  179,105  3,952  195,084  198,342  3,281,196 
Capital Appreciation Value  1,146,913  287,903  (293,499)  1,141,317  205,645  1,804,525  141,708  14,494,723 
China Emerging Leaders  144,005  5,064  (35,304)  113,765  6,375  36,913  (48,933)  1,146,749 
Core High Yield  —  376,513  —  376,513  —  —  —  4,171,765 
Disciplined Value  101,758  18,842  (31,974)  88,626  15,352  83,297  23,417  1,716,684 
Emerging Markets  848,354  19,870  (348,914)  519,310  100,037  —  278,370  5,888,976 
Emerging Markets Debt  224,617  423,783  (35,551)  612,849  175,078  12,167  (3,565)  6,220,420 
Equity-Income  197,276  40,333  (46,167)  191,442  88,465  25,297  15,920  4,106,433 
Financial Industries  —  52,216  (846)  51,370  —  —  (107)  887,667 
Floating Rate Income  3,529,483  430,343  (339,075)  3,620,751  1,502,637  87,075  (21,718)  33,890,234 
Fundamental Global Franchise  242,666  70,801  (84,250)  229,217  28,719  133,219  70,739  3,048,580 
Fundamental Large Cap Value  172,563  148,231  (101,506)  219,288  41,093  316,129  326  3,127,043 
Fundamental Value  42,653  306  (42,959)  —  6,401  —  534,877  — 
Global Absolute Return Strategies  585,574  9,181  —  594,755  101,170  —  —  6,762,363 
Global Bond  714,650  152,022  (177,712)  688,960  —  —  35,971  8,694,676 
Global Equity  275,471  44,270  (82,651)  237,090  21,432  13,541  40,662  2,773,958 
Global Income  839,153  205,330  (188,085)  856,398  489,984  62,088  (5,743)  8,752,390 
Global Real Estate  266,969  53,432  (93,226)  227,175  88,508  —  137,827  2,133,174 
Global Shareholder Yield  544,448  123,626  (169,398)  498,676  187,506  220,473  189,562  6,148,676 
Global Short Duration Credit  —  675,092  (19,507)  655,585  87,273  —  (259)  6,608,302 
Health Sciences  79,378  11,701  (53,680)  37,399  —  197,410  405,503  758,083 
High Yield  1,195,867  152,643  (834,232)  514,278  707,706  —  767,819  4,906,209 
International Core  63,536  12,715  (41,052)  35,199  71,699  —  225,687  1,250,263 
International Growth  —  74,589  (5,470)  69,119  4,914  6,814  534  980,792 
Opportunities                 
International Growth Stock  137,602  21,211  (82,978)  75,835  29,192  —  184,021  1,080,655 
International Small Cap  172,184  26,773  (53,783)  145,174  47,950  —  69,169  2,825,078 
International Small Company  319,831  55,209  (111,624)  263,416  42,649  —  108,380  2,844,892 
International Value  231,984  72,742  (169,244)  135,482  74,932  —  470,022  2,448,165 
International Value Equity  122,048  25,791  (73,500)  74,339  16,968  46,720  71,921  712,907 
Mid Cap Stock  157,428  54,125  (57,442)  154,111  48  394,951  22,641  3,496,772 
Mid Value  218,595  78,658  (64,275)  232,978  20,957  125,580  21,101  4,240,193 
Mutual Shares  96,591  7,984  (104,575)  —  20,989  86,804  377,640  — 
Natural Resources  273,882  47,600  (73,784)  247,698  32,199  —  1,505  4,651,772 
Real Estate Equity  205,052  44,294  (77,430)  171,916  31,220  —  134,635  1,982,191 
Real Return Bond  487,023  115,807  (172,483)  430,347  123,341  —  (97,601)  5,086,704 
Redwood  300,372  31,217  (38,166)  293,423  —  62,631  8,740  3,391,965 
Science & Technology  —  80,860  —  80,860  —  —  —  1,175,711 
Short Duration Credit  1,539,664  296,228  (198,668)  1,637,224  562,016  191,213  6,235  16,781,544 
Opportunities                 
Small Cap Growth  82,094  71,635  (34,600)  119,129  —  82,814  28,688  1,317,566 
Small Cap Value  —  35,848  (27)  35,821  —  —  (2)  693,490 
Small Company Value  25,303  12,669  (18,941)  19,031  1,915  5,503  105,431  709,468 
Spectrum Income  1,415,712  226,075  (602,283)  1,039,504  463,134  365,220  333,673  11,694,414 
Strategic Equity Allocation  6,080,526  1,003,734  (1,872,699)  5,211,561  1,109,642  1,139,172  2,846,394  72,753,391 
Strategic Growth  174,379  78,088  (62,256)  190,211  9,026  83,967  149,775  3,142,291 
Strategic Income Opportunities  1,662,476  350,038  (302,506)  1,710,008  800,260  198,053  60,480  18,758,792 
Total Return  2,616,725  385,187  (568,667)  2,433,245  709,555  497,619  (17,047)  33,968,100 
U.S. Equity  606,742  183,892  (201,006)  589,628  154,852  827,469  219,042  8,142,756 
U.S. High Yield Bond  890,837  136,627  (634,817)  392,647  681,524  211,094  157,972  4,939,505 
Value Equity  —  123,046  —  123,046  —  —  —  1,241,533 
          $10,444,460  $8,925,580  $8,926,029  $395,260,080 

 

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Auditor’s Letter

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of John Hancock Funds II:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Retirement Living through 2010 Portfolio, John Hancock Retirement Living through 2015 Portfolio, John Hancock Retirement Living through 2020 Portfolio, John Hancock Retirement Living through 2025 Portfolio, John Hancock Retirement Living through 2030 Portfolio, John Hancock Retirement Living through 2035 Portfolio, John Hancock Retirement Living through 2040 Portfolio, John Hancock Retirement Living through 2045 Portfolio, John Hancock Retirement Living through 2050 Portfolio, and John Hancock Retirement Living through 2055 Portfolio, which are each a part of John Hancock Funds II (the “Trust”) at August 31, 2014, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian and transfer agent, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

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Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the portfolios, if any, paid during its taxable year ended August 31, 2014.

The portfolios report the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.

The portfolios report 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.

The portfolios below have the following amounts as foreign tax credits, which represent taxes paid on the income derived from foreign sources.

  Foreign Sourced  Foreign Tax 
Portfolio  Income  Credit 
Retirement Living through 2045  $1,770,376  $232,161 
Retirement Living through 2040  1,825,088  238,839 
Retirement Living through 2035  2,314,830  301,452 
Retirement Living through 2030  2,675,547  334,616 
Retirement Living through 2025  2,698,885  323,198 
Retirement Living through 2020  2,153,469  236,740 
Retirement Living through 2015  1,190,375  122,610 

 

The portfolios below paid the following amounts in capital gain dividends.

Portfolio  Capital Gain 
Retirement Living through 2050  2,052,305 
Retirement Living through 2045  12,823,244 
Retirement Living through 2040  12,466,057 
Retirement Living through 2035  16,094,077 
Retirement Living through 2030  18,400,837 
Retirement Living through 2025  18,419,890 
Retirement Living through 2020  18,693,432 
Retirement Living through 2015  12,776,568 
Retirement Living through 2010  10,818,103 

 

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the portfolio.

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EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES

At in-person meetings held on March 11-13, 2014, the Board of Trustees (the Board) of John Hancock Funds II (the Trust), including all of the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), approved Retirement Living through 2055 Portfolio (2055 Portfolio), a new series of the Trust.

This section describes the evaluation by the Board of:

(a) an advisory agreement between the Trust and John Hancock Advisers, LLC (the Advisor) relating to the 2055 Portfolio (the Advisory Agreement);

(b) an amendment to the subadvisory agreement between the Advisor and John Hancock Asset Management a division of Manulife Asset Management (US) LLC (JHAM US) to add the 2055 Portfolio (the JHAM US Subadvisory Agreement);

(c) an amendment to the subadvisory agreement between the Advisor and John Hancock Asset Management a division of Manulife Asset Management (North America) Limited (JHAM NA) to add the 2055 Portfolio (the JHAM NA Subadvisory Agreement); and

(d) an amendment to the sub-subadvisory agreement between JHAM US, JHAM NA and QS Investors, LLC (QS and, together with JHAM US and JHAM NA, the Subadvisors) to add the 2055 Portfolio (QS Subadvisory Agreement and, together with the JHAM US Subadvisory Agreement and the JHAM NA Subadvisory Agreement, the Subadvisory Agreements).

In considering the Advisory Agreement and the Subadvisory Agreements with respect to the 2055 Portfolio, the Board received in advance of the meeting a variety of materials relating to the 2055 Portfolio, the Advisor and the Subadvisors, including comparative fee and expense information for a peer group of similar mutual funds; and including with respect to the Subadvisors, performance information for comparatively managed accounts, as applicable, and other information provided by the Advisor and the Subadvisors regarding the nature, extent, and quality of services to be provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the 2055 Portfolio and any compensation paid to affiliates of the Advisor. The Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisors to the John Hancock Funds (the Funds), including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisors with respect to the other funds that they manage. The Board noted the affiliation of certain of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the 2055 Portfolio by the Advisor’s affiliates, including distribution services. The Board also took into account information with respect to the 2055 Portfolio presented at their December 2013 meeting.

Throughout the process, the Board asked questions of and were afforded the opportunity to request additional information from management. The Board is assisted by legal counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed Advisory Agreement and Subadvisory Agreements and discussed the proposed Advisory Agreement and Subadvisory Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the 2055 Portfolio, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, Extent, and Quality of Services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services to be provided to the 2055 Portfolio, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the Funds’ compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor will be responsible for the management of the day-to-day operations of the 2055 Portfolio, including but not limited to, general supervision of and coordination of the services to be provided by the Subadvisors, and also will be responsible for monitoring and reviewing the activities of the Subadvisors and other third-party service providers.

In considering the nature, extent and quality of the services to be provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

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In the course of its deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationships, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives; review of brokerage matters, including with respect to trade allocation and best execution; and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications, and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the funds;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the 2055 Portfolio; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust, and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that Advisor may reasonably be expected to provide a high quality of services under the Advisory Agreement with respect to the 2055 Portfolio.

Investment performance. In connection with its consideration of the Advisory Agreement, the Board considered, at this and at prior meetings, the performance of other comparable funds or accounts, if any, managed by the Advisor and Subadvisors and the performance of their respective benchmarks and/or peer groups. The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the Subadvisors.

Fees and Expenses. The Board reviewed comparative fee and expense information with respect to similarly situated investment companies deemed to be comparable to the 2055 Portfolio. The Board reviewed information provided by the Advisor concerning investment advisory fees charged to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisors’ services to the 2055 Portfolio and the services they provide to other such comparable clients or funds.

The Board took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor, and not the 2055 Portfolio, would be responsible for paying the subadvisory fees. The Board also noted that the Advisor has agreed to waive fees and/or reimburse expenses with respect to the 2055 Portfolio. The Board also took into account that management has agreed to implement an overall fee waiver across a number of funds in the complex, which is discussed further below. The Board also noted management’s discussion of the 2055 Portfolio’s anticipated expenses.

In addition, the Trustees reviewed the advisory fee to be paid to the Advisor for the 2055 Portfolio, which is a fund of funds, and concluded that such fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the 2055 Portfolio, and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the 2055 Portfolio and those of its underlying portfolios.

The Board concluded that the advisory fees to be paid by the Trust with respect to the 2055 Portfolio are reasonable.

Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including certain of the Subadvisors) from the Advisor’s relationship with the 2055 Portfolio, the Board:

(a) considered the financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the anticipated net profitability to the Advisor and its affiliates with respect to the 2055 Portfolio;

(c) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain Funds of the Trust and noted that these tax benefits, which are not available to contract owners under applicable income tax law, are reflected in the profitability information reviewed by the Board;

(d) considered that the Advisor will also provide administrative services to the 2055 Portfolio on a cost basis pursuant to an administrative services agreement;

(e) noted that JHAM US and JHAM NA are affiliates of the Advisor;

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(f) noted that affiliates of the Advisor will provide transfer agency services and distribution services to the 2055 Portfolio, and that the Trust’s distributor will receive Rule 12b-1 payments to support distribution of the 2055 Portfolio;

(g) noted that the Advisor will derive reputational and other indirect benefits from providing advisory services to the 2055 Portfolio;

(h) noted that the subadvisory fees for the 2055 Portfolio will be paid by Advisor and were negotiated at arms’ length with respect to QS;

(i) with respect to the 2055 Portfolio, the Board noted that the advisory fee is in addition to the fees received by the Advisor and its affiliates with regard to the underlying portfolios in which the 2055 Portfolio may invest; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it will provide to the 2055 Portfolio and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including certain of the Subadvisors) from their relationship with the 2055 Portfolio is reasonable and not excessive.

Economies of Scale. In considering the extent to which economies of scale would be realized if the 2055 Portfolio grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that with respect to the John Hancock underlying portfolios in which the 2055 Portfolio invests the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such underlying portfolios and for each of the other John Hancock funds in the complex (except as discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement): The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.0 15% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are each of the fund of funds of the Trust and of John Hancock Variable Insurance Trust. The 2055 Portfolio also benefits from such overall management fee waiver through its investment in underlying portfolios that include certain of the Participating Portfolios, which are subject to the Reimbursement.);

(b) considered that the Advisor has agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the 2055 Portfolio to reduce operating expenses;

(c) reviewed the Trust’s and the 2055 Portfolio’s advisory fee structure and concluded that: (i) the 2055 Portfolio’s fee structure contains breakpoints at the advisory fee level; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the 2055 Portfolio to benefit from economies of scale if the 2055 Portfolio grows; and

(d) the Board also considered the potential effect of the 2055 Portfolio’s future growth in size on its performance and fees. The Board also noted that if the 2055 Portfolio’s assets increase over time, the 2055 Portfolio may realize other economies of scale.

Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(a) information relating to the Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(b) the comparative performance of the 2055 Portfolio’s benchmarks and comparable funds managed by the 2055 Portfolio’s portfolio managers;

(c) the proposed subadvisory fee for the 2055 Portfolio; and

(d) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and QS.

Nature, Extent, and Quality of Services. With respect to the services to be provided by each of the Subadvisors, the Board received information provided to the Board by each of the Subadvisors, as well as took into account information presented throughout the past year. The Board considered each Subadvisor’s current level of staffing and their overall resources, as well received information relating to a Subadvisor’s compensation programs. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of each Subadvisor’s investment and compliance personnel who will provide services to the 2055 Portfolio. The Board also considered, among other things, each Subadvisor’s compliance programs and any disciplinary history. The Board also considered each Subadvisor’s risk assessment and monitoring processes. The Board reviewed each Subadvisor’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular periodic reviews of each Subadvisor and its operations in regard to the Funds, including regarding investment processes and organizational and staffing matters. The Board

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also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisors and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of each Subadvisor and procedures reasonably designed by it to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisors.

The Board considered the Subadvisors’ investment processes and philosophies. The Board took into account that each Subadvisor’s responsibilities will include the development and maintenance of an investment program for the 2055 Portfolio that is consistent with the 2055 Portfolio’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor Compensation. In considering the cost of services to be provided by the Subadvisors and the profitability to the Subadvisors of their relationship to the 2055 Portfolio, the Board noted that the fees under the Subadvisory Agreements are paid by the Advisor and not the 2055 Portfolio. The Board also relied on the ability of the Advisor to negotiate the Subadvisory Agreement with QS at arms’ length. As a result, the costs of the services to be provided and the profits to be realized by QS from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreement.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the unaffiliated Subadvisor) of any material relationships, if any, with respect to QS, which include arrangements in which unaffiliated subadvisors or their affiliates provide advisory, distribution or management services in connection with financial products sponsored by the Trust’s Advisor or its affiliates, and may include shares of the Trust, other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreements.

In addition, the Board considered other potential indirect benefits that the Subadvisors and their affiliates may receive from the Subadvisors’ relationship with the 2055 Portfolio, such as the opportunity to provide advisory services to additional John Hancock Funds and reputational benefits.

Subadvisory Fees. The Board considered that the 2055 Portfolio will pay advisory fees to the Advisor and that, in turn, the Advisor will pay subadvisory fees to the Subadvisors. The Board considered the 2055 Portfolio’s subadvisory fee compared to similarly situated investment companies deemed to be comparable to the 2055 Portfolio, as applicable. The Board also took into account the sub-advisory fees paid by the Advisor to fees charged by each Subadvisor to manage other sub-advised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor Performance. The Board considered performance results of comparable funds managed by the Subadvisors against an applicable benchmark. The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the Subadvisors. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisors. The Board was mindful of the Advisor’s focus on the Subadvisors’ performance. The Board also noted each Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreements was based on a number of determinations, including the following:

(1) Each Subadvisor has extensive experience and demonstrated skills as a manager, and currently subadvises other funds of the Trust and the fund complex and the Board is generally satisfied with each Subadvisor’s management of these funds, and may reasonably be expected to provide a high quality of investment management services to the 2055 Portfolio;

(2) The proposed subadvisory fees are reasonable in relation to the level and quality of services to be provided. and

(3) The subadvisory fees are paid by the Advisor and not the 2055 Portfolio and the advisory fee for the 2055 Portfolio contains breakpoints that permit shareholders to benefit from economies of scale.

In addition, the Trustees reviewed the subadvisory fee to be paid to each Subadvisor for the 2055 Portfolio and concluded that such subadvisory fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the 2055 Portfolio, and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the 2055 Portfolio and those of its underlying portfolios.

* * * 

 

Based on the Board’s evaluation of all factors that it deemed to be material, including those factors described above, and assisted by the advice of independent legal counsel, the Board, including the Independent Trustees, concluded that approval of the Advisory Agreement and the Subadvisory Agreements would be in the best interest of the 2055 Portfolio and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreements.

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EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) and each Subadvisory Agreement and the Sub-subadvisory Agreement (collectively, the Subadvisory Agreements) with respect to each of the portfolios of the Trust included in this report (the Funds). The Advisory Agreement and Subadvisory Agreements are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

The advisory agreement and subadvisory agreement for John Hancock Retirement Living through 2055 was not considered at this time because that fund recently commenced operations.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reapproved for an annual period, the continuation of the Advisory Agreement between the Trust and the Advisor and the applicable Subadvisory Agreements between the Advisor and the sub-advisors and sub-subadvisor (each, a Subadvisor and collectively, the Subadvisors) with respect to each of the Funds.

In considering the Advisory Agreement and the Subadvisory Agreements with respect to each Fund, the Board received in advance of the meetings a variety of materials relating to each Fund, the Advisor and each Subadvisor, including comparative performance, fee and expense information for peer groups of similar mutual funds prepared by an independent third-party provider of mutual fund data; performance information for the Funds’ benchmark indices; and, with respect to each Subadvisor, comparative performance information for comparably managed accounts, as applicable; and other information provided by the Advisor and the Subadvisors regarding the nature, extent and quality of services provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the Funds and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreements are considered, particular focus is given to information concerning Fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisors is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisors to the Funds, including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisors with respect to the Funds they manage. The Board noted the affiliation of certain of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the Funds by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by legal counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to each Fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of Fund performance and operations throughout the year.

Nature, Extent and Quality of Services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services provided to the Funds, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the Funds’ compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the Funds, including but not limited to, general supervision of and coordination of the services provided by the Subadvisors, and is also responsible for monitoring and reviewing the activities of the Subadvisors and other third-party service providers.

In considering the nature, extent and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

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In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationships, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives, review of brokerage matters including with respect to trade allocation and best execution, and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the Funds;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the Funds; and

(f) the Advisor’s reputation and experience in serving as an investment adviser to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the Funds.

Investment Performance. In considering each Fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the Funds’ performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the Funds’ performance;

(b) considered the comparative performance of each Fund’s respective benchmark;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of mutual fund data; and

(d) took into account the Advisor’s analysis of each Fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally and with respect to particular Funds.

The Board concluded that the performance of each of the Funds has generally been in line with or generally outperformed the historical performance of comparable funds and/or the Fund’s respective benchmark, with certain exceptions noted in Appendix A. The Board also concluded that each Fund’s performance is being monitored and reasonably addressed, where appropriate.

Fees and Expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data including, among other data, each Fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the Fund. The Board considered each Fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the Fund’s ranking within broader groups of funds. In comparing each Fund’s contractual and net management fees to that of comparable funds, the Board noted that such fee includes both advisory and administrative costs.

The Board took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fees. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to each of the Funds. The Board also noted that the Advisor pays the subadvisory fees of the Funds, and that such fees are negotiated at arm’s length with respect to unaffiliated Subadvisors. The Board also took into account that management had agreed to implement an overall fee waiver across the complex, which is discussed further below. The Board also noted management’s discussion of the Funds’ expenses, as well as certain actions taken over the past several years to reduce the Funds’ operating expenses. The Board reviewed information provided by the Advisor concerning investment advisory fees charged to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to a Fund and the services they provide to other such comparable clients or funds. The Board concluded that the advisory fee paid with respect to each of the Funds is reasonable.

In addition, the Trustees reviewed the advisory fee to be paid to the Advisor for each Fund, each of which is a fund of funds, and concluded that the advisory fee to be paid to the Advisor with respect to each Fund is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the Fund and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of a Fund and those of its underlying portfolios.

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Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisors that are affiliated with the Advisor) from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates, of each Fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain Funds of the Trust and noted that these tax benefits, which are not available to contract owners under applicable income tax law, are reflected in the profitability information reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the Funds on a cost basis pursuant to an administrative services agreement;

(g) noted that certain of the Funds’ Subadvisors are affiliates of the Advisor;

(h) noted that affiliates of the Advisor provide transfer agency services and distribution services to the Funds, and that the Trust’s distributor also receives Rule 12b-1 payments to support distribution of the products;

(i) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the Funds;

(j) noted that the subadvisory fees for the Funds are paid by the Advisor and are negotiated at arms’ length with respect to the unaffiliated Subadvisors;

(k) with respect to each Fund, the Board noted that the advisory fee is in addition to the fees received by the Advisor and its affiliates with regard to the underlying portfolios in which the Funds may invest; and

(l) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to each Fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including any Subadvisors that are affiliated with the Advisor), from their relationship with each Fund was reasonable and not excessive.

Economies of Scale. In considering the extent to which economies of scale would be realized as a Fund grows and whether fee levels reflect these economies of scale for the benefit of Fund shareholders, the Board:

(a) considered that with respect to the John Hancock underlying portfolios in which the Funds invest, the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such underlying portolios and for each of the other John Hancock funds in the complex (except as discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement): The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are each of the fund of funds of the Trust and of John Hancock Variable Insurance Trust. The Funds also benefit from such overall management fee waiver through their investment in underlying portfolios that include certain of the Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the Trust’s advisory fee structure and concluded that (i) the Funds’ fee structures contain breakpoints at the advisory fee level and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the Funds to benefit from economies of scale if those Funds grow. The Board also took into account management’s discussion of the Funds’ advisory fee structure; and

(c) the Board also considered the effect of the Funds’ growth in size on their performance and fees. The Board also noted that if the Funds’ assets increase over time, the Funds may realize other economies of scale.

Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(1) information relating to each Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

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(2) the historical and current performance of each Fund and comparative performance information relating to the Fund’s benchmark and comparable funds;

(3) the subadvisory fee for each Fund, including any breakpoints, and comparative fee information, where available, prepared by an independent third party provider of mutual fund data; and

(4) information relating to the nature and scope of any material relationships and their significance to the Trust’s Advisor and unaffiliated Subadvisors.

Nature, Extent and Quality of Services. With respect to the services provided by each of the Subadvisors with respect to each Fund, the Board received information provided to the Board by each Subadvisor, including each Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered each Subadvisor’s current level of staffing and its overall resources, as well as received information relating to a Subadvisor’s compensation program. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the Funds. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed each Subadvisor’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of each Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the CCO and his staff conduct regular, periodic compliance reviews with each of the Subadvisors and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisors and procedures reasonably designed by them to assure compliance with the federal securities laws. The Board also took into account the financial condition of each Subadvisor.

The Board considered each Subadvisor’s investment process and philosophy. The Board took into account that each Subadvisor’s responsibilities include the development and maintenance of an investment program for the applicable Fund which is consistent with the Fund’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor Compensation. In considering the cost of services to be provided by each Subadvisor and the profitability to that Subadvisor of its relationship with the Fund, the Board noted that the fees under the Subadvisory Agreements are paid by the Advisor and not the Funds. The Board also relied on the ability of the Advisor to negotiate each Subadvisory Agreement with the Subadvisor that is not affiliated with the Advisor and the fees thereunder at arm’s length. As a result, the costs of the services to be provided and the profits to be realized by the unaffiliated Subadvisor from its relationship with the Trust were not a material factor in the Board’s consideration of the Subadvisory Agreements.

The Board also received information regarding the nature and scope (including their significance to the Advisor and its affiliates and to the unaffiliated Subadvisor) of any material relationships, if any, with respect to the unaffiliated Subadvisor, which include arrangements in which unaffiliated subadvisors or their affiliates provide advisory, distribution or management services in connection with financial products sponsored by the Trust’s Advisor or its affiliates, and may include shares of the Trust, other registered investment companies, a 529 education savings plan, managed separate accounts and exempt group annuity contracts sold to qualified plans. The Board also received information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreements.

In addition, the Board considered other potential indirect benefits that the Subadvisors and their affiliates may receive from the Subadvisor’s relationship with the Fund, such as the opportunity to provide advisory services to additional portfolios of the Trust and reputational benefits.

Subadvisory Fees. The Board considered that the Fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to each Subadvisor. As noted above, the Board also considered, if available, each Fund’s sub-advisory fees as compared to similarly situated investment companies deemed to be comparable to the Fund as included in the report prepared by the independent third party provider of mutual fund data. The Board also took into account the sub-advisory fees paid by the Advisor to fees charged by each Fund’s Subadvisor to manage other sub-advised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor Performance. As noted above, the Board considered each Fund’s performance as compared to the Fund’s respective peer group and benchmark and noted that the Board reviews information about the Fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style, and risk-adjusted performance of each Subadvisor. The Board was mindful of the Advisor’s focus on each Subadvisor’s performance.

The Board also noted each Subadvisor’s long-term performance record for similar accounts, as applicable.

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The Board’s decision to approve the Subadvisory Agreement with respect to each Fund was based on a number of determinations, including the following:

(1) Each Subadvisor has extensive experience and demonstrated skills as a manager;

(2) Although not without variation, the performance of each Fund managed by a Subadvisor generally has been in line with or outperformed the historical performance of comparable funds and the Fund’s respective benchmarks, with the exceptions noted in Appendix A (with respect to such exceptions, the Board concluded that performance is being monitored and reasonably addressed, where appropriate);

(3) The subadvisory fees are reasonable in relation to the level and quality of services being provided; and

(4) The subadvisory fees are paid by the Advisor and not the Funds and the advisory fee for each of the Funds contains breakpoints that permit shareholders to benefit from economies of scale.

In addition, in the case of each Fund, the Trustees reviewed the subadvisory fee to be paid to the Subadvisor for the Fund and concluded that the subadvisory fee to be paid to the Subadvisor with respect to each Fund is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the Fund and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of a Fund and those of its underlying portfolios. Additional information relating to each Fund’s fees and expenses and performance that the Board considered in approving the Advisory Agreement and Subadvisory Agreement for a particular Fund is set forth in Appendix A.

* * * 

 

Based on their evaluation of all factors that they deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and each of the Subadvisory Agreements with respect to each Fund would be in the best interest of each of the respective Funds and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement with respect to each Fund for an additional one-year period.

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Appendix A
 
  Performance as of     
Portfolio (Subadvisor)  December 31, 2013  Fees and Expenses  Comments 
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2010  Fund underperformed for  data not provided due to  management’s discussion 
  the one- and three-year peri-  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  ods and outperformed for  group for this purpose.  including the favorable 
Management a division of  the five-year period.    performance relative to its 
Manulife Asset Management    Net management fees for  benchmark index for the five- 
(North America) Limited)  Lipper Category — The  this Fund are higher than the  year period and to the peer 
  Fund outperformed the  peer group median.  group for the one-, three- and 
(John Hancock Asset  average for the one-,   five-year periods.
Management a division of three- and five-year periods. Total expenses for this   
Manulife Asset Management   Fund are equal to the peer The Board took into account
(US) LLC)  group median.  management’s discussion of 
    the Fund’s expenses, includ-
(QS Investors, LLC)      ing fee and expense waivers
      applicable to the Fund and 
      certain of its classes. 
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2015  Fund underperformed for  data not provided due to  management’s discussion 
  the one- and three-year peri-  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  ods and outperformed for  group for this purpose.  including the favorable 
Management a division of  the five-year period.    performance relative to its 
Manulife Asset Management    Net management fees for this  benchmark index for the five- 
(North America) Limited)  Lipper Category — The  Fund are equal to the peer  year period and to the peer 
  Fund outperformed the  group median.  group for the one-, three- and 
(John Hancock Asset  average for the one-,    five-year periods.
Management a division of three- and five-year periods. Total expenses for this Fund   
Manulife Asset Management   are lower than the peer The Board noted fee and
(US) LLC)  group median. expense waivers applicable 
    to the Fund and certain of
(QS Investors, LLC)      its classes.
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2020  Fund underperformed for  data not provided due to  management’s discussion 
  the one- and three-year peri-  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  ods and outperformed for  group for this purpose.  including the favorable 
Management a division of  the five-year period.    performance relative to its 
Manulife Asset Management    Net management fees for this  benchmark for the five-year 
(North America) Limited)  Lipper Category — The  Fund are lower than the peer  period and to the peer group 
  Fund outperformed the  group median.  for the one-, three- and 
(John Hancock Asset  average for the one-,    five-year periods.
Management a division of  three- and five-year periods. Total expenses for this Fund   
Manulife Asset Management   are lower than the peer The Board noted fee and
(US) LLC) group median.  expense waivers applicable 
    to the Fund and certain of
(QS Investors, LLC)      its classes.

 

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  Performance as of     
Portfolio (Subadvisor)  December 31, 2013  Fees and Expenses  Comments 
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2025  Fund underperformed for  data not provided due to  management’s discussion 
  the one- and three-year peri-  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  ods and outperformed for  group for this purpose.  including the favorable 
Management a division of  the five-year period.    performance relative to its 
Manulife Asset Management    Net management fees for this  benchmark for the five-year 
(North America) Limited)  Lipper Category — The  Fund are lower than the peer  period and to the peer group 
  Fund outperformed the  group median.  for the one-, three- and
(John Hancock Asset  average for the one-,    five-year periods.
Management a division of  three- and five-year periods. Total expenses for this Fund   
Manulife Asset Management   are lower than the peer The Board noted fee and
(US) LLC)  group median. expense waivers applicable 
    to the Fund and certain of
(QS Investors, LLC)      its classes.
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2030  Fund underperformed  data not provided due to  management’s discussion 
  for the one-, three- and  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  five-year periods.  group for this purpose.  including the favorable per- 
Management a division of      formance relative to its peer 
Manulife Asset Management  Lipper Category — The  Net management fees for this  group for the one-, three- and 
(North America) Limited)  Fund outperformed the  Fund are equal to the peer  five-year periods. 
  average for the one-,  group median.   
(John Hancock Asset  three- and five-year periods.    The Board noted fee and 
Management a division of    Total expenses for this Fund  expense waivers applicable 
Manulife Asset Management    are lower than the peer  to the Fund and certain of 
(US) LLC)    group median.  its classes. 
 
(QS Investors, LLC)       
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2035  Fund underperformed  data not provided due to  management’s discussion 
  for the one-, three- and  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  five-year periods.  group for this purpose.  including the favorable per- 
Management a division of      formance relative to its peer 
Manulife Asset Management  Lipper Category — The  Net management fees for this  group for the one-, three- and 
(North America) Limited)  Fund outperformed the  Fund are lower than the peer  five-year periods. 
  average for the one-,  group median.   
(John Hancock Asset  three- and five-year periods.    The Board noted fee and 
Management a division of    Total expenses for this Fund  expense waivers applicable 
Manulife Asset Management    are lower than the peer  to the Fund and certain of 
(US) LLC)    group median.  its classes. 
 
(QS Investors, LLC)       
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2040  Fund underperformed  data not provided due to  management’s discussion 
  for the one-, three- and  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  five-year periods.  group for this purpose.  including the favorable per- 
Management a division of      formance relative to its peer 
Manulife Asset Management  Lipper Category — The  Net management fees for this  group for the one-, three- and 
(North America) Limited)  Fund outperformed the  Fund are lower than the peer  five-year periods. 
  average for the one-,  group median.   
(John Hancock Asset  three- and five-year periods.    The Board noted fee and 
Management a division of    Total expenses for this Fund  expense waivers applicable 
Manulife Asset Management    are lower than the peer  to the Fund and certain of 
(US) LLC)    group median.  its classes. 
 
(QS Investors, LLC)       

 

98  Retirement Living Portfolios | Annual report 

 


  Performance as of     
Portfolio (Subadvisor)  December 31, 2013  Fees and Expenses  Comments 
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
Through 2045  Fund underperformed  data not provided due to  management’s discussion 
  for the one-, three- and  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  five-year periods.  group for this purpose.  including differences in the 
Management a division of      Fund’s investment strate- 
Manulife Asset Management  Lipper Category — The  Net management fees for this  gies from the Lipper peer 
(North America) Limited)  Fund outperformed the  Fund are lower than the peer  group and the favorable 
  average for the one- and  group median.  performance relative to its
(John Hancock Asset  five-year periods and under-    peer group for the one-and
Management a division of performed the average for Total expenses for this Fund five-year periods. 
Manulife Asset Management the three-year period. are lower than the peer  
(US) LLC) group median. The Board noted fee and 
    expense waivers applicable
(QS Investors, LLC)      to the Fund and certain of
      its classes.
     
JHF II Retirement Living  Benchmark Index — The  Subadvisor fee comparative  The Board noted the Fund’s 
Through 2050  Fund underperformed for  data not provided due to  favorable performance rela- 
  the one-year period.  limited size of Lipper peer  tive to its peer group for the 
(John Hancock Asset    group for this purpose.  one-year period. 
Management a division of  Lipper Category — The     
Manulife Asset Management  Fund outperformed  Net management fees for this  The Board also took into 
(North America) Limited)  the average for the  Fund are equal to the peer  account the relatively short 
  one-year period.  group median.  performance history of 
(John Hancock Asset      the Fund. 
Management a division of    Total expenses for this Fund   
Manulife Asset Management    are lower than the peer  The Board noted fee and 
(US) LLC)    group median.  expense waivers applicable 
      to the Fund and certain of 
(QS Investors, LLC)      its classes. 

 

Annual report | Retirement Living Portfolios  99 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees

    Number of 
Name, year of birth  Trustee of  John Hancock 
Position(s) held with fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, 
Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) 
(1997–2011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut 
River Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).     
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and since 2012) and Chairperson of 
the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and Chairperson of the Board (since 2005), John Hancock Variable 
Insurance Trust; Trustee and Chairperson of the Board, John Hancock Funds II (since 2005).     
  
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
  
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the 
University of Texas, Austin, Texas; Director, LIN Television (since 2009); Chairman (since 2009) and Director (since 2006), Lincoln National 
Corporation (insurance); Director, Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, Inc. (until 2007); former 
Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); former Advisory Director, JP Morgan Chase Bank (formerly 
Texas Commerce Bank–Austin) (until 2009).     
 
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).     
  
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). 
  
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). 

 

100  Retirement Living Portfolios | Annual report 

 


Independent Trustees (continued)

    Number of 
Name, Year of Birth  Trustee of  John Hancock 
Position(s) held with Fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and John Hancock Funds II 
(since 2012).     
  
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The Barnes Group (since 2010); 
Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013).     
 
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).     
  
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of 
Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC 
(real estate) (since 2000); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, 
John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012).   
  
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The 
Moorings, Inc. (nonprofit continuing care community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
    Number of 
Name, year of birth  Trustee of  John Hancock 
Position(s) held with fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife 
Financial Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, 
including prior positions).     
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012).   
  
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance 
Company (since 2009); Chairman and Chief Executive Officer, Manulife Asset Management (since 2001, including prior positions); 
Director (since 2006), and President and Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).   

 

Annual report | Retirement Living Portfolios  101 

 


Principal officers who are not Trustees

  Officer 
Name, year of birth  of the 
Position(s) held with fund  Trust 
Principal occupation(s) and other directorships during past 5 years  since 
 
Andrew G. Arnott, Born: 1971  2009 
President   
Senior Vice President, John Hancock Financial Services (since 2009); 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 (effective 
3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II 
(since 2007, including prior positions).   
  
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 funds3 and John Hancock Variable 
Insurance Trust; 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).   
  
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).   
  
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions). 


The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.
2 Member of the Audit Committee.
3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.
4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

 

102  Retirement Living Portfolios | Annual report 
 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisors 
Craig Bromley†  John Hancock Asset Management a division of 
Peter S. Burgess*  Manulife Asset Management (US) LLC 
William H. Cunningham  John Hancock Asset Management a division of 
Grace K. Fey  Manulife Asset Management (North America) Limited 
Theron S. Hoffman*  
Deborah C. Jackson Principal distributor 
Hassell H. McClellan John Hancock Funds, LLC 
Gregory A. Russo  
Warren A. Thomson† Custodian 
  State Street Bank and Trust Company 
Officers
Andrew G. Arnott Transfer agent 
President John Hancock Signature Services, Inc. 
 
John J. Danello Legal counsel 
Senior Vice President, Secretary, and Chief Legal Officer K&L Gates LLP 
   
Francis V. Knox, Jr.  Independent registered public accounting firm 
Chief Compliance Officer  PricewaterhouseCoopers LLP 
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

 

The portfolios’ proxy voting policies and procedures, as well as the portfolios’ 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 portfolios’ complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The portfolios’ 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 202-551-8090 to receive information on the operation of the SEC’s Public Reference Room.

We make this information on your portfolio, as well as monthly portfolio holdings, and other portfolio details available on our website at jhinvestments.com or by calling 800-225-5291.

You can also contact us:     
800-225-5291  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

Annual report | Retirement Living Portfolios  103 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com

 

 
This report is for the information of the shareholders of John Hancock Retirement Living Portfolios.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  LCA 8/14 
MF198778  10/14 

 




John Hancock Retirement Choices at 2050 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2050 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11  4-29-11 
Average annual total returns                 
1-year  18.00%  18.27%  18.59%  18.83%  18.77%  25.25%  5.66%  21.55% 
Since inception  8.42%  7.28%  9.17%  8.79%  9.32%  14.75%  3.89%  12.85% 
Cumulative returns                 
1-year  18.00%  18.27%  18.59%  18.83%  18.77%  25.25%  5.66%  21.55% 
Since inception  31.01%  26.47%  34.06%  32.53%  34.71%  58.37%  13.61%  49.80% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  15.39  15.14  20.31  14.76  0.72 
Net (%)  1.39  1.14  0.89  0.64  0.69 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

Annual report | Retirement Choices Portfolios  7 

 


John Hancock Retirement Choices at 2045 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2045 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  18.05%  18.33%  18.54%  18.97%  18.83%  25.25%  5.66%  21.55% 
Since inception  9.16%  7.75%  10.31%  8.42%  10.43%  14.82%  4.26%  13.02% 
Cumulative returns                 
1-year  18.05%  18.33%  18.54%  18.97%  18.83%  25.25%  5.66%  21.55% 
Since inception  46.26%  38.26%  53.11%  42.03%  53.83%  82.14%  19.85%  70.07% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  15.38  15.15  20.32  14.74  0.70 
Net (%)  1.39  1.14  0.89  0.64  0.69 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

8  Retirement Choices Portfolios | Annual report 

 


John Hancock Retirement Choices at 2040 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2040 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  17.90%  18.17%  18.37%  18.72%  18.65%  25.25%  5.66%  21.31% 
Since inception  9.11%  8.23%  10.28%  8.45%  10.40%  14.82%  4.26%  12.90% 
Cumulative returns                 
1-year  17.90%  18.17%  18.37%  18.72%  18.65%  25.25%  5.66%  21.31% 
Since inception  46.01%  40.96%  52.88%  42.21%  53.60%  82.14%  19.85%  69.33% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  15.40  15.15  20.14  13.75  0.69 
Net (%)  1.39  1.14  0.89  0.64  0.69 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

Annual report | Retirement Choices Portfolios  9 

 


John Hancock Retirement Choices at 2035 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2035 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.

 

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  17.09%  17.36%  17.66%  18.00%  17.86%  25.25%  5.66%  20.40% 
Since inception  8.90%  8.04%  9.98%  8.91%  10.08%  14.82%  4.26%  12.46% 
Cumulative returns                 
1-year  17.09%  17.36%  17.66%  18.00%  17.86%  25.25%  5.66%  20.40% 
Since inception  44.76%  39.88%  51.09%  44.85%  51.69%  82.14%  19.85%  66.45% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  15.42  15.18  20.37  13.80  0.68 
Net (%)  1.38  1.13  0.88  0.63  0.68 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

10  Retirement Choices Portfolios | Annual report 

 


John Hancock Retirement Choices at 2030 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2030 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  15.65%  16.01%  16.23%  16.48%  16.51%  25.25%  5.66%  18.75% 
Since inception  8.31%  7.76%  9.36%  8.45%  9.48%  14.82%  4.26%  11.63% 
Cumulative returns                 
1-year  15.65%  16.01%  16.23%  16.48%  16.51%  25.25%  5.66%  18.75% 
Since inception  41.38%  38.30%  47.44%  42.20%  48.13%  82.14%  19.85%  61.19% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6  Class 1 
Gross (%)  15.52  15.27  20.27  12.30  0.68 
Net (%)  1.38  1.13  0.88  0.63  0.68 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

Please refer to the most recent prospectus and annual or semiannnual 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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

Annual report | Retirement Choices Portfolios  11 

 


John Hancock Retirement Choices at 2025 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2025 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  13.13%  13.40%  13.63%  13.94%  13.89%  25.25%  5.66%  15.84% 
Since inception  7.30%  6.74%  8.30%  7.66%  8.41%  14.82%  4.26%  10.14% 
Cumulative returns                 
1-year  13.13%  13.40%  13.63%  13.94%  13.89%  25.25%  5.66%  15.84% 
Since inception  35.78%  32.73%  41.36%  37.78%  41.98%  82.14%  19.85%  52.05% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4*  Class R6 Class 1 
Gross (%)  15.70  15.46  20.64  11.24  0.88 
Net (%)  1.38  1.13  0.88  0.63  0.88 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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 fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

12  Retirement Choices Portfolios | Annual report 

 


John Hancock Retirement Choices at 2020 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2020 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  9.78%  10.13%  10.39%  10.59%  10.63%  25.25%  5.66%  12.10% 
Since inception  5.75%  5.23%  6.77%  5.98%  6.87%  14.82%  4.26%  8.12% 
Cumulative returns                 
1-year  9.78%  10.13%  10.39%  10.59%  10.63%  25.25%  5.66%  12.10% 
Since inception  27.48%  24.75%  32.85%  28.65%  33.41%  82.14%  19.85%  40.31% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  15.96  15.71  20.89  12.32  0.69 
Net (%)  1.39  1.14  0.89  0.64  0.69 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

Annual report | Retirement Choices Portfolios  13 

 


John Hancock Retirement Choices at 2015 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2015 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.

 

It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  5.95%  6.22%  6.48%  6.84%  6.79%  25.25%  5.66%  8.05% 
Since inception  3.90%  3.51%  4.94%  3.92%  5.08%  14.82%  4.26%  5.76% 
Cumulative returns                 
1-year  5.95%  6.22%  6.48%  6.84%  6.79%  25.25%  5.66%  8.05% 
Since inception  18.08%  16.14%  23.29%  18.18%  24.00%  82.14%  19.85%  27.52% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  16.30  16.06  21.45  12.36  0.71 
Net (%)  1.42  1.17  0.92  0.67  0.72 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

14  Retirement Choices Portfolios | Annual report 

 


John Hancock Retirement Choices at 2010 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Choices at 2010 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for period ended 8-31-14

  Class R11,2  Class R21,2  Class R41,3  Class R61,2  Class 11  Index 1  Index 2  Index 3 
Inception  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10  4-30-10 
Average annual total returns                 
1-year  4.35%  4.62%  4.88%  5.05%  5.00%  25.25%  5.66%  7.14% 
Since inception  3.33%  2.54%  4.39%  3.11%  4.48%  14.82%  4.26%  5.15% 
Cumulative returns                 
1-year  4.35%  4.62%  4.88%  5.05%  5.00%  25.25%  5.66%  7.14% 
Since inception  15.27%  11.51%  20.48%  14.23%  20.96%  82.14%  19.85%  24.35% 

Performance figures assume all distributions have been reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

  Class R1  Class R2  Class R4* Class R6 Class 1 
Gross (%)  16.42  16.18  21.39  15.09  0.73 
Net (%)  1.42  1.17  0.92  0.67  0.72 

* The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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 fluctu-ate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

2 Class R1, Class R2, and Class R6 shares were first offered on 9-4-12. The returns prior to these dates are those of Class 1 shares that have been recalculated to apply the gross fees and expenses of Class R1, Class R2, and Class R6 shares, as applicable.

3 Class R4 shares were first offered on 5-1-12. The returns prior to this date are those of Class 1 shares, which have lower expense than Class R4. Had the returns reflected Class R4 expenses, returns would be lower.

Annual report | Retirement Choices Portfolios  15 

 


Your expenses

As a shareholder of a John Hancock Funds II Retirement Choices Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchases or redemptions, and (2) ongoing costs, including management fees, distribution and service (Rule 12b-1) fees, and other portfolio expenses. In addition to the operating expenses which each portfolio bears directly, the portfolio indirectly bears a pro rata share of the operating expenses of the underlying funds in which each portfolio invests. Because the underlying funds have varied operating expenses and transaction costs and each portfolio may own different proportions of the underlying funds at different times, the amount of expenses incurred indirectly by the portfolio will vary. Had these indirect expenses been reflected in the following analysis, total expenses would have been higher than the amounts shown.

These examples are intended to help you understand your ongoing costs (in dollars) of investing in a portfolio so you can compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 at the beginning of the period and held for the entire period (March 1, 2014 through August 31, 2014).

Actual expenses:

The first line of each share class in the tables on the following pages provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes:

The second line of each share class in the table on the following pages provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed annualized rate of return of 5% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. See the portfolios’ prospectuses for details regarding transaction costs.

16  Retirement Choices Portfolios | Annual report 

 


Shareholder expense example chart

        Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-2014  8-31-2014  3-1-2014–8-31-2014  Expense Ratio2 
Retirement Choices at 2055 Portfolio 3         
Class R1  Actual  $1,000.00  $1,062.00  $4.37  0.98% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.30  4.99  0.98% 
Class R2  Actual  1,000.00  1,064.00  3.26  0.73% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.72  0.73% 
Class R4  Actual  1,000.00  1,065.00  2.15  0.48% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.80  2.45  0.48% 
Class R6  Actual  1,000.00  1,066.00  1.03  0.23% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.80  1.17  0.23% 
Class 1  Actual  1,000.00  1,065.00  1.25  0.28% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.80  1.43  0.28% 
 
Retirement Choices at 2050 Portfolio         
Class R1  Actual  $1,000.00  $1,056.00  $5.13  0.99% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.20  5.04  0.99% 
Class R2  Actual  1,000.00  1,057.70  3.84  0.74% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.77  0.74% 
Class R4  Actual  1,000.00  1,058.40  2.54  0.49% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.70  2.50  0.49% 
Class R6  Actual  1,000.00  1,059.50  1.25  0.24% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.00  1.22  0.24% 
Class 1  Actual  1,000.00  1,059.50  1.51  0.29% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.70  1.48  0.29% 
 
Retirement Choices at 2045 Portfolio         
Class R1  Actual  $1,000.00  $1,056.70  $5.13  0.99% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.20  5.04  0.99% 
Class R2  Actual  1,000.00  1,057.50  3.84  0.74% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.77  0.74% 
Class R4  Actual  1,000.00  1,058.90  2.54  0.49% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.70  2.50  0.49% 
Class R6  Actual  1,000.00  1,060.60  1.25  0.24% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.00  1.22  0.24% 
Class 1  Actual  1,000.00  1,059.80  1.51  0.29% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.70  1.48  0.29% 
 
Retirement Choices at 2040 Portfolio         
Class R1  Actual  $1,000.00  $1,056.10  $5.13  0.99% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.20  5.04  0.99% 
Class R2  Actual  1,000.00  1,056.90  3.84  0.74% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.77  0.74% 
Class R4  Actual  1,000.00  1,058.30  2.54  0.49% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.40  2.50  0.49% 
Class R6  Actual  1,000.00  1,059.30  1.25  0.24% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.00  1.22  0.24% 
Class 1  Actual  1,000.00  1,059.20  1.51  0.29% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.70  1.48  0.29% 

 

Annual report | Retirement Choices Portfolios  17 

 


Shareholder expense example chart, continued

        Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-2014  8-31-2014  3-1-2014–8-31-2014  Expense Ratio2 
Retirement Choices at 2035 Portfolio         
Class R1  Actual  $1,000.00  $1,053.50  $5.12  0.99% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.20  5.04  0.99% 
Class R2  Actual  1,000.00  1,055.10  3.83  0.74% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.50  3.77  0.74% 
Class R4  Actual  1,000.00  1,056.50  2.54  0.49% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.70  2.50  0.49% 
Class R6  Actual  1,000.00  1,057.40  1.24  0.24% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,024.00  1.22  0.24% 
Class 1  Actual  1,000.00  1,057.50  1.50  0.29% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.70  1.48  0.29% 
 
Retirement Choices at 2030 Portfolio         
Class R1  Actual  $1,000.00  $1,049.20  $5.27  1.02% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.10  5.19  1.02% 
Class R2  Actual  1,000.00  1,051.60  3.98  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.30  3.92  0.77% 
Class R4  Actual  1,000.00  1,052.30  2.69  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class R6  Actual  1,000.00  1,053.30  1.40  0.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.80  1.38  0.27% 
Class 1  Actual  1,000.00  1,053.20  1.66  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 
 
Retirement Choices at 2025 Portfolio         
Class R1  Actual  $1,000.00  $1,042.20  $5.56  1.08% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,019.80  5.50  1.08% 
Class R2  Actual  1,000.00  1,043.00  4.27  0.83% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.00  4.23  0.83% 
Class R4  Actual  1,000.00  1,044.60  2.99  0.58% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.96  0.58% 
Class R6  Actual  1,000.00  1,045.50  1.70  0.33% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.68  0.33% 
Class 1  Actual  1,000.00  1,045.50  1.96  0.38% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.30  1.94  0.38% 
 
Retirement Choices at 2020 Portfolio         
Class R1  Actual  $1,000.00  $1,031.70  $5.89  1.15% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,019.40  5.85  1.15% 
Class R2  Actual  1,000.00  1,033.40  4.61  0.90% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.70  4.58  0.90% 
Class R4  Actual  1,000.00  1,034.30  3.33  0.65% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.90  3.31  0.65% 
Class R6  Actual  1,000.00  1,035.20  2.05  0.40% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.20  2.04  0.40% 
Class 1  Actual  1,000.00  1,036.00  2.31  0.45% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.90  2.29  0.45% 

 

18  Retirement Choices Portfolios | Annual report 

 


Shareholder expense example chart, continued

        Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-2014  8-31-2014  3-1-2014–8-31-2014  Expense Ratio2 
Retirement Choices at 2015 Portfolio         
Class R1  Actual  $1,000.00  $1,018.60  $6.36  1.25% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,018.90  6.36  1.25% 
Class R2  Actual  1,000.00  1,020.40  5.09  1.00% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.20  5.09  1.00% 
Class R4  Actual  1,000.00  1,021.30  3.82  0.75% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.40  3.82  0.75% 
Class R6  Actual  1,000.00  1,023.10  2.55  0.50% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.70  2.55  0.50% 
Class 1  Actual  1,000.00  1,023.10  2.80  0.55% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.40  2.80  0.55% 
 
Retirement Choices at 2010 Portfolio         
Class R1  Actual  $1,000.00  $1,013.50  $6.45  1.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,018.80  6.46  1.27% 
Class R2  Actual  1,000.00  1,014.40  5.18  1.02% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.10  5.19  1.02% 
Class R4  Actual  1,000.00  1,016.30  3.91  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.40  3.92  0.77% 
Class R6  Actual  1,000.00  1,016.30  2.64  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class 1  Actual  1,000.00  1,016.30  2.90  0.57% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.91  0.57% 

1 Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (184) and divided by 365 (to reflect the one-half year period).

2 The portfolios’ expense ratios do not include fees and expenses indirectly incurred by the underlying funds and can vary based on the mix of underlying funds held by the portfolios. The range of expense ratios of the underlying funds held by the portfolios was as follows:

  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement 
Period  Choices at  Choices at  Choices at  Choices at  Choices at  Choices at  Choices at  Choices at  Choices at  Choices at 
ended  2055  2050  2045  2040  2035  2030  2025  2020  2015  2010 
8-31-14  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65%  0.08%–0.65% 

3 The inception date for Retirement Choices at 2055 Portfolio is 3-26-14. Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (158) and divided by 365 (to reflect the period).

Annual report | Retirement Choices Portfolios  19 

 


Asset allocation*

Retirement Choices at 2055 Portfolio   
Affiliated Investment Companies  73.4% 
Equity  72.5% 
Fixed Income  0.9% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  26.6% 
Fixed Income  16.7% 
Equity  9.9% 

 

Retirement Choices at 2050 Portfolio   
Affiliated Investment Companies  70.5% 
Equity  69.6% 
Fixed Income  0.9% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  29.5% 
Fixed Income  17.1% 
Equity  12.4% 

 

Retirement Choices at 2045 Portfolio   
Affiliated Investment Companies  70.2% 
Equity  69.5% 
Fixed Income  0.7% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  29.8% 
Fixed Income  17.3% 
Equity  12.5% 

 

Retirement Choices at 2040 Portfolio   
Affiliated Investment Companies  68.9% 
Equity  68.3% 
Fixed Income  0.6% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  31.1% 
Fixed Income  18.4% 
Equity  12.7% 

 

Retirement Choices at 2035 Portfolio   
Affiliated Investment Companies  65.3% 
Equity  64.3% 
Fixed Income  1.0% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  34.7% 
Fixed Income  22.7% 
Equity  12.0% 

 

Retirement Choices at 2030 Portfolio   
Affiliated Investment Companies  58.1% 
Equity  57.1% 
Fixed Income  1.0% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  41.9% 
Fixed Income  31.0% 
Equity  10.9% 

 

Retirement Choices at 2025 Portfolio   
Affiliated Investment Companies  45.2% 
Equity  43.7% 
Fixed Income  1.5% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  54.8% 
Fixed Income  45.6% 
Equity  9.2% 

 

Retirement Choices at 2020 Portfolio   
Affiliated Investment Companies  29.0% 
Equity  27.5% 
Fixed Income  1.5% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  71.0% 
Fixed Income  64.8% 
Equity  6.2% 

 

Retirement Choices at 2015 Portfolio   
Affiliated Investment Companies  12.7% 
Equity  10.6% 
Fixed Income  2.1% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  87.3% 
Fixed Income  83.3% 
Equity  4.0% 

 

Retirement Choices at 2010 Portfolio   
Affiliated Investment Companies  9.5% 
Equity  7.5% 
Fixed Income  2.0% 
Unaffiliated Investment Companies/   
Exchange-Traded Funds  90.5% 
Fixed Income  86.0% 
Equity  4.5% 

*As a percentage of total investments on 8-31-14.

20  Retirement Choices Portfolios | Annual report 

 


Portfolios’ investments

Retirement Choices at 2055 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 72.8%   
EQUITY 71.9%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  418,823  $5,846,774 
 
FIXED INCOME 0.9%     
Short Term Government Income, Class NAV     
(John Hancock1) (A)  7,269  71,159 
 
UNAFFILIATED INVESTMENT COMPANIES — 26.3%   
EXCHANGE-TRADED FUNDS 26.3%     
 
Financial Select Sector SPDR Fund  2,514  58,727 
iShares iBoxx Investment Grade     
Corporate Bond ETF  325  39,189 
PowerShares Senior Loan Portfolio  6,348  156,986 
SPDR Barclays Capital High Yield Bond ETF  10,436  431,737 
Vanguard Dividend Appreciation ETF  4,426  345,759 
Vanguard Energy ETF  368  52,355 
Vanguard FTSE Emerging Markets ETF  1,929  87,577 
Vanguard Health Care ETF  595  69,740 
Vanguard Information Technology ETF  1,139  115,529 
Vanguard Intermediate-Term Corporate Bond ETF  1,938  168,897 
Vanguard Materials ETF  154  17,477 
Vanguard REIT ETF  666  51,402 
Vanguard Total Bond Market ETF  6,630  547,505 
 
Total investments     
(Cost $7,900,725) 99.1%    $8,060,813 
 
Other assets and liabilities, net 0.9%    73,332 
TOTAL NET ASSETS 100.0%    $8,134,145 
 
Percentages are based upon net assets.     
 
 
 
Retirement Choices at 2050 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 70.5%   
EQUITY 69.6%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  18,950,537  $264,549,491 
 
FIXED INCOME 0.9%     
Short Term Government Income, Class NAV     
(John Hancock1) (A)  339,738  3,326,035 
 
UNAFFILIATED INVESTMENT COMPANIES — 29.5%   
EXCHANGE-TRADED FUNDS 29.5%     
 
Financial Select Sector SPDR Fund  118,254  2,762,413 
iShares iBoxx Investment Grade     
Corporate Bond ETF  15,791  1,904,079 
PowerShares Senior Loan Portfolio  306,349  7,576,011 
SPDR Barclays Capital High Yield Bond ETF  504,715  20,880,060 

 

Retirement Choices at 2050 Portfolio 
(continued)     
  Shares  Value 
EXCHANGE-TRADED FUNDS (continued)   
Vanguard Dividend Appreciation ETF  207,133  $16,181,230 
Vanguard Energy ETF  17,326  2,464,970 
Vanguard FTSE Emerging Markets ETF  305,125  13,852,675 
Vanguard Health Care ETF  27,995  3,281,294 
Vanguard Information Technology Index ETF  53,256  5,401,756 
Vanguard Intermediate-Term Corporate Bond ETF  93,873  8,181,032 
Vanguard Materials ETF  7,182  815,085 
Vanguard REIT ETF  31,204  2,408,325 
Vanguard Total Bond Market ETF  321,161  26,521,475 
 
Total investments     
(Cost $323,446,154) 100.0%    $380,105,931 
 
Other assets and liabilities, net 0.0%    21,619 
TOTAL NET ASSETS 100.0%    $380,127,550 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Choices at 2045 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 70.2% 
EQUITY 69.5%     
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  25,500,873  $355,992,189 
 
FIXED INCOME 0.7%     
Short Term Government Income, Class NAV     
(John Hancock1) (A)  343,278  3,360,690 
 
UNAFFILIATED INVESTMENT COMPANIES — 29.8%   
EXCHANGE-TRADED FUNDS 29.8%     
Financial Select Sector SPDR Fund  158,291  3,697,677 
iShares iBoxx Investment Grade     
Corporate Bond ETF  31,931  3,850,240 
PowerShares Senior Loan Portfolio  413,242  10,219,475 
SPDR Barclays Capital High Yield Bond ETF  679,320  28,103,468 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  83,138  2,558,988 
Vanguard Dividend Appreciation ETF  278,622  21,765,951 
Vanguard Energy ETF  23,184  3,298,388 
Vanguard FTSE Emerging Markets ETF  423,700  19,235,980 
Vanguard Health Care ETF  37,472  4,392,093 
Vanguard Information Technology Index ETF  71,985  7,301,439 
Vanguard Intermediate-Term Bond ETF  39,377  3,358,071 
Vanguard Intermediate-Term Corporate Bond ETF  120,462  10,498,263 
Vanguard Materials ETF  9,648  1,094,952 

 

 

See notes to financial statements Annual report | Retirement Choices Portfolios  21 
   

 


Retirement Choices at 2045 Portfolio 
(continued)     
  Shares  Value 
EXCHANGE-TRADED FUNDS (continued)   
Vanguard REIT ETF  41,947  $3,237,469 
Vanguard Total Bond Market ETF  364,728  30,119,238 
 
Total investments     
(Cost $425,473,544) 100.0%    $512,084,571 
 
Other assets and liabilities, net 0.0%    108,495 
TOTAL NET ASSETS 100.0%    $512,193,066 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Choices at 2040 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 68.9% 
EQUITY 68.3%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  33,652,987  $469,795,697 
 
FIXED INCOME 0.6%     
 
Short Term Government Income, Class NAV     
(John Hancock1) (A)  388,386  3,802,300 
 
UNAFFILIATED INVESTMENT COMPANIES — 31.2%   
EXCHANGE-TRADED FUNDS 31.2%     
 
Financial Select Sector SPDR Fund  214,873  5,019,433 
iShares iBoxx Investment Grade     
Corporate Bond ETF  45,602  5,498,689 
PowerShares Senior Loan Portfolio  554,341  13,708,853 
SPDR Barclays Capital High Yield Bond ETF  849,288  35,135,045 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  284,147  8,746,045 
Vanguard Dividend Appreciation ETF  379,044  29,610,917 
Vanguard Energy ETF  31,585  4,493,598 
Vanguard FTSE Emerging Markets ETF  581,191  26,386,071 
Vanguard Health Care ETF  51,050  5,983,571 
Vanguard Information Technology Index ETF  97,013  9,840,029 
Vanguard Intermediate-Term Bond ETF  148,282  12,645,489 
Vanguard Intermediate-Term Corporate Bond ETF  152,528  13,292,815 
Vanguard Materials ETF  13,137  1,490,918 
Vanguard REIT ETF  57,099  4,406,901 
Vanguard Total Bond Market ETF  458,699  37,879,363 
 
Total investments     
(Cost $571,423,174) 100.1%    $687,735,734 
 
Other assets and liabilities, net (0.1%)    (348,597) 
TOTAL NET ASSETS 100.0%    $687,387,137 
 
Percentages are based upon net assets.     

 

Retirement Choices at 2035 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 65.3% 
EQUITY 64.3%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  44,031,134  $614,674,637 
 
FIXED INCOME 1.0%     
 
Short Term Government Income, Class NAV     
(John Hancock1) (A)  964,855  9,445,932 
 
UNAFFILIATED INVESTMENT COMPANIES — 34.7%   
EXCHANGE-TRADED FUNDS 34.7%     
 
Financial Select Sector SPDR Fund  277,030  6,471,420 
iShares iBoxx Investment Grade     
Corporate Bond ETF  75,349  9,085,582 
PowerShares Senior Loan Portfolio  768,036  18,993,530 
SPDR Barclays Capital High Yield Bond ETF  1,073,275  44,401,387 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  898,984  27,670,728 
Vanguard Dividend Appreciation ETF  485,509  37,927,963 
Vanguard Energy ETF  40,571  5,772,036 
Vanguard FTSE Emerging Markets ETF  790,869  35,905,453 
Vanguard Health Care ETF  65,577  7,686,280 
Vanguard Information Technology Index ETF  126,544  12,835,358 
Vanguard Intermediate-Term Bond ETF  260,226  22,192,073 
Vanguard Intermediate-Term Corporate Bond ETF  410,840  35,804,706 
Vanguard Materials ETF  16,877  1,915,371 
Vanguard REIT ETF  73,330  5,659,609 
Vanguard Short-Term Corporate Bond ETF  29,703  2,383,369 
Vanguard Total Bond Market ETF  684,048  56,488,684 
 
Total investments     
(Cost $797,997,624) 100.0%    $955,314,118 
 
Other assets and liabilities, net 0.0%    83,596 
TOTAL NET ASSETS 100.0%    $955,397,714 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Choices at 2030 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 58.1% 
EQUITY 57.2%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  49,022,292  $684,351,198 
 
FIXED INCOME 0.9%     
 
Short Term Government Income, Class NAV     
(John Hancock1) (A)  1,164,714  11,402,552 
 
UNAFFILIATED INVESTMENT COMPANIES — 41.9%   
EXCHANGE-TRADED FUNDS 41.9%     
 
Financial Select Sector SPDR Fund  302,018  7,055,142 
iShares iBoxx Investment Grade     
Corporate Bond ETF  149,028  17,969,796 
PowerShares Senior Loan Portfolio  966,581  23,903,548 
SPDR Barclays Capital High Yield Bond ETF  1,215,369  50,279,816 

 

22  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Retirement Choices at 2030 Portfolio 
(continued)     
  Shares  Value 
EXCHANGE-TRADED FUNDS (continued)   
SPDR Barclays Capital Short Term     
Corporate Bond ETF  917,205  $28,231,570 
Vanguard Dividend Appreciation ETF  596,269  46,580,534 
Vanguard Energy ETF  44,249  6,295,305 
Vanguard FTSE Emerging Markets ETF  880,344  39,967,618 
Vanguard Health Care ETF  71,581  8,390,009 
Vanguard Information Technology Index ETF  136,729  13,868,422 
Vanguard Intermediate-Term Bond ETF  521,420  44,466,698 
Vanguard Intermediate-Term Corporate Bond ETF  638,351  55,632,290 
Vanguard Materials ETF  18,284  2,075,051 
Vanguard REIT ETF  79,463  6,132,954 
Vanguard Short-Term Bond ETF  394,816  31,691,880 
Vanguard Short-Term Corporate Bond ETF  351,225  28,182,294 
Vanguard Total Bond Market ETF  1,101,859  90,991,516 
 
Total investments     
(Cost $1,019,789,086) 100.0%    $1,197,468,193 
 
Other assets and liabilities, net 0.0%    (287,297) 
TOTAL NET ASSETS 100.0%    $1,197,180,896 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Choices at 2025 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 45.2% 
EQUITY 43.7%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A) 40,504,378  $565,441,111 
 
FIXED INCOME 1.5%     
Short Term Government Income, Class NAV     
(John Hancock1) (A)  2,016,333  19,739,900 
 
UNAFFILIATED INVESTMENT COMPANIES — 54.8% 
EXCHANGE-TRADED FUNDS 54.8%       
       
Financial Select Sector SPDR Fund  260,860  6,093,688 
iShares iBoxx Investment Grade     
Corporate Bond ETF  214,758  25,895,520 
PowerShares Senior Loan Portfolio  1,039,629  25,710,025 
SPDR Barclays Capital High Yield Bond ETF  1,167,064  48,281,438 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  1,598,159  49,191,334 
Vanguard Dividend Appreciation ETF  599,850  46,860,282 
Vanguard Energy ETF  38,308  5,450,079 
Vanguard FTSE Emerging Markets ETF  757,628  34,396,311 
Vanguard Health Care ETF  61,908  7,256,237 
Vanguard Information Technology Index ETF  118,043  11,973,101 
Vanguard Intermediate-Term Bond ETF  619,050  52,792,584 
Vanguard Intermediate-Term     
Corporate Bond ETF  1,244,267  108,437,869 
Vanguard Materials ETF  15,942  1,809,258 
Vanguard REIT ETF  69,142  5,336,380 
Vanguard Short-Term Bond ETF  916,755  73,587,924 

 

Retirement Choices at 2025 Portfolio 
(continued)     
  Shares  Value 
EXCHANGE-TRADED FUNDS (continued)   
 
Vanguard Short-Term Corporate Bond ETF  612,686  $49,161,925 
Vanguard Total Bond Market ETF  1,913,665  158,030,456 
 
Total investments     
(Cost $1,134,802,821) 100.0%    $1,295,445,422 
 
Other assets and liabilities, net 0.0%    (115,801) 
TOTAL NET ASSETS 100.0%    $1,295,329,621 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Choices at 2020 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 28.9% 
EQUITY 27.4%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  18,591,934  $259,543,395 
FIXED INCOME 1.5%     
Short Term Government Income, Class NAV     
(John Hancock1) (A)  1,470,628  14,397,447 
UNAFFILIATED INVESTMENT COMPANIES — 71.0% 
EXCHANGE-TRADED FUNDS 71.0%     
 
Financial Select Sector SPDR Fund  109,402  2,555,629 
iShares TIPS Bond ETF  83,184  9,586,956 
iShares iBoxx Investment Grade     
Corporate Bond ETF  206,965  24,955,840 
PowerShares Senior Loan Portfolio  762,062  18,845,793 
SPDR Barclays Capital High Yield Bond ETF  715,349  29,593,988 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  1,969,411  60,618,471 
Vanguard Dividend Appreciation ETF  332,097  25,943,418 
Vanguard Energy ETF  16,063  2,285,283 
Vanguard FTSE Emerging Markets ETF  378,562  17,186,715 
Vanguard Health Care ETF  25,963  3,043,123 
Vanguard Information Technology Index ETF  49,912  5,062,574 
Vanguard Intermediate-Term Bond ETF  674,729  57,540,889 
Vanguard Intermediate-Term Corporate Bond ETF  1,024,531  89,287,877 
Vanguard Materials ETF  6,689  759,135 
Vanguard REIT ETF  28,883  2,229,190 
Vanguard Short-Term Bond ETF  1,011,630  81,203,540 
Vanguard Short-Term Corporate Bond ETF  872,480  70,007,795 
Vanguard Total Bond Market ETF  2,089,936  172,586,915 
 
Total investments     
(Cost $866,083,139) 99.9%    $947,233,973 
 
Other assets and liabilities, net 0.1%    516,616 
TOTAL NET ASSETS 100.0%    $947,750,589 
 
Percentages are based upon net assets.     

 

See notes to financial statements Annual report | Retirement Choices Portfolios  23 
   

 


Retirement Choices at 2015 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 12.6% 
EQUITY 10.5%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  3,327,045  $46,445,549 
 
FIXED INCOME 2.1%     
 
Short Term Government Income, Class NAV     
(John Hancock1) (A)  943,058  9,232,541 
 
UNAFFILIATED INVESTMENT COMPANIES — 87.3%   
EXCHANGE-TRADED FUNDS 87.3%     
 
Financial Select Sector SPDR Fund  37,072  866,000 
iShares TIPS Bond ETF  69,925  8,058,856 
iShares iBoxx Investment Grade     
Corporate Bond ETF  250,438  30,197,814 
iShares MSCI USA Minimum Volatility ETF  115,519  4,407,050 
PowerShares Senior Loan Portfolio  354,323  8,762,408 
SPDR Barclays Capital High Yield Bond ETF  379,599  15,704,011 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  1,785,979  54,972,434 
Vanguard Dividend Appreciation ETF  92,430  7,220,632 
Vanguard Energy ETF  3,879  551,865 
Vanguard FTSE Emerging Markets ETF  62,948  2,857,839 
Vanguard Health Care ETF  4,693  550,067 
Vanguard Information Technology Index ETF  9,134  926,462 
Vanguard Intermediate-Term Bond ETF  216,349  18,450,243 
Vanguard Intermediate-Term Corporate Bond ETF  330,827  28,831,573 
Vanguard Short-Term Bond ETF  777,026  62,371,877 
Vanguard Short-Term Corporate Bond ETF  683,902  54,876,296 
Vanguard Total Bond Market ETF  1,022,863  84,468,027 
 
Total investments     
(Cost $423,084,719) 99.9%    $439,751,544 
 
Other assets and liabilities, net 0.1%    395,136 
TOTAL NET ASSETS 100.0%    $440,146,680 
 
Percentages are based upon net assets.     

 

Retirement Choices at 2010 Portfolio 
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) — 9.5%   
EQUITY 7.5%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  1,449,431  $20,234,059 
 
FIXED INCOME 2.0%     
Short Term Government Income, Class NAV     
(John Hancock1) (A)  551,092  5,395,187 
 
UNAFFILIATED INVESTMENT COMPANIES — 90.7%   
EXCHANGE-TRADED FUNDS 90.7%     
 
Financial Select Sector SPDR Fund  17,362  405,576 
iShares TIPS Bond ETF  58,598  6,753,420 
iShares iBoxx Investment Grade     
Corporate Bond ETF  56,103  6,764,900 
iShares MSCI USA Minimum Volatility ETF  141,993  5,417,033 
PowerShares Senior Loan Portfolio  217,469  5,378,008 
SPDR Barclays Capital High Yield Bond ETF  195,695  8,095,902 
SPDR Barclays Capital Short Term     
Corporate Bond ETF  1,492,291  45,932,716 
Vanguard Dividend Appreciation ETF  60,538  4,729,229 
Vanguard Energy ETF  1,813  257,936 
Vanguard FTSE Emerging Markets ETF  14,781  671,057 
Vanguard Health Care ETF  2,194  257,159 
Vanguard Information Technology Index ETF  4,274  433,512 
Vanguard Intermediate-Term Corporate Bond ETF  93,153  8,118,284 
Vanguard Short-Term Bond ETF  605,675  48,617,532 
Vanguard Short-Term Corporate Bond ETF  572,012  45,898,243 
Vanguard Total Bond Market ETF  687,601  56,782,091 
 
Total investments     
(Cost $262,737,153) 100.2%    $270,141,844 
 
Other assets and liabilities, net (0.2%)    (418,503) 
TOTAL NET ASSETS 100.0%    $269,723,341 
 
Percentages are based upon net assets.     

Footnote Legend:

ETF Exchange Traded Funds

SPDR Standard & Poor’s Depositary Receipts

(A) The subadvisor is an affiliate of the advisor.

(G) The portfolio’s subadvisor is shown parenthetically.

1 Manulife Asset Management (US) LLC is doing business as John Hancock Asset Management.

24  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Financial statements

Statements of assets and liabilities 8-31-14

These Statements of assets and liabilities are the portfolios’ balance sheets. They show the value of what each portfolio owns, is due and owes. You’ll also find the net asset value and the maximum public offering price per share for each portfolio. Net asset value is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Choices at  Choices at  Choices at  Choices at  Choices at 
  2055 Portfolio  2050 Portfolio  2045 Portfolio  2040 Portfolio  2035 Portfolio 
Assets           
Investments in unaffiliated issuers, at value  $2,142,880  $112,230,405  $152,731,692  $214,137,737  $331,193,549 
Investments in affiliated underlying funds, at value  5,917,933  267,875,526  359,352,879  473,597,997  624,120,569 
Total investments, at value  8,060,813  380,105,931  512,084,571  687,735,734  955,314,118 
 
Cash  66,169  309,255  714,995  713,097  319,463 
Receivable for investments sold  83,938  —  —  142,403  232,635 
Receivable for fund shares sold  267,223  379,601  247,642  —  119,992 
Dividends and interest receivable  —  3,285  7,124  9,332  13,026 
Receivable due from advisor  2,677  482  —  859  603 
Other assets  67,623  36,229  36,647  37,243  38,139 
Total assets  8,548,443  380,834,783  513,090,979  688,638,668  956,037,976 
 
Liabilities           
Payable for investments purchased  272,147  634,699  817,294  809,171  551,187 
Payable for fund shares repurchased  —  —  —  360,866  — 
Payable to affiliates           
Accounting and legal services fees  144  7,778  10,480  14,122  19,649 
Transfer agent fees  13  15  15  31  18 
Trustees’ fees  5  36  54  73  104 
Investment management fees  —  —  5,077  —  — 
Distribution and service fees  —  —  7  147  4 
Other liabilities and accrued expenses  141,989  64,705  64,986  67,121  69,300 
Total liabilities  414,298  707,233  897,913  1,251,531  640,262 
 
Net assets  $8,134,145  $380,127,550  $512,193,066  $687,387,137  $955,397,714 
 
Net assets consist of           
Paid-in capital  $7,971,157  $321,074,749  $422,920,113  $566,916,607  $791,055,044 
Undistributed net investment income  2,948  992,086  1,378,095  1,887,589  3,061,039 
Accumulated undistributed net realized gain (loss)           
on investments  (48)  1,400,938  1,283,831  2,270,381  3,965,137 
Net unrealized appreciation on investments  160,088  56,659,777  86,611,027  116,312,560  157,316,494 
Net assets  $8,134,145  $380,127,550  $512,193,066  $687,387,137  $955,397,714 
Investments in unaffiliated issuers, at cost  $2,110,472  $104,298,194  $141,015,777  $198,500,632  $310,665,764 
Investments in affiliated underlying funds, at cost  $5,790,253  $219,147,960  $284,457,767  $372,922,542  $487,331,860 
 
Net asset value per share           
The portfolios have an unlimited number of shares           
authorized with no par value. Net asset value is calculated           
by dividing the net assets of each class of shares by the           
number of outstanding shares in the class.           
Class R1: Net assets  $106,246  $140,206  $128,117  $125,474  $124,156 
Shares outstanding  10,000  11,094  9,043  8,889  8,881 
Net asset value, offering and redemption price per share  $10.62  $12.64  $14.17  $14.12  $13.98 
Class R2: Net assets  $106,361  $130,955  $180,302  $602,067  $148,956 
Shares outstanding  10,000  10,360  12,724  42,649  10,653 
Net asset value, offering and redemption price per share  $10.64  $12.64  $14.17  $14.12  $13.98 
Class R4: Net assets  $106,476  $126,794  $126,560  $126,200  $124,916 
Shares outstanding  10,000  10,000  8,905  8,905  8,905 
Net asset value, offering and redemption price per share  $10.65  $12.68  $14.21  $14.17  $14.03 
Class R6: Net assets  $106,591  $135,543  $127,934  $239,106  $242,091 
Shares outstanding  10,000  10,719  9,025  16,932  17,306 
Net asset value, offering and redemption price per share  $10.66  $12.65  $14.18  $14.12  $13.99 
Class 1: Net assets  $7,708,471  $379,594,052  $511,630,153  $686,294,290  $954,757,595 
Shares outstanding  723,577  30,024,478  36,104,288  48,575,156  68,288,351 
Net asset value, offering and redemption price per share  $10.65  $12.64  $14.17  $14.13  $13.98 

 

See notes to financial statements  Annual report | Retirement Choices Portfolios  25 
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of assets and liabilities 8-31-14

Continued 

         
  Retirement  Retirement  Retirement  Retirement  Retirement 
  Choices at  Choices at  Choices at  Choices at  Choices at 
  2030 Portfolio  2025 Portfolio  2020 Portfolio  2015 Portfolio  2010 Portfolio 
Assets           
Investments in unaffiliated issuers, at value  $501,714,443  $710,264,411  $673,293,131  $384,073,454  $244,512,598 
Investments in affiliated underlying funds, at value  695,753,750  585,181,011  273,940,842  55,678,090  25,629,246 
Total investments, at value  1,197,468,193  1,295,445,422  947,233,973  439,751,544  270,141,844 
 
Cash  1,522,244  —  666,718  —  — 
Receivable for investments sold  23  601,689  151,766  2,305,285  195,641 
Receivable for fund shares sold  —  —  566,343  538,750  — 
Dividends and interest receivable  14,759  15,039  8,817  3,018  957 
Receivable due from advisor  587  643  605  —  2,255 
Other assets  38,973  39,207  38,107  36,374  35,811 
Total assets  1,199,044,779  1,296,102,000  948,666,329  442,634,971  270,376,508 
 
Liabilities           
Due to custodian  —  419,730  —  2,305,567  88,595 
Payable for investments purchased  1,520,341  77  829,495  107,005  87,773 
Payable for fund shares repurchased  246,515  253,668  —  —  410,401 
Payable to affiliates           
Accounting and legal services fees  24,590  26,593  19,553  9,153  5,611 
Transfer agent fees  28  28  27  15  18 
Trustees’ fees  131  147  117  61  36 
Investment management fees  —  —  —  5,644  — 
Distribution and service fees  138  —  63  1  61 
Other liabilities and accrued expenses  72,140  72,136  66,485  60,845  60,672 
Total liabilities  1,863,883  772,379  915,740  2,488,291  653,167 
 
Net assets  $1,197,180,896  $1,295,329,621  $947,750,589  $440,146,680  $269,723,341 
 
Net assets consist of           
Paid-in capital  $1,010,462,354  $1,124,079,058  $856,033,368  $419,223,759  $261,446,380 
Undistributed net investment income  4,562,728  6,551,355  6,299,000  3,479,904  1,812,224 
Accumulated undistributed net realized gain (loss)           
on investments  4,476,707  4,056,607  4,267,387  776,192  (939,954) 
Net unrealized appreciation on investments  177,679,107  160,642,601  81,150,834  16,666,825  7,404,691 
Net assets  $1,197,180,896  $1,295,329,621  $947,750,589  $440,146,680  $269,723,341 
Investments in unaffiliated issuers, at cost  $478,261,578  $686,273,247  $660,844,895  $380,660,875  $242,252,257 
Investments in affiliated underlying funds, at cost  $541,527,508  $448,529,574  $205,238,244  $42,423,844  $20,484,896 
 
Net asset value per share           
The portfolios have an unlimited number of shares           
authorized with no par value. Net asset value is calculated           
by dividing the net assets of each class of shares by the           
number of outstanding shares in the class.           
Class R1: Net assets  $121,130  $116,553  $110,000  $104,804  $101,171 
Shares outstanding  8,881  8,904  8,898  9,111  9,004 
Net asset value, offering and redemption price per share  $13.64  $13.09  $12.36  $11.50  $11.24 
Class R2: Net assets  $433,598  $115,951  $269,537  $102,155  $254,045 
Shares outstanding  31,777  8,857  21,797  8,881  22,604 
Net asset value, offering and redemption price per share  $13.65  $13.09  $12.37  $11.50  $11.24 
Class R4: Net assets  $122,092  $117,360  $111,202  $104,305  $102,441 
Shares outstanding  8,921  8,945  8,985  9,066.2  9,124 
Net asset value, offering and redemption price per share  $13.69  $13.12  $12.38  $11.50  $11.23 
Class R6: Net assets  $298,995  $597,612  $421,317  $203,697  $159,477 
Shares outstanding  21,916  45,641  34,076  17,701  14,196 
Net asset value, offering and redemption price per share  $13.64  $13.09  $12.36  $11.51  $11.23 
Class 1: Net assets  $1,196,205,081  $1,294,382,145  $946,838,533  $439,631,719  $269,106,207 
Shares outstanding  87,660,534  98,874,363  76,624,188  38,211,356  23,958,154 
Net asset value, offering and redemption price per share  $13.65  $13.09  $12.36  $11.51  $11.23 

 

26  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of operations For the period ended 8-31-14

These Statements of operations summarize the portfolios’ investment income earned and expenses directly incurred in operating each portfolio. They also show net gains (losses) for the period stated.

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Choices at  Choices at  Choices at  Choices at  Choices at 
  2055 Portfolio1  2050 Portfolio  2045 Portfolio  2040 Portfolio  2035 Portfolio 
Investment income           
Dividends  $6,311  $2,789,470  $3,995,363  $5,446,340  $8,199,848 
Income distributions received from affiliated           
underlying funds  60  2,880,820  4,196,366  5,611,680  7,558,200 
Total investment income  6,371  5,670,290  8,191,729  11,058,020  15,758,048 
 
Expenses           
Investment management fees  2,012  582,203  829,276  1,147,790  1,742,039 
Distribution and service fees  924  153,506  215,937  292,070  410,340 
Transfer agent fees  34  97  97  146  118 
Accounting and legal services fees  175  37,363  52,699  71,254  100,350 
State registration fees  29,115  59,298  59,298  59,298  59,298 
Professional fees  44,137  55,329  56,847  58,884  61,869 
Printing and postage  594  1,480  1,392  1,739  1,447 
Custodian fees  4,542  12,227  12,227  12,227  12,227 
Trustees’ fees  8  3,881  5,600  7,615  10,769 
Registration and filing fees  23,088  27,831  27,781  28,772  31,994 
Expense recapture  —  19,528  56,235  82,986  29,509 
Other  4,103  6,425  7,057  7,766  9,550 
 
Total expenses before reductions  108,732  959,168  1,324,446  1,770,547  2,469,510 
 
Net expense reductions  (105,007)  (70,200)  (63,547)  (63,788)  (63,624) 
Total expenses  3,725  888,968  1,260,899  1,706,759  2,405,886 
 
Net investment income  2,646  4,781,322  6,930,830  9,351,261  13,352,162 
Realized and unrealized gain (loss)           
Net realized gain (loss) on           
Investments in unaffiliated issuers  (421)  (1,077,466)  (1,454,879)  (1,535,357)  (1,407,967) 
Investments in affiliated underlying funds  370  517,948  (29,228)  (26,434)  39,619 
Capital gain distributions received from           
unaffiliated issuers  3  57,508  101,328  187,110  422,273 
Capital gain distributions received from affiliated           
underlying funds  —  2,922,303  4,270,281  5,718,115  7,650,830 
  (48)  2,420,293  2,887,502  4,343,434  6,704,755 
Change in net unrealized appreciation of           
 
Investments in unaffiliated issuers  32,408  9,775,163  13,887,829  18,400,188  25,140,805 
Investments in affiliated underlying funds  127,680  32,542,608  47,003,986  62,684,988  83,937,629 
  160,088  42,317,771  60,891,815  81,085,176  109,078,434 
Net realized and unrealized gain  160,040  44,738,064  63,779,317  85,428,610  115,783,189 
 
Increase in net assets from operations  $162,686  $49,519,386  $70,710,147  $94,779,871  $129,135,351 
 
1 Period from 3-26-14 (commencement of operations) to 8-31-14.         

 

  Annual report | Retirement Choices Portfolios  27 
See notes to financial statements     

 


F I N A N C I A L  S T A T E M E N T S

Statements of operations For the period ended 8-31-14

Continued

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Choices at  Choices at  Choices at  Choices at  Choices at 
  2030 Portfolio  2025 Portfolio  2020 Portfolio  2015 Portfolio  2010 Portfolio 
Investment income           
Dividends  $11,767,714  $15,978,210  $14,935,550  $8,475,146  $4,563,212 
Income distributions received from affiliated           
underlying funds  8,438,064  7,314,216  3,644,858  820,637  359,057 
Total investment income  20,205,778  23,292,426  18,580,408  9,295,783  4,922,269 
 
Expenses           
Investment management fees  2,518,717  3,416,077  3,245,387  1,931,804  1,194,448 
Distribution and service fees  515,326  566,043  434,351  216,450  129,661 
Transfer agent fees  152  187  159  105  103 
Accounting and legal services fees  126,013  138,626  106,135  52,844  31,500 
State registration fees  59,262  59,298  59,298  59,298  59,298 
Professional fees  64,602  65,882  62,522  59,561  54,809 
Printing and postage  1,534  1,678  1,573  1,473  1,502 
Custodian fees  12,227  12,227  12,227  12,227  12,227 
Trustees’ fees  13,492  14,979  11,549  5,850  3,512 
Registration and filing fees  32,249  32,959  29,857  27,828  25,261 
Expense recapture  3,352  3,345  3,347  59,102  7,872 
Other  10,846  11,758  11,195  11,826  10,714 
 
Total expenses before reductions  3,357,772  4,323,059  3,977,600  2,438,368  1,530,907 
 
Net expense reductions  (63,674)  (63,953)  (63,813)  (69,282)  (73,255) 
Total expenses  3,294,098  4,259,106  3,913,787  2,369,086  1,457,652 
 
Net investment income  16,911,680  19,033,320  14,666,621  6,926,697  3,464,617 
 
Realized and unrealized gain (loss)           
Net realized gain (loss) on           
Investments in unaffiliated issuers  (1,938,080)  (3,464,340)  (2,494,855)  (986,535)  (819,206) 
Investments in affiliated underlying funds  68,595  1,501,435  3,473,911  1,655,681  97,497 
Capital gain distributions received from           
unaffiliated issuers  807,027  1,396,853  1,482,692  793,862  403,172 
Capital gain distributions received from affiliated           
underlying funds  8,530,283  7,276,300  3,563,094  717,948  298,636 
  7,467,825  6,710,248  6,024,842  2,180,956  (19,901) 
Change in net unrealized appreciation of           
Investments in unaffiliated issuers  31,395,082  36,673,590  26,907,238  11,960,907  5,916,487 
Investments in affiliated underlying funds  93,971,225  79,664,429  37,372,920  6,747,385  3,101,345 
  125,366,307  116,338,019  64,280,158  18,708,292  9,017,832 
Net realized and unrealized gain  132,834,132  123,048,267  70,305,000  20,889,248  8,997,931 
 
Increase in net assets from operations  $149,745,812  $142,081,587  $84,971,621  $27,815,945  $12,462,548 

 

28  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the portfolios’ net assets have changed during the last two periods. They reflect income less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of portfolio share transactions.

  Retirement Choices at  Retirement Choices at  Retirement Choices at 
  2055 Portfolio    2050 Portfolio    2045 Portfolio 
  Period ended  Year ended  Year ended  Year ended  Year ended 
  8-31-141  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets           
From operations           
 
Net investment income  $2,646  $4,781,322  $2,358,148  $6,930,830  $3,989,571 
Net realized gain (loss)  (48)  2,420,293  (191,479)  2,887,502  (385,844) 
Change in net unrealized appreciation  160,088  42,317,771  12,484,776  60,891,815  22,217,354 
Increase in net assets resulting           
from operations  162,686  49,519,386  14,651,445  70,710,147  25,821,081 
 
Distributions to shareholders           
From net investment income           
Class R1  —  (1,182)  (700)  (1,203)  (718) 
Class R2  —  (1,458)  (949)  (1,489)  (966) 
Class R4  —  (1,739)  (1,201)  (1,758)  (1,216) 
Class R6  —  (2,009)  (1,446)  (2,030)  (1,462) 
Class 1  —  (4,554,669)  (1,734,187)  (6,728,756)  (3,084,330) 
From net realized gain           
Class R1  —  (337)  (1,683)  (338)  (1,831) 
Class R2  —  (337)  (1,683)  (340)  (1,831) 
Class R4  —  (338)  (1,688)  (338)  (1,835) 
Class R6  —  (337)  (1,683)  (338)  (1,831) 
Class 1  —  (786,185)  (2,089,964)  (1,150,127)  (3,998,954) 
 
Total distributions  —  (5,348,591)  (3,835,184)  (7,886,717)  (7,094,974) 
 
From portfolio share transactions  7,971,459  118,742,680  119,763,765  116,841,766  144,934,882 
 
Total increase  8,134,145  162,913,475  130,580,026  179,665,196  163,660,989 
 
Net assets           
Beginning of period  —  217,214,075  86,634,049  332,527,870  168,866,881 
 
End of period  $8,134,145  $380,127,550  $217,214,075  $512,193,066  $332,527,870 
Undistributed net investment           
income  $2,948  $992,086  $771,618  $1,378,095  $1,182,253 

1 Period from 3-26-14 (commencement of operations) to 8-31-14.

See notes to financial statements  Annual report | Retirement Choices Portfolios  29 
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

Continued

  Retirement Choices at  Retirement Choices at  Retirement Choices at 
    2040 Portfolio    2035 Portfolio    2030 Portfolio 
  Year ended  Year ended  Year ended  Year ended  Year ended  Year ended 
  8-31-14  8-31-13  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets             
From operations             
 
Net investment income  $9,351,261  $5,371,452  $13,352,162  $7,937,631  $16,911,680  $10,310,807 
Net realized gain (loss)  4,343,434  (440,886)  6,704,755  (485,341)  7,467,825  (328,282) 
Change in net unrealized appreciation  81,085,176  30,238,806  109,078,434  41,366,419  125,366,307  43,803,104 
Increase in net assets resulting             
from operations  94,779,871  35,169,372  129,135,351  48,818,709  149,745,812  53,785,629 
 
Distributions to shareholders             
 
From net investment income             
Class R1  (1,173)  (690)  (1,152)  (680)  (1,131)  (669) 
Class R2  (1,455)  (938)  (1,468)  (928)  (1,462)  (917) 
Class R4  (1,727)  (1,189)  (1,704)  (1,180)  (1,679)  (1,171) 
Class R6  (3,771)  (1,435)  (3,695)  (1,425)  (5,326)  (1,414) 
Class 1  (9,027,521)  (4,171,623)  (12,729,688)  (6,144,114)  (16,026,370)  (7,735,788) 
From net realized gain             
Class R1  (332)  (2,039)  (315)  (1,949)  (283)  (1,896) 
Class R2  (334)  (2,039)  (325)  (1,949)  (295)  (1,896) 
Class R4  (332)  (2,043)  (316)  (1,954)  (284)  (1,904) 
Class R6  (626)  (2,039)  (591)  (1,949)  (776)  (1,895) 
Class 1  (1,541,475)  (6,140,596)  (2,093,908)  (8,702,838)  (2,400,300)  (10,743,002) 
 
Total distributions  (10,578,746)  (10,324,631)  (14,833,162)  (14,858,966)  (18,437,906)  (18,490,552) 
 
From portfolio share transactions  149,052,899  202,277,268  191,287,803  271,097,877  245,033,235  352,865,149 
 
Total increase  233,254,024  227,122,009  305,589,992  305,057,620  376,341,141  388,160,226 
 
Net assets             
Beginning of period  454,133,113  227,011,104  649,807,722  344,750,102  820,839,755  432,679,529 
 
End of period  $687,387,137  $454,133,113  $955,397,714  $649,807,722  $1,197,180,896  $820,839,755 
Undistributed net investment             
income  $1,887,589  $1,571,442  $3,061,039  $2,445,560  $4,562,728  $3,686,190 

 

30  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

Continued

  Retirement Choices at  Retirement Choices at 
    2025 Portfolio    2020 Portfolio 
  Year ended  Year ended  Year ended  Year ended 
  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets         
From operations         
 
Net investment income  $19,033,320  $12,348,883  $14,666,621  $10,464,820 
Net realized gain  6,710,248  154,122  6,024,842  1,294,728 
Change in net unrealized appreciation  116,338,019  33,896,163  64,280,158  9,218,738 
Increase in net assets resulting         
from operations  142,081,587  46,399,168  84,971,621  20,978,286 
 
Distributions to shareholders         
 
From net investment income         
Class R1  (1,087)  (638)  (993)  (605) 
Class R2  (1,337)  (886)  (1,237)  (853) 
Class R4  (1,617)  (1,145)  (1,516)  (1,118) 
Class R6  (9,800)  (1,381)  (6,567)  (1,348) 
Class 1  (17,739,788)  (8,925,728)  (13,481,065)  (7,608,926) 
From net realized gain         
Class R1  (247)  (1,947)  (330)  (1,660) 
Class R2  (244)  (1,947)  (325)  (1,659) 
Class R4  (247)  (1,966)  (331)  (1,684) 
Class R6  (1,280)  (1,947)  (1,222)  (1,659) 
Class 1  (2,385,815)  (13,043,468)  (2,585,949)  (9,718,772) 
 
Total distributions  (20,141,462)  (21,981,053)  (16,079,535)  (17,338,284) 
 
From portfolio share transactions  236,010,811  393,415,728  121,301,053  305,652,456 
 
Total increase  357,950,936  417,833,843  190,193,139  309,292,458 
 
Net assets         
Beginning of period  937,378,685  519,544,842  757,557,450  448,264,992 
 
End of period  $1,295,329,621  $937,378,685  $947,750,589  $757,557,450 
 
Undistributed net investment         
income  $6,551,355  $5,270,638  $6,299,000  $5,123,199 

 

See notes to financial statements  Annual report | Retirement Choices Portfolios  31 
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

Continued

  Retirement Choices at  Retirement Choices at 
    2015 Portfolio    2010 Portfolio 
  Year ended  Year ended  Year ended  Year ended 
  8-31-14  8-31-13  8-31-14  8-31-13 
Increase (decrease) in net assets         
From operations         
 
Net investment income  $6,926,697  $5,910,603  $3,464,617  $3,265,534 
Net realized gain (loss)  2,180,956  378,614  (19,901)  (356,037) 
Change in net unrealized (depreciation)  18,708,292  (6,144,524)  9,017,832  (3,918,587) 
appreciation         
Increase (decrease) in net assets         
resulting from operations  27,815,945  144,693  12,462,548  (1,009,090) 
 
Distributions to shareholders         
 
From net investment income         
Class R1  (854)  (608)  (611)  (552) 
Class R2  (1,090)  (855)  (856)  (799) 
Class R4  (1,365)  (1,126)  (1,126)  (1,070) 
Class R6  (3,381)  (1,351)  (2,134)  (1,294) 
Class 1  (6,687,837)  (4,688,032)  (3,375,746)  (2,972,181) 
From net realized gain         
Class R1  (310)  (1,605)  (108)  (1,664) 
Class R2  (306)  (1,605)  (108)  (1,664) 
Class R4  (313)  (1,639)  (110)  (1,702) 
Class R6  (653)  (1,604)  (170)  (1,664) 
Class 1  (1,333,468)  (5,783,474)  (279,281)  (3,976,905) 
 
Total distributions  (8,029,577)  (10,481,899)  (3,660,250)  (6,959,495) 
 
From portfolio share transactions  15,502,625  122,227,472  24,851,459  46,580,412 
 
Total increase  35,288,993  111,890,266  33,653,757  38,611,827 
 
Net assets         
Beginning of period  404,857,687  292,967,421  236,069,584  197,457,757 
End of period  $440,146,680  $404,857,687  $269,723,341  $236,069,584 
 
Undistributed net investment         
income  $3,479,904  $3,247,510  $1,812,224  $1,729,724 

 

32  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

These Financial highlights show how each portfolio’s net asset value for a share has changed since the end of the previous period.

Retirement Choices at 2055 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-20145  10.00  (0.01)  0.63  0.62  —  —  —  —  10.62  6.206  23.597  0.987  (0.22)  —8  12 
CLASS R2                               
08-31-20145  10.00  —9  0.64  0.64  —  —  —  —  10.64  6.406  23.337  0.737  0.03  —8  12 
CLASS R4                               
08-31-20145  10.00  0.01  0.64  0.65  —  —  —  —  10.65  6.506  23.327  0.487  0.28  —8  12 
CLASS R6                               
08-31-20145  10.00  0.02  0.64  0.66  —  —  —  —  10.66  6.606  24.807  0.237  0.53  —8  12 
CLASS 1                               
08-31-20145  10.00  0.01  0.64  0.65  —  —  —  —  10.65  6.506  6.967  0.287  0.25  8  12 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 3-26-14 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.
8 Less than $500,000.
9 Less than $0.005 per share.

See notes to financial statements Annual report | Retirement Choices Portfolios  33 
   

 


Financial highlights

Continued

Retirement Choices at 2050 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  10.85  0.12  1.82  1.94  (0.12)  (0.03)  —  (0.15)  12.64  18.00  14.26  0.99  0.99  —5  9 
08-31-20136  10.03  0.11  0.95  1.06  (0.07)  (0.17)  —  (0.24)  10.85  10.737  14.758  1.008  1.018  —5  39 
CLASS R2                               
08-31-2014  10.85  0.15  1.82  1.97  (0.15)  (0.03)  —  (0.18)  12.64  18.27  14.02  0.74  1.24  —5  9 
08-31-20136  10.03  0.13  0.96  1.09  (0.10)  (0.17)  —  (0.27)  10.85  11.007  14.508  0.758  1.268  —5  39 
CLASS R4                               
08-31-2014  10.88  0.18  1.83  2.01  (0.18)  (0.03)  —  (0.21)  12.68  18.59  13.71  0.49  1.50  —5  9 
08-31-2013  10.06  0.16  0.95  1.11  (0.12)  (0.17)  —  (0.29)  10.88  11.24  19.82  0.50  1.49  —5  3 
08-31-201210  10.00  0.01  0.05  0.06  —  —  —  —  10.06  0.607  21.468  0.488  0.238  —5  13211 
CLASS R6                               
08-31-2014  10.85  0.21  1.82  2.03  (0.21)  (0.03)  —  (0.24)  12.64  18.83  13.65  0.24  1.72  —5  9 
08-31-20136  10.03  0.19  0.94  1.13  (0.14)  (0.17)  —  (0.31)  10.85  11.557  14.378  0.258  1.768  —5  39 
CLASS 1                               
08-31-2014  10.85  0.19  1.83  2.02  (0.20)  (0.03)  —  (0.23)  12.64  18.77  0.29  0.29  1.57  380  9 
08-31-2013  10.03  0.16  0.97  1.13  (0.14)  (0.17)  —  (0.31)  10.85  11.49  0.33  0.30  1.48  217  3 
08-31-2012  9.14  0.11  0.91  1.02  (0.13)  —  —  (0.13)  10.03  11.30  0.38  0.23  1.14  87  132 
08-31-201112  10.00  —13  (0.86)  (0.86)  —  —  —  —  9.14  (8.60)7  4.348  0.168  (0.08)8  11  —14 
                             

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, and 0.48%–0.56% for the years ended
8-31-14, 8-31-13, 8-31-12, and 8-31-11, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Period from 4-29-11 (commencement of operations) to 8-31-11.
13 Less than $0.005 per share.
14 Less than 1%.

34  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

Continued

Retirement Choices at 2045 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  12.16  0.13  2.05  2.18  (0.13)  (0.04)  —  (0.17)  14.17  18.05  14.27  0.99  0.99  —5  9 
08-31-20136  11.25  0.12  1.08  1.20  (0.08)  (0.21)  —  (0.29)  12.16  10.827  14.748  1.008  1.008  —5  39 
CLASS R2                               
08-31-2014  12.16  0.16  2.05  2.21  (0.16)  (0.04)  —  (0.20)  14.17  18.33  13.66  0.74  1.20  —5  9 
08-31-20136  11.25  0.15  1.08  1.23  (0.11)  (0.21)  —  (0.32)  12.16  11.097  14.518  0.758  1.258  —5  39 
CLASS R4                               
08-31-2014  12.20  0.20  2.05  2.25  (0.20)  (0.04)  —  (0.24)  14.21  18.54  13.73  0.49  1.51  —5  9 
08-31-2013  11.28  0.18  1.09  1.27  (0.14)  (0.21)  —  (0.35)  12.20  11.43  19.8310  0.50  1.48  —5  3 
08-31-201211  11.23  0.01  0.04  0.05  —  —  —  —  11.28  0.457  21.418  0.498  0.218  —5  12412 
CLASS R6                               
08-31-2014  12.16  0.23  2.06  2.29  (0.23)  (0.04)  —  (0.27)  14.18  18.97  13.83  0.24  1.74  —5  9 
08-31-20136  11.25  0.21  1.07  1.28  (0.16)  (0.21)  —  (0.37)  12.16  11.647  14.358  0.258  1.748  —5  39 
CLASS 1                               
08-31-2014  12.16  0.22  2.05  2.27  (0.22)  (0.04)  —  (0.26)  14.17  18.83  0.29  0.29  1.61  512  9 
08-31-2013  11.25  0.18  1.10  1.28  (0.16)  (0.21)  —  (0.37)  12.16  11.59  0.31  0.30  1.51  332  3 
08-31-2012  10.28  0.14  0.99  1.13  (0.16)  —13  —  (0.16)  11.25  11.16  0.26  0.23  1.30  169  124 
08-31-2011  9.12  0.06  1.26  1.32  (0.15)  (0.01)  —  (0.16)  10.28  14.45  0.55  0.16  0.54  44  5 
08-31-201014  10.00  0.01  (0.89)  (0.88)  —  —  —  —  9.12  (8.80)7  336.548  0.168  0.398  —5  —15 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
11 The inception date for Class R4 shares is 5-1-12.
12 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
13 Less than $0.005 per share.
14 Period from 4-30-10 (commencement of operations) to 8-31-10.
15 Less than 1%.

See notes to financial statements Annual report | Retirement Choices Portfolios  35 
   

 


Financial highlights

Continued

Retirement Choices at 2040 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period   come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  12.13  0.13  2.03  2.16  (0.13)  (0.04)  —  (0.17)  14.12  17.90  14.33  0.99  0.99  —5  9 
08-31-20136  11.25  0.11  1.08  1.19  (0.08)  (0.23)  —  (0.31)  12.13  10.757  14.768  1.008  0.978  —5  39 
CLASS R2                               
08-31-2014  12.13  0.08  2.11  2.19  (0.16)  (0.04)  —  (0.20)  14.12  18.17  6.48  0.74  0.57  1  9 
08-31-20136  11.25  0.14  1.07  1.21  (0.10)  (0.23)  —  (0.33)  12.13  11.027  14.518  0.758  1.228  —5  39 
CLASS R4                               
08-31-2014  12.18  0.20  2.02  2.22  (0.19)  (0.04)  —  (0.23)  14.17  18.37  13.76  0.49  1.50  —5  9 
08-31-2013  11.29  0.17  1.08  1.25  (0.13)  (0.23)  —  (0.36)  12.18  11.34  19.65  0.50  1.45  —5  3 
08-31-201210  11.23  0.01  0.05  0.06  —  —  —  —  11.29  0.537  21.378  0.498  0.208  —5  12411 
CLASS R6                               
08-31-2014  12.13  0.23  2.02  2.25  (0.22)  (0.04)  —  (0.26)  14.12  18.72  7.57  0.24  1.73  —5  9 
08-31-20136  11.25  0.19  1.08  1.27  (0.16)  (0.23)  —  (0.39)  12.13  11.567  13.368  0.258  1.648  —5  39 
CLASS 1                               
08-31-2014  12.14  0.21  2.04  2.25  (0.22)  (0.04)  —  (0.26)  14.13  18.65  0.29  0.29  1.61  686  9 
08-31-2013  11.25  0.18  1.10  1.28  (0.16)  (0.23)  —  (0.39)  12.14  11.60  0.30  0.30  1.49  454  3 
08-31-2012  10.28  0.14  0.98  1.12  (0.15)  —12  —  (0.15)  11.25  11.09  0.25  0.23  1.28  227  124 
08-31-2011  9.12  0.06  1.26  1.32  (0.15)  (0.01)  —  (0.16)  10.28  14.49  0.54  0.16  0.55  50  12 
08-31-201013  10.00  0.01  (0.89)  (0.88)  —  —  —  —  9.12  (8.80)7  336.548  0.168  0.398  —5  —14 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Less than $0.005 per share.
13 Period from 4-30-10 (commencement of operations) to 8-31-10.
14 Less than 1%.

36  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

Continued

Retirement Choices at 2035 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  12.09  0.13  1.93  2.06  (0.13)  (0.04)  —  (0.17)  13.98  17.09  14.45  0.99  0.99  —8  9 
08-31-20135  11.26  0.11  1.02  1.13  (0.08)  (0.22)  —  (0.30)  12.09  10.186  14.797  1.027  0.977  —8  59 
CLASS R2                               
08-31-2014  12.09  0.16  1.93  2.09  (0.16)  (0.04)  —  (0.20)  13.98  17.36  13.50  0.74  1.21  —8  9 
08-31-20135  11.26  0.14  1.02  1.16  (0.11)  (0.22)  —  (0.33)  12.09  10.456  14.557  0.777  1.227  —8  59 
CLASS R4                               
08-31-2014  12.13  0.20  1.93  2.13  (0.19)  (0.04)  —  (0.23)  14.03  17.66  13.87  0.49  1.50  —8  9 
08-31-2013  11.29  0.17  1.02  1.19  (0.13)  (0.22)  —  (0.35)  12.13  10.78  19.89  0.52  1.45  —8  5 
08-31-201210  11.23  0.01  0.05  0.06  —  —  —  —  11.29  0.536  21.347  0.497  0.257  —8  12811 
CLASS R6                               
08-31-2014  12.09  0.23  1.93  2.16  (0.22)  (0.04)  —  (0.26)  13.99  18.00  7.52  0.24  1.73  —8  9 
08-31-20135  11.26  0.19  1.02  1.21  (0.16)  (0.22)  —  (0.38)  12.09  10.996  13.427  0.277  1.657  —8  59 
CLASS 1                               
08-31-2014  12.09  0.22  1.92  2.14  (0.21)  (0.04)  —  (0.25)  13.98  17.86  0.29  0.29  1.63  955  9 
08-31-2013  11.26  0.18  1.03  1.21  (0.16)  (0.22)  —  (0.38)  12.09  10.94  0.3215  0.32  1.51  649  5 
08-31-2012  10.30  0.14  0.98  1.12  (0.16)  —12  —  (0.16)  11.26  10.98  0.24  0.23  1.28  345  128 
08-31-2011  9.15  0.07  1.24  1.31  (0.14)  (0.02)  —  (0.16)  10.30  14.25  0.40  0.16  0.72  75  13 
08-31-201013  10.00  0.01  (0.86)  (0.85)  —  —  —  —  9.15  (8.50)6  335.747  0.167  0.467  —8  —14 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
6 Not annualized.
7 Annualized.
8 Less than $500,000.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Less than $0.005 per share.
13 Period from 4-30-10 (commencement of operations) to 8-31-10.
14 Less than 1%.
15 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.

See notes to financial statements  Annual report | Retirement Choices Portfolios  37 
   

 


Financial highlights

Continued

Retirement Choices at 2030 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period   come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  11.94  0.13  1.73  1.86  (0.13)  (0.03)  —  (0.16)  13.64  15.65  14.74  1.02  1.01  —5  9 
08-31-20136  11.26  0.12  0.85  0.97  (0.08)  (0.21)  —  (0.29)  11.94  8.757  14.928  1.048  1.018  —5  69 
CLASS R2                               
08-31-2014  11.94  0.10  1.80  1.90  (0.16)  (0.03)  —  (0.19)  13.65  16.01  7.63  0.77  0.76  —5  9 
08-31-20136  11.26  0.15  0.85  1.00  (0.11)  (0.21)  —  (0.32)  11.94  9.027  14.678  0.798  1.268  —5  69 
CLASS R4                               
08-31-2014  11.98  0.20  1.73  1.93  (0.19)  (0.03)  —  (0.22)  13.69  16.23  14.14  0.52  1.51  —5  9 
08-31-2013  11.29  0.18  0.85  1.03  (0.13)  (0.21)  —  (0.34)  11.98  9.35  19.82  0.54  1.49  —5  6 
08-31-201210  11.21  0.01  0.07  0.08  —  —  —  —  11.29  0.717  21.288  0.528  0.338  —5  12211 
CLASS R6                               
08-31-2014  11.94  0.23  1.72  1.95  (0.22)  (0.03)  —  (0.25)  13.64  16.48  5.76  0.27  1.82  —5  9 
08-31-20136  11.26  0.18  0.87  1.05  (0.16)  (0.21)  —  (0.37)  11.94  9.557  11.958  0.298  1.598  —5  69 
CLASS 1                               
08-31-2014  11.94  0.21  1.74  1.95  (0.21)  (0.03)  —  (0.24)  13.65  16.51  0.32  0.32  1.65  1,196  9 
08-31-2013  11.26  0.18  0.87  1.05  (0.16)  (0.21)  —  (0.37)  11.94  9.50  0.3412  0.34  1.55  820  6 
08-31-2012  10.34  0.14  0.94  1.08  (0.16)  —13  —  (0.16)  11.26  10.54  0.24  0.24  1.34  433  122 
08-31-2011  9.25  0.09  1.17  1.26  (0.15)  (0.02)  —  (0.17)  10.34  13.56  0.35  0.16  0.88  91  10 
08-31-201014  10.00  0.02  (0.77)  (0.75)  —  —  —  —  9.25  (7.50)7  333.408  0.168  0.638  —5  —15 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11 and 8-31-10, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
13 Less than $0.005 per share.
14 Period from 4-30-10 (commencement of operations) to 8-31-10.
15 Less than 1%.

38  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

Continued

Retirement Choices at 2025 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  11.71  0.13  1.40  1.53  (0.12)  (0.03)  —  (0.15)  13.09  13.13  15.21  1.08  1.03  —8  13 
08-31-20135  11.29  0.12  0.59  0.71  (0.07)  (0.22)  —  (0.29)  11.71  6.406  15.157  1.097  1.047  —8  99 
CLASS R2                               
08-31-2014  11.71  0.16  1.40  1.56  (0.15)  (0.03)  —  (0.18)  13.09  13.40  15.08  0.83  1.28  —8  13 
08-31-20135  11.29  0.15  0.59  0.74  (0.10)  (0.22)  —  (0.32)  11.71  6.676  14.917  0.847  1.307  —8  99 
CLASS R4                               
08-31-2014  11.74  0.19  1.40  1.59  (0.18)  (0.03)  —  (0.21)  13.12  13.63  14.64  0.58  1.53  —8  13 
08-31-2013  11.31  0.18  0.60  0.78  (0.13)  (0.22)  —  (0.35)  11.74  7.01  20.24  0.59  1.53  —8  9 
08-31-201210  11.18  0.02  0.11  0.13  —  —  —  —  11.31  1.166  21.167  0.557  0.497  —8  12311 
CLASS R6                               
08-31-2014  11.71  0.22  1.40  1.62  (0.21)  (0.03)  —  (0.24)  13.09  13.94  3.15  0.33  1.77  1  13 
08-31-20135  11.29  0.19  0.61  0.80  (0.16)  (0.22)  —  (0.38)  11.71  7.196  10.947  0.347  1.627  1  99 
CLASS 1                               
08-31-2014  11.71  0.21  1.40  1.61  (0.20)  (0.03)  —  (0.23)  13.09  13.89  0.38  0.38  1.68  1,294  13 
08-31-2013  11.29  0.19  0.60  0.79  (0.15)  (0.22)  —  (0.37)  11.71  7.14  0.3913  0.39  1.60  937  9 
08-31-2012  10.42  0.16  0.86  1.02  (0.15)  —12  —  (0.15)  11.29  9.96  0.2613  0.26  1.47  519  123 
08-31-2011  9.40  0.12  1.06  1.18  (0.14)  (0.02)  —  (0.16)  10.42  12.57  0.30  0.16  1.20  123  14 
08-31-201014  10.00  0.03  (0.63)  (0.60)  —  —  —  —  9.40  (6.00)6  329.877  0.167  0.897  —8  —15 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
6 Not annualized.
7 Annualized.
8 Less than $500,000.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Less than $0.005 per share.
13 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reduction.
14 Period from 4-30-10 (commencement of operations) to 8-31-10.
15 Less than 1%.

See notes to financial statements  Annual report | Retirement Choices Portfolios  39 
   

 


Financial highlights

Continued

Retirement Choices at 2020 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  11.40  0.12  0.99  1.11  (0.11)  (0.04)  —  (0.15)  12.36  9.78  15.97  1.15  1.02  —5  16 
08-31-20136  11.30  0.12  0.24  0.36  (0.07)  (0.19)  —  (0.26)  11.40  3.187  15.478  1.168  1.028  —5  119 
CLASS R2                               
08-31-2014  11.40  0.13  1.02  1.15  (0.14)  (0.04)  —  (0.18)  12.37  10.13  10.59  0.90  1.07  —5  16 
08-31-20136  11.30  0.15  0.24  0.39  (0.10)  (0.19)  —  (0.29)  11.40  3.447  15.228  0.918  1.278  —5  119 
CLASS R4                               
08-31-2014  11.41  0.18  1.00  1.18  (0.17)  (0.04)  —  (0.21)  12.38  10.39  15.33  0.65  1.52  —5  16 
08-31-2013  11.31  0.17  0.24  0.41  (0.12)  (0.19)  —  (0.31)  11.41  3.69  20.55  0.66  1.50  —5  11 
08-31-201210  11.13  0.03  0.15  0.18  —  —  —  —  11.31  1.627  21.058  0.608  0.768  —5  12711 
CLASS R6                               
08-31-2014  11.40  0.21  0.99  1.20  (0.20)  (0.04)  —  (0.24)  12.36  10.59  4.41  0.40  1.75  —5  16 
08-31-20136  11.30  0.19  0.25  0.44  (0.15)  (0.19)  —  (0.34)  11.40  3.957  12.088  0.418  1.718  —5  119 
CLASS 1                               
08-31-2014  11.39  0.20  1.00  1.20  (0.19)  (0.04)  —  (0.23)  12.36  10.63  0.45  0.45  1.69  947  16 
08-31-2013  11.30  0.18  0.25  0.43  (0.15)  (0.19)  —  (0.34)  11.39  3.81  0.4612  0.46  1.61  757  11 
08-31-2012  10.54  0.17  0.74  0.91  (0.15)  —13  —  (0.15)  11.30  8.75  0.2912  0.29  1.62  448  127 
08-31-2011  9.70  0.17  0.81  0.98  (0.11)  (0.03)  —  (0.14)  10.54  10.13  0.32  0.16  1.60  105  12 
08-31-201014  10.00  0.05  (0.35)  (0.30)  —  —  —  —  9.70  (3.00)7  323.168  0.168  1.418  —5  —15 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reduction.
13 Less than $0.005 per share.
14 Period from 4-30-10 (commencement of operations) to 8-31-10.
15 Less than 1%.

40  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

Continued

Retirement Choices at 2015 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period   come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  10.98  0.10  0.55  0.65  (0.09)  (0.04)  —  (0.13)  11.50  5.95  16.81  1.25  0.91  —5  22 
08-31-20136  11.26  0.11  (0.14)  (0.03)  (0.07)  (0.18)  —  (0.25)  10.98  (0.30)7  15.888  1.258  0.938  —5  279 
CLASS R2                               
08-31-2014  10.98  0.13  0.55  0.68  (0.12)  (0.04)  —  (0.16)  11.50  6.22  16.81  1.00  1.16  —5  22 
08-31-20136  11.26  0.13  (0.13)  —  (0.10)  (0.18)  —  (0.28)  10.98  (0.05)7  15.648  1.008  1.188  —5  279 
CLASS R4                               
08-31-2014  10.98  0.16  0.55  0.71  (0.15)  (0.04)  —  (0.19)  11.50  6.48  16.19  0.75  1.42  —5  22 
08-31-2013  11.26  0.16  (0.14)  0.02  (0.12)  (0.18)  —  (0.30)  10.98  0.20  21.18  0.75  1.42  —5  27 
08-31-201210  11.03  0.04  0.19  0.23  —  —  —  —  11.26  2.097  20.898  0.668  1.048  —5  13311 
CLASS R6                               
08-31-2014  10.98  0.19  0.56  0.75  (0.18)  (0.04)  —  (0.22)  11.51  6.84  8.15  0.50  1.66  —5  22 
08-31-20136  11.26  0.18  (0.13)  0.05  (0.15)  (0.18)  —  (0.33)  10.98  0.457  12.198  0.508  1.648  —5  279 
CLASS 1                               
08-31-2014  10.98  0.18  0.56  0.74  (0.17)  (0.04)  —  (0.21)  11.51  6.79  0.55  0.55  1.61  440  22 
08-31-2013  11.26  0.18  (0.13)  0.05  (0.15)  (0.18)  —  (0.33)  10.98  0.40  0.5512  0.55  1.57  404  27 
08-31-2012  10.68  0.19  0.54  0.73  (0.15)  —13  —  (0.15)  11.26  6.92  0.32  0.31  1.79  293  133 
08-31-2011  10.03  0.23  0.55  0.78  (0.09)  (0.04)  —  (0.13)  10.68  7.85  0.41  0.16  2.21  70  26 
08-31-201014  10.00  0.07  (0.04)  0.03  —  —  —  —  10.03  0.307  315.948  0.168  1.968  —5  —15 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 The inception date for Class R4 shares is 5-1-12.
11 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
12 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
13 Less than $0.005 per share.
14 Period from 4-30-10 (commencement of operations) to 8-31-10.
15 Less than 1%.

See notes to financial statements  Annual report | Retirement Choices Portfolios  41 
   

 


Financial highlights

Continued

Retirement Choices at 2010 Portfolio

Per share operating performance for a share outstanding throughout each period    Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-  unrealized  invest-  invest-    From    Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  tax return  Total;  value, end  Total  before  including  investment  end of  Portfolio 
  of period   come (loss)  on invest-  operations  income  realized  of capital  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss) (%)2  millions)  (%) 
CLASS R1                               
08-31-2014  10.85  0.07  0.40  0.47  (0.07)  (0.01)  —  (0.08)  11.24  4.35  17.28  1.27  0.66  —5  26 
08-31-20136  11.21  0.08  (0.19)  (0.11)  (0.06)  (0.19)  —  (0.25)  10.85  (1.03)7  16.028  1.288  0.738  —5  469 
CLASS R2                               
08-31-2014  10.85  0.09  0.41  0.50  (0.10)  (0.01)  —  (0.11)  11.24  4.62  11.28  1.02  0.83  —5  26 
08-31-20136  11.21  0.11  (0.19)  (0.08)  (0.09)  (0.19)  —  (0.28)  10.85  (0.78)7  15.788  1.038  0.988  —5  469 
CLASS R4                               
08-31-2014  10.84  0.13  0.40  0.53  (0.13)  (0.01)  —  (0.14)  11.23  4.88  16.41  0.77  1.16  —5  26 
08-31-2013  11.20  0.13  (0.18)  (0.05)  (0.12)  (0.19)  —  (0.31)  10.84  (0.53)  21.1410  0.78  1.21  —5  46 
08-31-201211  10.96  0.04  0.20  0.24  —  —  —  —  11.20  2.197  20.848  0.698  1.068  —5  14812 
CLASS R6                               
08-31-2014  10.85  0.16  0.38  0.54  (0.15)  (0.01)  —  (0.16)  11.23  5.05  10.91  0.52  1.41  —5  26 
08-31-20136  11.21  0.16  (0.18)  (0.02)  (0.15)  (0.19)  —  (0.34)  10.85  (0.28)7  14.948  0.538  1.488  —5  469 
CLASS 1                               
08-31-2014  10.85  0.15  0.39  0.54  (0.15)  (0.01)  —  (0.16)  11.23  5.00  0.57  0.57  1.35  269  26 
08-31-2013  11.21  0.15  (0.18)  (0.03)  (0.14)  (0.19)  —  (0.33)  10.85  (0.33)  0.58  0.58  1.36  236  46 
08-31-2012  10.75  0.20  0.43  0.63  (0.17)  —13  —  (0.17)  11.21  5.96  0.35  0.33  1.83  197  148 
08-31-2011  10.37  0.29  0.24  0.53  (0.10)  (0.05)  —  (0.15)  10.75  5.19  0.44  0.16  2.82  52  109 
08-31-201014  10.00  0.09  0.28  0.37  —  —  —  —  10.37  3.707  308.908  0.168  2.558  —5  —15 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65%, 0.10%–0.65%, 0.10%–0.63%, 0.48%–0.56%, and 0.48%–0.56% for
the years ended 8-31-14, 8-31-13, 8-31-12, 8-31-11, and 8-31-10, respectively.
5 Less than $500,000.
6 The inception date for Class R1, Class R2 and Class R6 shares is 9-4-12.
7 Not annualized.
8 Annualized.
9 Portfolio turnover is shown for the period from 9-1-12 to 8-31-13.
10 Expense ratio has been revised to conform with current year presentation of expense recapture and net expense reductions.
11 The inception date for Class R4 shares is 5-1-12.
12 The portfolio turnover is shown for the period from 9-1-11 to 8-31-12.
13 Less than $0.005 per share.
14 Period from 4-30-10 (commencement of operations) to 8-31-10.
15 Less than 1%.

42  Retirement Choices Portfolios | Annual report   See notes to financial statements
   

 


Notes to financial statements

Note 1 — Organization

John Hancock Funds II (the Trust) is 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). It is a series company with multiple investment series, 10 of which (collectively Retirement Choices Portfolios or the portfolios, and each individually, the portfolio) are presented in this report. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “funds of funds” that invest in other series of the Trust, other funds in the John Hancock group of funds and certain other investments.

The portfolios may offer multiple classes of shares. The shares currently offered by the Trust are detailed in the Statements of assets and liabilities. Class R1, Class R2 and Class R4 shares are available only to certain retirement plans. Class R6 shares are only available to certain retirement plans, institutions and other investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage for each class may differ.

The accounting policies of the John Hancock underlying funds in which the portfolios invest are outlined in the underlying funds’ shareholder reports, which include the underlying funds’ financial statements, available without charge by calling 800-344-1029 or visiting jhinvestments.com, on the Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s public reference room in Washington, D.C. The underlying funds are not covered by this report.

Retirement Choices at 2055 Portfolio commenced operations on March 26, 2014.

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 portfolios intend to qualify as investment companies 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 portfolios:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 P.M., Eastern Time. In order to value the securities, the portfolios use the following valuation techniques: Investments by the portfolios in underlying affiliated funds and/or other open-end management investment companies are valued at their respective net asset values each business day. Exchange-traded funds held by the portfolios are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. 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 portfolios’ 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 portfolios use a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the portfolios’ own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

As of August 31, 2014, all investments are categorized as Level 1 under the hierarchy described above.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Dividend income is recorded on the ex-date, except for dividends of foreign securities where the dividend may not be known until after the ex-date. In those cases, dividend income, net of withholding taxes, is recorded when the portfolios become aware of

Annual report | Retirement Choices Portfolios  43 

 


the dividends. Income and capital gain distributions from underlying funds are recorded on ex-date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

Line of credit. The portfolios may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the portfolios’ custodian agreement, the custodian may loan money to the portfolios to make properly authorized payments. The portfolios are 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 portfolio property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

In addition, the portfolios and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating fund on a pro rata basis and is reflected in other expenses on the Statements of operations. For the year ended August 31, 2014, the portfolios had no borrowings under the line of credit.

Commitment fees for the year ended August 31, 2014 were as follows:

Portfolio  Commitment Fee 
Retirement Choices at 2055  $215 
Retirement Choices at 2050  485 
Retirement Choices at 2045  538 
Retirement Choices at 2040  596 
Retirement Choices at 2035  691 
Retirement Choices at 2030  775 
Retirement Choices at 2025  823 
Retirement Choices at 2020  733 
Retirement Choices at 2015  566 
Retirement Choices at 2010  494 

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual portfolio are allocated to such portfolio. Expenses that are not readily attributable to a specific portfolio are allocated among all portfolios in an equitable manner, taking into consideration, among other things, the nature and type of expense and the portfolio’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 portfolio level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. Each portfolio intends to continue to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, the portfolios had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The portfolios’ federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

The costs of investments owned at August 31, 2014, including short-term investments, for federal income tax purposes, were as follows:

        Net Unrealized 
    Unrealized  Unrealized  Appreciation/ 
Portfolio  Aggregate Cost  Appreciation  (Depreciation)  (Depreciation) 
Retirement Choices at 2055  $7,901,258  $159,742  ($187)  $159,555 
Retirement Choices at 2050  323,549,532  56,599,903  (43,504)  56,556,399 
Retirement Choices at 2045  425,634,368  86,520,226  (70,023)  86,450,203 
Retirement Choices at 2040  571,787,895  116,030,320  (82,481)  115,947,839 
Retirement Choices at 2035  798,718,679  157,393,555  (798,116)  156,595,439 
Retirement Choices at 2030  1,020,685,963  178,198,374  (1,416,144)  176,782,230 
Retirement Choices at 2025  1,135,915,881  161,965,715  (2,436,174)  159,529,541 
Retirement Choices at 2020  867,618,039  83,542,569  (3,926,635)  79,615,934 
Retirement Choices at 2015  425,418,728  16,343,549  (2,010,733)  14,332,816 
Retirement Choices at 2010  264,311,493  6,532,484  (702,133)  5,830,351 

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 portfolios generally declare and pay dividends and capital gain distributions, if any, annually.

44  Retirement Choices Portfolios | Annual report 

 


The tax character of distributions for the year ended August 31, 2014 was as follows:

Portfolio  Ordinary Income  Long Term Capital Gains  Total 
Retirement Choices at 2050  $5,348,591  —  $5,348,591 
Retirement Choices at 2045  7,886,717  —  7,886,717 
Retirement Choices at 2040  10,578,746  —  10,578,746 
Retirement Choices at 2035  14,833,162  —  14,833,162 
Retirement Choices at 2030  18,401,696  $36,210  18,437,906 
Retirement Choices at 2025  19,874,316  267,146  20,141,462 
Retirement Choices at 2020  14,622,379  1,457,156  16,079,535 
Retirement Choices at 2015  7,687,296  342,281  8,029,577 
Retirement Choices at 2010  3,618,156  42,094  3,660,250 

The tax character of distributions for the year ended August 31, 2013 was as follows:

Portfolio  Ordinary Income  Long Term Capital Gains  Total 
Retirement Choices at 2050  $3,755,334  $79,850  $3,835,184 
Retirement Choices at 2045  6,698,687  396,287  7,094,974 
Retirement Choices at 2040  9,902,760  421,871  10,324,631 
Retirement Choices at 2035  14,046,783  812,183  14,858,966 
Retirement Choices at 2030  17,352,414  1,138,138  18,490,552 
Retirement Choices at 2025  19,993,993  1,987,060  21,981,053 
Retirement Choices at 2020  15,197,942  2,140,342  17,338,284 
Retirement Choices at 2015  8,698,338  1,783,561  10,481,899 
Retirement Choices at 2010  5,386,678  1,572,817  6,959,495 

Distributions paid by the portfolios 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 August 31, 2014, the components of distributable earnings on a tax basis were as follows:

    Undistributed 
  Undistributed  Long Term 
Portfolio  Ordinary Income  Capital Gains 
Retirement Choices at 2055  $3,430  $3 
Retirement Choices at 2050  992,086  1,504,316 
Retirement Choices at 2045  1,378,095  1,444,655 
Retirement Choices at 2040  1,887,589  2,635,102 
Retirement Choices at 2035  3,061,039  4,686,192 
Retirement Choices at 2030  4,562,728  5,373,584 
Retirement Choices at 2025  6,551,355  5,169,667 
Retirement Choices at 2020  8,612,235  3,489,052 
Retirement Choices at 2015  4,627,139  1,962,966 
Retirement Choices at 2010  1,917,212  529,398 

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 portfolios’ financial statements as a return of capital. Short-term gains from underlying funds are treated as ordinary income for tax purposes.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the portfolios. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 — Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the portfolios. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for all portfolios except Retirement Choices at 2055 Portfolio. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its

Annual report | Retirement Choices Portfolios  45 

 


capacity as investment advisor prior to January 1, 2014. JHA has served as the investment Advisor for Retirement Choices at 2055 Portfolio since its inception. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the portfolios. The Advisor and the Distributor are indirect, wholly owned subsidiaries of Manulife Financial Corporation.

Management fee. The portfolios have an investment management agreement with the Advisor under which the portfolios pay a daily management fee to the Advisor, on an annual basis, as detailed below. Aggregate net assets include the net assets of the portfolios and the net assets of similar funds of the Trust. John Hancock Asset Management a division of Manulife Asset Management (North America) Limited and John Hancock Asset Management a division of Manulife Asset Management (US) LLC, both indirectly owned subsidiaries of MFC and affiliates of the Advisor, act as subadvisors to the portfolios. The portfolios are not responsible for payment of the subadvisory fees.

The advisory fee has two components: (a) a fee on assets invested in affiliated funds (Affiliated fund assets) and (b) a fee on assets not invested in affiliated funds (Other assets). Affiliated funds are any funds of the Trust or John Hancock Funds III.

The rates, outlined below, are applied to the Affiliated fund assets and Other assets of each portfolio.

  First $7.5 billion of  Excess over $7.5 billion 
  aggregate net assets  of aggregate net assets 
Affiliated fund assets  0.06%  0.05% 
Other assets  0.51%  0.50% 

Expense reimbursements. The Advisor has voluntarily agreed to waive its advisory fee or reimburse the portfolios so that the aggregate advisory fee retained by the Advisor with respect to each portfolio and the underlying investments in a portfolio does not exceed 0.51% of the portfolio’s first $7.5 billion of average daily net assets and 0.50% of the portfolio’s average daily net assets in excess of $7.5 billion. This voluntary waiver may be terminated at any time by the Advisor on notice to the portfolios.

The Advisor has contractually agreed to reduce its management fee and/or make payment to each portfolio in an amount equal to the amount by which “Other expenses” of each portfolio exceed 0.05% of the average annual net assets (on an annualized basis) of each portfolio. “Other expenses” means all of the expenses of each portfolio, excluding certain expenses such as advisory fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of each portfolio’s business, distribution and service (Rule 12b-1) fees, transfer agency and service fees, blue sky fees, printing and postage, underlying fund expenses (acquired fund fees), and short dividend expense. The current expense limitation agreement expires on December 31, 2015 for Retirement Choices at 2055 and December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolios and the advisor based upon a determination that this is appropriate under the circumstances at that time.

The Advisor has contractually agreed to reduce its management fee or, if necessary, make payment to each of Class R1, Class R2, Class R4, and Class R6 shares in an amount equal to the amount by which the “Expenses” of the share class exceed 0.75%, 0.50%, and 0.25%, 0.00% of the average annual net assets (on an annualized basis) attributable to Class R1, Class R2, Class R4, and Class R6 shares, respectively. “Expenses” means all expenses attributable to a class of shares, excluding portfolio level expenses such as: (a) advisory fees, (b) underlying fund expenses (“acquired fund fees”), (c) taxes, (d) brokerage commissions, (e) interest expense, (f) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business, and (g) short dividend expense. The current expense limitation agreement expires on December 31, 2015 for Retirement Choices at 2055 and December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolios and the advisor based upon a determination that this is appropriate under the circumstances at that time.

For the year ended August 31, 2014, the expense reductions to these plans amounted to the following and are reflected as a reduction of total expenses in the Statements of operations:

      Expense Reimbursement by Class     
Portfolio  Class R1  Class R2  Class R4  Class R6  Class 1  Total 
Retirement Choices at 2055  $14,261  $14,264  $14,333  $15,157  $46,947  $104,962 
Retirement Choices at 2050  15,801  15,801  15,674  16,251  6,554  70,081 
Retirement Choices at 2045  15,799  15,803  15,671  16,155  —  63,428 
Retirement Choices at 2040  15,799  15,677  15,671  16,522  —  63,669 
Retirement Choices at 2035  15,801  15,802  15,671  16,232  —  63,506 
Retirement Choices at 2030  15,796  15,771  15,663  16,328  —  63,558 
Retirement Choices at 2025  15,823  15,812  15,674  16,532  —  63,841 
Retirement Choices at 2020  15,832  15,797  15,685  16,392  —  63,706 
Retirement Choices at 2015  15,839  15,830  15,679  16,279  5,553  69,180 
Retirement Choices at 2010  15,835  15,813  15,682  16,311  9,513  73,154 

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that a portfolio is below its expense limitation during this period. The table below outlines the amounts recovered

46  Retirement Choices Portfolios | Annual report 

 


during the year ended August 31, 2014, and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates.

        Amount recovered 
  Amounts eligible for  Amounts eligible for  Amounts eligible for  during the 
  recovery through  recovery through  recovery through  period ended 
Portfolio  August 1, 2015  August 1, 2016  August 1, 2017  August 31, 2014 
Retirement Choices at 2055  —  —  $98,922  — 
Retirement Choices at 2050  $62,333  $101,004  70,081  $19,528 
Retirement Choices at 2045  31,458  76,754  63,428  56,235 
Retirement Choices at 2040  6,255  61,099  63,669  82,986 
Retirement Choices at 2035  6,281  61,280  63,506  29,509 
Retirement Choices at 2030  6,255  61,110  63,558  3,352 
Retirement Choices at 2025  6,282  61,304  63,841  3,345 
Retirement Choices at 2020  6,282  61,309  63,706  3,347 
Retirement Choices at 2015  11,545  65,191  69,180  59,102 
Retirement Choices at 2010  33,193  74,316  73,154  7,872 

 

Amounts recovered by class          
Portfolio  Class R1  Class R2  Class R4  Class R6  Class 1  Total 
Retirement Choices at 2050  $1,136  $1,136  $6  $1,103  $16,147  $19,528 
Retirement Choices at 2045  1,144  1,145  14  1,111  52,821  56,235 
Retirement Choices at 2040  1,146  1,165  16  1,126  79,533  82,986 
Retirement Choices at 2035  1,134  1,134  4  1,103  26,134  29,509 
Retirement Choices at 2030  1,129  1,130  —  1,093  —  3,352 
Retirement Choices at 2025  1,129  1,128  —  1,088  —  3,345 
Retirement Choices at 2020  1,128  1,128  —  1,091  —  3,347 
Retirement Choices at 2015  1,140  1,140  13  1,122  55,687  59,102 
Retirement Choices at 2010  1,128  1,130  2  1,099  4,513  7,872 

Effective October 1, 2014, the expense recapture program has been terminated.

The investment management fees incurred for the year ended August 31, 2014, including expense waivers and amounts recaptured as described above, were equivalent to a net annual effective rate of the portfolios’ average daily net assets as follows:

Portfolio  Annual Effective Rate 
Retirement Choices at 2055  — 
Retirement Choices at 2050  0.17% 
Retirement Choices at 2045  0.19% 
Retirement Choices at 2040  0.20% 
Retirement Choices at 2035  0.21% 
Retirement Choices at 2030  0.24% 
Retirement Choices at 2025  0.30% 
Retirement Choices at 2020  0.37% 
Retirement Choices at 2015  0.45% 
Retirement Choices at 2010  0.44% 

 

Accounting and legal services. Pursuant to a service agreement, the portfolios reimburse the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the portfolios, 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 August 31, 2014 amounted to an annual rate of 0.02% of Retirement Choices at 2055 and 0.01% for all other portfolios’ average daily net assets.

Distribution and service plans. The portfolios have a distribution agreement with the Distributor. The portfolios have adopted distribution and service plans with respect to Class R1, Class R2, Class R4 and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the portfolios. In addition, under a service plan for Class R1, Class R2 and Class R4 shares, the portfolios pay for certain other services. The portfolios 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 portfolios’ shares.

Class  Rule 12b-1 Fee  Service Fee 
Class R1  0.50%  0.25% 
Class R2  0.25%  0.25% 
Class R4  0.25%  0.10% 
Class 1  0.05%  — 

 

Annual report | Retirement Choices Portfolios  47 

 


The portfolios’ Distributor has contractually agreed to waive 0.10% of 12b-1 fees for Class R4 shares to limit the 12b-1 fees on Class R4 to 0.15% of the average daily net assets of Class R4 shares, until at least December 31, 2015 for Retirement Choices at 2055, and until December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolio and the Distributor based upon a determination that this is appropriate under the circumstances at the time. Reimbursements related to this contractual waiver amounted to the following for Class R4 shares for the year ended August 31, 2014.

  Class R4 12b-1 
Portfolio  Reimbursement 
Retirement Choices at 2055  $45 
Retirement Choices at 2050  119 
Retirement Choices at 2045  119 
Retirement Choices at 2040  119 
Retirement Choices at 2035  118 
Retirement Choices at 2030  116 
Retirement Choices at 2025  112 
Retirement Choices at 2020  107 
Retirement Choices at 2015  102 
Retirement Choices at 2010  101 

Transfer agent fees. The portfolios have a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the portfolios and to all other John Hancock affiliated funds. 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 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.

Prior to October 1, 2013, Signature Services Cost were calculated monthly and allocated, as applicable, to four categories of share classes: Institutional Share Classes, Retirement Share Classes, Municipal Bond Share Classes and all other Retail Share Classes. Within each of these categories, the applicable costs were 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 August 31, 2014 were:

  Share  Distribution and  Transfer  State registration  Printing and 
Portfolio  Class  service fees  agent fees  fees  postage 
 
Retirement Choices at 2055  Class R1  $224  $9  $7,106  $127 
  Class R2  112  9  7,106  128 
  Class R4  112  8  7,106  128 
  Class R6  —  8  7,797  211 
  Class 1  476  —  —  — 
  Total  $924  $34  $29,115  $594 
Retirement Choices at 2050  Class R1  $595  $24  $14,619  $324 
  Class R2  298  24  14,619  324 
  Class R4  299  24  15,441  325 
  Class R6  —  25  14,619  507 
  Class 1  152,314  —  —  — 
  Total  $153,506  $97  $59,298  $1,480 
Retirement Choices at 2045  Class R1  $595  $24  $14,619  $324 
  Class R2  314  25  14,619  328 
  Class R4  298  24  15,441  325 
  Class R6  —  24  14,619  415 
  Class 1  214,730  —  —  — 
  Total  $215,937  $97  $59,298  $1,392 
 
Retirement Choices at 2040  Class R1  $592  $24  $14,619  $323 
  Class R2  914  52  14,619  326 
  Class R4  298  24  15,441  324 
  Class R6  —  46  14,619  766 
  Class 1  290,266  —  —  — 
  Total  $292,070  $146  $59,298  $1,739 

 

48  Retirement Choices Portfolios | Annual report 

 


  Share  Distribution and  Transfer  State registration  Printing and 
Portfolio  Class  service fees  agent fees  fees  postage 
 
Retirement Choices at 2035  Class R1  $587  $24  $14,619  $323 
  Class R2  321  25  14,619  326 
  Class R4  295  24  15,441  324 
  Class R6  —  45  14,619  474 
  Class 1  409,137  —  —  — 
  Total  $410,340  $118  $59,298  $1,447 
 
Retirement Choices at 2030  Class R1  $576  $23  $14,610  $321 
  Class R2  811  45  14,610  325 
  Class R4  290  23  15,432  323 
  Class R6  —  61  14,610  565 
  Class 1  513,649  —  —  — 
  Total  $515,326  $152  $59,262  $1,534 
 
Retirement Choices at 2025  Class R1  $563  $23  $14,619  $330 
  Class R2  278  23  14,619  319 
  Class R4  281  23  15,441  322 
  Class R6  —  118  14,619  707 
  Class 1  564,921  —  —  — 
  Total  $566,043  $187  $59,298  $1,678 
 
Retirement Choices at 2020  Class R1  $537  $22  $14,619  $327 
  Class R2  516  32  14,619  316 
  Class R4  269  22  15,441  329 
  Class R6  —  83  14,619  601 
  Class 1  433,029  —  —  — 
  Total  $434,351  $159  $59,298  $1,573 
 
Retirement Choices at 2015  Class R1  $512  $21  $14,619  $323 
  Class R2  250  20  14,619  313 
  Class R4  255  21  15,441  318 
  Class R6  —  43  14,619  519 
  Class 1  215,433  —  —  — 
  Total  $216,450  $105  $59,298  $1,473 
 
Retirement Choices at 2010  Class R1  $494  $20  $14,619  $313 
  Class R2  492  30  14,619  312 
  Class R4  252  20  15,441  317 
  Class R6  —  33  14,619  560 
  Class 1  128,423  —  —  — 
  Total  $129,661  $103  $59,298  $1,502 

Trustee expenses. The Trust compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each portfolio based on its net assets relative to other funds within the John Hancock group of funds complex.

Annual report | Retirement Choices Portfolios  49 

 


Note 5 — Portfolio share transactions

Transactions in the portfolios’ shares for the years ended August 31, 2014 and 2013 were as follows:

Retirement Choices at 2055 Portfolio

Period ended 8-31-141
  Shares  Amount 
Class R1 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R2 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
 
Net increase  10,000  $100,000 
 
Class 1 shares     
Sold  755,387  $7,910,264 
Repurchased  (31,810)  (338,805) 
 
Net increase  723,577  $7,571,459 
 
Total net increase  763,577  $7,971,459 
 
1Period from 3-26-14 (commencement of operations) to 8-31-14.     

Retirement Choices at 2050 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  1,124  $14,177  9,970  $100,000 
 
Net increase  1,124  $14,177  9,970  $100,000 
 
Class R2 shares         
Sold  390  $4,894  9,970  $100,000 
 
Net increase  390  $4,894  9,970  $100,000 
 
Class R6 shares         
Sold  749  $9,179  9,970  $100,000 
 
Net increase  749  $9,179  9,970  $100,000 
 
Class 1 shares         
Sold  10,086,346  $119,364,616  11,094,899  $116,922,060 
Distributions reinvested  453,383  5,340,854  379,757  3,824,151 
Repurchased  (497,822)  (5,991,040)  (119,968)  (1,282,446) 
 
Net increase  10,041,907  $118,714,430  11,354,688  $119,463,765 
 
Total net increase  10,044,170  $118,742,680  11,384,598  $119,763,765 

 

50  Retirement Choices Portfolios | Annual report 

 


Retirement Choices at 2045 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  154  $2,155  8,889  $100,000 
 
Net increase  154  $2,155  8,889  $100,000 
 
Class R2 shares         
Sold  3,835  $53,280  8,889  $100,000 
 
Net increase  3,835  $53,280  8,889  $100,000 
 
Class R6 shares         
Sold  136  $1,907  8,889  $100,000 
 
Net increase  136  $1,907  8,889  $100,000 
 
Class 1 shares         
Sold  8,899,667  $118,324,090  11,998,432  $141,461,765 
Distributions reinvested  596,885  7,878,883  627,951  7,083,284 
Repurchased  (701,115)  (9,418,549)  (321,679)  (3,910,167) 
 
Net increase  8,795,437  $116,784,424  12,304,704  $144,634,882 
 
Total net increase  8,799,562  $116,841,766  12,331,371  $144,934,882 

Retirement Choices at 2040 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  —  —  8,889  $100,000 
 
Net increase  —  —  8,889  $100,000 
 
Class R2 shares         
Sold  39,824  $537,892  8,889  $100,000 
Repurchased  (6,064)  (83,091)  —  — 
 
Net increase  33,760  $454,801  8,889  $100,000 
 
Class R6 shares         
Sold  520  $6,918  16,596  $195,943 
Distributions reinvested  157  2,067  —  — 
Repurchased  (341)  (4,690)  —  — 
 
Net increase  336  $4,295  16,596  $195,943 
 
Class 1 shares         
Sold  11,306,598  $150,196,776  16,643,376  $195,807,922 
Distributions reinvested  802,505  10,568,996  915,828  10,312,219 
Repurchased  (902,243)  (12,171,969)  (352,498)  (4,238,816) 
 
Net increase  11,206,860  $148,593,803  17,206,706  $201,881,325 
 
Total net increase  11,240,956  $149,052,899  17,241,080  $202,277,268 

 

Annual report | Retirement Choices Portfolios  51 

 


Retirement Choices at 2035 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  —  —  8,881  $100,000 
 
Net increase  —  —  8,881  $100,000 
 
Class R2 shares         
Sold  1,768  $23,822  8,881  $100,000 
Distributions reinvested  4  53  —  — 
 
Net increase  1,772  $23,875  8,881  $100,000 
 
Class R6 shares         
Sold  808  $10,683  16,399  $193,205 
Distributions reinvested  153  1,998  —  — 
Repurchased  (53)  (705)  —  (5) 
 
Net increase  908  $11,976  16,399  $193,200 
 
Class 1 shares         
Sold  14,907,672  $196,031,585  22,573,714  $265,341,294 
Distributions reinvested  1,135,907  14,823,596  1,317,387  14,846,952 
Repurchased  (1,479,481)  (19,603,229)  (785,347)  (9,483,569) 
 
Net increase  14,564,098  $191,251,952  23,105,754  $270,704,677 
 
Total net increase  14,566,778  $191,287,803  23,139,915  $271,097,877 

Retirement Choices at 2030 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  —  —  8,881  $100,000 
 
Net increase  —  —  8,881  $100,000 
 
Class R2 shares         
Sold  24,540  $319,742  8,881  $100,000 
Distributions reinvested  6  73  —  — 
Repurchased  (1,650)  (21,849)  —  — 
 
Net increase  22,896  $297,966  8,881  $100,000 
 
Class R6 shares         
Sold  887  $11,451  31,179  $372,472 
Distributions reinvested  303  3,876  —  — 
Repurchased  (3,326)  (42,570)  (7,127)  (85,385) 
 
Net increase  (2,136)  ($27,243)  24,052  $287,087 
 
Class 1 shares         
Sold  18,963,262  $244,848,742  30,125,968  $351,785,926 
Distributions reinvested  1,440,709  18,426,670  1,642,559  18,478,790 
Repurchased  (1,414,819)  (18,512,900)  (1,509,628)  (17,886,654) 
 
Net increase  18,989,152  $244,762,512  30,258,899  $352,378,062 
 
Total net increase  19,009,912  $245,033,235  30,300,713  $352,865,149 

 

52  Retirement Choices Portfolios | Annual report 

 


Retirement Choices at 2025 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  129  $1,574  8,857  $100,000 
Repurchased  (82)  (1,041)  —  — 
 
Net increase  47  $533  8,857  $100,000 
 
Class R2 shares         
Sold  —  —  8,857  $100,000 
 
Net increase  —  —  8,857  $100,000 
 
Class R6 shares         
Sold  2,715  $33,857  45,486  $537,660 
Distributions reinvested  727  8,970  —  — 
Repurchased  (3,287)  (41,748)  —  — 
 
Net increase  155  $1,079  45,486  $537,660 
 
Class 1 shares         
Sold  20,615,747  $257,914,520  33,889,749  $392,883,409 
Distributions reinvested  1,630,924  20,125,603  1,958,039  21,969,196 
Repurchased  (3,353,045)  (42,030,924)  (1,879,245)  (22,174,537) 
 
Net increase  18,893,626  $236,009,199  33,968,543  $392,678,068 
 
Total net increase  18,893,828  $236,010,811  34,031,743  $393,415,728 

Retirement Choices at 2020 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  133  $1,574  8,850  $100,000 
Repurchased  (85)  (1,029)  —  — 
 
Net increase  48  $545  8,850  $100,000 
 
Class R2 shares         
Sold  12,974  $155,571  8,850  $100,000 
Repurchased  (27)  (331)  —  — 
 
Net increase  12,947  $155,240  8,850  $100,000 
 
Class R4 shares         
Sold  33  $389  —  — 
Repurchased  (33)  (395)  —  — 
 
Net increase  —  ($6)  —  — 
 
Class R6 shares         
Sold  911  $10,855  35,399  $407,422 
Distributions reinvested  486  5,714  —  — 
Repurchased  (2,720)  (32,503)  —  — 
 
Net increase  (1,323)  ($15,934)  35,399  $407,422 
 
Class 1 shares         
Sold  14,672,697  $174,937,589  28,133,519  $321,654,148 
Distributions reinvested  1,367,405  16,067,014  1,548,498  17,327,698 
Repurchased  (5,836,869)  (69,843,395)  (2,938,050)  (33,936,812) 
 
Net increase  10,203,233  $121,161,208  26,743,967  $305,045,034 
 
Total net increase  10,214,905  $121,301,053  26,797,066  $305,652,456 

 

Annual report | Retirement Choices Portfolios  53 

 


Retirement Choices at 2015 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  320  $3,594  8,881  $100,000 
Repurchased  (90)  (1,013)  —  — 
 
Net increase  230  $2,581  8,881  $100,000 
 
Class R2 shares         
Sold  —  —  8,881  $100,000 
 
Net increase  —  —  8,881  $100,000 
 
Class R6 shares         
Sold  506  $5,686  21,854  $244,056 
Distributions reinvested  193  2,143  —  — 
Repurchased  (4,852)  (54,320)  —  — 
 
Net increase  (4,153)  ($46,491)  21,854  $244,056 
 
Class 1 shares         
Sold  7,706,172  $86,863,426  15,087,434  $169,317,685 
Distributions reinvested  723,945  8,021,306  946,791  10,471,506 
Repurchased  (7,045,727)  (79,338,197)  (5,208,677)  (58,005,775) 
 
Net increase  1,384,390  $15,546,535  10,825,548  $121,783,416 
 
Total net increase  1,380,467  $15,502,625  10,865,164  $122,227,472 

Retirement Choices at 2010 Portfolio

    Year ended 8-31-14    Year ended 8-31-13 
  Shares  Amount  Shares  Amount 
Class R1 shares         
Sold  83  $931  8,921  $100,002 
 
Net increase  83  $931  8,921  $100,002 
 
Class R2 shares         
Sold  13,712  $151,934  8,921  $100,000 
Repurchased  (29)  (320)  —  — 
 
Net increase  13,683  $151,614  8,921  $100,000 
 
Class R6 shares         
Sold  3  $29  14,150  $157,160 
Distributions reinvested  78  851  —  — 
Repurchased  (35)  (388)  —  — 
 
Net increase  46  $492  14,150  $157,160 
 
Class 1 shares         
Sold  7,437,814  $82,211,830  10,813,383  $120,034,822 
Distributions reinvested  335,016  3,655,027  634,620  6,949,086 
Repurchased  (5,536,755)  (61,168,435)  (7,332,957)  (80,760,658) 
 
Net increase  2,236,075  $24,698,422  4,115,046  $46,223,250 
 
Total net increase  2,249,887  $24,851,459  4,147,038  $46,580,412 

 

54  Retirement Choices Portfolios | Annual report 

 


Affiliates of the Trust owned shares of beneficial interest of the following portfolios on August 31, 2014.

Portfolio  Class  % by Class 
Retirement Choices at 2055  Class R1  100% 
Retirement Choices at 2055  Class R2  100% 
Retirement Choices at 2055  Class R4  100% 
Retirement Choices at 2055  Class R6  100% 
Retirement Choices at 2055  Class 1  1% 
Retirement Choices at 2050  Class R1  90% 
Retirement Choices at 2050  Class R2  96% 
Retirement Choices at 2050  Class R4  100% 
Retirement Choices at 2050  Class R6  93% 
Retirement Choices at 2045  Class R1  98% 
Retirement Choices at 2045  Class R2  70% 
Retirement Choices at 2045  Class R4  100% 
Retirement Choices at 2045  Class R6  99% 
Retirement Choices at 2040  Class R1  100% 
Retirement Choices at 2040  Class R2  21% 
Retirement Choices at 2040  Class R4  100% 
Retirement Choices at 2040  Class R6  52% 
Retirement Choices at 2035  Class R1  100% 
Retirement Choices at 2035  Class R2  83% 
Retirement Choices at 2035  Class R4  100% 
Retirement Choices at 2035  Class R6  51% 
Retirement Choices at 2030  Class R1  100% 
Retirement Choices at 2030  Class R2  28% 
Retirement Choices at 2030  Class R4  100% 
Retirement Choices at 2030  Class R6  41% 
Retirement Choices at 2025  Class R1  99% 
Retirement Choices at 2025  Class R2  100% 
Retirement Choices at 2025  Class R4  100% 
Retirement Choices at 2025  Class R6  19% 
Retirement Choices at 2020  Class R1  99% 
Retirement Choices at 2020  Class R2  41% 
Retirement Choices at 2020  Class R4  100% 
Retirement Choices at 2020  Class R6  26% 
Retirement Choices at 2015  Class R1  97% 
Retirement Choices at 2015  Class R2  100% 
Retirement Choices at 2015  Class R4  100% 
Retirement Choices at 2015  Class R6  50% 
Retirement Choices at 2010  Class R1  99% 
Retirement Choices at 2010  Class R2  39% 
Retirement Choices at 2010  Class R4  100% 
Retirement Choices at 2010  Class R6  63% 

 

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to the following for the year ended August 31, 2014:

Portfolio  Purchases  Sales 
Retirement Choices at 2055  $8,240,012  $339,236 
Retirement Choices at 2050  148,100,734  27,331,450 
Retirement Choices at 2045  156,387,900  37,544,706 
Retirement Choices at 2040  202,731,448  49,528,137 
Retirement Choices at 2035  270,593,464  74,104,571 
Retirement Choices at 2030  346,650,581  96,264,061 
Retirement Choices at 2025  389,336,029  148,465,276 
Retirement Choices at 2020  261,432,569  140,494,953 
Retirement Choices at 2015  110,596,849  96,515,080 
Retirement Choices at 2010  91,583,750  66,104,494 

Note 7 – Investment in affiliated underlying funds

The portfolios invest primarily in affiliated underlying funds that are managed by the Advisor and its affiliates. The portfolios do not invest in the affiliated underlying funds for the purpose of exercising management or control; however, the portfolios’

Annual report | Retirement Choices Portfolios  55 

 


investment may represent a significant portion of each underlying fund’s net assets. At August 31, 2014, each portfolio listed below held 5% or more of the net assets of the underlying funds shown below:

Portfolio  Affiliated Class NAV  Underlying Funds Net Assets 
Retirement Choices at 2045  John Hancock Funds II Strategic Equity Allocation Fund  6.0% 
Retirement Choices at 2040  John Hancock Funds II Strategic Equity Allocation Fund  7.9% 
Retirement Choices at 2035  John Hancock Funds II Strategic Equity Allocation Fund  10.3% 
Retirement Choices at 2030  John Hancock Funds II Strategic Equity Allocation Fund  11.5% 
Retirement Choices at 2025  John Hancock Funds II Short Term Government Income Fund  8.5% 
Retirement Choices at 2025  John Hancock Funds II Strategic Equity Allocation Fund  9.5% 
Retirement Choices at 2020  John Hancock Funds II Short Term Government Income Fund  6.2% 

Information regarding the portfolios fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the portfolios from their investments in affiliated underlying funds is as follows:

          Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Security  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Choices at 2055 Portfolio               
Short Term Government Income  —  7,568  (299)  7,269  $60  —  ($12)  $71,159 
Strategic Equity Allocation  —  436,730  (17,907)  418,823  —  —  382  5,846,774 
          $60  —  $370  $5,917,933 
Retirement Choices at 2050 Portfolio               
Short Term Government Income  138,925  205,233  (4,420)  339,738  $34,271  —  ($1,337)  $3,326,035 
Strategic Equity Allocation  12,504,423  6,700,399  (254,285)  18,950,537  2,846,549  $2,922,303  519,285  264,549,491 
          $2,880,820  $2,922,303  $517,948  $267,875,526 
Retirement Choices at 2045 Portfolio               
Short Term Government Income  190,791  161,915  (9,428)  343,278  $36,781  —  ($2,774)  $3,360,690 
Strategic Equity Allocation  19,161,378  6,621,082  (281,587)  25,500,873  4,159,585  $4,270,281  (26,454)  355,992,189 
          $4,196,366  $4,270,281  ($29,228)  $359,352,879 
Retirement Choices at 2040 Portfolio               
Short Term Government Income  249,614  152,988  (14,216)  388,386  $41,793  —  ($4,164)  $3,802,300 
Strategic Equity Allocation  25,817,992  8,104,623  (269,628)  33,652,987  5,569,887  $5,718,115  (22,270)  469,795,697 
          $5,611,680  $5,718,115  ($26,434)  $473,597,997 
Retirement Choices at 2035 Portfolio               
Short Term Government Income  697,879  300,691  (33,715)  964,855  $105,699  —  ($10,037)  $9,445,932 
Strategic Equity Allocation  35,176,133  9,665,645  (810,644)  44,031,134  7,452,501  $7,650,830  49,656  614,674,637 
          $7,558,200  $7,650,830  $39,619  $624,120,569 
Retirement Choices at 2030 Portfolio               
Short Term Government Income  893,719  327,407  (56,412)  1,164,714  $128,907  —  ($16,601)  $11,402,552 
Strategic Equity Allocation  39,661,053  10,393,417  (1,032,178)  49,022,292  8,309,157  $8,530,283  85,196  684,351,198 
          $8,438,064  $8,530,283  $68,595  $695,753,750 
Retirement Choices at 2025 Portfolio               
Short Term Government Income  1,576,001  528,892  (88,560)  2,016,333  $226,536  —  ($26,227)  $19,739,900 
Strategic Equity Allocation  35,536,898  8,129,209  (3,161,729)  40,504,378  7,087,680  $7,276,300  1,527,662  565,441,111 
          $7,314,216  $7,276,300  $1,501,435  $585,181,011 
Retirement Choices at 2020 Portfolio               
Short Term Government Income  1,232,782  313,316  (75,470)  1,470,628  $174,128  —  ($21,462)  $14,397,447 
Strategic Equity Allocation  18,809,310  3,830,443  (4,047,819)  18,591,934  3,470,730  $3,563,094  3,495,373  259,543,395 
          $3,644,858  $3,563,094  $3,473,911  $273,940,842 
Retirement Choices at 2015 Portfolio               
Short Term Government Income  872,505  182,258  (111,705)  943,058  $121,300  —  ($31,846)  $9,232,541 
Strategic Equity Allocation  4,262,592  1,082,499  (2,018,046)  3,327,045  699,337  $717,948  1,687,527  46,445,549 
          $820,637  $717,948  $1,655,681  $55,678,090 
Retirement Choices at 2010 Portfolio               
Short Term Government Income  483,646  163,222  (95,776)  551,092  $68,163  —  ($27,327)  $5,395,187 
Strategic Equity Allocation  1,493,345  672,731  (716,645)  1,449,431  290,894  $298,636  124,824  20,234,059 
          $359,057  $298,636  $97,497  $25,629,246 

 

56  Retirement Choices Portfolios | Annual report 

 


Auditors’ report

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of John Hancock Funds II:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Retirement Choices at 2010 Portfolio, John Hancock Retirement Choices at 2015 Portfolio, John Hancock Retirement Choices at 2020 Portfolio, John Hancock Retirement Choices at 2025 Portfolio, John Hancock Retirement Choices at 2030 Portfolio, John Hancock Retirement Choices at 2035 Portfolio, John Hancock Retirement Choices at 2040 Portfolio, John Hancock Retirement Choices at 2045 Portfolio, John Hancock Retirement Choices at 2050 Portfolio and John Hancock Retirement Choices at 2055 Portfolio, which are each a part of John Hancock Funds II (the “Trust”) at August 31, 2014, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the transfer agent and custodian, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

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Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the portfolios, if any, paid during the taxable year ended August 31, 2014.

The portfolios report the maximum amount allowable of their net taxable income as eligible for the corporate dividends-received deduction.

The portfolios report the maximum amount allowable of their net taxable income as qualified dividend income as provided in the Jobs and Growth Tax Relief Reconciliation Act of 2003.

The portfolios below paid the following amounts in capital gain dividends.

Portfolio  Capital Gain 
Retirement Choices at 2030  $36,210 
Retirement Choices at 2025  267,146 
Retirement Choices at 2020  1,457,156 
Retirement Choices at 2015  342,281 
Retirement Choices at 2010  42,094 

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

58  Retirement Choices Portfolios | Annual report 

 


EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES

At in-person meetings held on March 11–13, 2014, the Board of Trustees (the Board) of John Hancock Funds II (the Trust), including all of the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), approved Retirement Choices at 2055 Portfolio (2055 Portfolio), a new series of the Trust.

This section describes the evaluation by the Board of:

(a) an advisory agreement between the Trust and John Hancock Advisers, LLC (the Advisor) relating to the 2055 Portfolio (the Advisory Agreement);

(b) an amendment to the subadvisory agreement between the Advisor and John Hancock Asset Management a division of Manulife Asset Management (US) LLC (JHAM US) to add the 2055 Portfolio (the JHAM US Subadvisory Agreement); and

(c) an amendment to the subadvisory agreement between the Advisor and John Hancock Asset Management a division of Manulife Asset Management (North America) Limited (JHAM NA, and together with JHAM US, the Subadvisors) to add the 2055 Portfolio (the JHAM NA Subadvisory Agreement, and together with the JHAM US Subadvisory Agreement, the Subadvisory Agreements).

In considering the Advisory Agreement and the Subadvisory Agreements with respect to the 2055 Portfolio, the Board received in advance of the meeting a variety of materials relating to the 2055 Portfolio, the Advisor and the Subadvisors, including comparative fee and expense information for a peer group of similar mutual funds, and including with respect to the Subadvisors, performance information for comparatively managed accounts, as applicable, and other information provided by the Advisor and the Subadvisors regarding the nature, extent, and quality of services to be provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the 2055 Portfolio and any compensation paid to affiliates of the Advisor. The Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisors to the John Hancock Funds (the Funds), including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisors with respect to the other funds that they manage. The Board noted the affiliation of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the 2055 Portfolio by the Advisor’s affiliates, including distribution services. The Board also took into account information with respect to the 2055 Portfolio presented at their December 2013 meeting.

Throughout the process, the Board asked questions of and were afforded the opportunity to request additional information from management. The Board is assisted by legal counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed Advisory Agreement and Subadvisory Agreements and discussed the proposed Advisory Agreement and Subadvisory Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the 2055 Portfolio, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of fund performance and operations throughout the year.

Nature, Extent, and Quality of Services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services to be provided to the 2055 Portfolio, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the Funds’ compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor will be responsible for the management of the day-to-day operations of the 2055 Portfolio, including but not limited to, general supervision of and coordination of the services to be provided by the Subadvisors, and also will be responsible for monitoring and reviewing the activities of the Subadvisors and other third-party service providers.

In considering the nature, extent and quality of the services to be provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

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In the course of its deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationships, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives; review of brokerage matters, including with respect to trade allocation and best execution; and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications, and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the funds;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the 2055 Portfolio; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust, and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that Advisor may reasonably be expected to provide a high quality of services under the Advisory Agreement with respect to the 2055 Portfolio.

Investment performance. In connection with its consideration of the Advisory Agreement, the Board considered, at this and at prior meetings, the performance of other comparable funds or accounts, if any, managed by the Advisor and Subadvisors and the performance of their respective benchmarks and/or peer groups. The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the Subadvisors.

Fees and Expenses. The Board reviewed comparative fee and expense information with respect to similarly situated investment companies deemed to be comparable to the 2055 Portfolio. The Board reviewed information provided by the Advisor concerning investment advisory fees charged to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisors’ services to the 2055 Portfolio and the services they provide to other such comparable clients or funds.

The Board took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor, and not the 2055 Portfolio, would be responsible for paying the subadvisory fees. The Board also noted that the Advisor has agreed to waive fees and/or reimburse expenses with respect to the 2055 Portfolio. The Board also took into account that management has agreed to implement an overall fee waiver across a number of funds in the complex, which is discussed further below. The Board also noted management’s discussion of the 2055 Portfolio’s anticipated expenses.

In addition, the Trustees reviewed the advisory fee to be paid to the Advisor for the 2055 Portfolio, which is a fund of funds, and concluded that such fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the 2055 Portfolio, and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the 2055 Portfolio and those of its underlying portfolios.

The Board concluded that the advisory fees to be paid by the Trust with respect to the 2055 Portfolio are reasonable.

Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisors) from the Advisor’s relationship with the 2055 Portfolio, the Board:

(a) considered the financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the anticipated net profitability to the Advisor and its affiliates with respect to the 2055 Portfolio;

(c) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain Funds of the Trust and noted that these tax benefits, which are not available to contract owners under applicable income tax law, are reflected in the profitability information reviewed by the Board;

(d) considered that the Advisor will also provide administrative services to the 2055 Portfolio on a cost basis pursuant to an administrative services agreement;

(e) noted that the Subadvisors are affiliates of the Advisor;

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(f) noted that affiliates of the Advisor will provide transfer agency services and distribution services to the 2055 Portfolio, and that the Trust’s distributor will receive Rule 12b-1 payments to support distribution of the 2055 Portfolio;

(g) noted that the Advisor will derive reputational and other indirect benefits from providing advisory services to the 2055 Portfolio;

(h) noted that the subadvisory fees for the 2055 Portfolio will be paid by Advisor;

(i) with respect to the 2055 Portfolio, the Board noted that the advisory fee is in addition to the fees received by the Advisor and its affiliates with regard to the underlying portfolios in which the 2055 Portfolio may invest; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it will provide to the 2055 Portfolio and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisors) from their relationship with the 2055 Portfolio is reasonable and not excessive.

Economies of Scale. In considering the extent to which economies of scale would be realized if the 2055 Portfolio grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that with respect to the John Hancock underlying portfolios in which the 2055 Portfolio invests the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such underlying portfolios and for each of the other John Hancock funds in the complex (except as discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement): The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.0 15% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are each of the fund of funds of the Trust and of John Hancock Variable Insurance Trust. The 2055 Portfolio also benefits from such overall management fee waiver through its investment in underlying portfolios that include certain of the Participating Portfolios, which are subject to the Reimbursement);

(b) considered that the Advisor has agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the 2055 Portfolio to reduce operating expenses;

(c) reviewed the Trust’s and the 2055 Portfolio’s advisory fee structure and concluded that: (i) the 2055 Portfolio’s fee structure contains breakpoints at the advisory fee level; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the 2055 Portfolio to benefit from economies of scale if the 2055 Portfolio grows; and

(d) the Board also considered the potential effect of the 2055 Portfolio’s future growth in size on its performance and fees. The Board also noted that if the 2055 Portfolio’s assets increase over time, the 2055 Portfolio may realize other economies of scale.

Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(a) information relating to each Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(b) the comparative performance of the 2055 Portfolio’s benchmarks and comparable funds managed by the 2055 Portfolio’s portfolio managers; and

(c) the proposed subadvisory fee for the 2055 Portfolio.

Nature, Extent, and Quality of Services. With respect to the services to be provided by each of the Subadvisors, the Board received information provided to the Board by each of the Subadvisors, as well as took into account information presented throughout the past year. The Board considered the each Subadvisor’s current level of staffing and their overall resources, as well received information relating to a Subadvisor’s compensation programs. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of each Subadvisor’s investment and compliance personnel who will provide services to the 2055 Portfolio. The Board also considered, among other things, each Subadvisor’s compliance programs and any disciplinary history. The Board also considered each Subadvisor’s risk assessment and monitoring processes. The Board reviewed each Subadvisor’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular periodic reviews of each Subadvisor and its operations in regard to the Funds, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisors and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of each Subadvisor and procedures reasonably designed by it to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisors.

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The Board considered the Subadvisors’ investment processes and philosophies. The Board took into account that each Subadvisor’s responsibilities will include the development and maintenance of an investment program for the 2055 Portfolio that is consistent with the 2055 Portfolio’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor Compensation. In considering the cost of services to be provided by the Subadvisors and the profitability to the Subadvisors of their relationship to the 2055 Portfolio, the Board noted that the fees under the Subadvisory Agreements are paid by the Advisor and not the 2055 Portfolio. The Board also received information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreements.

In addition, the Board considered other potential indirect benefits that the Subadvisors and their affiliates may receive from the Subadvisors’ relationship with the 2055 Portfolio, such as the opportunity to provide advisory services to additional John Hancock Funds and reputational benefits.

Subadvisory Fees. The Board considered that the 2055 Portfolio will pay advisory fees to the Advisor and that, in turn, the Advisor will pay subadvisory fees to the Subadvisors. The Board considered the 2055 Portfolio’s subadvisory fee compared to similarly situated investment companies deemed to be comparable to the 2055 Portfolio, as applicable. The Board also took into account the sub-advisory fees paid by the Advisor to fees charged by each Subadvisor to manage other sub-advised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor Performance. The Board considered performance results of comparable funds managed by the Subadvisors against an applicable benchmark. The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the Subadvisors. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisors. The Board was mindful of the Advisor’s focus on the Subadvisors’ performance. The Board also noted each Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreements was based on a number of determinations, including the following:

(1) Each Subadvisor has extensive experience and demonstrated skills as a manager, and currently subadvises other funds of the Trust and the fund complex and the Board is generally satisfied with each Subadvisor’s management of these funds, and may reasonably be expected to provide a high quality of investment management services to the 2055 Portfolio;

(2) The proposed subadvisory fees are reasonable in relation to the level and quality of services to be provided; and

(3) The subadvisory fees are paid by the Advisor and not the 2055 Portfolio and the advisory fee for the 2055 Portfolio contains breakpoints that permit shareholders to benefit from economies of scale.

In addition, the Trustees reviewed the subadvisory fee to be paid to each Subadvisor for the 2055 Portfolio and concluded that such subadvisory fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the 2055 Portfolio, and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the 2055 Portfolio and those of its underlying portfolios.

* * * 

Based on the Board’s evaluation of all factors that it deemed to be material, including those factors described above, and assisted by the advice of independent legal counsel, the Board, including the Independent Trustees, concluded that approval of the Advisory Agreement and the Subadvisory Agreements would be in the best interest of the 2055 Portfolio and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreements.

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EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES

This section describes the evaluation by the Board of Trustees (the Board) of John Hancock Funds II (the Trust) of the Advisory Agreement (the Advisory Agreement) and each Subadvisory Agreement (collectively, the Subadvisory Agreements) with respect to each of the portfolios of the Trust included in this report (the Funds). The Advisory Agreement and Subadvisory Agreements are collectively referred to as the Agreements. Prior to the June 23–25, 2014 meeting at which the Agreements were approved, the Board also discussed and considered information regarding the proposed continuation of the Agreements at an in-person meeting held on May 27–29, 2014.

The Advisory and Subadvisory Agreement for John Hancock Retirement Choices at 2055 was not considered at this time because that fund recently commenced operations.

Approval of Advisory and Subadvisory Agreements

At in-person meetings held on June 23–25, 2014, the Board, including the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), reap-proved for an annual period, the continuation of the Advisory Agreement between the Trust and the Advisor and the applicable Subadvisory Agreements between the Advisor and the sub-advisors (each, a Subadvisor and collectively, the Subadvisors) with respect to each of the Funds.

In considering the Advisory Agreement and the Subadvisory Agreements with respect to each Fund, the Board received in advance of the meetings a variety of materials relating to each Fund, the Advisor and each Subadvisor, including comparative performance, fee and expense information for peer groups of similar mutual funds prepared by an independent third-party provider of mutual fund data; performance information for the Funds’ benchmark indices; and, with respect to each Subadvisor, comparative performance information for comparably managed accounts, as applicable; and other information provided by the Advisor and the Subadvisors regarding the nature, extent and quality of services provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the Funds and any compensation paid to affiliates of the Advisor. At the meetings at which the renewal of the Advisory Agreement and Subadvisory Agreements are considered, particular focus is given to information concerning Fund performance, comparability of fees and total expenses, and profitability. However, the Board notes that the evaluation process with respect to the Advisor and the Subadvisors is an ongoing one. In this regard, the Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisors to the Funds, including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisors with respect to the Funds they manage. The Board noted the affiliation of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the Funds by the Advisor’s affiliates, including distribution services.

Throughout the process, the Board asked questions of and requested additional information from management. The Board is assisted by legal counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed continuation of the Agreements and discussed the proposed continuation of the Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to each Fund, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s ongoing regular review of Fund performance and operations throughout the year.

Nature, Extent and Quality of Services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services provided to the Funds, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history, including its Form ADV. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the Funds’ compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor is responsible for the management of the day-to-day operations of the Funds, including but not limited to, general supervision of and coordination of the services provided by the Subadvisors, and is also responsible for monitoring and reviewing the activities of the Subadvisors and third-party service providers.

In considering the nature, extent and quality of the services provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

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In the course of their deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationships, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives, review of brokerage matters including with respect to trade allocation and best execution, and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the Funds;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the Funds; and

(f) the Advisor’s reputation and experience in serving as an investment adviser to the Trust and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that the Advisor may reasonably be expected to continue to provide a high quality of services under the Advisory Agreement with respect to the Funds.

Investment Performance. In considering each Fund’s performance, the Board noted that it reviews at its regularly scheduled meetings information about the Funds’ performance results. In connection with the consideration of the Advisory Agreement, the Board:

(a) reviewed information prepared by management regarding the Funds’ performance;

(b) considered the comparative performance of each Fund’s respective benchmark;

(c) considered the performance of comparable funds, if any, as included in the report prepared by an independent third-party provider of mutual fund data; and

(d) took into account the Advisor’s analysis of each Fund’s performance and its plans and recommendations regarding the Trust’s subadvisory arrangements generally and with respect to particular Funds.

The Board concluded that the performance of each of the Funds has generally been in line with or generally outperformed the historical performance of comparable funds and/or the Fund’s respective benchmark, with certain exceptions noted in Appendix A. The Board also concluded that each Fund’s performance is being monitored and reasonably addressed, where appropriate.

Fees and Expenses. The Board reviewed comparative information prepared by an independent third-party provider of mutual fund data including, among other data, each Fund’s contractual and net management fees (and subadvisory fees, to the extent available) and total expenses as compared to similarly situated investment companies deemed to be comparable to the Fund. The Board considered each Fund’s ranking within a smaller group of peer funds chosen by the independent third-party provider, as well as the Fund’s ranking within broader groups of funds. In comparing each Fund’s contractual and net management fees to that of comparable funds, the Board noted that such fee includes both advisory and administrative costs.

The Board took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fees. The Board also noted that, in addition, the Advisor is currently waiving fees and/or reimbursing expenses with respect to each of the Funds. The Board also noted that the Advisor pays the subadvisory fees of the Funds. The Board also took into account that management had agreed to implement an overall fee waiver across the complex, which is discussed further below. The Board also noted management’s discussion of the Funds’ expenses, as well as certain actions taken over the past several years to reduce the Funds’ operating expenses. The Board reviewed information provided by the Advisor concerning investment advisory fees charged to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisor’s services to a Fund and the services they provide to other such comparable clients or funds. The Board concluded that the advisory fee paid with respect to each of the Funds is reasonable.

In addition, the Trustees reviewed the advisory fee to be paid to the Advisor for each Fund, each of which is a fund of funds, and concluded that the advisory fee to be paid to the Advisor with respect to each Fund is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the Fund and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of a Fund and those of its underlying portfolios.

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Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisors) from the Advisor’s relationship with the Trust, the Board:

(a) reviewed financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the net profitability to the Advisor and its affiliates, of each Fund;

(c) received and reviewed profitability information with respect to the John Hancock fund complex as a whole;

(d) received information with respect to the Advisor’s allocation methodologies used in preparing the profitability data;

(e) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain Funds of the Trust and noted that these tax benefits, which are not available to contract owners under applicable income tax law, are reflected in the profitability information reviewed by the Board;

(f) considered that the Advisor also provides administrative services to the Funds on a cost basis pursuant to an administrative services agreement;

(g) noted that the Funds’ Subadvisors are affiliates of the Advisor;

(h) noted that affiliates of the Advisor provide transfer agency services and distribution services to the Funds, and that the Trust’s distributor also receives Rule 12b-1 payments to support distribution of the products;

(i) noted that the Advisor also derives reputational and other indirect benefits from providing advisory services to the Funds;

(j) noted that the subadvisory fees for the Funds are paid by the Advisor;

(k) with respect to each Fund, the Board noted that the advisory fee is in addition to the fees received by the Advisor and its affiliates with regard to the underlying portfolios in which the Funds may invest; and

(l) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it provides to each Fund and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including any Subadvisors), from their relationship with each Fund was reasonable and not excessive.

Economies of Scale. In considering the extent to which economies of scale would be realized as a Fund grows and whether fee levels reflect these economies of scale for the benefit of Fund shareholders, the Board:

(a) considered that with respect to the John Hancock underlying portfolios in which the Funds invest, the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such underlying portfolios and for each of the other John Hancock funds in the complex (except as discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement): The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are each of the fund of funds of the Trust and of John Hancock Variable Insurance Trust. The Funds also benefit from such overall management fee waiver through their investment in underlying portfolios that include certain of the Participating Portfolios, which are subject to the Reimbursement.)

(b) reviewed the Trust’s advisory fee structure and concluded that (i) the Funds’ fee structures contain breakpoints at the advisory fee level and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the Funds to benefit from economies of scale if those Funds grow. The Board also took into account management’s discussion of the Funds’ advisory fee structure; and

(c) the Board also considered the effect of the Funds’ growth in size on their performance and fees. The Board also noted that if the Funds’ assets increase over time, the Funds may realize other economies of scale.

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Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(1) information relating to each Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(2) the historical and current performance of each Fund and comparative performance information relating to the Fund’s benchmark and comparable funds; and

(3) the subadvisory fee for each Fund, including any breakpoints, and comparative fee information, where available, prepared by an independent third party provider of mutual fund data.

Nature, Extent and Quality of Services. With respect to the services provided by each of the Subadvisors with respect to each Fund, the Board received information provided to the Board by each Subadvisor, including each Subadvisor’s Form ADV, as well as took into account information presented throughout the past year. The Board considered each Subadvisor’s current level of staffing and its overall resources, as well as received information relating to a Subadvisor’s compensation program. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background and responsibilities of the Subadvisor’s investment and compliance personnel who provide services to the Funds. The Board also considered, among other things, the Subadvisor’s compliance program and any disciplinary history. The Board also considered the Subadvisor’s risk assessment and monitoring process. The Board reviewed each Subadvisor’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular, periodic reviews of each Subadvisor and its operations, including regarding investment processes and organizational and staffing matters. The Board also noted that the CCO and his staff conduct regular, periodic compliance reviews with each of the Subadvisors and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of the Subadvisors and procedures reasonably designed by them to assure compliance with the federal securities laws. The Board also took into account the financial condition of each Subadvisor.

The Board considered each Subadvisor’s investment process and philosophy. The Board took into account that each Subadvisor’s responsibilities include the development and maintenance of an investment program for the applicable Fund which is consistent with the Fund’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor Compensation. In considering the cost of services to be provided by each Subadvisor and the profitability to that Subadvisor of its relationship with the Fund, the Board noted that the fees under the Subadvisory Agreements are paid by the Advisor and not the Funds.

The Board also received information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreements. In addition, the Board considered other potential indirect benefits that the Subadvisors and their affiliates may receive from the Subadvisor’s relationship with the Fund, such as the opportunity to provide advisory services to additional portfolios of the Trust and reputational benefits.

Subadvisory Fees. The Board considered that the Fund pays an advisory fee to the Advisor and that, in turn, the Advisor pays a subadvisory fee to each Subadvisor. As noted above, the Board also considered, if available, each Fund’s sub-advisory fees as compared to similarly situated investment companies deemed to be comparable to the Fund as included in the report prepared by the independent third party provider of mutual fund data. The Board also took into account the sub-advisory fees paid by the Advisor to fees charged by each Fund’s Subadvisor to manage other sub-advised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor Performance. As noted above, the Board considered each Fund’s performance as compared to the Fund’s respective peer group and benchmark and noted that the Board reviews information about the Fund’s performance results at its regularly scheduled meetings. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style, and risk-adjusted performance of each Subadvisor. The Board was mindful of the Advisor’s focus on each Subadvisor’s performance.

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The Board also noted each Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreement with respect to each Fund was based on a number of determinations, including the following:

(1) Each Subadvisor has extensive experience and demonstrated skills as a manager;

(2) Although not without variation, the performance of each Fund managed by a Subadvisor generally has been in line with or outperformed the historical performance of comparable funds and the Fund’s respective benchmarks with the exceptions noted in Appendix A (with respect to such exceptions, a Board concluded that performance is being monitored and reasonably addressed, where appropriate);

(3) The subadvisory fees are reasonable in relation to the level and quality of services being provided; and

(4) The subadvisory fees are paid by the Advisor and not the Funds and the advisory fee for each of the Funds contains breakpoints that permit shareholders to benefit from economies of scale.

In addition, in the case of each Fund, the Trustees reviewed the subadvisory fee to be paid to the Subadvisor for the Fund and concluded that the subadvisory fee to be paid to the Subadvisor with respect to each Fund is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the Fund and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of a Fund and those of its underlying portfolios. Additional information relating to each Fund’s fees and expenses and performance that the Board considered in approving the Advisory Agreement and Subadvisory Agreement for a particular Fund is set forth in Appendix A.

* * * 

Based on their evaluation of all factors that they deemed to be material, including those factors described above, the Board, including the Independent Trustees, concluded that renewal of the Advisory Agreement and each of the Subadvisory Agreements with respect to each Fund would be in the best interest of each of the respective Funds and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreement with respect to each Fund for an additional one-year period.

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Appendix A 

 

  Performance as of     
Portfolio (Subadvisor)  December 31, 2013  Fees and Expenses  Comments 
Retirement Choices at 2010  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
  Fund outperformed for the  data not provided due to  management’s discussion 
(John Hancock Asset  one- and three-year periods.  limited size of Lipper peer  of the Fund’s performance 
Management a division of    group for this purpose.  including differences in the 
Manulife Asset Management  Lipper Category — The    Fund’s investment strate- 
(North America) Limited)  Fund underperformed the  Net management fees for  gies relative to the Lipper 
  average for the one-and  this Fund are higher than the  peer group. 
(John Hancock Asset  three-year periods. peer group median. 
Management a division of   
Manulife Asset Management     The Board also noted the 
(US) LLC)   Total expenses for this Fund  Fund’s favorable performance 
  are lower than the peer  relative to its benchmark 
    group median.  index for the one- and 
      three-year periods. 
 
      The Board took into account 
      management's discussion of 
      the Fund's expenses, includ- 
      ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 
Retirement Choices at 2015  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
  Fund outperformed for the  data not provided due to  management’s discussion 
(John Hancock Asset  one- and three-year periods.  limited size of Lipper peer  of the Fund’s performance 
Management a division of    group for this purpose.  including differences in the 
Manulife Asset Management  Lipper Category — The    Fund’s investment strate- 
(North America) Limited)  Fund underperformed the  Net management fees for  gies relative to the Lipper 
  average for the one-and  this Fund are higher than the  peer group. 
(John Hancock Asset  three-year periods.  peer group median. 
Management a division of      The Board also noted the 
Manulife Asset Management    Total expenses for this Fund  Fund’s favorable performance 
(US) LLC)    are lower than the peer  relative to its benchmark 
    group median.  index for the three- and 
      five-year periods. 
 
      The Board took into account 
      management's discussion of 
      the Fund's expenses, includ- 
      ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 
Retirement Choices at 2020  Benchmark Index —  Subadvisor fee comparative  The Board took into account 
  The Fund underper-  data not provided due to  management’s discussion 
(John Hancock Asset  formed for the one- and  limited size of Lipper peer  of the Fund’s performance 
Management a division of  three-year periods.  group for this purpose.  including differences in the 
Manulife Asset Management      Fund’s investment strate- 
(North America) Limited)  Lipper Category — The  Net management fees for  gies relative to the Lipper 
  Fund underperformed the  this Fund are higher than the  peer group. 
(John Hancock Asset  average for the one- and  peer group median.
Management a division of  three-year periods.    The Board took into account 
Manulife Asset Management    Total expenses for this Fund  management's discussion of 
(US) LLC)    are lower than the peer  the Fund's expenses, includ- 
    group median.  ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 

 

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  Performance as of     
Portfolio (Subadvisor)  December 31, 2013  Fees and Expenses  Comments 
Retirement Choices at 2025  Benchmark Index —  Subadvisor fee comparative  The Board took into account 
  The Fund underper-  data not provided due to  management’s discussion 
(John Hancock Asset  formed for the one- and  limited size of Lipper peer  of the Fund’s performance 
Management a division of  three-year periods.  group for this purpose.  including differences in the 
Manulife Asset Management      Fund’s investment strate- 
(North America) Limited)  Lipper Category — The  Net management fees for  gies relative to the Lipper 
Fund underperformed the  this Fund are higher than the  peer group.
(John Hancock Asset average for the one- and  peer group median. 
Management a division of  three-year periods. The Board took into account
Manulife Asset Management   Total expenses for this Fund  management's discussion of 
(US) LLC)   are lower than the peer  the Fund's expenses, includ- 
    group median.  ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 
Retirement Choices at 2030  Benchmark Index —  Subadvisor fee comparative  The Board took into account 
  The Fund underper-  data not provided due to  management’s discussion 
(John Hancock Asset  formed for the one- and  limited size of Lipper peer  of the Fund’s performance 
Management a division of  three-year periods.  group for this purpose.  including differences in the 
Manulife Asset Management      Fund’s investment strate- 
(North America) Limited)  Lipper Category — The  Net management fees for  gies relative to the Lipper 
  Fund underperformed the  this Fund are higher than the  peer group. 
(John Hancock Asset  average for the one-year  peer group median. 
Management a division of  period and outperformed The Board also noted the 
Manulife Asset Management the average for the three-year Total Expenses for this Fund  Fund’s favorable performance
(US) LLC) period.  are lower than the peer relative to its peer group for 
  group median. the three-year period.
   
      The Board took into account 
      management's discussion of 
      the Fund's expenses, includ- 
      ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 
Retirement Choices at 2035  Benchmark Index —  Subadvisor fee comparative  The Board took into account 
  The Fund underper-  data not provided due to  management’s discussion 
(John Hancock Asset  formed for the one- and  limited size of Lipper peer  of the Fund’s performance 
Management a division of  three-year periods.  group for this purpose.  including differences in the 
Manulife Asset Management      Fund’s investment strate- 
(North America) Limited)  Lipper Category — The  Net management fees for  gies relative to the Lipper 
  Fund underperformed the  this Fund are higher than the  peer group. 
(John Hancock Asset  average for the one- and  peer group median. 
Management a division of  three-year periods.    The Board took into account 
Manulife Asset Management    Total expenses for this Fund  management's discussion of 
(US) LLC)    are lower than the peer  the Fund's expenses, including 
    group median.  fee and expense waivers appli- 
      cable to the Fund and certain 
      of its classes. 

 

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  Performance as of     
Portfolio (Subadvisor)  December 31, 2013  Fees and Expenses  Comments 
JHF II Retirement Choices  Benchmark Index —  Subadvisor fee comparative  The Board took into account 
at 2040  The Fund underper-  data not provided due to  management’s discussion 
  formed for the one- and  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  three-year periods.  group for this purpose.  including differences in the 
Management a division of      Fund’s investment strate- 
Manulife Asset Management  Lipper Category — The  Net management fees for  gies relative to the Lipper 
(North America) Limited)  Fund underperformed the  this Fund are higher than the  peer group. 
  average for the one-year  peer group median.   
(John Hancock Asset  period and outperformed    The Board also noted the 
Management a division of  the average for the three-year  Total expenses for this Fund  Fund’s favorable performance 
Manulife Asset Management  period. are lower than the peer  relative to its peer group for
(US) LLC)   group median. the three-year period.
   
      The Board took into account 
      management's discussion of 
      the Fund's expenses, includ- 
      ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 
JHF II Retirement Choices  Benchmark Index —  Subadvisor fee comparative  The Board took into account 
at 2045  The Fund underper-  data not provided due to  management’s discussion 
  formed for the one- and  limited size of Lipper peer  of the Fund’s performance 
(John Hancock Asset  three-year periods.  group for this purpose.  including differences in the 
Management a division of      Fund’s investment strate- 
Manulife Asset Management  Lipper Category — The  Net management fees for  gies relative to the Lipper 
(North America) Limited)  Fund underperformed the  this Fund are higher than the  peer group. 
  average for the one- and  peer group median.   
(John Hancock Asset  three-year periods.    The Board took into account 
Management a division of    Total expenses for this Fund  management's discussion of 
Manulife Asset Management    are lower than the peer  the Fund's expenses, includ- 
(US) LLC)    group median.  ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 
JHF II Retirement Choices  Benchmark Index — The  Subadvisor fee comparative  The Board took into account 
at 2050  Fund underperformed for  data not provided due to  management’s discussion 
  the one-year period.  limited size of Lipper peer  of the Fund’s performance, 
(John Hancock Asset    group for this purpose.  including differences in the 
Management a division of  Lipper Category — The    Fund’s investment strate- 
Manulife Asset Management  Fund underperformed the  Net management fees for  gies relative to the Lipper 
(North America) Limited)  average for the one-year  this Fund are higher than the  peer group. 
  period.  peer group median.   
(John Hancock Asset      The Board also noted the 
Management a division of    Total expenses for this Fund  relatively short performance 
Manulife Asset Management    are lower than the peer  history of the Fund. 
(US) LLC)    group median.   
      The Board took into account 
      management's discussion of 
      the Fund's expenses, includ- 
      ing fee and expense waivers 
      applicable to the Fund and 
      certain of its classes. 

 

70  Retirement Choices Portfolios | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees

    Number of 
Name, year of birth  Trustee of  John Hancock 
Position(s) held with fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, 
Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) 
(1997–2011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut 
River Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).     
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and since 2012) and Chairperson of 
the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and Chairperson of the Board (since 2005), John Hancock Variable 
Insurance Trust; Trustee and Chairperson of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the 
University of Texas, Austin, Texas; Director, LIN Television (since 2009); Chairman (since 2009) and Director (since 2006), Lincoln National 
Corporation (insurance); Director, Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, Inc. (until 2007); former 
Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); former Advisory Director, JP Morgan Chase Bank (formerly 
Texas Commerce Bank–Austin) (until 2009).     
 
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).     
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). 
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). 

 

Annual report | Retirement Choices Portfolios  71 

 


Independent Trustees (continued)

Name, Year of Birth  Trustee of  John Hancock 
Position(s) held with Fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and John Hancock Funds II 
(since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The Barnes Group (since 2010); 
Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013).     
 
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).     
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of 
Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC 
(real estate) (since 2000); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, 
John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012).   
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The 
Moorings, Inc. (nonprofit continuing care community) (since 2012); 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).     

Non-Independent Trustees4

    Number of 
Name, year of birth  Trustee of  John Hancock 
Position(s) held with fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife 
Financial Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, 
including prior positions).     
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012).   
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance 
Company (since 2009); Chairman and Chief Executive Officer, Manulife Asset Management (since 2001, including prior positions); 
Director (since 2006), and President and Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).   

 

72  Retirement Choices Portfolios | Annual report 

 


Principal officers who are not Trustees

  Officer 
Name, year of birth  of the 
Position(s) held with fund  Trust 
Principal occupation(s) and other directorships during past 5 years  since 
 
Andrew G. Arnott, Born: 1971  2009 
President   
Senior Vice President, John Hancock Financial Services (since 2009); 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 (effective 
3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II 
(since 2007, including prior positions).   
 
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 funds3 and John Hancock Variable 
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions). 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

Annual report | Retirement Choices Portfolios  73 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisors 
Craig Bromley†  John Hancock Asset Management a division of 
Peter S. Burgess*  Manulife Asset Management (US) LLC 
William H. Cunningham  John Hancock Asset Management a division of 
Grace K. Fey  Manulife Asset Management (North America) Limited 
Theron S. Hoffman* 
Deborah C. Jackson  Principal distributor
Hassell H. McClellan  John Hancock Funds, LLC 
Gregory A. Russo 
Warren A. Thomson†  Custodian
  State Street Bank and Trust Company 
Officers 
Andrew G. Arnott  Transfer agent
President  John Hancock Signature Services, Inc. 
John J. Danello  Legal counsel
Senior Vice President, Secretary, and Chief Legal Officer  K&L Gates LLP 
 
Francis V. Knox, Jr.  Independent registered public accounting firm 
Chief Compliance Officer  PricewaterhouseCoopers LLP 
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

The portfolios’ proxy voting policies and procedures, as well as the portfolios’ 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 portfolios’ complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The portfolios’ 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 202-551-8090 to receive information on the operation of the SEC’s Public Reference Room.

We make this information on your portfolio, as well as monthly portfolio holdings, and other portfolio details available on our website at jhinvestments.com or by calling 800-225-5291.

You can also contact us:     
800-225-5291  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

74  Retirement Choices Portfolios | Annual report 

 



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


This report is for the information of the shareholders of John Hancock Retirement Choices Portfolios.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.  RCPA 8/14 
MF198777  10/14 

 


 

John Hancock Retirement Living through II 2050 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2050 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  12.13%  12.27%  12.52%  12.51%  15.11%  4.21%  14.56% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.02  2.87  2.52  1.24 
Net (%)  1.14  0.89  0.64  0.69 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

6  Retirement Living II Portfolios | Annual report 

 


John Hancock Retirement Living through II 2045 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2045 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  12.13%  12.27%  12.52%  12.41%  15.11%  4.21%  14.56% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.02  2.87  2.52  1.24 
Net (%)  1.14  0.89  0.64  0.69 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

Annual report | Retirement Living II Portfolios  7 

 

  

John Hancock Retirement Living through II 2040 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2040 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  12.02%  12.27%  12.52%  12.41%  15.11%  4.21%  14.56% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.02  2.87  2.52  1.24 
Net (%)  1.14  0.89  0.64  0.69 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

8  Retirement Living II Portfolios | Annual report 

 


John Hancock Retirement Living through II 2035 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2035 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  12.00%  12.25%  12.50%  12.49%  15.11%  4.21%  14.36% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.02  2.87  2.52  1.24 
Net (%)  1.14  0.89  0.64  0.69 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

Annual report | Retirement Living II Portfolios  9 

 


John Hancock Retirement Living through II 2030 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2030 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  11.38%  11.63%  11.88%  11.77%  15.11%  4.21%  13.61% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.03  2.88  2.53  1.25 
Net (%)  1.15  0.90  0.65  0.70 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

10  Retirement Living II Portfolios | Annual report 

 


John Hancock Retirement Living through II 2025 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2025 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  10.66%  10.91%  11.06%  11.05%  15.11%  4.21%  12.62% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.05  2.90  2.55  1.27 
Net (%)  1.17  0.92  0.67  0.72 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

Annual report | Retirement Living II Portfolios  11 

 


John Hancock Retirement Living through II 2020 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2020 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  9.69%  9.94%  10.19%  10.07%  15.11%  4.21%  11.31% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.07  2.92  2.57  1.29 
Net (%)  1.19  0.94  0.69  0.74 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

12  Retirement Living II Portfolios | Annual report 

 


John Hancock Retirement Living through II 2015 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2015 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  8.64%  8.89%  9.04%  9.03%  15.11%  4.21%  10.10% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.08  2.93  2.58  1.30 
Net (%)  1.20  0.95  0.70  0.75 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

Annual report | Retirement Living II Portfolios  13 

 


John Hancock Retirement Living through II 2010 Portfolio

Growth of $10,000

This chart and table show what happened to a hypothetical $10,000 investment in John Hancock Retirement Living through II 2010 Portfolio for the share classes and periods indicated, assuming all distributions were reinvested. For comparison, we’ve shown the same investment in a blended index and two separate indexes.


It is not possible to invest directly in an index. Index figures do not reflect expenses or sales charges, which would have resulted in lower values.

Performance chart

Total returns for the period ended 8-31-14

  Class R21  Class R41  Class R61  Class 11  Index 1  Index 2  Index 3 
Inception  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13  11-7-13 
Cumulative returns               
Since inception  8.01%  8.25%  8.40%  8.39%  15.11%  4.21%  9.10% 

Performance figures assume all distributions are reinvested.

The expense ratios of the portfolio, both net (including any fee waivers and/or expense limitations) and gross (excluding any fee waivers and/or expense limitations), are set forth according to the most recent publicly available prospectuses for the portfolio and may differ from those disclosed in the Financial highlights tables in this report. Had the fee waivers and expense limitations not been in place, gross expenses would apply. The following expense ratios include the expenses of the underlying affiliated funds in which the portfolio invests. The expense ratios are as follows:

Class R2* Class R4*^ Class R6* Class 1*
Gross (%)  3.10  2.95  2.60  1.32 
Net (%)  1.22  0.97  0.72  0.77 

* Expenses have been estimated for the portfolio’s first year of operations.

^ The portfolio’s distributor has contractually agreed to waive 0.10% of Rule 12b-1 fees for Class R4 shares.

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, the portfolio’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 portfolio’s website at jhinvestments.com.

This performance information does not reflect the deduction of taxes that a shareholder may pay on portfolio distributions or the redemption of portfolio shares. The portfolio’s performance results reflect any applicable fee waivers or expense reductions, without which the expenses would increase and results would have been less favorable.

1 For certain types of investors, as described in the portfolio’s prospectuses.

14  Retirement Living II Portfolios | Annual report 

 


Your expenses

As a shareholder of a John Hancock Funds II Retirement Living II Portfolio, you incur two types of costs: (1) transaction costs, including sales charges (loads) on certain purchases or redemptions, and (2) ongoing costs, including management fees, distribution and service (Rule 12b-1) fees, and other portfolio expenses. In addition to the operating expenses, which each portfolio bears directly, the portfolio indirectly bears a pro rata share of the operating expenses of the underlying funds in which each portfolio invests. Because the underlying funds have varied operating expenses and transaction costs and each portfolio may own different proportions of the underlying funds at different times, the amount of expenses incurred indirectly by the portfolio will vary. Had these indirect expenses been reflected in the following analysis, total expenses would have been higher than the amounts shown.

These examples are intended to help you understand your ongoing costs (in dollars) of investing in a portfolio so you can compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 at the beginning of the period and held for the entire period (March 1, 2014 through August 31, 2014).

Actual expenses:

The first line of each share class in the tables on the following pages provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes:

The second line of each share class in the table on the following pages provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed annualized rate of return of 5% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of each share class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. See the portfolios’ prospectuses for details regarding transaction costs.

Annual report | Retirement Living II Portfolios  15 

 


Shareholder expense example chart

        Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-2014  8-31-2014  3-1-2014–8-31-2014  Expense Ratio2 
Retirement Living through II 2055 Portfolio 3         
Class R2  Actual  $1,000.00  $1,071.00  $3.45  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.30  3.92  0.77% 
Class R4  Actual  1,000.00  1,072.00  2.33  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class R6  Actual  1,000.00  1,073.00  1.21  0.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.90  1.38  0.27% 
Class 1  Actual  1,000.00  1,073.00  1.44  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 
 
Retirement Living through II 2050 Portfolio         
Class R2  Actual  $1,000.00  $1,065.20  $4.01  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.30  3.92  0.77% 
Class R4  Actual  1,000.00  1,065.10  2.71  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class R6  Actual  1,000.00  1,067.10  1.41  0.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.80  1.38  0.27% 
Class 1  Actual  1,000.00  1,067.10  1.67  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 
 
Retirement Living through II 2045 Portfolio         
Class R2  Actual  $1,000.00  $1,065.20  $4.01  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.30  3.92  0.77% 
Class R4  Actual  1,000.00  1,065.10  2.71  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class R6  Actual  1,000.00  1,067.10  1.41  0.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.80  1.38  0.27% 
Class 1  Actual  1,000.00  1,066.10  1.67  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 
 
Retirement Living through II 2040 Portfolio         
Class R2  Actual  $1,000.00  $1,064.20  $4.01  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.30  3.92  0.77% 
Class R4  Actual  1,000.00  1,065.10  2.71  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class R6  Actual  1,000.00  1,067.10  1.41  0.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.80  1.38  0.27% 
Class 1  Actual  1,000.00  1,066.10  1.67  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 

 

16  Retirement Living II Portfolios | Annual report 

 


Shareholder expense example chart, continued

        Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-2014  8-31-2014  3-1-2014–8-31-2014  Expense Ratio2 
Retirement Living through II 2035 Portfolio         
Class R2  Actual  $1,000.00  $1,064.20  $4.01  0.77% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.30  3.92  0.77% 
Class R4  Actual  1,000.00  1,066.10  2.71  0.52% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.60  2.65  0.52% 
Class R6  Actual  1,000.00  1,067.10  1.41  0.27% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.80  1.38  0.27% 
Class 1  Actual  1,000.00  1,067.10  1.67  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 
 
Retirement Living through II 2030 Portfolio         
Class R2  Actual  $1,000.00  $1,060.30  $4.10  0.79% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.20  4.02  0.79% 
Class R4  Actual  1,000.00  1,061.20  2.81  0.54% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.50  2.75  0.54% 
Class R6  Actual  1,000.00  1,063.20  1.51  0.29% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.70  1.48  0.29% 
Class 1  Actual  1,000.00  1,062.20  1.77  0.34% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.50  1.73  0.34% 
 
Retirement Living through II 2025 Portfolio         
Class R2  Actual  $1,000.00  $1,055.40  $4.25  0.82% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.10  4.18  0.82% 
Class R4  Actual  1,000.00  1,057.40  2.96  0.57% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.30  2.91  0.57% 
Class R6  Actual  1,000.00  1,057.30  1.66  0.32% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.60  1.63  0.32% 
Class 1  Actual  1,000.00  1,058.40  1.92  0.37% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.30  1.89  0.37% 
 
Retirement Living through II 2020 Portfolio         
Class R2  Actual  $1,000.00  $1,049.60  $4.44  0.86% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.90  4.38  0.86% 
Class R4  Actual  1,000.00  1,051.50  3.15  0.61% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.10  3.11  0.61% 
Class R6  Actual  1,000.00  1,053.50  1.86  0.36% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.40  1.84  0.36% 
Class 1  Actual  1,000.00  1,052.50  2.12  0.41% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.10  2.09  0.41% 

 

Annual report | Retirement Living II Portfolios  17 

 


Shareholder expense example chart, continued

        Expenses Paid   
    Account Value  Account Value  During Period1  Annualized 
    3-1-2014  8-31-2014  3-1-2014–8-31-2014  Expense Ratio2 
Retirement Living through II 2015 Portfolio         
Class R2  Actual  $1,000.00  $1,044.80  $4.59  0.89% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.70  4.53  0.89% 
Class R4  Actual  1,000.00  1,046.80  3.30  0.64% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.00  3.26  0.64% 
Class R6  Actual  1,000.00  1,046.70  2.01  0.39% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.20  1.99  0.39% 
Class 1  Actual  1,000.00  1,046.70  2.27  0.44% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.00  2.24  0.44% 
 
Retirement Living through II 2010 Portfolio         
Class R2  Actual  $1,000.00  $1,040.80  $4.73  0.92% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,020.60  4.69  0.92% 
Class R4  Actual  1,000.00  1,042.80  3.45  0.67% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,021.80  3.41  0.67% 
Class R6  Actual  1,000.00  1,043.80  2.16  0.42% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,023.10  2.14  0.42% 
Class 1  Actual  1,000.00  1,043.80  2.42  0.47% 
  Hypothetical (5% annualized return before expenses)  1,000.00  1,022.80  2.40  0.47% 

1 Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (184) and divided by 365 (to reflect the one-half year period).

2 The portfolios’ expense ratios do not include fees and expenses indirectly incurred by the underlying funds and can vary based on the mix of underlying funds held by the portfolios. The range of expense ratios of the underlying funds held by the portfolios was as follows:

  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living  Living  Living  Living  Living  Living 
Period  through II  through II  through II  through II  through II  through II  through II  through II  through II  through II 
ended  2055  2050  2045  2040  2035  2030  2025  2020  2015  2010 
8-31-14 0.08%–0.65% 0.08%–0.65% 0.08%–0.65% 0.08%–0.65% 0.08%–0.65% 0.08%–0.65% 0.08%–0.65% 0.08%–0.65% 0.08%–0.65%   0.08%–0.65%

3 The inception date for Retirement Living through II 2055 Portfolio is 3-26-14. Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period (158) and divided by 365 (to reflect the period).

18  Retirement Living II Portfolios | Annual report 

 


Asset Allocation*

Retirement Living through II 2055 Portfolio   
Affiliated Investment Companies  63.5% 
Equity  63.5% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  36.5% 
Equity  31.5% 
Fixed Income  5.0% 

 

Retirement Living through II 2050 Portfolio   
Affiliated Investment Companies  65.4% 
Equity  65.4% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  34.6% 
Equity  29.9% 
Fixed Income  4.7% 

 

Retirement Living through II 2045 Portfolio   
Affiliated Investment Companies  64.6% 
Equity  64.6% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  35.4% 
Equity  28.0% 
Fixed Income  7.4% 

 

Retirement Living through II 2040 Portfolio   
Affiliated Investment Companies  63.9% 
Equity  63.9% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  36.1% 
Equity  31.2% 
Fixed Income  4.9% 

 

RetirementLiving through II 2035 Portfolio   
Affiliated Investment Companies  63.9% 
Equity  63.9% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  36.1% 
Equity  29.4% 
Fixed Income  6.7% 

 

Retirement Living through II 2030 Portfolio   
Affiliated Investment Companies  59.6% 
Equity  59.6% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  40.4% 
Equity  27.1% 
Fixed Income  13.3% 

 

Retirement Living through II 2025 Portfolio   
Affiliated Investment Companies  55.5% 
Equity  55.5% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  44.5% 
Equity  23.5% 
Fixed Income  21.0% 

 

Retirement Living through II 2020 Portfolio   
Affiliated Investment Companies  48.0% 
Equity  48.0% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  52.0% 
Fixed Income  32.2% 
Equity  19.8% 

 

Retirement Living through II 2015 Portfolio   
Affiliated Investment Companies  39.7% 
Equity  39.7% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  60.3% 
Fixed Income  43.4% 
Equity  16.9% 

 

Retirement Living through II 2010 Portfolio   
Affiliated Investment Companies  31.0% 
Equity  31.0% 
Unaffiliated Investment Companies/   
Exchange Traded Funds  69.0% 
Fixed Income  54.3% 
Equity  14.7% 

*As a percentage of total investments on 8-31-14.

Annual report | Retirement Living II Portfolios  19 

 


Portfolios’ investments

Retirement Living through II 2055   
Portfolio     
As of 8-31-14     
 
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 63.3%   
EQUITY 63.3%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  22,608  $315,606 
UNAFFILIATED INVESTMENT COMPANIES 36.4%   
EXCHANGE TRADED FUNDS 36.4%     
 
Financial Select Sector SPDR Fund  310  7,241 
iShares Barclays TIPS Bond Fund  7  807 
iShares iBoxx Investment Grade Corporate Bond Fund  13  1,568 
iShares JP Morgan USD Emerging Markets Bond ETF  5  578 
PowerShares Senior Loan Portfolio  246  6,084 
SPDR Barclays Capital High Yield Bond ETF  188  7,778 
Vanguard Consumer Staples ETF  112  13,119 
Vanguard Dividend Appreciation ETF  569  44,450 
Vanguard Energy ETF  49  6,971 
Vanguard FTSE Emerging Markets ETF  549  24,925 
Vanguard Health Care ETF  96  11,252 
Vanguard Information Technology ETF  139  14,099 
Vanguard Intermediate-Term Bond ETF  15  1,279 
Vanguard Intermediate-Term Corporate Bond ETF  43  3,747 
Vanguard Materials ETF  21  2,383 
Vanguard Mid-Cap ETF  109  13,208 
Vanguard MSCI EAFE ETF  194  8,088 
Vanguard REIT ETF  67  5,171 
Vanguard Small-Cap ETF  46  5,376 
Vanguard Total Bond Market ETF  37  3,055 
 
Total investments     
(Cost $466,182) 99.7%    $496,785 
 
Other assets and liabilities, net 0.3%    1,730 
TOTAL NET ASSETS 100.0%    $498,515 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Living through II 2050   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 63.7%   
EQUITY 63.7%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  48,903  $682,688 
 
UNAFFILIATED INVESTMENT COMPANIES 33.7%   
EXCHANGE TRADED FUNDS 33.7%     
 
Financial Select Sector SPDR Fund  628  14,670 
iShares Barclays TIPS Bond Fund  13  1,498 
iShares iBoxx Investment Grade Corporate Bond Fund  26  3,135 
iShares JP Morgan USD Emerging Markets Bond ETF  10  1,156 

 

Retirement Living through II 2050   
Portfolio (continued)     
  Shares  Value 
EXCHANGE TRADED FUNDS (continued)     
 
PowerShares Senior Loan Portfolio  478  $11,821 
SPDR Barclays Capital High Yield Bond ETF  378  15,638 
Vanguard Consumer Staples ETF  219  25,651 
Vanguard Dividend Appreciation ETF  1,147  89,604 
Vanguard Energy ETF  97  13,800 
Vanguard FTSE Emerging Markets ETF  1,115  50,621 
Vanguard Health Care ETF  196  22,973 
Vanguard Information Technology ETF  283  28,705 
Vanguard Intermediate-Term Bond ETF  30  2,558 
Vanguard Intermediate-Term Corporate Bond ETF  85  7,408 
Vanguard Materials ETF  40  4,540 
Vanguard Mid-Cap ETF  210  25,446 
Vanguard MSCI EAFE ETF  378  15,759 
Vanguard REIT ETF  131  10,111 
Vanguard Small-Cap ETF  88  10,285 
Vanguard Total Bond Market ETF  73  6,028 
 
Total investments     
(Cost $996,379) 97.4%    $1,044,095 
 
Other assets and liabilities, net 2.6%    27,689 
TOTAL NET ASSETS 100.0%    $1,071,784 
 
Percentages are based upon net assets.     
 
 
 
Retirement Living through II 2045   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 63.7%   
EQUITY 63.7%     
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  79,808  $1,114,115 
 
UNAFFILIATED INVESTMENT COMPANIES 34.9%   
EXCHANGE TRADED FUNDS 34.9%     
 
Financial Select Sector SPDR Fund  1,062  24,806 
iShares Barclays TIPS Bond Fund  23  2,651 
iShares iBoxx Investment Grade Corporate Bond Fund  44  5,306 
iShares JP Morgan USD Emerging Markets Bond ETF  16  1,850 
PowerShares Senior Loan Portfolio  810  20,031 
SPDR Barclays Capital High Yield Bond ETF  642  26,560 
Vanguard Consumer Staples ETF  369  43,221 
Vanguard Dividend Appreciation ETF  1,943  151,787 
Vanguard Energy ETF  164  23,332 
Vanguard FTSE Emerging Markets ETF  1,871  84,943 
Vanguard Health Care ETF  331  38,797 
Vanguard Information Technology ETF  472  47,875 
Vanguard Intermediate-Term Bond ETF  51  4,349 
Vanguard Intermediate-Term Corporate Bond ETF  144  12,550 

 

20  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


Retirement Living through II 2045   
Portfolio     
(continued)     
  Shares  Value 
EXCHANGE TRADED FUNDS (continued)     
 
Vanguard Materials ETF  68  $7,717 
Vanguard Mid-Cap ETF  356  43,137 
Vanguard MSCI EAFE ETF  639  26,640 
Vanguard REIT ETF  222  17,134 
Vanguard Small-Cap ETF  150  17,531 
Vanguard Total Bond Market ETF  124  10,240 
 
Total investments     
(Cost $1,669,967) 98.6%    $1,724,572 
 
Other assets and liabilities, net 1.4%    24,998 
TOTAL NET ASSETS 100.0%    $1,749,570 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Living through II 2040 
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 63.7%   
EQUITY 63.7%     
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  108,578  $1,515,754 
 
UNAFFILIATED INVESTMENT COMPANIES 35.9%   
EXCHANGE TRADED FUNDS 35.9%     
 
Financial Select Sector SPDR Fund  1,486  34,712 
iShares Barclays TIPS Bond Fund  32  3,688 
iShares iBoxx Investment Grade Corporate Bond Fund  62  7,476 
iShares JP Morgan USD Emerging Markets Bond ETF  22  2,544 
PowerShares Senior Loan Portfolio  1,132  27,994 
SPDR Barclays Capital High Yield Bond ETF  897  37,109 
Vanguard Consumer Staples ETF  516  60,439 
Vanguard Dividend Appreciation ETF  2,716  212,174 
Vanguard Energy ETF  231  32,864 
Vanguard FTSE Emerging Markets ETF  2,766  125,576 
Vanguard Health Care ETF  462  54,151 
Vanguard Information Technology ETF  662  67,147 
Vanguard Intermediate-Term Bond ETF  72  6,140 
Vanguard Intermediate-Term Corporate Bond ETF  202  17,604 
Vanguard Materials ETF  95  10,782 
Vanguard Mid-Cap ETF  498  60,343 
Vanguard MSCI EAFE ETF  742  30,934 
Vanguard REIT ETF  311  24,003 
Vanguard Small-Cap ETF  209  24,426 
Vanguard Total Bond Market ETF  174  14,369 
 
Total investments     
(Cost $2,299,331) 99.6%    $2,370,229 
 
Other assets and liabilities, net 0.4%    10,445 
TOTAL NET ASSETS 100.0%    $2,380,674 
 
Percentages are based upon net assets.     

 

Retirement Living through II 2035   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 62.3%   
EQUITY 62.3%     
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  126,919  $1,771,796 
 
UNAFFILIATED INVESTMENT COMPANIES 35.2%   
EXCHANGE TRADED FUNDS 35.2%     
 
Financial Select Sector SPDR Fund  1,655  38,659 
iShares Barclays TIPS Bond Fund  51  5,878 
iShares iBoxx Investment Grade Corporate Bond Fund  99  11,937 
iShares JP Morgan USD Emerging Markets Bond ETF  49  5,666 
PowerShares Senior Loan Portfolio  1,792  44,316 
SPDR Barclays Capital High Yield Bond ETF  1,381  57,132 
Vanguard Consumer Staples ETF  577  67,584 
Vanguard Dividend Appreciation ETF  3,055  238,657 
Vanguard Energy ETF  253  35,994 
Vanguard FTSE Emerging Markets ETF  3,014  136,836 
Vanguard Health Care ETF  509  59,660 
Vanguard Information Technology ETF  728  73,841 
Vanguard Intermediate-Term Bond ETF  114  9,722 
Vanguard Intermediate-Term Corporate Bond ETF  319  27,801 
Vanguard Materials ETF  105  11,916 
Vanguard Mid-Cap ETF  547  66,280 
Vanguard MSCI EAFE ETF  778  32,435 
Vanguard REIT ETF  349  26,936 
Vanguard Small-Cap ETF  219  25,595 
Vanguard Total Bond Market ETF  275  22,710 
 
Total investments     
Cost $2,708,678) 97.5%    $2,771,351 
 
Other assets and liabilities, net 2.5%    71,311 
TOTAL NET ASSETS 100.0%    $2,842,662 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Living through II 2030   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 57.6%   
EQUITY 57.6%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  164,534  $2,296,894 
 
UNAFFILIATED INVESTMENT COMPANIES 39.0%   
EXCHANGE TRADED FUNDS 39.0%     
 
Financial Select Sector SPDR Fund  2,069  48,334 
iShares Barclays TIPS Bond Fund  142  16,366 
iShares iBoxx Investment Grade Corporate Bond Fund  273  32,918 
iShares JP Morgan USD Emerging Markets Bond ETF  91  10,522 
PowerShares Senior Loan Portfolio  4,947  122,339 
SPDR Barclays Capital High Yield Bond ETF  3,937  162,874 
Vanguard Consumer Staples ETF  793  92,884 
Vanguard Dividend Appreciation ETF  4,317  337,244 

 

See notes to financial statements  Annual report | Retirement Living II Portfolios  21 
   

 


Retirement Living through II 2030   
Portfolio     
(continued)     
  Shares  Value 
EXCHANGE TRADED FUNDS (continued)     
 
Vanguard Energy ETF  308  $43,819 
Vanguard FTSE Emerging Markets ETF  3,373  153,134 
Vanguard Health Care ETF  692  81,109 
Vanguard Information Technology ETF  929  94,228 
Vanguard Intermediate-Term Bond ETF  316  26,948 
Vanguard Intermediate-Term Corporate Bond ETF  882  76,866 
Vanguard Materials ETF  128  14,527 
Vanguard Mid-Cap ETF  674  81,669 
Vanguard MSCI EAFE ETF  874  36,437 
Vanguard REIT ETF  494  38,127 
Vanguard Small-Cap ETF  183  21,387 
Vanguard Total Bond Market ETF  761  62,843 
 
Total investments (Cost $3,780,030) 96.6%  $3,851,469 
 
Other assets and liabilities, net 3.4%    133,877 
TOTAL NET ASSETS 100.0%    $3,985,346 
Percentages are based upon net assets.     
 
 
 
 
Retirement Living through II 2025   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 51.6%   
EQUITY 51.6%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  175,552  $2,450,712 
 
UNAFFILIATED INVESTMENT COMPANIES 41.3%   
EXCHANGE TRADED FUNDS 41.3%     
 
Financial Select Sector SPDR Fund  2,005  46,837 
iShares Barclays TIPS Bond Fund  243  28,006 
iShares iBoxx Investment Grade Corporate Bond Fund  549  66,198 
iShares JP Morgan USD Emerging Markets Bond ETF  143  16,535 
PowerShares Senior Loan Portfolio  8,215  203,157 
SPDR Barclays Capital High Yield Bond ETF  6,730  278,420 
Vanguard Consumer Staples ETF  867  101,552 
Vanguard Dividend Appreciation ETF  4,770  372,632 
Vanguard Energy ETF  308  43,819 
Vanguard FTSE Emerging Markets ETF  2,698  122,489 
Vanguard Health Care ETF  687  80,523 
Vanguard Information Technology ETF  930  94,330 
Vanguard Intermediate-Term Bond ETF  632  53,897 
Vanguard Intermediate-Term Corporate Bond ETF  1,766  153,907 
Vanguard Materials ETF  127  14,413 
Vanguard Mid-Cap ETF  605  73,308 
Vanguard MSCI EAFE ETF  723  30,142 
Vanguard REIT ETF  572  44,147 

 

Retirement Living through II 2025   
Portfolio     
(continued)     
  Shares  Value 
EXCHANGE TRADED FUNDS (continued)     
 
Vanguard Small-Cap ETF  99  $11,570 
Vanguard Total Bond Market ETF  1,524  125,852 
 
Total investments     
(Cost $4,326,082) 92.9%    $4,412,446 
 
Other assets and liabilities, net 7.1%    336,943 
TOTAL NET ASSETS 100.0%    $4,749,389 
 
Percentages are based upon net assets.     
 
 
 
 
Retirement Living through II 2020   
Portfolio     
As of 8-31-14     
 
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G)3 43.6%   
EQUITY 43.6%     
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  76,926  $1,073,886 
 
UNAFFILIATED INVESTMENT COMPANIES 47.1%   
EXCHANGE TRADED FUNDS 47 .1%     
 
Financial Select Sector SPDR Fund  832  19,438 
iShares Barclays TIPS Bond Fund  176  20,284 
iShares iBoxx Investment Grade Corporate Bond Fund  480  57,878 
iShares JP Morgan USD Emerging Markets Bond ETF  85  9,829 
PowerShares Senior Loan Portfolio  5,633  139,304 
SPDR Barclays Capital High Yield Bond ETF  4,847  200,520 
Vanguard Consumer Staples ETF  402  47,086 
Vanguard Dividend Appreciation ETF  2,044  159,677 
Vanguard Energy ETF  150  21,341 
Vanguard FTSE Emerging Markets ETF  956  43,402 
Vanguard Health Care ETF  300  35,163 
Vanguard Information Technology ETF  408  41,383 
Vanguard Intermediate-Term Bond ETF  551  46,989 
Vanguard Intermediate-Term Corporate Bond ETF  1,542  134,385 
Vanguard Materials ETF  62  7,036 
Vanguard Mid-Cap ETF  195  23,628 
Vanguard MSCI EAFE ETF  369  15,384 
Vanguard REIT ETF  310  23,926 
Vanguard Small-Cap ETF  40  4,675 
Vanguard Total Bond Market ETF  1,330  109,831 
 
Total investments     
(Cost $2,173,791) 90.7%    $2,235,045 
 
Other assets and liabilities, net 9.3%    229,978 
TOTAL NET ASSETS 100.0%    $2,465,023 
 
Percentages are based upon net assets.     

 

22  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


Retirement Living through II 2015   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 36.2%   
EQUITY 36.2%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  51,596  $720,277 
 
UNAFFILIATED INVESTMENT COMPANIES  55.0%   
EXCHANGE TRADED FUNDS 55.0%     
 
iShares Barclays TIPS Bond Fund  178  20,515 
iShares iBoxx Investment Grade Corporate Bond Fund  568  68,489 
iShares JP Morgan USD Emerging Markets Bond ETF  89  10,291 
PowerShares Senior Loan Portfolio  5,748  142,148 
SPDR Barclays Capital High Yield Bond ETF  4,864  201,224 
Vanguard Consumer Staples ETF  331  38,770 
Vanguard Dividend Appreciation ETF  1,916  149,678 
Vanguard Energy ETF  111  15,792 
Vanguard FTSE Emerging Markets ETF  497  22,564 
Vanguard Health Care ETF  238  27,896 
Vanguard Intermediate-Term Bond ETF  653  55,688 
Vanguard Intermediate-Term Corporate Bond ETF  1,827  159,221 
Vanguard Materials ETF  46  5,221 
Vanguard Mid-Cap ETF  121  14,662 
Vanguard MSCI EAFE ETF  308  12,841 
Vanguard REIT ETF  244  18,832 
Vanguard Total Bond Market ETF  1,574  129,981 
 
Total investments     
(Cost $1,778,930) 91.2%    $1,814,090 
 
Other assets and liabilities, net 8.8%    175,938 
TOTAL NET ASSETS 100.0%    $1,990,028 
 
Percentages are based upon net assets.     

 

Retirement Living through II 2010   
Portfolio     
As of 8-31-14     
  Shares  Value 
AFFILIATED INVESTMENT COMPANIES (G) 30.2%   
EQUITY 30.2%     
 
Strategic Equity Allocation, Class NAV     
(John Hancock1) (A)  78,301  $1,093,078 
 
UNAFFILIATED INVESTMENT COMPANIES 67.2%   
EXCHANGE TRADED FUNDS 67.2%     
 
iShares Barclays TIPS Bond Fund  404  46,561 
iShares iBoxx Investment Grade Corporate Bond Fund  1,453  175,203 
iShares JP Morgan USD Emerging Markets Bond ETF  213  24,629 
PowerShares Senior Loan Portfolio  13,379  330,863 
SPDR Barclays Capital High Yield Bond ETF  11,012  455,566 
Vanguard Consumer Staples ETF  667  78,126 
Vanguard Dividend Appreciation ETF  3,554  277,638 
Vanguard Energy ETF  189  26,889 
Vanguard FTSE Emerging Markets ETF  470  21,338 
Vanguard Health Care ETF  454  53,213 
Vanguard Intermediate-Term Bond ETF  1,679  143,185 
Vanguard Intermediate-Term Corporate Bond ETF  4,690  408,734 
Vanguard Materials ETF  78  8,852 
Vanguard Mid-Cap ETF  149  18,054 
Vanguard REIT ETF  448  34,577 
Vanguard Total Bond Market ETF  4,047  334,201 
 
Total investments     
(Cost $3,477,525) 97.4%    $3,530,707 
 
Other assets and liabilities, net 2.6%    93,868 
TOTAL NET ASSETS 100.0%    $3,624,575 
 
Percentages are based upon net assets.     

Footnote Legend:
(A) The subadvisor is an affiliate of the advisor.
(G) The portfolio’s subadvisor is shown parenthetically.
1 Manulife Asset Management (US) LLC is doing business as John Hancock Asset Management.

See notes to financial statements  Annual report | Retirement Living II Portfolios  23 
   

 


F I N A N C I A L  S T A T E M E N T S

Financial statements

Statements of assets and liabilities 8-31-14

These Statements of assets and liabilities are the portfolios’ balance sheets. They show the value of what each portfolio owns, is due and owes. You’ll also find the net asset value and the maximum public offering price per share for each portfolio. Net asset value is calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living 
  through II  through II  through II  through II 
  2055 Portfolio  2050 Portfolio  2045 Portfolio  2040 Portfolio 
Assets         
Investments in unaffiliated issuers, at value  $181,179  $361,407  $610,457  $854,475 
Investments in affiliated funds, at value  315,606  682,688  1,114,115  1,515,754 
Total investments, at value  496,785  1,044,095  1,724,572  2,370,229 
Cash  52,464  69,719  72,096  72,738 
Receivable for investments sold  4,446  788  —  — 
Receivable for fund shares sold  4,869  79,889  73,047  35,652 
Receivable due from advisor  635  3,320  3,351  2,359 
Other assets  56,652  23,325  23,327  23,330 
Total assets  615,851  1,221,136  1,896,393  2,504,308 
 
Liabilities         
Payable for investments purchased  3,349  52,400  49,828  26,596 
Payable to affiliates         
Accounting and legal services fees  12  20  34  47 
Transfer agent fees  10  10  10  10 
Other liabilities and accrued expenses  113,965  96,922  96,951  96,981 
Total liabilities  117,336  149,352  146,823  123,634 
 
Net assets  $498,515  $1,071,784  $1,749,570  $2,380,674 
Net assets consist of         
Paid-in capital  $467,582  $1,024,091  $1,695,362  $2,309,799 
Undistributed net investment income (loss)  240  —  —  — 
Accumulated undistributed net realized gain (loss) on investments  90  (23)  (397)  (23) 
Net unrealized appreciation (depreciation) on investments  30,603  47,716  54,605  70,898 
Net assets  $498,515  $1,071,784  $1,749,570  $2,380,674 
Investments in unaffiliated issuers, at cost  $170,128  $342,587  $588,350  $825,897 
Investments in affiliated funds, at cost  $296,054  $653,792  $1,081,617  $1,473,434 
Net asset value per share         
The portfolios have an unlimited number of shares authorized with no par value.         
Net asset value is calculated by dividing the net assets of each class of shares by         
the number of outstanding shares in the class.         
Class R2: Net assets  $107,098  $107,866  $107,867  $107,849 
Shares outstanding  10,000  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.71  $10.79  $10.79  $10.78 
Class R4: Net assets  $107,214  $108,046  $108,048  $108,029 
Shares outstanding  10,000  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.72  $10.80  $10.80  $10.80 
Class R6: Net assets  $107,329  $108,221  $108,222  $108,203 
Shares outstanding  10,000  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.73  $10.82  $10.82  $10.82 
Class 1: Net assets  $176,874  $747,651  $1,425,433  $2,056,593 
Shares outstanding  16,485  69,125  131,811  190,198 
Net asset value, offering and redemption price per share  $10.73  $10.82  $10.81  $10.81 

 

24  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of assets and liabilities 8-31-14

Continued

  Retirement  Retirement  Retirement 
  Living  Living  Living 
  through II  through II  through II 
  2035 Portfolio  2030 Portfolio  2025 Portfolio 
Assets       
Investments in unaffiliated issuers, at value  $999,555  $1,554,575  $1,961,734 
Investments in affiliated funds, at value  1,771,796  2,296,894  2,450,712 
Total investments, at value  2,771,351  3,851,469  4,412,446 
Cash  73,640  74,197  73,793 
Receivable for fund shares sold  192,692  324,931  686,896 
Receivable due from advisor  2,372  2,399  2,407 
Other assets  23,327  23,332  23,334 
Total assets  3,063,382  4,276,328  5,198,876 
 
Liabilities       
Payable for investments purchased  123,667  193,862  352,339 
Payable to affiliates       
Accounting and legal services fees  50  70  80 
Transfer agent fees  10  10  10 
Other liabilities and accrued expenses  96,993  97,040  97,058 
Total liabilities  220,720  290,982  449,487 
 
Net assets  $2,842,662  $3,985,346  $4,749,389 
 
Net assets consist of       
Paid-in capital  $2,780,043  $3,914,010  $4,663,537 
Undistributed net investment income (loss)  —  —  — 
Accumulated undistributed net realized gain (loss) on investments  (54)  (103)  (512) 
Net unrealized appreciation (depreciation) on investments  62,673  71,439  86,364 
Net assets  $2,842,662  $3,985,346  $4,749,389 
Investments in unaffiliated issuers, at cost  $972,156  $1,522,926  $1,924,918 
Investments in affiliated funds, at cost  $1,736,522  $2,257,104  $2,401,164 
 
Net asset value per share       
The portfolios have an unlimited number of shares authorized with no par value. Net asset value is       
calculated by dividing the net assets of each class of shares by the number of outstanding shares in       
the class.       
Class R2: Net assets  $107,836  $107,315  $106,679 
Shares outstanding  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.78  $10.73  $10.67 
Class R4: Net assets  $108,016  $107,494  $106,858 
Shares outstanding  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.80  $10.75  $10.69 
Class R6: Net assets  $108,190  $107,668  $107,030 
Shares outstanding  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.82  $10.77  $10.70 
Class 1: Net assets  $2,518,620  $3,662,869  $4,428,822 
Shares outstanding  232,830  340,380  413,924 
Net asset value, offering and redemption price per share  $10.82  $10.76  $10.70 

 

See notes to financial statements  Annual report | Retirement Living II Portfolios  25 
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of assets and liabilities 8-31-14

Continued

  Retirement  Retirement  Retirement 
  Living  Living  Living 
  through II  through II  through II 
  2020 Portfolio  2015 Portfolio  2010 Portfolio 
Assets       
Investments in unaffiliated issuers, at value  $1,161,159  $1,093,813  $2,437,629 
Investments in affiliated funds, at value  1,073,886  720,277  1,093,078 
Total investments, at value  2,235,045  1,814,090  3,530,707 
Cash  72,647  70,915  703,656 
Receivable for investments sold  —  —  78 
Receivable for fund shares sold  408,620  276,280  135,991 
Receivable due from advisor  2,342  2,334  2,343 
Other assets  23,329  23,327  23,332 
Total assets  2,741,983  2,186,946  4,396,107 
 
Liabilities       
Payable for investments purchased  179,933  99,908  674,464 
Payable to affiliates       
Accounting and legal services fees  41  35  54 
Transfer agent fees  10  9  9 
Other liabilities and accrued expenses  96,976  96,966  97,005 
Total liabilities  276,960  196,918  771,532 
 
Net assets  $2,465,023  $1,990,028  $3,624,575 
 
Net assets consist of       
Paid-in capital  $2,405,511  $1,957,948  $3,568,490 
Undistributed net investment income (loss)  —  —  824 
Accumulated undistributed net realized gain (loss) on investments  (1,742)  (3,080)  2,079 
Net unrealized appreciation (depreciation) on investments  61,254  35,160  53,182 
Net assets  $2,465,023  $1,990,028  $3,624,575 
Investments in unaffiliated issuers, at cost  $1,134,847  $1,076,231  $2,413,400 
Investments in affiliated funds, at cost  $1,038,944  $702,699  $1,064,125 
 
Net asset value per share       
The portfolios have an unlimited number of shares authorized with no par value. Net asset value is       
calculated by dividing the net assets of each class of shares by the number of outstanding shares in       
the class.       
Class R2: Net assets  $105,927  $104,980  $104,498 
Shares outstanding  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.59  $10.50  $10.45 
Class R4: Net assets  $106,104  $105,155  $104,672 
Shares outstanding  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.61  $10.52  $10.47 
Class R6: Net assets  $106,275  $105,324  $104,841 
Shares outstanding  10,000  10,000  10,000 
Net asset value, offering and redemption price per share  $10.63  $10.53  $10.48 
Class 1: Net assets  $2,146,717  $1,674,569  $3,310,564 
Shares outstanding  202,091  159,069  316,017 
Net asset value, offering and redemption price per share  $10.62  $10.53  $10.48 

 

26  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of operations For the period ended 8-31-14

These Statements of operations summarize the portfolios’ investment income earned and expenses directly incurred in operating each portfolio. They also show net gains (losses) for the period stated.

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living 
  through II  through II  through II  through II  through II 
  2055 Portfolio1   2050 Portfolio2  2045 Portfolio2  2040 Portfolio2  2035 Portfolio2 
Investment income           
Income distributions received from affiliated           
underlying funds  —  $3,957  $3,957  $3,957  $3,874 
Dividends  $988  3,142  3,355  4,080  3,978 
 
Total investment income  988  7,099  7,312  8,037  7,852 
 
Expenses           
Investment management fees  423  953  1,187  1,480  1,496 
Distribution and service fees  255  511  565  632  627 
Transfer agent fees  26  49  49  49  49 
Accounting and legal services fees  26  57  70  88  87 
State registration fees  23,078  39,660  39,660  39,660  39,660 
Professional fees  31,525  32,712  32,714  32,717  32,717 
Printing and postage  290  289  289  289  289 
Custodian fees  4,542  9,175  9,175  9,175  9,175 
Trustees’ fees  3  4  5  5  5 
Registration and filing fees  24,754  18,258  18,294  17,310  17,322 
Other  3,686  4,582  4,581  4,582  4,582 
 
Total expenses before reductions  88,608  106,250  106,589  105,987  106,009 
 
Net expense reductions  (87,718)  (104,357)  (104,356)  (103,325)  (103,341) 
Total expenses  890  1,893  2,233  2,662  2,668 
 
Net investment income  98  5,206  5,079  5,375  5,184 
 
Realized and unrealized gain           
Net realized gain on           
Investments in unaffiliated issuers  99  164  226  147  196 
Investments in affiliated underlying funds  (9)  156  40  156  224 
Capital gain distributions received from unaffiliated           
underlying funds  —  30  30  30  42 
Capital gain distributions received from affiliated           
underlying funds  —  4,063  4,063  4,063  3,977 
  90  4,413  4,359  4,396  4,439 
Change in net unrealized appreciation of           
Investments in unaffiliated issuers  11,051  18,820  22,107  28,578  27,399 
Investments in affiliated underlying funds  19,552  28,896  32,498  42,320  35,274 
  30,603  47,716  54,605  70,898  62,673 
Net realized and unrealized gain  30,693  52,129  58,964  75,294  67,112 
 
Increase in net assets from operations  $30,791  $57,335  $64,043  $80,669  $72,296 

1 Period from 3-26-14 (commencement of operations) to 8-31-14.
2 Period from 11-7-13 (commencement of operations) to 8-31-14.

See notes to financial statements  Annual report | Retirement Living II Portfolios  27 
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of operations For the period ended 8-31-14

Continued

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living 
  through II  through II  through II  through II  through II 
  2030 Portfolio1  2025 Portfolio1  2020 Portfolio1  2015 Portfolio1  2010 Portfolio1 
Investment income           
Income distributions received from affiliated           
underlying funds  $3,579  $3,201  $2,698  $2,236  $1,862 
Dividends  6,426  10,094  9,970  9,214  16,005 
 
Total investment income  10,005  13,295  12,668  11,450  17,867 
Expenses           
Investment management fees  2,107  2,639  2,034  1,862  3,041 
Distribution and service fees  724  777  620  562  702 
Transfer agent fees  49  49  48  48  48 
Accounting and legal services fees  110  126  86  70  105 
State registration fees  39,660  39,661  39,660  39,661  39,660 
Professional fees  32,721  32,722  32,711  32,707  32,710 
Printing and postage  289  289  289  290  289 
Custodian fees  9,175  9,175  9,175  9,175  9,175 
Trustees’ fees  5  5  4  4  5 
Registration and filing fees  17,362  17,378  17,299  17,286  17,320 
Other  4,581  4,580  4,582  4,579  4,079 
 
Total expenses before reductions  106,783  107,401  106,508  106,244  107,134 
 
Net expense reductions  (103,311)  (103,290)  (103,316)  (103,341)  (102,773) 
Total expenses  3,472  4,111  3,192  2,903  4,361 
 
Net investment income  6,533  9,184  9,476  8,547  13,506 
 
Realized and unrealized gain           
Net realized gain on           
Investments in unaffiliated issuers  88  (51)  (410)  (1,951)  (48) 
Investments in affiliated underlying funds  236  114  (514)  (659)  314 
Capital gain distributions received from unaffiliated           
underlying funds  86  159  272  384  484 
Capital gain distributions received from affiliated           
underlying funds  3,675  3,286  2,769  2,296  1,911 
  4,085  3,508  2,117  70  2,661 
Change in net unrealized appreciation of           
Investments in unaffiliated issuers  31,649  36,816  26,312  17,582  24,229 
Investments in affiliated underlying funds  39,790  49,548  34,942  17,578  28,953 
  71,439  86,364  61,254  35,160  53,182 
Net realized and unrealized gain  75,524  89,872  63,371  35,230  55,843 
 
Increase in net assets from operations  $82,057  $99,056  $72,847  $43,777  $69,349 

1 Period from 11-7-13 (commencement of operations) to 8-31-14.

28  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

These Statements of changes in net assets show how the value of the portfolios’ net assets have changed during the last period. They reflect income less expenses, any investment gains and losses, distributions, if any, paid to shareholders and the net of portfolio share transactions.

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living 
  through II  through II  through II  through II  through II 
  2055 Portfolio  2050 Portfolio  2045 Portfolio  2040 Portfolio  2035 Portfolio 
  Period ended 8-31-141  Period ended 8-31-142  Period ended 8-31-142  Period ended 8-31-142  Period ended 8-31-142 
Increase (decrease) in net assets           
From operations           
Net investment income  $98  $5,206  $5,079  $5,375  $5,184 
Net realized gain  90  4,413  4,359  4,396  4,439 
 
Change in net unrealized appreciation  30,603  47,716  54,605  70,898  62,673 
Increase in net assets resulting           
from operations  30,791  57,335  64,043  80,669  72,296 
 
Distributions to shareholders           
From net investment income           
Class R2  —  (2,146)  (2,196)  (2,184)  (2,159) 
Class R4  —  (2,168)  (2,219)  (2,206)  (2,182) 
Class R6  —  (2,191)  (2,242)  (2,230)  (2,206) 
Class 1  —  (2,186)  (2,228)  (2,225)  (2,200) 
From net realized gain           
Class R2  —  (272)  (272)  (272)  (267) 
Class R4  —  (272)  (272)  (272)  (267) 
Class R6  —  (272)  (272)  (272)  (267) 
Class 1  —  (272)  (272)  (272)  (267) 
From tax return of capital           
Class R2  —  (1,511)  (1,461)  (1,473)  (1,478) 
Class R4  —  (1,527)  (1,476)  (1,489)  (1,493) 
Class R6  —  (1,543)  (1,492)  (1,504)  (1,508) 
Class 1  —  (1,540)  (1,488)  (1,501)  (1,506) 
 
Total distributions  —  (15,900)  (15,890)  (15,900)  (15,800) 
From portfolio share transactions  467,724  1,030,349  1,701,417  2,315,905  2,786,166 
 
Total increase  498,515  1,071,784  1,749,570  2,380,674  2,842,662 
 
Net assets           
 
Beginning of period  —  —  —  —  — 
 
End of period  $498,515  $1,071,784  $1,749,570  $2,380,674  $2,842,662 
 
Undistributed net investment income (loss)  $240  —  —  —  — 

1Period from 3-26-14 (commencement of operations) to 8-31-14.
2Period from 11-7-13 (commencement of operations) to 8-31-14.

See notes to financial statements  Annual report | Retirement Living II Portfolios  29 
   

 


F I N A N C I A L  S T A T E M E N T S

Statements of changes in net assets

Continued

  Retirement  Retirement  Retirement  Retirement  Retirement 
  Living  Living  Living  Living  Living 
  through II  through II  through II  through II  through II 
  2030 Portfolio  2025 Portfolio  2020 Portfolio  2015 Portfolio  2010 Portfolio 
  Period ended 8-31-141  Period ended 8-31-141  Period ended 8-31-141  Period ended 8-31-141  Period ended 8-31-141 
Increase (decrease) in net assets           
 
From operations           
Net investment income  $6,533  $9,184  $9,476  $8,547  $13,506 
Net realized gain  4,085  3,508  2,117  70  2,661 
Change in net unrealized appreciation  71,439  86,364  61,254  35,160  53,182 
Increase in net assets resulting           
from operations  82,057  99,056  72,847  43,777  69,349 
 
Distributions to shareholders           
 
From net investment income           
Class R2  (2,435)  (3,479)  (3,359)  (2,753)  (3,159) 
Class R4  (2,461)  (3,517)  (3,397)  (2,785)  (3,197) 
Class R6  (2,488)  (3,556)  (3,436)  (2,818)  (3,234) 
Class 1  (2,483)  (3,548)  (3,428)  (2,811)  (3,227) 
From net realized gain           
Class R2  (248)  (225)  (195)  (167)  (146) 
Class R4  (248)  (225)  (195)  (167)  (146) 
Class R6  (248)  (225)  (195)  (167)  (146) 
Class 1  (248)  (225)  (195)  (167)  (146) 
From tax return of capital           
Class R2  (1,121)  —  —  (509)  — 
Class R4  (1,133)  —  —  (515)  — 
Class R6  (1,145)  —  —  (521)  — 
Class 1  (1,142)  —  —  (520)  — 
 
Total distributions  (15,400)  (15,000)  (14,400)  (13,900)  (13,401) 
From portfolio share transactions  3,918,689  4,665,333  2,406,576  1,960,151  3,568,627 
 
Total increase  3,985,346  4,749,389  2,465,023  1,990,028  3,624,575 
 
Net assets           
Beginning of period  —  —  —  —  — 
 
End of period  $3,985,346  $4,749,389  $2,465,023  $1,990,028  $3,624,575 
 
Undistributed net investment income (loss)  —  —  —  —  $824 

1Period from 11-7-13 (commencement of operations) to 8-31-14.

30  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

These Financial highlights show how each portfolio’s net asset value for a share has changed since the commencement of operations.

Retirement Living through II 2055 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  (0.01)  0.72  0.71  —  —  —  —  10.71  7.106  50.107  0.777  (0.26)7  107  6 
CLASS R4                               
08-31-20145  10.00  —8  0.72  0.72  —  —  —  —  10.72  7.206  50.187  0.527  (0.01)7  107  6 
CLASS R6                               
08-31-20145  10.00  0.01  0.72  0.73  —  —  —  —  10.73  7.306  51.427  0.277  0.237  107  6 
CLASS 1                               
08-31-20145  10.00  0.01  0.72  0.73  —  —  —  —  10.73  7.306  33.107  0.327  0.197  177  6 
                               

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 3-26-14 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.
8 Less than $0.005 per share.

Retirement Living through II 2050 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.10  1.08  1.18  (0.21)  (0.03)  (0.15)  (0.39)  10.79  12.136  31.137  0.777  1.247  108  4 
CLASS R4                               
08-31-20145  10.00  0.12  1.08  1.20  (0.22)  (0.03)  (0.15)  (0.40)  10.80  12.276  31.177  0.527  1.487  108  4 
CLASS R6                               
08-31-20145  10.00  0.14  1.08  1.22  (0.22)  (0.03)  (0.15)  (0.40)  10.82  12.526  31.107  0.277  1.737  108  4 
CLASS 1                               
08-31-20145  10.00  0.07  1.15  1.22  (0.22)  (0.03)  (0.15)  (0.40)  10.82  12.516  15.067  0.327  0.797  748  4 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

See notes to financial statements Annual report | Retirement Living II Portfolios  31 
   

 


Financial highlights

Continued

Retirement Living through II 2045 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.10  1.08  1.18  (0.21)  (0.03)  (0.15)  (0.39)  10.79  12.136  28.217  0.777  1.247  108  10 
CLASS R4                               
08-31-20145  10.00  0.12  1.08  1.20  (0.22)  (0.03)  (0.15)  (0.40)  10.80  12.276  28.267  0.527  1.497  108  10 
CLASS R6                               
08-31-20145  10.00  0.14  1.08  1.22  (0.22)  (0.03)  (0.15)  (0.40)  10.82  12.526  28.187  0.277  1.737  108  10 
CLASS 1                               
08-31-20145  10.00  0.04  1.17  1.21  (0.22)  (0.03)  (0.15)  (0.40)  10.81  12.416  12.157  0.327  0.467  1,425  10 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

Retirement Living through II 2040 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.10  1.07  1.17  (0.21)  (0.03)  (0.15)  (0.39)  10.78  12.026  25.727  0.777  1.247  108  3 
CLASS R4                               
08-31-20145  10.00  0.12  1.08  1.20  (0.22)  (0.03)  (0.15)  (0.40)  10.80  12.276  25.767  0.527  1.487  108  3 
CLASS R6                               
08-31-20145  10.00  0.14  1.08  1.22  (0.22)  (0.03)  (0.15)  (0.40)  10.82  12.526  25.697  0.277  1.737  108  3 
CLASS 1                               
08-31-20145  10.00  0.03  1.18  1.21  (0.22)  (0.03)  (0.15)  (0.40)  10.81  12.416  9.657  0.327  0.387  2,057  3 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

32  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

Continued

Retirement Living through II 2035 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.11  1.06  1.17  (0.21)  (0.03)  (0.15)  (0.39)  10.78  12.006  25.877  0.777  1.277  108  6 
CLASS R4                               
08-31-20145  10.00  0.13  1.06  1.19  (0.21)  (0.03)  (0.15)  (0.39)  10.80  12.256  25.927  0.527  1.527  108  6 
CLASS R6                               
08-31-20145  10.00  0.15  1.07  1.22  (0.22)  (0.03)  (0.15)  (0.40)  10.82  12.506  25.847  0.277  1.767  108  6 
CLASS 1                               
08-31-20145  10.00  0.03  1.19  1.22  (0.22)  (0.03)  (0.15)  (0.40)  10.82  12.496  9.807  0.327  0.337  2,519  6 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds whose expense ratios can vary based on the mix of underlying funds held by the portfolio.
The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

Retirement Living through II 2030 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.12  0.99  1.11  (0.25)  (0.02)  (0.11)  (0.38)  10.73  11.386  23.797  0.797  1.387  107  4 
CLASS R4                               
08-31-20145  10.00  0.14  0.99  1.13  (0.25)  (0.02)  (0.11)  (0.38)  10.75  11.636  23.837  0.547  1.637  107  4 
CLASS R6                               
08-31-20145  10.00  0.16  1.00  1.16  (0.26)  (0.02)  (0.11)  (0.39)  10.77  11.886  23.767  0.297  1.887  108  4 
CLASS 1                               
08-31-20145  10.00  0.03  1.12  1.15  (0.26)  (0.02)  (0.11)  (0.39)  10.76  11.776  7.697  0.347  0.407  3,663  4 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds whose expense ratios can vary based on the mix of underlying funds held by the portfolio.
The range of expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

See notes to financial statements  Annual report | Retirement Living II Portfolios  33 
   

 


Financial highlights

Continued

Retirement Living through II 2025 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.13  0.91  1.04  (0.35)  (0.02)  —  (0.37)  10.67  10.666  23.047  0.827  1.527  107  9 
CLASS R4                               
08-31-20145  10.00  0.15  0.91  1.06  (0.35)  (0.02)  —  (0.37)  10.69  10.916  23.087  0.577  1.777  107  9 
CLASS R6                               
08-31-20145  10.00  0.17  0.91  1.08  (0.36)  (0.02)  —  (0.38)  10.70  11.066  23.017  0.327  2.017  107  9 
CLASS 1                               
08-31-20145  10.00  0.05  1.03  1.08  (0.36)  (0.02)  —  (0.38)  10.70  11.056  6.907  0.377  0.667  4,429  9 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

Retirement Living through II 2020 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.14  0.81  0.95  (0.34)  (0.02)  —  (0.36)  10.59  9.696  26.227  0.867  1.697  106  68 
CLASS R4                               
08-31-20145  10.00  0.16  0.81  0.97  (0.34)  (0.02)  —  (0.36)  10.61  9.946  26.267  0.617  1.947  106  68 
CLASS R6                               
08-31-20145  10.00  0.18  0.81  0.99  (0.34)  (0.02)  —  (0.36)  10.63  10.196  26.197  0.367  2.197  106  68 
CLASS 1                               
08-31-20145  10.00  0.09  0.89  0.98  (0.34)  (0.02)  —  (0.36)  10.62  10.076  10.037  0.417  1.137  2,147  68 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

34  Retirement Living II Portfolios | Annual report   See notes to financial statements
   

 


Financial highlights

Continued

Retirement Living through II 2015 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.15  0.69  0.84  (0.27)  (0.02)  (0.05)  (0.34)  10.50  8.646  28.357  0.897  1.847  105  108 
CLASS R4                               
08-31-20145  10.00  0.17  0.70  0.87  (0.28)  (0.02)  (0.05)  (0.35)  10.52  8.896  28.397  0.647  2.097  105  108 
CLASS R6                               
08-31-20145  10.00  0.19  0.69  0.88  (0.28)  (0.02)  (0.05)  (0.35)  10.53  9.046  28.337  0.397  2.347  105  108 
CLASS 1                               
08-31-20145  10.00  0.09  0.79  0.88  (0.28)  (0.02)  (0.05)  (0.35)  10.53  9.036  12.097  0.447  1.137  1,675  108 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

Retirement Living through II 2010 Portfolio

Per share operating performance for a share outstanding throughout the period      Ratios and supplemental data   
    Income (loss) from                         
    investment operations      Less distributions        Ratios to average net assets     
 
 
 
 
 
      Net                         
      realized  Total                       
  Net asset  Net  and  from  From net                  Net   
  value,  invest-   unrealized  invest-  invest-        Net asset    Expenses  Expenses  Net  assets,   
  beginning  ment in-  gain (loss)  ment  ment  From net  From tax  Total   value, end  Total  before  including  investment  end of  Portfolio 
  of period  come (loss)  on invest-  operations  income  realized  return of  distribu-  of period  return  reductions  reductions  income  period (in  turnover 
Period ended  ($)  ($)1,2  ments ($)  ($)  ($)  gain ($)  capital ($)  tions ($)  ($)  (%)3  (%)4  (%)4   (loss)(%)2  thousands)  (%) 
CLASS R2                               
08-31-20145  10.00  0.15  0.63  0.78  (0.32)  (0.01)  —  (0.33)  10.45  8.016  24.387  0.927  1.797  104  12 
CLASS R4                               
08-31-20145  10.00  0.17  0.63  0.80  (0.32)  (0.01)  —  (0.33)  10.47  8.256  24.427  0.677  2.047  105  12 
CLASS R6                               
08-31-20145  10.00  0.19  0.63  0.82  (0.33)  (0.01)  —  (0.34)  10.48  8.406  24.357  0.427  2.297  105  12 
CLASS 1                               
08-31-20145  10.00  0.12  0.70  0.82  (0.33)  (0.01)  —  (0.34)  10.48  8.396  8.077  0.477  1.467  3,311  12 

1 Based on average daily shares outstanding.
2 Recognition of net investment income by the portfolio is affected by the timing and frequency of the declaration of dividends by the underlying funds in which the
portfolio invests.
3 Total returns would have been lower had certain expenses not been reduced during the applicable periods.
4 Ratios do not include expenses indirectly incurred from underlying funds and can vary based on the mix of underlying funds held by the portfolio. The range of
expense ratios of the underlying funds held by the portfolio was as follows: 0.08%–0.65% for the period ended 8-31-14.
5 Period from 11-7-13 (commencement of operations) to 8-31-14.
6 Not annualized.
7 Annualized.

See notes to financial statements  Annual report | Retirement Living II Portfolios  35 
   

 


Notes to financial statements

Note 1 — Organization

John Hancock Funds II (the Trust) is 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). It is a series company with multiple investment series, ten of which (collectively, Retirement Living II Portfolios or the portfolios, and each individually the portfolio) are presented in this report. The Lifestyle, Retirement Choices and Retirement Living Portfolios are series of the Trust and operate as “fund of fund” that invest in other series of the Trust, other funds in the John Hancock group of funds and certain other investments.

The portfolios may offer multiple classes of shares. The shares currently offered by the Trust are detailed in the Statements of assets and liabilities. Class R2 shares and Class R4 shares are available only to certain retirement plans. Class R6 shares are available only to certain retirement plans, institutions and other investors. Class 1 shares are offered only to certain affiliates of Manulife Financial Corporation (MFC). Shareholders of each class have exclusive voting rights to matters that affect that class. The distribution and service fees, if any, transfer agent fees, printing and postage and state registration fees for each class may differ.

The accounting policies of the John Hancock underlying funds in which the portfolios invest are outlined in the underlying funds’ shareholder reports, which include the underlying funds’ financial statements, available without charge by calling 800-344-1029 or visiting jhinvestments.com, on the Securities and Exchange Commission (SEC) website at sec.gov or at the SEC’s public reference room in Washington, D.C. The underlying funds are not covered by this report.

Retirement Living Portfolios II commenced operations on November 7, 2013 with the exception of Retirement Living through II 2055 Portfolio, which commenced operations on March 26, 2014.

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 portfolios intend to qualify as an investment companies 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 portfolios:

Security valuation. Investments are stated at value as of the close of regular trading on the New York Stock Exchange (NYSE), normally at 4:00 p.m., Eastern Time. In order to value the securities, the portfolios use the following valuation techniques: Equity securities, including exchange-traded funds, held by the portfolios are valued at the last sale price or official closing price on the exchange where the security was acquired or most likely will be sold. In the event there were no sales during the day or closing prices are not available, the securities are valued using the last available bid price. Investments by the portfolios in underlying affiliated funds are valued at their respective net asset values each business day.

The portfolios use a three-tier hierarchy to prioritize the pricing assumptions, referred to as inputs, used in valuation techniques to measure fair value. Level 1 includes securities valued using quoted prices in active markets for identical securities, including registered investment companies. Level 2 includes securities valued using other significant observable inputs. Observable inputs may include quoted prices for similar securities, interest rates, prepayment speeds and credit risk. Prices for securities valued using these inputs are received from independent pricing vendors and brokers and are based on an evaluation of the inputs described. Level 3 includes securities valued using significant unobservable inputs when market prices are not readily available or reliable, including the own assumptions in determining the fair value of investments. Factors used in determining value may include market or issuer specific events or trends, changes in interest rates and credit quality. The inputs or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

As of August 31, 2014, all investments are categorized as Level 1 under the hierarchy described above.

Security transactions and related investment income. Investment security transactions are accounted for on a trade date plus one basis for daily net asset value calculations. However, for financial reporting purposes, investment transactions are reported on trade date. Income and capital gain distributions from underlying funds are recorded on ex-date. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds from litigation.

36  Retirement Living II Portfolios | Annual report 

 


Line of credit. The portfolios may borrow from banks for temporary or emergency purposes, including meeting redemption requests that otherwise might require the untimely sale of securities. Pursuant to the portfolios’ custodian agreement, the custodian may loan money to the portfolios to make properly authorized payments. The portfolios are 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 portfolio property that is not otherwise segregated or pledged, to the maximum extent permitted by law, to the extent of any overdraft.

In addition, the portfolios and other affiliated funds have entered into an agreement with Citibank N.A. that enables them to potentially participate in a $300 million unsecured committed line of credit. A commitment fee, payable at the end of each calendar quarter, based on the average daily unused portion of the line of credit, is charged to each participating portfolio on a pro rata basis and is reflected in other expenses on the Statements of operations. For the period ended August 31, 2014, the portfolios had no borrowings under the line of credit.

The commitment fees for the period ended August 31, 2014 were as follows:
Portfolio  Amount 
Retirement Living through II 2055  $215 
Retirement Living through II 2050  325 
Retirement Living through II 2045  325 
Retirement Living through II 2040  325 
Retirement Living through II 2035  325 
Retirement Living through II 2030  325 
Retirement Living through II 2025  325 
Retirement Living through II 2020  325 
Retirement Living through II 2015  325 
Retirement Living through II 2010  325 

Expenses. Within the John Hancock group of funds complex, expenses that are directly attributable to an individual portfolio are allocated to such portfolio. Expenses that are not readily attributable to a specific portfolio are allocated among all portfolios in an equitable manner, taking into consideration, among other things, the nature and type of expense and the portfolio’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 portfolio level and allocated daily to each class of shares based on the net assets of the class. Class-specific expenses, such as distribution and service fees, if any, transfer agent fees, state registration fees and printing and postage, for all classes, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

Federal income taxes. Each portfolio intends to qualify as a regulated investment company by complying with the applicable provisions of the Internal Revenue Code and will not be subject to federal income tax on taxable income that is distributed to shareholders. Therefore, no federal income tax provision is required.

As of August 31, 2014, the portfolios had no uncertain tax positions that would require financial statement recognition, derecognition or disclosure. The portfolios’ federal tax returns are subject to examination by the Internal Revenue Service for a period of three years.

The costs of investments owned on August 31, 2014, including short-term investments, for federal income tax purposes, were as follows:

        Net Unrealized 
    Unrealized  Unrealized  Appreciation/ 
Portfolio  Aggregate Cost  Appreciation  Depreciation  (Depreciation) 
Retirement Living through II 2055 Portfolio  $466,237  $30,574  ($26)  $30,548 
Retirement Living through II 2050 Portfolio  996,402  47,794  (101)  47,693 
Retirement Living through II 2045 Portfolio  1,670,364  54,612  (404)  54,208 
Retirement Living through II 2040 Portfolio  2,299,354  71,459  (584)  70,875 
Retirement Living through II 2035 Portfolio  2,708,732  63,202  (583)  62,619 
Retirement Living through II 2030 Portfolio  3,780,133  72,724  (1,388)  71,336 
Retirement Living through II 2025 Portfolio  4,326,594  87,371  (1,519)  85,852 
Retirement Living through II 2020 Portfolio  2,175,533  59,834  (322)  59,512 
Retirement Living through II 2015 Portfolio  1,782,010  32,352  (272)  32,080 
Retirement Living through II 2010 Portfolio  3,477,979  53,890  (1,162)  52,728 

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 portfolios generally declare and pay dividends and capital gain distributions, if any, annually.

Annual report | Retirement Living II Portfolios  37 

 


During the period ended August 31, 2014, the tax character of distributions paid was as follows:

Portfolio  Ordinary Income  Capital Gains  Capital  Total 
Retirement Living through II 2050  $6,774  $3,006  $6,120  $15,900 
Retirement Living through II 2045  6,967  3,006  5,917  15,890 
Retirement Living through II 2040  6,926  3,006  5,968  15,900 
Retirement Living through II 2035  6,862  2,953  5,985  15,800 
Retirement Living through II 2030  8,091  2,768  4,541  15,400 
Retirement Living through II 2025  12,455  2,545  —  15,000 
Retirement Living through II 2020  12,141  2,259  —  14,400 
Retirement Living through II 2015  9,828  2,006  2,066  13,900 
Retirement Living through II 2010  13,401  —  —  13,401 

Distributions paid by the portfolios 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 August 31, 2014, the components of distributable earnings on a tax basis were as follows:

    Undistributed 
  Undistributed  Long Term 
Portfolio  Ordinary Income  Capital Gains 
 
Retirement Living through II 2055  $385  — 
Retirement Living through II 2010  1,548  $1,809 

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 portfolios’ financial statements as a return of capital. Short-term gains from underlying funds are treated as ordinary income for tax purposes.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences, if any, will reverse in a subsequent period. Book-tax differences are primarily attributable to wash sale loss deferrals and characterization of distributions.

Note 3 — Guarantees and indemnifications

Under the Trust’s organizational documents, its Officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust, including the portfolios. Additionally, in the normal course of business, the Trust enters into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust that have not yet occurred. The risk of material loss from such claims is considered remote.

Note 4 – Fees and transactions with affiliates

John Hancock Advisers, LLC (the Advisor or JHA) serves as investment advisor for the portfolios. Prior to January 1, 2014, John Hancock Investment Management Services, LLC (JHIMS) served as investment advisor for all the portfolios, except Retirement Living through II 2055 Portfolio. JHIMS and JHA have identical officers, directors and other personnel, and share common facilities and resources. Terms of the investment management contract with JHA are substantially identical to the former contract with JHIMS. In this report, depending on the context, the term “Advisor” shall refer to either JHA in its current capacity as investment advisor, or to JHIMS in its capacity as investment advisor, prior to January 1, 2014. JHA has served as the investment advisor for Retirement Living through II 2055 Portfolio since its inception. John Hancock Funds, LLC (the Distributor), an affiliate of the Advisor, serves as principal underwriter of the portfolios. The Advisor and the Distributor are indirect, wholly owned subsidiaries MFC.

Management fee. The portfolios pay the Advisor a management fee for its services to the portfolios. The management fee has two components: (a) a fee on net assets invested in affiliated funds (Affiliated Fund Assets) and (b) a fee on net assets not invested in affiliated funds (Other Assets). Affiliated funds are any funds of the Trust or JHF III. The fee on assets invested in Affiliated Fund Assets is stated as an annual percentage of the current value of the aggregate net assets of the portfolio, together with the assets of any other applicable fund identified in the advisory agreement, and is equivalent to the sum of: (a) 0.06% of the first $7.5 billion of aggregate net assets and (b) 0.05% of the excess over $7.5 billion of aggregate net assets. The fee on Other Assets is stated as an annual percentage of the current value of the aggregate net assets of the portfolio, together with the assets of any other applicable fund identified in the advisory agreement, and is equivalent to the sum of: (a) 0.51% of the first $7.5 billion of aggregate net assets and (b) 0.50% of the excess over $7.5 billion of aggregate net assets and is applied to the Other Assets of the portfolios.

John Hancock Asset Management a division of Manulife Asset Management (North America) Limited and John Hancock Asset Management a division of Manulife Asset Management (US) LLC, both indirectly owned subsidiaries of MFC and affiliates of the Advisor, act as subadvisors to the portfolios. The portfolios are not responsible for payment of the subadvisory fees.

38  Retirement Living II Portfolios | Annual report 

 


Expense reimbursements. The Advisor has contractually agreed to reduce its management fee and/or payment to each portfolio in an amount equal to the amount by which certain portfolio level expenses of each portfolio exceeds 0.05% of the average annual net assets (on an annualized basis) of each portfolio. Certain portfolio level expenses means all the expenses of each portfolio, excluding certain expenses such as advisory fees, taxes, brokerage commissions, interest expense, litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of each portfolio’s business, distribution and service (Rule 12b-1) fees, transfer agency and service fees, blue sky fees, printing and postage, underlying fund expenses (acquired fund fees), and short dividend expense. The current expense limitation agreement expires on December 31, 2015 for Retirement Living through II 2055 and December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolios and the advisor based upon a determination that this is appropriate under the circumstances at that time.

The Advisor has contractually agreed to limit certain expenses of Class R2, Class R4 and Class R6 shares to 0.50%, 0.25% and 0.00%, of the average annual net assets (on an annualized basis) attributable to Class R2, Class R4 and Class R6 shares, respectively. Expenses means all class-specific expenses attributable to Class R2, Class R4 and Class R6, as applicable, and excludes portfolio level expenses such as: (a) advisory fees, (b) underlying fund expenses (acquired fund fees), (c) taxes, (d) brokerage commissions, (e) interest expense, (f) litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of business, and (g) short dividend expense. The current expense limitation agreement expires on December 31, 2015 for Retirement Living through II 2055 and December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolio and the Advisor based upon a determination that this is appropriate under the circumstances at that time.

The Advisor voluntarily agreed to waive its advisory fee for each portfolio so that the aggregate advisory fee retained by the Advisor with respect to both the portfolio and its underlying investments (after payment of subadvisory fees) does not exceed 0.51% of the portfolio’s first $7.5 billion of average annual net assets and 0.50% of the portfolio’s average annual net assets in excess of $7.5 billion. The Advisor may terminate this voluntary waiver at any time upon notice to the Trust.

For the period ended August 31, 2014, the expense reductions of these plans amounted to the following and are reflected as a reduction of total expenses in the Statements of operations:

  Expense Reimbursement by Class  
Portfolio  Class R2  Class R4  Class R6  Class 1  Total 
Retirement Living through II 2055  $22,161  $22,274  $23,001  $20,237  $87,673 
Retirement Living through II 2050  25,360  25,538  25,784  27,591  104,273 
Retirement Living through II 2045  22,924  23,100  23,349  34,899  104,272 
Retirement Living through II 2040  20,845  21,021  21,262  40,113  103,241 
Retirement Living through II 2035  20,964  21,140  21,383  39,770  103,257 
Retirement Living through II 2030  19,168  19,343  19,584  45,133  103,228 
Retirement Living through II 2025  18,477  18,649  18,889  47,192  103,207 
Retirement Living through II 2020  21,020  21,193  21,436  39,584  103,233 
Retirement Living through II 2015  22,655  22,831  23,074  34,698  103,258 
Retirement Living through II 2010  19,312  19,484  19,724  44,171  102,691 

The investment management fees incurred, including the impact of waivers and reimbursements, for the period ended August 31, 2014 were equivalent to a net annual effective rate of 0.00% for each of the portfolio’s average daily net assets.

Expense recapture. The Advisor may recapture operating expenses reimbursed or fees waived under previous expense limitation or waiver arrangements for a period of three years following the month in which the reimbursements or waivers occurred to the extent that a portfolio is below its expense limitation during this period. The table below outlines the amounts recovered during the period ended August 31, 2014 and the amount of waived or reimbursed expenses subject to potential recovery and the respective expiration dates. Certain reimbursements or waivers are not subject to recapture.

        Amount recovered 
  Amounts eligible for  Amounts eligible for  Amounts eligible for  during the 
  recovery through  recovery through  recovery through  period ended 
Portfolio  August 1, 2015  August 1, 2016  August 1, 2017  August 31, 2014 
Retirement Living through II 2055  —  —  $81,454  — 
Retirement Living through II 2050  —  —  104,273  — 
Retirement Living through II 2045  —  —  104,272  — 
Retirement Living through II 2040  —  —  103,241  — 
Retirement Living through II 2035  —  —  103,257  — 
Retirement Living through II 2030  —  —  103,228  — 
Retirement Living through II 2025  —  —  103,207  — 
Retirement Living through II 2020  —  —  103,233  — 
Retirement Living through II 2015  —  —  103,258  — 
Retirement Living through II 2010  —  —  102,691  — 

 

Annual report | Retirement Living II Portfolios  39 

 


Effective October 1, 2014, the expense recapture program has been terminated.

Accounting and legal services. Pursuant to a service agreement, the portfolios reimburse the Advisor for all expenses associated with providing the administrative, financial, legal, accounting and recordkeeping services to the portfolios, 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 period ended August 31, 2014 amounted to an annual rate of 0.01% of each of the portfolio’s average daily net assets.

Distribution and service plans. The portfolios have a distribution agreement with the Distributor. The portfolios have adopted distribution and service plans with respect to Class R2, Class R4 and Class 1 shares pursuant to Rule 12b-1 under the 1940 Act, to pay the Distributor for services provided as the distributor of shares of the portfolios. In addition, under a service plan for Class R2 and Class R4 shares, the portfolios pay for certain other services. The portfolios 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 each portfolio’s shares.

Class  Rule 12b-1 Fee  Service Fee 
Class R2  0.25%  0.25% 
Class R4  0.25%  0.10% 
Class 1  0.05%  — 

 

The Distributor has contractually agreed to waive 0.10% of 12b-1 fees for Class R4 to 0.15% of the average daily net assets of Class R4 shares, until at least December 31, 2015 for Retirement Living through II 2055, and until December 31, 2014 for all other portfolios, unless renewed by mutual agreement of the portfolios and the Distributor based upon a determination that this is appropriate under the circumstances at the time. Reimbursements related to this contractual waiver amounted to the following for Class R4 shares for the period ended August 31, 2014.

Portfolio  Reimbursement 
Retirement Living through II 2055  $45 
Retirement Living through II 2050  84 
Retirement Living through II 2045  84 
Retirement Living through II 2040  84 
Retirement Living through II 2035  84 
Retirement Living through II 2030  83 
Retirement Living through II 2025  83 
Retirement Living through II 2020  83 
Retirement Living through II 2015  83 
Retirement Living through II 2010  82 

Transfer agent fees. The portfolios have a transfer agent agreement with John Hancock Signature Services, Inc. (Signature Services), an affiliate of the Advisor. The transfer agent fees paid to Signature Services are determined based on the cost to Signature Services (Signature Services Cost) of providing recordkeeping services. The Signature Services Cost includes a component of allocated John Hancock corporate overhead for providing transfer agent services to the portfolios and to all other John Hancock affiliated funds. 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.

40  Retirement Living II Portfolios | Annual report 

 


Class level expenses. Class level expenses for the period ended August 31, 2014 were:

    Distribution and  Transfer  State registration  Printing and 
Portfolio  Class  service fees  agent fees  fees  postage 
 
Retirement Living through II 2055  Class R2  $112  $9  $7,521  $17 
  Class R4  112  9  7,515  61 
  Class R6  —  8  8,042  212 
  Class 1  31  —  —  — 
  Total  $255  $26  $23,078  $290 
Retirement Living through II 2050  Class R2  $209  $17  $13,218  $17 
  Class R4  209  16  13,218  61 
  Class R6  —  16  13,224  211 
  Class 1  93  —  —  — 
  Total  $511  $49  $39,660  $289 
Retirement Living through II 2045  Class R2  $209  $17  $13,218  $17 
  Class R4  208  16  13,218  61 
  Class R6  —  16  13,224  211 
  Class 1  148  —  —  — 
  Total  $565  $49  $39,660  $289 
 
Retirement Living through II 2040  Class R2  $209  $17  $13,218  $18 
  Class R4  209  16  13,218  61 
  Class R6  —  16  13,224  210 
  Class 1  214  —  —  — 
  Total  $632  $49  $39,660  $289 
 
Retirement Living through 2035 II  Class R2  $209  $17  $13,218  $17 
  Class R4  209  16  13,218  61 
  Class R6  —  16  13,224  211 
  Class 1  209  —  —  — 
  Total  $627  $49  $39,660  $289 
 
Retirement Living through II 2030  Class R2  $208  $17  $13,218  $17 
  Class R4  208  16  13,218  61 
  Class R6  —  16  13,224  211 
  Class 1  308  —  —  — 
  Total  $724  $49  $39,660  $289 
 
Retirement Living through II 2025  Class R2  $208  $16  $13,218  $17 
  Class R4  208  16  13,218  61 
  Class R6  —  17  13,225  211 
  Class 1  361  —  —  — 
  Total  $777  $49  $39,661  $289 
 
Retirement Living through II 2020  Class R2  $207  $16  $13,218  $17 
  Class R4  207  16  13,218  61 
  Class R6  —  16  13,224  211 
  Class 1  206  —  —  — 
  Total  $620  $48  $39,660  $289 
 
Retirement Living through II 2015  Class R2  $206  $16  $13,218  $17 
  Class R4  206  16  13,218  62 
  Class R6  —  16  13,225  211 
  Class 1  150  —  —  — 
  Total  $562  $48  $39,661  $290 
 
Retirement Living through II 2010  Class R2  $206  $16  $13,218  $17 
  Class R4  206  16  13,218  62 
  Class R6  —  16  13,224  210 
  Class 1  290  —  —  — 
  Total  $702  $48  $39,660  $289 

Trustee expenses. The Trust compensates each Trustee who is not an employee of the Advisor or its affiliates. The costs of paying Trustee compensation and expenses are allocated to each portfolio based on its net assets relative to other funds within the John Hancock group of funds complex.

Annual report | Retirement Living II Portfolios  41 

 


Note 5 — Fund share transactions
Transactions in the portfolios’ shares for the period ended August 31, 2014 were as follows:

Retirement Living through II 2055 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  18,670  $191,047 
Repurchased  (2,185)  (23,323) 
Net increase  16,485  $167,724 
 
Total net increase  46,485  $467,724 
1Period from 3-26-14 (commencement of operations) to 8-31-14.     
 
Retirement Living through II 2050 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  69,221  $731,384 
Repurchased  (96)  (1,035) 
Net increase  69,125  $730,349 
 
Total net increase  99,125  $1,030,349 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     
 
Retirement Living through II 2045 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  137,009  $1,456,697 
Repurchased  (5,198)  (55,280) 
Net increase  131,811  $1,401,417 
 
Total net increase  161,811  $1,701,417 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     

 

42  Retirement Living II Portfolios | Annual report 

 


Retirement Living through II 2040 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  190,216  $2,016,092 
Repurchased  (18)  (187) 
Net increase  190,198  $2,015,905 
 
Total net increase  220,198  $2,315,905 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     
 
Retirement Living through II 2035 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  235,396  $2,513,062 
Repurchased  (2,566)  (26,896) 
Net increase  232,830  $2,486,166 
 
Total net increase  262,830  $2,786,166 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     
 
Retirement Living through II 2030 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  340,543  $3,620,378 
Repurchased  (163)  (1,689) 
Net increase  340,380  $3,618,689 
 
Total net increase  370,380  $3,918,689 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     

 

Annual report | Retirement Living II Portfolios  43 

 


Retirement Living through II 2025 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  420,844  $4,438,751 
Repurchased  (6,920)  (73,418) 
Net increase  413,924  $4,365,333 
 
Total net increase  443,924  $4,665,333 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     
 
Retirement Living through II 2020 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  252,814  $2,641,310 
Repurchased  (50,723)  (534,734) 
Net increase  202,091  $2,106,576 
 
Total net increase  232,091  $2,406,576 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     
 
Retirement Living through II 2015 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  225,267  $2,353,239 
Repurchased  (66,198)  (693,088) 
Net increase  159,069  $1,660,151 
 
Total net increase  189,069  $1,960,151 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     

 

44  Retirement Living II Portfolios | Annual report 

 


Retirement Living through II 2010 Portfolio     
    Period ended 8-31-141 
  Shares  Amount 
Class R2 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R4 shares     
Sold  10,000  $100,000 
Net increase  10,000  $100,000 
 
Class R6 shares     
Sold  10,000  $100,000 
Net Increase  10,000  $100,000 
 
Class 1 shares     
Sold  325,501  $3,367,035 
Repurchased  (9,484)  (98,408) 
Net increase  316,017  $3,268,627 
 
Total net increase  346,017  $3,568,627 
1Period from 11-7-13 (commencement of operations) to 8-31-14.     

 

Affiliates of the Trust owned of shares of beneficial interest of the following portfolios on August 31, 2014:

Portfolio  Class  % by Class
Retirement Living Through II 2055  Class R6  100% 
Retirement Living Through II 2055  Class R4  100% 
Retirement Living Through II 2055  Class R2  100% 
Retirement Living Through II 2055  Class 1  62% 
 
Retirement Living Through II 2050  Class R6  100% 
Retirement Living Through II 2050  Class R4  100% 
Retirement Living Through II 2050  Class R2  100% 
Retirement Living Through II 2050  Class 1  16% 
 
Retirement Living Through II 2045  Class R6  100% 
Retirement Living Through II 2045  Class R4  100% 
Retirement Living Through II 2045  Class R2  100% 
Retirement Living Through II 2045  Class 1  8% 
 
Retirement Living Through II 2040  Class R6  100% 
Retirement Living Through II 2040  Class R4  100% 
Retirement Living Through II 2040  Class R2  100% 
Retirement Living Through II 2040  Class 1  5% 
 
Retirement Living Through II 2035  Class R6  100% 
Retirement Living Through II 2035  Class R4  100% 
Retirement Living Through II 2035  Class R2  100% 
Retirement Living Through II 2035  Class 1  5% 
 
Retirement Living Through II 2030  Class R6  100% 
Retirement Living Through II 2030  Class R4  100% 
Retirement Living Through II 2030  Class R2  100% 
Retirement Living Through II 2030  Class 1  3% 
 
Retirement Living Through II 2025  Class R6  100% 
Retirement Living Through II 2025  Class R4  100% 
Retirement Living Through II 2025  Class R2  100% 
Retirement Living Through II 2025  Class 1  3% 
 
Retirement Living Through II 2020  Class R6  100% 
Retirement Living Through II 2020  Class R4  100% 
Retirement Living Through II 2020  Class R2  100% 
Retirement Living Through II 2020  Class 1  6% 

 

Annual report | Retirement Living II Portfolios  45 

 


Portfolio  Class  % by Class 
Retirement Living Through II 2015  Class R6  100% 
Retirement Living Through II 2015  Class R4  100% 
Retirement Living Through II 2015  Class R2  100% 
Retirement Living Through II 2015  Class 1  8% 
 
Retirement Living Through II 2010  Class R6  100% 
Retirement Living Through II 2010  Class R4  100% 
Retirement Living Through II 2010  Class R2  100% 
Retirement Living Through II 2010  Class 1  3% 

Note 6 — Purchase and sale of securities

Purchases and sales of securities, other than short-term investments, amounted to the following for the period ended August 31, 2014:

Portfolio  Purchases  Sales 
Retirement Living through II 2055  $492,185  $26,093 
Retirement Living through II 2050  1,020,084  24,024 
Retirement Living through II 2045  1,741,286  71,585 
Retirement Living through II 2040  2,320,994  21,966 
Retirement Living through II 2035  2,761,849  53,591 
Retirement Living through II 2030  3,819,416  39,710 
Retirement Living through II 2025  4,442,772  116,753 
Retirement Living through II 2020  2,746,914  572,199 
Retirement Living through II 2015  2,515,764  734,224 
Retirement Living through II 2010  3,620,800  143,541 

Note 7 – Investment in affiliated underlying funds

The portfolios invest primarily in affiliated underlying funds that are managed by the Advisor and its affiliates. The portfolios do not invest in the affiliated underlying funds for the purpose of exercising management or control; however, the fund’s investment may represent a significant portion of each underlying fund’s net assets. For the period ended August 31, 2014, the portfolios did not hold 5% or more of the net assets of the underlying funds.

Information regarding the portfolios’ fiscal year to date purchases and sales of the affiliated underlying funds as well as income and capital gains earned by the portfolios’ from their investments in affiliated underlying funds is as follows:

          Dividends and Distributions     
 
 
  Beginning      Ending  Income  Capital Gains     
  Share  Shares  Shares  Share  Distributions  Distributions  Realized  Ending 
Security  Amount  Purchased  Sold  Amount  Received  Received  Gain (Loss)  Value 
Retirement Living through II 2055                 
Strategic Equity Allocation  —  23,663  (1,055)  22,608  —  —  ($9)  $315,606 
Retirement Living through II 2050                 
Strategic Equity Allocation  —  49,965  (1,062)  48,903  $3,957  $4,063  $156  $682,688 
Retirement Living through II 2045                 
Strategic Equity Allocation  —  83,214  (3,406)  79,808  $3,957  $4,063  $40  $1,114,115 
Retirement Living through II 2040                 
Strategic Equity Allocation  —  109,640  (1,062)  108,578  $3,957  $4,063  $156  $1,515,754 
Retirement Living through II 2035                 
Strategic Equity Allocation  —  129,436  (2,517)  126,919  $3,874  $3,977  $224  $1,771,796 
Retirement Living through II 2030                 
Strategic Equity Allocation  —  165,988  (1,454)  164,534  $3,579  $3,675  $236  $2,296,894 
Retirement Living through II 2025                 
Strategic Equity Allocation  —  179,433  (3,881)  175,552  $3,201  $3,286  $114  $2,450,712 
Retirement Living through II 2020                 
Strategic Equity Allocation  —  95,203  (18,277)  76,926  $2,698  $2,769  ($514)  $1,073,886 
Retirement Living through II 2015                 
Strategic Equity Allocation  —  71,150  (19,554)  51,596  $2,236  $2,296  ($659)  $720,277 
Retirement Living through II 2010                 
Strategic Equity Allocation  —  81,751  (3,450)  78,301  $1,862  $1,911  $314  $1,093,078 

 

46  Retirement Living II Portfolios | Annual report 

 


Auditor’s Letter

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of John Hancock Funds II:

In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of John Hancock Retirement Living through II 2010 Portfolio, John Hancock Retirement Living through II 2015 Portfolio, John Hancock Retirement Living through II 2020 Portfolio, John Hancock Retirement Living through II 2025 Portfolio, John Hancock Retirement Living through II 2030 Portfolio, John Hancock Retirement Living through II 2035 Portfolio, John Hancock Retirement Living through II 2040 Portfolio, John Hancock Retirement Living through II 2045 Portfolio, John Hancock Retirement Living through II 2050 Portfolio and John Hancock Retirement Living through II 2055 Portfolio, which are each a part of John Hancock Funds II (the “Trust”) at August 31, 2014, and the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 2014 by correspondence with the custodian and transfer agent, and the application of alternative auditing procedures where securities purchased confirmations had not been received, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts
October 17, 2014

Annual report | Retirement Living II Portfolios  47 

 


Tax information

Unaudited

For federal income tax purposes, the following information is furnished with respect to the distributions of the portfolios, if any, paid during its taxable year ended August 31, 2014.

The portfolios report the maximum amount allowable of its net taxable income as eligible for the corporate dividends-received deduction.

The portfolios report 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.

The portfolios below paid the following amounts in capital gain dividends.

Portfolio  Capital Gain 
Retirement Living through II 2050  $3,006 
Retirement Living through II 2045  3,006 
Retirement Living through II 2040  3,006 
Retirement Living through II 2035  2,953 
Retirement Living through II 2030  2,768 
Retirement Living through II 2025  2,545 
Retirement Living through II 2020  2,259 
Retirement Living through II 2015  2,006 

Eligible shareholders will be mailed a 2014 Form 1099-DIV in early 2015. This will reflect the tax character of all distributions paid in calendar year 2014.

Please consult a tax advisor regarding the tax consequences of your investment in the fund.

48  Retirement Living II Portfolios | Annual report 

 


EVALUATION OF ADVISORY AND SUBADVISORY AGREEMENTS BY THE BOARD OF TRUSTEES

At in-person meetings held on March 11–13, 2014, the Board of Trustees (the Board) of John Hancock Funds II (the Trust), including all of the Trustees who are not considered to be interested persons of the Trust under the Investment Company Act of 1940, as amended (the 1940 Act) (the Independent Trustees), approved Retirement Living through II 2055 Portfolio (2055 Portfolio), a new series of the Trust.

This section describes the evaluation by the Board of:

(a) an advisory agreement between the Trust and John Hancock Advisers, LLC (the Advisor) relating to the 2055 Portfolio (the Advisory Agreement);

(b) an amendment to the subadvisory agreement between the Advisor and John Hancock Asset Management a division of Manulife Asset Management (US) LLC (JHAM US) to add the 2055 Portfolio (the JHAM US Subadvisory Agreement); and

(c) an amendment to the subadvisory agreement between the Advisor and John Hancock Asset Management a division of Manulife Asset Management (North America) Limited (JHAM NA, and together with JHAM US, the Subadvisors) to add the 2055 Portfolio (the JHAM NA Subadvisory Agreement, and together with the JHAM US Subadvisory Agreement, the Subadvisory Agreements).

In considering the Advisory Agreement and the Subadvisory Agreements with respect to the 2055 Portfolio, the Board received in advance of the meeting a variety of materials relating to the 2055 Portfolio, the Advisor and the Subadvisors, including comparative fee and expense information for a peer group of similar mutual funds, and including with respect to the Subadvisors, performance information for comparatively managed accounts, as applicable, and other information provided by the Advisor and the Subadvisors regarding the nature, extent, and quality of services to be provided by the Advisor and the Subadvisors under their respective Agreements, as well as information regarding the Advisor’s revenues and costs of providing services to the 2055 Portfolio and any compensation paid to affiliates of the Advisor. The Board also took into account discussions with management and information provided to the Board at prior meetings with respect to the services provided by the Advisor and the Subadvisors to the John Hancock Funds (the Funds), including quarterly performance reports prepared by management containing reviews of investment results, and periodic presentations from the Subadvisors with respect to the other funds that they manage. The Board noted the affiliation of the Subadvisors with the Advisor, noting any potential conflicts of interest. The Board also considered the nature, quality, and extent of the non-advisory services, if any, to be provided to the 2055 Portfolio by the Advisor’s affiliates, including distribution services. The Board also took into account information with respect to the 2055 Portfolio presented at their December 2013 meeting.

Throughout the process, the Board asked questions of and were afforded the opportunity to request additional information from management. The Board is assisted by legal counsel for the Trust and the Independent Trustees are also separately assisted by independent legal counsel throughout the process. The Independent Trustees also received a memorandum from their independent legal counsel discussing the legal standards for their consideration of the proposed Advisory Agreement and Subadvisory Agreements and discussed the proposed Advisory Agreement and Subadvisory Agreements in private sessions with their independent legal counsel at which no representatives of management were present.

Approval of Advisory Agreement

In approving the Advisory Agreement with respect to the 2055 Portfolio, the Board, including the Independent Trustees, considered a variety of factors, including those discussed below. The Board also considered other factors (including conditions and trends prevailing generally in the economy, the securities markets and the industry) and does not treat any single factor as determinative, and each Trustee may attribute different weights to different factors. The Board’s conclusions may be based in part on its consideration of the advisory and subadvisory arrangements in prior years and on the Board’s regular review of fund performance and operations throughout the year.

Nature, Extent, and Quality of Services. Among the information received by the Board from the Advisor relating to the nature, extent and quality of services to be provided to the 2055 Portfolio, the Board reviewed information provided by the Advisor relating to its operations and personnel, descriptions of its organizational and management structure, and information regarding the Advisor’s compliance and regulatory history. The Board also noted that on a regular basis it receives and reviews information from the Trust’s Chief Compliance Officer (CCO) regarding the Funds’ compliance policies and procedures established pursuant to Rule 38a-1 under the 1940 Act. The Board also considered the Advisor’s risk management processes. The Board considered that the Advisor will be responsible for the management of the day-to-day operations of the 2055 Portfolio, including but not limited to, general supervision of and coordination of the services to be provided by the Subadvisors, and also will be responsible for monitoring and reviewing the activities of the Subadvisors and other third-party service providers.

In considering the nature, extent and quality of the services to be provided by the Advisor, the Trustees also took into account their knowledge of the Advisor’s management and the quality of the performance of the Advisor’s duties, through Board meetings, discussions and reports during the preceding year and through each Trustee’s experience as a Trustee of the Trust and of the other trusts in the complex.

Annual report | Retirement Living II Portfolios  49 

 


In the course of its deliberations regarding the Advisory Agreement, the Board considered, among other things:

(a) the skills and competency with which the Advisor has in the past managed the Trust’s affairs and its subadvisory relationships, the Advisor’s oversight and monitoring of the Subadvisors’ investment performance and compliance programs, such as the Subadvisors’ compliance with fund policies and objectives; review of brokerage matters, including with respect to trade allocation and best execution; and the Advisor’s timeliness in responding to performance issues;

(b) the background, qualifications, and skills of the Advisor’s personnel;

(c) the Advisor’s compliance policies and procedures and its responsiveness to regulatory changes and mutual fund industry developments;

(d) the Advisor’s administrative capabilities, including its ability to supervise the other service providers for the funds;

(e) the financial condition of the Advisor and whether it has the financial wherewithal to provide a high level and quality of services to the 2055 Portfolio; and

(f) the Advisor’s reputation and experience in serving as an investment advisor to the Trust, and the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of investments.

The Board concluded that Advisor may reasonably be expected to provide a high quality of services under the Advisory Agreement with respect to the 2055 Portfolio.

Investment performance. In connection with its consideration of the Advisory Agreement, the Board considered, at this and at prior meetings, the performance of other comparable funds or accounts, if any, managed by the Advisor and Subadvisors and the performance of their respective benchmarks and/or peer groups. The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the Subadvisors.

Fees and Expenses. The Board reviewed comparative fee and expense information with respect to similarly situated investment companies deemed to be comparable to the 2055 Portfolio. The Board reviewed information provided by the Advisor concerning investment advisory fees charged to other clients (including other funds in the complex) having similar investment mandates, if any. The Board considered any differences between the Advisor’s and Subadvisors’ services to the 2055 Portfolio and the services they provide to other such comparable clients or funds.

The Board took into account management’s discussion with respect to the advisory/subadvisory fee structure, including the amount of the advisory fee retained by the Advisor after payment of the subadvisory fee. The Board also noted that the Advisor, and not the 2055 Portfolio, would be responsible for paying the subadvisory fees. The Board also noted that the Advisor has agreed to waive fees and/or reimburse expenses with respect to the 2055 Portfolio. The Board also took into account that management has agreed to implement an overall fee waiver across a number of funds in the complex, which is discussed further below. The Board also noted management’s discussion of the 2055 Portfolio’s anticipated expenses.

In addition, the Trustees reviewed the advisory fee to be paid to the Advisor for the 2055 Portfolio, which is a fund of funds, and concluded that such fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the advisory agreements for the underlying portfolios of the 2055 Portfolio, and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the 2055 Portfolio and those of its underlying portfolios.

The Board concluded that the advisory fees to be paid by the Trust with respect to the 2055 Portfolio are reasonable.

Profitability/Indirect Benefits. In considering the costs of the services to be provided and the profits to be realized by the Advisor and its affiliates (including the Subadvisors) from the Advisor’s relationship with the 2055 Portfolio, the Board:

(a) considered the financial information of the Advisor;

(b) reviewed and considered information presented by the Advisor regarding the anticipated net profitability to the Advisor and its affiliates with respect to the 2055 Portfolio;

(c) considered that the John Hancock insurance companies that are affiliates of the Advisor, as shareholders of the Trust directly or through their separate accounts, receive certain tax credits or deductions relating to foreign taxes paid and dividends received by certain Funds of the Trust and noted that these tax benefits, which are not available to contract owners under applicable income tax law, are reflected in the profitability information reviewed by the Board;

(d) considered that the Advisor will also provide administrative services to the 2055 Portfolio on a cost basis pursuant to an administrative services agreement;

(e) noted that the Subadvisors are affiliates of the Advisor;

50  Retirement Living II Portfolios | Annual report 

 


(f) noted that affiliates of the Advisor will provide transfer agency services and distribution services to the 2055 Portfolio, and that the Trust’s distributor will receive Rule 12b-1 payments to support distribution of the 2055 Portfolio;

(g) noted that the Advisor will derive reputational and other indirect benefits from providing advisory services to the 2055 Portfolio;

(h) noted that the subadvisory fees for the 2055 Portfolio will be paid by Advisor;

(i) with respect to the 2055 Portfolio, the Board noted that the advisory fee is in addition to the fees received by the Advisor and its affiliates with regard to the underlying portfolios in which the 2055 Portfolio may invest; and

(j) considered that the Advisor should be entitled to earn a reasonable level of profits in exchange for the level of services it will provide to the 2055 Portfolio and the entrepreneurial risk that it assumes as Advisor.

Based upon its review, the Board concluded that the level of profitability, if any, of the Advisor and its affiliates (including the Subadvisors) from their relationship with the 2055 Portfolio is reasonable and not excessive.

Economies of Scale. In considering the extent to which economies of scale would be realized if the 2055 Portfolio grows and whether fee levels reflect these economies of scale for the benefit of fund shareholders, the Board:

(a) considered that with respect to the John Hancock underlying portfolios in which the 2055 Portfolio invests the Advisor has agreed, effective July 1, 2014, to waive a portion of its management fee for such underlying portfolios and for each of the other John Hancock funds in the complex (except as discussed below) (the Participating Portfolios) or otherwise reimburse the expenses of the Participating Portfolios as follows (the Reimbursement): The Reimbursement shall equal, on an annualized basis, 0.01% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $75 billion but is less than or equal to $125 billion, 0.0125% of that portion of the aggregate net assets of all the Participating Portfolios that exceed $125 billion but is less than or equal to $150 billion and 0.015% of that portion of the aggregate net assets of all the Participating Portfolios that exceeds $150 billion. (The funds that are not Participating Portfolios are each of the fund of funds of the Trust and of John Hancock Variable Insurance Trust. The 2055 Portfolio also benefits from such overall management fee waiver through its investment in underlying portfolios that include certain of the Participating Portfolios, which are subject to the Reimbursement);

(b) considered that the Advisor has agreed to waive all or a portion of its management fee and/or reimburse or pay operating expenses of the 2055 Portfolio to reduce operating expenses;

(c) reviewed the Trust’s and the 2055 Portfolio’s advisory fee structure and concluded that: (i) the 2055 Portfolio’s fee structure contains breakpoints at the advisory fee level; and (ii) although economies of scale cannot be measured with precision, these arrangements permit shareholders of the 2055 Portfolio to benefit from economies of scale if the 2055 Portfolio grows; and

(d) the Board also considered the potential effect of the 2055 Portfolio’s future growth in size on its performance and fees. The Board also noted that if the 2055 Portfolio’s assets increase over time, the 2055 Portfolio may realize other economies of scale.

Approval of Subadvisory Agreements

In making its determination with respect to approval of the Subadvisory Agreements, the Board reviewed:

(a) information relating to each Subadvisor’s business, including current subadvisory services to the Trust (and other funds in the John Hancock family of funds);

(b) the comparative performance of the 2055 Portfolio’s benchmarks and comparable funds managed by the 2055 Portfolio’s portfolio managers; and

(c) the proposed subadvisory fee for the 2055 Portfolio.

Nature, Extent, and Quality of Services. With respect to the services to be provided by each of the Subadvisors, the Board received information provided to the Board by each of the Subadvisors, as well as took into account information presented throughout the past year. The Board considered each Subadvisor’s current level of staffing and their overall resources, as well received information relating to a Subadvisor’s compensation programs. The Board reviewed each Subadvisor’s history and investment experience, as well as information regarding the qualifications, background, and responsibilities of each Subadvisor’s investment and compliance personnel who will provide services to the 2055 Portfolio. The Board also considered, among other things, each Subadvisor’s compliance programs and any disciplinary history. The Board also considered each Subadvisor’s risk assessment and monitoring processes. The Board reviewed each Subadvisor’s regulatory history, including whether it was currently involved in any regulatory actions or investigations as well as material litigation, and any settlements and amelioratory actions undertaken, as appropriate. The Board noted that the Advisor conducts regular periodic reviews of each Subadvisor and its operations in regard to the Funds, including regarding investment processes and organizational and staffing matters. The Board also noted that the Trust’s CCO and his staff conduct regular, periodic compliance reviews with the Subadvisors and present reports to the Independent Trustees regarding the same, which includes evaluating the regulatory compliance systems of each Subadvisor and procedures reasonably designed by it to assure compliance with the federal securities laws. The Board also took into account the financial condition of the Subadvisors.

Annual report | Retirement Living II Portfolios  51 

 


The Board considered the Subadvisors’ investment processes and philosophies. The Board took into account that each Subadvisor’s responsibilities will include the development and maintenance of an investment program for the 2055 Portfolio that is consistent with the 2055 Portfolio’s investment objectives, the selection of investment securities and the placement of orders for the purchase and sale of such securities, as well as the implementation of compliance controls related to performance of these services. The Board also received information with respect to each Subadvisor’s brokerage policies and practices, including with respect to best execution and soft dollars.

Subadvisor Compensation. In considering the cost of services to be provided by the Subadvisors and the profitability to the Subadvisors of their relationship to the 2055 Portfolio, the Board noted that the fees under the Subadvisory Agreements are paid by the Advisor and not the 2055 Portfolio. The Board also received information and took into account any other potential conflicts of interests the Advisor might have in connection with the Subadvisory Agreements.

In addition, the Board considered other potential indirect benefits that the Subadvisors and their affiliates may receive from the Subadvisors’ relationship with the 2055 Portfolio, such as the opportunity to provide advisory services to additional John Hancock Funds and reputational benefits.

Subadvisory Fees. The Board considered that the 2055 Portfolio will pay advisory fees to the Advisor and that, in turn, the Advisor will pay subadvisory fees to the Subadvisors. The Board considered the 2055 Portfolio’s subadvisory fee compared to similarly situated investment companies deemed to be comparable to the 2055 Portfolio, as applicable. The Board also took into account the sub-advisory fees paid by the Advisor to fees charged by each Subadvisor to manage other sub-advised portfolios and portfolios not subject to regulation under the 1940 Act, as applicable.

Subadvisor Performance. The Board considered performance results of comparable funds managed by the Subadvisors against an applicable benchmark. The Board also noted that it reviews at its regularly scheduled meetings information about the performance of other John Hancock Funds managed by the Advisor and the Subadvisors. The Board noted the Advisor’s expertise and resources in monitoring the performance, investment style and risk-adjusted performance of the Subadvisors. The Board was mindful of the Advisor’s focus on the Subadvisors’ performance. The Board also noted each Subadvisor’s long-term performance record for similar accounts, as applicable.

The Board’s decision to approve the Subadvisory Agreements was based on a number of determinations, including the following:

(1) Each Subadvisor has extensive experience and demonstrated skills as a manager, and currently subadvises other funds of the Trust and the fund complex and the Board is generally satisfied with each Subadvisor’s management of these funds, and may reasonably be expected to provide a high quality of investment management services to the 2055 Portfolio; and

(2) The proposed subadvisory fees are reasonable in relation to the level and quality of services to be provided; and

(3) The subadvisory fees are paid by the Advisor and not the 2055 Portfolio and the advisory fee for the 2055 Portfolio contains breakpoints that permit shareholders to benefit from economies of scale.

In addition, the Trustees reviewed the subadvisory fee to be paid to each Subadvisor for the 2055 Portfolio and concluded that such subadvisory fee is based on services provided that are in addition to, rather than duplicative of, the services provided pursuant to the subadvisory agreements for the underlying portfolios of the 2055 Portfolio, and that the additional services are necessary because of the differences between the investment policies, strategies and techniques of the 2055 Portfolio and those of its underlying portfolios.

* * *

Based on the Board’s evaluation of all factors that it deemed to be material, including those factors described above, and assisted by the advice of independent legal counsel, the Board, including the Independent Trustees, concluded that approval of the Advisory Agreement and the Subadvisory Agreements would be in the best interest of the 2055 Portfolio and its shareholders. Accordingly, the Board, and the Independent Trustees voting separately, approved the Advisory Agreement and Subadvisory Agreements.

52  Retirement Living II Portfolios | Annual report 

 


Trustees and Officers

This chart provides information about the Trustees and Officers who oversee your John Hancock fund. Officers elected by the Trustees manage the day-to-day operations of the fund and execute policies formulated by the Trustees.

Independent Trustees

    Number of 
Name, year of birth  Trustee of  John Hancock 
Position(s) held with fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
James M. Oates, Born: 1946  2005  230 
Managing Director, Wydown Group (financial consulting firm) (since 1994); Chairman and Director, Emerson Investment Management, 
Inc. (since 2000); Independent Chairman, Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services company) 
(1997–2011); Director, Stifel Financial (since 1996); Director, Investor Financial Services Corporation (1995–2007); Director, Connecticut 
River Bancorp (since 1998); Director, Virtus Funds (formerly Phoenix Mutual Funds) (since 1988).     
 
Trustee and Chairperson of the Board, John Hancock retail funds3 (since 2012); Trustee (2005–2006 and since 2012) and Chairperson of 
the Board (since 2012), John Hancock Funds III; Trustee (since 2004) and Chairperson of the Board (since 2005), John Hancock Variable 
Insurance Trust; Trustee and Chairperson of the Board, John Hancock Funds II (since 2005).     
 
Charles L. Bardelis,2 Born: 1941  2005  230 
Director, Island Commuter Corp. (marine transport).     
 
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).     
 
Peter S. Burgess,2 Born: 1942  2005  230 
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 (since 2010); Director, PMA Capital Corporation (2004–2010).     
 
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  2012  230 
Professor, University of Texas, Austin, Texas (since 1971); former Chancellor, University of Texas System and former President of the 
University of Texas, Austin, Texas; Director, LIN Television (since 2009); Chairman (since 2009) and Director (since 2006), Lincoln National 
Corporation (insurance); Director, Resolute Energy Corporation (since 2009); Director, Southwest Airlines (since 2000); former Director, 
Introgen (manufacturer of biopharmaceuticals) (until 2008); former Director, Hicks Acquisition Company I, Inc. (until 2007); former 
Director, Texas Exchange Bank, SSB (formerly Bank of Crowley) (until 2009); former Advisory Director, JP Morgan Chase Bank (formerly 
Texas Commerce Bank–Austin) (until 2009).     
 
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).     
 
Grace K. Fey, Born: 1946  2008  230 
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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). 
 
Theron S. Hoffman,2 Born: 1947  2008  230 
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); 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 retail funds3 (since 2012); Trustee, John Hancock Variable Insurance Trust and John Hancock Funds II (since 2008). 

 

Annual report | Retirement Living II Portfolios  53 

 


Independent Trustees (continued)

    Number of 
Name, Year of Birth  Trustee of  John Hancock 
Position(s) held with Fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
 
Deborah C. Jackson, Born: 1952  2012  230 
President, Cambridge College, Cambridge, Massachusetts (since 2011); 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 of John Hancock Variable Insurance Trust and John Hancock Funds II 
(since 2012).     
 
Hassell H. McClellan, Born: 1945  2005  230 
Trustee, Virtus Variable Insurance Trust (formerly Phoenix Edge Series Funds) (since 2008); Director, The Barnes Group (since 2010); 
Associate Professor, The Wallace E. Carroll School of Management, Boston College (retired 2013).     
 
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).     
 
Steven R. Pruchansky, Born: 1944  2012  230 
Chairman and Chief Executive Officer, Greenscapes of Southwest Florida, Inc. (since 2000); Director and President, Greenscapes of 
Southwest Florida, Inc. (until 2000); Member, Board of Advisors, First American Bank (until 2010); Managing Director, Jon James, LLC 
(real estate) (since 2000); Director, First Signature Bank & Trust Company (until 1991); Director, Mast Realty Trust (until 1994); President, 
Maxwell Building Corp. (until 1991).     
 
Trustee (since 1992) and Chairperson of the Board (2011–2012), John Hancock retail funds3; Trustee and Vice Chairperson of the Board, 
John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012).   
 
Gregory A. Russo, Born: 1949  2012  230 
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 of Finance Committee, The 
Moorings, Inc. (nonprofit continuing care community) (since 2012); 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).     
 
 
Non-Independent Trustees4     
 
    Number of 
Name, year of birth  Trustee of  John Hancock 
Position(s) held with fund  the Trust  funds overseen 
Principal occupation(s) and other directorships during past 5 years  since1  by Trustee 
Craig Bromley, Born: 1966  2012  230 
President, John Hancock Financial Services (since 2012); Senior Executive Vice President and General Manager, U.S. Division, Manulife 
Financial Corporation (since 2012); President and Chief Executive Officer, Manulife Insurance Company (Manulife Japan) (2005–2012, 
including prior positions).     
 
Trustee, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II (since 2012).   
 
Warren A. Thomson, Born: 1955  2012  230 
Senior Executive Vice President and Chief Investment Officer, Manulife Financial Corporation and The Manufacturers Life Insurance 
Company (since 2009); Chairman and Chief Executive Officer, Manulife Asset Management (since 2001, including prior positions); 
Director (since 2006), and President and Chief Executive Officer (since 2013), Manulife Asset Management Limited; 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).   

 

54  Retirement Living II Portfolios | Annual report 

 


Principal officers who are not Trustees

  Officer 
Name, year of birth  of the 
Position(s) held with fund  Trust 
Principal occupation(s) and other directorships during past 5 years  since 
 
Andrew G. Arnott, Born: 1971  2009 
President   
Senior Vice President, John Hancock Financial Services (since 2009); 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 (effective 
3-13-14) and Executive Vice President, John Hancock retail funds,3 John Hancock Variable Insurance Trust, and John Hancock Funds II 
(since 2007, including prior positions).   
 
 
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 funds3 and John Hancock Variable 
Insurance Trust; 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).   
 
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).   
 
Salvatore Schiavone, Born: 1965  2009 
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 (since 2010 and 2007–2009, including prior positions). 

The business address for all Trustees and Officers is 601 Congress Street, Boston, Massachusetts 02210-2805.

1 Each Trustee holds office until his or her successor is elected and qualified, or until the Trustee’s death, retirement, resignation, or removal.

2 Member of the Audit Committee.

3 “John Hancock retail funds” comprises John Hancock Funds III and 37 other John Hancock funds consisting of 27 series of other John Hancock trusts and 10 closed-end funds.

4 Because Messrs. Bromley and Thomson are senior executives or directors of the advisor and/or its affiliates, each of them is considered an “interested person of the fund,” as defined in the Investment Company Act of 1940.

Annual report | Retirement Living II Portfolios  55 

 


More information

Trustees  Investment advisor 
James M. Oates, Chairperson  John Hancock Advisers, LLC 
Steven R. Pruchansky, Vice Chairperson   
Charles L. Bardelis*  Subadvisors 
Craig Bromley†  John Hancock Asset Management a division of 
Peter S. Burgess*  Manulife Asset Management (US) LLC 
William H. Cunningham  John Hancock Asset Management a division of 
Grace K. Fey  Manulife Asset Management (North America) Limited 
Theron S. Hoffman* 
Deborah C. Jackson  Principal distributor
Hassell H. McClellan  John Hancock Funds, LLC 
Gregory A. Russo 
Warren A. Thomson†  Custodian
  State Street Bank and Trust Company 
Officers 
Andrew G. Arnott  Transfer agent
President  John Hancock Signature Services, Inc.
   
John J. Danello  Legal counsel
Senior Vice President, Secretary, and Chief Legal Officer  K&L Gates LLP 
 
Francis V. Knox, Jr.  Independent registered public accounting firm 
Chief Compliance Officer  PricewaterhouseCoopers LLP 
 
Charles A. Rizzo   
Chief Financial Officer   
 
Salvatore Schiavone   
Treasurer   
 
*Member of the Audit Committee   
†Non-Independent Trustee   

The portfolios’ proxy voting policies and procedures, as well as the portfolios’ 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 portfolios’ complete list of portfolio holdings, for the first and third fiscal quarters, is filed with the SEC on Form N-Q. The portfolios’ 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 202-551-8090 to receive information on the operation of the SEC’s Public Reference Room.

We make this information on your portfolio, as well as monthly portfolio holdings, and other portfolio details available on our website at jhinvestments.com or by calling 1-800-225-5291.

You can also contact us:     
800-225-5291  Regular mail:  Express mail: 
jhinvestments.com  John Hancock Signature Services, Inc.  John Hancock Signature Services, Inc. 
  P.O. Box 55913  30 Dan Road 
  Boston, MA 02205-5913  Canton, MA 02021 

 

56 Retirement Living II Portfolios | Annual report



800-225-5291
800-231-5469 TDD
800-338-8080 EASI-Line
jhinvestments.com


This report is for the information of the shareholders of John Hancock Retirement Living II Portfolios.   
It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.   
MF198939  RL2A 8/14 
  10/14 

 


ITEM 2. CODE OF ETHICS.

(a) As of the end of the fiscal year August 31, 2014 the registrant has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its Principal Executive Officer and Principal Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.

(b)Not applicable

(c)Not applicable

(d)Not applicable

(e)Not applicable

(f)(1) A copy of the Code of Ethics is attached hereto.


JOHN HANCOCK VARIABLE INSURANCE TRUST
JOHN HANCOCK FUNDS
JOHN HANCOCK FUNDS II
 
SARBANES-OXLEY CODE OF ETHICS
FOR
PRINCIPAL EXECUTIVE, PRINCIPAL FINANCIAL OFFICERS & TREASURER 

 

I. Covered Officers/Purpose of the Code

This code of ethics (this “Code”) for John Hancock Variable Insurance Trust, John Hancock Funds1, and John Hancock Funds II and, each a registered management investment company under the Investment Company Act of 1940, as amended (“1940 Act”), which may issue shares in separate and distinct series (each investment company and series thereunder to be hereinafter referred to as a “Fund”), applies to each Fund’s Principal Executive Officer (“President”), Principal Financial Officer (“Chief Financial Officer”) and Treasurer (“Treasurer”) (the “Covered Officers” as set forth in Exhibit A) for the purpose of promoting:

► honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

► full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Fund;

► compliance with applicable laws and governmental rules and regulations;

► the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

► accountability for adherence to the Code.

____________________________
1 John Hancock Funds includes the following trusts: John Hancock Financial Opportunities Fund; John Hancock Bond Trust; John Hancock California Tax-Free Income Fund; John Hancock Capital Series; John Hancock Current Interest; john Hancock Funds III; John Hancock Income Securities Trust; John Hancock Investment Trust; John Hancock Investment Trust II; John Hancock Investment Trust III; John Hancock Investors Trust; John Hancock Municipal Securities Trust; John Hancock Premium Dividend Fund ; John Hancock Preferred Income Fund; John Hancock Preferred Income Fund II; John Hancock Preferred Income Fund III; John Hancock Sovereign Bond Fund; John Hancock Strategic Series; John Hancock Tax-Exempt Series Fund; John Hancock Tax-Advantaged Dividend Income Fund; John Hancock Tax-Advantaged Global Shareholder Yield Fund and John Hancock Hedged Equity and Income Fund.

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Each of the Covered Officers should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest

Overview

A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Fund. Certain conflicts of interest arise out of the relationships between the Covered Officers and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the “Investment Company Act”) and the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Fund because of their status as “affiliated persons” of the Fund. Each of the Covered Officers is an officer or employee of the investment adviser or a service provider (“Service Provider”) to the Fund. The Fund’s, the investment adviser’s and the Service Provider’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Fund and the investment adviser and the Service Provider of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund, for the investment adviser or for the Service Provider), be involved in establishing policies and implementing decisions which will have different effects on the investment adviser, the Service Provider and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the investment adviser and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if such participation is performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, it will be deemed to have been handled ethically. In addition, it is recognized by the Fund’s Board of Trustees/Directors (the “Board”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by other Codes.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but the Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Fund.

*                                     *                                     * 

 

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Each Covered Officer must:

► not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

► not cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Fund; and

► not use material non-public knowledge of portfolio transactions made or contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions.

Additionally, conflicts of interest may arise in other situations, the propriety of which may be discussed, if material, with the Fund’s Chief Compliance Officer (“CCO”). Examples of these include:

► service as a director/trustee on the board of any public or private company;

► the receipt of any non-nominal gifts;

► the receipt of any entertainment from any company with which the Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety (or other formulation as the Fund already uses in another code of conduct);

► any ownership interest in, or any consulting or employment relationship with, any of the Fund’s service providers, other than its investment adviser, any sub-adviser, principal underwriter, administrator or any affiliated person thereof; and

► a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

III. Disclosure & Compliance

► Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Fund;

► Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund’s directors and auditors, and to governmental regulators and self-regulatory organizations;

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► Each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Fund and the Fund’s adviser or any sub-adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and

► It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

IV. Reporting & Accountability

Each Covered Officer must:

► upon adoption of the Code (or thereafter as applicable, upon becoming an Covered Officer), affirm in writing to the Fund’s CCO that he/she has received, read, and understands the Code;

► annually thereafter affirm to the Fund’s CCO that he/she has complied with the requirements of the Code;

► not retaliate against any employee or Covered Officer or their affiliated persons for reports of potential violations that are made in good faith;

► notify the Fund’s CCO promptly if he/she knows of any violation of this Code (Note: failure to do so is itself a violation of this Code); and

► report at least annually any change in his/her affiliations from the prior year.

The Fund’s CCO is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by the Principal Executive Officer will be considered by the Fund’s Board or the Compliance Committee thereof (the “Committee”).

The Fund will follow these procedures in investigating and enforcing this Code:

► the Fund’s CCO will take all appropriate action to investigate any potential violations reported to him/her;

► if, after such investigation, the CCO believes that no violation has occurred, the CCO is not required to take any further action;

► any matter that the CCO believes is a violation will be reported to the Board or, if applicable, Compliance Committee;

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► if the Board or, if applicable, Compliance Committee concurs that a violation has occurred, the Board, either upon its determination of a violation or upon recommendation of the Compliance Committee, if applicable, will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the Service Provider or the investment adviser or its board; or a recommendation to dismiss the Registrant’s Executive Officer;

► the Board, or if applicable the Compliance Committee, will be responsible for granting waivers, as appropriate; and

► any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

V. Other Policies & Procedures

This Code shall be the sole code of ethics adopted by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Fund, the Fund’s adviser, any sub-adviser, principal underwriter or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Fund’s and its investment adviser’s codes of ethics under Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, respectively, are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VI. Amendments

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Fund’s Board, including a majority of independent directors.

VII. Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Fund’s Board and its counsel, the investment adviser and the relevant Service Providers.

VIII. Internal Use

The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact, circumstance, or legal conclusion.

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Exhibit A
Persons Covered by this Code of Ethics 
(As of March 13, 2014)

 

John Hancock Variable Insurance Trust
► Principal Executive Officer and President – Andrew Arnott
► Principal Financial Officer and Chief Financial Officer – Charles Rizzo
► Treasurer – Salvatore Schiavone

John Hancock Funds
► Principal Executive Officer and President – Andrew Arnott
► Principal Financial Officer and Chief Financial Officer – Charles Rizzo
► Treasurer – Salvatore Schiavone

John Hancock Funds II
► Principal Executive Officer and President – Andrew Arnott
► Principal Financial Officer and Chief Financial Officer – Charles Rizzo
► Treasurer – Salvatore Schiavone

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(f)(2) Not applicable.

(f)(3) The Registrant will provide a copy of the Code of Ethics to any person without charge, upon request by calling the following toll free number (800) 344-1029.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Trustees has determined that at least one member of its audit committee is an “audit committee financial expert”. Peter S. Burgess is an 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:

2014: $2,535,450
2013: $2,159,912

These fees represent aggregate fees billed for the last two fiscal years (the “Reporting Periods”) 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 filing or engagements for such Reporting Periods.

(b) AUDIT RELATED FEES:

2014: $19,505
2013: $131,708

These fees represent the aggregate fees billed for the Reporting Periods for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item. Such fees relate to professional services rendered by the principal accountant for separate audit reports in connection with security counts pursuant to Rule 17f-2 under the Investment Company Act of 1940 and service provider internal controls reviews. In addition, amounts billed to control affiliates for service provider internal controls reviews were $198,642 and $51,270 for the fiscal years ended August 31, 2014 and 2013, respectively.

(c) TAX FEES:

2014: $0
2013: $0


These fees represent aggregate fees billed for the Reporting Periods for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning. The tax fees for the years ended August 31, 2014 and 2013 were $0 as the tax services were provided by a service provider other than the principal accountant.

(d) ALL OTHER FEES:

2014: $25,151
2013: $24,042

These fees represent all other fees billed to the Registrant for products and services provided by the principal accountant. These fees were billed to the Registrant and were approved by the Registrant’s audit committee.

(e) (1) Audit Committee Pre-Approval Policies and Procedures:

The Trust’s Audit Committee must pre-approve all audit and non-audit services provided by the independent registered public accounting firm (the “Auditor”) relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.

The Trust’s Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of audit-related and non-audit services by the Auditor. The policies and procedures require that any audit-related and non-audit service provided by the Auditor and any non-audit service provided by the Auditor to a fund service provider that relates directly to the operations and financial reporting of a fund are subject to approval by the Audit Committee before such service is provided. Audit-related services provided by the Auditor that are expected to exceed $25,000 per instance/per fund are subject to specific pre-approval by the Audit Committee. Tax services provided by the Auditor that are expected to exceed $30,000 per instance/per fund are subject to specific pre-approval by the Audit Committee.

All audit services, as well as the audit-related and non-audit services that are expected to exceed the amounts stated above, must be approved in advance of provision of the service by formal resolution of the Audit Committee. At the regularly scheduled Audit Committee meetings, the Committee reviews a report summarizing the services, including fees, provided by the Auditor.

(2) Amount approved by the Audit Committee pursuant paragraph (c) (7) (i) (C) of Rule 2-01 of Regulation S-X: None.

(f) Not applicable.

(g) The aggregate non-audit fees billed by the registrant’s principal accountant for services rendered to the registrant and rendered to the registrant’s control affiliates for each of the last two fiscal years of the registrant were $6,048,884 for the fiscal year ended August 31, 2014, and $3,799,212 for the fiscal year ended August 31, 2013.

(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 non pre-approved are compatible with maintaining the principal accountant’s independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Peter S. Burgess – Chairman
Charles L. Bardelis
Theron S. Hoffman

ITEM 6. SCHEDULE OF INVESTMENTS.

(a) This schedule is included as part of the Report to shareholders filed under Item 1 of this form, except for Emerging Markets Fund and International Small Company Fund, which follow:


Emerging Markets Fund

  Shares  Value 
 
Common Stocks 97.6%    $2,554,847,460 
(Cost $2,136,691,138)     
 
Australia 0.0%    451,006 
MMG, Ltd.  1,240,000  451,006 
 
Brazil 9.3%    243,083,786 
Abril Educacao SA  19,000  332,553 
AES Tiete SA  42,393  320,244 
Aliansce Shopping Centers SA  50,686  472,330 
ALL - America Latina Logistica SA  272,791  1,005,372 
Alupar Investimento SA  2,400  19,813 
AMBEV SA  843,800  6,144,266 
AMBEV SA, ADR (L)  1,136,323  8,283,795 
Arezzo Industria e Comercio SA  35,391  507,980 
Autometal SA  16,062  138,556 
B2W Cia Digital (I)  36,265  614,002 
Banco ABC Brasil SA (I)  2,630  16,918 
Banco Alfa de Investimento SA  10,300  29,908 
Banco Bradesco SA  339,018  6,060,978 
Banco Bradesco SA, ADR  477,247  8,704,985 
Banco do Brasil SA  532,774  8,327,792 
Banco Pan SA (I)  181,991  284,551 
Banco Santander Brasil SA, ADR  580,408  3,987,403 
BB Seguridade Participacoes SA  126,679  2,022,563 
Bematech SA  66,175  255,713 
BHG SA - Brazil Hospitality Group (I)  16,880  133,094 
BM&FBovespa SA  1,016,040  6,127,559 
BR Malls Participacoes SA  365,219  3,796,581 
Brasil Brokers Participacoes SA  155,943  252,184 
Brasil Insurance Participacoes e Administracao SA  37,195  132,762 
Brasil Pharma SA (I)  5,572  10,405 
Braskem SA, ADR (L)  50,629  691,086 
BRF SA, ADR (L)  386,423  10,302,037 
Brookfield Incorporacoes SA (I)  495,494  340,880 
CCR SA  409,156  3,703,150 
Centrais Eletricas Brasileiras SA  132,700  483,138 
Centrais Eletricas Brasileiras SA, ADR (L)  47,167  173,103 
Centrais Eletricas Brasileiras SA, ADR, B Shares (L)  35,300  194,856 
CETIP SA - Mercados Organizados  132,934  1,938,930 
Cia Brasileira de Distribuicao (L)  94,154  4,791,497 
Cia de Locacao das Americas  4,000  9,185 
Cia de Saneamento Basico de Estado de Sao Paulo, ADR (L)  116,220  1,097,117 
Cia de Saneamento Basico do Estado de Sao Paulo  110,892  1,059,629 
Cia de Saneamento de Minas Gerais-COPASA  53,100  948,850 
Cia de Transmissao de Energia Eletrica Paulista (I)  2,070  30,239 
Cia Energetica de Minas Gerais  44,404  376,893 
Cia Energetica de Minas Gerais, ADR (L)  381,843  3,280,031 
Cia Hering  164,400  2,055,643 
Cia Paranaense de Energia  11,700  144,571 
Cia Paranaense de Energia, ADR (L)  55,947  995,857 
Cia Providencia Industria e Comercio SA  39,800  134,059 
Cia Siderurgica Nacional SA  157,600  691,370 
Cia Siderurgica Nacional SA, ADR (L)  259,126  1,132,381 
Cielo SA  298,716  5,599,340 
Contax Participacoes SA  25,700  182,432 
Cosan SA Industria e Comercio  111,000  2,305,785 
CPFL Energia SA  102,500  1,034,387 
CPFL Energia SA, ADR (L)  28,796  579,951 

 

1 

 


Emerging Markets Fund

CR2 Empreendimentos Imobiliarios SA (I)  28,800  36,410 
Cyrela Brazil Realty SA Empreendimentos e Participacoes  226,428  1,435,342 
Cyrela Commercial Properties SA Empreendimentos e Participacoes  2,100  14,147 
Direcional Engenharia SA  47,225  239,448 
Duratex SA  293,406  1,319,901 
EcoRodovias Infraestrutura e Logistica SA  122,433  782,127 
EDP - Energias do Brasil SA  211,372  1,067,011 
Embraer SA, ADR (L)  99,670  3,862,213 
Eneva SA (I)  222,601  120,325 
Equatorial Energia SA  146,322  1,719,128 
Estacio Participacoes SA  148,922  1,977,865 
Eternit SA  65,999  247,662 
Even Construtora e Incorporadora SA  241,500  730,380 
EZ Tec Empreendimentos e Participacoes SA  62,600  690,460 
Fertilizantes Heringer SA (I)  33,400  126,528 
Fibria Celulose SA, ADR (I)(L)  248,951  2,579,132 
Fleury SA  44,000  314,300 
Forjas Taurus SA (I)  15,531  5,897 
Gafisa SA  521,522  785,137 
Gafisa SA, ADR (L)  74,154  220,979 
General Shopping Brasil SA (I)  29,420  142,599 
Gerdau SA  105,528  503,008 
Gerdau SA, ADR (L)  615,001  3,560,856 
Grendene SA  80,101  581,479 
Guararapes Confeccoes SA  3,000  143,400 
Helbor Empreendimentos SA  188,760  503,416 
Hypermarcas SA (I)  271,417  2,359,515 
Iguatemi Empresa de Shopping Centers SA  101,500  1,246,929 
Industrias Romi SA  70,700  123,176 
International Meal Company Holdings SA  30,600  267,793 
Iochpe-Maxion SA  98,076  783,819 
Itau Unibanco Holding SA  128,616  2,137,376 
Itau Unibanco Holding SA, ADR  782,454  14,084,172 
JBS SA  397,379  1,796,505 
JHSF Participacoes SA  127,200  210,248 
Joao Fortes Engenharia SA  675  1,266 
JSL SA  23,700  125,991 
Kepler Weber SA  1,000  20,773 
Klabin SA  513,445  2,607,938 
Kroton Educacional SA  291,368  8,727,373 
Light SA  62,003  681,382 
Localiza Rent a Car SA  102,629  1,827,012 
Log-in Logistica Intermodal SA (I)  65,400  175,588 
Lojas Americanas SA  107,875  626,480 
Lojas Renner SA  89,950  3,078,834 
LPS Brasil Consultoria de Imoveis SA  46,600  228,993 
M Dias Branco SA  24,729  1,115,760 
Magnesita Refratarios SA  282,565  485,984 
Mahle-Metal Leve SA Industria e Comercio  42,500  437,816 
Marcopolo SA  16,000  29,162 
Marfrig Global Foods SA (I)  240,283  815,792 
Marisa Lojas SA  48,673  402,474 
Mills Estruturas e Servicos de Engenharia SA  81,217  830,855 
Minerva SA (I)  80,800  481,154 
MMX Mineracao e Metalicos SA (I)  74,409  27,257 
MRV Engenharia e Participacoes SA  333,700  1,359,546 
Multiplan Empreendimentos Imobiliarios SA  47,700  1,229,737 
Multiplus SA  47,697  698,888 
Natura Cosmeticos SA  117,500  2,152,636 
Odontoprev SA  270,770  1,180,574 
Oi SA  417,311  277,772 

 

2 

 


Emerging Markets Fund

Oi SA, ADR (L)  175,443  117,547 
Oi SA, ADR, Series C  12,205  8,360 
Paranapanema SA (I)  275,500  276,915 
PDG Realty SA Empreendimentos e Participacoes (I)  934,284  621,882 
Petroleo Brasileiro SA  59,683  590,298 
Petroleo Brasileiro SA, ADR (L)  342,492  6,702,568 
Petroleo Brasileiro SA, ADR  568,759  11,835,875 
Porto Seguro SA  157,025  2,327,491 
Positivo Informatica SA  26,000  25,785 
Profarma Distribuidora de Produtos Farmaceuticos SA  28,400  178,253 
QGEP Participacoes SA  84,400  361,957 
Qualicorp SA (I)  95,150  1,190,172 
Raia Drogasil SA  124,576  1,213,204 
Restoque Comercio e Confeccoes de Roupas SA  94,596  384,554 
Rodobens Negocios Imobiliarios SA  48,300  250,293 
Rossi Residencial SA (I)  193,531  122,767 
Santos Brasil Participacoes SA  56,208  430,129 
Sao Carlos Empreendimentos e Participacoes SA  58,100  965,522 
Sao Martinho SA  66,300  1,344,363 
SLC Agricola SA  49,500  382,776 
Sonae Sierra Brasil SA  23,036  195,526 
Souza Cruz SA  203,600  1,906,391 
Springs Global Participacoes SA (I)  323,987  115,787 
Sul America SA  307,888  2,127,776 
T4F Entretenimento SA (I)  20,100  43,011 
Technos SA  8,300  45,940 
Tecnisa SA  81,200  231,067 
Tegma Gestao Logistica  25,578  225,100 
Telefonica Brasil SA, ADR (L)  88,100  1,885,340 
Tempo Participacoes SA  16,496  35,741 
Tereos Internacional SA  9,500  11,883 
Tim Participacoes SA  139,800  783,779 
Tim Participacoes SA, ADR  43,961  1,230,029 
Totvs SA  89,499  1,633,652 
TPI - Triunfo Participacoes e Investimentos SA  75,690  208,625 
Tractebel Energia SA  69,404  1,162,986 
Transmissora Alianca de Energia Eletrica SA  199,000  2,074,898 
Trisul SA  30,607  49,906 
Ultrapar Participacoes SA  18,100  466,468 
Ultrapar Participacoes SA, ADR (L)  151,580  3,881,964 
UNICASA Industria de Moveis SA  9,500  15,957 
Usinas Siderurgicas de Minas Gerais SA (I)  62,544  209,551 
Vale SA  26,900  349,934 
Vale SA, ADR, Ordinary A Shares (L)  539,442  7,045,113 
Vale SA, ADR, Preference A Shares  516,426  6,016,363 
Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao SA  59,785  1,014,889 
Vanguarda Agro SA (I)  196,311  215,736 
WEG SA  157,170  1,965,239 
 
Canada 0.0%    117,720 
Rio Alto Mining, Ltd. (I)  41,161  117,720 
 
Chile 1.5%    40,191,670 
AES Gener SA  1,091,902  561,992 
Aguas Andinas SA  1,419,735  888,000 
Banco de Chile  5,340,737  658,900 
Banco de Chile, ADR (L)  6,564  483,832 
Banco de Credito e Inversiones  20,037  1,104,705 
Banco Santander Chile  8,581,093  507,471 
Banco Santander Chile, ADR (L)  51,996  1,240,625 
Banmedica SA  20,641  34,826 
Besalco SA  274,576  189,521 

 

3 

 


Emerging Markets Fund

CAP SA  44,286  532,019 
Cementos BIO BIO SA  2,795  2,430 
Cencosud SA  485,684  1,456,820 
Cia Cervecerias Unidas SA  28,990  315,330 
Cia Cervecerias Unidas SA, ADR (L)  21,542  466,384 
Cia General de Electricidad SA  302,832  1,419,299 
Cia Sud Americana de Vapores SA (I)  8,532,311  364,844 
Cintac SA  78,352  12,979 
Colbun SA  3,809,759  994,773 
Corpbanca SA  73,881,094  915,392 
Corpbanca SA, ADR  13,087  245,512 
Cristalerias de Chile SA  62,943  429,089 
Cruz Blanca Salud SA  3,593  2,952 
E.CL SA  416,294  606,605 
Embotelladora Andina SA, ADR, Series A  300  4,935 
Embotelladora Andina SA, ADR, Series B  1,594  31,099 
Empresa Nacional de Electricidad SA  1,492,037  2,294,913 
Empresa Nacional de Electricidad SA, ADR (L)  15,602  716,912 
Empresas AquaChile SA (I)  57,292  37,592 
Empresas CMPC SA  863,219  2,177,173 
Empresas COPEC SA  255,960  3,258,609 
Empresas Hites SA  44,774  21,442 
Empresas Iansa SA  3,811,926  128,632 
Empresas La Polar SA (I)  55,116  4,415 
Enersis SA, ADR  320,755  5,423,967 
ENTEL Chile SA  96,955  1,122,792 
Forus SA  52,928  225,510 
Gasco SA  211,571  1,485,569 
Grupo Security SA  593,749  192,476 
Inversiones Aguas Metropolitanas SA  548,849  882,166 
Invexans SA (I)  8,564,556  120,420 
Latam Airlines Group SA (I)  43,757  544,464 
Latam Airlines Group SA, ADR (I)(L)  90,517  1,122,411 
Masisa SA  4,377,608  201,437 
Molibdenos y Metales SA  7,542  82,263 
Multiexport Foods SA (I)  72,522  16,698 
Parque Arauco SA  457,536  838,249 
PAZ Corp., SA  115,321  64,795 
Ripley Corp. SA  665,959  361,547 
SACI Falabella  304,343  2,292,583 
Salfacorp SA  66,565  50,483 
Sigdo Koppers SA  190,206  301,472 
Sociedad Matriz SAAM SA  8,590,526  710,070 
Sociedad Quimica y Minera de Chile SA, ADR (L)  21,439  587,000 
Socovesa SA  678,810  147,502 
Sonda SA  306,446  715,455 
Tech Pack SA (I)  91,088  45,370 
Vina Concha y Toro SA  199,620  398,042 
Vina Concha y Toro SA, ADR  311  11,625 
Vina San Pedro Tarapaca SA  16,312,632  137,282 
 
China 10.5%    274,237,184 
361 Degrees International, Ltd.  372,000  109,534 
Agile Property Holdings, Ltd.  954,000  747,210 
Agricultural Bank of China, Ltd., H Shares  7,207,000  3,337,138 
Air China, Ltd., H Shares  1,190,000  733,716 
Airtac International Group  47,000  483,922 
Aluminum Corp. of China, Ltd., ADR (I)(L)  37,554  394,693 
Aluminum Corp. of China, Ltd., H Shares (I)(L)  1,452,000  618,534 
Angang Steel Company, Ltd., H Shares  902,000  610,464 
Anhui Conch Cement Company, Ltd., H Shares (L)  466,500  1,687,115 

 

4 

 


Emerging Markets Fund

Anhui Expressway Company, Ltd., H Shares  414,000  248,383 
Anhui Tianda Oil Pipe Company, Ltd., H Shares  334,000  71,123 
ANTA Sports Products, Ltd.  557,000  1,071,746 
Anton Oilfield Services Group  588,000  252,369 
Asia Cement China Holdings Corp.  480,000  330,549 
AVIC International Holdings, Ltd. (I)  140,000  68,428 
AviChina Industry & Technology Company, Ltd., H Shares  1,148,000  683,921 
Bank of China, Ltd., H Shares  22,185,075  10,271,340 
Bank of Communications Company, Ltd., H Shares  2,630,858  1,914,158 
Baoxin Auto Group, Ltd.  184,000  136,498 
Baoye Group Company, Ltd., H Shares  400,000  242,598 
BBMG Corp., H Shares  700,500  519,438 
Beijing Capital International Airport Company, Ltd., H Shares  1,834,415  1,434,219 
Beijing Capital Land, Ltd., H Shares  1,240,000  448,169 
Beijing Jingneng Clean Energy Company, Ltd.  376,000  165,901 
Beijing North Star Company, H Shares  800,000  224,991 
Biostime International Holdings, Ltd.  101,500  376,257 
Bloomage Biotechnology Corp., Ltd. (L)  72,500  132,446 
Boer Power Holdings, Ltd.  127,000  160,579 
Byd Company, Ltd., H Shares  62,000  440,177 
BYD Electronic International Company, Ltd.  891,983  828,318 
Central China Real Estate, Ltd.  522,538  136,147 
Changshouhua Food Company, Ltd.  185,000  168,249 
Chaowei Power Holdings, Ltd.  184,000  96,636 
China Animal Healthcare, Ltd.  182,000  138,410 
China Aoyuan Property Group, Ltd.  1,552,000  260,483 
China Automation Group, Ltd.  117,000  24,145 
China BlueChemical, Ltd., H Shares  1,596,000  782,384 
China Child Care Corp., Ltd.  339,000  92,151 
China CITIC Bank Corp., Ltd., H Shares  2,269,962  1,431,338 
China Coal Energy Company, Ltd., H Shares (L)  1,352,000  821,700 
China Communications Construction Company, Ltd., H Shares  2,263,202  1,648,719 
China Communications Services Corp., Ltd., H Shares  1,803,200  867,619 
China Construction Bank Corp., H Shares  29,155,000  21,623,635 
China COSCO Holdings Company, Ltd., H Shares (I)  1,360,500  580,813 
China Datang Corp. Renewable Power Company, Ltd., H Shares  1,649,000  253,055 
China Dongxiang Group Company  2,060,000  443,661 
China Dredging Environment Protection Holdings, Ltd. (I)(L)  184,000  50,792 
China Eastern Airlines Corp., Ltd., ADR (I)  1,037  16,831 
China Eastern Airlines Corp., Ltd., H Shares (I)(L)  1,020,000  344,669 
China Galaxy Securities Company, Ltd., H Shares  248,500  182,025 
China Great Star International, Ltd. (I)  43,004  150,157 
China Hongqiao Group, Ltd.  112,000  94,211 
China Huiyuan Juice Group, Ltd. (I)  762,500  329,621 
China International Marine Containers Group Company, Ltd., H Shares  79,900  171,710 
China ITS Holdings Company, Ltd.  344,000  56,806 
China Jiuhao Health Industry Corp., Ltd. (I)  490,000  30,336 
China Lesso Group Holdings, Ltd.  567,000  324,637 
China Life Insurance Company, Ltd., ADR (L)  86,653  3,720,880 
China Life Insurance Company, Ltd., H Shares  135,000  387,588 
China Lilang, Ltd.  450,000  303,628 
China Longyuan Power Group Corp., H Shares  1,004,000  1,085,074 
China Medical System Holdings, Ltd.  623,800  903,386 
China Mengniu Dairy Company, Ltd.  267,000  1,236,023 
China Merchants Bank Company, Ltd., H Shares  1,393,461  2,655,949 
China Minsheng Banking Corp., Ltd., H Shares  2,610,700  2,451,509 
China Molybdenum Company, Ltd., H Shares  461,000  312,863 
China National Building Material Company, Ltd., H Shares  1,490,000  1,367,572 
China National Materials Company, Ltd., H Shares  754,000  181,845 
China Oilfield Services, Ltd., H Shares  830,000  2,445,048 
China Pacific Insurance Group Company, Ltd., H Shares  343,800  1,289,217 

 

5 

 


Emerging Markets Fund

China Petroleum & Chemical Corp., ADR (L)  129,123  13,041,423 
China Qinfa Group, Ltd.  944,000  43,362 
China Railway Construction Corp., H Shares  1,420,335  1,361,285 
China Railway Group, Ltd., H Shares  1,909,000  984,639 
China Rare Earth Holdings, Ltd. (I)  1,272,000  180,454 
China Rongsheng Heavy Industry Group Company, Ltd. (I)(L)  1,359,000  238,481 
China Sanjiang Fine Chemicals Company, Ltd. (L)  360,000  152,778 
China Shanshui Cement Group, Ltd.  1,080,000  396,842 
China Shenhua Energy Company, Ltd., H Shares  1,209,000  3,494,098 
China Shineway Pharmaceutical Group, Ltd.  203,000  351,786 
China Shipping Container Lines Company, Ltd., H Shares (I)  3,357,850  957,118 
China Shipping Development Company, Ltd., H Shares (I)  1,410,000  996,361 
China Southern Airlines Company, Ltd., ADR  1,402  22,698 
China Southern Airlines Company, Ltd., H Shares  910,000  306,301 
China Suntien Green Energy Corp., Ltd., H Shares  1,117,000  335,238 
China Taifeng Beddings Holdings Ltd.  46,000  7,418 
China Telecom Corp., Ltd., ADR (L)  5,800  356,758 
China Telecom Corp., Ltd., H Shares  3,218,000  1,977,130 
China Tian Lun Gas Holdings, Ltd. (I)  64,500  77,996 
China Tontine Wines Group, Ltd. (I)  56,000  2,309 
China Yurun Food Group, Ltd. (I)(L)  1,115,000  543,710 
China ZhengTong Auto Services Holdings, Ltd.  710,500  379,401 
China Zhongwang Holdings, Ltd. (L)  1,643,000  697,009 
Chinasoft International, Ltd. (I)(L)  670,000  243,922 
Chongqing Iron & Steel Company, Ltd., H Shares (I)  834,000  183,940 
Chongqing Machinery & Electric Company, Ltd., H Shares  1,100,000  164,551 
Chongqing Rural Commercial Bank, H Shares  268,000  133,121 
Chu Kong Petroleum & Natural Gas Steel Pipe Holdings, Ltd.  165,000  56,637 
CITIC Securities Company, Ltd., H Shares  517,000  1,226,654 
CNOOC, Ltd.  8,121,000  16,276,445 
CNOOC, Ltd., ADR (L)  30,277  6,058,428 
Comtec Solar Systems Group, Ltd. (I)(L)  512,000  94,507 
Coolpad Group, Ltd.  1,896,000  410,694 
Country Garden Holdings Company, Ltd.  2,759,463  1,216,347 
CPMC Holdings, Ltd.  144,000  113,682 
CSR Corp., Ltd., H Shares  566,000  510,832 
Dalian Port PDA Company, Ltd., H Shares  1,186,621  365,808 
Daphne International Holdings, Ltd.  808,000  413,706 
Datang International Power Generation Company, Ltd., H Shares  1,458,000  805,109 
Dongfang Electric Corp., Ltd., H Shares  206,200  344,203 
Dongfeng Motor Group Company, Ltd., H Shares  754,000  1,398,284 
Dongjiang Environmental Company, Ltd., H Shares  35,200  139,190 
Dongyue Group, Ltd.  860,000  358,276 
ENN Energy Holdings, Ltd.  398,000  2,808,727 
Evergrande Real Estate Group, Ltd. (L)  4,424,000  1,843,544 
Fantasia Holdings Group Company, Ltd.  523,500  62,794 
First Tractor Company, Ltd., H Shares  260,750  178,676 
Fosun International, Ltd.  829,059  1,017,308 
Fufeng Group, Ltd.  158,000  62,574 
Geely Automobile Holdings, Ltd.  3,850,000  1,478,977 
Golden Eagle Retail Group, Ltd.  287,000  351,998 
GOME Electrical Appliances Holdings, Ltd.  7,712,000  1,372,337 
Goodbaby International Holdings, Ltd.  21,000  10,430 
Great Wall Motor Company, Ltd., H Shares  405,500  1,719,353 
Greatview Aseptic Packaging Company, Ltd.  196,000  151,728 
Greenland Hong Kong Holdings, Ltd.  397,925  192,512 
Greentown China Holdings, Ltd.  681,500  717,291 
Guangshen Railway Company, Ltd., ADR (L)  38,951  786,031 
Guangzhou Automobile Group Company, Ltd., H Shares  1,052,857  1,095,696 
Guangzhou Pharmaceutical Company, Ltd.  108,000  376,288 
Guangzhou R&F Properties Company, Ltd., H Shares  684,999  825,489 

 

6 

 


Emerging Markets Fund

Guangzhou Shipyard International Company, Ltd., H Shares  26,000  45,894 
Guodian Technology & Environment Group Corp., Ltd., H Shares  128,000  26,086 
Hainan Meilan International Airport Company, Ltd., H Shares  163,000  146,157 
Haitian International Holdings, Ltd.  229,000  590,716 
Harbin Electric Company, Ltd., H Shares  780,000  463,652 
Hengan International Group Company, Ltd.  275,500  2,933,647 
Hidili Industry International Development, Ltd. (I)(L)  798,000  93,759 
Hilong Holding, Ltd.  367,000  199,228 
Hisense Kelon Electrical Holdings Company, Ltd., H Shares (I)  239,000  299,734 
Honghua Group, Ltd.  1,149,000  305,371 
Huadian Power International Corp., H Shares  926,000  652,665 
Huaneng Power International, Inc., ADR (L)  4,400  214,060 
Huaneng Power International, Inc., H Shares  852,000  1,027,770 
Huaneng Renewables Corp., Ltd., H Shares  1,934,000  710,610 
Hunan Nonferrous Metal Corp., Ltd., H Shares (I)(L)  1,658,000  590,584 
Industrial & Commercial Bank of China, Ltd., H Shares  37,214,000  24,627,591 
Intime Retail Group Company, Ltd.  733,500  667,143 
Jiangsu Expressway Company, Ltd., H Shares  592,000  673,558 
Jiangxi Copper Company, Ltd., H Shares  650,000  1,151,504 
Jingwei Textile Machinery Company, Ltd., H Shares  222,000  204,780 
Kaisa Group Holdings, Ltd. (L)  1,089,000  401,810 
Kasen International Holdings, Ltd.  240,000  44,234 
Kingdee International Software Group Company, Ltd. (I)  598,000  193,060 
Kingsoft Corp., Ltd. (L)  348,000  998,356 
KWG Property Holding, Ltd.  1,340,512  978,920 
Labixiaoxin Snacks Group, Ltd. (I)  121,000  21,071 
Lenovo Group, Ltd.  2,282,000  3,484,674 
Lianhua Supermarket Holdings Company, Ltd., H Shares (I)(L)  296,200  173,852 
Lingbao Gold Company, Ltd., H Shares  222,000  43,018 
Livzon Pharmaceutical Group, Inc.  2,400  15,207 
Longfor Properties Company, Ltd.  549,000  700,861 
Lonking Holdings, Ltd. (L)  1,240,000  215,998 
Maanshan Iron & Steel Company, Ltd., H Shares (I)  2,014,000  444,635 
Maoye International Holdings, Ltd.  866,000  146,330 
Metallurgical Corp. of China, Ltd., H Shares  891,000  219,546 
Microport Scientific Corp. (L)  131,000  75,936 
Minth Group, Ltd.  278,000  591,078 
New China Life Insurance Company, Ltd., H Shares  243,100  869,172 
NVC Lighting Holdings, Ltd.  1,230,000  282,501 
O-Net Communications Group, Ltd.  352,000  96,249 
Pacific Online, Ltd.  209,000  115,586 
Parkson Retail Group, Ltd.  986,500  324,487 
Peak Sport Products Company, Ltd.  401,000  119,502 
PetroChina Company, Ltd., ADR (L)  26,230  3,719,414 
PetroChina Company, Ltd., H Shares  2,682,000  3,811,006 
PICC Property & Casualty Company, Ltd., H Shares  1,145,960  1,899,209 
Ping An Insurance Group Company, H Shares  654,500  5,328,873 
Powerlong Real Estate Holdings, Ltd.  620,000  84,710 
Qunxing Paper Holdings Company, Ltd.  969,268  258,136 
Renhe Commercial Holdings Company, Ltd. (I)(L)  8,596,000  398,972 
Sany Heavy Equipment International Holdings Company, Ltd.  682,000  148,628 
Semiconductor Manufacturing International Corp., ADR (I)  164,905  758,563 
Semiconductor Manufacturing International Corp. (I)  11,326,000  1,061,922 
Shandong Chenming Paper Holdings, Ltd., H Shares  225,584  101,898 
Shandong Weigao Group Medical Polymer Company, Ltd., H Shares  716,000  726,027 
Shanghai Electric Group Company, Ltd., H Shares  1,384,000  607,258 
Shanghai Fosun Pharmaceutical Group Company, Ltd., H Shares  33,000  106,812 
Shanghai Jin Jiang International Hotels Group Company, Ltd., H Shares  1,160,000  387,607 
Shanghai Pharmaceuticals Holding Company, Ltd., H Shares  331,100  679,983 
Shanghai Prime Machinery Company, Ltd., H Shares  804,000  155,467 
Shengli Oil & Gas Pipe Holdings, Ltd.  450,000  30,169 

 

7 

 


Emerging Markets Fund

Shenguan Holdings Group, Ltd.  854,000  310,835 
Shenzhen Expressway Company, Ltd., H Shares  468,000  297,081 
Shenzhou International Group Holdings, Ltd.  154,000  481,182 
Shui On Land, Ltd.  3,823,567  1,000,530 
Sichuan Expressway Company, Ltd., H Shares  718,000  241,755 
Sihuan Pharmaceutical Holdings Group, Ltd.  1,968,000  1,317,211 
Sino-Ocean Land Holdings, Ltd.  3,374,450  1,897,947 
SinoMedia Holding, Ltd.  133,000  94,201 
Sinopec Shanghai Petrochemical Company, Ltd., ADR  2,380  79,587 
Sinopec Shanghai Petrochemical Company, Ltd., H Shares  1,530,000  511,207 
Sinopec Yizheng Chemical Fibre Company, Ltd., H Shares (I)  912,000  208,288 
Sinopharm Group Company, Ltd., H Shares  474,400  1,657,918 
Sinotrans, Ltd., H Shares  1,759,574  1,184,533 
Sinotruk Hong Kong, Ltd.  826,055  433,707 
SOHO China, Ltd.  1,762,000  1,436,067 
Springland International Holdings, Ltd.  221,000  86,936 
SPT Energy Group, Inc.  556,000  282,592 
Sun Art Retail Group, Ltd. (L)  706,000  838,758 
Sunac China Holdings, Ltd.  335,000  260,210 
Sunny Optical Technology Group Company, Ltd.  412,000  558,097 
TCL Communication Technology Holdings, Ltd.  336,000  416,012 
Tencent Holdings, Ltd.  1,625,100  26,449,924 
Tian Shan Development Holdings, Ltd.  134,000  56,725 
Tiangong International Company, Ltd. (L)  1,007,564  228,659 
Tianjin Capital Environmental Protection Group Company, Ltd., H Shares  184,000  125,326 
Tianjin Jinran Public Utilities Company, Ltd., H Shares (I)  350,000  75,917 
Tianneng Power International, Ltd.  664,700  243,723 
Tingyi Cayman Islands Holding Corp.  670,000  1,876,423 
Tong Ren Tang Technologies Company, Ltd., H Shares  226,000  317,226 
Tonly Electronics Holdings, Ltd.  76,520  59,620 
Travelsky Technology, Ltd., H Shares  1,016,500  999,754 
Trigiant Group, Ltd.  482,000  130,516 
Tsingtao Brewery Company, Ltd., H Shares  102,000  776,080 
Uni-President China Holdings, Ltd.  573,600  518,148 
Want Want China Holdings, Ltd.  2,218,000  2,742,871 
Weichai Power Company, Ltd., H Shares  291,400  1,179,658 
Weiqiao Textile Company, H Shares  409,000  207,345 
West China Cement, Ltd.  2,098,000  224,615 
Winsway Enterprises Holdings, Ltd. (I)  203,000  10,465 
Wumart Stores, Inc., H Shares  172,000  164,148 
Xiamen International Port Company, Ltd., H Shares  1,056,662  203,096 
Xingda International Holdings, Ltd.  848,000  318,490 
Xinhua Winshare Publishing and Media Company, Ltd., H Shares  403,650  350,963 
Xinjiang Goldwind Science & Technology Company, Ltd., H Shares  179,200  282,094 
Xinjiang Xinxin Mining Industry Company, Ltd., H Shares (I)  877,000  203,821 
Xiwang Property Holdings Company, Ltd.  593,020  39,008 
XTEP International Holdings, Ltd.  426,000  199,232 
Yanzhou Coal Mining Company, Ltd., ADR (L)  52,903  442,798 
Yanzhou Coal Mining Company, Ltd., H Shares  874,000  734,566 
Yuzhou Properties Company  52,000  11,675 
Zall Development Group, Ltd.  119,000  41,304 
Zhaojin Mining Industry Company, Ltd., H Shares  608,500  380,703 
Zhejiang Expressway Company, Ltd., H Shares  876,000  876,938 
Zhejiang Glass Company, Ltd., H Shares (I)  172,000  0 
Zhong An Real Estate, Ltd.  793,200  129,993 
Zhongsheng Group Holdings, Ltd.  300,500  332,946 
Zhuzhou CSR Times Electric Company, Ltd., H Shares  238,000  822,656 
Zijin Mining Group Company, Ltd., H Shares  2,299,000  592,236 
Zoomlion Heavy Industry Science and Technology Company, Ltd., H Shares  794,600  491,769 
ZTE Corp., H Shares  300,800  679,713 

 

8 

 


Emerging Markets Fund

Colombia 0.6%    14,591,583 
Bancolombia SA, ADR (L)  72,323  4,576,599 
Celsia SA ESP  13,732  46,471 
Cementos Argos SA  149,705  880,741 
Corp. Financiera Colombiana SA  10,012  213,195 
Ecopetrol SA  998,247  1,728,078 
Ecopetrol SA, ADR (L)  88,238  3,051,270 
Empresa de Energia de Bogota SA  690,124  625,187 
Empresa de Telecomunicaciones de Bogota  243,548  72,022 
Grupo Argos SA  5,127  63,476 
Interconexion Electrica SA ESP  308,840  1,559,692 
Isagen SA ESP  1,187,809  1,774,852 
 
Cyprus 0.1%    2,071,166 
Eurasia Drilling Company, Ltd., GDR  61,453  1,777,879 
Globaltrans Investment PLC, GDR  32,027  293,287 
 
Czech Republic 0.2%    5,171,679 
CEZ AS  66,250  1,922,229 
Fortuna Entertainment Group NV  1,880  11,416 
Komercni Banka AS  4,862  1,129,914 
Pegas Nonwovens SA  27,820  830,220 
Philip Morris CR AS  293  144,527 
Unipetrol AS (I)  190,067  1,133,373 
 
Egypt 0.1%    1,669,462 
Commercial International Bank Egypt SAE, GDR  154,195  981,528 
Global Telecom Holding, GDR (I)  191,382  687,934 
 
Greece 0.6%    15,922,356 
Aegean Airlines SA (I)  28,191  230,837 
Alpha Bank AE (I)  1,447,149  1,278,248 
Athens Water Supply and Sewage Company SA  4,067  50,541 
Bank of Greece  2,764  48,462 
Corinth Pipeworks SA (I)  2,289  4,134 
Ellaktor SA (I)  24,344  111,671 
FF Group (I)  16,481  685,216 
Fourlis Holdings SA (I)  16,807  111,430 
Frigoglass SA (I)  13,816  58,000 
GEK Terna Holding Real Estate Construction SA (I)  10,636  48,613 
Hellenic Exchanges - Athens Stock Exchange SA (I)  60,791  569,782 
Hellenic Petroleum SA  28,546  209,101 
Hellenic Telecommunications Organization SA (I)  180,762  2,594,867 
Intracom Holdings SA (I)  39,886  35,670 
Intralot SA-Integrated Lottery Systems & Services (I)  75,208  175,492 
JUMBO SA (I)  65,424  967,217 
Lamda Development SA (I)  3,765  23,106 
Marfin Investment Group Holdings SA (I)  375,232  198,539 
Metka SA  17,449  262,156 
Motor Oil Hellas Corinth Refineries SA  32,048  346,336 
Mytilineos Holdings SA (I)  15,661  127,723 
National Bank of Greece SA (I)  602,001  2,073,793 
OPAP SA  121,452  1,945,071 
Piraeus Bank SA (I)  741,025  1,474,754 
Piraeus Port Authority SA  1,380  30,553 
Public Power Corp. SA (I)  77,701  1,131,780 
Sidenor Holdings SA (I)  4,142  6,961 
Terna Energy SA (I)  25,348  123,328 
Titan Cement Company SA  37,325  998,975 

 

9 

 


Emerging Markets Fund

Guernsey Channel Islands 0.0%    311,957 
Etalon Group, Ltd., GDR  83,447  311,957 
 
Hong Kong 4.5%    117,980,698 
Ajisen China Holdings, Ltd.  341,000  282,386 
Alibaba Pictures Group, Ltd. (I)  460,000  96,154 
AMVIG Holdings, Ltd.  675,333  279,780 
Anxin-China Holdings, Ltd.  1,988,000  233,305 
Asia Energy Logistics Group, Ltd. (I)  2,960,000  32,909 
Asian Citrus Holdings, Ltd.  144,000  30,661 
AVIC International Holdings Hong Kong, Ltd. (I)  2,478,000  107,075 
Beijing Enterprises Holdings, Ltd.  251,430  2,166,377 
Beijing Enterprises Water Group, Ltd. (I)  1,194,000  811,639 
Belle International Holdings, Ltd.  1,934,000  2,472,699 
Bosideng International Holdings, Ltd. (L)  1,874,000  297,134 
Brilliance China Automotive Holdings, Ltd.  630,000  1,162,429 
C C Land Holdings, Ltd.  450,693  94,727 
Carrianna Group Holdings Company, Ltd.  624,000  110,285 
CECEP COSTIN New Materials Group, Ltd.  54,000  20,901 
CGN Mining Company, Ltd. (I)  315,000  34,135 
Chaoda Modern Agriculture Holdings, Ltd. (I)  5,797,312  113,049 
Chigo Holding, Ltd. (I)  1,536,000  37,807 
China Aerospace International Holdings, Ltd.  2,044,755  213,605 
China Agri-Industries Holdings, Ltd.  2,316,600  944,446 
China All Access Holdings, Ltd.  170,000  67,332 
China Chengtong Development Group, Ltd. (I)  2,031,216  86,499 
China Culiangwang Beverages Holdings, Ltd. (I)  381,000  19,413 
China Energine International Holdings, Ltd. (I)  1,897,589  181,162 
China Everbright International, Ltd.  1,360,000  1,861,620 
China Everbright, Ltd.  425,000  805,653 
China Fiber Optic Network System Group, Ltd. (L)  268,000  87,796 
China Foods, Ltd. (I)  624,000  251,135 
China Gas Holdings, Ltd.  916,000  1,630,891 
China Glass Holdings, Ltd.  98,000  12,763 
China High Precision Automation Group, Ltd. (I)  74,000  11,840 
China High Speed Transmission Equipment Group Company, Ltd. (I)(L)  662,000  574,402 
China Household Holdings, Ltd. (I)  370,000  40,067 
China Lumena New Materials Corp. (L)  1,272,000  205,160 
China Merchants Holdings International Company, Ltd.  583,796  1,927,782 
China Merchants Land, Ltd.  124,000  19,816 
China Metal Recycling Holdings, Ltd. (I)(L)  358,200  0 
China Mining Resources Group, Ltd. (I)  1,546,000  14,265 
China Mobile, Ltd.  348,500  4,328,039 
China Mobile, Ltd., ADR (L)  358,226  22,310,315 
China New Town Development Company, Ltd. (I)  2,185,332  121,303 
China Nickel Resources Holding Company, Ltd. (I)  878,000  28,889 
China Ocean Resources Company, Ltd. (I)  56,544  67,545 
China Oil and Gas Group, Ltd.  3,288,219  576,956 
China Overseas Grand Oceans Group, Ltd. (L)  524,000  329,137 
China Overseas Land & Investment, Ltd.  1,478,000  4,154,983 
China Power International Development, Ltd. (L)  1,873,000  855,988 
China Power New Energy Development Company, Ltd. (I)  3,180,000  225,653 
China Precious Metal Resources Holdings Company, Ltd. (I)(L)  1,488,000  182,560 
China Properties Group, Ltd. (I)  877,000  190,186 
China Resources Cement Holdings, Ltd.  783,518  538,622 
China Resources Enterprises, Ltd.  784,000  2,114,113 
China Resources Gas Group, Ltd.  390,000  1,137,984 
China Resources Land, Ltd.  1,010,000  2,308,777 
China Resources Power Holdings Company, Ltd.  606,000  1,837,869 
China Ruifeng Renewable Energy Holdings, Ltd. (I)  376,000  66,959 
China Singyes Solar Technologies Holdings, Ltd. (I)  261,800  433,900 

 

10 

 


Emerging Markets Fund

China South City Holdings, Ltd.  1,250,000  623,823 
China Starch Holdings, Ltd.  2,630,000  65,133 
China State Construction International Holdings, Ltd.  625,200  1,007,690 
China Taiping Insurance Holdings Company, Ltd. (I)  449,000  1,087,802 
China Tianyi Holdings, Ltd.  332,000  49,271 
China Travel International Investment Hong Kong, Ltd.  2,982,000  934,672 
China Unicom Hong Kong, Ltd.  208,000  369,712 
China Unicom Hong Kong, Ltd., ADR  277,036  4,911,848 
China Vanadium Titano - Magnetite Mining Company, Ltd.  369,000  41,907 
China Water Affairs Group, Ltd.  754,000  271,416 
China Water Industry Group, Ltd. (I)  112,000  21,686 
China WindPower Group, Ltd. (I)  1,460,000  133,585 
Chinese People Holdings Company, Ltd. (I)  1,598,000  37,948 
CIMC Enric Holdings, Ltd.  368,000  407,378 
CITIC 21CN Company, Ltd. (I)  958,000  753,955 
CITIC Resources Holdings, Ltd. (I)  2,830,000  460,119 
CITIC, Ltd. (L)  824,923  1,596,684 
Citychamp Watch & Jewellery Group, Ltd. (I)  2,601,800  345,758 
Clear Media, Ltd.  57,000  59,203 
Coastal Greenland, Ltd. (I)  1,485,000  54,660 
Comba Telecom Systems Holdings, Ltd.  857,500  372,652 
COSCO International Holdings, Ltd.  807,040  396,668 
COSCO Pacific, Ltd.  1,053,561  1,475,948 
CP Pokphand Company, Ltd.  2,984,000  342,546 
CSPC Pharmaceutical Group, Ltd.  732,000  611,771 
DaChan Food Asia, Ltd. (I)  552,000  72,592 
Dah Chong Hong Holdings, Ltd.  584,000  361,686 
Dawnrays Pharmaceutical Holdings, Ltd.  144,000  120,324 
DBA Telecommunication Asia Holdings, Ltd. (I)  32,000  8,382 
Digital China Holdings, Ltd.  541,000  523,367 
Dynasty Fine Wines Group, Ltd. (I)  242,000  44,965 
Embry Holdings, Ltd.  80,000  43,936 
EVA Precision Industrial Holdings, Ltd.  134,000  33,898 
Extrawell Pharmaceutical Holdings, Ltd. (I)  1,310,000  56,627 
Franshion Properties China, Ltd.  3,976,000  1,076,768 
GCL-Poly Energy Holdings, Ltd. (I)(L)  1,791,000  642,017 
Global Bio-Chem Technology Group Company, Ltd. (I)  2,707,200  104,807 
Global Sweeteners Holdings, Ltd. (I)  444,000  22,877 
Glorious Property Holdings, Ltd. (I)  545,000  77,347 
Goldbond Group Holdings, Ltd.  100,000  4,901 
Golden Meditech Holdings, Ltd.  1,195,500  211,277 
Goldlion Holdings, Ltd.  345,000  148,729 
Good Friend International Holdings, Inc.  42,000  15,302 
Guangdong Investment, Ltd.  1,254,000  1,513,917 
Guangdong Land Holdings, Ltd.  690,000  149,485 
Haier Electronics Group Company, Ltd.  341,000  979,243 
Hanergy Solar Group, Ltd. (I)(L)  5,490,000  899,941 
Heng Tai Consumables Group, Ltd. (I)  2,805,525  50,649 
Hengdeli Holdings, Ltd. (L)  1,720,400  310,830 
HKC Holdings, Ltd. (I)  3,725,423  99,978 
Hopewell Highway Infrastructure, Ltd.  573,000  286,871 
Hopson Development Holdings, Ltd. (I)  692,000  697,238 
Hua Han Bio-Pharmaceutical Holdings, Ltd., H Shares  1,726,617  545,671 
Huabao International Holdings, Ltd.  1,267,000  925,072 
Inspur International, Ltd.  689,000  158,246 
Interchina Holdings Company (I)  1,870,000  91,793 
Jinchuan Group International Resources Company, Ltd. (I)  144,000  14,675 
Ju Teng International Holdings, Ltd.  981,722  568,432 
Kai Yuan Holdings, Ltd. (I)  10,020,000  172,683 
Kingboard Chemical Holdings, Ltd.  716,148  1,477,848 
Kingboard Laminates Holdings, Ltd.  204,000  90,250 

 

11 

 


Emerging Markets Fund

Kunlun Energy Company, Ltd.  1,532,000  2,520,895 
Lai Fung Holdings, Ltd.  4,286,000  99,612 
Le Saunda Holdings, Ltd.  108,000  51,114 
Lee & Man Paper Manufacturing, Ltd.  889,000  520,883 
Lijun International Pharmaceutical Holding, Ltd.  750,000  382,791 
LK Technology Holdings, Ltd. (I)  40,000  4,126 
Loudong General Nice Resources China Holdings, Ltd. (I)  1,830,000  120,647 
Madex International Holdings, Ltd. (I)  900,000  17,538 
MIE Holdings Corp.  510,000  85,567 
MIN XIN Holdings, Ltd.  168,000  97,056 
Mingfa Group International Company, Ltd. (I)  840,000  226,411 
Minmetals Land, Ltd.  1,502,000  183,977 
Nan Hai Corp., Ltd. (I)  26,350,000  183,711 
NetDragon Websoft, Inc.  121,500  234,233 
New World China Land, Ltd.  2,457,230  1,490,193 
New World Department Store China, Ltd.  211,000  89,828 
Nine Dragons Paper Holdings, Ltd.  705,000  547,764 
North Mining Shares Company, Ltd. (I)(L)  1,340,000  60,268 
Phoenix Satellite Television Holdings, Ltd.  726,000  246,277 
Poly Property Group Company, Ltd.  2,221,944  960,804 
Ports Design, Ltd.  242,500  100,452 
Pou Sheng International Holdings, Ltd. (I)  2,224,000  212,299 
Prosperity International Holdings HK, Ltd. (I)  1,460,000  46,152 
Qingling Motors Company, Ltd., H Shares  948,000  303,435 
Real Nutriceutical Group, Ltd. (L)  620,000  184,742 
REXLot Holdings, Ltd. (L)  6,393,536  725,629 
Road King Infrastructure, Ltd.  166,000  149,313 
Rotam Global Agrosciences, Ltd.  24,000  53,435 
Samson Holding, Ltd.  740,915  97,430 
Shanghai Industrial Holdings, Ltd.  537,041  1,801,849 
Shanghai Industrial Urban Development Group, Ltd. (I)  1,049,500  200,349 
Shanghai Zendai Property, Ltd. (I)  4,865,000  74,079 
Shenzhen International Holdings, Ltd.  921,399  1,236,065 
Shenzhen Investment, Ltd.  2,703,824  857,422 
Shimao Property Holdings, Ltd.  1,041,000  2,281,626 
Shougang Concord International Enterprises Company, Ltd. (I)  4,862,000  225,721 
Shougang Fushan Resources Group, Ltd. (L)  3,492,000  962,935 
Silver Grant International, Ltd.  1,054,334  159,153 
SIM Technology Group, Ltd. (I)  1,671,000  91,620 
Sino Biopharmaceutical, Ltd.  1,804,000  1,660,943 
Sino Oil And Gas Holdings, Ltd. (I)  6,745,000  208,016 
Sinofert Holdings, Ltd.  2,242,000  349,914 
Sinolink Worldwide Holdings, Ltd. (I)  1,820,000  159,611 
Sinopec Kantons Holdings, Ltd. (L)  784,000  656,580 
Sinotrans Shipping, Ltd. (I)  1,611,000  505,010 
SITC International Holdings Company, Ltd.  147,000  65,427 
Skyworth Digital Holdings, Ltd.  1,397,675  748,161 
SMI Corp., Ltd.  1,328,000  52,240 
Solargiga Energy Holdings, Ltd. (I)  997,000  53,392 
Sparkle Roll Group, Ltd. (I)  1,144,000  61,266 
SRE Group, Ltd.  3,944,000  115,028 
TCC International Holdings, Ltd.  1,253,417  556,333 
TCL Multimedia Technology Holdings, Ltd. (I)(L)  509,200  195,096 
Texhong Textile Group, Ltd. (L)  265,000  192,984 
Tian An China Investment, Ltd.  931,000  659,584 
Tianjin Development Holdings, Ltd.  348,000  290,110 
Tianjin Port Development Holdings, Ltd.  392,000  65,221 
Tibet 5100 Water Resources Holdings, Ltd.  129,000  42,436 
Tomson Group, Ltd.  741,335  206,476 
Tongda Group Holdings, Ltd.  1,070,000  146,260 
Towngas China Company, Ltd.  567,000  604,261 

 

12 

 


Emerging Markets Fund

TPV Technology, Ltd.  952,588  201,551 
Truly International Holdings, Ltd.  973,000  528,330 
United Energy Group, Ltd. (I)(L)  1,926,000  278,419 
V1 Group, Ltd. (I)  1,941,600  190,213 
Wasion Group Holdings, Ltd.  522,000  435,016 
Welling Holding, Ltd. (L)  608,000  156,821 
Yanchang Petroleum International, Ltd. (I)  4,992,273  264,122 
Yingde Gases Group Company, Ltd.  593,000  634,228 
Yip's Chemical Holdings, Ltd.  218,000  157,223 
Yuexiu Property Company, Ltd.  5,625,200  1,204,179 
Yuexiu Transport Infrastructure, Ltd. (L)  430,000  263,510 
 
Hungary 0.2%    4,654,152 
Danubius Hotel and Spa PLC (I)  951  21,424 
FHB Mortgage Bank PLC (I)  7,029  21,033 
Magyar Telekom Telecommunications PLC  240,319  370,334 
MOL Hungarian Oil and Gas PLC  19,068  939,795 
OTP Bank PLC  128,464  2,221,789 
PannErgy (I)(L)  2,974  3,902 
Richter Gedeon Nyrt  66,910  1,075,875 
 
India 8.7%    228,532,058 
Aban Offshore, Ltd.  21,138  247,145 
ABB, Ltd.  32,944  536,762 
ABG Shipyard, Ltd. (I)  16,236  63,549 
ACC, Ltd.  22,489  554,492 
Adani Enterprises, Ltd.  84,130  667,013 
Adani Ports and Special Economic Zone  278,291  1,307,531 
Adani Power, Ltd. (I)  448,722  350,311 
Aditya Birla Nuvo, Ltd.  50,286  1,203,147 
Advanta, Ltd. (I)  6,741  32,288 
Agro Tech Foods, Ltd.  1,994  18,224 
AIA Engineering, Ltd.  17,208  249,369 
Ajanta Pharma, Ltd.  12,219  320,041 
Akzo Nobel India, Ltd.  3,239  60,873 
Alembic Pharmaceuticals, Ltd.  74,308  453,820 
Allahabad Bank  122,827  231,022 
Alok Industries, Ltd.  487,315  102,286 
Alstom India, Ltd.  15,910  127,925 
Amara Raja Batteries, Ltd.  40,738  370,899 
Ambuja Cements, Ltd.  482,068  1,647,740 
Amtek Auto, Ltd.  149,007  580,016 
Amtek India, Ltd.  24,960  41,312 
Anant Raj, Ltd. (I)  151,998  138,480 
Andhra Bank  157,627  187,101 
Apollo Hospitals Enterprise, Ltd.  48,981  953,964 
Apollo Tyres, Ltd.  207,899  568,305 
Arvind, Ltd.  144,398  680,398 
Ashok Leyland, Ltd.  1,368,930  829,416 
Asian Paints, Ltd.  133,213  1,374,349 
Atul, Ltd.  6,667  148,098 
Aurobindo Pharma, Ltd.  141,579  1,912,134 
Axis Bank, Ltd.  352,830  2,309,269 
Axis Bank, Ltd., GDR  95  3,156 
Bajaj Auto, Ltd.  42,775  1,598,275 
Bajaj Corp., Ltd.  17,522  78,581 
Bajaj Electricals, Ltd.  17,856  83,394 
Bajaj Finance, Ltd.  17,501  713,595 
Bajaj Finserv, Ltd.  35,935  626,021 
Bajaj Hindusthan, Ltd.  266,322  99,596 
Bajaj Holdings and Investment, Ltd.  41,862  924,875 
Balkrishna Industries, Ltd.  19,674  235,187 

 

13 

 


Emerging Markets Fund

Ballarpur Industries, Ltd.  487,134  123,720 
Balmer Lawrie & Company, Ltd.  13,965  133,230 
Balrampur Chini Mills, Ltd.  160,224  191,238 
Bank of Baroda  50,107  740,088 
Bank of India  128,328  585,609 
Bank of Maharashtra  160,436  121,871 
BASF India, Ltd.  4,646  91,390 
Bata India, Ltd.  4,257  90,240 
BEML, Ltd.  19,471  182,899 
Berger Paints India, Ltd.  77,333  440,091 
BGR Energy Systems, Ltd.  18,048  45,860 
Bharat Electronics, Ltd.  8,497  287,345 
Bharat Forge, Ltd.  68,219  892,527 
Bharat Heavy Electricals, Ltd.  301,334  1,187,499 
Bharat Petroleum Corp., Ltd.  125,930  1,440,315 
Bharti Airtel, Ltd.  324,067  1,979,282 
Bhushan Steel, Ltd.  33,252  55,529 
Biocon, Ltd.  44,490  342,066 
Birla Corp., Ltd.  41,760  375,833 
Blue Dart Express, Ltd.  1,817  142,321 
Blue Star, Ltd.  4,203  24,201 
Bombay Dyeing & Manufacturing Company, Ltd.  64,751  73,225 
Bombay Rayon Fashions, Ltd. (I)  12,093  32,528 
Bosch, Ltd.  3,714  908,555 
Britannia Industries, Ltd.  19,519  401,084 
Cadila Healthcare, Ltd.  32,900  654,130 
Cairn India, Ltd.  327,939  1,766,785 
Canara Bank  91,968  574,953 
Capital First, Ltd.  9,269  42,529 
Carborundum Universal, Ltd.  2,776  8,513 
Ceat Ltd.  2,252  21,805 
Central Bank of India  256,929  273,783 
Century Plyboards India, Ltd.  34,507  51,273 
Century Textiles & Industries, Ltd.  32,699  320,721 
CESC, Ltd.  55,765  637,476 
Chambal Fertilizers & Chemicals, Ltd.  224,870  208,207 
Chennai Petroleum Corp., Ltd. (I)  26,771  39,337 
Cholamandalam Investment and Finance Company, Ltd.  8,951  59,826 
Cipla, Ltd.  219,186  1,867,684 
City Union Bank, Ltd.  160,171  204,094 
Clariant Chemicals India, Ltd.  4,724  70,170 
CMC, Ltd.  6,409  226,074 
Colgate-Palmolive India, Ltd.  16,631  422,904 
Container Corp of India  18,835  431,578 
Coromandel International, Ltd.  51,552  220,535 
Corporation Bank  30,114  161,576 
Cox & Kings, Ltd.  38,333  187,839 
CRISIL, Ltd.  335  10,498 
Crompton Greaves, Ltd.  202,125  652,409 
Cummins India, Ltd.  45,869  526,249 
Dabur India, Ltd.  74,356  283,933 
Dalmia Bharat, Ltd.  18,693  144,000 
DB Corp., Ltd.  6,096  32,752 
DCB Bank, Ltd. (I)  184,559  261,446 
DCM Shriram, Ltd.  26,804  93,547 
Deepak Fertilizers & Petrochemicals Corp., Ltd.  44,612  112,281 
DEN Networks, Ltd. (I)  17,084  46,221 
Dena Bank  77,870  75,252 
Dish TV India, Ltd. (I)  261,785  232,577 
Divi's Laboratories, Ltd.  21,346  547,103 
DLF, Ltd.  407,900  1,196,267 

 

14 

 


Emerging Markets Fund

Dr. Reddy's Laboratories, Ltd.  28,782  1,415,822 
Dr. Reddy's Laboratories, Ltd., ADR (L)  18,324  898,059 
Dredging Corp. of India, Ltd. (I)  4,719  35,126 
eClerx Services, Ltd.  9,561  213,717 
Edelweiss Financial Services, Ltd.  221,050  182,253 
Eicher Motors, Ltd.  6,579  1,058,121 
EID Parry India, Ltd.  81,890  282,824 
EIH, Ltd.  63,165  113,720 
Elder Pharmaceuticals, Ltd. (I)  1,105  3,485 
Electrosteel Castings, Ltd.  93,708  40,716 
Emami, Ltd.  32,116  347,955 
Engineers India, Ltd.  52,818  203,216 
Entertainment Network India, Ltd.  2,857  19,822 
Era Infra Engineering, Ltd. (I)  27,625  7,117 
Eros International Media, Ltd. (I)  18,037  77,787 
Escorts, Ltd.  43,887  82,882 
Ess Dee Aluminium, Ltd.  8,586  71,747 
Essar Oil, Ltd. (I)  198,149  408,015 
Essar Ports, Ltd.  118,939  173,647 
Essar Shipping, Ltd. (I)  59,469  20,038 
Essel Propack, Ltd.  89,057  145,570 
Exide Industries, Ltd.  226,687  609,858 
FAG Bearings India, Ltd.  584  27,570 
FDC, Ltd.  45,702  119,765 
Federal Bank, Ltd.  806,835  1,609,963 
Federal-Mogul Goetze India, Ltd. (I)  8,130  34,156 
Financial Technologies India, Ltd.  15,328  64,477 
Finolex Cables, Ltd.  89,396  321,865 
Finolex Industries, Ltd.  64,689  306,951 
Firstsource Solutions, Ltd. (I)  232,387  142,948 
Fortis Healthcare, Ltd. (I)  99,267  196,031 
GAIL India, Ltd.  185,255  1,355,266 
GAIL India, Ltd., GDR  1,143  50,630 
Gammon India, Ltd. (I)  51,039  24,713 
Gateway Distriparks, Ltd.  73,703  318,772 
Gillette India, Ltd.  1,325  55,963 
Gitanjali Gems, Ltd. (I)  50,394  55,104 
GlaxoSmithKline Consumer Healthcare, Ltd.  1,735  153,064 
Glenmark Pharmaceuticals, Ltd.  38,363  453,738 
GMR Infrastructure, Ltd.  1,267,487  528,335 
Godfrey Philips India, Ltd.  379  16,838 
Godrej Consumer Products, Ltd.  48,992  796,770 
Godrej Industries, Ltd.  38,781  207,382 
Godrej Properties, Ltd.  20,318  74,916 
Graphite India, Ltd.  80,822  137,699 
Grasim Industries, Ltd.  31,208  1,845,488 
Greaves Cotton, Ltd.  22,029  47,456 
Grindwell Norton, Ltd.  43  323 
Gujarat Alkalies & Chemicals, Ltd.  50,650  161,331 
Gujarat Fluorochemicals, Ltd.  32,948  282,567 
Gujarat Gas Company, Ltd.  18,111  133,678 
Gujarat Industries Power Company, Ltd.  11,048  14,317 
Gujarat Mineral Development Corp., Ltd.  39,642  94,628 
Gujarat Narmada Valley Fertilizers & Chemicals, Ltd.  65,805  93,633 
Gujarat NRE Coke, Ltd. (I)  85,965  13,293 
Gujarat Pipavav Port, Ltd. (I)  82,351  194,548 
Gujarat State Fertilisers & Chemicals, Ltd.  178,141  197,686 
Gujarat State Petronet, Ltd.  135,739  190,672 
Gulf Oil Corp., Ltd.  22,053  48,395 
Gulf Oil Lubricants India, Ltd. (I)  22,053  104,123 
GVK Power & Infrastructure, Ltd. (I)  648,891  146,352 

 

15 

 


Emerging Markets Fund

Hathway Cable & Datacom, Ltd. (I)  32,074  141,809 
Havells India Ltd.  292,245  1,373,447 
HCL Infosystems, Ltd. (I)  185,657  239,680 
HCL Technologies, Ltd.  114,858  3,094,985 
HDFC Bank, Ltd.  538,287  8,015,286 
HEG, Ltd.  17,873  85,009 
HeidelbergCement India, Ltd. (I)  87,352  100,748 
Hero Motorcorp, Ltd.  35,345  1,521,309 
Hexa Tradex, Ltd. (I)  42,642  23,457 
Hexaware Technologies, Ltd.  327,232  862,799 
Himachal Futuristic Communications, Ltd. (I)  446,484  99,570 
Hindalco Industries, Ltd.  1,014,546  2,848,980 
Hinduja Ventures, Ltd.  5,652  30,159 
Hindustan Construction Company, Ltd. (I)  41,263  25,831 
Hindustan Oil Exploration Company, Ltd. (I)  20,262  16,677 
Hindustan Petroleum Corp., Ltd.  66,901  507,132 
Hindustan Unilever, Ltd.  72,182  881,302 
Honeywell Automation India, Ltd.  130  11,167 
Hotel Leela Venture, Ltd. (I)  161,732  63,736 
Housing Development & Infrastructure, Ltd. (I)  335,502  501,119 
HSIL, Ltd.  27,538  140,444 
Ht Media Ltd.  9,443  16,216 
ICICI Bank, Ltd.  135,764  3,482,082 
ICICI Bank, Ltd., ADR  65,621  3,510,724 
IDBI Bank, Ltd.  325,447  408,095 
Idea Cellular, Ltd.  578,462  1,541,823 
IDFC, Ltd.  597,521  1,423,015 
IFCI, Ltd.  799,536  444,025 
IIFL Holdings, Ltd.  254,359  582,607 
Indiabulls Housing Finance, Ltd.  316,454  1,991,864 
Indiabulls Infrastructure and Power, Ltd. (I)  1,348,842  107,807 
Indiabulls Real Estate, Ltd.  251,053  286,986 
Indian Bank  92,080  207,459 
Indian Hotels Company, Ltd.  502,469  802,193 
Indian Oil Corp., Ltd.  79,634  472,539 
Indian Overseas Bank  198,424  196,899 
Indoco Remedies, Ltd.  16,271  68,799 
Indraprastha Gas, Ltd.  23,389  146,046 
IndusInd Bank, Ltd.  99,860  970,704 
Info Edge India, Ltd.  8,983  112,092 
Infosys, Ltd.  70,049  4,161,660 
Infosys, Ltd., ADR (L)  107,637  6,404,402 
Infotech Enterprises, Ltd.  22,275  154,457 
ING Vysya Bank, Ltd.  77,939  831,150 
Ingersoll-Rand India, Ltd.  9,856  106,328 
Ipca Laboratories, Ltd.  21,683  261,101 
IRB Infrastructure Developers, Ltd.  112,896  467,913 
ITC, Ltd.  790,826  4,639,890 
Jagran Prakashan, Ltd.  22,862  44,631 
Jain Irrigation Systems, Ltd.  206,193  303,818 
Jaiprakash Associates, Ltd. (I)  692,948  536,849 
Jaiprakash Power Ventures, Ltd. (I)  623,661  146,316 
Jammu & Kashmir Bank, Ltd.  33,817  830,411 
JB Chemicals & Pharmaceuticals, Ltd.  44,422  153,796 
JBF Industries, Ltd.  30,363  67,913 
Jindal Poly Films, Ltd.  15,538  72,843 
Jindal Poly Investments and Finance Company, Ltd. (I)  3,884  10,814 
Jindal Saw, Ltd.  176,270  225,516 
Jindal Stainless, Ltd. (I)  78,009  57,451 
Jindal Steel & Power, Ltd.  202,531  780,381 
JK Cement, Ltd.  22,552  174,597 

 

16 

 


Emerging Markets Fund

JK Lakshmi Cement, Ltd.  70,257  352,833 
JK Tyre & Industries, Ltd.  5,373  24,524 
JM Financial, Ltd.  368,362  266,997 
JSW Energy, Ltd.  345,624  435,060 
JSW Steel, Ltd.  123,306  2,526,699 
Jubilant Foodworks, Ltd. (I)  8,461  179,650 
Jubilant Life Sciences, Ltd.  64,699  178,379 
Kajaria Ceramics, Ltd.  18,941  204,234 
Kalpataru Power Transmission, Ltd.  22,050  60,615 
Kansai Nerolac Paints, Ltd.  587  15,647 
Kaveri Seed Company, Ltd.  21,588  322,318 
KEC International, Ltd.  68,163  113,916 
Kesoram Industries, Ltd. (I)  80,244  155,932 
Kirloskar Brothers, Ltd.  4,757  23,865 
Kotak Mahindra Bank, Ltd.  177,238  3,040,718 
KPIT Cummins Infosystems, Ltd.  87,601  214,302 
KSB Pumps, Ltd.  7,884  69,345 
KSK Energy Ventures, Ltd. (I)  7,103  11,024 
Lakshmi Machine Works, Ltd.  2,257  146,583 
Lakshmi Vilas Bank, Ltd.  37,195  49,347 
Lanco Infratech, Ltd. (I)  511,323  71,378 
Larsen & Toubro, Ltd.  174,869  4,428,161 
Larsen & Toubro, Ltd., GDR  40,288  1,014,556 
Lupin, Ltd.  57,843  1,335,645 
Maharashtra Seamless, Ltd.  54,295  320,728 
Mahindra & Mahindra, Ltd.  193,404  4,492,465 
Mahindra & Mahindra, Ltd., GDR  19,216  448,550 
Mahindra Holidays & Resorts India, Ltd.  3,261  16,041 
Mahindra Lifespace Developers, Ltd.  21,630  194,821 
Manaksia, Ltd.  35,648  50,217 
Mangalore Refinery and Petrochemicals, Ltd. (I)  252,641  257,412 
Marico Kaya Enterprises, Ltd. (I)  1,827  16,650 
Marico, Ltd.  91,382  412,381 
Maruti Suzuki India, Ltd.  46,311  2,196,516 
MAX India, Ltd.  45,603  247,346 
McLeod Russel India, Ltd.  37,627  183,310 
Mercator, Ltd. (I)  212,137  113,533 
Merck, Ltd.  2,868  35,838 
MindTree, Ltd.  29,963  556,641 
Monnet Ispat & Energy, Ltd.  32,137  60,250 
Monsanto India, Ltd.  5,675  207,513 
Motherson Sumi Systems, Ltd.  178,753  1,102,004 
Mphasis, Ltd.  22,375  164,898 
MRF, Ltd.  1,922  760,723 
Nagarjuna Fertilizers & Chemicals, Ltd. (I)  252,025  43,988 
Nagarjuna Oil Refinery, Ltd. (I)  229,114  18,914 
Natco Pharma, Ltd.  9,399  187,482 
National Aluminium Company, Ltd.  427,632  402,344 
Nava Bharat Ventures, Ltd.  43,984  148,137 
Navneet Publications India, Ltd.  61,133  99,703 
NCC, Ltd.  246,877  279,986 
NESCO, Ltd.  1,049  21,728 
Nestle India, Ltd.  4,192  419,524 
NHPC, Ltd.  1,621,426  577,139 
NIIT Technologies, Ltd.  45,471  269,771 
NIIT, Ltd.  86,244  71,446 
Nitin Fire Protection Industries, Ltd.  42,198  43,982 
Noida Toll Bridge Company, Ltd.  76,450  41,098 
NTPC, Ltd.  419,472  951,420 
Oberoi Realty, Ltd.  12,621  49,349 
Oil & Natural Gas Corp., Ltd.  292,338  2,102,523 

 

17 

 


Emerging Markets Fund

Oil India, Ltd.  61,573  623,823 
OMAXE, Ltd.  106,368  221,827 
Opto Circuits India, Ltd. (I)  43,971  17,729 
Oracle Financial Services Software, Ltd. (I)  9,555  567,730 
Orient Cement, Ltd.  82,674  164,642 
Oriental Bank of Commerce  67,526  291,670 
Orissa Minerals Development Company, Ltd.  400  26,306 
Page Industries, Ltd.  1,818  213,426 
Panacea Biotec, Ltd. (I)  18,056  51,396 
Pantaloon Retail India, Ltd.  7,341  14,896 
Parsvnath Developers, Ltd. (I)  129,259  49,613 
Peninsula Land, Ltd.  89,370  50,240 
Persistent Systems, Ltd.  6,484  134,925 
Petronet LNG, Ltd.  130,308  395,468 
Pfizer, Ltd.  5,987  140,567 
PI Industries, Ltd.  2,185  16,206 
Pidilite Industries, Ltd.  73,344  494,572 
Pipavav Defence & Offshore Engineering Company, Ltd. (I)  85,649  65,948 
Piramal Enterprises, Ltd.  87,007  982,293 
Plethico Pharmaceuticals, Ltd. (I)  5,976  4,321 
Polaris Financial Technology, Ltd.  63,788  226,323 
Polyplex Corp., Ltd.  12,401  51,803 
Power Grid Corp. of India, Ltd.  479,923  1,020,863 
Praj Industries, Ltd.  57,344  59,851 
Prestige Estates Projects, Ltd.  19,118  70,456 
Prism Cement, Ltd. (I)  71,827  89,367 
PTC India, Ltd.  222,817  320,762 
Punj Lloyd, Ltd. (I)  224,909  137,691 
Punjab National Bank, Ltd.  5,000  82,145 
Radico Khaitan, Ltd.  60,239  77,796 
Rain Industries, Ltd.  114,375  81,460 
Rajesh Exports, Ltd.  43,299  101,319 
Rallis India, Ltd.  62,589  241,485 
Ranbaxy Laboratories, Ltd. (I)  64,371  678,877 
Ranbaxy Laboratories, Ltd., GDR (I)  2,335  25,264 
Raymond, Ltd.  43,363  326,022 
Redington India, Ltd.  66,332  114,759 
REI Agro, Ltd.  164,589  7,612 
Reliance Capital, Ltd.  108,604  951,295 
Reliance Communications, Ltd.  564,683  1,084,175 
Reliance Industries, Ltd.  753,846  12,450,087 
Reliance Infrastructure, Ltd.  72,487  836,481 
Reliance Power, Ltd. (I)  555,888  686,211 
Rolta India, Ltd.  45,837  79,054 
Ruchi Soya Industries, Ltd.  127,227  83,617 
Rural Electrification Corp., Ltd.  370,755  1,646,288 
Sadbhav Engineering, Ltd.  12,270  42,475 
Sanofi India, Ltd.  493  24,626 
Schneider Electric Infrastructure, Ltd. (I)  27,670  61,511 
Sesa Sterlite, Ltd.  70,743  324,351 
Sesa Sterlite, Ltd., ADR  195,801  3,600,780 
Shipping Corp. of India, Ltd. (I)  51,056  50,723 
Shoppers Stop, Ltd.  8,260  62,504 
Shree Cement, Ltd.  4,757  620,427 
Shree Renuka Sugars, Ltd.  423,210  136,524 
Shriram Transport Finance Company, Ltd.  43,154  648,013 
Siemens India, Ltd.  46,078  605,006 
Sintex Industries, Ltd.  88,110  106,410 
SJVN, Ltd.  117,873  47,115 
SKF India, Ltd.  7,769  147,624 
Sobha Developers, Ltd.  50,252  375,999 

 

18 

 


Emerging Markets Fund

Solar Industries India, Ltd.  1,324  45,447 
SREI Infrastructure Finance, Ltd.  294,220  213,319 
SRF, Ltd.  19,638  220,731 
State Bank of Bikaner & Jaipur  18,445  180,522 
State Bank of India  59,375  2,415,316 
State Bank of India, GDR  4,501  368,664 
Steel Authority of India, Ltd.  208,468  279,021 
Sterling Biotech, Ltd. (I)  96,778  18,130 
Sterlite Technologies, Ltd.  53,825  56,484 
Strides Arcolab, Ltd.  10,655  116,920 
Styrolution ABS India, Ltd.  189  1,853 
Sun Pharma Advanced Research Company, Ltd. (I)  56,021  181,886 
Sun Pharmaceutical Industries, Ltd.  189,104  2,661,116 
Sun TV Network, Ltd.  63,501  372,305 
Sundaram Finance, Ltd.  17,300  268,408 
Supreme Industries, Ltd.  24,824  243,287 
Suzlon Energy, Ltd. (I)  534,875  190,876 
Syndicate Bank  165,888  327,953 
Tamil Nadu Newsprint & Papers, Ltd.  37,939  101,498 
Tata Chemicals, Ltd.  57,964  362,415 
Tata Communications, Ltd.  50,265  313,323 
Tata Consultancy Services, Ltd.  141,485  5,872,085 
Tata Elxsi, Ltd.  10,774  108,697 
Tata Global Beverages, Ltd.  410,020  1,022,473 
Tata Investment Corp., Ltd.  1,067  9,591 
Tata Motors, Ltd.  198,438  1,719,069 
Tata Motors, Ltd., ADR (L)  53,090  2,558,407 
Tata Power Company, Ltd.  676,029  965,635 
Tata Sponge Iron, Ltd.  4,883  68,598 
Tata Steel, Ltd.  302,239  2,564,455 
Tata Teleservices Maharashtra, Ltd. (I)  545,887  99,861 
Tech Mahindra, Ltd.  65,286  2,538,106 
Texmaco Rail & Engineering, Ltd.  5,288  6,993 
The Great Eastern Shipping Company, Ltd.  84,792  515,115 
The India Cements, Ltd.  309,375  578,056 
The Karnataka Bank, Ltd.  140,550  284,472 
The Karur Vysya Bank, Ltd.  49,942  387,651 
The Phoenix Mills, Ltd.  4,315  23,097 
The Ramco Cements, Ltd.  89,830  502,563 
The South Indian Bank, Ltd.  847,658  390,065 
Thermax, Ltd.  19,232  272,728 
Time Technoplast, Ltd.  105,115  88,196 
Timken India, Ltd.  92  670 
Titan Company, Ltd.  96,547  610,404 
Torrent Pharmaceuticals, Ltd.  46,498  635,545 
Torrent Power, Ltd.  83,936  184,979 
Transport Corp. Of India Ltd.  5,995  20,345 
Trent, Ltd.  871  16,383 
Triveni Turbine, Ltd.  25,986  36,306 
TTK Prestige, Ltd.  1,939  148,915 
Tube Investments of India, Ltd.  19,386  91,203 
TV18 Broadcast, Ltd. (I)  301,121  144,272 
TVS Motor Company, Ltd.  126,700  390,331 
UCO Bank  198,438  291,910 
Uflex, Ltd.  34,032  83,459 
Ultratech Cement, Ltd.  27,084  1,140,439 
Unichem Laboratories, Ltd.  4,033  14,853 
Union Bank of India, Ltd.  122,021  418,397 
Unitech, Ltd. (I)  1,334,364  483,532 
United Breweries, Ltd.  29,446  342,804 
UPL, Ltd.  205,653  1,074,296 

 

19 

 


Emerging Markets Fund

Usha Martin, Ltd.  176,167  117,776 
Uttam Value Steels, Ltd. (I)  25,353  3,201 
V-Guard Industries, Ltd.  7,855  95,196 
VA Tech Wabag, Ltd.  2,474  57,331 
Vakrangee, Ltd.  55,120  118,265 
Vardhman Special Steels, Ltd. (I)  1,653  928 
Vardhman Textiles, Ltd.  8,267  61,276 
Videocon Industries, Ltd.  86,553  238,807 
Vijaya Bank  167,219  125,904 
VIP Industries, Ltd.  47,835  77,148 
Voltas, Ltd.  67,658  273,712 
VST Industries, Ltd.  2,273  57,401 
WABCO India, Ltd.  458  27,260 
Welspun Corp, Ltd.  26,878  30,264 
Welspun Enterprises, Ltd. (I)  1,343  5,946 
Wipro, Ltd.  202,769  1,890,396 
Wockhardt, Ltd.  24,404  276,769 
Wyeth, Ltd.  346  5,618 
Yes Bank, Ltd.  142,487  1,342,175 
Zee Entertainment Enterprises, Ltd.  281,698  1,274,034 
Zensar Technologies, Ltd.  1,904  13,951 
Zuari Agro Chemicals, Ltd.  9,847  29,114 
Zuari Global, Ltd.  9,847  13,795 
Zydus Wellness, Ltd.  2,372  23,920 
 
Indonesia 3.2%    83,338,945 
Ace Hardware Indonesia Tbk PT  5,219,000  417,103 
Adaro Energy Tbk PT  12,283,000  1,382,903 
Adhi Karya Persero Tbk PT  1,556,800  408,550 
Agung Podomoro Land Tbk PT  4,926,700  159,288 
AKR Corporindo Tbk PT  1,516,000  679,992 
Alam Sutera Realty Tbk PT  11,989,900  522,980 
Aneka Tambang Persero Tbk PT  5,330,000  545,030 
Arwana Citramulia Tbk PT  1,418,900  123,125 
Asahimas Flat Glass Tbk PT  113,500  80,781 
Astra Agro Lestari Tbk PT  345,200  752,508 
Astra Graphia Tbk PT  606,500  115,621 
Astra International Tbk PT  10,389,900  6,727,128 
Bakrie & Brothers Tbk PT (I)  129,839,261  554,987 
Bakrie Sumatera Plantations Tbk PT (I)  17,913,000  76,572 
Bakrie Telecom Tbk PT (I)  34,369,000  146,907 
Bakrieland Development Tbk PT (I)  43,066,000  184,082 
Bank Bukopin Tbk PT  4,762,666  301,231 
Bank Central Asia Tbk PT  3,604,500  3,450,240 
Bank Danamon Indonesia Tbk PT  3,002,071  962,068 
Bank Mandiri Persero Tbk PT  3,581,046  3,195,188 
Bank Negara Indonesia Persero Tbk PT  3,686,403  1,686,296 
Bank Pan Indonesia Tbk PT (I)  8,366,900  640,029 
Bank Pembangunan Daerah Jawa Barat Dan Banten Tbk PT  2,188,700  162,767 
Bank Permata Tbk PT  25,500  3,051 
Bank Rakyat Indonesia Persero Tbk PT  7,767,900  7,334,601 
Bank Tabungan Negara Persero Tbk PT  4,665,198  444,628 
Bank Tabungan Pensiunan Nasional Tbk PT (I)  227,500  82,874 
Barito Pacific Tbk PT (I)  3,360,000  81,569 
Bayan Resources Tbk PT (I)  98,000  58,529 
Benakat Petroleum Energy Tbk PT (I)  2,038,300  22,997 
Berau Coal Energy Tbk PT (I)  876,800  8,516 
Berlian Laju Tanker Tbk PT (I)  11,916,666  0 
Bisi International PT  903,000  41,301 
Budi Starch & Sweetener Tbk PT (I)  2,039,000  20,077 
Bumi Resources Tbk PT (I)  31,738,030  530,654 

 

20 

 


Emerging Markets Fund

Bumi Serpong Damai PT  7,573,000  1,039,852 
BW Plantation Tbk PT  2,248,500  197,993 
Central Proteinaprima Tbk PT (I)  30,464,500  130,218 
Chandra Asri Petrochemical Tbk PT  8,000  2,219 
Charoen Pokphand Indonesia Tbk PT  3,980,220  1,308,830 
Ciputra Development Tbk PT  15,864,000  1,648,992 
Ciputra Property Tbk PT  1,797,900  116,123 
Ciputra Surya Tbk PT  1,437,500  294,550 
Citra Marga Nusaphala Persada Tbk PT  1,580,000  547,021 
Darma Henwa Tbk PT (I)  20,860,500  89,166 
Davomas Abadi Tbk PT (I)  8,435,500  36,057 
Delta Dunia Makmur Tbk PT (I)  4,163,000  72,579 
Elnusa Tbk PT  2,863,500  166,572 
Energi Mega Persada Tbk PT (I)  40,739,638  313,550 
Erajaya Swasembada Tbk Pt (I)  1,509,800  147,113 
Exploitasi Energi Indonesia Tbk PT (I)  3,373,000  62,339 
Express Transindo Utama Tbk PT  1,728,200  193,510 
Fajar Surya Wisesa Tbk PT (I)  146,500  19,106 
Gajah Tunggal Tbk PT  2,601,000  393,620 
Global Mediacom Tbk PT  7,069,700  1,169,423 
Golden Eagle Energy Tbk PT (I)  368,800  55,844 
Gozco Plantations Tbk PT (I)  4,730,700  41,240 
Gudang Garam Tbk PT  290,743  1,342,140 
Hanson International Tbk PT (I)  4,974,500  282,912 
Harum Energy Tbk PT  841,000  154,613 
Hexindo Adiperkasa Tbk PT  117,000  36,597 
Holcim Indonesia Tbk PT  1,243,900  310,498 
Indah Kiat Pulp & Paper Corp. Tbk PT (I)  4,254,000  487,264 
Indika Energy Tbk PT  2,104,400  132,291 
Indo Tambangraya Megah Tbk PT  293,700  707,482 
Indocement Tunggal Prakarsa Tbk PT  849,300  1,759,894 
Indofood CBP Sukses Makmur Tbk PT  406,500  364,790 
Indofood Sukses Makmur Tbk PT  2,828,900  1,662,658 
Indosat Tbk PT  980,800  321,218 
Inovisi Infracom Tbk PT (I)  671,012  75,399 
Intiland Development Tbk PT  4,212,900  210,811 
Japfa Comfeed Indonesia Tbk PT  4,442,100  490,059 
Jasa Marga Tbk PT  1,491,900  790,432 
Kalbe Farma Tbk PT  9,526,500  1,352,213 
Kawasan Industri Jababeka Tbk PT  17,916,919  433,738 
Lippo Cikarang Tbk PT (I)  505,800  368,741 
Lippo Karawaci Tbk PT  13,758,325  1,259,152 
Malindo Feedmill Tbk PT  1,047,700  301,747 
Matahari Putra Prima Tbk PT  3,161,000  832,304 
Mayora Indah Tbk PT  258,708  677,264 
Medco Energi Internasional Tbk PT  2,289,000  713,638 
Media Nusantara Citra Tbk PT  3,278,200  786,104 
Mitra Adiperkasa Tbk PT  1,088,100  560,481 
Mitra International Resources Tbk PT (I)  1,477,900  6,443 
MNC Investama Tbk PT  24,011,300  773,840 
MNC Sky Vision Tbk PT  362,500  50,502 
Modern Internasional Tbk PT  304,100  18,850 
Multipolar Corp. Tbk PT  5,073,900  342,646 
Nippon Indosari Corpindo Tbk PT  880,900  91,513 
Nusantara Infrastructure Tbk PT (I)  9,591,800  168,888 
Pabrik Kertas Tjiwi Kimia Tbk PT  642,000  56,409 
Pakuwon Jati Tbk PT  15,351,400  571,166 
Panin Financial Tbk PT (I)  18,582,500  417,493 
Panin Insurance Tbk PT  1,443,000  79,474 
Panin Sekuritas Tbk Pt  22,500  10,051 
Pembangunan Perumahan Persero Tbk PT  3,623,500  763,597 

 

21 

 


Emerging Markets Fund

Perusahaan Gas Negara Persero Tbk PT  4,440,600  2,201,871 
Perusahaan Perkebunan London Sumatra Indonesia Tbk PT  3,882,500  620,648 
Petrosea Tbk PT  243,000  25,784 
Ramayana Lestari Sentosa Tbk PT  4,070,000  346,162 
Resource Alam Indonesia Tbk PT  392,500  49,922 
Salim Ivomas Pratama Tbk PT  1,348,100  95,587 
Samindo Resources Tbk PT  31,500  1,374 
Sampoerna Agro Tbk PT  1,086,500  196,010 
Selamat Sempurna Tbk PT  1,127,500  379,513 
Semen Gresik Persero Tbk PT  1,364,300  1,892,759 
Sentul City Tbk PT (I)  25,494,900  259,461 
Sinar Mas Multiartha Tbk PT  37,000  11,781 
Sugih Energy Tbk PT (I)  9,430,400  336,927 
Summarecon Agung Tbk PT  9,548,800  1,093,529 
Surya Citra Media Tbk PT  2,302,900  808,990 
Surya Semesta Internusa Tbk PT  3,281,500  227,206 
Suryainti Permata Tbk PT (I)  1,802,000  0 
Tambang Batubara Bukit Asam Persero Tbk PT  945,000  1,079,812 
Telekomunikasi Indonesia Persero Tbk PT  5,167,600  1,181,158 
Telekomunikasi Indonesia Tbk PT, ADR (L)  77,740  3,580,704 
Tempo Scan Pacific Tbk PT  130,300  31,738 
Tiga Pilar Sejahtera Food Tbk  1,816,500  388,863 
Timah Persero Tbk PT  4,180,080  511,924 
Tiphone Mobile Indonesia Tbk PT (I)  1,046,900  74,731 
Total Bangun Persada Tbk PT  1,726,900  117,390 
Tower Bersama Infrastructure Tbk PT  1,227,100  826,075 
Trada Maritime Tbk PT (I)  2,675,000  421,917 
Trias Sentosa Tbk PT  1,000,000  29,671 
Trimegah Securities Tbk PT (I)  1,137,100  6,804 
Truba Alam Manunggal Engineering Tbk PT (I)  19,436,000  9,969 
Tunas Baru Lampung Tbk PT  1,536,000  87,963 
Tunas Ridean Tbk PT  872,500  51,836 
Unilever Indonesia Tbk PT  687,000  1,822,655 
United Tractors Tbk PT  909,500  1,722,036 
Vale Indonesia Tbk PT  3,245,000  1,159,024 
Visi Media Asia Tbk PT (I)  1,338,900  39,031 
Waskita Karya Persero Tbk PT  2,520,900  195,024 
Wijaya Karya Persero Tbk PT  2,712,100  665,425 
XL Axiata Tbk PT  2,107,400  1,072,269 
 
Luxembourg 0.0%    103,216 
O'Key Group SA, GDR  12,712  103,216 
 
Malaysia 4.6%    120,317,583 
Adventa BHD (I)  25,200  8,401 
Aeon Company BHD  382,400  471,991 
AEON Credit Service M BHD  6,360  33,533 
Affin Holdings BHD  546,390  584,264 
AirAsia BHD  1,519,200  1,161,505 
Alam Maritim Resources BHD  267,200  117,042 
Alliance Financial Group BHD  1,182,400  1,823,631 
AMMB Holdings BHD  1,394,050  2,954,440 
Amway Malaysia Holdings BHD  400  1,510 
Ann Joo Resources BHD  256,700  104,309 
APM Automotive Holdings BHD  115,500  219,883 
Astro Malaysia Holdings BHD  473,400  492,508 
Axiata Group BHD  1,241,200  2,729,906 
Batu Kawan BHD  26,700  166,029 
Benalec Holdings BHD  376,200  109,771 
Berjaya Assets BHD  388,400  125,683 
Berjaya Corp. BHD  3,698,200  598,321 
Berjaya Land BHD  846,900  228,311 

 

22 

 


Emerging Markets Fund

Berjaya Sports Toto BHD  504,041  601,260 
BIMB Holdings BHD  308,500  421,951 
Bintulu Port Holdings BHD  300  666 
Bonia, Corp. BHD  155,200  61,049 
Boustead Holdings BHD  421,306  689,676 
Boustead Plantations BHD (I)  84,200  42,741 
British American Tobacco Malaysia BHD  56,200  1,283,981 
Bumi Armada BHD  678,400  634,831 
Bursa Malaysia BHD  301,400  770,676 
Cahya Mata Sarawak BHD  506,100  672,719 
Carlsberg Brewery-Malay BHD  123,400  489,420 
CB Industrial Product Holding BHD  188,770  275,444 
CIMB Group Holdings BHD  2,678,177  6,270,573 
Coastal Contracts BHD  244,266  394,298 
CSC Steel Holdings BHD  234,900  84,962 
Cypark Resources BHD  89,300  73,673 
Daibochi Plastic & Packaging Industry BHD  9,100  12,529 
Daya Materials BHD  431,600  39,017 
Dayang Enterprise Holdings BHD  214,500  249,785 
Dialog Group BHD  1,872,460  1,027,979 
DiGi.Com BHD  1,025,680  1,865,367 
DKSH Holdings Malaysia BHD  6,800  13,694 
DRB-Hicom BHD  1,126,700  789,839 
Dutch Lady Milk Industries BHD  9,900  146,999 
Eastern & Oriental BHD  830,700  748,419 
ECM Libra Financial Group BHD (I)  100,844  33,268 
Evergreen Fibreboard BHD (I)  388,400  77,006 
Faber Group BHD  287,400  308,954 
Fraser & Neave Holdings BHD  45,100  251,835 
Gamuda BHD  1,352,300  2,072,147 
Genting BHD  945,000  2,871,843 
Genting Malaysia BHD  1,880,100  2,689,935 
Genting Plantations BHD  193,400  616,849 
Globetronics Technology BHD  193,180  300,945 
Glomac BHD  411,400  147,483 
Goldis BHD (I)  356,063  271,130 
Green Packet BHD (I)  409,300  45,438 
Guinness Anchor BHD  94,900  403,398 
GuocoLand Malaysia BHD  37,100  21,889 
Hai-O Enterprise BHD  58,500  49,735 
Hap Seng Consolidated BHD  813,400  970,113 
Hap Seng Plantations Holdings BHD  241,000  199,489 
Hartalega Holdings BHD  173,100  378,862 
Ho Wah Genting BHD (I)  671,700  40,458 
Hock Seng LEE BHD  157,592  94,474 
Hong Leong Bank BHD  274,040  1,251,788 
Hong Leong Financial Group BHD  252,900  1,367,038 
Hong Leong Industries BHD  62,900  153,410 
Hua Yang BHD  105,966  77,611 
Hwang-DBS Malaysia BHD  69,400  41,400 
IGB Corp. BHD  1,316,240  1,198,570 
IJM Corp. BHD  1,448,680  2,986,827 
IJM Land BHD  437,700  457,971 
IJM Plantations BHD  204,200  230,112 
Inari Amertron BHD  32,000  31,773 
Insas BHD  488,074  190,444 
Integrax BHD  74,400  53,569 
IOI Corp. BHD  1,559,900  2,364,510 
IOI Properties Group BHD (I)  549,049  428,461 
Iris Corp. BHD  1,098,200  134,007 
JAKS Resources BHD (I)  413,200  95,663 

 

23 

 


Emerging Markets Fund

Jaya Tiasa Holdings BHD  206,605  138,965 
JCY International BHD  623,800  136,529 
K&N Kenanga Holdings BHD (I)  199,317  46,787 
Karambunai Corp. BHD (I)  1,224,300  34,982 
Keck Seng Malaysia BHD  287,150  570,254 
Kian JOO CAN Factory BHD  332,000  318,079 
Kim Loong Resources BHD  37,800  32,261 
Kimlun Corp. BHD  93,700  45,473 
Kinsteel BHD (I)  429,100  28,605 
KLCC Property Holdings BHD  588,400  1,235,430 
KNM Group BHD (I)  1,446,225  437,946 
Kossan Rubber Industries BHD  261,000  331,236 
KPJ Healthcare BHD  513,600  623,909 
KSL Holdings BHD (I)  210,966  264,398 
Kuala Lumpur Kepong BHD  169,958  1,187,702 
KUB Malaysia BHD (I)  592,900  100,627 
Kulim Malaysia BHD (I)  511,700  535,738 
Kumpulan Europlus BHD (I)  320,300  114,826 
Kumpulan Fima BHD  93,300  67,199 
Kumpulan Perangsang Selangor BHD  251,200  135,494 
Lafarge Malayan Cement BHD  297,400  962,388 
Land & General BHD (I)  339,000  69,363 
Landmarks BHD (I)  325,700  133,257 
LBS Bina Group BHD  210,000  111,993 
Lion Industries Corp. BHD  544,000  110,424 
LPI Capital BHD  12,600  68,744 
Magnum BHD  179,600  174,929 
Mah Sing Group BHD  730,739  568,008 
Malayan Banking BHD  2,219,063  7,111,365 
Malayan Flour Mills BHD  169,300  99,879 
Malaysia Airports Holdings BHD  461,866  1,128,117 
Malaysia Building Society BHD  232,887  183,963 
Malaysia Marine and Heavy Engineering Holdings BHD  183,300  190,664 
Malaysian Airline System BHD (I)  2,798,100  221,931 
Malaysian Bulk Carriers BHD  326,400  177,037 
Malaysian Pacific Industries BHD  38,838  70,209 
Malaysian Resources Corp. BHD  1,334,000  719,314 
Maxis BHD  663,985  1,380,060 
MBM Resources BHD  151,150  140,974 
Media Chinese International, Ltd.  186,800  53,930 
Media Prima BHD  787,280  569,568 
Mega First Corp. BHD  193,700  138,187 
MISC BHD  609,650  1,330,407 
MK Land Holdings BHD  623,400  97,900 
MKH BHD  161,933  174,215 
MMC Corp. BHD  988,700  775,068 
MNRB Holdings BHD  55,100  82,093 
Mudajaya Group BHD  174,600  119,621 
Muhibbah Engineering Malaysia BHD  350,900  357,270 
Mulpha International BHD (I)  1,698,900  258,666 
My EG Services BHD  250,800  233,056 
Naim Holdings BHD  148,000  181,685 
NCB Holdings BHD  29,600  26,861 
Nestle Malaysia BHD  4,100  87,557 
NTPM Holdings BHD  83,500  21,580 
Oldtown BHD  123,500  76,396 
Oriental Holdings BHD  365,420  914,729 
OSK Holdings BHD  812,645  585,155 
Padini Holdings BHD  431,000  252,794 
Panasonic Manufacturing Malaysia BHD  10,900  73,654 
Pantech Group Holdings BHD  36,500  11,692 

 

24 

 


Emerging Markets Fund

Paramount Corp. BHD  85,400  42,822 
Parkson Holdings BHD (I)  495,282  471,245 
Perdana Petroleum BHD (I)  456,400  265,052 
Perisai Petroleum Teknologi BHD (I)  559,800  245,023 
Petronas Chemicals Group BHD  1,390,800  2,779,551 
Petronas Dagangan BHD  116,500  743,254 
Petronas Gas BHD  265,800  1,921,854 
Pharmaniaga BHD  12,000  18,236 
PJ Development Holdings BHD  297,900  202,218 
POS Malaysia BHD  304,900  469,102 
Power Root BHD  51,800  31,382 
PPB Group BHD  457,700  2,145,641 
Press Metal BHD  170,300  359,289 
Prestariang BHD  202,200  128,255 
Protasco BHD  141,500  73,609 
Public Bank BHD  392,360  2,399,911 
Puncak Niaga Holding BHD  134,800  143,154 
QL Resources BHD  359,100  378,334 
RCE Capital BHD  491,550  55,352 
RHB Capital BHD  678,281  1,972,860 
Rimbunan Sawit BHD  215,800  48,962 
Salcon BHD  534,800  134,028 
Sapurakencana Petroleum BHD  1,483,657  1,985,804 
Sarawak Oil Palms BHD  110,400  213,723 
Scientex BHD  92,200  179,301 
Scomi Group BHD (I)  1,525,800  196,085 
Scomi Marine BHD (I)  284,000  81,064 
SEG International BHD  19,800  9,044 
Selangor Dredging BHD  328,000  130,019 
Selangor Properties BHD  18,300  35,879 
Shangri-La Hotels Malaysia BHD  36,700  83,806 
Shell Refining Company Federation of Malaya BHD  145,700  279,811 
SHL Consolidated BHD  167,900  165,638 
Sime Darby BHD  1,169,901  3,511,223 
SP Setia BHD  402,389  440,410 
Star Publications Malaysia BHD  210,500  185,639 
Sunway BHD  874,228  832,036 
Supermax Corp. BHD  389,500  271,859 
Suria Capital Holdings BHD  249,100  206,174 
Syarikat Takaful Malaysia BHD  43,700  173,621 
Symphony Life BHD (I)  174,168  64,667 
TA Ann Holdings BHD  277,840  342,078 
TA Enterprise BHD  1,731,500  508,023 
TA Global BHD  1,466,040  172,028 
Talam Transform BHD (I)  1,080,000  42,855 
Tambun Indah Land BHD  107,200  83,660 
TAN Chong Motor Holdings BHD  191,600  273,540 
Tanjung Offshore BHD (I)  192,400  34,458 
Tasek Corp. BHD  1,700  8,306 
TDM BHD  952,695  287,141 
Tebrau Teguh BHD (I)  339,000  177,451 
Telekom Malaysia BHD  526,209  1,062,270 
Tenaga Nasional BHD  1,114,000  4,376,294 
TH Plantations BHD  185,160  105,190 
Time dotCom BHD (I)  459,740  712,229 
Tiong NAM Logistics Holdings  140,900  57,201 
Top Glove Corp. BHD  394,700  599,707 
Tropicana Corp. BHD  388,100  169,828 
TSH Resources BHD  265,400  286,150 
Uchi Technologies BHD  106,800  48,118 
UEM Sunrise BHD  1,090,266  664,124 

 

25 

 


Emerging Markets Fund

UMW Holdings BHD  425,400  1,668,536 
Unisem M BHD  640,620  359,639 
United Malacca BHD  112,550  251,449 
United Plantations BHD  26,800  233,884 
UOA Development BHD  143,000  95,685 
Uzma BHD (I)  40,500  47,548 
VS Industry BHD  130,197  89,222 
Wah Seong Corp. BHD  246,372  148,561 
WCT Holdings BHD  771,755  521,641 
Wing Tai Malaysia BHD  302,600  191,938 
WTK Holdings BHD  255,000  110,019 
Yinson Holdings BHD  73,300  69,053 
YNH Property BHD  541,996  355,940 
YTL Corp. BHD  4,532,258  2,329,562 
YTL E-Solutions BHD  86,200  17,093 
YTL Power International BHD (I)  1,524,075  720,499 
Zhulian Corp. BHD  117,200  89,592 
 
Malta 0.1%    3,006,880 
Brait SE (I)  404,792  3,006,880 
 
Mexico 5.3%    139,678,330 
Alfa SAB de CV, Class A  2,376,350  7,672,357 
Alpek SA de CV  114,312  230,604 
Alsea SAB de CV (L)  496,745  1,717,007 
America Movil SAB de CV, Series L  6,441,854  7,916,385 
America Movil SAB de CV, Series L, ADR (L)  351,768  8,621,834 
Arca Continental SAB de CV  408,233  2,996,950 
Axtel SAB de CV (I)(L)  1,177,009  369,032 
Banregio Grupo Financiero SAB de CV  139,682  792,689 
Bolsa Mexicana de Valores SAB de CV  371,594  801,058 
Cemex SAB de CV, ADR (I)(L)  785,393  10,390,749 
Cia Minera Autlan SAB de CV, Series B  15,400  18,442 
Coca-Cola Femsa SAB de CV, ADR (L)  21,331  2,318,040 
Compartamos SAB de CV  73,796  158,802 
Consorcio ARA SAB de CV (I)  1,233,066  562,938 
Controladora Comercial Mexicana SAB de CV  649,859  2,510,630 
Corporacion GEO SAB de CV, Series B (I)  777,652  5,834 
Corporacion Inmobiliaria Vesta SAB de CV  59,974  130,389 
Dine SAB de CV (I)  103,700  51,546 
El Puerto de Liverpool SAB de CV  94,607  1,084,778 
Empresas ICA SAB de CV, ADR (I)(L)  231,841  1,722,579 
Fomento Economico Mexicano SAB de CV, ADR  101,045  9,792,271 
Genomma Lab Internacional SAB de CV (I)  507,413  1,362,750 
Gruma SAB de CV, Class B (I)  270,205  3,085,814 
Grupo Aeroportuario del Centro Norte SAB de CV (I)  205,789  888,827 
Grupo Aeroportuario del Centro Norte SAB de CV, ADR (I)(L)  14,736  508,539 
Grupo Aeroportuario del Pacifico SAB de CV, ADR (L)  49,708  3,465,145 
Grupo Aeroportuario del Sureste SAB de CV, ADR  27,725  3,562,108 
Grupo Aeroportuario del Sureste SAB de CV, Class B  12,377  159,095 
Grupo Bimbo SAB de CV, Series A  815,056  2,579,159 
Grupo Carso SAB de CV, Series A1  583,351  3,568,783 
Grupo Cementos de Chihuahua SAB de CV  57,000  155,220 
Grupo Comercial Chedraui SA de CV  4,509  15,551 
Grupo Famsa SAB de CV, Class A (I)  289,538  327,029 
Grupo Financiero Banorte SAB de CV, Series O  1,171,567  8,259,450 
Grupo Financiero Inbursa SAB de CV, Series O  1,255,569  3,848,296 
Grupo Financiero Santander Mexico SAB de CV  235,209  707,781 
Grupo Gigante SAB de CV  168,900  489,518 
Grupo Herdez SAB de CV  111,662  312,697 
Grupo Industrial Maseca SAB de CV, Series B  2,600  4,173 
Grupo Industrial Saltillo SAB de CV  100,600  250,024 

 

26 

 


Emerging Markets Fund

Grupo KUO SAB de CV, Series B (I)  164,700  387,040 
Grupo Mexico SAB de CV, Series B  2,056,249  7,492,708 
Grupo Pochteca SAB de CV (I)  20,836  24,729 
Grupo Simec SAB de CV, Series B (I)  177,735  797,832 
Grupo Televisa SAB  394,690  2,929,219 
Grupo Televisa SAB, ADR  166,208  6,161,331 
Impulsora del Desarrollo y El Empleo en America Latina SAB de CV (I)  43,850  136,143 
Industrias Bachoco SAB de CV, ADR (L)  2,632  149,734 
Industrias Bachoco SAB de CV, Series B  24,800  118,019 
Industrias CH SAB de CV, Series B (I)  292,935  1,626,776 
Industrias Penoles SAB de CV  55,518  1,413,768 
Infraestructura Energetica Nova SAB de CV  23,399  140,858 
Inmuebles Carso SAB de CV, Class B1 (I)  1,093,966  1,230,599 
Kimberly-Clark de Mexico SAB de CV  544,862  1,462,910 
Maxcom Telecomunicaciones SAB de CV (I)  86,584  18,473 
Megacable Holdings SAB de CV  58,568  275,222 
Mexichem SAB de CV  761,608  3,304,616 
Minera Frisco SAB de CV, Class A1 (I)(L)  1,169,372  2,361,681 
OHL Mexico SAB de CV (I)  224,576  663,763 
Organizacion Soriana SAB de CV, Series B  1,658,803  5,670,254 
Promotora y Operadora de Infraestructura SAB de CV (I)  245,315  3,438,640 
Qualitas Controladora SAB de CV  364,900  998,702 
Sanluis Corp SAB de CV (I)  5,950  18,200 
TV Azteca SA de CV  119,754  64,837 
Urbi Desarrollos Urbanos SAB de CV (I)  883,860  106,117 
Wal-Mart de Mexico SAB de CV  1,940,633  5,271,286 
 
Netherlands 0.1%    1,589,712 
Global City Holdings NV (I)  2,841  31,336 
VimpelCom, Ltd., ADR  182,908  1,558,376 
 
Peru 0.1%    3,465,664 
Cementos Pacasmayo SAA, ADR  7,219  67,642 
Compania de Minas Buenaventura SA, ADR  21,714  316,156 
Credicorp, Ltd.  17,149  2,659,295 
Grana y Montero SAA, ADR  25,798  422,571 
 
Philippines 1.3%    34,603,750 
Aboitiz Equity Ventures, Inc.  770,580  967,791 
Aboitiz Power Corp.  824,700  709,533 
Alliance Global Group, Inc.  1,226,700  692,314 
Alsons Consolidated Resources, Inc.  629,000  29,859 
Atlas Consolidated Mining & Development  664,800  257,132 
Ayala Corp.  70,510  1,132,994 
Ayala Land, Inc.  2,118,000  1,604,583 
Bank of the Philippine Islands  485,825  1,058,723 
BDO Unibank, Inc.  940,081  1,951,210 
Belle Corp.  4,310,000  469,535 
Cebu Air, Inc.  271,510  388,603 
China Banking Corp.  259,787  307,460 
COL Financial Group, Inc.  10,000  3,413 
D&l Industries, Inc.  60,800  15,620 
DMCI Holdings, Inc.  593,400  1,090,675 
EEI Corp.  297,300  75,972 
Empire East Land Holdings, Inc. (I)  5,540,000  114,407 
Energy Development Corp.  7,600,400  1,268,223 
Filinvest Land, Inc.  16,089,750  572,284 
First Gen Corp.  1,075,300  594,393 
First Philippine Holdings Corp.  356,370  645,935 
Globe Telecom, Inc.  17,600  726,250 
International Container Terminal Services, Inc.  648,840  1,680,446 
JG Summit Holdings, Inc.  82,800  97,701 

 

27 

 


Emerging Markets Fund

Jollibee Foods Corp.  283,920  1,172,239 
Lepanto Consolidated Mining, Class B (I)  6,536,000  58,571 
Lopez Holdings Corp.  3,321,500  426,691 
LT Group, Inc.  405,500  142,544 
Manila Electric Company  78,410  455,766 
Manila Water Company, Inc.  711,800  489,921 
Megawide Construction Corp. (I)  21,840  6,463 
Megaworld Corp.  16,300,000  1,634,678 
Metro Pacific Investments Corp.  7,881,600  931,225 
Metropolitan Bank & Trust Company  292,214  576,110 
Pepsi-Cola Products Philippines, Inc.  1,469,000  155,025 
Philippine Long Distance Telephone Company  16,810  1,320,521 
Philippine National Bank (I)  399,820  800,694 
Philippine Stock Exchange, Inc.  16,944  110,751 
Philweb Corp.  628,140  74,500 
Puregold Price Club, Inc.  172,100  142,913 
RFM Corp.  101,000  11,348 
Rizal Commercial Banking Corp.  420,900  514,694 
Robinsons Land Corp.  2,446,350  1,257,440 
San Miguel Corp.  306,044  554,675 
Security Bank Corp.  209,127  607,408 
Semirara Mining And Power Corp.  82,120  762,812 
SM Investments Corp.  87,710  1,553,349 
SM Prime Holdings, Inc.  3,754,604  1,394,091 
Top Frontier Investment Holdings, Inc. (I)  25,432  74,626 
Trans-Asia Oil & Energy Development  377,000  20,841 
Union Bank of Philippines, Inc.  313,910  860,605 
Universal Robina Corp.  335,280  1,249,595 
Vista Land & Lifescapes, Inc.  5,662,600  788,598 
 
Poland 2.0%    51,347,442 
ABC Data SA  23,575  29,379 
Action SA  5,661  74,533 
Agora SA (I)(L)  59,188  149,606 
Alchemia SA (I)  31,570  49,699 
Alior Bank SA (I)  2,237  53,270 
Amica Wronki SA  1,050  32,768 
AmRest Holdings SE (I)  4,670  116,035 
Apator SA  5,905  65,212 
Asseco Poland SA  121,418  1,603,841 
ATM SA  2,780  10,088 
Bank Handlowy w Warszawie SA  28,970  1,033,894 
Bank Millennium SA  746,905  1,873,072 
Bank Pekao SA  57,932  3,267,030 
Bank Zachodni WBK SA  3,981  461,726 
Bioton SA (I)  63,938  96,375 
Boryszew SA (I)  152,807  296,053 
Budimex SA  14,056  535,651 
CCC SA  11,792  438,761 
CD Projekt SA (I)(L)  113,759  552,084 
Ciech SA  59,120  667,538 
ComArch SA  2,909  71,552 
Cyfrowy Polsat SA  80,981  647,707 
Eko Export SA  2,160  19,767 
Emperia Holding SA  9,026  151,182 
Enea SA  83,195  390,075 
Eurocash SA (L)  59,439  640,217 
Fabryki Mebli Forte SA  22,635  332,914 
Famur SA  29,897  33,294 
Firma Oponiarska Debica SA  7,602  229,976 
Getin Holding SA (I)(L)  277,927  232,191 

 

28 

 


Emerging Markets Fund

Getin Noble Bank SA (I)  780,891  634,992 
Grupa Azoty SA  19,269  451,309 
Grupa Kety SA  19,266  1,460,575 
Grupa Lotos SA (I)  95,939  906,209 
Hawe SA (I)(L)  95,254  83,691 
Impexmetal SA (I)  97,051  78,332 
ING Bank Slaski SA  22,258  945,127 
Integer.pl SA (I)  362  24,510 
Inter Cars SA  1,070  63,393 
Jastrzebska Spolka Weglowa SA (I)(L)  22,070  231,015 
KGHM Polska Miedz SA  96,503  3,977,339 
Kopex SA  55,318  186,024 
Kruk SA (I)  1,684  50,608 
LC Corp. SA (I)  368,248  196,094 
LPP SA  386  1,026,551 
Lubelski Wegiel Bogdanka SA (L)  35,336  1,288,274 
mBank (L)  9,398  1,364,575 
MCI Management SA (I)  26,839  79,125 
Midas SA (I)  130,454  21,135 
Netia SA  393,934  675,670 
Neuca SA  1,696  106,662 
Orange Polska SA  487,811  1,637,684 
Orbis SA  55,058  705,596 
Pelion SA  9,437  216,388 
Pfleiderer Grajewo SA (I)  6,153  53,080 
PGE SA  509,374  3,469,184 
Polimex-Mostostal SA (I)(L)  505,319  12,659 
Polnord SA (I)  21,527  50,654 
Polski Koncern Miesny Duda SA (I)  4,865  11,063 
Polski Koncern Naftowy Orlen SA  347,694  4,291,665 
Polskie Gornictwo Naftowe i Gazownictwo SA  776,556  1,186,018 
Powszechna Kasa Oszczednosci Bank Polski SA  430,696  5,150,041 
Powszechny Zaklad Ubezpieczen SA  23,363  3,425,738 
PZ Cormay SA (I)  23,416  39,149 
Rafako SA (I)  15,011  18,745 
Sygnity SA (I)  20,419  106,333 
Synthos SA (L)  470,372  676,983 
Tauron Polska Energia SA  695,459  1,086,207 
Trakcja SA (I)(L)  222,190  69,462 
TVN SA (I)  177,353  777,591 
Warsaw Stock Exchange  25,983  305,293 
Wawel SA  80  24,720 
Zespol Elektrowni Patnow Adamow Konin SA  2,811  26,489 
 
Russia 1.7%    43,323,290 
Gazprom OAO, ADR  1,677,622  11,997,131 
Lukoil OAO, ADR  114,200  6,358,692 
Magnitogorsk Iron & Steel Works, GDR (I)  108,364  277,089 
Mail.ru Group, Ltd., GDR  11,226  301,777 
Mechel, ADR (I)(L)  150,712  257,718 
MegaFon OAO, GDR  8,115  229,674 
MMC Norilsk Nickel OJSC, ADR (I)  90,200  1,767,841 
Novolipetsk Steel OJSC, GDR  56,267  804,618 
Novorossiysk Commercial Sea Port PJSC, GDR  4,024  16,688 
Phosagro OAO, GDR  26,586  300,415 
PIK Group, GDR (I)(L)  101,350  267,669 
Rosneft OAO, GDR  421,261  2,572,004 
Rostelecom OJSC, ADR  23,354  373,069 
RusHydro JSC, ADR  397,792  734,372 
Sberbank of Russia, ADR  660,665  5,395,167 
Severstal OAO, GDR  116,065  1,122,093 

 

29 

 


Emerging Markets Fund

Tatneft OAO, ADR  137,475  5,106,218 
TMK OAO, GDR  19,336  189,471 
Uralkali OJSC, GDR  121,432  2,265,737 
VTB Bank OJSC, GDR (I)(L)  966,334  2,013,612 
X5 Retail Group NV, GDR (I)  51,315  972,235 
 
South Africa 8.1%    212,522,418 
Adcock Ingram Holdings, Ltd. (L)  172,266  833,275 
Adcorp Holdings, Ltd.  83,592  260,422 
Advtech, Ltd.  61,218  45,984 
Aeci, Ltd.  182,131  2,099,879 
African Bank Investments, Ltd.  878,658  25,537 
African Oxygen, Ltd.  26,369  44,529 
African Rainbow Minerals, Ltd.  79,703  1,360,694 
Allied Electronics Corp., Ltd.  87,102  211,850 
Anglo American Platinum, Ltd. (I)  32,665  1,362,040 
AngloGold Ashanti, Ltd. (I)  39,933  679,538 
AngloGold Ashanti, Ltd., ADR (I)(L)  338,968  5,823,470 
ArcelorMittal South Africa, Ltd. (I)  240,520  887,819 
Aspen Pharmacare Holdings, Ltd.  89,379  2,565,889 
Assore, Ltd.  17,794  525,127 
Astral Foods, Ltd.  48,731  653,501 
Aveng, Ltd. (I)(L)  614,766  1,315,779 
AVI, Ltd.  336,803  1,927,688 
Barclays Africa Group, Ltd. (L)  130,595  2,039,798 
Barloworld, Ltd.  348,438  3,311,257 
Basil Read Holdings, Ltd.  162,259  90,528 
Bell Equipment, Ltd.  69,257  94,481 
Bidvest Group, Ltd.  197,447  5,212,105 
Blue Label Telecoms, Ltd.  174,483  145,355 
Business Connexion Group, Ltd.  125,086  76,139 
Capitec Bank Holdings, Ltd. (L)  24,774  492,895 
Cashbuild, Ltd.  18,751  233,199 
Caxton & CTP Publishers & Printers, Ltd.  249,440  357,427 
City Lodge Hotels, Ltd.  28,557  331,643 
Clicks Group, Ltd.  257,095  1,671,021 
Clover Industries, Ltd.  4,600  7,924 
Consolidated Infrastructure Group, Ltd. (I)  12,412  36,404 
Coronation Fund Managers, Ltd. (L)  215,758  2,025,707 
DataTec, Ltd. (I)  306,784  1,542,467 
Discovery, Ltd.  252,300  2,326,708 
Distell Group, Ltd.  10,579  135,402 
Distribution and Warehousing Network, Ltd.  10,512  9,484 
DRDGOLD, Ltd.  375,211  101,381 
EOH Holdings, Ltd.  99,559  878,013 
Eqstra Holdings, Ltd.  292,995  174,430 
Exxaro Resources, Ltd. (L)  100,138  1,421,128 
Famous Brands, Ltd.  45,352  420,050 
FirstRand, Ltd.  1,794,737  7,279,762 
Gold Fields, Ltd., ADR (L)  750,118  3,630,571 
Grand Parade Investments, Ltd.  55,326  32,922 
Grindrod, Ltd.  628,659  1,458,907 
Group Five, Ltd.  169,328  645,822 
Growthpoint Properties, Ltd.  239,399  565,804 
Harmony Gold Mining Company, Ltd., ADR (I)  365,804  1,112,044 
Hudaco Industries, Ltd.  19,872  174,693 
Hulamin, Ltd. (I)  227,519  162,511 
Iliad Africa, Ltd.  234,348  161,195 
Illovo Sugar, Ltd. (I)  149,926  408,805 
Impala Platinum Holdings, Ltd.  280,211  2,536,371 
Imperial Holdings, Ltd.  219,928  3,932,729 

 

30 

 


Emerging Markets Fund

Investec, Ltd.  169,681  1,531,492 
JD Group, Ltd.  236,599  495,762 
JSE, Ltd.  97,796  927,979 
KAP Industrial Holdings, Ltd. (I)  90,584  36,117 
Kumba Iron Ore, Ltd.  40,159  1,203,853 
Lewis Group, Ltd. (L)  136,085  765,836 
Liberty Holdings, Ltd. (L)  129,384  1,584,540 
Life Healthcare Group Holdings, Ltd.  766,361  3,217,556 
Massmart Holdings, Ltd. (L)  70,410  864,405 
Mediclinic International, Ltd.  229,290  1,988,310 
Merafe Resources, Ltd. (I)  2,194,710  274,005 
Metair Investments, Ltd.  156,701  514,394 
MMI Holdings, Ltd.  982,559  2,534,141 
Mondi, Ltd.  117,206  2,004,436 
Mpact, Ltd.  296,453  979,572 
Mr. Price Group, Ltd.  202,744  3,895,936 
MTN Group, Ltd. (L)  956,727  21,641,563 
Murray & Roberts Holdings, Ltd. (I)  468,406  1,160,259 
Mustek, Ltd.  29,272  20,870 
Nampak, Ltd.  556,163  2,225,262 
Naspers, Ltd.  53,318  6,800,818 
Nedbank Group, Ltd. (L)  140,953  3,033,484 
Netcare, Ltd.  819,995  2,483,492 
Northam Platinum, Ltd. (I)  234,035  937,810 
Nu-World Holdings, Ltd.  9,429  17,741 
Oceana Group, Ltd.  13,593  99,881 
Omnia Holdings, Ltd.  80,853  1,714,850 
Peregrine Holdings, Ltd.  219,538  470,887 
Petmin, Ltd.  283,328  56,042 
Pick n Pay Stores, Ltd.  207,930  1,103,513 
Pinnacle Holdings, Ltd.  135,354  172,091 
Pioneer Foods, Ltd.  64,921  720,301 
PPC, Ltd.  500,645  1,560,749 
PSG Group, Ltd. (L)  143,491  1,257,108 
Raubex Group, Ltd.  172,178  390,546 
RCL Foods, Ltd. (I)  10,269  15,329 
Reunert, Ltd.  186,446  1,155,444 
Sanlam, Ltd.  1,275,265  7,901,158 
Santam, Ltd.  18,401  379,855 
Sappi, Ltd. (I)  523,706  2,164,846 
Sappi, Ltd., ADR (I)  384,521  1,553,465 
Sasol, Ltd.  295,861  17,194,781 
Sasol, Ltd., ADR  87,011  5,097,104 
Shoprite Holdings, Ltd.  191,737  2,657,049 
Sibanye Gold, Ltd.  12,292  28,804 
Sibanye Gold, Ltd., ADR (L)  187,529  1,760,897 
Spur Corp., Ltd.  38,159  105,323 
Standard Bank Group, Ltd.  665,971  8,627,641 
Stefanutti Stocks Holdings, Ltd. (I)  55,487  46,850 
Steinhoff International Holdings, Ltd. (L)  1,189,033  5,862,565 
Sun International, Ltd.  96,977  1,061,709 
Super Group, Ltd. (I)  525,989  1,545,499 
Telkom SA, Ltd. (I)  433,076  2,320,916 
The Foschini Group, Ltd.  129,624  1,400,791 
The SPAR Group, Ltd.  145,933  1,782,356 
Tiger Brands, Ltd.  90,966  2,625,326 
Tiger Wheels, Ltd. (I)  14,267  0 
Times Media Group, Ltd.  95,372  179,205 
Tongaat Hulett, Ltd.  77,546  1,243,162 
Trencor, Ltd.  208,864  1,429,702 
Truworths International, Ltd.  342,378  2,391,530 

 

31 

 


Emerging Markets Fund

Tsogo Sun Holdings, Ltd.  125,922  313,575 
Value Group, Ltd.  263,348  105,641 
Vodacom Group, Ltd. (L)  165,438  1,995,247 
Wilson Bayly Holmes-Ovcon, Ltd.  58,620  762,269 
Woolworths Holdings, Ltd.  539,228  4,022,138 
Zeder Investments, Ltd.  451,653  246,537 
 
South Korea 15.0%    392,260,281 
Able C&C Company, Ltd. (L)  2,430  68,083 
Actoz Soft Company, Ltd. (I)(L)  4,148  120,337 
Advanced Process Systems Corp. (I)  14,541  105,205 
Aekyung Petrochemical Company, Ltd.  1,668  121,436 
AfreecaTV Company, Ltd. (L)  5,274  148,398 
Agabang&Company (L)  20,301  110,185 
AJ Rent A Car Company, Ltd. (I)  9,408  149,917 
AK Holdings, Inc. (L)  3,300  197,031 
Amorepacific Corp.  807  1,679,328 
AMOREPACIFIC Group  1,483  1,547,379 
Amotech Company, Ltd. (I)  1,152  10,646 
Anapass, Inc.  7,670  80,603 
Asia Cement Company, Ltd. (L)  2,357  269,767 
ASIA Holdings Company, Ltd.  1,032  141,550 
Asia Paper Manufacturing Company, Ltd.  2,000  48,846 
Asiana Airlines, Inc. (I)  84,180  400,751 
AtlasBX Company, Ltd.  4,784  218,980 
AUK Corp. (I)  34,850  68,079 
Autech Corp. (L)  9,157  61,357 
Avaco Company, Ltd. (I)(L)  3,479  13,564 
Baiksan Company, Ltd. (L)  10,760  61,472 
BH Company, Ltd. (I)(L)  10,353  67,853 
BHI Company, Ltd. (L)  1,880  24,123 
Binggrae Company, Ltd.  3,758  336,980 
Bioland, Ltd.  4,037  82,871 
Biospace Company, Ltd.  6,971  152,510 
Boryung Medience Company, Ltd. (I)(L)  5,135  41,283 
Boryung Pharmaceutical Company, Ltd.  3,420  127,754 
Bosung Power Technology Company, Ltd. (I)(L)  11,061  18,062 
BS Financial Group, Inc.  190,776  3,162,244 
Bukwang Pharmaceutical Company, Ltd.  14,950  254,496 
Byucksan Corp.  12,229  64,565 
CammSys Corp. (L)  17,736  37,639 
Capro Corp. (L)  19,020  72,584 
Celltrion Pharm, Inc. (I)(L)  11,319  116,195 
Celltrion, Inc. (L)(I)  16,817  691,347 
Chabio Company, Ltd. (I)(L)  15,453  195,401 
Chadiostech Company, Ltd. (I)  5,824  16,571 
Charm Engineering Company, Ltd. (I)  19,130  29,830 
Cheil Worldwide, Inc. (I)  48,550  1,099,146 
Chemtronics Company, Ltd. (L)  7,016  65,165 
Chin Hung International, Inc. (I)(L)  22,036  34,250 
Chong Kun Dang Pharm Corp.  2,433  116,416 
Chong Kun Dang Pharmaceutical Corp.  6,290  435,706 
Chosun Refractories Company, Ltd.  1,489  179,897 
CJ CGV Company, Ltd. (L)  7,965  405,525 
CJ CheilJedang Corp.  6,902  2,573,821 
CJ Corp.  12,535  2,213,696 
CJ E&M Corp. (I)  15,428  721,259 
CJ Korea Express Company, Ltd. (I)  5,061  776,514 
CJ O Shopping Company, Ltd.  1,544  548,194 
CJ Seafood Corp. (I)  15,980  42,718 
Cosmax BTI, Inc.  2,399  112,683 

 

32 

 


Emerging Markets Fund

Cosmax, Inc. (I)  4,700  491,707 
CosmoAM&T Company, Ltd. (I)  6,266  27,208 
Cosmochemical Company, Ltd. (I)(L)  3,900  23,789 
Coway Company, Ltd.  26,831  2,251,796 
Credu Corp.  751  56,240 
Crown Confectionery Company, Ltd.  442  93,719 
D.ID Corp. (L)  9,191  20,856 
Dae Dong Industrial Company, Ltd.  16,750  185,025 
Dae Han Flour Mills Company, Ltd.  1,190  251,818 
Dae Won Kang Up Company, Ltd.  30,329  207,051 
Dae-Il Corp. (L)  20,210  130,220 
Daea TI Company, Ltd. (I)(L)  63,278  100,769 
Daechang Company, Ltd. (L)  105,580  93,757 
Daeduck Electronics Company  45,240  376,722 
Daeduck GDS Company, Ltd.  18,850  249,282 
Daegu Department Store  7,610  129,129 
Daehan Steel Company, Ltd. (L)  20,010  123,148 
Daehwa Pharmaceutical Company, Ltd.  5,629  37,385 
Daekyo Company, Ltd.  33,460  226,088 
Daekyung Machinery & Engineering Company, Ltd. (I)  29,000  52,069 
Daelim Industrial Company, Ltd.  28,009  2,416,388 
Daesang Corp.  14,640  798,870 
Daesang Holdings Company, Ltd.  19,170  410,365 
Daesung Holdings Company, Ltd.  6,326  76,464 
Daesung Industrial Company, Ltd. (I)  1,455  6,542 
Daewon Pharmaceutical Company, Ltd.  9,464  104,166 
Daewon San Up Company, Ltd.  1,510  19,589 
Daewoo Engineering & Construction Company, Ltd. (I)(L)  102,190  859,174 
Daewoo International Corp. (L)  24,710  908,025 
Daewoo Securities Company, Ltd. (I)  146,352  1,704,689 
Daewoo Shipbuilding & Marine Engineering Company, Ltd.  64,655  1,586,472 
Daewoong Pharmaceutical Company, Ltd.  2,863  186,181 
Daishin Securities Company, Ltd.  45,940  548,546 
Daou Data Corp.  5,479  30,381 
Daou Technology, Inc.  32,570  398,795 
Dasan Networks, Inc. (I)(L)  10,023  79,653 
Daum Communications Corp.  6,695  1,091,653 
Dawonsys Company, Ltd.  2,412  30,230 
Dayou Automotive Seat Technology Company, Ltd. (L)  31,947  50,267 
DCM Corp.  5,310  74,644 
Deutsch Motors, Inc. (I)(L)  4,973  18,913 
DGB Financial Group, Inc.  164,870  2,879,573 
Digital Chosun Company, Ltd.  10,179  49,760 
Digital Power Communications Company, Ltd.  14,000  48,209 
DIO Corp. (I)(L)  8,354  65,630 
Dong Ah Tire & Rubber Company, Ltd.  11,060  230,164 
Dong Yang Gang Chul Company, Ltd. (I)  11,100  29,577 
Dong-A Pharmaceutical Company, Ltd.  1,196  142,761 
Dong-Ah Geological Engineering Company, Ltd.  2,970  26,950 
Dong-Il Corp.  2,233  182,924 
Dongaone Company, Ltd.  9,970  31,374 
Dongbang Transport Logistics Company, Ltd.  9,310  19,846 
Dongbu CNI Company, Ltd.  770  2,307 
Dongbu Corp. (I)  16,730  25,260 
Dongbu HiTek Company, Ltd. (I)(L)  31,340  182,285 
Dongbu Insurance Company, Ltd.  36,958  2,231,472 
Dongbu Securities Company, Ltd.  37,619  170,993 
Dongbu Steel Company, Ltd. (I)(L)  41,073  95,723 
Dongil Industries Company, Ltd.  1,652  100,240 
Dongjin Semichem Company, Ltd. (L)  20,619  75,447 
Dongkook Industrial Company, Ltd. (I)  5,390  19,309 

 

33 

 


Emerging Markets Fund

Dongkook Pharmaceutical Company, Ltd.  1,970  59,567 
Dongkuk Steel Mill Company, Ltd. (L)  63,906  462,392 
Dongkuk Structures & Construction Company, Ltd. (L)  17,849  77,070 
Dongsung Chemical Company, Ltd. (L)  1,620  31,342 
Dongsung Holdings Company, Ltd.  13,020  94,862 
Dongsung Pharmaceutical Company, Ltd. (L)  8,820  64,422 
Dongwha Pharmaceutical Company, Ltd.  28,590  145,817 
Dongwon F&B Company, Ltd.  1,238  327,234 
Dongwon Industries Company, Ltd.  1,120  430,822 
Dongyang E&P, Inc.  815  10,615 
Dongyang Mechatronics Corp.  18,470  165,129 
Doosan Corp.  6,710  797,743 
Doosan Engineering & Construction Company, Ltd. (I)(L)  3,741  45,036 
Doosan Heavy Industries and Construction Company, Ltd.  36,543  1,040,714 
Doosan Infracore Company, Ltd. (I)  81,890  957,939 
Dragonfly GF Company, Ltd. (L)  4,732  43,201 
DRB Holding Company, Ltd.  8,273  115,481 
Duksan Hi-Metal Company, Ltd. (I)(L)  7,115  112,360 
DuzonBlzon Company, Ltd.  16,734  137,887 
e-LITECOM Company, Ltd.  6,244  104,134 
E-Mart Company, Ltd.  13,549  3,261,522 
e-Starco Company, Ltd. (I)(L)  20,813  59,415 
E1 Corp.  2,450  168,011 
Easy Bio, Inc. (L)  23,788  186,725 
Ecopro Company, Ltd. (I)  6,273  48,310 
ELK Corp. (I)(L)  7,328  29,260 
ENF Technology Company, Ltd.  2,939  25,900 
Eo Technics Company, Ltd. (L)  5,160  415,996 
Estechpharma Company, Ltd.  3,845  26,874 
Eugene Investment & Securities Company, Ltd. (I)(L)  69,792  149,860 
Eugene Technology Company, Ltd.  9,577  154,978 
Fila Korea, Ltd.  5,725  570,274 
Finetex EnE, Inc. (I)  14,450  28,227 
Firstec Company, Ltd. (L)  25,320  48,217 
Flexcom, Inc. (I)(L)  6,630  44,773 
Fursys, Inc.  2,060  70,615 
Gamevil, Inc. (I)  2,102  260,402 
Gaon Cable Company, Ltd.  2,496  66,216 
Genic Company, Ltd. (I)(L)  2,322  39,627 
GIIR, Inc.  3,590  28,685 
Global & Yuasa Battery Company, Ltd.  6,600  305,359 
Global Display Company, Ltd.  3,599  26,017 
GNCO Company, Ltd. (I)(L)  22,159  26,907 
Golfzon Company, Ltd.  11,515  272,172 
Grand Korea Leisure Company, Ltd.  16,893  753,722 
Green Cross Corp.  2,817  330,768 
Green Cross Holdings Corp.  16,810  275,303 
GS Engineering & Construction Corp. (I)  44,045  1,602,260 
GS Global Corp.  12,780  121,827 
GS Holdings Corp.  52,237  2,218,531 
GS Home Shopping, Inc.  992  276,971 
GS Retail Company, Ltd.  18,793  447,002 
Gwangju Shinsegae Company, Ltd.  916  254,786 
Halla Engineering & Construction Corp. (L)  18,491  130,847 
Halla Visteon Climate Control Corp. (L)  20,533  1,091,862 
Han Kuk Carbon Company, Ltd.  28,000  176,239 
Hana Financial Group, Inc.  129,649  5,445,015 
Hana Micron, Inc. (I)(L)  11,049  91,240 
Hana Tour Service, Inc.  4,988  349,935 
Hancom, Inc.  3,470  86,122 
Handok, Inc.  171  4,016 

 

34 

 


Emerging Markets Fund

Handsome Company, Ltd.  13,708  419,248 
Hanil Cement Company, Ltd.  3,724  519,778 
Hanil E-Hwa Company, Ltd. (I)  12,178  281,045 
Hanil E-Wha Company, Ltd.  5,581  108,579 
Hanjin Heavy Industries & Construction Company, Ltd. (I)(L)  78,985  484,127 
Hanjin Heavy Industries & Construction Holdings Company, Ltd. (L)  17,990  186,395 
Hanjin Kal Corp. (I)  9,646  247,599 
Hanjin P&C Company, Ltd. (I)(L)  14,656  25,839 
Hanjin Shipping Company, Ltd. (I)(L)  36,200  221,839 
Hanjin Transportation Company, Ltd.  12,430  461,233 
Hankook Shell Oil Company, Ltd.  516  284,508 
Hankook Tire Company, Ltd.  33,390  1,733,108 
Hankuk Glass Industries, Inc. (I)  1,820  47,575 
Hankuk Paper Manufacturing Company, Ltd.  5,180  161,885 
Hanmi Pharm Company, Ltd. (I)(L)  3,815  349,682 
Hanmi Science Company, Ltd. (I)  14,242  195,304 
Hanmi Semiconductor Company, Ltd.  4,310  64,440 
Hansae Company, Ltd.  10,163  310,377 
Hansae Yes24 Holdings Company, Ltd.  10,079  99,273 
Hanshin Construction Company, Ltd.  1,870  28,149 
Hansol Chemical Company, Ltd. (L)  7,900  249,124 
Hansol HomeDeco Company, Ltd. (I)(L)  52,659  99,742 
Hansol Logistics Company, Ltd.  62,840  148,517 
Hansol Paper Company, Ltd.  41,000  471,240 
Hansol Technics Company, Ltd. (I)(L)  8,272  127,393 
Hanssem Company, Ltd.  6,025  704,243 
Hanwha Chemical Corp. (L)  87,790  1,420,666 
Hanwha Corp.  36,602  1,092,515 
Hanwha General Insurance Company, Ltd. (I)  7,399  44,458 
Hanwha Investment & Securities Company, Ltd. (I)  68,711  308,316 
Hanwha Life Insurance Company, Ltd.  113,900  781,815 
Hanwha Timeworld Company, Ltd.  2,310  144,475 
Hanyang Eng Company, Ltd.  6,728  47,335 
Hanyang Securities Company, Ltd.  12,290  89,853 
Harim Holdings Company, Ltd. (I)  14,101  94,508 
Heung-A Shipping Company, Ltd. (L)  59,339  105,156 
Heungkuk Fire & Marine Insurance Company, Ltd. (I)  3,370  13,829 
High Tech Pharm Company, Ltd.  3,915  57,191 
Hite Jinro Company, Ltd. (L)  23,390  533,248 
Hitejinro Holdings Company, Ltd.  12,240  163,640 
HMC Investment Securities Company, Ltd.  21,160  268,405 
Hotel Shilla Company, Ltd.  17,510  2,055,575 
HS R&A Company, Ltd. (L)  5,860  215,941 
Huchems Fine Chemical Corp.  14,200  330,034 
Humax Company, Ltd.  7,700  83,605 
Huons Company, Ltd. (L)  2,375  114,651 
Husteel Company, Ltd.  6,520  116,154 
Huvis Corp.  7,932  91,969 
Huvitz Company, Ltd. (L)  3,134  44,570 
Hwa Shin Company, Ltd.  14,742  164,378 
Hwacheon Machine Tool Company, Ltd.  730  50,414 
Hy-Lok Corp.  6,115  207,558 
Hyosung Corp.  26,891  2,080,153 
Hyundai BNG Steel Company, Ltd. (I)  8,640  196,511 
Hyundai Corp.  9,340  346,537 
Hyundai Department Store Company, Ltd.  11,251  1,759,452 
Hyundai Development Company  69,255  2,816,439 
Hyundai Elevator Company, Ltd. (I)  7,613  280,550 
Hyundai Engineering & Construction Company, Ltd.  37,895  2,390,086 
Hyundai Engineering Plastics Company, Ltd. (L)  14,370  103,788 
Hyundai Glovis Company, Ltd.  4,561  1,361,228 

 

35 

 


Emerging Markets Fund

Hyundai Greenfood Company, Ltd.  28,150  554,052 
Hyundai Heavy Industries Company, Ltd.  11,976  1,702,641 
Hyundai Home Shopping Network Corp.  3,804  611,688 
Hyundai Hy Communications & Networks Company, Ltd.  23,276  108,278 
Hyundai Hysco Company, Ltd.  2,634  214,879 
Hyundai Marine & Fire Insurance Company, Ltd.  44,607  1,370,586 
Hyundai Mipo Dockyard (L)  5,635  717,749 
Hyundai Mobis  19,412  5,631,232 
Hyundai Motor Company  56,440  12,974,393 
Hyundai Securities Company, Ltd.  135,477  1,046,038 
Hyundai Steel Company  27,556  2,058,884 
Hyundai Wia Corp.  7,027  1,546,344 
Hyunjin Materials Company, Ltd.  1,859  8,872 
HyVision System, Inc.  5,340  40,592 
ICD Company, Ltd. (I)  5,517  38,278 
Il Dong Pharmaceutical Company, Ltd. (L)  15,060  211,779 
Iljin Electric Company, Ltd.  23,940  183,061 
Iljin Materials Company, Ltd. (I)(L)  3,915  43,728 
Ilshin Spinning Company, Ltd. (L)  1,370  210,740 
Ilsung Pharmaceutical Company, Ltd.  1,664  144,425 
IM Company, Ltd.  6,464  25,100 
iMarketKorea, Inc. (L)  8,940  288,919 
Industrial Bank of Korea  65,670  1,140,716 
Infopia Company, Ltd. (I)(L)  5,359  72,220 
Infraware, Inc. (I)(L)  11,671  83,505 
InkTec Company, Ltd. (I)(L)  3,756  54,868 
Innochips Technology, Inc.  4,000  58,032 
InnoWireless, Inc.  2,748  31,178 
Innox Corp. (I)  7,796  130,415 
Intelligent Digital Integrated Securities Company, Ltd.  971  15,327 
Interflex Company, Ltd. (I)(L)  4,480  61,911 
Interojo Company, Ltd.  2,789  55,296 
Interpark Corp.  23,554  267,373 
INTOPS Company, Ltd.  4,143  69,502 
Inzi Controls Company, Ltd.  9,850  55,282 
IS Dongseo Company, Ltd. (I)  9,585  354,106 
ISU Chemical Company, Ltd. (L)  13,580  168,232 
IsuPetasys Company, Ltd. (L)  32,560  171,289 
Jahwa Electronics Company, Ltd.  10,952  148,619 
JB Financial Group Company, Ltd.  99,325  727,062 
Jcontentree Corp. (I)  18,149  63,229 
Jeil Pharmaceutical Company  10,190  296,616 
Jeil Savings Bank (I)  1,850  55 
Jenax, Inc. (I)  2,720  25,342 
Jinsung T.E.C. (L)  7,934  44,171 
Joymax Company, Ltd. (I)(L)  2,441  65,666 
Jusung Engineering Company, Ltd. (I)  9,704  37,642 
JVM Company, Ltd. (I)  2,141  120,617 
JW Holdings Company, Ltd.  17,650  44,238 
JW Pharmaceutical Corp.  14,018  216,532 
Kangwon Land, Inc.  31,400  1,117,293 
KB Capital Company, Ltd.  12,823  285,270 
KB Financial Group, Inc., ADR (L)  170,990  6,957,583 
KC Cottrell Company, Ltd.  4,309  27,338 
KC Green Holdings Company, Ltd. (L)  2,730  22,531 
KC Tech Company, Ltd.  20,266  128,612 
KCC Corp.  2,643  1,781,106 
KCP Company, Ltd. (L)  8,921  101,739 
Keangnam Enterprises, Ltd. (I)(L)  16,288  71,346 
KEC Corp. (I)  4,795  5,533 
KEPCO Engineering & Construction Company, Inc. (L)  4,570  270,577 

 

36 

 


Emerging Markets Fund

KEPCO Plant Service & Engineering Company, Ltd.  9,026  696,237 
Keyang Electric Machinery Company, Ltd. (L)  34,010  169,150 
KG Chemical Corp.  8,530  117,802 
Kginicis Company, Ltd. (L)  12,757  142,904 
KGMobilians Company, Ltd. (L)  6,784  72,661 
KH Vatec Company, Ltd. (L)  10,606  249,683 
Kia Motors Corp.  124,957  7,545,881 
KISCO Corp.  6,646  202,799 
KISCO Holdings Company, Ltd.  1,771  89,500 
Kishin Corp.  12,176  92,014 
KISWIRE, Ltd.  5,362  276,234 
KIWOOM Securities Company, Ltd.  8,385  432,775 
KMH Company, Ltd. (I)  6,513  59,462 
KMW Company, Ltd. (I)(L)  7,294  104,052 
KNB Financial Group Company, Ltd. (I)  12,987  174,295 
Koentec Company, Ltd. (L)  42,375  103,121 
Koh Young Technology, Inc.  7,932  216,810 
Kolao Holdings (L)  5,208  97,944 
Kolon Corp.  7,040  191,532 
Kolon Global Corp. (I)  6,752  54,813 
Kolon Industries, Inc.  13,157  780,595 
Kolon Life Science, Inc. (L)  1,865  120,355 
KONA I Company, Ltd. (L)  5,953  210,015 
Kook Je Electric Korea Company, Ltd.  2,701  58,489 
Korea Aerospace Industries, Ltd.  12,766  452,882 
Korea Cast Iron Pipe Industries Company, Ltd.  6,600  38,488 
Korea Circuit Company, Ltd. (L)  13,150  117,703 
Korea District Heating Corp.  2,085  133,961 
Korea Electric Power Corp.  56,480  2,362,474 
Korea Electric Power Corp., ADR (L)  49,816  1,040,158 
Korea Electric Terminal Company, Ltd.  5,890  271,564 
Korea Electronic Power Industrial Development Company, Ltd.  3,789  20,746 
Korea Flange Company, Ltd.  5,690  118,738 
Korea Gas Corp. (I)  15,899  885,050 
Korea Info & Comm (I)  10,114  67,966 
Korea Investment Holdings Company, Ltd.  48,107  2,416,525 
Korea Kolmar Company, Ltd.  8,815  468,909 
Korea Kolmar Holdings Company, Ltd. (L)  5,094  166,816 
Korea United Pharm, Inc.  4,151  43,847 
Korea Zinc Company, Ltd.  4,165  1,728,004 
Korean Air Lines Company, Ltd. (I)  19,963  718,285 
Korean Petrochemical Industrial Company, Ltd.  2,717  193,256 
Korean Reinsurance Company, Ltd.  66,077  769,230 
Kortek Corp.  7,186  93,259 
KPF  5,296  23,592 
KPX Chemical Company, Ltd.  2,439  144,373 
KSCB Company, Ltd. (I)  1,889  6,014 
KT Corp.  41,949  1,449,524 
KT Hitel Company, Ltd. (I)  1,181  8,401 
KT Skylife Company, Ltd.  15,845  352,505 
KT&G Corp.  36,527  3,421,415 
KTB Investment & Securities Company, Ltd. (I)  50,240  127,484 
Kukdo Chemical Company, Ltd.  3,388  167,539 
Kumho Electric Company, Ltd.  5,450  104,323 
Kumho Investment Bank (I)(L)  230,729  104,727 
Kumho Petrochemical Company, Ltd.  7,468  599,309 
Kumho Tire Company, Inc. (I)  53,048  541,810 
Kunsul Chemical Industrial Company, Ltd.  3,660  161,244 
Kwang Dong Pharmaceutical Company, Ltd.  41,850  417,040 
Kwang Myung Electric Engineering Company, Ltd. (I)  35,220  85,147 
Kwangju Bank (I)  8,498  95,181 

 

37 

 


Emerging Markets Fund

Kyeryong Construction Industrial Company, Ltd. (I)  4,430  59,482 
Kyobo Securities Company  22,328  284,220 
Kyung Dong Navien Company, Ltd. (L)  4,350  133,011 
Kyung-In Synthetic Corp. (L)  20,270  149,133 
Kyungbang, Ltd.  1,250  220,795 
Kyungchang Industrial Company, Ltd.  9,658  130,598 
KyungDong City Gas Company, Ltd.  1,574  192,590 
Kyungdong Pharm Company, Ltd.  2,618  56,962 
L&F Company, Ltd.  6,143  43,775 
LB Semicon, Inc. (I)(L)  25,490  46,526 
LEENO Industrial, Inc.  7,356  292,488 
LF Corp.  17,440  524,681 
LG Chem, Ltd.  17,688  4,705,329 
LG Corp.  51,302  3,589,633 
LG Display Company, Ltd. (I)  11,637  402,325 
LG Display Company, Ltd., ADR (I)(L)  370,028  6,386,683 
LG Electronics, Inc.  80,880  6,033,534 
LG Hausys, Ltd.  4,138  845,108 
LG Household & Health Care, Ltd.  3,658  1,851,850 
LG Innotek Company, Ltd. (I)  8,868  1,177,425 
LG International Corp.  27,429  755,189 
LG Life Sciences, Ltd. (I)(L)  7,060  235,127 
LG Uplus Corp.  190,281  2,056,226 
LIG Insurance Company, Ltd.  37,232  1,110,835 
Livart Furniture Company, Ltd.  4,180  172,611 
LMS Company, Ltd. (L)  4,340  79,662 
Lock & Lock Company, Ltd. (L)  12,480  148,365 
Lotte Chemical Corp.  11,475  1,852,178 
Lotte Chilsung Beverage Company, Ltd.  748  1,521,620 
Lotte Confectionery Company, Ltd.  924  1,977,269 
LOTTE Himart Company, Ltd. (L)  5,289  391,409 
Lotte Non-Life Insurance Company, Ltd. (I)(L)  16,170  51,099 
Lotte Samkang Company, Ltd.  503  385,538 
Lotte Shopping Company, Ltd.  5,797  1,898,702 
LS Corp.  15,170  1,047,679 
LS Industrial Systems Company, Ltd.  9,502  586,877 
Lumens Company, Ltd. (I)(L)  37,944  309,496 
Macquarie Korea Infrastructure Fund  223,060  1,526,775 
Macrogen, Inc. (I)  2,975  145,759 
Maeil Dairy Industry Company, Ltd.  3,530  124,342 
Mando Corp.  9,658  1,304,942 
Medy-Tox, Inc.  2,559  510,435 
MegaStudy Company, Ltd.  3,551  229,466 
Melfas, Inc.  9,992  62,628 
Meritz Financial Group, Inc. (L)  3,712  28,561 
Meritz Fire & Marine Insurance Company, Ltd.  52,828  714,160 
Meritz Securities Company, Ltd.  197,383  665,302 
Mi Chang Oil Industrial Company, Ltd.  724  54,672 
Mirae Asset Securities Company, Ltd.  11,630  556,463 
Miwon Specialty Chemical Company, Ltd.  136  38,838 
MK Electron Company, Ltd.  17,922  92,807 
MNTech Company, Ltd. (L)  14,020  62,195 
Modetour Network, Inc.  5,693  145,768 
Moorim P&P Company, Ltd.  28,480  139,149 
Moorim Paper Company, Ltd.  36,840  89,439 
Motonic Corp.  16,365  266,350 
Muhak Company, Ltd. (I)  702  23,090 
Namhae Chemical Corp.  22,270  205,297 
Namyang Dairy Products Company, Ltd.  586  478,546 
NAVER Corp.  10,011  7,601,801 
NCSoft Corp.  8,697  1,244,468 

 

38 

 


Emerging Markets Fund

Neowiz Games Corp. (I)  12,997  259,096 
NEOWIZ HOLDINGS Corp. (I)  3,728  74,345 
NEPES Corp. (L)  16,629  113,261 
Nexen Corp.  4,810  418,056 
Nexen Tire Corp.  21,640  306,464 
Nexon GT Company, Ltd. (I)  10,825  139,931 
NH Investment & Securities Company, Ltd. (L)  37,537  299,385 
NHN Entertainment Corp. (I)(L)  4,774  340,927 
NICE Holdings Company, Ltd.  8,982  127,165 
NICE Information Service Company, Ltd.  24,705  99,210 
NK Company, Ltd. (L)  21,127  89,671 
Nong Shim Holdings Company, Ltd.  2,723  312,929 
NongShim Company, Ltd.  3,604  895,782 
OCI Company, Ltd. (L)(I)  4,063  583,429 
OCI Materials Company, Ltd.  5,799  259,706 
OPTRON-TEC, Inc. (I)(L)  10,866  55,642 
Orion Corp. (L)  1,706  1,469,481 
OSANGJAIEL Company, Ltd. (I)  4,672  77,400 
Osstem Implant Compnay, Ltd. (I)  9,092  335,751 
Ottogi Corp.  993  606,300 
Pan Ocean Company, Ltd. (I)(L)  7,701  32,860 
Pan-Pacific Company, Ltd. (L)  12,491  71,466 
PaperCorea, Inc. (I)(L)  99,660  74,220 
Paradise Company, Ltd.  9,935  385,437 
Partron Company, Ltd.  36,954  345,942 
Pharmicell Company, Ltd. (I)(L)  33,697  98,173 
Poonglim Industrial Company, Ltd. (I)  276  599 
Poongsan Corp.  22,689  705,248 
Poongsan Holdings Corp.  4,780  222,980 
POSCO  9,576  3,166,130 
POSCO Chemtech Company, Ltd.  1,403  219,636 
POSCO Coated & Color Steel Company, Ltd. (I)  2,860  40,590 
Posco ICT Company, Ltd. (L)  33,737  243,110 
Posco M-Tech Company, Ltd. (L)  11,680  44,250 
POSCO, ADR (L)  34,509  2,857,345 
Power Logics Company, Ltd. (I)(L)  15,589  57,065 
PSK, Inc.  2,173  28,310 
Pulmuone Company, Ltd.  1,122  151,668 
Pyeong Hwa Automotive Company, Ltd.  10,765  234,802 
Redrover Company, Ltd. (I)(L)  5,881  38,938 
RFsemi Technologies, Inc.  2,994  23,427 
Romanson Company, Ltd.  2,746  37,129 
S&T Corp.  1,630  27,341 
S&T Dynamics Company, Ltd.  29,369  283,624 
S&T Holdings Company, Ltd.  10,110  169,063 
S&T Motiv Company, Ltd.  8,720  296,735 
S-Energy Company, Ltd. (L)  5,134  49,101 
S-MAC Company, Ltd. (L)  11,231  60,310 
S-Oil Corp.  22,187  1,025,180 
S1 Corp.  9,097  664,102 
Saeron Automotive Corp.  5,190  59,161 
Sajo Industries Company, Ltd. (I)  1,299  50,370 
Sam Young Electronics Company, Ltd.  16,140  206,182 
Sam Yung Trading Company, Ltd.  11,085  229,792 
Samchully Company, Ltd.  1,909  309,838 
Samick Musical Instruments Company, Ltd. (L)  59,990  212,366 
Samick THK Company, Ltd.  8,300  70,003 
Samjin Pharmaceutical Company, Ltd.  5,770  116,158 
Samkwang Glass  2,292  159,602 
Samlip General Foods Company, Ltd.  1,348  146,221 
Samsung Electro-Mechanics Company, Ltd.  43,082  2,334,261 

 

39 

 


Emerging Markets Fund

Samsung Electronics Company, Ltd.  53,483  65,120,413 
Samsung Electronics Company, Ltd., GDR  2,125  1,294,737 
Samsung Engineering Company, Ltd. (I)  6,378  402,228 
Samsung Fine Chemicals Company, Ltd. (L)  15,753  621,788 
Samsung Fire & Marine Insurance Company, Ltd.  13,875  3,799,197 
Samsung Heavy Industries Company, Ltd.  74,380  2,001,210 
Samsung Life Insurance Company, Ltd.  28,363  2,978,297 
Samsung SDI Company, Ltd.  25,641  3,834,932 
Samsung Securities Company, Ltd.  45,200  2,211,069 
Samsung Techwin Company, Ltd.  16,646  700,525 
Samyang Foods Company, Ltd.  2,320  61,913 
Samyang Genex Company, Ltd.  1,074  152,052 
Samyang Holdings Corp.  4,625  381,385 
Samyang Tongsang Company, Ltd.  690  51,596 
Samyoung Chemical Company, Ltd.  21,460  38,743 
Sangbo Corp. (I)(L)  6,869  62,300 
SAVEZONE I&C Corp.  16,880  123,071 
SBS Contents Hub Company, Ltd.  3,027  42,557 
SBS Media Holdings Company, Ltd.  47,640  183,806 
SBW (I)(L)  30,360  24,558 
SeAH Besteel Corp.  13,850  488,940 
SeAH Holdings Corp.  1,272  207,181 
SeAH Steel Corp.  2,658  245,027 
Sebang Company, Ltd.  13,150  275,631 
Seegene, Inc. (I)(L)  4,041  229,387 
Sejong Industrial Company, Ltd.  8,680  163,567 
Seobu T&D (I)(L)  4,423  101,236 
Seohee Construction Company, Ltd. (I)(L)  78,403  57,637 
Seoul Semiconductor Company, Ltd.  18,165  523,665 
SeowonIntech Company, Ltd.  7,357  93,306 
Sewon Cellontech Company, Ltd. (I)(L)  18,530  56,781 
Sewoonmedical Company, Ltd. (L)  13,302  93,344 
SFA Engineering Corp. (L)  5,602  243,277 
SG Corp. (I)(L)  48,000  28,689 
SH Energy Chemical Company, Ltd. (L)  84,833  73,582 
Shin Poong Pharmaceutical Company, Ltd.  21,776  90,768 
Shinhan Financial Group Company, Ltd., ADR (L)  238,879  12,352,433 
Shinhan Financial Group Company, Ltd.  5,040  261,095 
Shinil Industrial Company, Ltd. (I)  18,638  40,356 
Shinsegae Company, Ltd.  4,952  1,138,587 
Shinsegae Information & Communication Company, Ltd.  668  69,535 
Shinsegae International Company, Ltd. (L)  1,183  137,746 
Shinsung Solar Energy Company, Ltd. (I)(L)  62,690  72,105 
Shinwon Corp. (I)(L)  43,430  97,272 
Shinyoung Securities Company, Ltd.  6,720  426,918 
Signetics Corp. (I)  26,200  41,767 
Sigong Tech Company, Ltd. (L)  10,503  51,147 
Silicon Works Company, Ltd. (L)  7,788  175,626 
Silla Company, Ltd.  8,067  227,940 
Simm Tech Company, Ltd. (L)  26,297  188,948 
SIMPAC, Inc.  11,000  73,911 
Sindoh Company, Ltd.  3,916  262,701 
SJM Company, Ltd.  6,871  59,603 
SK Broadband Company, Ltd. (I)  117,961  422,665 
SK C&C Company, Ltd.  7,126  1,494,261 
SK Chemicals Company, Ltd.  12,447  831,424 
SK Communications Company, Ltd. (I)(L)  15,923  142,280 
SK Gas Company, Ltd.  4,584  511,208 
SK Holdings Company, Ltd.  23,306  3,691,606 
SK Hynix, Inc. (I)  188,306  8,441,962 
SK Innovation Company, Ltd.  23,025  2,138,294 

 

40 

 


Emerging Markets Fund

SK Networks Company, Ltd. (I)  155,810  1,511,379 
SK Securities Company, Ltd. (I)  230,570  235,566 
SK Telecom Company, Ltd.  3,258  880,403 
SKC Company, Ltd.  17,430  589,315 
SL Corp.  10,350  204,206 
SM Entertainment Company (I)(L)  9,715  398,872 
Solco Biomedical Company, Ltd. (I)  27,413  13,388 
Solid, Inc. (L)  10,752  80,635 
Songwon Industrial Company, Ltd. (L)  11,060  78,265 
Soulbrain Company, Ltd.  7,666  221,406 
Ssangyong Cement Industrial Company, Ltd. (I)  21,840  226,252 
STX Engine Company, Ltd. (I)(L)  13,540  46,872 
Suheung Capsule Company, Ltd. (L)  6,030  297,938 
Sung Kwang Bend Company, Ltd.  14,002  242,514 
Sungchang Enterprise Holdings, Ltd. (I)  2,240  52,720 
Sungshin Cement Company, Ltd. (I)  5,760  60,265 
Sungwoo Hitech Company, Ltd.  28,324  476,652 
Sunjin Company, Ltd.  4,995  190,720 
Suprema, Inc. (I)(L)  6,488  159,427 
Synopex, Inc. (I)(L)  44,976  72,568 
Tae Kyung Industrial Company, Ltd.  14,930  90,567 
Taekwang Industrial Company, Ltd.  529  679,709 
Taewoong Company, Ltd. (I)  6,173  136,494 
Taeyoung Engineering & Construction Company, Ltd.  46,820  264,714 
Tailim Packaging Industrial Company, Ltd.  24,670  55,507 
TechWing, Inc. (L)  2,522  17,893 
TES Company, Ltd.  1,563  22,600 
The Basic House Company, Ltd.  5,150  109,759 
The Willbes & Company (I)(L)  41,740  54,131 
TK Chemical Corp. (I)(L)  26,138  60,962 
Tongyang Life Insurance  30,990  348,537 
TONGYANG Securities, Inc. (L)  82,290  244,917 
Top Engineering Company, Ltd. (I)  300  1,252 
Toptec Company, Ltd.  3,318  41,086 
Toray Chemical Korea, Inc. (I)  15,596  190,765 
Tovis Company, Ltd. (L)  10,878  145,512 
TS Corp.  4,922  172,153 
Uangel Corp.  4,790  18,106 
Ubiquoss, Inc.  3,984  31,212 
Ubivelox, Inc. (I)  1,773  21,165 
UI Display Company, Ltd.  5,128  38,261 
Uju Electronics Company, Ltd.  5,317  64,280 
Unid Company, Ltd.  3,957  248,704 
Union Steel  4,420  50,127 
Unison Company, Ltd. (I)(L)  13,882  39,995 
Value Added Technologies Company, Ltd.  2,832  61,801 
Vieworks Company, Ltd. (L)  4,427  140,115 
Visang Education, Inc.  3,857  34,510 
Webzen, Inc. (I)(L)  6,102  44,542 
Wiscom Company, Ltd.  3,680  20,476 
WiSoL Company, Ltd. (I)(L)  13,233  113,129 
Wonik IPS Company, Ltd. (I)  36,791  472,141 
Woojeon & Handan Company, Ltd. (L)  7,950  27,349 
Woongjin Energy Company, Ltd. (I)(L)  41,980  94,454 
Woongjin Holdings Company, Ltd. (I)  6,630  15,797 
Woongjin Thinkbig Company, Ltd. (I)  16,780  113,404 
Wooree ETI Company, Ltd.  6,680  12,759 
Woori Finance Holdings Company, Ltd. (I)  111,995  1,520,131 
Woori Finance Holdings Company, Ltd., ADR (I)(L)  3,163  128,165 
Woori Investment & Securities Company, Ltd.  148,549  1,737,622 
WooSung Feed Company, Ltd.  5,600  19,554 

 

41 

 


Emerging Markets Fund

Y G-1 Company, Ltd. (L)  10,640  127,565 
YESCO Company, Ltd.  1,480  57,946 
YG Entertainment, Inc. (L)  6,361  305,669 
Yoosung Enterprise Company, Ltd.  10,176  70,373 
Youlchon Chemical Company, Ltd.  12,530  168,724 
Young Poong Corp.  471  645,959 
Youngone Corp.  15,714  877,378 
Youngone Holdings Company, Ltd.  4,709  378,573 
Yuhan Corp.  5,221  891,145 
YuHwa Securities Company, Ltd.  3,240  45,705 
Yungjin Pharmaceutical Company, Ltd. (I)(L)  46,320  73,350 
 
Spain 0.0%    717,057 
Cemex Latam Holdings SA (I)  72,488  717,057 
 
Taiwan 15.1%    394,357,829 
A-DATA Technology Company, Ltd.  171,242  397,680 
Ability Enterprise Company, Ltd.  129,000  83,002 
AcBel Polytech, Inc.  356,000  567,209 
Accton Technology Corp.  662,796  403,499 
Ace Pillar Company, Ltd.  44,147  34,371 
Acer, Inc. (I)  2,285,000  1,891,503 
Aces Electronic Company, Ltd.  42,000  67,003 
ACHEM Technology Corp.  244,447  157,156 
Acter Company, Ltd.  30,000  95,230 
Action Electronics Company, Ltd. (I)  439,640  95,413 
Actron Technology Corp.  46,300  176,737 
Adlink Technology, Inc.  79,001  208,628 
Advanced Ceramic X Corp.  37,000  165,160 
Advanced Connectek ,Inc. (I)  31,000  13,594 
Advanced International Multitech Company, Ltd.  108,000  97,587 
Advanced Semiconductor Engineering, Inc.  2,370,532  2,980,506 
Advanced Semiconductor Engineering, Inc., ADR (L)  246,003  1,569,499 
Advanced Wireless Semiconductor Company (I)  61,000  53,766 
Advancetek Enterprise Company, Ltd.  111,440  106,882 
Advantech Company, Ltd.  106,300  998,467 
AGV Products Corp. (I)  545,829  164,404 
Aimcore Technology Company, Ltd.  30,969  24,213 
Alcor Micro Corp.  85,000  92,600 
ALI Corp.  234,000  223,338 
Allis Electric Company, Ltd.  154,000  45,784 
Alpha Networks, Inc.  440,000  304,042 
Altek Corp.  360,702  311,378 
AMPOC Far-East Company, Ltd.  132,000  130,510 
AmTRAN Technology Company, Ltd.  1,105,775  713,885 
Anpec Electronics Corp. (I)  145,000  145,966 
Apacer Technology, Inc.  90,188  101,334 
APCB, Inc.  143,000  108,110 
Apex Biotechnology Corp.  84,060  164,253 
Apex International Company, Ltd.  51,284  80,683 
Apex Medical Corp.  49,000  82,966 
Apex Science & Engineering  238,235  108,293 
Arcadyan Technology Corp.  77,000  111,692 
Ardentec Corp.  147,450  136,785 
Arima Communication Corp. (I)  273,676  136,385 
Asia Cement Corp.  1,477,608  2,027,424 
Asia Optical Company, Inc. (I)  274,710  423,302 
Asia Plastic Recycling Holding, Ltd.  48,580  74,634 
Asia Polymer Corp.  463,600  333,881 
Asia Vital Components Company, Ltd.  140,667  113,708 
ASROCK, Inc.  34,000  113,144 
Asustek Computer, Inc.  412,528  4,316,963 

 

42 

 


Emerging Markets Fund

Aten International Company, Ltd.  74,000  213,844 
AU Optronics Corp. (I)  867,000  431,783 
AU Optronics Corp., ADR (L)  812,167  4,012,105 
Audix Corp. (I)  173,200  225,696 
Aurora Corp.  72,000  124,471 
AV Tech Corp.  28,000  63,969 
Avermedia Technologies, Inc. (I)  89,000  36,920 
Avision, Inc. (I)  277,916  93,999 
AVY Precision Technology, Inc.  7,000  16,527 
Awea Mechantronic Company, Ltd.  6,300  8,980 
Bank of Kaohsiung  657,615  205,765 
Basso Industry Corp.  103,000  129,391 
BenQ Materials Corp.  104,000  142,144 
BES Engineering Corp.  2,014,200  536,508 
Bin Chuan Enterprise Company, Ltd.  70,273  48,800 
Bionet Corp.  24,000  36,265 
Biostar Microtech International Corp.  227,000  96,846 
Boardtek Electronics Corp.  131,000  139,541 
Bright Led Electronics Corp.  100,000  47,901 
C Sun Manufacturing, Ltd.  175,729  152,242 
Cameo Communications, Inc.  350,955  93,878 
Capella Microsystems Taiwan, Inc.  20,349  92,442 
Capital Securities Corp.  2,487,371  870,348 
Career Technology MFG. Company, Ltd.  235,000  362,384 
Carnival Industrial Corp.  512,000  141,737 
Catcher Technology Company, Ltd.  385,000  3,905,270 
Cathay Chemical Works  106,000  56,355 
Cathay Financial Holdings Company, Ltd.  2,912,619  4,971,912 
Cathay Real Estate Development Company, Ltd.  954,000  537,977 
Central Reinsurance Company, Ltd.  198,825  111,034 
ChainQui Construction Development Company, Ltd.  141,000  114,166 
Chaintech Technology Corp.  36,157  37,207 
Champion Building Materials Company, Ltd.  512,852  186,152 
Chang Hwa Commercial Bank  4,176,606  2,599,733 
Chang Wah Electromaterials, Inc.  39,010  100,602 
Channel Well Technology Company, Ltd.  80,000  50,909 
Charoen Pokphand Enterprise  276,150  250,007 
Chaun-Choung Technology Corp.  73,000  252,891 
CHC Resources Corp.  48,000  115,412 
Chen Full International Company, Ltd.  49,000  64,025 
Chenbro Micom Company, Ltd.  62,000  132,161 
Cheng Loong Corp.  1,278,480  530,478 
Cheng Shin Rubber Industry Company, Ltd.  1,126,031  2,599,351 
Cheng Uei Precision Industry Company, Ltd.  507,335  981,032 
Chenming Mold Industrial Corp. (I)  80,000  88,931 
Chia Hsin Cement Corp.  700,089  359,537 
Chicony Electronics Company, Ltd.  390,935  1,281,305 
Chien Kuo Construction Company, Ltd.  425,872  176,054 
Chien Shing Stainless Steel Company (I)  180,000  45,705 
Chilisin Electronics Corp. (I)  64,400  65,317 
Chime Ball Technology Company, Ltd.  22,000  56,215 
Chimei Materials Technology Corp.  155,050  181,427 
Chin-Poon Industrial Company, Ltd.  403,642  716,456 
China Airlines, Ltd. (I)  2,184,820  731,104 
China Chemical & Pharmaceutical Company, Ltd.  215,000  158,338 
China Development Financial Holdings Corp.  9,084,331  3,071,713 
China Ecotek Corp.  33,000  77,669 
China Electric Manufacturing Corp.  229,000  91,996 
China General Plastics Corp.  369,304  153,385 
China Life Insurance Company, Ltd.  1,702,025  1,581,264 
China Manmade Fibers Corp. (I)  1,304,000  413,448 

 

43 

 


Emerging Markets Fund

China Metal Products Company, Ltd.  312,966  336,628 
China Motor Corp.  632,905  605,551 
China Petrochemical Development Corp.  2,554,045  910,831 
China Steel Chemical Corp.  105,000  660,651 
China Steel Corp.  4,296,038  3,710,041 
China Steel Structure Company, Ltd.  187,000  181,490 
China Synthetic Rubber Corp.  563,937  582,618 
China Wire & Cable Company, Ltd. (I)  218,000  94,587 
Chipbond Technology Corp.  306,000  535,616 
Chong Hong Construction Company  103,424  281,763 
Chroma ATE, Inc.  211,440  622,944 
Chun Yu Works & Company, Ltd.  321,000  142,516 
Chun Yuan Steel  647,381  263,281 
Chung Hsin Electric & Machinery Manufacturing Corp.  535,000  378,409 
Chung Hung Steel Corp. (I)  1,284,226  356,685 
Chung Hwa Pulp Corp. (I)  580,290  178,817 
Chunghwa Chemical Synthesis & Biotech Company, Ltd.  52,000  65,493 
Chunghwa Picture Tubes, Ltd. (I)  5,416,320  340,921 
Chunghwa Telecom Company, Ltd.  603,000  1,878,555 
Chunghwa Telecom Company, Ltd., ADR (I)(L)  67,506  2,107,537 
Chyang Sheng Dyeing & Finishing Company, Ltd. (I)  70,000  34,301 
Cleanaway Company, Ltd.  45,000  248,537 
Clevo Company  310,120  587,157 
CMC Magnetics Corp. (I)  3,492,000  560,888 
CoAsia Microelectronics Corp.  67,200  30,808 
Collins Company, Ltd.  223,797  89,111 
Compal Electronics, Inc.  3,929,895  3,493,044 
Compeq Manufacturing Company  1,220,000  745,135 
Continental Holdings Corp.  565,950  225,401 
Coretronic Corp. (I)  136,500  226,735 
Cosmo Electronics Corp. (I)  58,000  69,499 
Cosmos Bank Taiwan (I)  131,000  67,684 
Coxon Precise Industrial Company, Ltd.  152,231  275,065 
CSBC Corp. Taiwan  93,312  55,099 
CTBC Financial Holding Company, Ltd.  4,886,211  3,558,147 
CTCI Corp.  345,000  617,283 
Cub Elecparts, Inc.  18,357  189,513 
CviLux Corp.  47,000  79,760 
Cyberlink Corp.  69,326  216,882 
CyberPower Systems, Inc.  36,000  76,032 
CyberTAN Technology, Inc.  277,000  260,990 
D-Link Corp.  947,627  682,197 
DA CIN Construction Company, Ltd.  147,000  109,740 
Da-Li Construction Company, Ltd. (I)  59,510  71,859 
Dafeng TV, Ltd.  32,670  56,148 
Danen Technology Corp. (I)  177,000  72,960 
Darfon Electronics Corp.  351,950  246,314 
Daxin Materials Corp.  16,800  26,299 
De Licacy Industrial Company  150,000  61,701 
Delpha Construction Company, Ltd.  293,383  139,506 
Delta Electronics, Inc.  491,000  3,452,289 
Depo Auto Parts Industrial Company, Ltd.  84,000  343,009 
DFI, Inc.  62,000  74,964 
Dimerco Express Corp.  46,000  36,710 
DYNACOLOR, Inc.  43,000  93,195 
Dynamic Electronics Company, Ltd. (I)  378,927  203,986 
Dynapack International Technology Corp.  84,000  248,391 
E Ink Holdings, Inc. (I)  705,000  429,244 
E-Lead Electronic Company, Ltd.  59,000  121,573 
E-LIFE MALL Corp.  66,000  139,088 
E-Ton Solar Tech Company, Ltd. (I)  212,541  134,602 

 

44 

 


Emerging Markets Fund

E.Sun Financial Holding Company, Ltd.  3,460,553  2,276,622 
Eastern Media International Corp.  458,164  159,685 
Eclat Textile Company, Ltd.  99,982  836,997 
Edimax Technology Company, Ltd.  101,359  45,663 
Edison Opto Corp. (I)  43,000  45,043 
Edom Technology Company, Ltd.  225,500  180,761 
EGALAX_EMPIA Technology, Inc.  58,067  141,896 
Elan Microelectronics Corp.  227,000  389,640 
Elite Advanced Laser Corp.  73,000  272,592 
Elite Material Company  284,000  326,721 
Elite Semiconductor Memory Technology, Inc.  209,000  360,567 
Elitegroup Computer Systems Company, Ltd. (I)  604,857  437,929 
eMemory Technology, Inc.  54,000  515,233 
ENG Electric Company, Ltd.  132,223  98,989 
EnTie Commercial Bank  379,000  191,462 
Episil Technologies, Inc. (I)  186,000  66,289 
Epistar Corp.  468,628  1,019,323 
Eternal Materials Company, Ltd.  383,823  415,508 
Etron Technology, Inc. (I)  181,000  99,003 
Eva Airways Corp. (I)  1,151,160  578,189 
Everest Textile Company, Ltd. (I)  272,000  129,160 
Evergreen International Storage & Transport Corp.  609,320  387,299 
Evergreen Marine Corp Taiwan, Ltd. (I)  1,770,886  1,081,818 
Everlight Chemical Industrial Corp.  188,346  209,792 
Everlight Electronics Company, Ltd.  291,000  646,827 
Excelsior Medical Company, Ltd.  83,600  161,493 
Far Eastern Department Stores Company, Ltd.  764,558  770,283 
Far Eastern International Bank  1,902,738  687,535 
Far Eastern New Century Corp.  1,965,646  2,109,566 
Far EasTone Telecommunications Company, Ltd.  905,000  1,927,559 
Faraday Technology Corp.  278,586  332,791 
Farglory Land Development Company, Ltd.  284,526  394,659 
Federal Corp.  607,164  395,209 
Feedback Technology Corp.  19,000  32,963 
Feng Hsin Iron & Steel Company  231,000  332,040 
Feng TAY Enterprise Company, Ltd.  153,876  440,408 
Firich Enterprises Company, Ltd.  13,000  75,425 
First Copper Technology Company, Ltd.  344,000  123,913 
First Financial Holding Company, Ltd.  4,207,754  2,605,095 
First Hotel  109,919  73,435 
First Insurance Company, Ltd.  313,165  174,511 
First Steamship Company, Ltd.  273,986  204,512 
FLEXium Interconnect, Inc.  185,206  525,248 
Flytech Technology Company, Ltd.  75,969  298,570 
Forhouse Corp.  575,894  247,610 
Formosa Advanced Technologies Company, Ltd.  90,000  73,248 
Formosa Chemicals & Fibre Corp.  1,416,440  3,527,484 
Formosa Epitaxy, Inc. (I)  170,000  102,667 
Formosa International Hotels Corp.  30,213  339,356 
Formosa Oilseed Processing  199,689  145,200 
Formosa Optical Technology Company, Ltd.  28,000  86,197 
Formosa Petrochemical Corp.  368,000  929,148 
Formosa Plastics Corp.  1,010,880  2,622,071 
Formosa Taffeta Company, Ltd.  863,000  917,424 
Formosan Rubber Group, Inc.  493,000  552,642 
Formosan Union Chemical  434,295  205,725 
Founding Construction & Development Company, Ltd.  227,636  153,850 
Foxconn Technology Company, Ltd.  520,936  1,307,795 
Foxlink Image Technology Company, Ltd.  123,000  88,317 
Froch Enterprise Company, Ltd. (I)  292,000  143,814 
FSP Technology, Inc.  249,224  237,654 

 

45 

 


Emerging Markets Fund

Fubon Financial Holding Company, Ltd.  2,418,422  3,949,815 
Fullerton Technology Company, Ltd.  156,819  137,418 
Fulltech Fiber Glass Corp.  215,027  81,663 
Fwusow Industry Company, Ltd.  311,467  172,414 
G Shank Enterprise Company, Ltd. (I)  226,000  190,718 
G Tech Optoelectronics Corp.  148,000  154,117 
Gamania Digital Entertainment Company, Ltd. (I)  122,000  122,627 
GEM Terminal Industrial Company, Ltd.  47,500  23,053 
Gemtek Technology Corp.  181,496  171,040 
Genesis Photonics, Inc. (I)  244,260  161,188 
Genius Electronic Optical Company, Ltd.  36,589  100,205 
GeoVision, Inc.  44,255  177,015 
Getac Technology Corp.  446,000  242,614 
Giant Manufacturing Company, Ltd.  146,000  1,214,906 
Giantplus Technology Company, Ltd. (I)  62,000  25,344 
Giga Solar Materials Corp.  17,040  298,457 
Giga Solution Tech Company, Ltd.  68,237  41,434 
Gigabyte Technology Company, Ltd.  259,719  346,930 
Gigastorage Corp. (I)  232,100  221,746 
Ginko International Company, Ltd.  18,000  251,221 
Gintech Energy Corp. (I)  310,000  296,555 
Global Brands Manufacture, Ltd. (I)  317,611  119,025 
Global Lighting Technologies, Inc.  53,000  75,297 
Global Mixed Mode Technology, Inc.  67,000  200,092 
Global Unichip Corp.  57,000  159,254 
Globe Union Industrial Corp.  206,000  127,116 
Gloria Material Technology Corp.  120,750  101,041 
Gold Circuit Electronics, Ltd. (I)  616,071  243,231 
Goldsun Development & Construction Company, Ltd.  1,820,005  645,444 
Gourmet Master Company, Ltd.  33,000  267,265 
Grand Pacific Petrochemical Corp.  1,174,000  596,000 
Grape King Bio, Ltd.  89,000  394,562 
Great China Metal Industry  218,000  243,562 
Great Taipei Gas Company, Ltd.  229,000  191,658 
Great Wall Enterprise Company, Ltd.  679,642  691,336 
Green Energy Technology, Inc. (I)  246,000  196,590 
GTM Corp. (I)  222,000  160,779 
Hannstar Board Corp.  264,467  120,840 
HannStar Display Corp.  3,848,980  1,354,585 
HannsTouch Solution, Inc. (I)  749,000  209,023 
Harvatek Corp. (I)  92,920  70,409 
Hey Song Corp.  410,250  455,745 
Hi-Clearance, Inc.  19,000  57,745 
Highwealth Construction Corp.  307,200  544,108 
Hiroca Holdings, Ltd.  21,000  76,580 
Hitron Technology, Inc.  167,000  97,508 
Hiwin Technologies Corp.  83,378  814,318 
Ho Tung Chemical Corp.  1,095,134  413,021 
Hocheng Corp.  313,000  117,293 
Hold-Key Electric Wire & Cable Company, Ltd.  169,119  54,190 
Holiday Entertainment Company, Ltd.  50,000  63,017 
Holtek Semiconductor, Inc.  144,000  263,194 
Holy Stone Enterprise Company, Ltd.  232,734  349,557 
Hon Hai Precision Industry Company, Ltd.  7,854,499  26,866,330 
Hong TAI Electric Industrial  309,000  114,258 
Hota Industrial Manufacturing Company, Ltd.  148,149  270,532 
Hotai Motor Company, Ltd.  100,000  1,406,897 
Hsin Kuang Steel Company, Ltd.  326,153  203,039 
Hsin Yung Chien Company, Ltd.  24,200  98,009 
Hsing TA Cement Company, Ltd.  200,000  94,713 
HTC Corp. (I)  284,700  1,310,792 

 

46 

 


Emerging Markets Fund

Hu Lane Associate, Inc.  65,066  264,463 
Hua Eng Wire & Cable Company, Ltd.  666,000  232,850 
Hua Nan Financial Holdings Company, Ltd.  4,537,017  2,816,513 
Hua Yu Lien Development Company, Ltd. (I)  2,372  3,859 
Huaku Development Company, Ltd.  168,353  405,224 
Huang Hsiang Construction Company  85,000  116,844 
Hung Ching Development & Construction Company, Ltd.  203,000  124,010 
Hung Poo Real Estate Development Corp.  102,000  81,752 
Hung Sheng Construction Company, Ltd. (I)  559,808  394,332 
Huxen Corp.  42,000  56,690 
Hwa Fong Rubber Company, Ltd.  353,259  273,454 
I-Chiun Precision Industry Company, Ltd.  93,000  68,634 
I-Sheng Electric Wire & Cable Company, Ltd.  95,000  139,560 
Ibase Technology, Inc.  83,512  170,855 
Ichia Technologies, Inc.  334,300  506,291 
IEI Integration Corp.  150,045  295,285 
ILI Technology Corp.  50,397  125,678 
Infortrend Technology, Inc.  245,000  141,121 
Innolux Corp.  8,170,219  4,154,277 
Inotera Memories, Inc. (I)  1,769,165  2,895,536 
Insyde Software Corp.  21,000  36,894 
Inventec Corp.  1,812,705  1,426,066 
ITE Technology, Inc.  110,881  144,613 
ITEQ Corp.  172,700  157,133 
J Touch Corp. (I)  101,000  71,569 
Janfusun Fancyworld Corp. (I)  48,983  8,568 
Jenn Feng New Energy Company, Ltd. (I)  128,000  34,013 
Jentech Precision Industrial Company, Ltd.  67,808  213,343 
Jess-Link Products Company, Ltd.  135,000  139,886 
Johnson Health Tech Company, Ltd.  63,100  152,877 
Kang Na Hsiung Enterprise Company, Ltd.  168,000  79,335 
Kaori Heat Treatment Company, Ltd.  49,401  125,089 
Kaulin Manufacturing Company, Ltd.  124,490  89,199 
KD Holding Corp.  4,000  22,704 
KEE TAI Properties Company, Ltd.  464,973  300,006 
Kenda Rubber Industrial Company, Ltd.  406,762  866,383 
Kenmec Mechanical Engineering Company, Ltd. (I)  12,000  5,989 
Kerry TJ Logistics Company, Ltd.  236,000  320,217 
King Slide Works Company, Ltd.  35,000  469,462 
King Yuan Electronics Company, Ltd.  1,612,762  1,476,707 
King's Town Bank  1,035,000  1,167,326 
King's Town Construction Company, Ltd. (I)  140,700  116,933 
Kingdom Construction Company, Ltd.  393,000  371,437 
Kinik Company  88,000  237,544 
Kinko Optical Company, Ltd.  158,648  140,357 
Kinpo Electronics, Inc.  1,558,724  754,263 
Kinsus Interconnect Technology Corp.  215,000  909,601 
KMC Kuei Meng International, Inc.  20,500  95,371 
KS Terminals, Inc.  57,000  83,011 
Kung Long Batteries Industrial Company, Ltd.  58,000  195,328 
Kuo Toong International Company, Ltd.  103,000  192,837 
Kuoyang Construction Company, Ltd.  200,543  95,890 
Kwong Fong Industries  315,280  203,159 
KYE System Corp.  234,911  98,009 
L&K Engineering Company, Ltd.  205,952  183,343 
LAN FA Textile  267,183  92,565 
Largan Precision Company, Ltd.  39,000  3,236,688 
Laser Tek Taiwan Company, Ltd.  9,964  8,512 
LCY Chemical Corp.  356,806  179,795 
Leader Electronics, Inc.  181,867  75,480 
Leadtrend Technology Corp.  23,599  41,516 

 

47 

 


Emerging Markets Fund

Lealea Enterprise Company, Ltd.  902,863  284,699 
Ledtech Electronics Corp.  6,236  4,094 
LEE CHI Enterprises Company, Ltd.  287,000  146,480 
Lelon Electronics Corp.  170,100  250,002 
Leofoo Development Company, Ltd. (I)  411,012  167,132 
LES Enphants Company, Ltd.  164,486  99,421 
Lextar Electronics Corp.  212,500  238,452 
Li Peng Enterprise Company, Ltd. (I)  774,962  265,897 
Lian HWA Food Corp.  135,128  167,400 
Lien Hwa Industrial Corp.  715,784  501,477 
Lingsen Precision Industries, Ltd.  438,101  242,045 
Lite-On Semiconductor Corp. (I)  332,080  243,954 
Lite-On Technology Corp.  1,585,521  2,629,549 
Long Bon International Company, Ltd.  407,000  275,094 
Long Chen Paper Company, Ltd.  691,968  370,578 
Longwell Company  79,000  85,622 
Lotes Company, Ltd.  47,000  196,181 
Lucky Cement Corp.  272,000  85,744 
Lumax International Corp., Ltd.  76,395  180,279 
Lung Yen Life Service Corp.  43,000  126,730 
Macroblock, Inc.  19,000  45,590 
Macronix International (I)  4,400,718  1,140,661 
MacroWell OMG Digital Entertainment Company, Ltd.  24,000  50,769 
Mag Layers Scientific-Technics Company, Ltd.  13,317  15,210 
Makalot Industrial Company, Ltd.  131,919  651,404 
Marketech International Corp.  207,000  162,925 
Masterlink Securities Corp.  1,351,809  468,129 
Mayer Steel Pipe Corp.  226,407  119,604 
Maywufa Company, Ltd.  18,000  8,882 
MediaTek, Inc.  251,000  4,194,904 
Mega Financial Holding Company, Ltd.  3,277,052  2,827,599 
Meiloon Industrial Company, Ltd.  151,412  72,239 
Mercuries & Associates, Ltd.  396,068  265,716 
Mercuries Life Insurance Company, Ltd. (I)  90,300  54,229 
Merida Industry Company, Ltd.  124,162  914,318 
Merry Electronics Company, Ltd.  132,585  764,051 
Micro-Star International Company, Ltd.  912,488  1,253,896 
Microlife Corp.  30,000  71,813 
MIN AIK Technology Company, Ltd.  59,000  323,996 
Mirle Automation Corp.  44,290  45,691 
Mitac Holdings Corp.  726,733  628,531 
Mobiletron Electronics Company, Ltd.  67,000  141,668 
Mosel Vitelic, Inc. (I)  583,484  153,995 
Motech Industries, Inc.  273,000  370,270 
MPI Corp.  44,000  156,145 
Mustek Systems, Inc. (I)  33,151  2,380 
Nak Sealing Technologies Corp.  47,000  195,919 
Namchow Chemical Industrial Company, Ltd.  149,000  322,248 
Nan Kang Rubber Tire Company, Ltd.  408,711  469,887 
Nan Ya Plastics Corp.  1,508,860  3,561,085 
Nan Ya Printed Circuit Board Corp. (I)  211,930  393,858 
Nantex Industry Company, Ltd.  355,526  200,019 
National Petroleum Company, Ltd.  153,000  174,527 
Neo Solar Power Corp.  459,452  444,899 
Netronix, Inc.  45,000  62,749 
New Asia Construction & Development Corp.  285,136  78,246 
New Era Electronics Company, Ltd.  44,000  53,160 
Newmax Technology Company, Ltd.  69,448  96,310 
Nichidenbo Corp.  104,742  99,161 
Nien Hsing Textile Company, Ltd.  357,572  317,311 
Novatek Microelectronics Corp., Ltd.  346,000  1,776,449 

 

48 

 


Emerging Markets Fund

Nuvoton Technology Corp.  30,000  33,912 
Ocean Plastics Company, Ltd. (I)  29,000  39,655 
Optimax Technology Corp. (I)  170,816  30,279 
OptoTech Corp.  268,000  136,395 
Orient Semiconductor Electronics, Ltd. (I)  720,000  307,294 
Oriental Union Chemical Corp.  399,300  375,347 
Orise Technology Company, Ltd.  52,000  77,237 
P-Two Industries, Inc.  17,000  8,087 
Pacific Construction Company, Ltd.  149,002  54,307 
Pacific Hospital Supply Company, Ltd.  34,000  78,410 
Pan Jit International, Inc. (I)  156,000  73,069 
Pan-International Industrial  333,443  241,831 
Parade Technologies, Ltd.  27,000  322,144 
Paragon Technologies Company, Ltd.  101,808  183,131 
PChome Online, Inc.  65,856  662,247 
Pegatron Corp.  1,384,321  2,935,389 
Phihong Technology Company, Ltd.  266,416  179,788 
Phison Electronics Corp.  112,000  810,878 
Phoenix Tours International, Inc.  43,000  65,320 
Pixart Imaging, Inc.  119,830  281,078 
Plotech Company, Ltd.  100,000  43,192 
Polytronics Technology Corp.  36,000  91,517 
Portwell, Inc.  83,000  114,552 
Posiflex Technologies, Inc.  31,522  191,589 
Pou Chen Corp.  2,164,448  2,505,847 
Power Mate Technology Company, Ltd.  8,000  16,482 
Power Quotient International Company, Ltd. (I)  130,000  73,001 
Powercom Company, Ltd. (I)  90,760  18,535 
Powertech Industrial Company, Ltd.  67,000  51,550 
Powertech Technology, Inc. (I)  630,000  1,194,121 
Poya Company, Ltd.  41,693  247,007 
President Chain Store Corp.  220,000  1,667,423 
President Securities Corp.  1,117,259  633,328 
Prime Electronics Satellitics, Inc.  82,759  44,320 
Prince Housing & Development Corp.  910,943  393,129 
Princeton Technology Corp. (I)  26,000  12,320 
Prodisc Technology, Inc. (I)  540,000  0 
Promate Electronic Company, Ltd.  222,000  281,108 
Promise Technology, Inc.  89,000  142,344 
Qisda Corp. (I)  1,246,440  634,562 
Qualipoly Chemical Corp.  50,000  38,222 
Quanta Computer, Inc.  966,000  2,728,121 
Quanta Storage, Inc.  77,000  97,176 
Quintain Steel Company, Ltd. (I)  475,194  112,580 
Radiant Opto-Electronics Corp.  344,343  1,487,373 
Radium Life Tech Company, Ltd. (I)  473,161  302,994 
Ralec Electronic Corp.  63,259  135,838 
Realtek Semiconductor Corp.  329,706  1,201,904 
Rechi Precision Company, Ltd.  282,038  306,508 
Rexon Industrial Corp., Ltd.  83,286  26,607 
Richtek Technology Corp.  112,000  626,538 
Ritek Corp. (I)  3,512,428  482,323 
Ruentex Development Company, Ltd.  375,586  675,957 
Ruentex Industries, Ltd.  264,801  642,950 
Run Long Construction Company, Ltd.  42,000  41,238 
Sampo Corp.  641,997  279,433 
San Fang Chemical Industry Company, Ltd.  73,732  73,731 
San Shing Fastech Corp.  63,163  176,512 
Sanyang Industrial Company, Ltd.  713,389  665,960 
Sanyo Electric Company, Ltd.  79,900  97,663 
SCI Pharmtech, Inc.  42,044  95,316 

 

49 

 


Emerging Markets Fund

ScinoPharm Taiwan, Ltd.  107,078  218,595 
SDI Corp.  103,000  139,258 
Senao International Company, Ltd.  62,000  111,995 
Sercomm Corp.  145,000  345,747 
Sesoda Corp.  113,557  166,669 
Shan-Loong Transportation Company, Ltd.  4,000  3,254 
Sheng Yu Steel Company, Ltd.  188,000  139,690 
ShenMao Technology, Inc.  57,000  68,704 
Shih Her Technologies, Inc.  21,000  51,019 
Shih Wei Navigation Company, Ltd.  117,363  83,259 
Shihlin Electric & Engineering Corp.  509,213  700,684 
Shihlin Paper Corp. (I)  72,000  108,969 
Shin Hai Gas Corp.  2,315  3,496 
Shin Kong Financial Holding Company, Ltd.  7,674,208  2,505,157 
Shin Shin Natural Gas Company  1,000  1,262 
Shin Zu Shing Company, Ltd.  159,933  433,620 
Shining Building Business Company, Ltd. (I)  249,334  180,783 
Shinkong Insurance Company, Ltd.  310,000  259,367 
Shinkong Synthetic Fibers Corp.  1,914,287  704,869 
Shinkong Textile Company, Ltd.  154,000  212,830 
Shiny Chemical Industrial Company, Ltd.  35,954  57,961 
Shuttle, Inc.  229,985  76,357 
Sigurd Microelectronics Corp.  427,887  479,807 
Silicon Integrated Systems Corp. (I)  794,000  259,981 
Silicon Power Computer & Communications, Inc.  35,000  41,253 
Siliconware Precision Industries Company  765,000  1,127,957 
Siliconware Precision Industries Company, ADR (L)  200,628  1,474,616 
Silitech Technology Corp.  92,697  82,672 
Simplo Technology Company, Ltd.  222,200  1,248,104 
Sinbon Electronics Company, Ltd.  203,000  306,471 
Sincere Navigation Corp.  306,000  279,368 
Singatron Enterprise Company, Ltd. (I)  99,000  46,098 
Sinkang Industries, Ltd.  69,000  29,793 
Sinmag Equipment Corp.  23,889  147,236 
Sino-American Silicon Products, Inc. (I)  247,000  401,419 
Sinon Corp.  449,150  260,770 
SinoPac Financial Holdings Company, Ltd.  6,167,832  2,819,407 
Sinphar Pharmaceutical Company, Ltd.  120,940  177,903 
Sinyi Realty, Inc.  173,369  229,022 
Sirtec International Company, Ltd.  104,000  225,431 
Sitronix Technology Corp.  87,000  189,807 
Siward Crystal Technology Company, Ltd.  181,301  129,504 
Soft-World International Corp.  104,000  344,494 
Solar Applied Materials Technology Company  211,899  196,755 
Solartech Energy Corp. (I)  159,000  120,422 
Solomon Technology Corp. (I)  183,303  109,231 
Solytech Enterprise Corp. (I)  136,758  46,707 
Sonix Technology Company, Ltd.  130,000  230,307 
Southeast Cement Company, Ltd.  356,000  196,879 
Spirox Corp. (I)  166,369  137,302 
Sporton International, Inc.  52,725  253,110 
St. Shine Optical Company, Ltd.  38,000  787,044 
Standard Chemical & Pharmaceutical Company, Ltd.  38,000  50,758 
Standard Foods Corp.  147,662  379,175 
Stark Technology, Inc.  164,000  151,483 
Sunonwealth Electric Machine Industry Company, Ltd.  141,000  99,982 
Sunplus Technology Company, Ltd. (I)  651,000  309,568 
Sunrex Technology Corp.  102,000  57,011 
Sunspring Metal Corp.  97,000  171,794 
Super Dragon Technology Company, Ltd.  15,766  10,886 
Supreme Electronics Company, Ltd.  216,234  133,759 

 

50 

 


Emerging Markets Fund

Swancor Ind. Company, Ltd.  30,402  116,109 
Sweeten Construction Company, Ltd.  115,551  81,168 
Syncmold Enterprise Corp.  97,000  236,364 
Synnex Technology International Corp.  418,132  638,151 
Sysage Technology Company, Ltd.  68,145  82,518 
TA Chen Stainless Pipe (I)  835,521  612,231 
Ta Chong Bank, Ltd. (I)  2,329,151  756,380 
Ta Chong Securities Company, Ltd.  16,000  5,967 
Ta Ya Electric Wire & Cable Company, Ltd.  637,406  152,863 
TA-I Technology Company, Ltd.  116,809  72,442 
Tah Hsin Industrial Company, Ltd. (I)  125,000  118,831 
TAI Roun Products Company, Ltd.  111,000  37,517 
Taichung Commercial Bank  2,180,728  762,944 
TaiDoc Technology Corp.  36,000  123,063 
Taiflex Scientific Company, Ltd.  161,000  290,738 
Taimide Tech, Inc.  72,000  103,786 
Tainan Enterprises Company, Ltd.  201,467  194,223 
Tainan Spinning Company, Ltd.  1,405,671  870,353 
Taishin Financial Holdings Company, Ltd.  6,969,091  3,543,403 
Taisun Enterprise Company, Ltd. (I)  422,026  185,029 
Taita Chemical Company, Ltd. (I)  184,188  57,718 
Taiwan Acceptance Corp.  99,000  266,716 
Taiwan Business Bank (I)  3,796,697  1,189,067 
Taiwan Cement Corp.  2,166,726  3,446,640 
Taiwan Chinsan Electronic Industrial Company, Ltd.  45,000  83,448 
Taiwan Cogeneration Corp.  556,137  416,966 
Taiwan Cooperative Financial Holding Company, Ltd.  4,996,917  2,792,742 
Taiwan FamilyMart Company, Ltd.  18,000  124,310 
Taiwan Fertilizer Company, Ltd.  554,000  1,050,976 
Taiwan Fire & Marine Insurance Company  155,000  120,108 
Taiwan FU Hsing Industrial Company, Ltd.  215,000  215,773 
Taiwan Glass Industrial Corp.  951,933  821,860 
Taiwan Hon Chuan Enterprise Company, Ltd.  208,400  414,063 
Taiwan Kolin Company, Ltd. (I)  400,000  0 
Taiwan Land Development Corp. (I)  800,149  314,641 
Taiwan Life Insurance Company, Ltd. (I)  295,836  209,603 
Taiwan Line Tek Electronic  64,050  63,208 
Taiwan Mask Corp.  325,850  110,060 
Taiwan Mobile Company, Ltd.  462,700  1,474,560 
Taiwan Navigation Company, Ltd.  36,000  29,017 
Taiwan Paiho, Ltd.  294,342  377,331 
Taiwan PCB Techvest Company, Ltd.  177,227  289,539 
Taiwan Prosperity Chemical Corp.  100,000  91,101 
Taiwan Pulp & Paper Corp. (I)  524,640  226,358 
Taiwan Sakura Corp.  200,156  146,019 
Taiwan Secom Company, Ltd.  164,430  467,031 
Taiwan Semiconductor Company, Ltd.  193,000  261,374 
Taiwan Semiconductor Manufacturing Company, Ltd.  9,233,000  38,587,271 
Taiwan Semiconductor Manufacturing Company, Ltd., ADR  256,101  5,362,755 
Taiwan Sogo Shin Kong SEC  349,460  485,463 
Taiwan Styrene Monomer Corp.  548,821  273,967 
Taiwan Surface Mounting Technology Company, Ltd.  192,606  306,237 
Taiwan TEA Corp.  791,723  505,983 
Taiwan Union Technology Corp.  112,000  111,069 
Taiyen Biotech Company, Ltd.  216,472  187,136 
Tatung Company, Ltd. (I)  2,948,526  955,667 
Te Chang Construction Company, Ltd.  83,265  74,181 
Teco Electric & Machinery Company, Ltd.  1,804,109  2,270,768 
Tecom Company, Ltd. (I)  41,000  5,157 
Tekcore Company, Ltd. (I)  33,000  13,565 
Ten Ren Tea Company, Ltd.  35,000  56,858 

 

51 

 


Emerging Markets Fund

Test Research, Inc.  173,596  306,054 
Test-Rite International Company, Ltd.  286,549  188,392 
Tex-Ray Industrial Company, Ltd. (I)  91,800  41,492 
The Ambassador Hotel  236,000  222,341 
Thinking Electronic Industrial Company, Ltd.  65,000  99,988 
Thye Ming Industrial Company, Ltd.  133,250  164,430 
Ton Yi Industrial Corp.  555,000  425,620 
Tong Hsing Electronic Industries, Ltd.  92,951  448,048 
Tong Yang Industry Company, Ltd.  359,043  456,965 
Tong-Tai Machine & Tool Company, Ltd.  111,114  119,589 
Topco Scientific Company, Ltd.  205,151  400,791 
Topco Technologies Corp. (I)  26,000  62,434 
Topoint Technology Company, Ltd.  179,248  203,017 
Toung Loong Textile Manufacturing  69,000  199,361 
TPK Holding Company, Ltd.  200,000  1,359,390 
Trade-Van Information Services Company  14,000  12,763 
Transasia Airways Corp.  26,000  9,830 
Transcend Information, Inc.  117,000  394,079 
Tripod Technology Corp.  312,770  635,758 
Tsann Kuen Enterprise Company, Ltd.  98,220  122,892 
TSC Auto ID Technology Company, Ltd.  11,000  104,703 
TSRC Corp.  339,706  475,549 
Ttet Union Corp.  47,000  112,898 
TTFB Company, Ltd.  2,000  20,008 
TTY Biopharm Company, Ltd.  95,094  217,800 
Tung Ho Steel Enterprise Corp.  1,131,138  949,804 
Tung Ho Textile Company, Ltd.  247,000  73,454 
Tung Thih Electronic Company, Ltd.  50,258  158,061 
TURVO International Company, Ltd.  24,062  98,267 
TXC Corp.  240,659  352,326 
TYC Brother Industrial Company, Ltd. (I)  125,531  76,533 
Tycoons Group Enterprise Company, Ltd. (I)  594,536  141,271 
Tyntek Corp. (I)  194,661  67,833 
TZE Shin International Company, Ltd.  146,247  49,963 
U-Ming Marine Transport Corp.  261,000  430,076 
U-Tech Media Corp. (I)  84,000  19,241 
Ubright Optronics Corp.  28,600  53,307 
Uni-President Enterprises Corp.  1,967,234  3,601,162 
Unimicron Technology Corp.  1,210,855  1,023,135 
Union Bank of Taiwan (I)  1,340,100  482,310 
Union Insurance Company, Ltd. (I)  65,384  62,088 
Unitech Computer Company, Ltd.  181,039  104,472 
Unitech Printed Circuit Board Corp. (I)  727,869  314,073 
United Integrated Services Company, Ltd.  165,000  173,148 
United Microelectronics Corp. (I)  6,881,468  3,148,961 
Unity Opto Technology Company, Ltd. (I)  230,389  268,481 
Universal Cement Corp.  494,504  486,577 
Unizyx Holding Corp.  526,000  396,067 
UPC Technology Corp.  1,005,938  396,891 
Userjoy Technology Company, Ltd.  18,000  30,242 
USI Corp.  1,078,801  584,032 
Vanguard International Semiconductor Corp.  550,000  805,656 
Ve Wong Corp.  195,450  166,488 
Viking Tech Corp.  26,770  20,278 
Visual Photonics Epitaxy Company, Ltd.  293,700  305,460 
Vivotek, Inc.  51,813  170,397 
Wafer Works Corp. (I)  232,872  102,995 
Wah Hong Industrial Corp.  14,835  19,882 
Wah Lee Industrial Corp.  35,000  67,145 
Walsin Lihwa Corp. (I)  4,134,000  1,480,921 
Walsin Technology Corp. (I)  897,721  354,618 

 

52 

 


Emerging Markets Fund

Walton Advanced Engineering, Inc.  383,661  188,764 
Wan Hai Lines, Ltd.  650,216  427,676 
WAN HWA Enterprise Company  3,351  1,704 
Waterland Financial Holding Company, Ltd.  3,025,499  924,340 
Ways Technical Corp., Ltd.  44,000  48,012 
WEI Chih Steel Industrial Company, Ltd. (I)  41,000  7,244 
Wei Chuan Food Corp.  275,000  404,596 
Wei Mon Industry Company, Ltd. (I)  266,912  76,973 
Weikeng Industrial Company, Ltd.  270,900  212,058 
Well Shin Technology Company, Ltd.  72,420  137,346 
Win Semiconductors Corp.  441,000  450,677 
Winbond Electronics Corp. (I)  4,148,000  1,408,632 
Wintek Corp. (I)  1,783,661  605,410 
Wisdom Marine Lines Company, Ltd. (I)  38,744  46,020 
Wistron Corp.  1,999,232  2,342,588 
Wistron NeWeb Corp.  212,083  553,884 
WPG Holdings Company, Ltd.  1,078,760  1,405,870 
WT Microelectronics Company, Ltd.  254,549  401,239 
WUS Printed Circuit Company, Ltd.  375,000  189,145 
X-Legend Entertainment Company, Ltd.  12,500  77,126 
XAC Automation Corp.  69,000  96,848 
Xxentria Technology Materials Corp. (I)  66,000  144,141 
Yageo Corp.  1,969,200  1,647,519 
Yang Ming Marine Transport Corp. (I)  1,611,916  725,663 
YC Company, Ltd.  284,376  168,039 
YC INOX Company, Ltd.  433,000  430,738 
YeaShin International Development Company, Ltd.  193,355  116,891 
Yeong Guan Energy Technology Group Company, Ltd.  27,000  132,900 
YFY, Inc.  1,606,614  733,773 
Yi Jinn Industrial Company, Ltd.  236,768  66,499 
Yieh Phui Enterprise Company, Ltd.  1,473,707  480,431 
Yonyu Plastics Company, Ltd.  30,450  33,651 
Young Fast Optoelectronics Company, Ltd.  89,648  79,276 
Young Optics, Inc.  41,000  79,100 
Youngtek Electronics Corp.  81,361  189,802 
Yuanta Financial Holdings Company, Ltd.  6,595,180  3,552,838 
Yufo Electronics Company, Ltd.  22,000  13,987 
Yulon Motor Company, Ltd.  898,900  1,444,213 
Yung Chi Paint & Varnish Manufacturing Company, Ltd.  92,850  262,351 
Yungshin Construction & Development Company  39,000  86,795 
Yungshin Global Holding Corp.  117,000  224,186 
Yungtay Engineering Company, Ltd.  265,000  656,613 
Zeng Hsing Industrial Company, Ltd.  42,232  226,459 
Zenitron Corp.  256,000  154,631 
Zhen Ding Technology Holding, Ltd.  166,450  550,711 
Zig Sheng Industrial Company, Ltd.  499,665  148,321 
Zinwell Corp.  236,000  220,423 
Zippy Technology Corp.  89,000  115,653 
ZongTai Real Estate Development Company, Ltd.  60,121  38,628 
 
Thailand 2.8%    74,585,869 
  274,500  212,278 
A.J. Plast PCL (I)  93,200  31,222 
AAPICO Hitech PCL  34,300  17,397 
Advanced Info Service PCL  423,291  2,769,813 
Airports of Thailand PCL  207,800  1,541,910 
Amata Corp. PCL  541,300  283,022 
AP Thailand PCL  971,980  243,451 
Asia Green Energy PCL  61,380  4,651 
Asia Plus Securities PCL  1,679,600  195,620 
Asian Insulators PCL  294,800  108,912 

 

53 

 


Emerging Markets Fund

Bangkok Aviation Fuel Services PCL (L)  46,500  53,139 
Bangkok Bank PCL  361,605  2,320,512 
Bangkok Chain Hospital PCL  1,369,125  426,512 
Bangkok Dusit Medical Services PCL  1,379,000  841,907 
Bangkok Expressway PCL  426,700  521,018 
Bangkok Insurance PCL  11,270  125,967 
Bangkok Life Assurance PCL, NVDR (L)  347,400  913,539 
Bangkokland PCL  11,604,400  799,301 
Banpu PCL (L)  821,500  829,473 
BEC World PCL  442,200  657,624 
Berli Jucker PCL  383,500  576,331 
Big C Supercenter PCL  35,900  269,756 
Big C Supercenter PCL, NVDR  98,800  742,414 
Bumrungrad Hospital PCL  182,500  771,368 
Cal-Comp Electronics Thailand PCL  3,148,288  293,735 
Central Pattana PCL  738,800  1,116,065 
Central Plaza Hotel PCL (L)  402,100  497,275 
CH Karnchang PCL (L)  538,023  454,810 
Charoen Pokphand Foods PCL  867,133  800,890 
Christiani & Nielsen Thai  17,200  3,070 
CP ALL PCL  1,041,700  1,549,178 
CS Loxinfo PCL  63,900  20,206 
Delta Electronics Thailand PCL  365,400  743,613 
Dhipaya Insurance PCL  44,600  60,044 
Diamond Building Products PCL  329,600  64,496 
DSG International Thailand PCL  277,200  72,468 
Dynasty Ceramic PCL (L)  153,500  279,943 
Eastern Water Resources Development & Management PCL  341,100  119,609 
Electricity Generating PCL  117,000  624,562 
Esso Thailand PCL (I)  2,078,900  384,017 
G J Steel PCL (I)  60,820,500  114,253 
G Steel PCL (I)  12,662,700  59,468 
GFPT PCL  461,400  261,470 
Glow Energy PCL  301,200  825,141 
GMM Grammy PCL (I)  103,440  48,255 
Grand Canal Land PCL  103,100  11,491 
Hana Microelectronics PCL  485,000  588,408 
Hemaraj Land & Development PCL  3,732,300  502,470 
Home Product Center PCL (L)  1,711,105  562,511 
Indorama Ventures PCL  1,137,100  961,230 
Intouch Holdings PCL  329,800  709,969 
IRPC PCL  9,392,900  976,344 
Italian-Thai Development PCL (I)  2,163,776  359,049 
Jasmine International PCL  2,535,600  508,073 
Jay Mart PCL  127,875  54,849 
Kang Yong Electric PCL  2,800  22,442 
Kasikornbank PCL  172,300  1,219,312 
Kasikornbank PCL, NVDR  324,700  2,287,111 
KCE Electronics PCL  192,400  233,422 
KGI Securities Thailand PCL  1,053,600  104,898 
Khon Kaen Sugar Industry PCL  509,800  220,264 
Kiatnakin Bank PCL  337,300  443,538 
Krung Thai Bank PCL  2,072,850  1,525,109 
Krungthai Card PCL  126,000  281,074 
Land and Houses PCL, NVDR  2,289,500  782,474 
Lanna Resources PCL  277,500  120,766 
Loxley PCL  1,037,610  142,290 
LPN Development PCL  562,300  382,026 
Major Cineplex Group PCL  340,500  231,335 
MBK PCL  861,000  436,700 
MCOT PCL  197,600  156,212 

 

54 

 


Emerging Markets Fund

Minor International PCL  1,031,450  1,138,341 
Modernform Group PCL  64,500  20,194 
Muang Thai Insurance PCL  2,600  12,414 
Nation Multimedia Group PCL  444,000  21,964 
Padaeng Industry PCL  127,600  72,309 
Polyplex PCL  275,000  104,180 
Pranda Jewelry PCL  214,300  44,953 
Precious Shipping PCL  615,400  525,036 
President Rice Products PCL  30,000  45,319 
Property Perfect PCL (I)  196,300  7,990 
Pruksa Real Estate PCL (L)  714,000  771,227 
PTT Exploration & Production PCL  771,828  3,975,132 
PTT Global Chemical PCL  649,192  1,260,172 
PTT PCL  655,700  6,589,847 
Quality House PCL  4,997,033  694,641 
Raimon Land PCL (I)  1,761,500  114,713 
Ratchaburi Electricity Generating Holding PCL  333,800  608,762 
Regional Container Lines PCL (I)  558,000  225,366 
Robinson Department Store PCL  275,400  491,478 
Rojana Industrial Park PCL  218,000  55,285 
RS PCL  332,500  80,679 
Saha-Union PCL  252,100  329,530 
Sahaviriya Steel Industries PCL (I)  9,365,780  102,631 
Samart Corp. PCL  467,200  372,999 
Samart I-Mobile PCL  818,900  96,402 
Samart Telcoms PCL (L)  273,500  162,696 
Sansiri PCL (L)  3,549,232  231,133 
SC Asset Corp. PCL  1,892,250  227,497 
Siam Cement PCL, Foreign Shares  27,700  381,640 
Siam Cement PCL, NVDR  83,100  1,144,941 
Siam City Cement PCL  55,100  734,897 
Siam Commercial Bank PCL  506,431  2,965,016 
Siam Future Development PCL  738,619  152,626 
Siamgas & Petrochemicals PCL  473,000  214,731 
Sino Thai Engineering & Construction PCL  613,128  489,504 
SNC Former PCL  130,300  69,352 
Somboon Advance Technology PCL  149,807  83,487 
SPCG PCL  311,200  258,197 
Sri Trang Agro-Industry PCL (L)  514,800  227,260 
Srithai Superware PCL  292,000  22,855 
STP & I PCL  490,500  331,709 
Supalai PCL  439,800  358,009 
Susco PCL  437,400  41,905 
SVI PCL  646,728  89,497 
Symphony Communication PCL  36,100  18,762 
Tata Steel Thailand PCL (I)  6,199,800  172,756 
Thai Agro Energy PCL (I)  55,500  8,775 
Thai Airways International PCL (L)  1,239,111  589,683 
Thai Carbon Black PCL  174,100  158,075 
Thai Central Chemical PCL  1,900  1,799 
Thai Oil PCL  305,600  495,141 
Thai Rung Union Car PCL  44,160  8,019 
Thai Stanley Electric PCL  18,200  129,919 
Thai Union Frozen Products PCL  348,400  749,922 
Thai Vegetable Oil PCL  360,100  253,671 
Thai-German Ceramic PCL  93,000  9,958 
Thaicom PCL (L)  442,900  547,732 
Thanachart Capital PCL  682,800  748,215 
The Bangchak Petroleum PCL  735,900  789,123 
The Erawan Group PCL  898,600  132,792 
Thoresen Thai Agencies PCL (I)  810,027  593,445 

 

55 

 


Emerging Markets Fund

Ticon Industrial Connection PCL  378,044  208,315 
Tipco Asphalt PCL  55,500  102,086 
TIPCO Foods PCL (I)  125,700  30,107 
Tisco Financial Group PCL  243,600  314,606 
TMB Bank PCL  5,249,100  499,601 
Total Access Communication PCL  377,800  1,289,299 
Total Access Communication PCL, NVDR  54,300  185,462 
Toyo-Thai Corp PCL  121,200  114,787 
TPI Polene PCL  1,098,240  560,467 
True Corp. PCL (I)(L)  3,535,115  1,272,818 
TTW PCL  1,203,300  470,922 
Unique Engineering & Construction PCL  352,700  108,769 
Univentures PCL  337,700  113,131 
Vanachai Group PCL  1,042,400  279,039 
Vibhavadi Medical Center PCL  113,060  61,238 
Vinythai PCL  100,000  35,379 
Workpoint Entertainment PCL  118,600  110,468 
 
Turkey 1.9%    50,015,262 
Adana Cimento Sanayii TAS, Class A  99,918  228,656 
Adel Kalemcilik Ticaret ve Sanayi AS  1,368  33,803 
Adese Alisveris Merkezleri Ticaret AS (I)  4,971  50,997 
Akbank TAS  733,566  2,796,577 
Akcansa Cimento AS  52,701  327,983 
Akenerji Elektrik Uretim AS (I)  251,487  133,820 
Akfen Holding AS  36,342  84,693 
Aksa Akrilik Kimya Sanayi AS  134,810  443,482 
Aksigorta AS  227,702  294,943 
Alarko Holding AS  97,048  197,640 
Albaraka Turk Katilim Bankasi AS  73,288  58,649 
Alkim Alkali Kimya AS  2,994  21,818 
Altinyildiz Mensucat ve Konfeksiyon Fabrikalari AS (I)  24,252  578,731 
Anadolu Anonim Tuerk Sigorta Sirketi (I)  422,736  283,603 
Anadolu Cam Sanayii AS  195,858  158,479 
Anadolu Efes Biracilik Ve Malt Sanayii AS  88,999  1,180,281 
Anadolu Hayat Emeklilik AS  70,899  167,486 
Arcelik AS (L)  209,265  1,253,724 
Aselsan Elektronik Sanayi Ve Ticaret AS (L)  43,639  194,520 
Asya Katilim Bankasi AS (I)  392,301  225,054 
Aygaz AS  124,835  554,478 
Bagfas Bandirma Gubre Fabrik  5,808  130,126 
Banvit Bandirma Vitaminli Yem Sanayii ASA (I)  28,994  45,990 
Baticim Bati Anadolu Cimento Sanayii AS  24,319  79,449 
Besiktas Futbol Yatirimlari Sanayi ve Ticaret AS (I)(L)  60,906  64,945 
BIM Birlesik Magazalar AS  90,197  2,119,349 
Bizim Toptan Satis Magazalari AS (L)  18,648  160,518 
Bolu Cimento Sanayii AS  118,381  218,399 
Borusan Mannesmann Boru Sanayi ve Ticaret AS  79,620  243,150 
Brisa Bridgestone Sabanci Sanayi ve Ticaret AS  46,453  152,274 
Bursa Cimento Fabrikasi AS  9,487  24,630 
Celebi Hava Servisi AS  8,476  102,694 
Cimsa Cimento Sanayi VE Tica  57,703  409,832 
Coca-Cola Icecek AS  19,155  451,629 
Deva Holding AS (I)(L)  64,490  59,956 
Dogan Sirketler Grubu Holdings AS (I)  1,172,973  423,154 
Dogan Yayin Holding AS (I)(L)  180,000  31,657 
Dogus Otomotiv Servis ve Ticaret AS  67,637  274,015 
Eczacibasi Yapi Gerecleri Sanayi ve Ticaret AS (I)  739  1,528 
Eczacibasi Yatirim Holding Ortakligi AS  7,623  19,766 
EGE Endustri VE Ticaret AS  793  46,766 
EGE Seramik Sanayi ve Ticaret AS  103,309  163,991 

 

56 

 


Emerging Markets Fund

EIS Eczacibasi Ilac ve Sinai ve Finansal Yatirimlar Sanayi ve Ticaret AS  273,434  263,082 
Enka Insaat ve Sanayi AS  243,321  609,304 
Eregli Demir ve Celik Fabrikalari TAS  1,025,297  1,993,293 
Fenerbahce Futbol ASA (I)  6,193  101,530 
Ford Otomotiv Sanayi AS (I)  25,853  341,075 
Galatasaray Sportif Sinai ve Ticari Yatirimlar AS (I)(L)  2,170  22,814 
Gentas Genel Metal Sanayi ve Ticaret AS  121,631  93,371 
Global Yatirim Holding AS  371,315  250,862 
Goldas Kuyumculuk Sanayi Ithalat ve Ihracat AS (I)  54,847  5,329 
Goltas Goller Bolgesi Cimento Sanayi ve Ticaret AS (L)  6,137  167,644 
Goodyear Lastikleri Turk AS  4,166  153,632 
Gozde Girisim Sermayesi Yatirim Ortakligi AS (I)(L)  121,034  159,131 
GSD Holding AS (I)  245,645  157,992 
Gubre Fabrikalari TAS  109,992  221,439 
Gunes Sigorta (I)  31,526  28,744 
Hurriyet Gazetecilik AS (I)  206,839  61,305 
Ihlas Holding AS (I)  918,430  131,813 
Ipek Dogal Enerji Kaynaklari Ve Uretim AS (I)  115,194  118,683 
Is Finansal Kiralama AS  1,536  677 
Is Yatirim Menkul Degerler AS  59,999  35,010 
Izmir Demir Celik Sanayi AS (I)(L)  135,199  206,854 
Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class A (I)  180,542  250,359 
Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class B (I)  144,223  197,136 
Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS, Class D (I)(L)  698,754  733,286 
Karsan Otomotiv Sanayii ve Ticaret AS (I)  114,281  62,934 
Kartonsan Karton Sanayi ve Ticaret AS  810  88,224 
Kerevitas Gida Sanayi ve Ticaret AS (I)  541  9,083 
KOC Holdings AS  170,672  871,842 
Konya Cimento Sanayi AS  738  90,110 
Koza Altin Isletmeleri AS  24,237  260,278 
Koza Anadolu Metal Madencilik Isletmeleri AS (I)  296,290  309,502 
Mardin Cimento Sanayii ve Ticaret AS  27,126  64,243 
Marshall Boya ve Vernik AS (I)  5,383  88,701 
Menderes Tekstil Sanayi ve Ticaret AS (I)  220,796  90,728 
Metro Ticari ve Mali Yatirimlar Holding AS (I)  84,642  26,215 
Migros Ticaret AS (I)  24,300  215,699 
Mutlu Yatirim Proje ve Gayrimenkul Gelistirme AS (I)  1  9 
NET Holding AS (L)  171,264  210,856 
Netas Telekomunikasyon AS (L)  48,217  140,732 
Nuh Cimento Sanayi AS  25,295  112,551 
Otokar Otomotiv Ve Savunma Sanayi AS  10,399  278,579 
Park Elektrik Uretim Madencilik Sanayi ve Ticaret AS  82,216  144,230 
Parsan Makina Parcalari (I)  28,857  65,645 
Petkim Petrokimya Holding AS (L)  481,933  767,641 
Pinar Entegre Et ve Un Sanayi AS  28,775  125,630 
Pinar SUT Mamulleri Sanayii AS  38,509  394,411 
Sarkuysan Elektrolitik Bakir Sanayi ve Ticaret AS  183,126  268,436 
Sasa Polyester Sanayi (I)  140,873  91,899 
Sekerbank TAS (I)  651,073  594,317 
Selcuk Ecza Deposu Ticaret ve Sanayi AS  255,745  269,687 
Soda Sanayii AS  104,311  172,552 
Tat Gida Sanayi AS (I)  58,025  80,558 
TAV Havalimanlari Holding AS  82,690  687,122 
Tekfen Holding AS  207,445  521,298 
Teknosa Ic ve Dis Ticaret AS  9,804  43,739 
Tekstil Bankasi AS (I)(L)  140,973  130,373 
Tofas Turk Otomobil Fabrikasi AS  101,323  623,676 
Trakya Cam Sanayi AS  352,160  431,459 
Tupras Turkiye Petrol Rafinerileri AS  54,165  1,271,769 
Turcas Petrol AS (L)  94,177  105,863 
Turk Hava Yollari (L)(I)  475,009  1,505,910 

 

57 

 


Emerging Markets Fund

Turk Telekomunikasyon AS  232,286  672,716 
Turk Traktor ve Ziraat Makineleri AS  7,187  244,145 
Turkcell Iletisim Hizmetleri AS (I)  178,635  1,048,118 
Turkcell Iletisim Hizmetleri AS, ADR (I)(L)  45,008  664,318 
Turkiye Garanti Bankasi AS  1,160,825  4,546,378 
Turkiye Halk Bankasi AS  357,012  2,618,766 
Turkiye Is Bankasi, Class C  912,868  2,357,310 
Turkiye Sinai Kalkinma Bankasi AS  1,103,740  969,898 
Turkiye Sise ve Cam Fabrikalari AS  643,093  868,536 
Turkiye Vakiflar Bankasi Tao, Class D  797,411  1,837,124 
Ulker Biskuvi Sanayi AS  89,477  661,874 
Vestel Beyaz Esya Sanayi ve Ticaret AS  32,916  120,317 
Vestel Elektronik Sanayi ve Tracaret AS (I)  159,179  306,416 
Yapi ve Kredi Bankasi AS  449,583  1,000,823 
Zorlu Enerji Elektrik Uretim AS (I)  139,311  84,422 
 
Ukraine 0.0%    328,184 
Kernel Holding SA (I)(L)  40,520  328,184 
 
United States 0.0%    299,271 
Bizlink Holding, Inc.  61,000  299,271 
 
 
Preferred Securities 1.6%    $40,221,309 
(Cost $43,731,710)     
 
Brazil 1.5%    39,419,514 
AES Tiete SA  71,219  640,128 
Alpargatas SA  109,254  534,434 
Banco ABC Brasil SA  101,882  682,703 
Banco Bradesco SA  309,608  5,648,600 
Banco Daycoval SA  90,600  366,690 
Banco do Estado do Rio Grande do Sul SA, B Shares  245,100  1,691,666 
Banco Industrial e Comercial SA  117,473  398,836 
Banco Pan SA (I)  166,400  260,918 
Banco Pine SA  61,628  224,928 
Banco Sofisa SA (I)  55,800  68,800 
Braskem SA, A Shares  6,300  42,919 
Centrais Eletricas Brasileiras SA, B Shares  114,148  629,764 
Centrais Eletricas de Santa Catarina SA  3,700  25,273 
Cia de Gas de Sao Paulo, A Shares  10,800  251,654 
Cia Energetica de Minas Gerais  128,618  1,100,880 
Cia Energetica de Sao Paulo, B Shares  112,195  1,588,322 
Cia Energetica do Ceara, A Shares  6,758  110,193 
Cia Ferro Ligas da Bahia - Ferbasa  74,676  341,938 
Cia Paranaense de Energia, B Shares  7,800  138,194 
Companhia de Transmissao de Energia Eletrica Paulista  29,018  422,728 
Eletropaulo Metropolitana Eletricidade de Sao Paulo SA  90,448  416,178 
Eucatex SA Industria e Comercio  24,300  48,850 
Forjas Taurus SA  58,514  14,377 
Gol Linhas Aereas Inteligentes SA (I)  95,100  589,250 
Itau Unibanco Holding SA  455,606  8,214,545 
Lojas Americanas SA  303,071  2,144,581 
Marcopolo SA  354,000  687,916 
Oi SA  2,490,720  1,613,377 
Parana Banco SA  21,100  108,398 
Petroleo Brasileiro SA  112,856  1,177,211 
Randon Participacoes SA  184,625  598,784 
Saraiva SA Livreiros Editores  16,800  128,111 
Suzano Papel e Celulose SA, A Shares  266,053  1,058,982 
Telefonica Brasil SA  27,400  585,700 
Unipar Carbocloro SA  854,010  198,385 
Usinas Siderurgicas de Minas Gerais SA, A Shares (I)  560,800  2,024,241 

 

58 

 


Emerging Markets Fund

Vale SA    400,039  4,641,060 
 
Chile 0.1%      490,535 
Coca-Cola Embonor SA, B Shares    720  1,221 
Embotelladora Andina SA, B Shares    86,063  286,016 
Sociedad Quimica y Minera de Chile SA, B Shares    7,394  203,298 
 
Colombia 0.0%      311,260 
Bancolombia SA    19,666  311,260 
 
Warrants 0.0%      $90,328 
(Cost $0)       
 
Golden Meditech Holdings, Ltd. (I)(N)    211,990  5,197 
Grand Canal Land PCL (I)(N)    6,873  553 
Indorama Ventures PCL (Expiration Date: 8-24-17; Strike Price: THB 36.00) (I)  113,710  17,152 
Indorama Ventures PCL (Expiration Date: 8-24-18; Strike Price: THB 43.00) (I)  87,469  12,776 
Land and Houses PCL (Expiration Date: 6-27-14; Strike Price: THB 3.50) (I)  246,900  54,497 
Loxley PCL (Expiration Date: 4-21-16; Strike Price THB 7.00) (I)    12,352  153 
 
Rights 0.0%      $47,486 
(Cost $54,528)       
 
Banco Pan SA (Expiration Date: 9-22-14; Strike Price: BRL 30.08) (I)    18,699  84 
Bumi Resources Tbk PT (Expiration Date: 09/01/2014; Strike Price: IDR 250.00) (I)  47,464,766  4,058 
China Culiangwang Beverages Holdings, Ltd. (I)(N)    190,500  3,564 
Eugene Investment & Securities Company, Ltd. (Expiration Date: 9-19-14; Strike     
Price: KRW 1905.00) (I)    37,469  9,497 
JB Financial Group Company, Ltd. (Expiration Date: 9-3-14; Strike Price: KRW     
6290.00) (I)    21,560  24,028 
Kepler Weber SA (Expiration Date: 6-15-21; Strike Price: BRL 613.00) (I)    7  175 
Meritz Financial Group, Inc. (Expiration Date: 9-19-14; Strike Price: KRW 5910.00) (I)  865  1,377 
PZ Cormay SA (Strike Price: PLN 3.40) (I)(N)    23,416  4,703 
 
  Yield (%)  Shares  Value 
 
Securities Lending Collateral 7.9%      $207,443,008 
(Cost $207,391,230)       
 
John Hancock Collateral Investment Trust (W)  0.1088(Y)  20,729,583  207,443,008 
 
Short-Term Investments 0.1%      $3,334,868 
(Cost $3,334,868)       
 
Money Market Funds 0.1%      3,334,868 
State Street Institutional Liquid Reserves Fund  0.0747(Y)  3,334,868  3,334,868 
 
 
Total investments (Cost $2,391,203,474)† 107.2%      $2,805,984,459 
 
Other assets and liabilities, net (7.2%)      ($188,646,171) 
 
Total net assets 100.0%      $2,617,338,288 

 

The percentage shown for each investment category is the total value of the category as a percentage of the net assets of the fund.

BRL  Brazilian Real 
HKD  Hong Kong Dollar 
KRW  Korean Won 
THB  Thai Baht 
ADR  American Depositary Receipts 
GDR  Global Depositary Receipt 
NVDR  Non-Voting Depositary Receipt 

 

59 

 


Emerging Markets Fund

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(N) Strike price and/or expiration date not available.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

† At 8-31-14, the aggregate cost of investment securities for federal income tax purposes was $2,413,347,075. Net unrealized appreciation aggregated $392,637,384 of which $651,012,606 related to appreciated investment securities and $258,375,222 related to depreciated investment securities.

60 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

  Shares  Value 
 
Common Stocks 99.5%    $589,486,339 
(Cost $493,366,563)     
 
Australia 6.1%    36,187,775 
Adelaide Brighton, Ltd.  113,304  375,950 
Aditya Birla Minerals, Ltd. (I)  40,783  9,904 
AED Oil, Ltd. (I)  18,722  0 
Ainsworth Game Technology, Ltd.  28,562  89,679 
AJ Lucas Group, Ltd. (I)  14,936  9,914 
Alkane Resources, Ltd. (I)  43,417  8,927 
Alliance Resources, Ltd. (I)  40,937  7,066 
Altium, Ltd.  9,381  25,409 
Amalgamated Holdings, Ltd.  26,025  239,952 
Amcom Telecommunications, Ltd.  101,922  187,247 
Ansell, Ltd.  1,212  22,547 
Antares Energy, Ltd. (I)  57,837  32,416 
AP Eagers, Ltd.  29,021  158,280 
APN News & Media, Ltd. (I)  243,192  168,254 
Aquarius Platinum, Ltd. (I)  621,954  267,083 
ARB Corp., Ltd. (L)  17,473  217,393 
Aristocrat Leisure, Ltd.  76,343  394,746 
Arrium, Ltd.  462,047  339,946 
ASG Group, Ltd. (I)  37,261  22,465 
Atlas Iron, Ltd.  124,328  66,236 
Ausdrill, Ltd.  74,956  91,513 
Ausenco, Ltd.  38,459  20,480 
Austal, Ltd. (I)  88,141  105,128 
Austbrokers Holdings, Ltd.  20,170  211,028 
Austin Engineering, Ltd. (L)  26,110  29,864 
Australian Agricultural Company, Ltd. (I)  124,050  144,279 
Australian Pharmaceutical Industries, Ltd.  118,330  64,629 
Automotive Holdings Group, Ltd.  70,356  265,747 
Aveo Group  25,154  54,112 
AVJennings, Ltd.  46,118  28,036 
AWE, Ltd. (I)  173,667  282,768 
BC Iron, Ltd.  44,650  116,539 
Beach Energy, Ltd.  421,976  641,130 
Beadell Resources, Ltd. (I)  123,034  58,996 
Bega Cheese, Ltd.  29,414  139,112 
Bentham IMF, Ltd.  26,353  48,998 
Berkeley Resources, Ltd. (I)  4,742  1,421 
Billabong International, Ltd. (I)  197,139  104,101 
Blackmores, Ltd.  2,489  70,451 
Boom Logistics, Ltd. (I)  42,444  6,349 
Bradken, Ltd.  62,294  273,708 
Breville Group, Ltd.  28,593  194,366 
Brickworks, Ltd.  16,854  221,997 
BT Investment Management, Ltd.  27,910  171,391 
Buru Energy, Ltd. (I)  5,343  4,621 
Cabcharge Australia, Ltd.  50,691  255,812 
Cape Lambert Iron Ore, Ltd. (I)  117,043  15,314 
Cardno, Ltd. (L)  48,985  301,381 
Carnarvon Petroleum, Ltd. (I)  75,535  18,691 
Carsales.com, Ltd.  29,680  308,871 
Cash Converters International, Ltd.  104,510  113,824 
Cedar Woods Properties, Ltd.  25,710  179,431 
Ceramic Fuel Cells, Ltd. (I)(L)  126,217  1,418 

 

1 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Chandler Macleod, Ltd.  6,197  2,257 
Coal of Africa, Ltd. (I)  45,649  2,648 
Cockatoo Coal, Ltd. (I)  202,916  4,527 
Codan, Ltd.  15,311  9,948 
Coffey International, Ltd. (I)  31,524  10,456 
Collins Foods, Ltd.  21,391  47,388 
Compass Resources, Ltd. (I)  15,577  0 
Corporate Travel Management, Ltd.  10,511  73,674 
Credit Corp. Group, Ltd.  4,455  41,580 
Crowe Horwath Australasia, Ltd.  95,840  32,218 
CSG, Ltd.  67,390  73,337 
CSR, Ltd.  155,444  508,551 
Cudeco, Ltd. (I)(L)  21,846  34,732 
Cue Energy Resources, Ltd. (I)  32,865  3,537 
Data#3, Ltd.  16,909  12,947 
Decmil Group, Ltd.  56,553  106,765 
Discovery Metals, Ltd. (I)(L)  78,992  2,656 
Domino's Pizza Enterprises, Ltd.  17,370  416,214 
Downer EDI, Ltd.  158,538  721,931 
Drillsearch Energy, Ltd. (I)(L)  159,949  217,622 
DuluxGroup, Ltd.  122,972  659,858 
DWS, Ltd.  13,969  16,376 
Echo Entertainment Group, Ltd.  293,206  866,576 
Elders, Ltd. (I)(L)  40,650  7,221 
Elemental Minerals, Ltd. (I)  11,100  2,383 
Emeco Holdings, Ltd.  145,230  28,539 
Energy Resources of Australia, Ltd. (I)  93,000  116,560 
Energy World Corp., Ltd. (I)  274,968  95,095 
Envestra, Ltd.  343,384  424,847 
ERM Power, Ltd.  29,578  53,034 
Ethane Pipeline Income Fund  15,720  17,338 
Euroz, Ltd.  8,183  9,400 
Evolution Mining, Ltd.  72,052  51,148 
Fairfax Media, Ltd.  656,737  531,499 
FAR, Ltd. (I)  83,631  4,060 
Finbar Group, Ltd.  59,459  85,228 
Fleetwood Corp., Ltd.  11,371  22,095 
FlexiGroup, Ltd.  70,555  258,751 
Flinders Mines, Ltd. (I)  121,835  2,617 
Focus Minerals, Ltd. (I)  509,833  5,027 
G8 Education, Ltd.  34,274  172,457 
Galaxy Resources, Ltd. (I)  16,452  843 
Gindalbie Metals, Ltd. (I)(L)  66,233  3,031 
Global Construction Services, Ltd. (I)  1,732  760 
Goodman Fielder, Ltd.  601,503  359,751 
GrainCorp, Ltd.  39,048  330,674 
Grange Resources, Ltd.  51,070  7,932 
Greenland Minerals & Energy, Ltd. (I)  39,312  5,880 
Gryphon Minerals, Ltd. (I)  26,258  3,959 
GUD Holdings, Ltd.  31,285  229,492 
Gunns, Ltd. (I)  100,882  0 
GWA Group, Ltd.  78,672  224,443 
Hansen Technologies, Ltd.  8,429  11,816 
HFA Holdings, Ltd.  1,276  1,871 
Hills, Ltd.  66,646  100,815 
Horizon Oil, Ltd. (I)  443,056  140,829 
Icon Energy, Ltd. (I)  23,206  3,683 
iiNET, Ltd.  43,765  315,916 
Imdex, Ltd.  37,597  26,356 

 

2 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Independence Group NL  86,185  377,404 
Indophil Resources NL (I)  104,144  19,493 
Infigen Energy (I)  229,890  49,447 
Infomedia, Ltd.  45,314  46,146 
International Ferro Metals, Ltd. (I)  9,556  978 
Intrepid Mines, Ltd. (I)  48,378  12,684 
Invocare, Ltd.  31,974  340,477 
IOOF Holdings, Ltd.  66,987  590,447 
Iress, Ltd. (L)  48,365  464,340 
Iron Ore Holdings, Ltd. (I)  4,139  4,620 
JB Hi-Fi, Ltd. (L)  32,465  511,374 
Karoon Gas Australia, Ltd. (I)  22,778  80,784 
Kingsgate Consolidated, Ltd. (I)  30,752  26,326 
Kingsrose Mining, Ltd. (I)  24,331  11,628 
Linc Energy, Ltd. (I)(L)  105,799  102,236 
Liquefied Natural Gas, Ltd. (I)  16,074  57,138 
Lonestar Resources, Ltd. (I)  34,714  15,743 
Lycopodium, Ltd.  1,265  2,576 
M2 Group, Ltd. (L)  45,039  310,271 
MACA, Ltd.  40,098  83,138 
Macmahon Holdings, Ltd. (I)  196,782  22,083 
Macquarie Atlas Roads Group  49,228  150,918 
Magellan Financial Group, Ltd.  23,820  298,674 
Matrix Composites & Engineering, Ltd. (I)  1,943  1,986 
Maverick Drilling & Exploration, Ltd. (I)  79,979  18,302 
MaxiTRANS Industries, Ltd.  51,752  48,830 
Mayne Pharma Group, Ltd. (I)  182,209  134,490 
McMillan Shakespeare, Ltd.  13,887  151,397 
McPherson's, Ltd.  20,700  26,309 
Medusa Mining, Ltd. (I)  28,581  32,598 
Melbourne IT, Ltd.  34,562  43,590 
Mermaid Marine Australia, Ltd.  118,508  255,759 
Mesoblast, Ltd. (I)  15,434  72,615 
Metals X, Ltd. (I)  128,000  26,894 
Metcash, Ltd.  242,202  635,869 
Mincor Resources NL  36,432  22,120 
Mineral Deposits, Ltd. (I)  34,649  49,853 
Mineral Resources, Ltd.  47,231  470,020 
Molopo Energy, Ltd. (I)  28,437  3,989 
Monadelphous Group, Ltd. (L)  29,248  428,217 
Mortgage Choice, Ltd.  27,364  74,879 
Mount Gibson Iron, Ltd.  215,287  139,070 
Myer Holdings, Ltd. (L)  206,736  467,631 
Mystate, Ltd.  28,572  131,622 
Navitas, Ltd.  55,536  278,945 
Neon Energy, Ltd. (I)(L)  217,572  5,055 
New Hope Corp., Ltd  24,666  70,463 
Newsat, Ltd. (I)(L)  230,084  60,175 
Nexus Energy, Ltd. (I)  299,265  3,633 
NIB Holdings, Ltd.  134,940  427,562 
Nick Scali, Ltd.  8,819  24,338 
Noble Mineral Resources, Ltd. (I)  41,564  349 
Northern Star Resources, Ltd.  195,803  322,285 
NRW Holdings, Ltd.  104,637  102,277 
Nufarm, Ltd.  54,937  221,277 
Oakton, Ltd.  9,591  16,703 
OceanaGold Corp. (I)  75,764  207,649 
Orocobre, Ltd. (I)  3,886  10,765 
OrotonGroup, Ltd.  8,865  37,095 

 

3 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

OZ Minerals, Ltd.  99,498  399,296 
Pacific Brands, Ltd.  302,056  149,398 
Paladin Resources, Ltd. (I)(L)  249,396  99,179 
Pan Pacific Petroleum NL (I)  67,247  4,023 
PanAust, Ltd.  137,928  295,785 
Panoramic Resources, Ltd.  33,708  25,005 
Patties Foods, Ltd.  13,226  16,308 
Peet, Ltd. (I)  117,084  144,296 
Perpetual, Ltd.  13,645  631,848 
Perseus Mining, Ltd. (I)  71,987  30,018 
Phosphagenics, Ltd. (I)  73,179  6,847 
Platinum Australia, Ltd. (I)  36,499  2,284 
PMP, Ltd. (I)  35,022  15,394 
Premier Investments, Ltd.  27,353  246,690 
Prima Biomed, Ltd. (I)  37,664  1,371 
Primary Health Care, Ltd.  153,305  647,917 
Prime Media Group, Ltd.  74,064  69,182 
Programmed Maintenance Services, Ltd.  39,697  105,736 
Qantas Airways, Ltd. (I)  44,689  61,435 
Qube Holdings, Ltd.  67,265  152,262 
RCG Corp., Ltd.  17,648  10,553 
RCR Tomlinson, Ltd.  41,458  124,856 
Reckon, Ltd.  35,555  69,711 
Red Fork Energy, Ltd. (I)  87,713  7,715 
Redflex Holdings, Ltd.  5,472  4,846 
Regis Resources, Ltd.  115,412  190,838 
Resolute Mining, Ltd. (I)  109,518  58,836 
Resource Generation, Ltd. (I)  9,069  1,237 
Retail Food Group, Ltd.  41,861  185,434 
Rex Minerals, Ltd. (I)  25,561  7,385 
Ridley Corp., Ltd.  92,109  76,463 
Roc Oil Company, Ltd. (I)  294,813  188,532 
Ruralco Holdings, Ltd.  5,507  17,642 
SAI Global, Ltd.  65,755  288,275 
Salmat, Ltd.  15,825  25,281 
Samson Oil & Gas, Ltd. (I)  96,490  1,905 
Sandfire Resources NL (I)  33,447  198,478 
Saracen Mineral Holdings, Ltd. (I)  131,134  47,605 
Sedgman, Ltd.  15,038  7,998 
Select Harvests, Ltd.  18,318  100,648 
Senex Energy, Ltd. (I)  283,286  154,810 
Servcorp, Ltd.  10,693  53,449 
Service Stream, Ltd.  22,001  4,321 
Seven Group Holdings, Ltd.  40,032  288,953 
Seven West Media, Ltd.  239,573  415,759 
Seymour Whyte, Ltd.  6,338  10,357 
Sigma Pharmaceuticals, Ltd.  366,039  282,397 
Silex Systems, Ltd. (I)  30,817  25,064 
Silver Chef, Ltd.  815  4,820 
Silver Lake Resources, Ltd. (I)  151,467  63,459 
Sirtex Medical, Ltd.  14,422  293,925 
Skilled Group, Ltd.  70,249  178,790 
Slater & Gordon, Ltd.  53,824  315,936 
SMS Management & Technology, Ltd. (L)  29,758  118,663 
Southern Cross Electrical Engineering, Ltd.  1,200  656 
Southern Cross Media Group, Ltd.  168,139  168,285 
Spark Infrastructure Group  379,529  698,366 
Specialty Fashion Group, Ltd.  51,331  43,633 
St. Barbara, Ltd. (I)  94,501  9,342 

 

4 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Strike Energy, Ltd. (I)  39,151  3,854 
STW Communications Group, Ltd.  119,812  145,644 
Sundance Energy Australia, Ltd. (I)  132,422  168,364 
Sundance Resources, Ltd. (I)  390,505  31,087 
Sunland Group, Ltd.  38,548  62,820 
Super Retail Group, Ltd.  43,477  384,056 
Swick Mining Services, Ltd.  30,800  7,899 
Tabcorp Holdings, Ltd.  56,929  190,915 
Tap Oil, Ltd. (I)  77,522  46,744 
Tassal Group, Ltd.  38,102  142,030 
Technology One, Ltd.  71,665  216,277 
Ten Network Holdings, Ltd. (I)  662,148  157,927 
TFS Corp., Ltd.  34,365  63,812 
The Reject Shop, Ltd.  10,731  96,855 
Thorn Group, Ltd.  15,982  36,573 
Tiger Resources, Ltd. (I)  291,282  81,613 
Tox Free Solutions, Ltd.  51,646  134,625 
Transfield Services, Ltd.  119,020  194,885 
Transpacific Industries Group, Ltd.  410,130  344,823 
Treasury Group, Ltd.  6,211  64,365 
Treasury Wine Estates, Ltd.  97,464  466,525 
Troy Resources, Ltd. (I)  34,428  25,931 
UGL, Ltd.  59,365  360,817 
UXC, Ltd.  90,235  72,488 
Village Roadshow, Ltd.  26,040  181,095 
Virgin Australia Holdings, Ltd. (I)  739,737  190,135 
Vision Eye Institute, Ltd.  55,907  36,540 
Vocus Communications, Ltd.  27,812  139,835 
Watpac, Ltd.  13,238  11,507 
WDS, Ltd.  18,432  17,229 
Webjet, Ltd.  14,957  41,828 
Western Areas, Ltd.  71,356  328,001 
Western Desert Resources, Ltd. (I)  102,010  18,128 
White Energy Company, Ltd. (I)(L)  29,677  5,264 
Whitehaven Coal, Ltd. (I)(L)  208,282  384,866 
Wide Bay Australia, Ltd.  4,752  25,385 
Wotif.com Holdings, Ltd.  46,694  143,932 
 
Austria 0.9%    5,258,112 
A-TEC Industries AG (I)  1,566  0 
Agrana Beteiligungs AG  898  96,883 
ams AG  15,100  539,700 
Austria Technologie & Systemtechnik AG  1,610  18,580 
CA Immobilien Anlagen AG (I)  1,728  35,737 
CAT Oil AG  4,813  103,539 
Conwert Immobilien Invest SE (I)  7,787  97,081 
DO & CO AG  2,686  182,455 
EVN AG  8,462  114,522 
Flughafen Wien AG  3,749  336,151 
Kapsch Trafficcom AG  1,796  52,261 
Lenzing AG  3,487  212,011 
Mayr-Melnhof Karton AG  3,092  360,653 
Oesterreichische Post AG  11,569  541,589 
Palfinger AG  5,059  161,278 
POLYTEC Holding AG  5,464  49,628 
RHI AG  9,842  294,997 
Rosenbauer International AG  1,492  135,686 
S IMMO AG (I)  24,153  185,847 
Schoeller-Bleckmann Oilfield Equipment AG  3,744  393,616 

 

5 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Semperit AG Holding  3,087  174,800 
Strabag SE  1,920  52,597 
UNIQA Insurance Group AG  11,822  141,851 
Wienerberger AG  48,890  731,845 
Zumtobel AG  11,734  244,805 
 
Bahamas 0.0%    114,534 
United International Enterprises  570  114,534 
 
Belgium 1.2%    7,281,740 
Ablynx NV (I)  10,485  118,499 
Ackermans & van Haaren NV  9,050  1,094,665 
AGFA-Gevaert NV (I)  94,981  257,881 
Arseus NV  8,934  486,669 
Atenor Group  171  8,582 
Banque Nationale de Belgique  65  297,309 
Barco NV  4,894  346,919 
Cie d'Entreprises CFE  3,589  381,639 
Cie Immobiliere de Belgique SA  592  33,398 
Cie Maritime Belge SA  5,192  124,304 
D'ieteren SA  7,873  326,984 
Deceuninck NV  14,114  38,602 
Econocom Group  21,104  190,189 
Elia System Operator SA  10,736  495,603 
Euronav NV (I)  3,699  45,200 
EVS Broadcast Equipment SA  5,232  226,067 
Exmar NV  11,216  173,965 
Galapagos NV (I)  6,955  115,156 
Gimv NV  675  32,982 
Ion Beam Applications (I)  6,698  101,859 
Kinepolis  7,185  271,260 
Lotus Bakeries SA  50  62,412 
MDxHealth (I)  4,665  24,651 
Melexis NV  6,229  285,617 
Mobistar SA  1,846  36,454 
NV Bekaert SA  15,640  581,396 
Nyrstar NV (I)(L)  34,774  104,161 
Picanol (I)  592  21,270 
Recticel SA  6,564  62,134 
Resilux  18  2,459 
Rezidor Hotel Group AB (I)  27,420  153,093 
RHJ International SA (I)  23,382  119,095 
Roularta Media Group NV (I)  668  11,413 
Sapec SA (I)  305  15,723 
Sioen Industries NV  1,073  17,658 
Sipef SA  1,363  98,093 
Tessenderlo Chemie NV  7,036  210,756 
ThromboGenics NV (I)(L)  6,765  73,886 
Van de Velde NV  2,675  134,206 
Viohalco SA (I)  18,237  99,531 
 
Bermuda 0.4%    2,444,757 
Archer, Ltd. (I)  76,017  130,788 
Catlin Group, Ltd.  99,663  850,934 
Frontline, Ltd. (I)  17,655  35,756 
Golden Ocean Group, Ltd.  91,751  151,191 
Hiscox, Ltd.  99,381  1,071,191 
Hoegh LNG Holdings, Ltd. (I)  13,024  170,189 
Northern Offshore, Ltd.  18,330  34,708 

 

6 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Cambodia 0.0%    151,163 
NagaCorp, Ltd.  194,000  151,163 
 
Canada 10.3%    60,696,729 
5N Plus, Inc. (I)  22,489  73,633 
Absolute Software Corp.  12,703  82,599 
Acadian Timber Corp.  4,303  55,405 
Advantage Oil & Gas, Ltd. (I)  74,864  462,693 
Aecon Group, Inc.  25,228  384,232 
AG Growth International, Inc.  5,100  220,407 
AGF Management, Ltd., Class B  28,799  329,495 
Ainsworth Lumber Company, Ltd. (I)(L)  44,103  109,923 
Air Canada, Class A (I)  14,084  109,454 
Akita Drilling, Ltd.  300  4,431 
Alamos Gold, Inc.  43,258  397,848 
Alaris Royalty Corp. (L)  7,200  218,854 
Alexco Resource Corp. (I)  6,700  6,655 
Algoma Central Corp.  1,600  24,251 
Algonquin Power & Utilities Corp.  59,553  495,682 
Alliance Grain Traders, Inc.  6,414  154,908 
Alterra Power Corp. (I)  16,806  4,946 
Altius Minerals Corp. (I)(L)  2,400  31,564 
Altus Group, Ltd.  10,355  198,281 
Alvopetro Energy, Ltd. (I)(L)  37,966  34,918 
Amica Mature Lifestyles, Inc.  10,700  71,346 
Andrew Peller, Ltd.  1,275  17,472 
Arsenal Energy, Inc. (L)  3,793  31,501 
Artek Exploration, Ltd. (I)(L)  14,934  42,441 
Asanko Gold, Inc. (I)  3,731  8,579 
Athabasca Oil Corp. (I)  27,340  199,147 
ATS Automation Tooling Systems, Inc. (I)  31,991  392,201 
AuRico Gold, Inc.  31,814  144,835 
AutoCanada, Inc.  6,443  401,465 
Avalon Rare Metals, Inc. (I)  8,025  3,395 
Avigilon Corp. (I)  5,100  87,009 
Axia NetMedia Corp.  18,035  43,126 
B2Gold Corp. (I)(L)  214,153  551,484 
Badger Daylighting, Ltd.  15,960  433,458 
Ballard Power Systems, Inc. (I)(L)  9,800  37,405 
Bankers Petroleum, Ltd. (I)  105,586  640,916 
Bellatrix Exploration, Ltd. (I)  52,156  403,894 
Birch Mountain Resources, Ltd. (I)  11,200  0 
Birchcliff Energy, Ltd. (I)  34,888  407,503 
Bird Construction, Inc. (L)  16,379  226,863 
Black Diamond Group, Ltd.  12,917  356,634 
BlackPearl Resources, Inc. (I)  75,408  154,658 
BMTC Group, Inc., Class A  3,096  42,711 
Bonterra Energy Corp. (L)  8,178  495,208 
Boralex, Inc.  9,400  117,576 
Brookfield Residential Properties, Inc. (I)  2,187  44,177 
Calfrac Well Services, Ltd.  24,804  467,884 
Calian Technologies, Ltd.  4,058  73,897 
Calvalley Petroleums, Inc.  6,543  8,726 
Canaccord Genuity Group, Inc. (L)  39,837  441,860 
Canacol Energy, Ltd. (I)  44,693  280,333 
Canadian Energy Services & Technology Corp. (L)  56,652  563,759 
Canadian Western Bank  18,303  684,616 
Canam Group, Inc.  15,936  167,084 

 

7 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

CanElson Drilling, Inc.  31,500  215,833 
Canexus Corp. (L)  22,895  112,654 
Canfor Corp. (I)  6,995  162,250 
Canfor Pulp Products, Inc.  13,360  136,389 
CanWel Building Materials Group, Ltd. (L)  11,650  66,109 
Canyon Services Group, Inc.  24,600  372,405 
Capital Power Corp.  29,020  749,988 
Capstone Infrastructure Corp. (L)  29,492  122,872 
Capstone Mining Corp. (I)  119,800  298,591 
Cascades, Inc.  31,418  182,330 
Cathedral Energy Services, Ltd.  11,360  48,269 
CCL Industries, Inc.  6,378  664,842 
Celestica, Inc. (I)  63,402  697,405 
Centerra Gold, Inc. (L)  37,478  226,116 
Cequence Energy, Ltd. (I)  64,292  137,773 
Cervus Equipment Corp.  2,192  41,167 
China Gold International Resources Corp., Ltd. (I)(L)  71,100  201,405 
Chinook Energy, Inc. (I)  16,391  36,481 
Cineplex, Inc. (L)  19,639  739,827 
Clarke, Inc.  2,900  27,605 
Claude Resources, Inc. (I)  21,200  5,362 
Clearwater Seafoods, Inc.  3,900  29,950 
Cogeco Cable, Inc.  4,452  256,728 
Cogeco, Inc.  1,529  80,437 
Colabor Group, Inc.  3,600  12,946 
COM DEV International, Ltd.  35,729  135,056 
Computer Modelling Group, Ltd.  10,500  122,933 
Connacher Oil and Gas, Ltd. (I)  57,057  9,708 
Contrans Group, Inc., Class A  8,562  120,087 
Copper Mountain Mining Corp. (I)  41,468  111,746 
Corby Spirit and Wine, Ltd.  3,522  67,117 
Corridor Resources, Inc. (I)(L)  11,000  20,335 
Corus Entertainment, Inc. (L)  29,790  669,885 
Cott Corp.  40,331  302,044 
Crew Energy, Inc. (I)  46,873  480,671 
DeeThree Exploration, Ltd. (I)  31,309  322,506 
Delphi Energy Corp. (I)  72,367  301,501 
Denison Mines Corp. (I)  184,719  249,735 
DH Corp. (L)  27,154  812,148 
DHX Media, Ltd.  1,971  13,795 
DirectCash Payments, Inc. (L)  4,420  67,034 
Dominion Diamond Corp. (I)  30,519  413,407 
Dorel Industries, Inc., Class B  10,074  340,494 
DragonWave, Inc. (I)(L)  2,598  3,847 
DragonWave, Inc. (I)  4,900  7,350 
Duluth Metals, Ltd. (I)  17,000  4,691 
Dundee Precious Metals, Inc. (I)  19,524  100,376 
E-L Financial Corp., Ltd.  74  48,322 
Eastern Platinum, Ltd. (I)  11,202  9,375 
easyhome, Ltd.  700  15,979 
EcoSynthetix, Inc. (I)  3,185  4,892 
Enbridge Income Fund Holdings, Inc.  16,746  497,775 
Endeavour Silver Corp. (I)  12,285  68,465 
Enerflex, Ltd.  16,741  323,026 
Energy Fuels, Inc. (I)  4,269  32,156 
Enghouse Systems, Ltd.  6,802  218,580 
Ensign Energy Services, Inc.  19,322  289,839 
Entree Gold, Inc. (I)  7,500  2,104 
Epsilon Energy, Ltd. (I)  12,800  58,155 

 

8 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Equitable Group, Inc.  1,700  101,909 
Essential Energy Services, Ltd.  57,270  143,794 
Evertz Technologies, Ltd.  7,228  116,268 
Excellon Resources, Inc. (I)  4,320  5,562 
Exchange Income Corp.  1,066  19,285 
Exco Technologies, Ltd.  9,290  94,412 
Exeter Resource Corp. (I)  7,379  5,090 
EXFO, Inc. (U.S. Exchange) (I)  8,512  37,187 
Extendicare, Inc. (L)  36,200  285,658 
Fiera Capital Corp.  2,500  30,419 
Firm Capital Mortgage Investment Corp. (L)  1,400  16,314 
First Majestic Silver Corp. (I)  18,800  192,617 
First National Financial Corp.  600  12,322 
FirstService Corp.  8,408  461,871 
Forsys Metals Corp. (I)  15,300  4,850 
Fortress Paper, Ltd. (I)(L)  2,404  5,660 
Fortuna Silver Mines, Inc. (I)  55,059  283,068 
Fortune Minerals, Ltd. (I)  3,334  966 
Fraser Papers, Inc. (I)  4,800  0 
Gamehost, Inc.  3,700  57,169 
Gasfrac Energy Services, Inc. (I)(L)  18,100  17,479 
Genesis Land Development Corp.  100  428 
Glacier Media, Inc.  8,800  11,088 
GLENTEL, Inc.  5,800  58,702 
Gluskin Sheff + Associates, Inc.  9,294  282,846 
GLV, Inc., Class A (I)  1,851  5,328 
GMP Capital, Inc.  19,948  152,642 
Golden Star Resources, Ltd. (I)(L)  38,298  19,020 
Golden Star Resources, Ltd. (I)  13,800  6,652 
Gran Tierra Energy, Inc. (I)  95,342  639,238 
Great Canadian Gaming Corp. (I)  21,929  398,324 
Great Panther Silver, Ltd. (I)  19,650  24,006 
Guardian Capital Group, Ltd.  200  3,381 
Guyana Goldfields, Inc. (I)  15,200  45,294 
Hanfeng Evergreen, Inc. (I)  3,700  17 
Heroux-Devtek, Inc. (I)  13,976  140,621 
High Liner Foods, Inc.  2,800  54,980 
HNZ Group, Inc.  700  13,198 
Home Capital Group, Inc.  6,924  345,277 
Horizon North Logistics, Inc.  39,033  219,343 
HudBay Minerals, Inc.  62,211  629,376 
Hudson's Bay Company  2,468  37,271 
IMAX Corp. (I)(L)  5,565  154,057 
IMAX Corp. (U.S. Exchange) (I)  15,379  426,306 
Imperial Metals Corp. (I)  14,800  122,505 
Imris, Inc. (I)  3,000  2,483 
Innergex Renewable Energy, Inc.  34,877  342,900 
Interfor Corp. (I)  23,555  360,485 
International Tower Hill Mines, Ltd. (I)  4,097  2,788 
Intertape Polymer Group, Inc.  18,311  248,739 
Ivanhoe Energy, Inc. (I)  1,543  3,533 
Just Energy Group, Inc. (L)  67,612  401,705 
K-Bro Linen, Inc. (L)  1,839  67,299 
KAB Distribution, Inc. (I)  18,405  2 
Katanga Mining, Ltd. (I)  66,538  30,598 
Kelt Exploration, Ltd. (I)  5,196  65,279 
Killam Properties, Inc. (L)  20,699  200,651 
Kingsway Financial Services, Inc. (I)  2,175  13,983 
Kirkland Lake Gold, Inc. (I)(L)  33,309  182,889 

 

9 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Knight Therapeutics, Inc. (I)  4,223  21,245 
Lake Shore Gold Corp. (I)  93,233  104,612 
Laurentian Bank of Canada  11,871  543,382 
Le Chateau, Inc. (I)  2,400  2,384 
Legacy Oil + Gas, Inc. (I)  58,052  418,051 
Leisureworld Senior Care Corp. (L)  12,633  159,176 
Leon's Furniture, Ltd.  7,809  108,377 
Leucrotta Exploration, Inc. (I)  24,000  48,340 
Lightstream Resources, Ltd.  75,972  438,797 
Linamar Corp.  7,737  446,587 
Liquor Stores N.A., Ltd. (L)  9,895  122,038 
Long Run Exploration, Ltd. (L)  54,489  264,101 
Lucara Diamond Corp.  122,592  273,980 
MacDonald Dettwiler & Associates, Ltd.  3,248  247,999 
Magellan Aerospace Corp.  2,800  29,100 
Mainstreet Equity Corp. (I)  1,600  62,113 
Major Drilling Group International, Inc.  20,111  150,930 
Mandalay Resources Corp. (L)  38,300  40,156 
Manitoba Telecom Services, Inc.  9,400  266,966 
Maple Leaf Foods, Inc.  35,629  663,559 
Martinrea International, Inc.  31,118  408,973 
Maxim Power Corp. (I)  6,300  18,483 
McCoy Global, Inc.  1,100  6,171 
Mediagrif Interactive Technologies, Inc.  600  10,573 
Medical Facilities Corp.  11,141  181,978 
Mega Uranium, Ltd. (I)  26,600  5,871 
Melcor Developments, Ltd.  4,900  113,160 
Migao Corp. (I)  3,400  4,378 
Minera Andes Acquisition Corp. (I)(L)  6,047  16,573 
Mitel Networks Corp. (I)  17,722  177,660 
Morneau Shepell, Inc.  15,055  236,078 
MTY Food Group, Inc.  1,758  53,663 
Mullen Group, Ltd. (L)  30,066  802,461 
Nautilus Minerals, Inc. (I)  20,040  9,584 
Nevada Copper Corp. (I)  6,158  12,743 
Nevsun Resources, Ltd. (L)  99,555  412,028 
New Flyer Industries, Inc.  15,187  191,356 
New Millennium Iron Corp. (I)  2,000  570 
Newalta Corp.  19,007  382,657 
Niko Resources, Ltd. (I)(L)  29,700  43,158 
Norbord, Inc.  9,523  202,056 
North American Energy Partners, Inc.  3,335  22,943 
North American Palladium, Ltd. (I)  80,700  22,236 
Northern Dynasty Minerals, Ltd. (I)(L)  6,576  4,415 
Northland Power, Inc.  29,111  484,603 
Novagold Resources, Inc. (I)  19,400  76,544 
NuVista Energy, Ltd. (I)  43,102  461,821 
Orvana Minerals Corp. (I)  9,998  3,770 
Painted Pony Petroleum, Ltd. (I)  5,576  74,617 
Pan American Silver Corp.  58,699  842,182 
Parex Resources, Inc. (I)  42,755  551,690 
Parkland Fuel Corp. (L)  24,902  473,397 
Pason Systems, Inc.  22,154  706,002 
Perpetual Energy, Inc. (I)  30,632  57,472 
PHX Energy Services Corp.  7,731  110,565 
Pilot Gold, Inc. (I)  4,070  4,866 
Platinum Group Metals, Ltd. (I)  11,200  11,846 
Points International, Ltd. (I)(L)  3,410  60,529 
Polymet Mining Corp. (I)(L)  20,250  23,653 

 

10 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Premium Brands Holdings Corp.  7,221  162,311 
Primero Mining Corp. (I)(L)  34,471  234,604 
Pulse Seismic, Inc.  28,891  81,840 
Pure Technologies, Ltd.  4,045  28,683 
QLT, Inc. (I)  8,200  45,778 
Questerre Energy Corp. (I)  26,400  28,651 
RB Energy, Inc. (I)  50,909  16,856 
Reitmans Canada, Ltd.  1,503  8,073 
Reitmans Canada, Ltd., Class A (L)  22,570  123,717 
Richelieu Hardware, Ltd.  4,946  225,625 
Richmont Mines, Inc. (I)  3,200  8,859 
Ritchie Brothers Auctioneers, Inc. (L)  28,526  677,493 
RMP Energy, Inc. (I)  46,017  370,320 
Rock Energy, Inc. (I)  13,173  93,167 
Rocky Mountain Dealerships, Inc. (L)  6,328  64,485 
Rogers Sugar, Inc. (L)  33,151  149,093 
RONA, Inc.  50,950  669,618 
Rubicon Minerals Corp. (I)  21,100  30,079 
Russel Metals, Inc.  23,007  771,908 
Sabina Gold & Silver Corp. (I)  8,968  6,598 
San Gold Corp. (I)  20,836  2,300 
Sandstorm Gold, Ltd. (I)  15,625  92,833 
Sandvine Corp. (I)  72,744  220,112 
Savanna Energy Services Corp. (L)  34,333  248,506 
Scorpio Mining Corp. (I)  24,416  7,635 
Sears Canada, Inc. (L)  10,168  137,095 
Secure Energy Services, Inc.  15,815  389,957 
SEMAFO, Inc.  47,507  211,472 
ShawCor, Ltd.  12,001  650,436 
Sherritt International Corp.  118,842  466,711 
Shore Gold, Inc. (I)  400  110 
Sierra Wireless, Inc. (I)(L)  2,900  81,229 
Sierra Wireless, Inc. (I)  11,249  314,926 
Silver Standard Resources, Inc. (I)(L)  23,810  223,581 
Solium Capital, Inc. (I)  11,629  84,707 
Southern Pacific Resource Corp. (I)  72,856  4,355 
Sprott Resource Corp. (I)(L)  45,670  137,770 
Sprott, Inc.  36,451  99,902 
Spyglass Resources Corp. (L)  39,338  56,802 
St Andrew Goldfields, Ltd. (I)  15,500  4,134 
Stantec, Inc.  5,443  370,913 
Stella-Jones, Inc.  12,507  343,244 
Stornoway Diamond Corp. (I)  2,566  1,510 
Strad Energy Services, Ltd.  8,902  41,264 
Stuart Olson Inc  7,100  66,867 
Student Transportation of America, Ltd. (L)  22,413  145,119 
SunOpta, Inc. (I)  22,862  303,621 
SunOpta, Inc. (U.S. Exchange) (I)  2,100  27,909 
Superior Plus Corp. (L)  42,100  574,601 
Surge Energy, Inc. (L)  67,976  542,658 
TAG Oil, Ltd. (I)(L)  20,222  44,450 
Taseko Mines, Ltd. (I)  58,536  128,136 
Tembec, Inc. (I)  40,748  126,295 
Teranga Gold Corp. (I)  17,598  13,919 
Teranga Gold Corp., ADR (I)  3,505  2,794 
The Descartes Systems Group, Inc. (I)  10,532  147,233 
The North West Company, Inc.  16,137  365,691 
Theratechnologies, Inc. (I)  6,398  3,236 
Timmins Gold Corp. (I)  66,972  116,414 

 

11 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

TORC Oil & Gas, Ltd.  22,180  297,828 
Toromont Industries, Ltd.  19,236  481,033 
Torstar Corp., Class B (L)  32,264  235,014 
Total Energy Services, Inc.  10,539  216,634 
Touchstone Exploration, Inc. (I)  10,234  8,000 
Tourmaline Oil Corp. (I)  1,005  50,902 
Transcontinental, Inc., Class A  26,887  373,643 
TransForce, Inc.  27,386  704,989 
TransGlobe Energy Corp.  30,627  207,598 
Transition Therapeutics, Inc. (I)  3,200  23,839 
Trican Well Service, Ltd.  54,044  780,862 
Trinidad Drilling, Ltd.  45,242  416,095 
Twin Butte Energy, Ltd.  111,685  195,164 
UEX Corp. (I)  14,600  5,908 
Uni-Select, Inc.  6,540  172,086 
Valener, Inc.  13,804  204,400 
Vecima Networks, Inc.  2,921  22,701 
Veresen, Inc.  512  8,768 
Vicwest, Inc.  5,763  59,946 
Virginia Mines, Inc. (I)  1,963  23,127 
Wajax Corp.  6,347  215,108 
Wesdome Gold Mines, Ltd. (I)  11,600  8,855 
Western Energy Services Corp.  22,926  225,612 
Western Forest Products, Inc.  90,704  205,216 
WesternOne, Inc.  8,400  65,976 
Westport Innovations, Inc. (I)(L)  2,300  33,143 
Westshore Terminals Investment Corp.  6,795  226,042 
Whistler Blackcomb Holdings, Inc.  11,451  191,886 
Whitecap Resources, Inc. (L)  49,430  836,941 
Wi-Lan, Inc.  55,498  214,887 
Winpak, Ltd.  9,100  246,059 
WSP Global, Inc.  12,378  415,294 
Xtreme Drilling and Coil Services Corp. (I)  6,548  29,870 
Zargon Oil & Gas, Ltd.  10,661  78,440 
Zenith Epigenetics Corp. (I)  5,300  2,096 
 
Cayman Islands 0.0%    66,669 
Endeavour Mining Corp. (I)(L)  79,658  66,669 
 
China 0.1%    284,101 
Aupu Group Holding Company, Ltd.  108,000  20,217 
Bund Center Investment, Ltd.  222,000  36,349 
Delong Holdings, Ltd. (I)  45,500  8,376 
HanKore Environment Tech Group, Ltd. (I)  8,400  5,921 
Joyou AG (I)  308  4,645 
Sino Grandness Food Industry Group, Ltd. (I)  72,000  40,597 
Xinyi Solar Holdings, Ltd.  566,000  167,996 
 
Cyprus 0.1%    357,093 
Bank of Cyprus PCL (I)  157,222  0 
Deep Sea Supply PLC  19,635  28,885 
ProSafe SE  49,091  300,615 
Songa Offshore SE (I)  69,207  27,593 
 
Denmark 1.7%    9,714,822 
ALK-Abello A/S  1,799  241,141 
Alm Brand A/S (I)  33,471  184,528 
Ambu A/S  2,023  145,972 
Auriga Industries A/S (I)  5,953  330,292 
Bang & Olufsen A/S (I)  10,516  120,926 

 

12 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Bavarian Nordic A/S (I)  11,114  220,207 
BoConcept Holding A/S (I)  75  1,465 
Brodrene Hartmann A/S  800  25,431 
D/S Norden A/S  6,864  217,694 
Dfds A/S  1,610  137,331 
East Asiatic Company, Ltd. A/S  2,528  25,113 
FLSmidth & Company A/S (L)  14,671  785,363 
Fluegger A/S  225  16,284 
Genmab A/S (I)  12,656  507,112 
GN Store Nord A/S  45,676  1,041,816 
Gronlandsbanken AB  20  2,273 
Harboes Bryggeri A/S  441  7,374 
IC Companys A/S  3,014  94,899 
Jeudan A/S  492  51,181 
Jyske Bank A/S (I)  19,610  1,073,557 
NKT Holding A/S  8,097  478,090 
Nordjyske Bank A/S  1,190  26,955 
Onxeo (I)  1,645  13,638 
Parken Sport & Entertainment A/S (I)  864  11,289 
PER Aarsleff A/S  827  154,719 
Ringkjoebing Landbobank A/S  1,164  235,250 
Rockwool International A/S, B Shares  2,189  344,810 
Royal Unibrew A/S (I)  3,238  576,842 
Schouw & Company A/S  4,906  235,482 
SimCorp A/S  11,721  345,634 
Solar A/S  2,890  178,592 
Spar Nord Bank A/S  31,135  333,080 
Sydbank A/S (I)  22,090  680,702 
TK Development A/S (I)  20,749  31,806 
Topdanmark A/S (I)  20,249  625,082 
Vestas Wind Systems A/S (I)  4,045  171,442 
Vestjysk Bank A/S (I)  3,265  8,962 
Zealand Pharma A/S (I)  2,591  32,488 
 
Faroe Islands 0.1%    239,088 
Bakkafrost P/F  11,056  239,088 
 
Finland 2.5%    14,693,600 
Afarak Group OYJ (I)  20,289  8,406 
Ahlstrom OYJ  2,379  24,020 
Aktia Bank OYJ  7,313  92,650 
Alma Media OYJ (I)  11,325  42,599 
Amer Sports OYJ  42,751  855,027 
Apetitt OYJ  930  20,291 
Aspo OYJ  4,876  40,411 
Atria PLC  2,503  23,497 
BasWare OYJ  1,417  61,326 
Biotie Therapies OYJ (I)  35,851  9,446 
Cargotec Corp. OYJ  13,137  477,352 
Caverion Corp.  39,502  318,640 
Citycon OYJ  99,549  366,734 
Cramo OYJ  3,712  66,654 
Digia PLC (I)  2,622  12,569 
Elektrobit OYJ  10,961  39,310 
Elisa OYJ, Class A  54,577  1,487,803 
F-Secure OYJ  38,302  130,810 
Finnair OYJ (I)  35,466  118,065 
Finnlines OYJ (I)  2,378  42,631 
Fiskars OYJ Abp  11,949  289,029 

 

13 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

HKScan OYJ  7,003  32,710 
Huhtamaki OYJ  29,001  778,425 
Ilkka-Yhtyma OYJ  2,083  6,021 
Kemira OYJ  42,097  587,229 
Kesko OYJ, A Shares  1,917  68,388 
Kesko OYJ, B Shares  22,023  806,054 
Konecranes OYJ  18,010  572,195 
Lassila & Tikanoja OYJ  10,137  181,834 
Lemminkainen OYJ (I)  993  16,058 
Metsa Board OYJ, Series B  88,841  405,980 
Metso OYJ  3,555  139,661 
Neste Oil OYJ  52,692  1,030,494 
Okmetic OYJ (I)  2,212  12,927 
Olvi OYJ, Series A  5,156  170,938 
Oriola-KD OYJ (I)  29,378  90,684 
Orion OYJ, Class B (L)  24,449  961,065 
Orion OYJ, Series A  6,771  262,248 
Outokumpu OYJ (I)  28,887  223,920 
Outotec OYJ (L)  57,733  520,811 
PKC Group OYJ  7,087  184,874 
Ponsse OYJ  1,465  23,839 
Poyry OYJ (I)  12,889  59,614 
Raisio OYJ  42,168  212,928 
Ramirent OYJ  26,482  236,123 
Rapala VMC OYJ  617  4,079 
Sanoma OYJ  14,882  109,559 
Stockmann OYJ ABP, Series A  1,949  24,687 
Stockmann OYJ ABP, Series B  7,056  89,490 
Talvivaara Mining Company PLC (I)  90,559  7,168 
Technopolis OYJ  30,810  171,100 
Teleste OYJ  1,377  8,516 
Tieto OYJ  24,201  658,429 
Tikkurila OYJ  13,250  314,024 
Uponor OYJ (L)  24,921  383,336 
Vacon PLC  7,998  296,167 
Vaisala OYJ  3,370  99,283 
YIT OYJ (L)  45,085  415,472 
 
France 3.9%    23,239,021 
ABC Arbitrage  1,775  10,943 
Actia Group  1,612  10,540 
Air France-KLM (I)(L)  53,194  557,166 
Akka Technologies SA  1,483  54,311 
ALBIOMA  6,532  165,460 
Altamir  3,756  56,985 
Alten SA  9,193  412,929 
Altran Technologies SA  51,932  540,256 
April  6,582  149,200 
Archos SA (I)  432  1,550 
Assystem SA  4,749  118,872 
Aubay  677  10,457 
Audika Groupe (I)  166  2,592 
Axway Software SA  728  21,429 
Beneteau SA (I)  17,083  290,840 
Bigben Interactive  107  892 
BioMerieux SA  4,170  437,318 
Boiron SA  2,707  236,852 
Bonduelle SCA  5,499  155,136 
Bongrain SA  1,532  118,773 

 

14 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Burelle SA  123  103,469 
Cegedim SA (I)  1,622  58,551 
Cegid SA  1,783  68,630 
Chargeurs SA (I)  6,364  47,867 
Cie des Alpes (I)  1,909  39,950 
Club Mediterranee SA (I)  4,985  140,830 
Compagnie Plastic Omnium SA  18,208  480,741 
Derichebourg SA  30,974  91,361 
Devoteam SA  1,307  29,120 
Eiffage SA  1,682  108,993 
Electricite de Strasbourg SA  142  20,487 
Eramet (I)  370  40,678 
Esso SA Francaise  513  22,583 
Etablissements Maurel et Prom SA  20,452  319,169 
Euler Hermes SA  680  77,343 
Euro Disney SCA (I)  3,416  16,347 
Exel Industries SA  185  12,815 
Faiveley Transport  1,900  130,117 
Faurecia  18,091  609,408 
Fimalac  2,383  182,498 
Fleury Michon SA  344  24,181 
GameLoft SA (I)  22,556  143,512 
Gaumont SA  489  25,062 
GEA  126  11,463 
GL Events SA  3,290  74,723 
Groupe Crit  887  53,382 
Groupe Eurotunnel SA  17,307  222,769 
Groupe Gorge (L)  478  11,818 
Guerbet SA  1,644  74,844 
Haulotte Group SA  4,229  69,620 
Havas SA  92,745  758,680 
Hi-Media SA (I)  12,010  43,564 
Ingenico SA (L)  9,221  886,267 
Interparfums SA  3,681  113,608 
Ipsen SA  8,540  407,888 
IPSOS  12,659  378,331 
Jacquet Metal Service  4,671  97,299 
Korian-Medica  13,418  469,275 
Lagardere SCA  39,934  1,099,872 
Laurent-Perrier  543  49,224 
Lectra  8,076  84,484 
LISI  1,564  240,569 
Maisons France Confort  1,083  46,994 
Manitou BF SA  2,368  40,600 
Manutan International  908  53,989 
Marseill Tunnel Prado-Carena  219  8,849 
Mersen  3,157  87,126 
Metabolic Explorer SA (I)  6,020  23,929 
Metropole Television SA  18,150  343,261 
MGI Coutier  2,860  50,565 
Montupet  2,372  166,150 
Naturex (L)  2,179  168,976 
Neopost SA  11,337  757,190 
Nexans SA (I)  9,495  400,314 
Nexity SA  9,689  396,363 
NextRadioTV  1,774  56,128 
Norbert Dentressangle SA  1,271  181,281 
NRJ Group (I)  2,509  23,944 
Orpea  10,658  703,215 

 

15 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Parrot SA (I)  2,312  57,556 
Pierre & Vacances SA (I)  1,815  73,771 
Rallye SA  9,462  452,467 
Recylex SA (I)  2,379  7,691 
Remy Cointreau SA  575  45,718 
Robertet SA  258  57,621 
Rubis SCA  12,034  726,067 
Saft Groupe SA (L)  11,499  420,649 
Samse SA  285  34,408 
Sartorius Stedim Biotech  847  138,188 
Schneider Electric SE (I)  5,531  467,914 
SEB SA  6,799  535,222 
Seche Environnement SA  1,623  52,456 
Sequana SA (I)  1,840  6,242 
Societe d'Edition de Canal Plus  21,988  171,595 
Societe Industrielle d'Aviations Latecoere SA (I)  1,647  22,746 
Societe Internationale de Plantations d'Heveas SA  288  12,788 
Societe Television Francaise 1  42,715  642,852 
SOITEC (I)  66,774  178,825 
Solocal Group (I)  128,634  101,534 
Somfy SA  383  134,832 
Sopra Group SA  4,084  388,071 
Stef SA  1,579  105,491 
Store Electronic (I)  124  2,362 
Synergie SA  2,549  66,165 
Technicolor SA (I)  69,157  531,275 
Teleperformance  19,264  1,250,921 
Tessi SA  410  49,766 
Theolia SA (I)  10,701  14,417 
Thermador Groupe  1,127  117,277 
Touax SA  271  6,049 
Trigano SA (I)  2,853  72,368 
UBISOFT Entertainment (I)  36,509  606,765 
Union Financiere de France Banque SA  577  16,528 
Valneva SE (I)(L)  7,219  46,189 
Vetoquinol SA  670  31,899 
Vicat SA  5,347  388,801 
Viel & Compagnie SA  6,515  16,796 
Vilmorin & Compagnie SA  1,633  185,381 
Virbac SA  822  163,996 
VM Materiaux SA  539  20,894 
Vranken-Pommery Monopole Group SA  407  13,701 
 
Gabon 0.0%    107,725 
Total Gabon SA  211  107,725 
 
Germany 5.0%    29,642,601 
Aareal Bank AG  21,708  975,834 
Adler Modemaerkte AG  876  13,929 
ADVA Optical Networking SE (I)  14,956  60,665 
Air Berlin PLC (I)  5,366  10,058 
Aixtron SE NA (I)  17,077  223,921 
Aixtron SE, ADR (I)(L)  3,360  43,949 
Allgeier SE  1,897  39,197 
Amadeus Fire AG  1,497  109,392 
Aurubis AG  8,568  421,437 
Balda AG  3,880  16,233 
Bauer AG (I)  3,572  69,204 
BayWa AG  5,268  248,392 

 

16 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Bechtle AG  6,895  547,602 
Bertrandt AG  1,134  144,251 
Bijou Brigitte AG  1,741  132,716 
Biotest AG  323  35,676 
Borussia Dortmund GmbH & Company KGaA (L)  27,856  175,002 
CANCOM SE (L)  5,946  261,461 
Carl Zeiss Meditec AG  10,155  310,197 
Celesio AG  34,202  1,162,993 
CENIT AG  2,997  45,296 
CENTROTEC Sustainable AG  4,066  86,939 
Cewe Color Holding AG  2,266  151,770 
comdirect bank AG  14,328  149,108 
CompuGroup Medical AG  9,736  244,308 
Constantin Medien AG (I)  7,438  13,220 
CropEnergies AG  7,965  47,183 
CTS Eventim AG  14,376  400,853 
DAB Bank AG  3,886  24,395 
Data Modul AG  635  15,381 
DEAG Deutsche Entertainment AG  38  291 
Delticom AG  2,284  59,503 
Deutsche Beteiligungs AG  222  6,360 
Deutsche Wohnen AG  79,007  1,785,478 
Deutz AG  37,738  222,797 
Dialog Semiconductor PLC (I)  23,925  707,417 
DMG MORI SEIKI AG  28,236  813,833 
Dr Hoenle AG  593  12,889 
Draegerwerk AG & Company KGaA  986  82,074 
Drillisch AG  19,160  736,687 
Duerr AG  6,854  529,174 
Eckert & Ziegler AG  2,133  64,399 
Elmos Semiconductor AG  4,483  88,728 
ElringKlinger AG  11,052  374,736 
Euromicron AG (L)  1,373  23,194 
Evotec AG (I)(L)  36,504  176,820 
First Sensor AG (I)  680  9,928 
Francotyp-Postalia Holding AG  2,607  14,244 
Freenet AG  39,259  1,051,930 
Gerresheimer AG  10,669  771,128 
Gerry Weber International AG  4,887  220,708 
Gesco AG  1,167  111,827 
GFK AG  5,703  236,391 
GFT Technologies AG  5,001  65,151 
Grammer AG  5,254  231,320 
Grenkeleasing AG  1,123  112,413 
H&R AG (I)  1,666  15,319 
Hamburger Hafen und Logistik AG  9,989  241,713 
Hawesko Holding AG  1,017  53,573 
Heidelberger Druckmaschinen AG (I)  115,600  360,955 
Homag Group AG  1,517  54,395 
Indus Holding AG  10,323  540,965 
Init Innovation In Traffic Systems AG  1,078  31,320 
Intershop Communications AG (I)  2,654  4,429 
Isra Vision AG  1,225  77,279 
Jenoptik AG  21,084  279,203 
Kloeckner & Company SE (I)  44,926  615,276 
Koenig & Bauer AG (I)  4,281  63,304 
Kontron AG (I)  18,337  109,650 
Krones AG  4,922  451,115 
KSB AG  73  44,703 

 

17 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

KUKA AG  9,672  583,395 
KWS Saat AG  861  306,044 
Leoni AG  12,569  777,149 
LPKF Laser & Electronics AG (L)  8,835  150,909 
Manz AG (I)  872  83,386 
MasterFlex AG (I)  414  3,795 
Mediclin AG (I)  8,179  38,524 
Medigene AG (I)  843  4,934 
MLP AG  14,178  84,292 
Mobotix AG  402  3,873 
MorphoSys AG (I)  614  56,719 
MTU Aero Engines Holding AG  3,653  319,463 
Muehlbauer Holding AG & Company KGaA  397  9,406 
MVV Energie AG  2,452  77,041 
Nemetschek AG  1,967  202,452 
Nordex SE (I)  26,497  482,514 
Norma Group SE  12,656  609,700 
OHB AG  2,619  73,033 
Patrizia Immobilien AG (I)  14,148  182,224 
Pfeiffer Vacuum Technology AG  3,724  336,354 
PNE Wind AG  16,577  62,201 
PSI AG (I)  2,339  35,973 
Puma SE  166  41,339 
PVA TePla AG  1,400  4,275 
QSC AG  42,179  133,797 
R Stahl AG  823  44,351 
Rational AG  623  194,954 
Rheinmetall AG  15,900  862,474 
Rhoen-Klinikum AG  39,678  1,242,952 
RIB Software AG  7,057  112,452 
SAF-Holland SA  16,905  234,497 
Salzgitter AG  5,274  197,237 
Schaltbau Holding AG  956  58,258 
SGL Carbon SE (I)(L)  2,341  68,600 
SHW AG  490  22,866 
Singulus Technologies AG (I)(L)  13,872  30,573 
Sixt SE  6,249  231,337 
SKW Stahl-Metallurgie Holding AG (I)  2,060  10,301 
SMA Solar Technology AG (I)(L)  4,351  139,770 
SMT Scharf AG (L)  1,261  28,478 
Softing AG  1,319  24,338 
Software AG  8,708  225,225 
Solarworld AG (I)  90  1,617 
Stada Arzneimittel AG  21,836  873,054 
Stroeer Media AG  7,167  160,766 
Suss Microtec AG (I)  4,892  37,381 
TAG Immobilien AG (L)  28,673  331,571 
Takkt AG  9,177  167,139 
Technotrans AG  2,268  25,062 
Telegate AG  848  4,963 
Tom Tailor Holding AG (I)  5,865  112,964 
Tomorrow Focus AG  802  3,376 
TUI AG  55,781  814,701 
Vossloh AG  2,354  153,203 
VTG AG  4,122  78,068 
Wacker Neuson SE  9,310  200,113 
Washtec AG  1,640  27,388 
Wincor Nixdorf AG  10,001  532,825 
XING AG  764  93,774 

 

18 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Gibraltar 0.1%    490,315 
888 Holdings PLC  55,416  116,801 
Bwin.Party Digital Entertainment PLC  248,582  373,514 
 
Greece 0.0%    98 
Alapis Holding Industrial and Commercial SA of Pharmaceutical (I)  1,810  98 
TT Hellenic Postbank SA (I)  20,725  0 
 
Guernsey, Channel Islands 0.0%    64,881 
Puma Brandenburg, Ltd. (I)  8,000  3,320 
Puma Brandenburg, Ltd., A Shares (I)  8,000  7,969 
Raven Russia, Ltd. (I)  40,951  50,309 
Tethys Petroleum, Ltd. (I)  10,200  3,283 
 
Hong Kong 3.0%    17,731,618 
Alco Holdings, Ltd.  54,000  10,733 
Allied Group, Ltd.  18,000  80,009 
Allied Properties HK, Ltd.  726,000  143,279 
Apac Resources, Ltd. (I)  98,541  2,641 
APT Satellite Holdings, Ltd.  85,500  125,760 
Asia Financial Holdings, Ltd.  66,000  29,121 
Asia Satellite Telecom Holdings Company, Ltd.  35,220  124,507 
Asia Standard International Group, Ltd.  354,000  95,932 
Associated International Hotels, Ltd.  26,000  77,157 
Bonjour Holdings, Ltd.  495,000  78,474 
Brightoil Petroleum Holdings Ltd (I)  934,000  349,628 
Brockman Mining, Ltd. (I)(L)  855,430  40,300 
Burwill Holdings Ltd. (I)  464,000  17,359 
Cafe de Coral Holdings, Ltd.  118,000  425,505 
Century City International Holdings, Ltd.  164,000  13,120 
Champion Technology Holdings, Ltd.  494,000  12,173 
Chen Hsong Holdings  40,000  12,125 
Chevalier International Holdings, Ltd.  40,000  69,675 
China Daye Non-Ferrous Metals Mining, Ltd. (I)  944,000  20,946 
China Dynamics Holdings, Ltd. (I)  150,000  17,458 
China Electronics Corp. Holdings Company, Ltd.  152,000  35,095 
China Energy Development Holdings, Ltd. (I)  658,000  22,493 
China Metal International Holdings, Inc.  58,000  21,698 
China Solar Energy Holdings Ltd. (I)  127,000  2,950 
China Star Entertainment, Ltd.  1,900,000  29,662 
China Strategic Holdings, Ltd. (I)  610,000  15,096 
China Ting Group Holdings, Ltd.  124,000  6,652 
China Tycoon Beverage Holdings, Ltd. (I)  104,000  2,877 
Chong Hing Bank, Ltd.  10,604  24,757 
Chow Sang Sang Holdings International, Ltd.  116,000  290,901 
Chu Kong Shipping Enterprise Group Company, Ltd.  104,000  24,817 
Chuang's Consortium International, Ltd.  164,021  21,369 
Citic Telecom International Holdings, Ltd.  368,000  147,210 
CK Life Sciences International Holdings, Inc.  1,270,000  132,744 
Convenience Retail Asia, Ltd.  68,000  44,925 
CP Lotus Corp. (I)  280,000  7,008 
Cross-Harbour Holdings, Ltd.  22,000  18,882 
CSI Properties, Ltd  2,266,333  102,361 
CST Mining Group, Ltd. (I)  2,383,040  14,138 
Culturecom Holdings, Ltd. (I)(L)  100,000  14,188 
Dah Sing Banking Group, Ltd.  123,648  222,157 
Dah Sing Financial Holdings, Ltd.  55,144  323,685 
Dan Form Holdings Company, Ltd. (I)  66,000  7,233 
Dickson Concepts International, Ltd.  94,000  53,255 

 

19 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

DMX Technologies Group, Ltd.  34,000  5,002 
Dorsett Hospitality International, Ltd.  299,000  60,562 
EganaGoldpfeil Holdings, Ltd. (I)  131,750  0 
Emperor Entertainment Hotel, Ltd.  215,000  69,623 
Emperor International Holdings, Ltd.  320,250  77,688 
Emperor Watch & Jewellery, Ltd.  1,310,000  78,558 
ENM Holdings, Ltd. (I)  60,000  3,947 
EPI Holdings, Ltd. (I)  1,630,000  37,229 
Esprit Holdings, Ltd.  630,150  1,020,848 
eSun Holdings, Ltd. (I)  113,000  12,681 
Fairwood Holdings, Ltd.  29,500  65,161 
Far East Consortium International, Ltd.  489,116  196,296 
Fortune Oil PLC  276,527  43,660 
Fountain SET Holdings, Ltd.  170,000  20,623 
Future Bright Holdings, Ltd.  126,000  66,304 
G-Resources Group, Ltd. (I)  8,689,800  235,055 
GCL New Energy Holdings, Ltd. (I)  26,000  5,931 
Get Nice Holdings, Ltd.  1,244,000  63,390 
Giordano International, Ltd.  451,708  268,686 
Glorious Sun Enterprises, Ltd.  88,000  19,421 
Goldin Properties Holdings, Ltd. (I)  89,000  47,300 
Guangnan Holdings, Ltd.  108,000  15,183 
Guotai Junan International Holdings, Ltd.  151,000  108,271 
Haitong International Securities Group, Ltd. (L)  194,520  110,641 
Hang Fung Gold Technology, Ltd. (I)  310,000  0 
Hao Tian Development Group, Ltd. (I)  211,200  18,239 
Harbour Centre Development, Ltd.  37,500  67,233 
HKR International, Ltd.  393,600  177,680 
Hong Kong Aircraft Engineering Company, Ltd.  12,400  142,070 
Hong Kong Television Network, Ltd. (I)  31,000  11,361 
Hong Kong Television Network, Ltd., ADR (I)  1,717  12,517 
Hongkong Chinese, Ltd.  216,000  51,556 
Hop Hing Group Holdings, Ltd.  412,000  10,825 
Hopewell Holdings, Ltd.  221,000  794,256 
Hsin Chong Construction Group, Ltd.  416,000  55,804 
Hung Hing Printing Group, Ltd.  76,216  11,202 
Hutchison Telecommunications Hong Kong Holdings, Ltd.  434,000  188,136 
Imagi International Holdings, Ltd. (I)  2,263,500  56,025 
Integrated Waste Solutions Group Holdings, Ltd. (I)  216,000  9,884 
IRC, Ltd. (I)  400,000  33,000 
IT, Ltd.  234,808  79,359 
Johnson Electric Holdings, Ltd.  132,500  516,901 
K Wah International Holdings, Ltd.  486,908  318,474 
Keck Seng Investments, Ltd.  1,000  878 
King Stone Energy Group, Ltd. (I)  120,000  3,964 
Kingston Financial Group, Ltd.  1,860,000  196,766 
Kowloon Development Company, Ltd.  135,000  163,902 
Lai Sun Development (I)  3,946,333  102,759 
Lee's Pharmaceutical Holdings, Ltd.  70,000  95,115 
Lifestyle International Holdings, Ltd.  161,000  299,121 
Lippo China Resources, Ltd.  1,494,000  69,443 
Lippo, Ltd.  31,250  18,764 
Liu Chong Hing Investment, Ltd.  60,000  78,907 
Luen Thai Holdings, Ltd.  103,000  28,136 
Luk Fook Holdings International, Ltd.  104,000  326,053 
Lung Kee Holdings, Ltd.  48,000  15,726 
Magnificent Estates  438,000  21,475 
Man Wah Holdings, Ltd.  106,400  170,452 
Man Yue Technology Holdings, Ltd.  46,000  10,862 

 

20 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Mei Ah Entertainment Group, Ltd. (I)  500,000  44,511 
Midland Holdings, Ltd. (I)(L)  322,000  159,496 
Ming Fai International Holdings, Ltd.  41,000  4,337 
Ming Fung Jewellery Group, Ltd. (I)  1,305,000  14,794 
Miramar Hotel & Investment Company, Ltd.  8,000  10,231 
Mongolia Energy Company, Ltd. (I)  130,000  3,762 
National Electronic Holdings, Ltd.  40,000  5,262 
Natural Beauty Bio-Technology, Ltd.  230,000  16,044 
Neo-Neon Holdings, Ltd. (I)  228,000  39,187 
Neptune Group, Ltd. (I)  540,000  14,347 
New Times Energy Corp., Ltd. (I)  24,400  1,069 
NewOcean Energy Holdings, Ltd. (L)  342,000  193,631 
Next Media, Ltd.  144,000  17,272 
Orange Sky Golden Harvest Entertainment Holdings, Ltd. (I)  295,000  18,258 
Oriental Watch Holdings, Ltd.  190,000  44,853 
Pacific Andes International Holdings, Ltd.  342,870  15,038 
Pacific Basin Shipping, Ltd.  632,000  387,954 
Pacific Textile Holdings, Ltd.  153,000  183,323 
Paliburg Holdings, Ltd.  71,380  24,673 
Paradise Entertainment, Ltd.  128,000  66,695 
PCCW, Ltd.  463,893  297,314 
Peace Mark Holdings, Ltd. (I)  180,000  0 
Pearl Oriental Oil, Ltd. (I)  322,000  9,505 
Perfect Shape PRC Holdings, Ltd.  48,000  10,526 
Pico Far East Holdings, Ltd.  204,000  47,372 
Playmates Holdings, Ltd.  52,000  61,474 
Playmates Toys, Ltd.  188,000  68,346 
PNG Resources Holdings, Ltd. (I)  79,200  3,781 
Polytec Asset Holdings, Ltd.  500,000  76,137 
Public Financial Holdings, Ltd.  48,000  23,281 
PYI Corp., Ltd.  1,100,801  25,846 
Regal Hotels International Holdings, Ltd.  195,200  117,627 
Richfield Group Holdings, Ltd. (I)  176,000  6,472 
Rising Development Holdings, Ltd. (I)  78,000  56,948 
SA SA International Holdings, Ltd. (L)  324,000  253,289 
SAS Dragon Holdings, Ltd.  76,000  23,729 
SEA Holdings, Ltd.  52,000  31,674 
Shenyin Wanguo HK, Ltd.  75,000  42,849 
Shougang Concord Technology Holdings (I)  556,000  22,229 
Shun Tak Holdings, Ltd.  549,250  284,770 
Silver Base Group Holdings, Ltd. (I)(L)  258,000  32,982 
Simsen International Corp., Ltd.  136,000  79,441 
Sing Tao News Corp., Ltd.  58,000  8,306 
Singamas Container Holdings, Ltd.  670,000  132,219 
Sitoy Group Holdings, Ltd.  76,000  53,937 
SmarTone Telecommunications Holdings, Ltd.  124,500  183,895 
SOCAM Development, Ltd.  116,927  107,430 
Solomon Systech International, Ltd. (I)  504,000  24,379 
Soundwill Holdings, Ltd.  42,000  72,736 
Stella International Holdings, Ltd.  159,500  436,518 
Stelux Holdings International, Ltd.  200,000  51,911 
Sun Hung Kai & Company, Ltd. (L)  262,318  213,190 
Superb Summit International Group, Ltd. (I)(L)  833,000  171,785 
TAI Cheung Holdings, Ltd.  82,000  68,285 
Tan Chong International, Ltd.  63,000  25,204 
Tao Heung Holdings, Ltd.  95,000  53,452 
Television Broadcasts, Ltd.  106,600  671,850 
Texwinca Holdings, Ltd.  236,000  214,822 
The Hongkong & Shanghai Hotels, Ltd.  120,500  178,157 

 

21 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Titan Petrochemicals Group, Ltd. (I)  600,000  19,045 
Tradelink Electronic Commerce, Ltd.  176,000  42,517 
Transport International Holdings, Ltd.  88,000  168,719 
Trinity, Ltd.  352,000  109,420 
TSC Group Holdings, Ltd. (I)  135,000  67,906 
Tse Sui Luen Jewellery International, Ltd.  34,000  13,300 
United Laboratories International Holdings, Ltd. (I)(L)  224,500  172,674 
Value Partners Group, Ltd.  264,000  203,934 
Varitronix International, Ltd.  142,000  123,831 
Victory City International Holdings, Ltd.  373,485  52,542 
Vitasoy International Holdings, Ltd.  208,000  262,451 
VST Holdings Company, Ltd.  204,400  52,201 
VTech Holdings, Ltd.  21,800  267,164 
Wai Kee Holdings, Ltd.  72,000  20,624 
Wing On Company International, Ltd.  17,000  50,010 
Wing Tai Properties, Ltd.  68,000  44,994 
Xinyi Glass Holdings Company, Ltd.  604,000  380,974 
YGM Trading, Ltd.  22,000  49,947 
 
India 0.1%    624,333 
Vedanta Resources PLC  37,139  624,333 
 
Ireland 1.7%    10,039,754 
Aer Lingus Group PLC  25,626  45,637 
Beazley PLC  181,281  759,608 
C&C Group PLC  65,089  369,343 
DCC PLC  27,000  1,604,513 
Endo International PLC (I)  6,896  438,381 
FBD Holdings PLC  9,931  200,778 
Glanbia PLC  43,057  656,463 
Grafton Group PLC  43,829  468,632 
Greencore Group PLC  149,514  660,745 
Henderson Group PLC  332,360  1,280,598 
IFG Group PLC  16,014  33,939 
Irish Continental Group PLC  33,050  127,981 
Kenmare Resources PLC (I)  214,459  36,650 
Kingspan Group PLC  38,438  668,825 
Paddy Power PLC  6,680  427,045 
Smurfit Kappa Group PLC  83,710  1,899,869 
UDG Healthcare PLC  63,974  360,747 
 
Isle of Man 0.0%    146,356 
Hansard Global PLC  11,952  18,552 
Playtech PLC  10,693  127,804 
 
Israel 0.8%    4,928,472 
Africa Israel Investments, Ltd. (I)  48,492  80,405 
Africa Israel Properties, Ltd. (I)  3,376  59,486 
Airport City, Ltd. (I)  10,983  107,622 
AL-ROV Israel, Ltd. (I)  722  23,354 
Allot Communications, Ltd. (I)  357  3,758 
Alrov Properties And Lodgings, Ltd. (I)  820  19,405 
Amot Investments, Ltd.  21,637  69,669 
AudioCodes, Ltd. (I)  2,505  13,821 
Avgol Industries 1953, Ltd.  11,336  10,168 
Azorim-Investment Development & Construction Company, Ltd. (I)  28,861  24,153 
Babylon, Ltd.  5,123  3,645 
Bayside Land Corp.  184  49,950 
Big Shopping Centers 2004, Ltd.  625  25,522 
Blue Square Real Estate, Ltd.  192  7,302 

 

22 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Brainsway, Ltd. (I)  1,628  19,971 
Cellcom Israel, Ltd.  14,952  175,173 
Ceragon Networks, Ltd. (I)  4,174  10,225 
Clal Biotechnology Industries, Ltd. (I)  10,503  24,923 
Clal Insurance Enterprise Holdings, Ltd.  7,277  133,706 
Cohen Development & Industrial Buildings, Ltd. (I)  330  11,666 
Compugen, Ltd. (I)  8,060  71,895 
Delek Automotive Systems, Ltd.  9,971  105,943 
Delta Galil Industries, Ltd.  3,158  92,817 
Elbit Systems, Ltd.  2,127  126,708 
Electra Israel, Ltd.  513  77,080 
Elron Electronic Industries, Ltd.  3,504  30,842 
Evogene, Ltd. (I)  4,508  58,671 
EZchip Semiconductor, Ltd. (I)(L)  7,907  220,922 
EZchip Semiconductor, Ltd. (I)  2,348  59,516 
First International Bank of Israel, Ltd.  6,732  105,461 
Formula Systems, Ltd.  2,056  56,342 
Fox Wizel, Ltd.  255  5,670 
Frutarom Industries, Ltd.  12,348  310,392 
Gilat Satellite Networks, Ltd. (I)(L)  621  2,937 
Gilat Satellite Networks, Ltd. (I)  5,111  24,257 
Hadera Paper, Ltd. (I)  503  19,003 
Harel Insurance Investments & Financial Services, Ltd.  40,770  229,605 
Industrial Buildings Corp.  16,301  31,546 
Israel Discount Bank, Ltd. (I)  20,157  33,874 
Ituran Location & Control, Ltd.  5,215  113,701 
Jerusalem Oil Exploration (I)  3,071  131,833 
Kamada, Ltd. (I)  6,739  46,358 
Magic Software Enterprises, Ltd.  2,657  19,372 
Matrix IT, Ltd.  9,853  53,757 
Mazor Robotics, Ltd. (I)  7,832  53,311 
Melisron, Ltd.  3,687  97,537 
Menorah Mivtachim Holdings, Ltd.  10,287  116,647 
Migdal Insurance Financial Holding, Ltd.  23,844  36,293 
Mivtach Shamir Holdings, Ltd.  1,098  34,760 
Naphtha Israel Petroleum Corp., Ltd. (I)  12,717  91,192 
NICE Systems, Ltd.  2  79 
Nitsba Holdings 1995, Ltd. (I)  12,427  203,919 
Nova Measuring Instruments, Ltd. (I)  8,212  91,151 
Oil Refineries, Ltd. (I)  268,829  89,052 
Ormat Industries, Ltd.  18,043  133,567 
Osem Investments, Ltd.  547  12,068 
Partner Communications Company, Ltd. (I)  23,067  166,344 
Paz Oil Company, Ltd.  1,232  189,794 
Perion Network, Ltd. (I)  699  4,537 
Plasson Industries, Ltd.  449  18,561 
Rami Levi Chain Stores Hashikma Marketing 2006, Ltd.  2,151  106,946 
Sapiens International Corp. NV (I)  5,270  43,627 
Shikun & Binui, Ltd.  62,663  147,194 
Shufersal, Ltd.  25,929  73,828 
Strauss Group, Ltd.  4,662  85,126 
The Phoenix Holdings, Ltd.  23,033  79,005 
Tower Semiconductor, Ltd. (I)  12,395  139,396 
Union Bank of Israel, Ltd. (I)  2,889  12,112 
 
Italy 3.4%    20,271,624 
A2A SpA  441,083  484,044 
ACEA SpA  18,335  249,019 
Aeroporto di Venezia Marco Polo SpA  5,677  96,983 

 

23 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Alerion Cleanpower SpA  3,891  16,508 
Amplifon SpA  35,403  204,344 
Ansaldo STS SpA  37,273  393,163 
Arnoldo Mondadori Editore SpA (I)  23,185  27,368 
AS Roma SpA (I)  24,913  25,548 
Ascopiave SpA  15,041  38,143 
Astaldi SpA  17,730  155,763 
Autogrill SpA (I)  35,555  298,572 
Azimut Holding SpA  35,238  918,273 
Banca Finnat Euramerica SpA  29,383  17,748 
Banca Generali SpA  13,612  370,740 
Banca IFIS SpA  6,105  123,186 
Banca Monte dei Paschi di Siena SpA (I)  275,204  414,456 
Banca Popolare dell'Emilia Romagna SC (I)  131,719  1,106,952 
Banca Popolare dell'Etruria e del Lazio (I)(L)  61,348  58,790 
Banca Popolare di Milano SpA (I)  1,242,096  990,052 
Banca Popolare di Sondrio SCRL  76,341  347,826 
Banca Profilo SpA  58,907  26,699 
Banco di Desio e della Brianza SpA  6,382  23,002 
Banco Popolare SC (I)  38,174  597,245 
BasicNet SpA (I)  1,902  5,562 
Beghelli SpA (I)  11,564  6,468 
Biesse SpA  4,094  43,258 
Brembo SpA  11,013  390,916 
Brunello Cucinelli SpA  7,111  177,811 
Buzzi Unicem SpA  27,302  414,319 
Cairo Communication SpA  9,146  71,761 
Caltagirone Editore SpA (I)  5,211  6,926 
Cementir SpA  16,168  109,782 
CIR-Compagnie Industriali Riunite SpA (I)  187,652  272,809 
Credito Emiliano SpA  30,822  284,845 
Credito Valtellinese Scarl (I)  334,449  385,808 
Danieli & C Officine Meccaniche SpA  4,650  136,603 
Datalogic SpA  5,132  57,283 
Davide Campari Milano SpA  78,435  605,015 
De'Longhi SpA  16,959  361,259 
DeA Capital SpA (I)  4,303  8,324 
Delclima (I)  18,320  34,932 
DiaSorin SpA  6,837  270,002 
Ei Towers SpA  2,951  155,341 
Elica SpA  3,807  8,114 
Engineering Ingegneria Informatica SpA  2,056  104,867 
ERG SpA  23,689  332,372 
Esprinet SpA  11,011  102,447 
Eurotech SpA (I)  10,718  26,092 
Falck Renewables SpA  30,895  45,939 
Finmeccanica SpA (I)  54,630  512,283 
FNM SpA  14,501  11,357 
Gas Plus SpA  265  1,602 
Geox SpA (L)  24,655  87,908 
Gruppo Editoriale L'Espresso SpA (I)  46,761  72,971 
Gruppo Mutuionline SpA  889  5,724 
Gtech SpA (L)  11,643  277,627 
Hera SpA  184,479  518,209 
IMMSI SpA (I)  60,338  48,110 
Impregilo SpA (I)  3,194  13,275 
Indesit Company SpA (I)  19,346  275,675 
Industria Macchine Automatiche SpA  4,695  178,057 
Intek Group SpA (I)  26,355  14,070 

 

24 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Interpump SpA  32,223  429,926 
Iren SpA  195,043  276,024 
Italcementi SpA  39,865  288,420 
Italmobiliare SpA  2,729  108,533 
Juventus Football Club SpA (I)  144,708  44,301 
La Doria SpA  1,227  10,208 
Landi Renzo SpA (I)  9,280  14,021 
Maire Tecnimont SpA (I)  34,969  97,086 
MARR SpA  10,396  162,601 
Nice SpA  3,458  13,732 
Piaggio & C SpA (I)  50,033  151,508 
Prelios SpA (I)(L)  11,532  6,886 
Prima Industrie SpA (I)  735  12,740 
Prysmian SpA  58,459  1,188,662 
RCS MediaGroup SpA (I)(L)  32,476  49,903 
Recordati SpA  29,781  485,202 
Reply SpA  1,989  160,916 
Retelit SpA (I)  16,163  11,642 
Sabaf SpA  962  14,661 
Safilo Group SpA (I)  13,971  289,675 
Saras SpA (I)  52,964  63,375 
Snai SpA (I)(L)  6,500  14,222 
Societa Cattolica di Assicurazioni SCRL  17,799  387,720 
Societa Iniziative Autostradali e Servizi SpA  23,492  265,300 
Socotherm SpA (I)  2,703  243 
Sogefi SpA (I)  21,868  87,458 
SOL SpA  10,113  90,283 
Sorin SpA (I)  107,753  272,111 
Tiscali SpA (I)  111,831  7,779 
Tod's SpA  2,686  298,131 
Trevi Finanziaria Industriale SpA  17,515  124,987 
TXT e-solutions SpA  974  11,041 
Unipol Gruppo Finanziario SpA  80,180  437,828 
Vianini Lavori SpA  4,074  28,601 
Vittoria Assicurazioni SpA  10,447  136,528 
World Duty Free SpA (I)  35,555  408,191 
Yoox SpA (I)  12,662  326,843 
Zignago Vetro SpA  10,467  74,189 
 
Japan 21.9%    129,522,407 
A&D Company, Ltd.  5,600  28,197 
Accordia Golf Company, Ltd. (L)  32,000  382,609 
Achilles Corp.  58,000  80,901 
Adastria Holdings Company, Ltd.  5,120  102,567 
ADEKA Corp.  30,391  406,297 
Aderans Company, Ltd.  7,000  103,581 
Advan Company, Ltd.  2,100  22,892 
Advanex, Inc.  2,000  3,194 
Aeon Delight Company, Ltd.  600  14,731 
Aeon Fantasy Company, Ltd. (L)  3,900  51,487 
AGORA Hospitality Group Company, Ltd. (I)  74,000  34,891 
Ahresty Corp.  6,200  46,533 
Ai Holdings Corp.  12,100  245,808 
Aica Kogyo Company, Ltd.  15,100  361,289 
Aichi Corp.  17,100  82,222 
Aichi Steel Corp.  37,000  143,187 
Aichi Tokei Denki Company, Ltd.  6,000  19,039 
Aida Engineering, Ltd.  18,200  174,212 
Ain Pharmaciez, Inc.  3,300  159,577 

 

25 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Aiphone Company, Ltd.  6,600  126,263 
Airport Facilities Company, Ltd.  8,100  56,294 
Aisan Industry Company, Ltd.  8,900  73,286 
Aizawa Securities Company, Ltd.  12,700  65,629 
Akebono Brake Industry Company, Ltd. (L)  27,400  121,846 
Alconix Corp.  1,000  14,478 
Alinco, Inc.  3,800  49,368 
Allied Telesis Holdings KK  6,100  5,112 
Alpen Company, Ltd.  5,100  81,790 
Alpha Corp.  1,000  9,926 
Alpha Systems, Inc.  1,120  16,515 
Alpine Electronics, Inc.  16,415  261,638 
Alps Logistics Company, Ltd.  2,000  23,738 
Altech Corp.  4,500  52,466 
Amano Corp.  19,000  205,588 
Amiyaki Tei Company, Ltd.  1,000  35,383 
Amuse, Inc.  3,200  74,853 
Anest Iwata Corp.  12,000  86,563 
Anritsu Corp.  31,997  272,497 
AOI Electronics Company, Ltd.  700  28,881 
AOKI Holdings, Inc.  12,800  153,133 
Aoyama Trading Company, Ltd.  14,100  349,006 
Arakawa Chemical Industries, Ltd.  5,100  56,151 
Arata Corp.  14,000  42,897 
Araya Industrial Company, Ltd.  21,000  32,371 
Arc Land Sakamoto Company, Ltd.  7,000  162,049 
Arcs Company, Ltd.  10,184  215,481 
Argo Graphics, Inc.  2,600  46,176 
Ariake Japan Company, Ltd.  6,300  147,033 
Arisawa Manufacturing Company, Ltd.  11,700  85,220 
Arrk Corp. (I)  12,900  20,355 
Artnature, Inc.  1,600  48,483 
As One Corp.  5,400  177,655 
Asahi Broadcasting Corp.  900  5,504 
Asahi Company, Ltd.  5,000  62,538 
Asahi Diamond Industrial Company, Ltd.  20,400  286,613 
Asahi Holdings, Inc.  7,800  138,005 
Asahi Intecc Company, Ltd.  900  42,065 
Asahi Kogyosha Company, Ltd.  2,000  7,755 
Asahi Net, Inc.  3,000  14,897 
Asahi Organic Chemicals Industry Company, Ltd.  31,000  68,563 
Asatsu-DK, Inc.  10,800  284,999 
Ashimori Industry Company, Ltd. (I)  14,000  28,956 
Asia Growth Capital, Ltd. (I)  9,900  15,819 
ASKA Pharmaceutical Company, Ltd.  7,000  93,907 
ASKUL Corp. (L)  3,500  84,314 
Asunaro Aoki Construction Company, Ltd.  4,000  30,551 
Atsugi Company, Ltd.  40,000  43,106 
Autobacs Seven Company, Ltd.  19,500  311,827 
Avex Group Holdings, Inc.  11,000  180,187 
Axell Corp.  3,300  56,086 
Axial Retailing, Inc.  4,400  84,137 
Azbil Corp.  17,900  453,475 
Bando Chemical Industries, Ltd.  29,000  116,594 
Bank of the Ryukyus, Ltd.  15,900  257,378 
Belc Company, Ltd.  3,900  107,450 
Belluna Company, Ltd.  16,300  74,920 
Benefit One, Inc.  4,500  42,841 
Best Bridal, Inc.  3,700  31,953 

 

26 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Best Denki Company, Ltd.  25,700  35,328 
Bic Camera, Inc. (L)  22,200  203,195 
Biofermin Pharmaceutical Company, Ltd.  1,500  40,533 
Bit-isle, Inc.  4,000  24,284 
BML, Inc.  5,200  171,841 
Bookoff Corp.  2,100  16,016 
Bunka Shutter Company, Ltd.  24,000  216,058 
C Uyemura & Company, Ltd.  2,600  142,380 
CAC Corp.  4,000  51,079 
Calsonic Kansei Corp.  49,000  282,885 
Can Do Company, Ltd.  3,300  52,721 
Canon Electronics, Inc.  7,100  135,165 
Capcom Company, Ltd.  12,000  220,555 
Career Design Center Company, Ltd.  200  2,227 
Carlit Holdings Company, Ltd.  2,600  13,870 
Cawachi, Ltd.  6,700  116,768 
Central Glass Company, Ltd.  75,432  280,812 
Central Sports Company, Ltd.  1,300  22,150 
Chino Corp.  1,200  14,545 
Chiyoda Company, Ltd.  7,900  166,130 
Chiyoda Integre Company, Ltd.  6,600  94,102 
Chofu Seisakusho Company, Ltd.  2,800  74,160 
Chori Company, Ltd.  4,000  49,494 
Chubu Shiryo Company, Ltd.  6,800  43,635 
Chudenko Corp.  6,700  107,613 
Chuetsu Pulp & Paper Company, Ltd.  39,000  68,724 
Chugai Mining Company, Ltd. (I)  34,900  10,418 
Chugai Ro Company, Ltd.  26,000  55,235 
Chugoku Marine Paints, Ltd.  26,000  194,956 
Chuo Gyorui Company, Ltd.  3,000  7,176 
Chuo Spring Company, Ltd.  1,000  2,931 
CKD Corp.  25,100  238,075 
Clarion Company, Ltd. (I)(L)  35,000  152,649 
Cleanup Corp.  9,900  91,524 
CMIC Holdings Company, Ltd.  3,300  63,853 
CMK Corp.  13,000  34,393 
Coca-Cola Central Japan Company, Ltd.  5,387  134,882 
Cocokara Fine Holdings, Inc.  5,030  133,250 
Colowide Company, Ltd.  9,900  129,986 
Computer Engineering & Consulting, Ltd.  1,500  11,432 
CONEXIO Corp.  5,200  53,711 
COOKPAD, Inc. (L)  2,700  89,555 
Corona Corp.  6,300  73,177 
Cosel Company, Ltd.  9,800  124,969 
Cosmo Oil Company, Ltd.  206,000  386,371 
CREATE SD HOLDINGS Company, Ltd.  3,500  122,862 
CROOZ, Inc.  1,300  38,258 
CTI Engineering Company, Ltd.  1,500  25,139 
Cybozu, Inc.  4,500  16,409 
DA Consortium, Inc.  1,700  8,553 
Dai Nippon Toryo Company, Ltd.  48,000  74,391 
Dai-Dan Company, Ltd.  7,000  41,526 
Dai-Ichi Kogyo Seiyaku Company, Ltd.  10,000  40,699 
Dai-ichi Seiko Company, Ltd.  2,400  46,092 
Daibiru Corp.  13,500  135,180 
Daido Kogyo Company, Ltd.  18,000  49,032 
Daido Metal Company, Ltd.  11,000  139,675 
Daidoh, Ltd.  9,700  51,663 
Daifuku Company, Ltd.  28,000  331,979 

 

27 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Daihatsu Diesel Manufacturing Company, Ltd.  9,000  60,980 
Daihen Corp.  40,000  161,838 
Daiho Corp.  10,000  52,796 
Daiichi Jitsugyo Company, Ltd.  17,000  98,276 
Daiichi Kigenso Kagaku-Kogyo Company, Ltd.  600  21,946 
Daiichikosho Company, Ltd.  8,500  247,937 
Daiken Corp.  38,000  103,785 
Daiken Medical Company, Ltd.  1,500  34,222 
Daiki Aluminium Industry Company, Ltd.  5,000  14,817 
Daiko Clearing Services Corp.  2,200  13,635 
Daikoku Denki Company, Ltd.  2,700  53,363 
Daikokutenbussan Company, Ltd.  1,500  45,509 
Daikyo, Inc.  100,144  191,901 
Dainichi Company, Ltd.  2,100  15,132 
Dainichiseika Color & Chemicals Manufacturing Company, Ltd.  25,000  127,783 
Dainippon Screen Manufacturing Company, Ltd.  65,000  360,156 
Daio Paper Corp.  31,000  276,577 
Daiseki Company, Ltd.  8,100  145,435 
Daishinku Corp.  14,000  51,701 
Daiso Company, Ltd.  27,000  88,342 
Daisue Construction Company, Ltd. (I)  700  6,889 
Daisyo Corp.  2,100  26,457 
Daito Pharmaceutical Company, Ltd.  3,500  62,961 
Daiwa Industries, Ltd.  5,000  37,424 
Daiwabo Holdings Company, Ltd.  91,000  182,886 
DC Company, Ltd.  5,300  28,245 
DCM Holdings Company, Ltd.  26,120  177,316 
Denki Kagaku Kogyo KK  136,000  460,809 
Denki Kogyo Company, Ltd.  12,000  73,171 
Denyo Company, Ltd.  7,400  106,683 
Descente, Ltd.  20,000  172,750 
Dijet Industrial Company, Ltd.  3,000  8,572 
Doshisha Company, Ltd.  9,400  169,950 
Doutor Nichires Holdings Company, Ltd.  8,893  145,578 
Dr. Ci:Labo Company, Ltd.  3,100  109,784 
DTS Corp.  8,800  191,786 
Dunlop Sports Company, Ltd.  4,800  56,777 
Duskin Company, Ltd.  15,100  268,014 
Dwango Company, Ltd. (L)  1,600  35,549 
Dydo Drinco, Inc.  1,500  63,582 
Dynic Corp.  1,000  1,645 
Eagle Industry Company, Ltd.  9,000  186,168 
Earth Chemical Company, Ltd.  2,000  77,239 
Ebara Jitsugyo Company, Ltd.  3,300  44,716 
EDION Corp.  29,100  184,235 
Eidai Company, Ltd.  8,000  36,399 
Eiken Chemical Company, Ltd.  4,100  72,283 
Eizo Corp.  7,200  187,035 
Elecom Company, Ltd.  2,000  49,581 
Elematec Corp.  3,300  60,694 
Em Systems Company, Ltd.  500  8,430 
Emori & Company, Ltd.  2,000  39,207 
en-japan, Inc.  2,200  47,290 
Endo Lighting Corp.  1,400  18,460 
Enplas Corp.  2,700  152,399 
Enshu, Ltd. (I)  34,000  42,507 
EPS Corp.  6,700  84,769 
Espec Corp.  9,700  88,030 
Excel Company, Ltd.  1,900  40,107 

 

28 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Exedy Corp.  9,500  263,132 
Ezaki Glico Company, Ltd.  8,000  156,369 
F T Communications Company, Ltd.  500  10,795 
F-Tech, Inc.  3,500  40,891 
F@N Communications Inc.  8,300  102,193 
Faith, Inc.  510  5,119 
FALCO HOLDINGS Company, Ltd.  1,800  21,241 
Fancl Corp.  14,700  183,447 
FCC Company, Ltd.  10,400  179,103 
FDK Corp. (I)  7,000  12,753 
Ferrotec Corp.  13,300  91,231 
Fidea Holdings Company, Ltd.  47,006  99,044 
Fields Corp.  4,500  68,017 
Financial Products Group Co Ltd.  4,900  46,517 
First Juken Company, Ltd.  200  2,588 
Foster Electric Company, Ltd.  7,400  107,895 
FP Corp.  8,000  257,093 
France Bed Holdings Company, Ltd.  43,000  78,149 
Fudo Tetra Corp.  69,500  166,360 
Fuji Company, Ltd.  6,200  119,401 
Fuji Corp., Ltd.  13,000  75,779 
Fuji Electronics Company, Ltd.  2,300  29,576 
Fuji Kiko Company, Ltd.  4,000  20,940 
Fuji Kosan Company, Ltd.  1,100  6,854 
Fuji Kyuko Company, Ltd.  7,000  75,266 
Fuji Oil Company, Ltd.  32,000  371,840 
Fuji Pharma Company, Ltd.  4,000  77,083 
Fuji Seal International, Inc.  6,500  219,178 
Fuji Soft, Inc.  6,200  148,919 
Fujibo Holdings, Inc.  40,000  129,750 
Fujicco Company, Ltd.  8,000  110,501 
Fujikura Kasei Company, Ltd.  8,500  44,181 
Fujikura Rubber, Ltd.  900  7,726 
Fujikura, Ltd.  121,000  592,396 
Fujimi, Inc.  7,500  114,589 
Fujimori Kogyo Company, Ltd.  4,100  126,608 
Fujisash Company, Ltd. (I)  22,400  36,098 
Fujitec Company, Ltd.  23,000  269,254 
Fujitsu Frontech, Ltd.  2,600  35,033 
Fujitsu General, Ltd.  18,000  250,431 
Fujiya Company, Ltd.  47,000  89,416 
Fukoku Company, Ltd.  800  8,792 
Fukuda Corp.  4,000  38,561 
Fukushima Industries Corp.  4,600  91,305 
Fukuyama Transporting Company, Ltd.  46,000  248,627 
Funai Consulting, Inc.  9,600  87,781 
Funai Electric Company, Ltd.  3,500  38,187 
Furukawa Battery Company, Ltd.  3,000  22,852 
Furukawa Company, Ltd.  90,000  207,816 
Furukawa Electric Company, Ltd.  199,000  428,827 
Furuno Electric Company, Ltd.  7,400  72,954 
Furusato Industries, Ltd.  400  6,293 
Furuya Metal Company, Ltd.  1,400  36,984 
Fuso Pharmaceutical Industries, Ltd.  26,000  79,353 
Futaba Corp.  5,657  87,190 
Futaba Industrial Company, Ltd.  19,900  111,028 
Future System Consulting Corp.  3,300  17,999 
Fuyo General Lease Company, Ltd.  3,700  148,399 
G-Tekt Corp.  6,800  71,139 

 

29 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Gakken Company, Ltd.  18,000  48,079 
GCA Savvian Corp.  1,200  10,689 
Gecoss Corp.  4,000  67,605 
Genki Sushi Company, Ltd.  400  8,702 
Genky Stores, Inc.  300  14,453 
Geo Holdings Corp.  15,400  135,184 
GLOBERIDE, Inc.  29,000  39,898 
Glory, Ltd.  10,500  317,680 
GMO Internet, Inc.  19,100  180,605 
GMO Payment Gateway, Inc.  2,100  101,291 
Godo Steel, Ltd.  46,000  72,136 
Goldcrest Company, Ltd.  6,470  132,692 
Goldwin, Inc.  9,000  46,031 
Gourmet Kineya Company, Ltd.  3,000  25,504 
GSI Creos Corp.  11,000  15,258 
Gulliver International Company, Ltd.  14,600  131,809 
Gun-Ei Chemical Industry Company, Ltd.  18,000  66,500 
Gunze, Ltd.  69,000  195,065 
Gurunavi, Inc. (L)  8,500  134,591 
H-One Company, Ltd.  3,400  23,788 
H20 Retailing Corp.  16,358  268,136 
Hagihara Industries, Inc.  600  9,183 
Hakuto Company, Ltd.  5,400  55,590 
Hakuyosha Company, Ltd.  2,000  4,668 
Hamakyorex Company, Ltd.  3,700  125,715 
Hanwa Company, Ltd.  61,000  240,671 
Happinet Corp. (L)  6,200  114,644 
Hard Off Corporation Company, Ltd.  1,300  11,054 
Harima Chemicals, Inc.  900  4,348 
Harmonic Drive Systems, Inc.  1,100  50,418 
Haruyama Trading Company, Ltd.  2,700  18,510 
Hazama Corp.  54,400  400,769 
Heiwa Corp.  800  18,280 
Heiwa Real Estate Company, Ltd.  11,300  172,178 
Heiwado Company, Ltd.  11,100  180,366 
Hi-lex Corp.  6,900  185,388 
Hibiya Engineering, Ltd.  8,300  129,264 
Hiday Hidaka Corp.  3,840  92,038 
Higashi Nihon House Company Ltd.  16,000  83,229 
Higo Bank, Ltd.  59,000  312,723 
Himaraya Company, Ltd.  600  6,020 
Hioki Ee Corp.  2,600  43,048 
Hiramatsu, Inc.  7,200  44,463 
Hisaka Works, Ltd.  4,000  35,102 
Hitachi Koki Company, Ltd.  19,500  164,083 
Hitachi Kokusai Electric, Inc.  14,000  216,990 
Hitachi Zosen Corp.  46,180  226,904 
Hochiki Corp.  2,000  16,493 
Hodogaya Chemical Company, Ltd.  25,000  46,123 
Hogy Medical Company, Ltd.  3,600  201,984 
Hokkaido Gas Company, Ltd. (L)  19,000  53,699 
Hokkan Holdings, Ltd.  17,000  47,588 
Hokuetsu Industries Company, Ltd.  2,000  17,599 
Hokuetsu Paper Mills, Ltd.  44,000  195,335 
Hokuriku Electric Industry Company, Ltd.  25,000  43,290 
Hokuto Corp.  8,800  166,322 
Honeys Company, Ltd.  6,460  65,293 
Hoosiers Holdings Company, Ltd.  7,500  35,999 
Horiba, Ltd.  11,292  424,434 

 

30 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Hosiden Corp.  27,700  151,019 
Hosokawa Micron Corp.  12,000  72,653 
House Food Corp.  3,800  68,149 
Howa Machinery, Ltd.  3,100  22,751 
Hyakujushi Bank, Ltd.  82,000  276,153 
I-Net Corp.  1,600  13,226 
IBJ Leasing Company, Ltd.  2,900  71,243 
Ichibanya Company, Ltd.  1,500  68,853 
Ichikoh Industries, Ltd.  7,000  11,989 
Ichinen Holdings Company, Ltd.  7,500  59,301 
Ichiyoshi Securities Company, Ltd.  1,600  19,330 
ICOM, Inc.  1,000  23,025 
Idec Corp.  11,800  102,156 
Ihara Chemical Industry Company, Ltd.  18,000  170,693 
Iida Group Holdings Company, Ltd.  21,422  307,157 
Iino Kaiun Kaisha, Ltd.  27,700  175,031 
IJT Technology Holdings Company, Ltd. (I)  2,360  10,784 
Ikyu Corp.  1,700  23,888 
Imagica Robot Holdings, Inc.  2,500  12,217 
Imasen Electric Industrial  4,700  87,063 
Imperial Hotel, Ltd.  2,300  49,322 
Inaba Denki Sangyo Company, Ltd.  7,600  260,307 
Inaba Seisakusho Company, Ltd.  1,900  24,873 
Inabata & Company, Ltd.  19,000  189,025 
Inageya Company, Ltd.  8,600  96,503 
Ines Corp.  12,700  104,718 
Infocom Corp.  4,400  38,802 
Information Services International-Dentsu, Ltd.  5,900  67,928 
Innotech Corp.  7,900  42,082 
Intage, Inc.  5,800  76,689 
Internet Initiative Japan, Inc.  7,600  158,964 
Inui Steamship Company, Ltd.  11,400  34,780 
Inui Warehouse Company, Ltd.  700  6,251 
Iriso Electronics Company, Ltd.  4,200  311,763 
Ise Chemical Corp.  3,000  21,189 
Iseki & Company, Ltd.  54,000  145,000 
Ishihara Sangyo Kaisha, Ltd. (I)  161,000  142,519 
Ishii Iron Works Company, Ltd.  16,000  40,027 
IT Holdings Corp.  26,400  486,797 
Itfor, Inc.  11,000  53,999 
Itochu Enex Company, Ltd.  24,800  178,744 
Itochu-Shokuhin Company, Ltd.  1,700  59,746 
Itoham Foods, Inc.  57,000  275,089 
Itoki Corpitoki Corp.  13,500  88,788 
IwaiCosmo Holdings, Inc.  8,900  87,453 
Iwasaki Electric Company, Ltd.  34,000  79,420 
Iwatani Corp.  62,000  484,538 
Iwatsu Electric Company, Ltd.  55,000  49,717 
Izutsuya Company, Ltd. (I)  17,000  11,598 
J-Oil Mills, Inc.  35,000  116,066 
Jalux, Inc.  1,500  18,506 
Jamco Corp.  3,000  52,644 
Janome Sewing Machine Company, Ltd. (I)  97,000  128,828 
Japan Airport Terminal Company, Ltd.  5,100  182,833 
Japan Aviation Electronics Industry, Ltd.  4,000  92,047 
Japan Communications, Inc. (I)(L)  30,800  219,955 
Japan Digital Laboratory Company, Ltd.  10,400  190,996 
Japan Drilling Company, Ltd. (L)  1,500  72,205 
Japan Pulp & Paper Company, Ltd.  38,000  119,786 

 

31 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Japan Radio Company, Ltd. (I)  29,000  115,240 
Japan Transcity Corp., Ltd.  12,000  42,140 
Japan Vilene Company, Ltd.  13,000  73,074 
Jastec Company, Ltd.  2,100  16,784 
JBCC Holdings, Inc.  8,400  62,988 
JCU Corp.  700  56,620 
Jeol, Ltd.  6,000  25,554 
Jin Company, Ltd. (L)  3,400  98,295 
JK Holdings Company, Ltd.  3,600  19,518 
JMS Company, Ltd.  7,000  19,867 
Joban Kosan Company, Ltd.  20,000  29,413 
Joshin Denki Company, Ltd.  13,000  113,741 
Jowa Holdings Company, Ltd.  3,000  111,359 
JP-Holdings, Inc.  4,300  17,450 
JSP Corp.  8,000  139,821 
Juki Corp. (I)  30,000  91,302 
Juroku Bank, Ltd.  109,000  416,310 
Justsystems Corp. (I)  16,400  133,759 
JVC Kenwood Corp.  46,428  124,679 
K&O Energy Group, Inc.  6,000  79,825 
K's Holdings Corp.  6,300  176,003 
kabu.com Securities Company, Ltd.  14,100  66,680 
Kabuki-Za Company, Ltd.  1,000  46,889 
Kadokawa Holdings, Inc. (L)  5,700  147,971 
Kaga Electronics Company, Ltd.  8,000  101,577 
Kaken Pharmaceutical Company, Ltd.  9,000  226,843 
Kakiyasu Honten Company, Ltd.  2,100  32,340 
Kameda Seika Company, Ltd.  4,600  143,863 
Kamei Corp.  9,500  70,182 
Kanaden Corp.  4,000  28,962 
Kanagawa Chuo Kotsu Company, Ltd.  14,000  70,508 
Kanamoto Company, Ltd.  8,000  365,574 
Kandenko Company, Ltd.  37,000  199,196 
Kanematsu Corp.  142,000  237,704 
Kanematsu Electronics, Ltd.  4,200  56,894 
Kansai Super Market, Ltd.  2,400  19,038 
Kansai Urban Banking Corp.  88,000  106,659 
Kanto Denka Kogyo Company, Ltd. (I)  16,000  65,074 
Kasai Kogyo Company, Ltd.  10,000  91,032 
Kasumi Company, Ltd.  13,200  106,831 
Katakura Industries Company, Ltd.  7,800  101,369 
Kato Sangyo Company, Ltd.  6,300  137,399 
Kato Works Company, Ltd.  20,000  144,577 
KAWADA TECHNOLOGIES, Inc.  1,000  53,886 
Kawai Musical Instruments Manufacturing Company, Ltd.  34,000  67,034 
Kawasumi Laboratories, Inc.  2,000  15,334 
Keihanshin Real Estate Company, Ltd.  11,900  63,045 
Keihin Company, Ltd.  10,000  16,240 
Keihin Corp.  15,800  223,376 
Keiyo Company, Ltd.  9,600  44,920 
Kenko Mayonnaise Company, Ltd.  200  2,104 
Kentucky Fried Chicken Japan, Ltd.  1,000  20,775 
KEY Coffee, Inc.  6,300  99,626 
KI Holdings Company, Ltd. (I)  1,000  5,508 
Kimoto Company, Ltd.  13,400  39,535 
King Jim Company, Ltd.  3,700  26,933 
Kinki Nippon Tourist Company, Ltd. (I)  14,000  24,104 
Kintetsu World Express, Inc.  3,800  151,228 
Kinugawa Rubber Industrial Company, Ltd.  16,000  72,914 

 

32 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Kissei Pharmaceutical Company, Ltd.  5,100  127,613 
Kitagawa Iron Works Company, Ltd.  39,000  69,466 
Kitano Construction Corp.  8,000  28,170 
Kito Corp.  3,800  85,897 
Kitz Corp.  33,700  180,189 
Koa Corp.  12,700  131,469 
Koatsu Gas Kogyo Company, Ltd.  9,000  50,654 
Kobelco Eco-Solutions Company, Ltd.  3,000  13,526 
Kogi Corp.  6,000  14,367 
Kohnan Shoji Company, Ltd.  10,400  109,204 
Kohsoku Corp.  3,200  27,716 
Koike Sanso Kogyo Company, Ltd.  5,000  11,347 
Kojima Company, Ltd.  4,900  15,116 
Kokusai Company, Ltd.  1,000  16,871 
Kokuyo Company, Ltd.  26,973  215,144 
Komaihaltec, Inc.  6,000  17,600 
Komatsu Seiren Company, Ltd.  4,000  20,749 
Komatsu Wall Industry Company, Ltd.  1,200  30,258 
Komeri Company, Ltd.  8,900  217,969 
Komori Corp.  9,724  112,987 
Konaka Company, Ltd.  6,300  41,866 
Kondotec, Inc.  6,100  43,363 
Konishi Company, Ltd.  5,200  102,998 
Kosaido Company, Ltd.  2,300  9,828 
Kose Corp.  1,200  52,428 
Kosei Securities Company, Ltd.  8,000  16,714 
Koshidaka Holdings Company, Ltd.  2,400  46,559 
Kotobuki Spirits Company, Ltd.  1,300  28,333 
Krosaki Harima Corp.  9,000  20,286 
Kumagai Gumi Company, Ltd. (I)  41,000  145,971 
Kumiai Chemical Industry Company, Ltd.  17,000  110,545 
Kura Corp.  3,300  93,947 
Kurabo Industries, Ltd.  77,000  136,302 
Kureha Corp.  48,000  236,966 
Kurimoto, Ltd.  40,000  94,562 
Kuroda Electric Company, Ltd.  13,400  206,387 
Kusuri No Aoki Company, Ltd.  1,800  69,905 
KYB Company, Ltd.  46,000  217,003 
Kyodo Printing Company, Ltd.  30,000  110,733 
Kyodo Shiryo Company, Ltd.  18,000  17,830 
Kyoei Steel, Ltd.  6,000  111,068 
Kyoei Tanker Company, Ltd.  5,000  10,297 
Kyokuto Kaihatsu Kogyo Company, Ltd.  10,600  154,597 
Kyokuto Securities Company, Ltd.  6,200  106,238 
Kyokuyo Company, Ltd.  28,000  68,110 
Kyorin Company, Ltd.  15,500  347,997 
Kyoritsu Maintenance Company, Ltd.  3,200  141,846 
Kyoritsu Printing Company, Ltd.  4,400  12,272 
Kyosan Electric Manufacturing Company, Ltd.  15,000  51,210 
Kyoto Kimono Yuzen Company, Ltd.  2,500  24,301 
Kyowa Electronics Instruments Company, Ltd.  2,000  9,459 
Kyowa Exeo Corp.  25,700  350,790 
Kyowa Leather Cloth Company, Ltd.  200  1,461 
Kyudenko Corp.  14,000  163,212 
LAC Company, Ltd.  4,100  30,961 
Land Business Company, Ltd.  7,800  34,738 
Lasertec Corp.  4,800  57,403 
LEC, Inc.  1,000  10,905 
Leopalace21 Corp. (I)  73,400  422,386 

 

33 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Life Corp.  6,200  93,753 
Link And Motivation, Inc.  300  488 
Lintec Corp.  15,200  325,387 
Lion Corp.  5,000  29,035 
Look, Inc.  7,000  17,101 
Macnica, Inc.  4,000  130,101 
Maeda Corp.  42,000  383,229 
Maeda Kosen Company, Ltd.  5,200  65,657 
Maeda Road Construction Company, Ltd.  20,000  337,098 
Maezawa Kasei Industries Company, Ltd.  2,000  21,218 
Maezawa Kyuso Industries Company, Ltd.  2,500  31,684 
Makino Milling Machine Company, Ltd.  34,575  257,123 
Mamiya-Op Company, Ltd.  9,000  20,713 
Mandom Corp.  4,870  187,583 
Mani, Inc.  400  22,489 
Mars Engineering Corp.  3,500  70,738 
Marubun Corp.  4,000  24,532 
Marudai Food Company, Ltd.  33,000  124,321 
Maruei Department Store Company, Ltd. (I)  7,000  9,903 
Marufuji Sheet Piling Company, Ltd.  3,000  12,198 
Maruha Nichiro Corp.  11,381  177,100 
Maruka Machinery Company, Ltd.  1,000  13,707 
Marusan Securities Company, Ltd.  22,961  171,555 
Maruwa Company, Ltd.  2,800  92,200 
Maruyama Manufacturing Company, Inc.  17,000  45,639 
Maruzen Showa Unyu Company, Ltd.  15,000  48,752 
Marvelous AQL, Inc.  11,100  141,537 
Matsuda Sangyo Company, Ltd.  5,520  67,768 
Matsui Construction Company, Ltd.  3,000  14,726 
Matsumotokiyoshi Holdings Company, Ltd.  1,000  31,592 
Matsuya Foods Company, Ltd.  2,100  41,987 
Max Company, Ltd.  11,000  127,950 
Maxvalu Tokai Company, Ltd.  2,000  28,480 
MEC Company, Ltd.  9,500  115,541 
Medical System Network Company, Ltd.  1,400  4,877 
Megachips Corp.  7,400  100,638 
Megmilk Snow Brand Company, Ltd.  13,400  175,903 
Meidensha Corp.  54,086  217,504 
Meiji Shipping Company, Ltd.  3,900  13,541 
Meiko Electronics Company, Ltd.  1,400  6,648 
Meiko Network Japan Company, Ltd.  2,100  24,448 
Meisei Industrial Company, Ltd.  15,000  95,802 
Meitec Corp.  8,000  257,792 
Meito Sangyo Company, Ltd.  1,500  16,789 
Meiwa Corp.  4,000  16,653 
Meiwa Estate Company, Ltd.  3,300  15,725 
Melco Holdings, Inc.  4,900  106,618 
Message Company, Ltd.  5,300  186,875 
Micronics Japan Company, Ltd. (L)  3,900  240,919 
Mikuni Corp.  1,000  3,975 
Milbon Company, Ltd.  3,460  114,604 
Mimasu Semiconductor Industry Company, Ltd.  5,700  51,234 
Ministop Company, Ltd.  5,600  83,446 
Miraial Company, Ltd.  1,500  26,844 
Mirait Holdings Corp.  18,580  211,777 
Miroku Jyoho Service Company, Ltd.  1,500  7,385 
Misawa Homes Company, Ltd.  7,300  81,060 
Mitani Corp.  5,500  143,631 
Mitani Sekisan Company, Ltd.  3,800  55,151 

 

34 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Mito Securities Company, Ltd.  18,000  68,974 
Mitsuba Corp.  11,000  181,722 
Mitsubishi Nichiyu Forklift Company, Ltd.  5,000  35,017 
Mitsubishi Paper Mills, Ltd. (I)  105,387  91,117 
Mitsubishi Pencil Company, Ltd.  5,400  171,154 
Mitsubishi Research Institute, Inc.  2,600  60,489 
Mitsubishi Shokuhin Company, Ltd.  3,800  89,671 
Mitsubishi Steel Manufacturing Company, Ltd.  53,000  118,829 
Mitsuboshi Belting Company, Ltd.  20,000  127,823 
Mitsui Engineering & Shipbuilding Company, Ltd.  229,000  500,310 
Mitsui High-Tec, Inc.  7,900  55,161 
Mitsui Home Company, Ltd.  9,000  43,022 
Mitsui Knowledge Industry Company, Ltd.  10,400  25,535 
Mitsui Matsushima Company, Ltd.  57,000  74,531 
Mitsui Mining & Smelting Company, Ltd.  194,000  597,699 
Mitsui Sugar Company, Ltd.  30,000  112,768 
Mitsui-Soko Company, Ltd.  27,000  112,987 
Mitsumi Electric Company, Ltd.  32,500  266,867 
Mitsumura Printing Company, Ltd.  4,000  10,080 
Mitsuuroko Holdings Company, Ltd.  16,100  91,348 
Miura Company, Ltd.  6,400  220,981 
Miyaji Engineering Group, Inc.  11,000  24,550 
Miyazaki Bank, Ltd.  67,000  214,547 
Miyoshi Oil & Fat Company, Ltd.  15,000  19,922 
Mizuno Corp.  27,000  156,754 
Mochida Pharmaceutical Company, Ltd.  3,600  247,426 
Monex Group, Inc.  49,000  154,244 
Monotaro Company, Ltd.  3,900  108,679 
Morinaga & Company, Ltd.  70,000  148,780 
Morinaga Milk Industry Company, Ltd.  61,000  212,772 
Morita Corp.  18,000  171,802 
Morozoff, Ltd.  1,000  3,412 
Mory Industries, Inc.  7,000  27,775 
MOS Food Services, Inc.  2,700  57,636 
Moshi Moshi Hotline, Inc.  14,500  143,154 
Mr. Max Corp.  3,200  10,124 
MTI, Ltd.  1,000  8,766 
Murakami Corp.  3,000  40,961 
Musashi Seimitsu Industry Company, Ltd.  6,100  138,002 
Musashino Bank, Ltd.  10,900  373,474 
Mutoh Holdings Company, Ltd.  5,000  24,991 
NAC Company, Ltd.  3,400  38,982 
Nachi-Fujikoshi Corp.  44,000  293,049 
Nafco Company, Ltd.  3,900  63,437 
Nagaileben Company, Ltd.  2,300  44,845 
Nagano Keiki Company, Ltd.  700  4,662 
Nagatanien Company, Ltd.  9,000  93,147 
Nagawa Company, Ltd.  400  9,656 
Nakabayashi Company, Ltd.  8,000  15,839 
Nakamuraya Company, Ltd.  13,000  53,487 
Nakanishi, Inc.  3,300  132,251 
Nakayama Steel Works, Ltd. (I)  11,000  8,800 
Nakayamafuku Company, Ltd.  2,500  18,739 
Namura Shipbuilding Company, Ltd. (L)  12,400  115,384 
Natori Company, Ltd.  600  6,484 
NDS Company, Ltd.  11,000  32,145 
NEC Capital Solutions, Ltd.  2,000  39,829 
NEC Networks & System Integration Corp.  7,700  182,003 
NET One Systems Company, Ltd.  29,600  184,491 

 

35 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Neturen Company, Ltd.  11,400  82,821 
New Japan Chemical Company, Ltd. (I)  3,500  8,073 
New Japan Radio Company, Ltd. (I)  2,000  8,125 
Next Company, Ltd.  1,100  8,386 
Nice Holdings, Inc.  34,000  70,013 
Nichi-iko Pharmaceutical Company, Ltd.  13,500  210,318 
Nichia Steel Works, Ltd.  4,000  12,158 
Nichias Corp.  28,000  187,047 
Nichiban Company, Ltd.  4,000  14,812 
Nichicon Corp.  17,573  128,398 
Nichiden Corp.  2,300  51,543 
Nichiha Corp.  8,800  90,249 
Nichii Gakkan Company, Ltd.  14,900  125,360 
Nichimo Company, Ltd.  7,000  12,115 
NICHIREI Corp.  77,000  362,786 
Nichireki Company, Ltd.  8,000  76,081 
Nidec Copal Electronics Corp.  3,000  26,393 
Nifco, Inc.  13,704  463,623 
NIFTY Corp.  1,500  21,815 
Nihon Chouzai Company, Ltd.  390  10,627 
Nihon Dempa Kogyo Company, Ltd.  6,100  57,076 
Nihon Eslead Corp.  2,000  19,218 
Nihon M&A Center, Inc.  8,300  262,524 
Nihon Nohyaku Company, Ltd.  15,000  157,364 
Nihon Parkerizing Company, Ltd.  14,000  321,898 
Nihon Trim Company, Ltd.  1,000  30,970 
Nihon Unisys, Ltd.  17,100  157,792 
Nihon Yamamura Glass Company, Ltd.  40,000  63,469 
Nikkiso Company, Ltd.  17,000  201,960 
Nikko Company, Ltd.  5,000  24,458 
Nippon Beet Sugar Manufacturing Company, Ltd.  34,000  63,446 
Nippon Carbide Industries Company, Inc.  15,000  36,789 
Nippon Carbon Company, Ltd.  45,000  79,602 
Nippon Ceramic Company, Ltd.  2,900  44,974 
Nippon Chemi-Con Corp. (I)  52,271  154,481 
Nippon Chemical Industrial Company, Ltd. (I)  17,000  25,512 
Nippon Chemiphar Company, Ltd.  7,000  36,426 
Nippon Coke & Engineering Company, Ltd.  83,500  91,602 
Nippon Concrete Industries Company, Ltd.  4,000  27,063 
Nippon Denko Company, Ltd.  38,300  101,392 
Nippon Densetsu Kogyo Company, Ltd.  11,000  184,259 
Nippon Felt Company, Ltd.  2,700  12,301 
Nippon Filcon Company, Ltd.  3,100  13,567 
Nippon Fine Chemical Company, Ltd.  3,000  20,422 
Nippon Flour Mills Company, Ltd.  35,000  176,017 
Nippon Formula Feed Manufacturing Company, Ltd.  6,000  6,635 
Nippon Gas Company, Ltd.  8,600  258,854 
Nippon Hume Corp.  5,000  39,509 
Nippon Jogesuido Sekkei Company, Ltd.  300  4,029 
Nippon Kanzai Company, Ltd.  800  21,832 
Nippon Kasei Chemical Company, Ltd.  5,000  6,880 
Nippon Kinzoku Company, Ltd. (I)  4,000  6,190 
Nippon Kodoshi Corp.  600  7,558 
Nippon Koei Company, Ltd.  26,000  118,327 
Nippon Konpo Unyu Soko Company, Ltd.  17,300  306,460 
Nippon Koshuha Steel Company, Ltd. (I)  24,000  25,904 
Nippon Light Metal Holdings Company, Ltd.  174,200  278,391 
Nippon Parking Development Company, Ltd.  29,300  31,018 
Nippon Pillar Packing Company, Ltd.  5,000  41,349 

 

36 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Nippon Piston Ring Company, Ltd.  24,000  55,010 
Nippon Rietec Company, Ltd.  3,000  23,090 
Nippon Seiki Company, Ltd.  14,000  312,093 
Nippon Seisen Company, Ltd.  6,000  41,480 
Nippon Sharyo, Ltd.  23,000  90,083 
Nippon Sheet Glass Company, Ltd. (I)  298,000  355,772 
Nippon Shinyaku Company, Ltd.  7,000  222,795 
Nippon Soda Company, Ltd.  46,000  242,920 
Nippon Steel & Sumikin Texeng Company, Ltd.  11,000  67,151 
Nippon Steel Trading Company., Ltd.  36,680  143,847 
Nippon Suisan Kaisha, Ltd. (I)  108,965  316,612 
Nippon Synthetic Chemical Industry Company, Ltd.  17,000  130,875 
Nippon Thompson Company, Ltd.  27,000  140,460 
Nippon Valqua Industries, Ltd.  34,000  102,726 
Nippon Yakin Kogyo Company, Ltd. (I)  41,400  120,084 
Nipro Corp. (L)  28,700  253,354 
Nishi-Nippon Railroad Company, Ltd.  129,000  507,478 
Nishikawa Rubber Company, Ltd.  4,000  71,305 
Nishimatsu Construction Company, Ltd.  81,000  432,156 
Nishimatsuya Chain Company, Ltd.  17,300  136,640 
Nishio Rent All Company, Ltd.  4,500  206,041 
Nissan Tokyo Sales Holdings Company, Ltd.  5,000  14,414 
Nissei ASB Machine Company, Ltd.  2,300  37,986 
Nissei Build Kogyo Company, Ltd.  5,000  13,660 
Nissei Corp.  1,100  10,036 
Nissei Plastic Industrial Company, Ltd.  2,300  16,358 
Nissha Printing Company, Ltd.  5,000  65,010 
Nisshin Fudosan Company, Ltd.  15,600  65,852 
Nisshin Oillio Group, Ltd. (L)  34,000  119,991 
Nisshin Steel Holdings Comapny, Ltd.  26,896  286,648 
Nisshinbo Holdings, Inc.  48,000  448,036 
Nissin Corp.  21,000  57,734 
Nissin Electric Company, Ltd.  15,000  91,754 
Nissin Kogyo Company, Ltd.  12,000  216,826 
Nissin Sugar Holdings Company, Ltd.  500  11,290 
Nissui Pharmaceutical Company, Ltd.  2,700  32,333 
Nitta Corp.  6,900  168,390 
Nitta Gelatin, Inc.  2,100  17,998 
Nittan Valve Company, Ltd.  4,000  12,766 
Nittetsu Mining Company, Ltd.  22,000  96,463 
Nitto Boseki Company, Ltd.  58,229  241,594 
Nitto FC Company, Ltd.  1,000  6,480 
Nitto Kogyo Corp.  7,200  148,817 
Nitto Kohki Company, Ltd.  3,500  70,749 
Nitto Seiko Company, Ltd.  4,000  14,193 
Nittoc Construction Company, Ltd.  20,400  85,119 
Nittoku Engineering Company, Ltd. (L)  3,800  42,040 
Noevir Holdings Company, Ltd.  6,500  133,305 
NOF Corp.  44,000  301,472 
Nohmi Bosai, Ltd.  10,000  174,850 
Nomura Company, Ltd.  9,500  88,230 
Noritake Company, Ltd.  41,000  105,670 
Noritsu Koki Company, Ltd.  2,000  12,748 
Noritz Corp.  8,700  149,732 
North Pacific Bank, Ltd.  114,500  464,500 
NS Solutions Corp.  5,300  156,589 
NS United Shinwa Kaiun Kaisha, Ltd.  24,000  62,329 
NSD Company, Ltd.  9,615  150,486 
Nuflare Technology, Inc.  1,000  49,396 

 

37 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Obara Group, Inc.  3,300  125,936 
Obayashi Road Corp.  18,000  110,841 
Odelic Company, Ltd.  1,000  28,031 
Oenon Holdings, Inc.  28,000  64,004 
Ohara, Inc.  2,000  11,326 
Ohashi Technica, Inc.  900  10,360 
Ohsho Food Service Corp.  3,600  138,786 
Oiles Corp.  7,227  182,989 
Okabe Company, Ltd.  12,400  148,423 
Okamoto Industries, Inc.  22,000  84,601 
Okamura Corp.  18,000  147,109 
Okasan Holdings, Inc.  2,000  15,259 
Oki Electric Industry Company, Ltd.  209,000  473,101 
Okinawa Cellular Telephone Company  4,700  131,285 
OKK Corp.  48,000  73,458 
OKUMA Corp.  46,382  372,655 
Okumura Corp.  54,000  315,756 
Okura Industrial Company, Ltd.  19,000  73,136 
Okuwa Company, Ltd.  7,000  66,966 
Olympic Corp.  1,000  9,544 
ONO Sokki Company, Ltd.  2,000  18,270 
Onoken Company, Ltd.  4,600  51,840 
Onward Holdings Company, Ltd.  42,000  280,153 
OPT, Inc.  3,900  27,588 
Optex Company, Ltd.  3,700  74,166 
Organo Corp.  20,000  95,206 
Origin Electric Company, Ltd.  7,000  27,131 
Osaka Organic Chemical Industry, Ltd.  3,200  14,118 
Osaka Steel Company, Ltd.  4,300  84,477 
OSAKA Titanium Technologies Company (L)  5,800  141,367 
Osaki Electric Company, Ltd.  9,000  53,035 
OSG Corp.  20,000  341,614 
Otsuka Kagu, Ltd.  2,100  21,021 
Outsourcing, Inc.  700  10,798 
Oyo Corp.  5,900  106,026 
Pacific Industrial Company, Ltd.  14,100  105,702 
Pacific Metals Company, Ltd. (I)  48,000  202,341 
Pal Company, Ltd.  3,200  86,977 
Paltac Corp.  11,400  145,735 
PanaHome Corp.  27,000  195,346 
Panasonic Electric Works SUNX Company, Ltd.  6,100  30,041 
Panasonic Information Systems  800  22,716 
Paramount Bed Holdings Company, Ltd.  5,600  172,772 
Parco Company, Ltd.  5,800  49,187 
Paris Miki Holdings, Inc.  6,300  29,276 
Pasco Corp.  4,000  17,739 
Pasona Group, Inc.  7,800  42,855 
Penta-Ocean Construction Company, Ltd.  98,000  359,976 
Pigeon Corp.  5,262  311,160 
Pilot Corp.  3,700  202,767 
Piolax, Inc.  3,400  164,757 
Pioneer Corp. (I)  88,400  275,118 
Plenus Company, Ltd.  5,900  141,293 
Press Kogyo Company, Ltd.  42,000  168,598 
Pressance Corp.  2,000  56,725 
Prestige International, Inc.  4,400  38,197 
Prima Meat Packers, Ltd.  44,000  121,052 
Pronexus, Inc.  5,900  43,728 
Proto Corp.  4,300  64,300 

 

38 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

PS Mitsubishi Construction Company, Ltd.  8,700  39,994 
Psc, Inc.  400  19,116 
Qol Company, Ltd.  1,800  10,730 
Raito Kogyo Company, Ltd.  18,800  168,560 
Rasa Industries, Ltd. (I)  21,000  29,892 
Relo Holdings, Inc.  3,000  204,003 
Renaissance, Inc.  1,000  9,104 
Rengo Company, Ltd.  65,000  305,535 
Renown, Inc. (I)  10,500  12,114 
Resorttrust, Inc.  7,400  162,583 
Rheon Automatic Machinery Company, Ltd.  2,000  8,760 
Rhythm Watch Company, Ltd.  29,000  45,459 
Ricoh Leasing Company, Ltd.  4,900  141,636 
Right On Company, Ltd.  3,900  25,305 
Riken Corp.  31,000  135,377 
Riken Keiki Company, Ltd.  3,000  31,391 
Riken Technos Corp.  8,000  35,642 
Riken Vitamin Company, Ltd.  2,000  51,401 
Rion Company, Ltd.  1,200  15,157 
Riso Kagaku Corp.  5,100  165,414 
Rock Field Company, Ltd.  3,300  60,418 
Rohto Pharmaceutical Company, Ltd.  2,800  39,661 
Rokko Butter Company, Ltd. (L)  2,600  23,472 
Roland D.G. Corp.  700  29,552 
Round One Corp.  28,000  182,235 
Royal Holdings Company, Ltd.  8,100  132,976 
Ryobi, Ltd.  51,000  152,200 
Ryoden Trading Company, Ltd.  12,000  88,564 
Ryosan Company, Ltd.  12,929  284,471 
Ryoyo Electro Corp.  3,200  35,460 
S Foods, Inc.  3,000  53,429 
S&B Foods, Inc.  100  3,893 
Sagami Chain Company, Ltd.  1,000  9,596 
Saibu Gas Company, Ltd.  105,000  267,296 
Saizeriya Company, Ltd.  10,600  144,852 
Sakai Chemical Industry Company, Ltd.  34,000  104,675 
Sakai Heavy Industries, Ltd.  6,000  17,553 
Sakai Moving Service Company, Ltd.  1,100  42,176 
Sakai Ovex Company, Ltd.  5,000  7,896 
Sakata INX Corp.  14,000  131,603 
Sakata Seed Corp.  8,800  117,102 
Sala Corp.  4,500  26,393 
SAMTY Company, Ltd.  1,100  7,613 
San Holdings, Inc.  200  3,009 
San-A Company, Ltd.  6,200  220,541 
San-Ai Oil Company, Ltd.  20,000  153,267 
Sanden Corp.  40,000  243,407 
Sangetsu Company, Ltd.  9,300  252,385 
Sanix, Inc. (I)(L)  8,500  72,974 
Sanken Electric Company, Ltd.  39,437  328,403 
Sanki Engineering Company, Ltd.  18,000  136,813 
Sanko Marketing Foods Company, Ltd.  500  4,360 
Sanko Metal Industrial Company, Ltd.  6,000  13,388 
Sankyo Seiko Company, Ltd.  7,700  29,554 
Sankyo Tateyama, Inc.  3,300  63,833 
Sankyu, Inc.  86,000  431,141 
Sanoh Industrial Company, Ltd.  8,300  58,198 
Sanshin Electronics Company, Ltd.  8,900  70,914 
Sanwa Shutter Corp.  63,124  462,090 

 

39 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Sanyo Chemical Industries, Ltd.  17,000  112,487 
Sanyo Denki Company, Ltd.  12,000  100,366 
Sanyo Electric Railway Company, Ltd.  6,000  26,649 
Sanyo Housing Nagoya Company, Ltd.  5,200  52,851 
Sanyo Shokai, Ltd.  40,000  91,690 
Sanyo Special Steel Company, Ltd.  32,648  134,443 
Sapporo Holdings, Ltd.  103,000  440,827 
Sasebo Heavy Industries Company, Ltd. (I)  24,000  28,208 
Sato Holdings Corp.  7,200  207,762 
Satori Electric Company, Ltd.  2,400  15,590 
Sawada Holdings Company, Ltd.  9,500  67,754 
Saxa Holdings, Inc.  9,000  14,443 
SBS Holdings, Inc.  900  7,030 
Scroll Corp.  4,000  10,579 
Seibu Electric Industry Company, Ltd.  3,000  14,136 
Seika Corp.  20,000  51,158 
Seikagaku Corp.  5,700  103,953 
Seikitokyu Kogyo Company, Ltd.  46,000  55,774 
Seiko Holdings Corp.  45,000  196,740 
Seiren Company, Ltd.  17,000  153,024 
Sekisui Jushi Corp.  8,000  109,768 
Sekisui Plastics Company, Ltd.  15,000  42,278 
Senko Company, Ltd.  25,000  123,401 
Senshu Electric Company, Ltd.  1,500  26,402 
Senshu Ikeda Holdings, Inc.  66,600  352,346 
Senshukai Company, Ltd.  11,200  92,931 
Septeni Holdings Company, Ltd.  400  4,789 
Seria Company, Ltd.  3,600  147,919 
Shibaura Electronics Company, Ltd.  600  14,189 
Shibaura Mechatronics Corp.  10,000  28,280 
Shibusawa Warehouse Company, Ltd.  16,000  54,314 
Shibuya Kogyo Company, Ltd.  3,600  100,729 
Shidax Corp.  4,200  20,232 
Shikibo, Ltd.  39,000  44,986 
Shikoku Chemicals Corp.  16,000  111,268 
Shima Seiki Manufacturing, Ltd.  8,200  132,380 
Shimachu Company, Ltd.  14,300  327,077 
Shimojima Company, Ltd.  1,800  17,567 
Shin Nippon Air Technologies Company, Ltd.  3,100  25,351 
Shin-Etsu Polymer Company, Ltd.  11,300  63,155 
Shin-Keisei Electric Railway Company, Ltd.  4,000  14,722 
Shinagawa Refractories Company, Ltd.  30,000  77,073 
Shindengen Electric Manufacturing Company, Ltd.  22,000  144,734 
Shinkawa, Ltd.  1,700  8,111 
Shinko Electric Industries Company, Ltd.  22,600  165,325 
Shinko Plantech Company, Ltd.  14,200  110,211 
Shinko Shoji Company, Ltd.  5,500  50,234 
Shinmaywa Industries, Ltd.  27,000  265,426 
Shinnihon Corp.  8,000  27,473 
Shinsho Corp.  10,000  24,926 
Shinwa Company, Ltd.  2,000  25,146 
Ship Healthcare Holdings, Inc.  10,300  328,816 
Shiroki Corp.  17,000  34,513 
Shizuki Electric Company, Inc.  3,000  13,997 
Shizuoka Gas Company, Ltd.  20,900  138,373 
Shobunsha Publications, Inc.  2,400  15,531 
Shoei Foods Corp.  900  7,802 
Shofu, Inc.  2,200  23,334 
Shoko Company, Ltd.  33,000  50,490 

 

40 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Showa Aircraft Industry Company, Ltd.  1,000  10,740 
Showa Corp.  14,600  163,905 
Showa Sangyo Company, Ltd.  37,000  136,954 
Siix Corp.  7,800  128,413 
Sinanen Company, Ltd.  15,000  64,496 
Sinfonia Technology Company, Ltd.  32,000  48,382 
Sinko Industries Ltd. (L)  5,100  49,193 
Sintokogio, Ltd.  16,000  107,137 
SKY Perfect JSAT Holdings, Inc.  3,500  21,446 
SMK Corp.  22,000  113,366 
SMS Company, Ltd.  2,500  64,713 
SNT Corp.  3,200  15,056 
Sodick Company Ltd. (L)  15,300  250,326 
Softbank Technology Corp.  800  11,275 
Softbrain Company, Ltd. (I)  6,100  14,682 
Software Service, Inc.  900  41,244 
Sogo Medical Company, Ltd.  1,500  72,567 
Space Company, Ltd.  2,700  28,986 
Sparx Group Company, Ltd.  2,000  4,239 
SPK Corp.  300  5,559 
SRA Holdings, Inc.  3,400  55,568 
Srg Takamiya Company, Ltd.  800  12,077 
ST Corp.  3,700  35,641 
St. Marc Holdings Company, Ltd.  2,800  158,302 
Star Micronics Company, Ltd.  17,300  243,996 
Starbucks Coffee Japan, Ltd.  11,100  135,288 
Starts Corp., Inc.  8,000  131,204 
Starzen Company, Ltd.  27,000  87,267 
Stella Chemifa Corp.  3,800  57,737 
Step Company, Ltd.  2,000  15,627 
Studio Alice Company, Ltd.  2,700  36,033 
Sugimoto & Company, Ltd.  300  2,956 
Sumida Corp.  4,700  31,649 
Suminoe Textile Company, Ltd.  12,000  40,178 
Sumitomo Bakelite Company, Ltd.  61,000  248,331 
Sumitomo Densetsu Company, Ltd.  5,900  82,321 
Sumitomo Mitsui Company, Ltd. (I)  100,500  122,820 
Sumitomo Osaka Cement Company, Ltd.  125,000  441,287 
Sumitomo Precision Products Company, Ltd.  9,000  37,481 
Sumitomo Real Estate Sales Company, Ltd.  3,500  90,865 
Sumitomo Seika Chemicals Company, Ltd.  19,000  119,424 
Sumitomo Warehouse Company, Ltd.  43,952  237,263 
Sun Frontier Fudousan Company, Ltd.  500  5,749 
Sun-Wa Technos Corp.  400  4,132 
Suncall Corp.  5,000  29,528 
SWCC Showa Holdings Company, Ltd. (I)  87,000  97,904 
Systena Corp.  6,400  49,225 
T Hasegawa Company, Ltd.  5,800  89,721 
T RAD Company, Ltd.  27,000  72,349 
T&K Toka Company, Ltd.  4,800  107,261 
T-Gaia Corp.  1,100  9,755 
Tabuchi Electric Company, Ltd.  7,200  118,216 
Tachi-S Company, Ltd.  9,800  148,191 
Tachibana Eletech Company, Ltd.  2,700  38,716 
Taihei Dengyo Kaisha, Ltd.  7,000  53,117 
Taiheiyo Kouhatsu, Inc.  8,000  7,612 
Taiho Kogyo Company, Ltd.  6,200  69,012 
Taikisha, Ltd.  8,700  206,523 
Taiko Pharmaceutical Company, Ltd.  1,100  18,615 

 

41 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Taisei Lamick Company, Ltd.  1,100  28,571 
Taiyo Holdings Company, Ltd.  2,800  94,432 
Taiyo Yuden Company, Ltd.  31,200  315,189 
Takagi Securities Company, Ltd. (L)  16,000  38,525 
Takamatsu Construction Group Comapany, Ltd.  3,400  60,719 
Takano Company, Ltd.  2,000  11,746 
Takaoka Toko Company, Ltd.  1,970  28,962 
Takara Holdings, Inc.  14,000  121,211 
Takara Leben Company, Ltd.  8,200  27,842 
Takara Standard Company, Ltd.  29,000  256,629 
Takasago International Corp.  33,000  178,317 
Takasago Thermal Engineering Company, Ltd.  20,600  259,989 
Takashima & Company, Ltd.  16,000  36,806 
Take and Give Needs Company, Ltd.  2,480  30,950 
Takeei Corp. (L)  5,000  55,038 
Takeuchi Manufacturing Company, Ltd.  5,200  238,330 
Takihyo Company, Ltd.  4,000  16,035 
Takiron Company, Ltd.  19,000  94,807 
Takisawa Machine Tool Company, Ltd.  12,000  24,121 
Takuma Company, Ltd.  21,000  134,185 
Tama Home Company, Ltd.  700  4,556 
Tamron Company, Ltd.  5,800  121,654 
Tamura Corp.  24,000  102,537 
Tanseisha Company, Ltd.  6,800  47,232 
Tatsuta Electric Wire & Cable Company, Ltd.  12,300  64,463 
Tayca Corp.  7,000  30,265 
TBK Company, Ltd.  6,000  34,684 
Techno Medica Company, Ltd.  1,500  30,517 
Tecmo Koei Holdings Company, Ltd.  5,200  79,166 
Teikoku Electric Manufacturing Company, Ltd.  3,100  81,367 
Teikoku Sen-I Company, Ltd.  6,000  123,873 
Teikoku Tsushin Kogyo Company, Ltd.  6,000  10,564 
Tenma Corp.  2,100  32,829 
The 77th Bank, Ltd.  6,000  32,375 
The Aichi Bank, Ltd.  3,800  190,910 
The Akita Bank, Ltd.  81,000  229,155 
The Aomori Bank, Ltd.  85,000  255,942 
The Awa Bank, Ltd.  71,000  414,483 
The Bank of Iwate, Ltd.  6,400  299,204 
The Bank of Kochi, Ltd.  37,000  50,517 
The Bank of Nagoya, Ltd.  54,000  213,520 
The Bank of Okinawa, Ltd.  6,188  261,646 
The Bank of Saga, Ltd.  57,000  131,014 
The Chiba Kogyo Bank, Ltd.  17,100  126,336 
The Chukyo Bank, Ltd.  42,000  77,518 
The Daiei, Inc. (I)  49,400  62,235 
The Daisan Bank, Ltd.  64,000  110,760 
The Daishi Bank, Ltd.  113,000  405,367 
The Daito Bank, Ltd.  35,000  45,434 
The Ehime Bank, Ltd.  71,253  168,500 
The Eighteenth Bank, Ltd.  70,000  187,221 
The Fukui Bank, Ltd.  96,188  227,674 
The Fukushima Bank, Ltd.  88,000  71,862 
The Higashi-Nippon Bank, Ltd.  41,000  109,237 
The Hokkoku Bank, Ltd.  98,000  338,450 
The Hokuetsu Bank, Ltd.  86,000  171,207 
The Hyakugo Bank, Ltd.  82,000  328,208 
The Japan Steel Works, Ltd.  5,000  21,609 
The Japan Wool Textile Company, Ltd.  23,000  169,169 

 

42 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

The Kagoshima Bank, Ltd.  53,000  341,372 
The Keiyo Bank, Ltd.  84,000  431,611 
The Kinki Sharyo Company, Ltd.  12,000  39,132 
The Kita-Nippon Bank, Ltd.  2,100  52,605 
The Kiyo Bank, Ltd.  10,139  146,172 
The Maruetsu, Inc.  7,000  30,290 
The Michinoku Bank, Ltd.  53,000  106,517 
The Mie Bank, Ltd.  36,000  85,143 
The Minato Bank, Ltd.  59,000  112,286 
The Monogatari Corp.  1,100  37,587 
The Nagano Bank, Ltd.  25,000  46,161 
The Nanto Bank, Ltd.  67,000  283,561 
The Nippon Road Company, Ltd.  21,000  118,159 
The Nippon Signal Company, Ltd.  17,100  176,040 
The Ogaki Kyoritsu Bank, Ltd.  109,000  301,785 
The Oita Bank, Ltd.  59,000  221,946 
The Okinawa Electric Power Company, Inc.  4,700  152,980 
The Pack Corp.  5,700  110,097 
The San-in Godo Bank, Ltd.  53,000  373,819 
The Shiga Bank, Ltd.  49,000  283,708 
The Shikoku Bank, Ltd.  75,000  166,641 
The Shimane Bank, Ltd.  200  2,544 
The Shimizu Bank, Ltd.  2,600  68,885 
The Taiko Bank, Ltd.  28,000  59,505 
The Tochigi Bank, Ltd.  44,000  180,814 
The Toho Bank, Ltd.  77,000  273,959 
The Tohoku Bank, Ltd.  34,000  49,692 
The Tokyo Tomin Bank, Ltd. (L)  13,400  157,678 
The Torigoe Company, Ltd.  2,300  15,481 
The Tottori Bank, Ltd.  25,000  53,135 
The Towa Bank, Ltd.  85,000  80,119 
The Yachiyo Bank, Ltd.  5,600  177,519 
The Yamagata Bank, Ltd. (L)  49,000  231,371 
The Yamanashi Chuo Bank, Ltd.  54,255  242,164 
The Yasuda Warehouse Company, Ltd.  6,200  59,728 
Tigers Polymer Corp.  2,000  11,869 
TKC Corp.  7,100  149,746 
Toa Corp.  69,000  199,951 
TOA Oil Company, Ltd.  14,000  23,161 
TOA Road Corp.  15,000  60,776 
Toabo Corp.  9,000  6,838 
Toagosei Company, Ltd.  70,000  292,239 
Tobishima Corp. (I)  40,900  71,625 
Tobu Store Company, Ltd.  8,000  21,830 
TOC Company, Ltd.  19,000  129,043 
Tocalo Company, Ltd.  4,500  89,112 
Toda Corp.  59,000  311,090 
Toda Kogyo Corp.  19,000  70,393 
Toei Animation Company, Ltd.  500  13,711 
Toei Company, Ltd.  23,000  126,521 
Toenec Corp.  13,000  73,777 
Toho Company, Ltd. (L)  16,000  59,827 
Toho Holdings Company, Ltd.  15,000  290,415 
Toho Titanium Company, Ltd.  3,300  24,357 
Toho Zinc Company, Ltd.  47,000  200,092 
Tohokushinsha Film Corp.  3,700  30,498 
Tohto Suisan Company, Ltd.  5,000  9,380 
Tokai Carbon Company, Ltd.  68,000  191,611 
Tokai Corp.  2,800  87,960 

 

43 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Tokai Holdings Corp.  22,900  113,821 
Tokai Lease Company, Ltd.  3,000  5,885 
Tokai Rika Company, Ltd.  8,700  172,969 
Tokai Rubber Industries, Ltd.  12,000  114,096 
Token Corp.  2,050  93,293 
Tokushu Tokai Paper Company, Ltd.  36,000  93,181 
Tokuyama Corp.  113,000  374,307 
Tokyo Derica Company, Ltd.  1,800  42,609 
Tokyo Dome Corp.  51,000  236,346 
Tokyo Electron Device, Ltd.  800  11,549 
Tokyo Energy & Systems, Inc.  4,000  27,196 
Tokyo Keiki, Inc.  28,000  77,354 
Tokyo Ohka Kogyo Company, Ltd.  7,200  194,745 
Tokyo Rakutenchi Company, Ltd.  6,000  27,614 
Tokyo Rope Manufacturing Company, Ltd. (I)  27,000  46,199 
Tokyo Sangyo Company, Ltd.  3,500  13,788 
Tokyo Seimitsu Company, Ltd.  11,500  193,170 
Tokyo Steel Manufacturing Company, Ltd.  35,200  201,913 
Tokyo Tekko Company, Ltd.  20,000  104,054 
Tokyo Theatres Company, Inc.  31,000  45,602 
Tokyu Construction Company, Ltd.  14,350  73,806 
Tokyu Recreation Company, Ltd.  4,000  25,184 
Toli Corp.  7,000  15,269 
Tomato Bank, Ltd.  38,000  64,287 
Tomen Electronics Corp.  3,200  50,776 
Tomoe Corp.  4,400  19,459 
Tomoe Engineering Company, Ltd.  1,500  24,833 
Tomoku Company, Ltd.  15,000  41,701 
TOMONY Holdings, Inc.  60,600  256,003 
Tomy Company, Ltd.  21,500  116,974 
Tonami Holdings Company, Ltd.  13,000  29,384 
Topcon Corp.  1,300  30,397 
Toppan Forms Company, Ltd.  17,500  176,846 
Topre Corp.  13,500  206,432 
Topy Industries, Ltd.  70,000  135,448 
Toridoll Corp.  4,000  44,374 
Torii Pharmaceutical Company, Ltd.  1,700  55,147 
Torishima Pump Manufacturing Company, Ltd. (L)  8,100  70,590 
Tosei Corp.  9,200  58,042 
Toshiba Machine Company, Ltd.  32,000  141,715 
Toshiba Plant Systems & Services Corp.  13,000  220,023 
Toshiba TEC Corp.  7,000  44,332 
Tosho Company, Ltd.  1,400  30,138 
Tosho Printing Company, Ltd.  15,000  75,195 
Totetsu Kogyo Company, Ltd.  6,800  168,679 
Tow Company, Ltd.  500  3,442 
Towa Corp.  4,400  27,136 
Towa Pharmaceutical Company, Ltd.  3,500  142,677 
Toyo Construction Company, Ltd.  23,300  115,203 
Toyo Corp.  10,400  118,388 
Toyo Electric Manufacturing Company, Ltd.  6,000  26,109 
Toyo Engineering Corp.  34,000  164,504 
Toyo Ink SC Holdings Company, Ltd.  61,000  285,849 
Toyo Kanetsu KK  33,000  82,903 
Toyo Kohan Company, Ltd.  16,000  88,785 
Toyo Securities Company, Ltd.  22,000  62,923 
Toyo Tanso Company, Ltd.  3,700  81,810 
Toyo Tire & Rubber Company, Ltd.  27,000  441,733 
Toyo Wharf & Warehouse Company, Ltd.  27,000  58,469 

 

44 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Toyobo Company, Ltd.  277,064  437,051 
TPR Company, Ltd.  6,300  165,255 
Trancom Company, Ltd.  2,100  88,105 
Transcosmos, Inc.  6,900  140,197 
Trusco Nakayama Corp.  5,900  151,743 
Trust Tech, Inc.  400  7,362 
TSI Holdings Company, Ltd.  30,505  210,181 
Tsubakimoto Chain Company, Ltd.  44,000  375,163 
Tsudakoma Corp. (I)  9,000  12,914 
Tsugami Corp. (L)  21,000  111,413 
Tsukishima Kikai Company, Ltd.  6,000  66,215 
Tsukuba Bank, Ltd.  31,500  113,975 
Tsukui Corp.  9,400  94,581 
Tsurumi Manufacturing Company, Ltd.  5,000  82,238 
Tsutsumi Jewelry Company, Ltd.  900  21,874 
TV Tokyo Holdings Corp.  800  16,511 
Tyo, Inc.  7,400  12,234 
U-Shin, Ltd. (L)  6,300  36,749 
UACJ Corp.  59,718  253,204 
Ube Industries, Ltd.  7,000  11,852 
Uchida Yoko Company, Ltd.  11,000  47,105 
UKC Holdings Corp.  4,100  72,044 
Ulvac, Inc. (I)  13,800  186,139 
Uniden Corp.  14,000  33,447 
Union Tool Company, Ltd.  3,700  95,972 
Unipres Corp.  11,700  231,520 
United Arrows, Ltd.  5,900  216,314 
Unitika, Ltd. (I)  43,000  19,035 
Universal Entertainment Corp.  8,000  142,410 
UNY Group Holdings Company, Ltd. (L)  75,500  424,475 
Usen Corp. (I)  39,190  142,934 
Ushio, Inc.  13,700  153,506 
UT Holdings Company, Ltd.  8,400  49,431 
Utoc Corp.  4,300  19,711 
Valor Company, Ltd.  11,100  178,030 
Village Vanguard Company, Ltd.  500  6,776 
Vital KSK Holdings, Inc.  10,900  96,159 
Vitec Company, Ltd.  800  6,150 
VT Holdings Company, Ltd.  20,400  85,560 
Wacoal Holdings Corp.  34,000  337,742 
Wacom Company, Ltd. (L)  39,300  176,768 
Wakachiku Construction Company, Ltd.  23,000  39,828 
Wakita & Company, Ltd.  12,000  139,413 
Warabeya Nichiyo Company, Ltd.  4,200  80,264 
Watabe Wedding Corp.  800  4,592 
WATAMI Company, Ltd. (L)  5,800  73,616 
Weathernews, Inc.  4,200  129,015 
Welcia Holdings Company, Ltd.  5,000  146,930 
Wellnet Corp.  100  1,668 
West Holdings Corp.  6,400  88,573 
Wood One Company, Ltd.  8,000  22,861 
Wowow, Inc.  2,200  94,221 
Xebio Company, Ltd.  6,700  109,782 
Y A C Company, Ltd.  900  5,645 
Yahagi Construction Company, Ltd.  4,700  35,419 
Yaizu Suisankagaku Industry Company, Ltd.  1,700  16,079 
YAMABIKO Corp.  2,100  68,970 
Yamaichi Electronics Company, Ltd.  1,600  12,726 
Yamatane Corp.  35,000  59,932 

 

45 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Yamaya Corp.  1,000  16,480 
Yamazawa Company, Ltd.  100  1,569 
Yamazen Corp.  18,000  137,138 
Yaoko Company, Ltd.  2,700  162,219 
Yellow Hat, Ltd.  4,400  95,728 
Yodogawa Steel Works, Ltd.  34,825  150,201 
Yokogawa Bridge Corp.  10,000  146,508 
Yokohama Reito Company, Ltd.  13,400  106,414 
Yokowo Company, Ltd.  2,800  14,459 
Yomeishu Seizo Company, Ltd.  3,000  26,675 
Yomiuri Land Company, Ltd.  4,000  19,475 
Yondenko Corp.  1,000  3,972 
Yondoshi Holdings, Inc.  7,200  145,481 
Yorozu Corp.  4,900  79,629 
Yuasa Funashoku Company, Ltd.  4,000  10,498 
Yuasa Trading Company, Ltd.  52,000  109,088 
Yuken Kogyo Company, Ltd.  20,000  47,570 
Yumeshin Holdings Company, Ltd.  5,500  46,378 
Yurtec Corp.  8,000  43,562 
Yusen Logistics Company, Ltd.  5,900  65,796 
Yushiro Chemical Industry Company, Ltd.  3,000  37,085 
Yutaka Giken Company, Ltd.  1,000  23,157 
Zappallas, Inc.  800  4,829 
Zenrin Company, Ltd.  10,100  117,954 
Zensho Holdings Company, Ltd. (L)  18,800  175,470 
Zeria Pharmaceutical Company, Ltd.  4,400  107,728 
Zojirushi Corp.  7,000  37,412 
Zuken, Inc.  2,300  22,531 
 
Jersey, Channel Islands 0.2%    1,269,736 
Atrium European Real Estate, Ltd. (I)  30,289  165,655 
Centamin PLC  160,427  170,560 
Petra Diamonds, Ltd. (I)  119,446  354,064 
Phoenix Group Holdings  47,031  579,457 
 
Liechtenstein 0.1%    318,794 
Liechtensteinische Landesbank AG  4,351  184,844 
Verwaltungs & Privat Bank AG  1,639  133,950 
 
Luxembourg 0.3%    1,888,107 
APERAM (I)  16,385  528,986 
d'Amico International Shipping SA  28,003  18,123 
Elcoteq SE (I)  353  0 
Eurofins Scientific  1,755  498,753 
GAGFAH SA (I)  7,615  149,182 
L'Occitane International SA  23,250  55,303 
Orco Property Group SA (I)  3,084  1,868 
Regus PLC  210,526  605,719 
Sword Group  1,316  30,173 
 
Malaysia 0.0%    141,049 
Nam Cheong, Ltd.  379,000  141,049 
 
Malta 0.1%    588,400 
Kambi Group PLC (I)  8,179  65,764 
Unibet Group PLC  10,144  522,636 
 
Monaco 0.0%    53,726 
Societe des Bains de Mer & du Cercle des Etrangers a Monaco SA  930  53,726 

 

46 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Mongolia 0.0%    40,583 
Mongolian Mining Corp. (I)  515,500  40,583 
 
Netherlands 2.1%    12,514,136 
Aalberts Industries NV  34,977  970,721 
Accell Group  7,041  126,843 
AMG Advanced Metallurgical Group NV (I)  12,164  115,303 
Amsterdam Commodities NV  5,873  137,751 
Arcadis NV  22,632  748,217 
ASM International NV  19,360  752,396 
BE Semiconductor Industries NV  13,618  240,146 
Beter Bed Holding NV  4,794  105,853 
BinckBank NV  28,602  313,339 
Brack Capital Properties NV (I)  166  10,609 
Brunel International NV  8,264  204,020 
Corbion NV  16,095  269,659 
Delta Lloyd NV  68,633  1,653,769 
DOCdata NV  350  8,637 
Exact Holdings NV  5,098  191,044 
Fugro NV  1,449  52,547 
Grontmij (I)  25,109  124,669 
Heijmans NV  7,985  110,659 
Hunter Douglas NV  368  16,275 
KAS Bank NV  3,650  46,960 
Kendrion NV  3,674  110,727 
Koninklijke BAM Groep NV (L)  120,060  284,460 
Koninklijke Ten Cate NV (L)  9,925  245,481 
Koninklijke Wessanen NV  32,316  179,837 
Macintosh Retail Group NV  3,311  32,863 
Nederlandsche Apparatenfabriek NV  765  29,446 
Nutreco NV  25,711  989,270 
Ordina NV (I)  29,382  71,112 
PostNL NV (I)  171,562  860,341 
Royal Imtech NV (I)(L)  86,424  43,712 
SBM Offshore NV (I)  66,552  1,019,979 
Sligro Food Group NV  7,215  285,139 
SNS REAAL NV (I)  28,136  0 
Telegraaf Media Groep NV  4,667  39,272 
TKH Group NV  11,249  379,994 
TNT Express NV  119,585  894,684 
TomTom NV (I)  63,002  483,880 
USG People NV  27,063  349,040 
Van Lanschot NV  651  15,482 
 
New Zealand 1.1%    6,569,525 
a2 Company, Ltd. (I)(L)  105,902  56,750 
Air New Zealand, Ltd.  151,805  278,852 
Bathurst Resources, Ltd. (I)  44,863  2,089 
Chorus, Ltd.  135,559  199,108 
Ebos Group, Ltd.  26,644  213,118 
Fisher & Paykel Healthcare Corp., Ltd.  184,359  789,756 
Freightways, Ltd.  51,124  220,729 
Hallenstein Glasson Holdings, Ltd.  19,805  46,381 
Hellaby Holdings, Ltd.  15,508  38,531 
Infratil, Ltd.  176,060  355,702 
Kathmandu Holdings, Ltd.  64,785  178,247 
Mainfreight, Ltd.  26,005  329,350 
Metlifecare, Ltd.  31,770  123,626 
Michael Hill International, Ltd.  43,259  44,883 

 

47 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

New Zealand Oil & Gas, Ltd.  50,250  32,578 
Nuplex Industries, Ltd.  75,775  193,461 
NZX, Ltd.  80,835  83,864 
Pacific Edge, Ltd. (I)(L)  105,378  72,394 
PGG Wrightson, Ltd.  18,780  6,286 
Pike River Coal Company, Ltd. (I)  57,122  0 
Port of Tauranga, Ltd.  15,938  210,402 
Pumpkin Patch, Ltd. (I)  30,500  10,711 
Restaurant Brands New Zealand, Ltd.  35,586  100,675 
Ryman Healthcare, Ltd.  118,002  795,815 
Sanford, Ltd.  6,681  23,198 
SKY Network Television, Ltd.  132,251  730,343 
SKYCITY Entertainment Group, Ltd. (L)  180,660  571,334 
Steel & Tube Holdings, Ltd.  23,995  60,183 
Telecom Corp. of New Zealand, Ltd.  27,552  67,630 
The New Zealand Refining Company, Ltd. (L)  20,150  27,811 
The Warehouse Group, Ltd.  34,757  90,128 
Tower, Ltd.  32,655  53,820 
Trade Me Group, Ltd.  118,272  366,193 
TrustPower, Ltd.  8,544  49,102 
Vector, Ltd.  64,856  145,525 
Xero, Ltd. (I)  45  950 
 
Norway 1.0%    5,754,554 
ABG Sundal Collier Holding ASA  82,654  71,775 
AF Gruppen ASA  3,241  38,279 
American Shipping ASA (L)  11,435  92,350 
Atea ASA  20,585  250,787 
Austevoll Seafood ASA  25,846  164,688 
Bionor Pharma ASA (I)(L)  25,868  11,224 
Biotec Pharmacon ASA (I)  11,916  35,462 
Bonheur ASA  2,557  45,194 
BW Offshore, Ltd.  121,482  168,166 
Cermaq ASA  10,587  139,496 
Det Norske Oljeselskap ASA (I)  19,905  205,592 
DOF ASA (I)  10,345  44,883 
Dolphin Group ASA (I)  50,001  34,007 
Ekornes ASA  7,513  97,409 
Electromagnetic GeoServices ASA (I)  45,328  32,446 
Eltek ASA  32,294  44,340 
Evry ASA  10,907  28,359 
Farstad Shipping ASA  4,400  70,475 
Ganger Rolf ASA  2,018  34,510 
Grieg Seafood ASA (I)  14,124  58,635 
Hexagon Composites ASA  19,708  103,137 
Hurtigruten ASA (I)  81,734  53,260 
Kongsberg Automotive Holding ASA (I)  151,819  182,939 
Kvaerner ASA  44,554  76,730 
Leroy Seafood Group ASA  6,448  237,982 
Nordic Semiconductor ASA (I)(L)  34,594  209,950 
Norske Skogindustrier ASA (I)  49,961  40,449 
Norwegian Air Shuttle AS (I)(L)  7,291  241,787 
Odfjell SE (I)  7,780  32,844 
Olav Thon Eiendomsselskap ASA  3,830  70,278 
Opera Software ASA  21,538  311,903 
Panoro Energy ASA (I)  86,556  47,890 
PhotoCure ASA (I)  1,408  4,930 
Q-Free ASA (I)  7,500  15,405 
REC Silicon ASA (I)  545,314  295,456 

 

48 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Salmar ASA  9,174  170,533 
Sevan Drilling AS (I)  61,510  28,002 
Sevan Marine ASA  7,650  28,534 
Siem Offshore, Inc.  37,522  47,307 
Solstad Offshore ASA  3,000  49,562 
SpareBank 1 SR-Bank ASA  40,014  394,618 
Sparebanken 1 SMN  16,711  156,966 
Storebrand ASA (I)  46,807  260,853 
Tomra Systems ASA  42,713  361,073 
TTS Group ASA  6,770  5,983 
Vard Holdings, Ltd. (I)  155,000  126,508 
Veidekke ASA  23,829  253,885 
Wilh Wilhelmsen Holding ASA  17,587  153,741 
Wilh Wilhelmsen Holding ASA, Class A  4,200  123,972 
 
Peru 0.0%    87,620 
Hochschild Mining PLC  32,648  87,620 
 
Portugal 0.7%    4,213,655 
Altri SGPS SA  44,909  133,652 
Banco BPI SA (I)(L)  131,340  253,065 
Banco Comercial Portugues SA (I)  11,738,463  1,599,489 
Mota-Engil SGPS SA  22,829  140,851 
Novabase SGPS SA  2,054  8,185 
Portucel - Empresa Produtora de Pasta e Papel SA (L)  66,599  287,391 
Redes Energeticas Nacionais SA  97,339  347,416 
Semapa-Sociedade de Investimento & Gestao  29,810  404,107 
Sonae  371,043  565,324 
Sonae Industria SGPS SA (I)  4,886  2,551 
Teixeira Duarte SA  37,298  43,859 
ZON OPTIMUS SGPS SA  73,271  427,765 
 
Republic of Georgia 0.1%    530,684 
Bank of Georgia Holdings PLC  12,888  530,684 
 
Singapore 1.5%    8,555,162 
Amara Holdings, Ltd.  80,000  36,520 
Amtek Engineering, Ltd.  52,000  25,585 
ASL Marine Holdings, Ltd.  3,000  1,465 
AusGroup, Ltd. (I)(L)  176,000  58,401 
Baker Technology, Ltd.  101,000  21,828 
Banyan Tree Holdings, Ltd.  78,000  40,582 
Biosensors International Group, Ltd.  291,000  171,056 
Bonvests Holdings, Ltd.  36,400  41,101 
Boustead Singapore, Ltd.  94,000  135,803 
Breadtalk Group, Ltd.  38,000  40,490 
Broadway Industrial Group, Ltd. (I)  18,000  2,889 
Bukit Sembawang Estates, Ltd.  51,000  241,168 
Cape PLC  38,567  199,018 
CH Offshore, Ltd.  50,000  19,202 
China Aviation Oil Singapore Corp., Ltd.  72,000  46,940 
China Merchants Holdings Pacific, Ltd.  41,000  30,834 
Chip Eng Seng Corp., Ltd.  216,000  153,821 
Chuan Hup Holdings, Ltd.  78,000  18,399 
CitySpring Infrastructure Trust  277,000  110,886 
Cosco Corp. Singapore, Ltd. (L)  337,000  195,595 
Creative Technology, Ltd.  7,050  12,487 
CSE Global, Ltd.  168,000  92,036 
Cw Group Holdings, Ltd.  92,000  29,065 
CWT, Ltd.  93,000  133,245 

 

49 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Elec & Eltek International Company, Ltd.  5,000  7,448 
Eu Yan Sang International, Ltd.  93,000  62,576 
Ezra Holdings, Ltd.  284,800  255,260 
Falcon Energy Group, Ltd.  32,000  9,996 
Far East Orchard, Ltd.  64,594  96,794 
FJ Benjamin Holdings, Ltd.  5,000  728 
Food Empire Holdings, Ltd.  43,800  13,674 
Fragrance Group, Ltd.  200,000  36,820 
Gallant Venture, Ltd. (I)  264,000  61,251 
Global Premium Hotels, Ltd.  16,000  4,544 
GMG Global, Ltd.  1,234,000  79,038 
Goodpack, Ltd.  148,000  295,131 
Guocoland, Ltd.  30,000  50,699 
GuocoLeisure, Ltd.  197,000  162,460 
Healthway Medical Corp, Ltd. (I)  336,375  14,545 
Hi-P International, Ltd.  51,000  29,618 
Hiap Hoe, Ltd.  38,000  26,292 
Ho Bee Investment, Ltd.  88,000  154,341 
Hong Fok Corp., Ltd.  137,760  109,696 
Hong Leong Asia, Ltd.  46,000  56,306 
Hotel Grand Central, Ltd.  11,521  12,396 
HTL International Holdings, Ltd.  24,000  5,573 
Hwa Hong Corp., Ltd.  55,000  13,873 
Hyflux, Ltd.  187,000  171,485 
Indofood Agri Resources, Ltd.  207,000  143,248 
Innotek, Ltd.  16,000  4,616 
Jiutian Chemical Group Ltdjiutian Chemical Group, Ltd. (I)  479,000  24,515 
K1 Ventures, Ltd.  273,000  42,808 
Keppel Infrastructure Trust  123,000  103,365 
Keppel Telecommunications & Transportation, Ltd.  30,000  40,351 
LCD Global Investments, Ltd.  68,000  16,338 
Lian Beng Group, Ltd.  132,000  76,620 
Low Keng Huat Singapore, Ltd.  64,000  33,830 
Mercator Lines Singapore, Ltd. (I)  70,000  4,654 
Metro Holdings, Ltd.  53,600  39,914 
Mewah International, Inc.  57,000  17,094 
Midas Holdings, Ltd.  382,000  119,302 
NSL, Ltd.  29,000  38,997 
Oceanus Group, Ltd. (I)  142,000  2,045 
OM Holdings, Ltd. (I)  23,407  8,853 
OSIM International, Ltd. (L)  68,000  146,469 
Otto Marine, Ltd.  223,500  13,237 
OUE, Ltd.  121,000  222,732 
Pan-United Corp., Ltd.  78,000  63,078 
Petra Foods, Ltd.  46,000  147,601 
Popular Holdings, Ltd.  41,000  8,209 
QAF, Ltd.  68,681  49,245 
Raffles Education Corp., Ltd. (I)  295,233  83,854 
Raffles Medical Group, Ltd.  13,489  42,980 
REC Solar ASA (I)  9,401  138,914 
Rickmers Maritime  215,000  49,886 
Rotary Engineering, Ltd.  100,000  55,238 
SBS Transit, Ltd.  20,500  27,726 
See Hup Seng, Ltd.  84,000  19,492 
Sheng Siong Group, Ltd.  103,000  57,684 
Sim Lian Group, Ltd.  69,447  49,770 
Sinarmas Land, Ltd.  417,000  216,949 
Sing Holdings, Ltd.  79,000  22,753 
Singapore Post, Ltd.  62,784  86,728 

 

50 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Singapore Reinsurance Corp., Ltd.  47,000  11,118 
SMRT Corp., Ltd.  270,000  338,332 
Stamford Land Corp., Ltd.  196,000  93,337 
SunVic Chemical Holdings, Ltd. (I)  41,000  17,715 
Super Group, Ltd.  76,000  81,845 
Swiber Holdings, Ltd.  171,000  67,114 
Tat Hong Holdings, Ltd.  139,000  92,921 
Technovator International, Ltd. (I)  78,000  40,289 
The Hour Glass, Ltd.  5,000  7,306 
Tiong Woon Corp. Holding, Ltd.  51,000  13,476 
Triyards Holdings, Ltd.  14,680  9,106 
Tuan Sing Holdings, Ltd.  312,549  100,125 
UMS Holdings, Ltd.  32,500  14,959 
United Engineers, Ltd.  178,000  406,066 
United Envirotech, Ltd.  126,000  140,243 
UOB-Kay Hian Holdings, Ltd.  133,554  173,833 
UPP Holdings, Ltd.  136,000  32,155 
Venture Corp., Ltd.  93,000  597,749 
Vibrant Group, Ltd.  359,012  33,349 
Vicom, Ltd.  4,000  20,401 
Wee Hur Holdings, Ltd.  102,000  31,430 
Wing Tai Holdings, Ltd.  176,817  264,573 
XP Power, Ltd.  3,050  77,790 
Yeo Hiap Seng, Ltd.  8,834  14,356 
Yongnam Holdings, Ltd.  393,000  67,519 
 
South Africa 0.1%    709,368 
Lonmin PLC (I)  134,717  514,581 
Mondi PLC  11,338  194,787 
 
Spain 1.8%    10,876,137 
Abengoa SA  8,274  49,867 
Abengoa SA, B Shares (L)  114,497  657,827 
Acciona SA  7,277  582,461 
Acerinox SA  28,118  430,902 
Adveo Group International SA  3,643  76,459 
Afirma Grupo Inmobiliario SA (I)  113,311  12,665 
Almirall SA (I)  12,869  201,562 
Atresmedia Corp de Medios de Comunicaion SA  15,346  224,028 
Azkoyen SA (I)  2,428  7,203 
Baron de Ley SA (I)  717  70,643 
Bolsas y Mercados Espanoles SA  24,154  1,000,714 
Caja de Ahorros del Mediterraneo (I)  1,684  0 
Cementos Portland Valderrivas SA (I)  1,810  12,125 
Cie Automotive SA  8,443  118,366 
Construcciones & Auxiliar de Ferrocarriles SA  346  136,751 
Deoleo SA (I)  129,706  67,273 
Duro Felguera SA  15,638  87,375 
Ebro Foods SA  16,205  327,893 
EDP Renovaveis SA  18,157  131,429 
Elecnor SA  5,499  76,332 
Ence Energia y Celulosa SA  36,627  83,053 
Ercros SA (I)  14,570  9,608 
Faes Farma SA  74,954  200,014 
Fluidra SA  7,614  29,514 
Fomento de Construcciones y Contratas SA (I)  13,986  261,596 
Gamesa Corporacion Tecnologica SA (I)  61,524  774,095 
Grupo Catalana Occidente SA  10,088  341,782 
Grupo Ezentis SA (I)  45,066  44,185 

 

51 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Iberpapel Gestion SA  1,271  21,013 
Indra Sistemas SA  29,559  444,530 
Laboratorios Farmaceuticos Rovi SA  1,848  22,561 
Mediaset Espana Comunicacion SA (I)  46,539  533,211 
Melia Hotels International SA  11,376  126,469 
Miquel y Costas SA  1,538  56,376 
Natra SA (I)  5,612  12,536 
NH Hoteles SA (I)  47,720  256,071 
Obrascon Huarte Lain SA  9,655  353,565 
Papeles y Cartones de Europa SA  11,407  73,108 
Pescanova SA (I)  2,188  0 
Prim SA  1,511  12,282 
Promotora de Informaciones SA (I)  143,222  57,408 
Prosegur Cia de Seguridad SA  36,773  249,431 
Realia Business SA (I)  26,450  43,793 
Sacyr SA (I)  102,068  572,151 
Solaria Energia y Medio Ambiente SA (I)  10,301  11,503 
Tecnicas Reunidas SA  9,803  536,514 
Telecomunicaciones y Energia (I)  4,417  8,420 
Tubacex SA  31,268  159,486 
Tubos Reunidos SA  31,261  104,997 
Vidrala SA  3,819  175,306 
Viscofan SA  14,051  783,703 
Vocento SA (I)  6,333  15,309 
Zeltia SA (I)  62,828  230,672 
 
Sweden 3.4%    20,054,399 
AarhusKarlshamn AB  7,379  432,680 
Acando AB  18,435  30,760 
Addtech AB  15,309  229,061 
AF AB, B Shares (L)  26,838  439,858 
Atrium Ljungberg AB, B Shares  8,549  128,896 
Avanza Bank Holding AB  3,081  114,271 
Axfood AB  6,562  326,318 
Axis Communications AB (L)  11,764  348,476 
B&B Tools AB  7,855  164,655 
BE Group AB (I)  8,608  12,021 
Beijer Alma AB  5,177  136,609 
Beijer Electronics AB  1,967  16,346 
Beijer Ref AB  4,345  85,811 
Betsson AB (I)  9,301  321,124 
Bilia AB  7,550  201,953 
BillerudKorsnas AB  53,475  773,779 
BioGaia AB  2,610  65,422 
Bjoern Borg AB (I)  3,904  14,182 
Bure Equity AB  24,662  107,130 
Byggmax Group AB  13,266  102,548 
Castellum AB  46,931  765,669 
Clas Ohlson AB, Series B  14,703  281,272 
Cloetta AB, B Shares (I)  61,978  204,136 
Concordia Maritime AB  748  1,441 
Dios Fastigheter AB  20,611  165,403 
Doro AB  8,530  37,646 
Duni AB (I)  11,291  150,424 
East Capital Explorer AB (I)  1,176  8,946 
Enea AB (I)  2,038  17,358 
Eniro AB (I)(L)  37,097  103,606 
Fabege AB  44,517  585,685 
Fagerhult AB (I)  1,800  38,018 

 

52 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Fastighets AB Balder - B Shares (I)  14,300  198,177 
Gunnebo AB  14,001  83,393 
Haldex AB  14,193  182,877 
Hexpol AB  7,107  600,543 
HIQ International AB (I)  11,691  61,174 
Holmen AB, B Shares  18,699  597,022 
Hufvudstaden AB, A Shares  3,446  45,813 
Husqvarna AB, B Shares  8,333  63,167 
Industrial & Financial Systems AB  6,980  221,683 
Indutrade AB  6,487  279,483 
Intrum Justitia AB  23,419  727,391 
JM AB  21,352  696,063 
KappAhl Holding AB (I)  22,127  121,346 
Karolinska Development AB (I)  11,601  27,946 
Klovern AB  7,293  37,783 
KNOW IT AB  3,226  27,025 
Kungsleden AB  48,476  329,215 
Lagercrantz AB  4,000  81,717 
Lindab International AB (I)  23,667  228,109 
Loomis AB  18,745  556,295 
Meda AB, Series A  13,740  184,804 
Medivir AB (I)(L)  11,625  210,020 
Mekonomen AB  5,842  135,505 
Micronic Laser Systems AB  30,882  73,797 
Modern Times Group AB, B Shares  15,580  588,094 
Munksjo OYJ (I)  1,315  13,633 
NCC AB, B Shares  10,970  349,972 
Net Entertainment NE AB, B Shares (I)  6,893  184,643 
Net Insight AB (I)  50,000  15,743 
New Wave Group AB  16,778  84,875 
Nibe Industrier AB  27,668  765,399 
Nobia AB  39,901  299,400 
Nolato AB  8,544  209,171 
Nordnet AB  29,572  124,062 
OEM International AB, B Shares  8,427  109,093 
PA Resources AB (I)  1,101  1,031 
Peab AB  63,290  453,038 
Pricer AB  42,894  29,658 
Proact IT Group AB  930  12,436 
Proffice AB  22,512  80,789 
Ratos AB  37,753  306,172 
Readsoft AB  578  4,716 
Saab AB  22,782  615,152 
SAS AB (I)(L)  58,109  93,977 
Sectra AB, B Shares  421  5,389 
Securitas AB, Series B  74,803  818,449 
Semcon AB  4,321  32,586 
SkiStar AB, Series B  4,288  51,746 
SSAB AB, A Shares (I)  9,753  89,064 
SSAB AB, B Shares (I)  24,900  203,829 
SSAB AB, Series A (I)  49,522  458,198 
SSAB AB, Series B (I)  22,810  189,713 
Sweco AB  6,993  104,942 
Swedish Orphan Biovitrum AB (I)  42,739  534,935 
Swedol AB  662  2,017 
Systemair AB  2,065  31,158 
TradeDoubler AB  9,405  11,962 
Transmode Holding AB  2,020  19,424 
Vitrolife AB  3,570  61,823 

 

53 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Wallenstam AB  26,871  441,945 
Wihlborgs Fastigheter AB  25,678  474,313 
 
Switzerland 4.3%    25,532,556 
Advanced Digital Broadcast Holdings SA (I)  310  4,387 
AFG Arbonia-Forster Holding AG (I)  7,238  188,534 
Allreal Holding AG (I)  5,054  693,630 
Alpiq Holding AG  165  17,950 
ALSO Holding AG  779  46,253 
APG SGA SA  695  219,645 
Ascom Holding AG  11,296  160,821 
Autoneum Holding AG (I)  1,210  208,719 
Bachem Holding AG (I)  525  28,435 
Bank Coop AG  2,190  100,002 
Banque Cantonale de Geneve  333  77,562 
Banque Privee Edmond de Rothschild SA  1  15,790 
Belimo Holding AG  173  452,867 
Bell AG  43  111,278 
Bellevue Group AG  887  11,581 
Berner Kantonalbank AG  992  194,598 
BKW AG  3,293  119,188 
Bobst Group AG  3,755  179,206 
Bossard Holding AG  2,214  271,844 
Bucher Industries AG  1,985  590,866 
Burckhardt Compression Holding AG  794  415,237 
Burkhalter Holding AG  1,239  113,704 
Calida Holding AG (I)  917  34,512 
Carlo Gavazzi Holding AG  76  19,212 
Charles Voegele Holding AG (I)  2,355  37,727 
Cie Financiere Tradition SA  106  4,918 
Coltene Holding AG  992  60,317 
Conzzeta AG (I)  69  282,581 
Daetwyler Holding AG  1,752  231,667 
Dufry AG (I)  8,056  1,374,526 
EFG International AG (I)  18,524  207,042 
Emmi AG (I)  687  248,890 
Energiedienst Holding AG  1,013  33,979 
Feintool International Holding AG  206  20,466 
Ferrexpo PLC  47,434  104,149 
Flughafen Zuerich AG  1,382  903,467 
Forbo Holding AG (I)  456  470,236 
GAM Holding AG (I)  62,411  1,215,080 
Gategroup Holding AG (I)  7,893  198,412 
Georg Fischer AG (I)  1,373  910,090 
Gurit Holding AG (I)  165  78,480 
Helvetia Patria Holding AG  2,098  1,044,496 
Highlight Communications AG (I)  4,309  19,554 
HOCHDORF Holding AG (I)  43  5,950 
Huber & Suhner AG  2,155  116,308 
Implenia AG (I)  4,985  314,721 
Inficon Holding AG (I)  702  229,777 
Interroll Holding AG (I)  110  65,496 
Intershop Holdings  427  166,121 
Jungfraubahn Holding AG  635  50,826 
Kaba Holding AG (I)  890  437,766 
Kardex AG (I)  2,606  128,491 
Komax Holding AG (I)  1,491  227,932 
Kudelski SA  16,563  247,161 
Kuoni Reisen Holding AG (I)  1,281  377,677 

 

54 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

LEM Holding SA  295  235,047 
LifeWatch AG (I)  3,031  30,381 
Logitech International SA  44,448  612,309 
Lonza Group AG (I)  12,538  1,437,801 
Luzerner Kantonalbank AG  1,099  429,084 
MCH Group AG  307  21,488 
Metall Zug AG  70  195,454 
Meyer Burger Technology AG (I)(L)  28,251  307,923 
Micronas Semiconductor Holding AG (I)  9,646  74,807 
Mobilezone Holding AG  8,979  100,171 
Mobimo Holding AG (I)  1,479  305,249 
Nobel Biocare Holding AG (I)  38,784  707,746 
OC Oerlikon Corp. AG (I)  21,272  301,784 
Orascom Development Holding AG (I)  3,860  83,607 
Orell Fuessli Holding AG (I)  223  24,046 
Orior AG (I)  1,924  114,263 
Panalpina Welttransport Holding AG  1,996  283,693 
Phoenix Mecano AG  246  128,321 
PSP Swiss Property AG (I)  67  6,059 
Rieter Holding AG (I)  1,028  230,542 
Romande Energie Holding SA  82  96,674 
Schaffner Holding AG (I)  151  49,785 
Schmolz & Bickenbach AG (I)  220,328  317,000 
Schweiter Technologies AG  355  260,378 
Schweizerische National-Versicherungs-Gesellschaft AG  5,763  515,157 
Siegfried Holding AG (I)  1,050  182,461 
St. Galler Kantonalbank AG  426  164,323 
Straumann Holding AG  1,539  377,692 
Swiss Life Holding AG (I)  68  17,155 
Swisslog Holding AG  60,097  72,832 
Swissquote Group Holding SA  3,162  107,384 
Tamedia AG  641  88,133 
Tecan Group AG  3,718  417,481 
Temenos Group AG (I)  21,579  834,936 
Tornos SA (I)  2,185  14,322 
U-Blox AG (I)  1,966  261,680 
Valiant Holding AG  5,125  478,787 
Valora Holding AG (I)  1,349  311,685 
Vaudoise Assurances Holding SA  338  151,113 
Vetropack Holding AG  96  162,156 
Von Roll Holding AG (I)  2,046  3,720 
Vontobel Holding AG  8,772  324,840 
Walliser Kantonalbank  31  23,997 
Walter Meier AG  600  27,853 
Ypsomed Holding AG (I)  776  71,854 
Zehnder Group AG  3,259  133,602 
Zueblin Immobilien Holding AG (I)  7,460  16,211 
Zug Estates Holding AG (I)  69  90,232 
Zuger Kantonalbank AG  48  239,214 
 
Thailand 0.0%    19,362 
Mermaid Maritime PCL  62,000  19,362 
 
United Arab Emirates 0.0%    223,856 
Lamprell PLC (I)  84,633  223,856 
 
United Kingdom 19.2%    113,859,784 
4imprint Group PLC  3,295  41,017 
A.G.BARR PLC  19,220  204,786 
Acal PLC  1,923  7,447 

 

55 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Afren PLC (I)  310,484  501,981 
African Barrick Gold, Ltd.  7,613  29,565 
Aga Rangemaster Group PLC (I)  16,809  41,808 
Alent PLC  99,919  580,886 
AMEC PLC  91,864  1,716,532 
Amlin PLC  165,498  1,237,154 
Anglo Pacific Group PLC  25,402  68,506 
Anglo-Eastern Plantations PLC  3,323  35,878 
Anite PLC  61,332  95,030 
Ashmore Group PLC (L)  93,395  546,822 
Ashtead Group PLC  85,952  1,399,928 
Avon Rubber PLC  2,655  27,651 
Balfour Beatty PLC  177,098  713,027 
Barratt Developments PLC  196,742  1,209,803 
BBA Aviation PLC  142,938  767,106 
Bellway PLC (I)  42,123  1,117,472 
Berendsen PLC  52,428  929,793 
Berkeley Group Holdings PLC  36,334  1,448,978 
Betfair Group PLC  11,942  216,592 
Bloomsbury Publishing PLC  18,160  53,260 
Bodycote PLC  66,699  770,530 
Booker Group PLC  487,010  1,083,746 
Boot Henry PLC  17,069  56,926 
Bovis Homes Group PLC  52,349  734,079 
Braemar Seascope Group PLC  1,929  15,871 
Brammer PLC  22,960  164,094 
Brewin Dolphin Holdings PLC  85,114  416,786 
British Polythene Industries PLC  8,247  83,853 
Britvic PLC  82,440  939,831 
BTG PLC (I)  111,260  1,183,460 
Cable & Wireless Communications PLC  597,780  491,985 
Cairn Energy PLC (I)  47,153  140,688 
Capital & Counties Properties PLC  5,753  31,980 
Capital & Regional PLC  10,673  8,511 
Carclo PLC  7,141  16,244 
Carillion PLC  113,187  632,988 
Carphone Warehouse Group PLC  170,477  977,441 
Carr's Milling Industries PLC  520  15,040 
Castings PLC  6,764  53,685 
Centaur Media PLC  19,732  19,386 
Charles Stanley Group PLC  5,789  33,153 
Charles Taylor Consulting PLC  5,241  19,157 
Chemring Group PLC  74,431  283,494 
Chesnara PLC  36,756  202,693 
Chime Communications PLC  19,625  105,008 
Cineworld Group PLC  62,600  336,470 
Clarkson PLC  2,633  102,722 
Close Brothers Group PLC  49,398  1,112,995 
Cobham PLC  339,361  1,674,911 
Colt Group SA (I)  103,634  252,375 
Communisis PLC  62,510  70,502 
Computacenter PLC  24,362  252,281 
Concentric AB  14,549  187,036 
Consort Medical PLC  8,715  130,264 
Costain Group PLC  17,941  85,461 
Cranswick PLC  14,704  324,858 
Creston PLC  10,587  19,508 
Croda International PLC  38,831  1,406,851 
CSR PLC  61,169  798,783 

 

56 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Daily Mail & General Trust PLC  83,972  1,210,203 
Dairy Crest Group PLC  48,688  334,270 
Darty PLC  89,867  124,016 
De La Rue PLC  16,318  192,738 
Debenhams PLC  348,350  384,322 
Dechra Pharmaceuticals PLC  24,655  297,353 
Development Securities PLC  39,022  132,715 
Devro PLC  43,875  177,813 
Dialight PLC  4,944  75,081 
Dignity PLC  17,265  410,670 
Diploma PLC  35,157  401,629 
Domino Printing Sciences PLC  35,721  343,610 
Domino's Pizza UK & IRL PLC  21,403  210,528 
Drax Group PLC  129,743  1,351,761 
DS Smith PLC  307,884  1,454,717 
Dunelm Group PLC  15,329  224,248 
E2V Technologies PLC  13,271  33,632 
Electrocomponents PLC  158,734  644,820 
Elementis PLC  163,797  764,026 
EnQuest PLC (I)  245,145  490,601 
Enterprise Inns PLC (I)  170,881  354,901 
Essentra PLC  62,101  884,843 
Euromoney Institutional Investor PLC  13,047  234,890 
Fenner PLC  51,955  314,811 
Fidessa Group PLC  12,505  474,789 
Findel PLC (I)  18,987  76,302 
FirstGroup PLC (I)  267,982  566,359 
Fuller Smith & Turner PLC  9,805  156,035 
Future PLC (I)  44,714  6,214 
Galliford Try PLC  28,088  605,340 
Gem Diamonds, Ltd. (I)  25,896  92,175 
Genus PLC  10,500  196,139 
Go-Ahead Group PLC  13,166  481,635 
Greene King PLC  69,987  959,144 
Greggs PLC  34,699  315,349 
Halfords Group PLC  73,406  581,505 
Halma PLC  122,902  1,262,120 
Hardy Oil & Gas PLC (I)  7,986  13,681 
Hays PLC  467,834  1,038,414 
Headlam Group PLC  20,970  143,402 
Helical Bar PLC  37,218  207,968 
Hikma Pharmaceuticals PLC  46,394  1,331,341 
Hill & Smith Holdings PLC  23,758  216,724 
Hilton Food Group, Ltd.  1,897  14,481 
Hogg Robinson Group PLC  48,756  46,570 
Home Retail Group PLC  311,743  949,037 
HomeServe PLC  97,976  525,542 
Howden Joinery Group PLC  197,239  1,158,951 
Hunting PLC  41,962  620,283 
Huntsworth PLC  40,056  33,607 
Hyder Consulting PLC  1,362  16,640 
ICAP PLC  181,432  1,143,342 
IG Group Holdings PLC  111,076  1,121,016 
Imagination Technologies Group PLC (I)  12,900  47,025 
Inchcape PLC  146,217  1,640,478 
Informa PLC  188,246  1,614,360 
Inmarsat PLC  143,288  1,669,293 
Innovation Group PLC  355,175  179,981 
Intermediate Capital Group PLC  51,098  346,548 

 

57 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

International Personal Finance PLC  25,827  221,980 
Interserve PLC  51,750  568,993 
IP Group PLC (I)  75,566  268,734 
ITE Group PLC  73,751  248,286 
Ithaca Energy, Inc. (I)  140,966  320,230 
J.D. Wetherspoon PLC  33,036  408,612 
James Fisher & Sons PLC  11,945  265,434 
Jardine Lloyd Thompson Group PLC  40,678  701,099 
Jazztel PLC (I)  68,343  890,504 
JD Sports Fashion PLC  15,920  105,828 
JKX Oil & Gas PLC (I)  17,585  13,173 
John Menzies PLC  17,248  177,653 
John Wood Group PLC  105,549  1,376,857 
Johnston Press PLC (I)  131,792  8,871 
Jupiter Fund Management PLC  93,351  581,696 
Kcom Group PLC  207,253  342,445 
Keller Group PLC  24,567  375,123 
Kier Group PLC  16,356  463,636 
Ladbrokes PLC  271,129  600,298 
Laird PLC  75,797  367,024 
Lancashire Holdings, Ltd.  55,390  576,103 
Laura Ashley Holdings PLC  68,094  28,722 
Lavendon Group PLC  30,529  100,547 
Lookers PLC  94,039  220,509 
Low & Bonar PLC  29,009  38,543 
LSL Property Services PLC  10,635  63,711 
Man Group PLC  602,130  1,184,567 
Management Consulting Group PLC  85,894  37,487 
Marshalls PLC  51,019  159,875 
Marston's PLC  223,058  549,238 
McBride PLC (I)  32,860  50,188 
Mears Group PLC  39,299  307,293 
Mecom Group PLC (I)  25,854  61,966 
Melrose Industries PLC  337,557  1,529,673 
Michael Page International PLC  89,474  677,216 
Micro Focus International PLC  45,685  661,526 
Millennium & Copthorne Hotels PLC  53,995  530,815 
Mitchells & Butlers PLC (I)  67,354  458,832 
Mitie Group PLC  118,454  621,862 
Moneysupermarket.com Group PLC  91,593  297,897 
Morgan Crucible Company PLC  98,684  521,421 
Morgan Sindall PLC  11,781  164,584 
Mothercare PLC (I)  18,944  78,939 
MWB Group Holdings PLC (I)  15,166  1,227 
N. Brown Group PLC  48,689  358,250 
National Express Group PLC  166,223  708,497 
NCC Group, Ltd.  21,866  76,954 
Norcros PLC  93,556  27,569 
Northgate PLC  47,234  399,851 
Novae Group PLC  17,166  153,778 
Optos PLC (I)  8,945  29,198 
Oxford Biomedica PLC (I)  110,000  6,439 
Oxford Instruments PLC  8,480  166,393 
Pace PLC  97,208  534,876 
PayPoint PLC  14,204  253,064 
Pendragon PLC  269,797  142,594 
Pennon Group PLC  120,792  1,633,524 
Persimmon PLC (I)  54,780  1,205,991 
Petropavlovsk PLC (I)(L)  33,706  22,679 

 

58 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Phoenix IT Group, Ltd.  10,564  16,352 
Photo-Me International PLC  41,479  93,583 
Premier Farnell PLC  127,373  412,876 
Premier Foods PLC (I)  172,601  123,109 
Premier Oil PLC  175,219  1,012,517 
Punch Taverns PLC (I)  147,074  22,416 
PZ Cussons PLC  84,138  515,904 
QinetiQ Group PLC  167,498  602,985 
Quintain Estates & Development PLC (I)  181,720  267,580 
R.E.A. Holdings PLC  2,867  20,082 
Rank Group PLC  7,361  19,595 
Rathbone Brothers PLC  4,711  158,791 
Redrow PLC  102,557  467,159 
Renishaw PLC  8,134  224,253 
Renold PLC (I)  36,501  36,676 
Rentokil Initial PLC  518,728  1,092,613 
Ricardo PLC  13,492  143,395 
Rightmove PLC  29,446  1,232,364 
RM PLC  12,019  30,751 
Robert Walters PLC  8,872  46,252 
Rotork PLC  26,720  1,223,380 
RPC Group PLC  54,776  516,323 
RPS Group PLC  61,847  285,695 
Salamander Energy PLC (I)  49,302  86,525 
Savills PLC  43,906  469,298 
SDL PLC (I)  15,813  86,792 
Senior PLC  148,012  703,918 
Sepura PLC  12,332  29,425 
Serco Group PLC  157,045  811,336 
Severfield Rowen PLC (I)  65,454  65,312 
Shanks Group PLC  165,728  291,418 
SIG PLC  214,506  665,371 
Skyepharma PLC (I)  3,323  16,929 
Smiths News PLC  61,486  155,988 
Soco International PLC (I)  68,528  481,551 
Spectris PLC  36,384  1,177,477 
Speedy Hire PLC  226,833  240,650 
Spirax-Sarco Engineering PLC  25,266  1,244,060 
Spirent Communications PLC  110,810  189,760 
Spirit Pub Company PLC  203,571  254,198 
Sportech PLC (I)  2,345  3,002 
St James's Place PLC  20,137  240,116 
St. Ives PLC  37,604  135,909 
St. Modwen Properties PLC  67,348  415,436 
Stagecoach Group PLC  141,960  863,655 
SThree PLC  31,058  179,989 
Stobart Group, Ltd.  9,904  20,644 
Stolt-Nielsen, Ltd.  8,163  177,731 
SuperGroup PLC (I)  11,805  214,381 
Synergy Health PLC  17,792  443,495 
Synthomer PLC  91,958  359,922 
TalkTalk Telecom Group PLC  162,113  814,417 
Taylor Wimpey PLC  837,733  1,596,362 
Ted Baker PLC  6,428  206,333 
Telecity Group PLC  35,206  433,550 
Telecom Plus PLC  12,675  306,963 
The Restaurant Group PLC  68,155  729,038 
The Unite Group PLC  74,757  544,255 
The Vitec Group PLC  3,750  37,715 

 

59 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

Thomas Cook Group PLC (I)  512,467  1,063,165 
Thorntons PLC (I)(L)  23,273  41,374 
Tipp24 SE  2,167  99,108 
Topps Tiles PLC  44,766  84,725 
Torotrak PLC (I)  880  250 
Travis Perkins PLC  17,373  503,331 
Tribal Group PLC  3,692  10,965 
Trifast PLC  22,400  42,029 
Trinity Mirror PLC (I)  103,423  353,998 
TT electronics PLC  55,567  156,964 
Tullett Prebon PLC  72,881  327,672 
UBM PLC  30,450  320,232 
UK Mail Group PLC  6,109  60,763 
Ultra Electronics Holdings PLC  23,325  692,375 
UTV Media PLC  24,720  85,630 
Vectura Group PLC (I)  77,999  172,189 
Vesuvius PLC  105,601  815,481 
Victrex PLC  24,286  702,115 
Volex Group PLC (L)  8,308  11,449 
Vp PLC  664  7,123 
W.S. Atkins PLC  32,320  747,797 
WH Smith PLC  44,033  844,563 
William Hill PLC  155,848  906,322 
Wilmington Group PLC  8,311  27,265 
Wincanton PLC (I)  26,476  61,994 
Xaar PLC  18,927  132,083 
Xchanging PLC  83,684  255,720 
 
United States 0.2%    1,385,758 
AgJunction, Inc. (I)  10,400  7,365 
Alacer Gold Corp.  74,271  168,720 
Argonaut Gold, Inc. (I)  33,554  137,327 
BNK Petroleum, Inc. (I)  21,400  23,421 
Boart Longyear, Ltd.  78,496  11,733 
Chaparral Gold Corp. (I)  3,700  1,872 
Diligent Board Member Services, Inc. (I)  7,635  29,050 
Kofax, Ltd. (I)  7,710  60,352 
Performance Sports Group, Ltd. (I)  7,233  124,397 
Sims Metal Management, Ltd. (I)  54,015  608,976 
Thompson Creek Metals Company, Inc. (I)  73,872  212,545 
 
Warrants 0.0%    $5,455 
(Cost $4,091)     
 
Bigben Interactive (Expiration Date: 1-31-16; Strike Price: EUR 7.70) (I)  107  12 
HudBay Minerals, Inc. (Expiration Date: 7-20-18; Strike Price: CAD 15.00) (I)  2,278  3,268 
Leucrotta Exploration, Inc. (Expiration Date: 9-5-14; Strike Price: CAD 1.70) (I)  4,800  2,097 
Seat Pagine Gialle SpA (Expiration Date: 8-31-14) (I)(N)  130,315  74 
Tower Semiconductor, Ltd. (Expiration Date: 6-27-17; Strike Price: ILS 7.33) (I)  1  4 
  
Rights 0.0%    $18,002 
(Cost $0)     
 
Borussia Dortmund GmbH & Company KGaA (Expiration Date: 9-8-14; Strike Price:     
EUR 4.66) (I)  27,856  1,464 
Guotai Junan International Holdings, Ltd. (Expiration Date: 9-22-14; Strike Price: HKD     
5.30) (I)  30,200  1,013 
Intercell AG (I)(N)  8,699  0 
Lemminkainen OYJ (Expiration Date: 9-17-14; Strike Price: EUR 8.20) (I)  993  975 
Mota-Engil Africa (I)(N)  22,829  14,550 

 

60 

 


International Small Company Fund
Fund’s investments
As of 8-31-14

  Yield (%)  Shares  Value 
Securities Lending Collateral 5.0%      $29,701,878 
(Cost $29,700,877)       
 
John Hancock Collateral Investment Trust, 0.1088% (W)(Y)(W)  0.1088  2,968,080  29,701,878 
 
Short-Term Investments 0.6%      $3,559,469 
(Cost $3,559,469)       
 
Money Market Funds 0.6%      3,559,469 
State Street Institutional Liquid Reserves Fund, 0.0747% (Y)  0.0747  3,559,469  3,559,469 
 
Total investments (Cost $526,631,000) 105.1%      $622,771,143 
 
Other assets and liabilities, net (5.1%)      ($30,345,136) 
 
Total net assets 100.0%      $592,426,007 

 

The percentage shown for each investment category is the total value of the category as a percentage of the net assets
of the fund.

ADR American Depositary Receipts

CAD Canadian Dollar

EUR Euro

HKD Hong Kong Dollars

ILS Israeli New Shekels

(I) Non-income producing security.

(L) A portion of this security is on loan as of 8-31-14.

(N) Strike price and/or expiration date not available.

(W) Investment is an affiliate of the fund, the advisor and/or subadvisor. This investment represents collateral received for securities lending.

(Y) The rate shown is the annualized seven-day yield as of 8-31-14.

61

 


(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. PURCHASE OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.

(a) The registrant has adopted procedures by which shareholders may recommend nominees to the registrant's Board of Trustees. A copy of the procedures is filed as an exhibit to this Form N-CSR. See attached "John Hancock Funds - Nominating and Governance Committee Charter".

ITEM 11. CONTROLS AND PROCEDURES.

(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in this Form N-CSR is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such disclosure controls and procedures include controls and procedures designed to ensure that such information is accumulated and communicated to the Registrant's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Within 90 days prior to the filing date of this Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant's management, including the Registrant's principal executive officer and the Registrant's principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures relating to information required to be disclosed on Form N-CSR. Based on such evaluation, the Registrant's principal executive officer and principal financial officer concluded that the Registrant's disclosure controls and procedures are operating effectively to ensure that:

(i) information required to be disclosed in this Form N-CSR is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission, and

(ii) information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) CHANGE IN REGISTRANT’S INTERNAL CONTROL: Not applicable.

ITEM 12. EXHIBITS.

(a)(1) Code of Ethics for Principal Executive Officer and Principal Financial Officer.

(a)(2) The certifications required by Rule 30a-2(a) under the 1940 Act.

(b) The certifications required by Rule 30a-2(b) under the 1940 Act.


(c)(1) Submission of Matters to a Vote of Security Holders is attached. See attached "John Hancock Funds - Nominating and Governance Committee Charter"

(c)(2) Contact person at the registrant.


SIGNATURES 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

JOHN HANCOCK FUNDS II 
 
 
 
 
/s/ Andrew Arnott 
Andrew Arnott 
President 
Date: October 10, 2014 

 

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.

/s/ Andrew Arnott 
Andrew Arnott 
President 
Date: October 10, 2014 
 
 
 
 
/s/ Charles A. Rizzo 
Charles A. Rizzo 
Chief Financial Officer 
Date: October 10, 2014